Is the relentless pressure to scale up suffocating your entrepreneurial spirit? Gwen Bortner and Tonya Kubo challenge the “bigger is better” narrative, diving deep into why strategically staying small might be your greatest competitive advantage. In this episode, they dismantle the scale-or-die myth, exploring how limiting your business size can lead to premium pricing, unparalleled quality, and the elusive work-life balance you crave. They unpack the hidden costs of growth, the power of boutique businesses, and actionable ways to boost profitability without expanding. If you’re questioning the scaling script and seeking a more sustainable path, this episode is your permission slip to redefine success on your own terms.
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When Not Scaling Is Your Strategic Advantage
Are you constantly feeling the pressure to grow, to scale, to expand your business? If so, you’re not alone. That seems to be sort of the forever advice that we see surrounding us in business, especially with those of us focused on online business. What if we were to tell you that sometimes the most strategic business decision you can make is to stay small? My name is Tonya Kubo. I am here as always with Gwen Bortner.
The focus of this episode is to challenge the “Bigger is better” mindset that tends to dominate entrepreneurial advice. What Gwen and I are going to do is explore why intentionally limiting your business size can be your greatest competitive advantage, allow you to command premium prices, and still maintain the quality of life that probably led you to choose entrepreneurship in the first place. To get us started, Gwen, could you address that scale or die messaging that we seem to be surrounded with?
The Pressure To Grow: Capitalism’s Influence
I think it’s driven by a lot of things. It’s driven by our capitalistic structure. In the United States, you’ve got to keep selling. You’ve got to be doing more all the time. It’s got to be bigger. It’s got to be better. If you’re not growing by X percent every year, you’re a failure. It’s any combination or version of that messaging that we see all over. I’d love to blame social media for all this stuff all the time, and I think it has increased it. That was there long before the internet even existed. This is not new news. I think that’s part of the issue, for sure.
I also think that there has been a standard messaging out there of If you’re not scaling, you’re working too hard, which there’s probably some truth in that. There’s always a little bit of truth in most things. There’s probably a little bit of truth in that, but I don’t think it’s as universal as it’s being presented. That’s always the problem. It’s that a lot of these things are presented as absolutes, as definite, or those kinds of things. That’s probably mostly true or partially true or something, but it’s not absolutely true.
I think that’s the other issue that we’re seeing there. It’s that it has become one of these things that if you don’t scale, you must be doing it wrong. You must be working too hard. You’re probably wasting time and energy. It’s all of these things, which isn’t necessarily true because you might be exactly where you want to be, where you are right now.
I’m thinking of two things. Thing number one, based on what you’re saying, is that it implies that, first of all, the work you’re doing at a small level is work you don’t like doing. I think that’s one thing. I’ll give a couple of examples in a second. The second thing that it implies is that the type of work you’re doing at the individual or smaller level is either time-intensive or energy-intensive. It’s hard work.
What I think about is as a service provider, for instance, my business has its own evolution. There was a time when I would be paid a set amount to do a thing. Maybe somebody hired me to write an article, that’s a service I no longer provide, just to be clear to anybody tuning in, and they may pay me $35 an hour to write an article under the idea that an article might take four hours, and that’s about how much they were willing to pay for an article. I then went to a model where I could promise a set of deliverables, say four articles per month at a different rate. I’m no longer getting penalized if I can write faster.
You can potentially write four articles in four hours.
Sometimes we don't realize that's not what we want until we've already gone down that path. Share on XRight, depending on what the article is. Rather than getting paid hourly just for the active writing, I started getting paid for the finished product. This was not the path I went, but I could have decided, “Now, I’m going to go to a retainer model. You pay me to be a writer for a month, regardless of what my deliverables are.” There are a lot of different ways to scale that out, while still working on a very one-to-one level.
Defining Success: Is Scaling Required?
There’s the other model, and this is where I think a lot of this scaling messaging comes from, which is the assumption that you’re ultimate goal is to get out of the work. Back to the initial point I made, it assumes you don’t like the work. This is where you are the high-level consultant, and then the business model that you switch to is rather than making money through your consulting services, you start making money by teaching other people how to be high-level consultants. What do you think are the hidden costs when it comes to scaling? Let’s start with the hidden cost of scaling that we know, but maybe not everybody knows. I also want to know about the ones that you see that aren’t getting discussed.
