Happy Medium is an advertising agency based in Des Moines, and founder and CEO Katie Patterson is wrestling with whether to add a second office. With 2014 revenue of $3.77 million, the firm has enough business to support another location, but Patterson is going through a divorce. She asks Marcus Lemonis, entrepreneur and host of CNBC's The Profit, for advice on what to do next.
Marcus Lemonis: Tell me about the business.
Katie Patterson: We do website and graphic design, development, social media implementation, and media buying.
ML: Do you do print ads? Do you do electronic ads?
KP: Everything. I started the company in 2011 and bootstrapped it. I didn't plan on employees, but I couldn't find anywhere to outsource, so now we're a team of 18. We got an offer to be acquired in April, but I didn't consider it. My team wants to open up a second location. How big should this company be?
ML: Are you asking me about growth because you're not sure, or you are sure and you just want somebody to validate it?
KP: Potentially validate it. I'm nervous to fail if we go bigger.
ML: You know, the likelihood of success drops dramatically when you expand, especially in the services business. And there's a lot of capital that goes into opening another office. If I were you, I would pitch it as: "I've had opportunities to move to New York City or Los Angeles, but I choose to stay in Des Moines, because I think it keeps me grounded in the heartbeat of America." Are you married?
KP: I'm in the middle of a divorce. My husband was not on board with having a company.
ML: Do you think that broke your marriage?
KP: One hundred percent. And my team is now telling me that I need to stop working directly with clients.
ML: Forget about your team for a minute. I'm not good at relationships either. And it's because I choose my career over my life. It sounds like you do the same thing.
KP: My son, then my career.
ML: You have a son?
ML: Well, you shouldn't open up another office. You can't let that next piece get fractured. I think a good two years of just chilling out, not making any sudden moves, is the answer. Focus on your son. It's going to be hard for him. Tell your team that you're going to run one business, and you need their help. Don't ever let them tell you that your clients don't want the one-on-one contact. They always want it.
Was Marcus right?
Having met with Lemonis in October, Patterson says that she won't open up a second location in the immediate future. But there are other ways that she plans to expand the company--for example, by launching new products.
"It was interesting advice," Patterson says. "Honestly, I took it more as, take a year or two to really do what I want to be doing."
Moving forward, however, she plans to interact less with her clients. "You can still be involved with clients but not be involved with the day-to-day," she says.