How Big Is Big Enough?

Believe it or not, there really are Inc. 500 companies that don't want to grow. Are they an aberration or the beginning of an entrepreneurial trend?

There used to be one fairly safe assumption you could make about Inc. 500 companies: They were committed to getting as big as they could as fast as they could. Granted, they all faced constraints of one sort or another -- limited access to capital, shortages of qualified people, insufficient cash flow, whatever -- but their common desire to become bigger companies was never in doubt. Not anymore. This year's Inc. 500 includes a small group of businesses that have already applied the brakes.

Consider the Works Corp., an Internet retailer based in Boise, Idaho, that has chalked up average annual sales growth of 208% since 1999, landing at No. 158 on the 2004 list. Founder and CEO Bruce Goode says he is happy to make the Inc. 500, but he really doesn't want the company to get much bigger. Right now he has six full-time and two part-time people on staff, and he believes that's just about the right number. "I may add one person in the next couple of years," he says, "but that's it. I don't want to get big."

Robert Catlin of Signature Mortgage (No. 459) in Canton, Ohio, feels pretty much the same way. He's developed a system that allows his 16 employees to outperform mortgage lenders with three or four times as many people, and there's no reason to believe that the approach wouldn't be just as effective in other midsize markets around the country. But Catlin isn't interested in expanding. "People tell me all the time, 'You're crazy, pal. You're missing a golden opportunity," he says. "I say, 'Hey, I'm doing just fine. I have control. I have freedom. I have family time and travel time. What more can I ask for?"

Then there's Robert Moore, the co-founder and CEO of Solid Earth (No. 308) in Huntsville, Ala., which provides an Internet-based multiple listings service to real estate agent associations. He and his partner have decided to restrict growth by taking on only four or five new associations per year. To do more, they'd have to expand their 11-person work force -- something they don't want to do. "There's definitely an advantage to having a small team that's devoted, well paid, and happy," Moore says. "I don't think I could get the same level of commitment from a larger group."

These three entrepreneurs are hardly representative of this year's Inc. 500 CEOs. Frankly, it's surprising to find them in that group at all. Their businesses challenge a fundamental belief we've long held about Inc. 500 companies -- namely, that they are engines of job generation. And their founders, it turns out, aren't the hard-charging, sales-obsessed workaholics we often assume entrepreneurs must be in order to build companies capable of growing fast enough to make the list.

The question is, are they an aberration or the leading edge of a trend? Over the years, we've noted changes in the profile of the typical Inc. 500 CEO. Companies that made the list in the 1980s were generally founded and led by self-taught, street-smart entrepreneurs who loved the adventure of building a business. In the 1990s, we saw the emergence of professional entrepreneurs, many of them with M.B.A.'s, who had often gained experience working for large companies and started their own businesses with the goal of going public or getting acquired. It's too soon to say with any confidence that Goode, Catlin, and Moore are harbingers of the next generation of Inc. 500 CEOs, but we may be able to discern clues about the shifting priorities of company builders by looking at the paths that led them to decide they needed to moderate their companies' growth.

For Bruce Goode of the Works Corp., it was a lifestyle decision. A recovering workaholic, he says he has more or less taken the past year off. He's learned how to fly an ultralight airplane and how to carve totem poles with a chain saw. He and his wife, Jody, have gone kayaking in Alaska and taken cruises to Mexico and the Bahamas. He has bought 40 acres of timberland in the mountains north of Boise and remodeled a 100-year-old log cabin on the property.

Not that he ignores his business. He puts in about 30 minutes a day dealing with company matters by telephone and Internet, and he drops by the office a couple of times a week -- "to say hi," he says -- when he's in town. In addition, he spends a considerable amount of time investigating new ventures that the Works Corp. -- which distributes home and garden products through several hundred websites it owns -- might pursue in the future.

For the moment, at least, Goode is content. "We've hit a number where we can make enough money to live very comfortably and travel, and everybody's happy," he says. "Too much growth could screw it up."

He didn't always hold that view. Goode used to work long days and long weeks. He and Jody owned a small garden center in Boise. About 10 years ago, Goode began putting up websites in an effort to sell garden products during the winter to people in other parts of the country. He was so successful that he kept expanding his online product offerings and adding websites until finally it dawned on him that he and Jody really didn't need the store anymore. "The few minutes a day we could get away from people in the store asking questions about $9 items, we could go online and sell $1,000 items," Goode says.

Bo Burlingham

Burlingham joined Inc. in 1983. An editor at large, he is the author of Small Giants: Companies That Choose to Be Great Instead of Big. The book was a finalist for the Financial Times/Goldman Sachs Business Book of the Year Award in 2006. Burlingham is also the co-author with Norm Brodsky of The Knack; and the co-author with Jack Stack of The Great Game of Business and A Stake in the Outcome.