The things that I think are first and foremost important are whether the size of the business, whatever you’re scaling it to, and the model that you’re using to scale are actually part of your definition of success, which goes back to, is it the business you really want? Lately, I’ve been paying more attention to the title of our show has a reason. Is it the business you really want? Do you want to just, and I say just not like it’s the only have to do, but do you only want to be the CEO and no longer be a part of delivering the services, or do you want to have a cadre of consultants working for you? The list goes on and on.
That’s the first piece. Is this the business you really want? I think that’s the question that nobody takes the time to first ask. The other reality is sometimes we don’t know that’s not what we want until we go down that path, and it’s like, “Everyone said this would be awesome, and I don’t like it at all.” When we started this conversation almost a year ago, people were talking about burning down their business.
I think a lot of the reasons people were burning down their business is because someone advised them to go down a path, usually, some sort of scaling path. When they realized it was no longer the business that they wanted, they didn’t know how to back out of it in a reasonable way, so they burned the whole thing down. The problem is, unless they’re clear on where that transition happened, they’re going to go down the exact same path again because that’s the only thing they know.
They may say, “This time I am stopping here.” That’s probably good, but it doesn’t necessarily mean that you could not have done something different at that inflection point, whatever that decision point was. I think that’s when one of the biggest challenges comes in. We have to be clear about what it is about the business that you really want.
Before we can talk about the costs associated with scaling, we first have to get clear on what we want.
Sometimes the cost is totally worth the benefit.
I was going to say sometimes the cost is that you wake up one day and you go, “How did I get here?”
That’s the other side, and two people could take the exact same path, it’s never the exact path, and each has a same answer. One has the answer, “How did I get here?” The other one is like, “This is totally what I wanted.” The path itself is not a problem.
What I have seen from supporting other businesses that have scaled, as much as I would love to give everybody a list of ten hidden costs that are rarely discussed, the costs vary according to the business owner. Business owner A’s costs could be that they’ve transitioned from providing a service to clients they love, to now managing a bunch of people, which they don’t love, so tthat those people can effectively provide services to the client they love, and the cost is that they now distance from the end user, which does not make them happy.
They don’t feel like they have their hand in the impact, all of those things, because they didn’t sign on to be a people manager. They signed on to deliver a service. For somebody else, that could be a benefit. I’m not having to do the fulfillment. I just get to develop and manage a team, but for them, the hidden costs could simply be the overhead associated with a team-based business versus when they were solopreneurs.
I think that’s where it’s tricky to say, “What are the costs?” I think there are lots of hidden costs, and this is a place of, does this cost feel costly?
Yeah, or cost-effective as it were.
Does it feel like it’s an investment?
Intentional Design Vs. Growth Burnout
Let’s set that aside and ask the question. Growth for growth’s sake, what comes as a result of that versus growth via intentional design?
I do think growth for growth’s sake almost always leads to burnout. Back to it’s not necessarily what someone really wants. They have bought into the bigger is better, scale is the right answer, and all of those things. Most of the people who are talking about burning down their business are not burning down like somebody who barely hits six figures. That’s not what’s happening. They’re burning down businesses that grew and scaled in giant ways. That is the growth for growth’s sake.
One of the biggest challenges comes in when we have to be really clear about what it is about the business that we really want. Share on XThey were just doing it because everyone said, “You need to have a high six-figures,” so they got high six-figures. Now, you need to have seven-figures, so they got seven-figures. You’ve got seven-figures, now you need to have eight-figures, without them evaluating whether that’s what they wanted in the process. It was just because it’s the easiest number to measure. We get very fixed on income as a measurement.
We do have to pay attention to the financials because that is how businesses keep score, but income is not the number. It’s a number, but it’s not the number. We have gotten fixed on the number. I’ve talked to business owners who went from a nice, comfortable upper-six-figure business into a seven-figure and eight-figure business. Not only are they more stressed out and freaked out and overwhelmed and all the rest of it, but they’re also putting less money in their pocket. They’re actually making less money.
They were growing. Were they scaling? Probably not, because part of the real definition of scaling is you’re doing more with fewer resources. You should be making a bigger profit on that. Choosing what things you want to scale. That’s the other thing that people forget. They scale everything. I don’t think the entire business always has to have everything scaled, depending on what you want. There is a price for scaling. That usually means you’re taking on some additional ongoing expenses. If you have scaled well and you’ve designed it so revenue is relatively consistent, then those additional expenses are not scary.
