Why You Should Forget the Word Scalable

This article is a reprint of Wise Bread's contribution to OPEN Forum from American Express -- where small business owners can get advice from experts and share tips with each other.

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Is it scalable? If you run a business or are thinking of opening one, someone has probably asked you this question about your concept. That's especially true if you're approaching potential investors.

There's a good reason to ask this question. If you have come up with a way to magnify the reach of your business by opening new locations, tapping the power of the web, or through some other means, you are likely to bring in more money for you and your backers and ultimately add to the value of the business. For some business owners, nothing is more exciting than coming up with a great idea and running with it — all the way to an IPO or some other big cash-out.

Am I the only one out there who wonders if scalability is the wrong goal for many entrepreneurs? In writing about small business for more than 15 years, I've come across countless business owners who have very ambitious visions — providing very high quality products and services, making a real difference in the lives of their customers, and achieving nice revenue and profit growth — but really don't care if they create the next Best Buy, Staples, or Starbucks. That type of huge exponential growth isn't their goal. Nonetheless, many run very profitable businesses, earn enviable incomes, and create plenty of jobs. Often their businesses are more welcome in their communities than the big chains that embody scalability taken to its most extreme conclusion.

At a time when many people feel disconnected from big businesses and are gravitating to the types of shops that do business on Etsy — which raised $20 million earlier this year at a valuation of about $300 million — perhaps it's time for more entrepreneurs to enjoy the unique rewards of keeping a business small. Here are three reasons you may want to forget about scalability in your business, gleaned from many conversations I've had with entrepreneurs on the subject:

You're passionate about running an artisanal or boutique business

Maybe you run a restaurant that's special because it is quirky, unique, and found in only one location. Or you offer a particular approach to a service — whether it is personal coaching, accounting, or dance instruction — that no one else does, and enjoy sharing what you do with a small-but-loyal set of customers.

In this case, trying to standardize what you do so you can expand it to other locales may not work for you or could hurt your brand. Many in the youngest generation of entrepreneurs seem to appreciate this. Witness the growth of crowdsourced funding sites, where fans of highly personal and artisanal businesses that are unlikely to attract traditional funding are making outright donations to these small enterprises.

Your business is at its ideal size — for you

For some owners, passing the 100-employee or 150-employee mark means running a much more corporate business. If you became an entrepreneur to get away from a corporate mindset and don't want to bring in another manager to run your company for you anytime soon, then this factor is important to consider.

You value your time more than money

Trying to grow a business to a much larger scale introduces a lot of complexity, which takes time and commitment to manage. If you're at a stage of life where you have other priorities, whether it is spending as much time as possible with your children, taking better care of your health, or making charitable activities part of your regular routine, putting pressure on yourself to grow the business to the greatest possible size as quickly as possible may compromise those goals. After all, isn't the idea of running your own business to have the freedom to work — and live — the way you want?