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STRATEGY

Who Needs Growth?

Two CEOs share their contradictory opinions of expanding thier companies
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Hands On

FACE-OFF

Is it better to expand your company--or enjoy a small, healthy business? Amy Blumenthal and Machael Kaye are long time friends who completely disagree on the topic. We asked them to defend their views.

Amy Blumenthal

SMALL AND SATISFIED. I've owned a company for ten years, and I'm still surprised by how frequently I'm asked if I plan to grow it. My answer has always been "Why would I want to?" That response seems to shock most people. "Isn't that the exact opposite of what owning a business is all about?" their expressions seem to say.

At any point over the past few years, I could have decided to grow my company into a multimillion-dollar public-relations agency. At each turn, I have looked at what I have built and asked myself, 'Do I really want to grow this?' The answer has always been 'No.' Staying small has allowed me to remain true to myself and my business philosophy.

Because my company is small, I spend most of my time doing the public-relations work I love--not just managing other people. Since I have only three employees, I don't have to take every client that comes through the door. I can afford to be choosy. Low overhead means lower stress. I don't have to worry about how we'll pay the bills, and I rarely work weekends.

Whenever I think about growing, I ask myself what I'd have to give up in return. Could I get bigger, more prestigious clients if I had a big agency? Perhaps. Could I make more money? Yes, but I'm already doing well. Adding $20,000 or even $50,000 to my salary isn't worth it if I have to work all the time.

I'll admit that there are times I envy my friend Michael's intense need to create something big. Because Michael has a million-dollar-plus company, he belongs to the Young Entrepreneurs' Organization (YEO). I've met some of his YEO friends and found we share the same entrepreneurial ethic. Still, I can't join the group because I haven't reached a million dollars in sales. By choice, I never will.

Amy Blumenthal, 33, heads Blumenthal & Associates, a $350,000 public-relations firm in Boston.

Michael Kaye

HOOKED ON GROWTH. I want my business to grow. I can't imagine it any other way. My company is only two years old, and already sales are well over $1 million. I believe we can reach $5 million in the next five years, and that's what drives me. Fast growth keeps me motivated--and it brings new opportunities. Not long ago, we got a call about a deal to buy a $3 million company. We get those calls now that we have 1,650 clients, because everyone in our industry knows about us.

I get a real high watching sales grow. At one trade show recently, I picked up 25 new clients in a single weekend. It's true that to expand my company quickly I have to put in 85 hours a week. But that will change. When I get sales to a certain level, I'll be able to hire professional managers. My friend Amy will always have to be the mainstay of her company.

However, I admire the fact that she can run a small company as professionally as a big one. Her sales are a third of mine, but her profit margins are a lot higher, and she takes a bigger salary right now! Would I trade places with Amy? I don't think so, but every time she tells me she's going off to the gym in the middle of the day, I want to hit her. I have too much to do. I talk to 25 to 50 clients a day; Amy might talk to 5. I wear a beeper everywhere; Amy doesn't own one.

I have to work much harder, but I know the payoff. Owning a bigger company has financial advantages. At her salary, Amy might retire in 20 years with $2 million in the bank. That's great. But when my company hits $5 million, I could make $500,000 a year. At that point, I might choose to sell the company and retire at 40. Amy will not have that choice.

Michael Kaye, 32, is CEO of Image Wear, an apparel company in Saddle Brook, N.J.

Last updated: Oct 1, 1996




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