Why the Right Size Might Be Smaller Than You Think –

I was a teenager when my father taught me one of the most important business lessons I’ve ever learned. He didn’t say a word. He just figured out how to be happier.

My father ran a towing and car repair business. For years it was a small operation — a modest garage, a handful of employees, a loyal customer base, and a man who genuinely loved the work. Then came the opportunity to grow. He moved to a new location, built a large new garage alongside a smaller one, and expanded his team from five employees to 17. By most conventional measures, he had “made it.”

The new garage, a bigger operation, and the trappings of success.

But something was wrong.

The bigger the business got, the less he enjoyed it. He was managing people problems he’d never had before. Gaining new customers to keep everyone busy and profitable was always a pressing issue. Overhead that used to be manageble became an unpredictable variable to cover.

He found himself spending less time doing the work he loved — the actual craft of fixing cars — and more time managing logistics, personnel conflicts, and cash flow anxiety. And when the dust settled and he looked honestly at the numbers, he wasn’t making dramatically more money. Just dramatically more aggravation and stress.

So he made a decision that most business owners would find nearly unthinkable: He sold the large garage, let most of his staff go, and scaled back to three employees in the smaller shop.

My father was never happier. And he made nearly as much money.
I’ve never forgotten that. It shaped how I think about business, about success, and about the quietly corrosive assumption that growth is always the right direction.

The belief that bigger is better is a flaw in the thinking of most entrepreneurs, so let’s get this right.

The Growth Assumption We Never Question

In American business culture, growth is treated less like a strategy and more like a moral obligation. Bigger means better. More employees means more success. Expanding means you’re winning. Standing still means you’re losing.

This assumption is so embedded that most business owners never consciously choose it — they simply absorb it, the way you absorb the idea that more education is always better or that busier means more productive.

But the assumption is worth examining. Because for a surprising number of founders and CEOs, especially those running small to mid-sized companies. the pursuit of growth is actively working against the things they actually care about: quality of work, quality of life, meaningful relationships with clients, and yes, profitability.

The emerging body of thought around what economists call “degrowth” — choosing the right size for you — makes a set of claims that should be deeply familiar to anyone who has ever felt strangled by the business they built. The core argument isn’t anti-profit. It isn’t anti-ambition.

It’s a challenge to the idea that growth and flourishing are the same thing. They’re not. And confusing them is costing a lot of founders more than they realize.

The Case That Showed Up in My Consulting Practice

A few years ago I worked with a CEO who was, by any surface measure, doing what you’re supposed to do. He was growing his technology product company. His product was unique – high value for niche clients, and a hefty annual licensing fee to go along with that. He had built his team to seven employees to handle marketing, customer service and technical support. Revenue was up. They were taking on more clients.

He called me because he was miserable, his margins were shrinking, and he couldn’t figure out why working harder was making things worse. He felt like he was putting more and more time in, dealing with more stress, and feeling less gratified. The problems at work were beginning to affect his personal life, causing issues with his wife and taking time away from his young son.

When we started pulling apart the numbers together, a clearer picture emerged. His five most profitable clients — the ones who had been with him longest, who were easiest to serve, and who consistently renewed — were generating the majority of his net income. They needed little support and training, and were pretty much on autopilot. The rest of his client roster required disproportionate time, created most of his service delivery headaches, and were the primary reason he needed the additional staff he’d hired.

He was working twice as hard to serve clients who were not very profitable. Staffing up to serve clients that drained him was the worst direction for him.

The conventional advice in that situation is to systematize, delegate, hire better, and push through to the next level of scale. Hiring someone to run the company for him or selling the company were explored We looked at every option seriously. And then he made a different call.

He let go of six employees, which reduced his overhead substantially. He kept one person to handle billing and basic customer service, and deliberately narrowed his client base to the relationships that were genuinely profitable and genuinely satisfying to serve. He stopped marketing his product and turned down new business that didn’t fit. He stopped chasing growth.

His margins improved. His stress dropped. He started enjoying the work again. And he made nearly the same net income.

What he had done — though neither of us would have called it this at the time — was apply the principle of sufficiency. He found the size at which the business actually worked, rather than the size he thought it was supposed to be.

Last I checked in with him, he was working hard and playing hard. There was a lot of snowboarding and mountain biking in his weekly schedule.

The Model That Got Rebuilt From the Inside Out

Another client came to me with a different version of the same problem — except his involved technology, not headcount.

He ran a custom software development firm. Good reputation, talented team, steady stream of project work. The model was familiar: a client comes in with a problem, you scope it, you build it, you deliver it, you find the next client. Repeat.

The problem with custom software as a business model is that it’s inherently labor-intensive and non-recurring. Every project starts from zero. Revenue is lumpy. You’re always selling.

Your people’s time is your product, which means your growth ceiling is basically the number of skilled developers you can hire and manage — and managing developers is its own full-time job.

He saw a different path: instead of continuing to build bespoke solutions for individual clients, he could identify the most common problems he was being asked to solve, build a well-designed software product around those problems, and offer it as a subscription service. Software as a Service (SaaS).

The transition wasn’t painless. It required real investment, a different kind of marketing, and a period of building before the recurring revenue kicked in. But the structural logic was compelling.

With a SaaS model, he needed fewer people. The workflow became smoother and more predictable — less dependent on the constant churn of project acquisition and delivery. His revenue, once the product was established, became recurring rather than episodic. His margins improved substantially. And his team — smaller, more focused — was doing more intellectually interesting work than they had been doing on the custom project treadmill.

He didn’t shrink because he failed. He restructured because he got smart about what kind of business he actually wanted to run. He traded volume for profitability for performance. Complexity for leverage. And the result was a more profitable, more sustainable, and frankly more enjoyable operation — with fewer moving parts.

