In the last post I discussed how making $1 million in net income on a company with $3 million in revenues would make life pretty amazing.  I'm hoping the first post convinces you that generating a million dollars per year in income would be enough to pay for most of what you would ever want.

Now let's talk about how building a $3 million company (versus a $100 million company) changes your approach significantly.

You can avoid investors. Professional investors aren't interested in funding a company that will only grow to $3 million in revenue, and that's OK.  Most entrepreneurs should be able to reach a $3 million revenue target within 5 years just based on natural organic growth.  The time you would otherwise spend on raising capital can be focused on hitting your first $50k in sales.

You can grow at a reasonable pace.  If you plan on hitting $10 million in revenues in 3 years you need to grow as quickly as possible.  If you're not doubling in revenues every 3 - 6 months you're behind.  But with a $3 million overall target, you can focus more on building slowly and gracefully.  That means you can take more time to hire the right people, spend more time developing each customer, and put less of your personal capital at risk in the process.

You can say "no" more often.  Startups that are starving for hyper growth rarely have the opportunity to say "no."  They can't say no to investors, they can rarely say no to potential new recruits, and they can almost never say no to a new customer.  In many cases the ability to say "no" is what helps grow a more healthy business.  If you're not buried in hyper-growth mode, "no" becomes a valuable asset.

You can focus on maximizing profit.  When you focus on growth, you need every penny of available profit to re-invest into more growth.  Yet if you know that your growth targets are more modest, like $3 million, you can afford to put more profit into your pocket because the business itself will consume less cash.  It's nearly impossible to maximize growth and profit at the same time.

You can see the white light.  One of the biggest challenges to running a business is seeing the white light at the end of the tunnel.  A growth-minded business is only focused on more growth, and perhaps one day a sale or IPO.  A business targeted at specific end-goals like $3 million can say in Year 3 "I'm generating $600k in profit this year, and I'm 18 months from my $1 million profit goal."  It's the rare case that an entrepreneur can see the finish line, and a tighter target like $3 million makes this feasible.

You can %$&!@ relax!  Starting a company and relaxing are just not compatible.  But if you know your goal is $1 million in profit and you're hitting it each year, you can worry less about your business and more about the rest of your life, which ideally is what making all that money was allowing you to do in the first place.

This list goes on, but I hate writing long blog posts.  The point of course is that building a $3 million business with $1 million in profit can be a much more advantageous pursuit than trying to build the next Google. 

While everyone else is applauding the big boys for their massive buyouts and huge IPOs, just ask yourself "is the risk and payoff really worth the cost?"  Chances are the answer is no, and you know what?  That's just fine.

Special Note - Personally, I'm a "bet the farm" kinda guy.  I wrote this post to point out that while my personal preference is to Go BIG at all costs, I recognize that for 99% of the world, my personal approach just doesn't make a lot of sense.  So yeah, it's a little counter to my theme, but I'm hoping you can appreciate another perspective on the approach to growing companies.