If you’ve got $100,000 coming in every month and you’ve got a $10,000 or $20,000 set of expenses every month. That’s not that scary. It’s not a huge percent, but if you’ve got $100,000 coming in every month, and you’ve got $80,000 that you have to cover, or people are not getting their paychecks and other things, that’s a little scary because it doesn’t take much for that $100,000 to become $80,000 in that income category.
Part of it is that piece of whether it is the risk that I’m willing to take, and what do you have in your own coffers? I know folks that it’s a little tight, but they plan for their business to grow this way. They’ve got money saved away. If it gets a little tight this month, it’s okay. I’ve got money. I can pull out of my business savings account to cover this, because I also know this is the way it’s going to be for a bit.
Strategic Smallness: Flexibility And Quick Pivots
We’re about a third of the way through our time here. I like to shift us to the topic of the episode, like the title of the episode, which is, What are the strategic advantages of staying small? Which ones come to mind for you?
First off, the strategic advantages of staying truly small, everyone that we talked to falls into the small category, even if you’ve got 10 or 20 employees. You can make adjustments and pivots so much easier. When you do, there is less impact on yourself, your business, your employees, your systems, and your processes. It is about, Are you trying to turn the Titanic? That is one of the advantages of staying smaller. People can argue about how small is small. Some folks are like, “A company with 100 employees. That’s big.” A lot of people would say, “No, that’s still tiny and microscopic.”
Something that you do have to consider as you’re starting to scale is how quickly you will be able to adjust as you get to be a larger business, and how important that is to you. For a lot of businesses, that’s not that important. They don’t need to make massive adjustments all the time because their environment is not an environment that gets impacted directly by lots of outside factors.
We had the pandemic a number of years back that impacted everybody in ways that people didn’t plan, but there are business models that get impacted by outside forces all the time. They’re always being impacted by weather, something we can’t control. They are always being impacted by economic factors, something that most of us can’t control. I think that’s also a part of it. How stable is the thing that you’re offering in the environment that you’re offering it in?
One benefit of staying small can be lower overhead costs. Share on XThat’s helpful. Let me first pull out some of what I have heard you say leading up to this point. One benefit of staying small can be lower overhead costs, simplified operations, because if you don’t have 22,000 departments, you’re automatically simplified, but even five departments, which I think is average for the small business that’s in a growth mode. That’s a lot to manage.
Every time you add a person to the communications network of any business, you’re not just adding one or two additional lines of conversation. It comes exponentially. Three people talking is a relatively simple line drawing where they all connect. Four people aren’t very bad, but five starts to get ugly. When you get to seven or eight, which is still not very many, it starts looking like a Spirograph graph. There are lots and lots of connections. That communication piece is another piece that it’s way easier to communicate in a smaller organization. As soon as you start to scale that, that communication piece is an exponential curve.
Boutique Business: Pricing Personalization & Expertise
You’ve got lower overhead costs. You’ve got simplified operations. You mentioned your flexibility to pivot quickly without having these big organizational constraints. When we started this show, part of it was a response to all of these very outwardly successful, highly visible business owners talking about burning their business to the ground or having a deep desire to tear down the entire structure of the business and rebuild it. A lot of what drove that feeling was that they had built their business into such a large organization that it became a monster, and they were no longer working to serve their end user or working to fulfill their passion. They were working to feed the monster.
Those are some of the advantages you mentioned. This is something that I have been exploring with my own business. I’ve been talking to some other business owners to do the same. The idea that a boutique business can command higher prices either by being exclusive or offering a level of personalization that a more scaled-out business can’t. Do you see that play out? Is that industry-specific, or is that something widely applicable?
I think it depends. In some cases, you can justify higher prices when it’s a boutique. Let’s be honest, we expect to pay differently for a group experience than we do for a one-on-one experience. The scaling proponents will say, “Yeah, but as the provider, you are still making more, providing to a group experience because you’re getting less per person, but you’ve got more people in the room. That’s when you can argue on either side, but also part of it is what energizes you.
If having a one-on-one conversation energizes you, and having to manage a group, even a small group, really drains you, are you better off energy-wise doing three one-on-one sessions versus a one-hour session, where maybe you make about the same money? I’m randomly putting dollars into it. Let’s say three one-hour sessions, one-on-one, may make the same money as a one-hour small group session. If you’re energy at the end of that is way higher, how do you put a price tag on that?