This is what right-sizing looks like when it’s driven by strategic clarity rather than crisis. And the direction he is heading is toward a much more profitable future with less stress.

Why We Don’t Shrink Even When We Should

If the logic of right-sizing is so compelling, why don’t more business owners pursue it?

The answer isn’t primarily financial. It’s psychological, cultural, and structural all at once.

Growth feels like proof.

We live in a business culture that uses size as a proxy for success. Having more employees signals that you’re serious. Bigger revenue signals that you matter. Shrinking — even intentionally, even profitably — carries a social stigma that can feel like failure even when it isn’t.

Growth creates its own momentum. Once you’ve hired people, you feel responsible for them. Once you’ve taken on clients, you feel obligated to serve them, even the bad fits.

Organizations develop what sociologists Paul DiMaggio and Walter Powell famously called “isomorphic” pressure — the tendency to keep looking and behaving like other organizations in your space, regardless of whether those patterns are actually working.

Conventional business advice is built around growth. Most business books, most mentors, most peer groups operate from the premise that scale is the goal. Questioning that premise can feel lonely. It can also feel like giving up — even when it’s actually a sophisticated strategic choice.

And perhaps most powerfully: Nobody teaches you that you’re allowed to stop. That you can look at what you’ve built, decide it’s the right size, and optimize for quality and sustainability instead of scale. That “enough” is a legitimate destination.

The Research Behind the Feeling

My father’s experience — and the experiences of those clients — aren’t anecdotes against a tide of contradicting data. They reflect patterns that researchers are increasingly documenting.

Studies of organizational diseconomies of scale consistently show that as companies grow, coordination costs rise, communication quality falls, and employees become less motivated in what they experience as an increasingly impersonal environment. There’s a cognitive limit — Robin Dunbar’s research puts it around 150 people — beyond which human beings cannot maintain the kinds of genuine relationships that make work feel meaningful.

Research on self-employment and small business ownership shows that people who move from corporate employment to running their own smaller operations consistently report higher life satisfaction — even when they earn less and work longer hours. The variable that drives the difference is autonomy: the sense that you’re making real choices about your work, your clients, and your time.

Research on bureaucracy as a workplace variable shows that the experience of bureaucratic overhead at work produces roughly the same drop in job satisfaction as low pay or active workplace conflict. When your job becomes more about managing systems, processes, and personnel than doing the work you’re actually good at, something important is lost.

The four-day workweek research points in the same direction. When companies in a large multi-country trial deliberately reduced the quantity of work their employees did, productivity stayed flat or improved, burnout dropped sharply, and satisfaction climbed. Less, done with more intention, produced better results than more, done on autopilot.

The through-line across all of this research is the same: quantity is not quality, and optimizing for quantity tends to degrade quality over time. This is as true in organizational design as it is in anything else.

What Right-Sizing Actually Looks Like

I’m not saying that growth is wrong. Some businesses genuinely benefit from scale — the economics of their model require it, or their mission demands it. If you’re building something designed to serve millions of people, you need to grow.

I’m not arguing that small is inherently beautiful. Small can also mean fragile, under-resourced, and unsustainable. Romantic notions about staying small don’t always pay the bills.

What I am advocating is that the right size for your company is not the largest size you can achieve. It’s the size at which you can do your best work, serve your best clients, take care of your people well, and sustain a business that still feels worth running five years from now.

That size may be different for every company. But finding it requires asking questions that most business owners are never encouraged to ask:

  • Which clients actually make us money, and which ones cost us more than they’re worth? Not just in direct revenue, but in time, energy, and quality of life.

  • Which parts of our operation create real value, and which parts exist mainly to manage the complexity of being bigger than we need to be? Administrative layers, coordination overhead, and management structures that exist to manage growth rather than serve the work deserve honest scrutiny.

  • What would we have to give up if we got smaller — and would we actually miss it? My father didn’t miss the large garage. The CEO who laid off five employees didn’t miss the clients he let go. The software developer doesn’t miss the custom project treadmill.

  • At what size do I actually enjoy running this company? This question is almost never asked in business planning conversations. It should be central to them.

The Permission Slip Nobody Gives You

E.F. Schumacher, whose 1973 book “Small is Beautiful” still reads with remarkable freshness more than fifty years later, asked an economics question that the discipline has never quite answered: how big can we grow before we cease to be humane?

That question applies as much to a 10-person professional firm as it applies to a nation-state or a multinational corporation. Growth has a ceiling above which the thing you were trying to build starts to collapse under its own weight. The challenge is that nobody tells you where that ceiling is — and the cultural assumption that bigger is always better makes it hard to even look for it.

My father found his ceiling the hard way. He built beyond it, recognized what it cost him, and had the courage to build back. He spent the rest of his working life in a small garage he loved, with three people he knew well, doing work he was genuinely good at, serving customers who actually needed him.

He was never happier. And he made nearly as much money.

That’s not a consolation prize. That’s the whole point.

If any of this resonates with where you are in your business right now — if you’re working harder than ever and wondering why it feels like the wheels are coming off — I’d genuinely like to talk. This is exactly the kind of conversation that the advisory work I do at Bizinuum is built around.

Not every business needs to grow bigger. Sometimes the most sophisticated strategic move you can make is to find the size at which your company is actually excellent, and build your whole operation around that.

Chuck Hall, MSOD, is a business advisor and coach with nearly two decades of entrepreneurship experience. He works with founders and CEOs of small to mid-sized companies through his practice, Bizinuum.

chuck@chuckemail.com | 267-640-5932

Note: The image at the top of the page is my father and me when I was a teenager working as one of the 17 employees working in his business.