That comes down to an individual. That is not the right answer or wrong answer, because there are other people that the thought of doing a one-hour one-on-one session with anybody is the most draining thing on the planet. I could totally do it because if it’s ten people in the room, I barely need to talk. It completely depends on the person. Back to there’s no right answer or a wrong answer. I think that depends.
I also think about what you are providing. A classic example is a bespoke tailor as opposed to a chain store. They may still tailor the suit for you. It’s not the same. They’re making sure that the pants length is correct. They may be tucking in a little bit at the waist or letting it out a little bit at the hip or whatever. They are maybe making some adjustments, but it’s not the same as a completely bespoke hand-tailored suit, and no one is expecting to pay Men’s Wearhouse prices for a completely custom-made suit.
It's much easier to communicate within a smaller organization, and as soon as you begin to scale, that communication becomes exponentially more complex. Share on XI also think, is it distinctive enough, and do people understand the distinction enough that you can actually get that? I think the third place of the bespokeness or the smallness is that we are so niche in those we deal with that we know more about this topic than practically anybody, and we can go so deep in ways that you can’t possibly imagine that people are like, “I need to pay for that level of expertise.”
Boosting Profitability By Simplifying Activities
If somebody is tuning in and they’re thinking, “What will I benefit from staying boutique or not,” it sounds to me like the signs that they should be looking for are if their competitive advantage relies on personalized attention, customization, or, to your most recent point, hyper-specific specialization and insight. What you had mentioned earlier is that if you value flexibility and work-life balance, you have the greatest control over that, the smaller you are.
If your most satisfied clients appreciate your direct involvement, that would be a sign that you would benefit from staying small. If you enjoy the craft or the service aspect more than you enjoy managing people, because you may not have to personally manage all the people if you scale out, but somebody is going to have to manage the people. There is a cost associated with management. One of your very early points is if you’ve tried growth in the past and it has diluted the quality or the level of your service or the perception of what makes your business special, those would all be signs that you would benefit from staying boutique.
What I’d like to do, Gwen, is I’d like to get your insight on what are some ways that you can increase profitability if you’ve made the decision not to increase volume?
This is the place where you can scale without actually growing. So often, we’re putting scale with growth. That doesn’t necessarily have to be true. We can do all of the work prior to real scaling without doing the growth component. The key thing there, quite honestly, is to simplify. I love to make it complex, but that would be a little bit ironic because the answer is simplify. It is simplify. Part of simplify is, do you need to be doing all of the things that you’re doing? That’s another way that you can scale, which is simplify.
Instead of offering the 6 or 12 offerings, can you take it down to 3 or 4? Your most profitable 3 or 4. When I say profitable, I’m saying dollars, but I mean profitable in all the ways, the time, the energy, and the money. Can we reduce that? Do you need to be doing all the things that you’re doing and, therefore, need all the people that you need? Can you cut back on some of the administrative services and/or some of the marketing aspects? There are other things, like, do you really want and need to do all of that? That’s a way that you can say, “I don’t need to have a whole team of people making two LinkedIn posts every day for Instagram posts, and five updates every week on Facebook.” I’m making things up here.
What you realize is that either all your people come from LinkedIn, for example. You could scale some of that back, which creates scale, or you could realize it like, “You know what? I could cut all of that by two-thirds, and I would still be getting some of the same responses.” That’s another place that you could scale.
The other is, are there things that you can let got that you’ve been doing, but you’re like, “We don’t actually need to do that. It’s just something that I’ve been doing or that I like doing, but it’s not really providing value,” and/or can you change or modify your services in a way that allows you to do a little bit more, but still feel boutique, still feels small, without actually making the big, giant growth.
The easiest way to increase profit is always to eliminate expenses. It is not to increase income. That’s the fastest way because when you remove an expense, it goes directly to the profit. When you add a sale, most of that goes to profit, but depending on. You may also need more time from your people, more effort, more whatever. It doesn’t go straight down to profit. If I can take a$100 out of my expenses every month, that $100 is going to land right on profit without anything else changing.
The simplifying of what we can remove, what we can eliminate, and what we can reduce is the way that you can use the scaling activity to increase your profit without necessarily growing the business at the same time. Our friend and wise associate always says, “Simplify before scaling.” That’s part of this. If you can simplify, you can get the benefit of scaling without necessarily having to go bigger.
Income Ceilings Vs. Selling Boutique Business
That all makes sense. What would you say, though, to the person who says, “If I don’t scale, won’t I max out my potential income?”
Yes.
Okay, so 100%, it is always true that a business that doesn’t scale reaches a ceiling on income.
At some point, unless there is a reason that they can continue to raise their price of an infinite item, which is not impossible, but really rare. If you’re selling water and at some point all water is gone, but you still have water, your income becomes almost infinite. It’s a pretty unique situation. There is a point, but part of it is, “Is the only way I’m wanting to make money by the effort I’m putting into my business?”
This is outside our particular topic, but if you’re making a nice solid income and aren’t spending it all, you can be investing it. That’s a way that you are also increasing your income over time. If you don’t grow, at some point, it’s going to max out. The part that most people don’t get is that it’s true with everybody. People are like, “If I scale, I’ll have infinite income.” No, you don’t, because you have to keep scaling forever, and what are you going to do with all that money? Is the money that’s really driving you?
I’m going to swim in it. That’s what I’m going to do with all the money.
Yeah, but we’re not. I think people who are tuning in are like, “They’re not. That is not their driver.”
Probably not. What about the person who wants to sell their business someday? Are boutique businesses sellable?
The easiest way to increase profit is always to eliminate expense, not to increase income. Share on XI think boutique businesses are very sellable, but it’s way less about the income, although the income plays a factor. I can’t say that it doesn’t have any factor, but the real value is in that profit line. If you’ve grown your business and have scaled it so that the profit has gotten as big or bigger over time, then you’re in a position to sell it, probably at a very profitable price. Once you sell it, there is no more income coming in.
Sometimes that’s a big enough number where you feel, “I don’t need any more income coming in.” For most of us, it’s pulling back a huge chunk of the investment that we put in initially. Often, what people forget is how much they put in because they didn’t necessarily put it in dollar for dollar. I got paid $24,000 this year for a job that anyone else would have wanted $80,000.” That’s part of that money. If that was 10 or 15 years ago, we’ve forgotten about that.
That’s what we call a sub cost.
Right, but when we say, “We made all this money,” how much did you really make? Some of that is actually that money finally coming back to you.
Sometimes, with a business sale, at least some of the people I know who have sold their business, it’s not about 2x-ing how much I’ve put into my business over the last 10 or 15 years. It’s about the price tag of not having to run this business anymore. I have seen businesses that could have sold for $100,000 be sold for $20,000 because it was worth $20,000 for the founder to not have to wake up tomorrow and run the business anymore. They didn’t want to hold out for a higher price tag.
We have covered a ton of ground. This comes to the end of our time today. Ultimately, the message here is that intentionally staying small with your business doesn’t automatically limit your success. What it does is it supports the definition of success on your own terms, and building a boutique business that plays to your strengths and values quality over quantity is a way of creating a sustainable enterprise for you, based on your desired lifestyle and your financial goals.
What we’re talking about here is focusing on depth rather than breadth in some cases, so that you can create a deeper experience of value for both your client but also for yourself. Gwen is famous for saying that every yes requires a no somewhere. Sometimes your most powerful strategic advantage is saying no to growth for growth’s sake.
If you are ready to transform your business into one that supports rather than drains you, we have a great free resource that could help you figure out what that looks like. It is an assessment called breaking the burnout cycle, which helps you figure out whether you’re burned out, maybe what areas are leading to that burnout, and then helps you create a customized action guide that identifies your natural strengths, pinpoints where your current business model is working against you, and helps you get that step by step plan to transform your way out of it, while supporting your well-being. Head over to TheBusinessYouReallyWant.com/burnout to download your copy. Until next time, keep remembering that the only definition of success that matters is the one that you have set for yourself.
Mentioned in This Episode
About Your Hosts
Gwen Bortner has spent four decades advising executives and entrepreneurs in 45+ industries. She helps women succeed in business without sacrificing happiness by identifying their true desires and aligning their business functions. She spots overlooked bottlenecks and crafts efficient plans toward sustainable success that center your values and priorities. Known for her unique approach to problem-solving and accountability through the G.E.A.R.S. framework, Gwen empowers clients to achieve their definition of success without sacrificing what matters most.
Tonya Kubo is a marketing strategist and community builder who helps entrepreneurs build thriving online communities. As co-host of The Business You Really Want and Chief Marketing and Operations Officer (CMOO) at Everyday Effectiveness, she keeps conversations on track and ensures complex business concepts are accessible to everyone. A master facilitator with 18+ years of experience in online community building, Tonya takes a people-first approach to marketing and centers the human experience in all she does.
