Small Giants

Staying small – and loving it
October 19, 2005
Lisa Stephens
Special to The Globe and Mail

For some entrepreneurs, the end of the rainbow isn't about the pot of gold you hope to collect for selling your successful company to a conglomerate or taking it public. It's about the golden glow of a satisfying life lived within the framework of your small, privately held business.

Instead of looking forward to expanding their operations, opening more locations or offering equity in their company, some business owners deliberately choose to stay small. And stay happy.

Richard Mund, owner of Richard Mund Pottery in Neustadt, Ont., is one of these. Before he began his successful ceramics business eight years ago, Mr. Mund thought long and hard about his business plan. He looked at costs, locations, equipment. But he had one overriding factor on his personal agenda: Carry no debt.

"I wanted everything to pay as it went because I didn't want to feel stress or pressure based on a debt load," he says. "I wanted to make my own decisions without the financial pressure driving everything."

Today, the Mund Pottery showroom is a popular stopping place en route to cottage country, with clients who come back year after year for Mund's hand-painted pieces.

As it happens, Mr. Mund's decision to stay small and stay happy is an increasingly envied choice in the business world.

Bo Burlingham, editor-at-large of Inc. magazine and author of the soon-to-be-published Small Giants: Companies That Choose to be Great Instead of Big has studied purposely small companies that give their founders more than just financial rewards.

The Burlingham study confined itself to those sterling examples of successful small companies that are widely acknowledged by their peers and customers to be the best of their type.

But the lessons and common factors he found among them apply with surprising consistency to many lesser operations, those that have been dubbed "lifestyle entrepreneurships": small businesses that are just big enough to support their owners in their chosen lifestyle. And it's the company's lifestyle -- and the decisions behind it -- that hold a particular allure.

These small giants seem to work a special kind of magic on those who come in contact with them.

"As I went around studying these companies," Mr. Burlingham says in an interview from California, "I invariably came away thinking: Wow, this would be a great place to work."

Small giants, Mr. Burlingham says, have "mojo," which he describes as "the corporate equivalent of charisma in a person. . . . Companies with mojo have a quality that makes people want to be part of them."

If there's one thing that every founder and leader of a company with mojo has, Mr. Burlingham says, it's an absolute passion for what their companies do.

Peter Renner, owner of The Silver Fox, maker of bowties, ascots and cumberbunds, knows that passion well. "I was 13 when I made my first bowtie, in 1947. I loved it from the beginning. I loved working with fine fabrics. I loved seeing people wear my designs."

What Mr. Renner didn't love was the continual demands of fashionable mens' stores for ever-greater quantities at ever-lower prices. He didn't love the some-time slipshod craftsmanship of hired manufacturers. He resisted using less than exquisite fabrics to cut costs. And he hated the long hours and continual demands of running his own store.

Mr. Burlingham would not be surprised at this. Small giants, he notes, invariably emerge out of confidence in, and clarity about, their founder's decision to put other goals ahead of revenue or geographical growth.

"The people in charge had remained in control or had regained control," he says, "by doing a lot of soul searching, rejecting a lot of well-intentioned advice, charting their own course and building the kind of business they wanted to live in, rather than accommodating themselves to a business shaped by outside forces."

While the founders of small giants may be consummate business people, in their passion for what they do they are the opposite of professional managers. "They have deep emotional attachments to the business, to the people who work in it and to their customers and suppliers -- the sort of feelings that are the bane of professional management," Mr. Burlingham says.

In spite of the production demands of his growing business, Mr. Renner still loved making bowties. "I came to the conclusion that I'm an artisan, not an entrepreneur. I love being close to my clients, working one on one with them. In a sense, they're really become my patrons, and not just my customers." He closed his shop.

Mr. Burlingham concurs. "Entrepreneurial management requires the soul of an artist and the business itself is an evolving work of art." Today, The Silver Fox is happily ensconced only on Saturdays at Toronto's St. Lawrence market, tucked away at a small table on the lower level inside the food court. "It's enough for me," Mr. Renner says. "My customers know where to find me, and this is all the selling I care to do. Being here at the market keeps me in touch with people, and it's as much about the social aspects of being here as it is about sales." Again, Mr. Burlingham concurs. "One of the key elements of mojo is that a successful small company is deeply rooted in the fabric of its local community. It has what the French winemakers call terroir, the flavour of the soil in which it grew."

This relationship with the community goes far beyond the usual concept of "giving back," he says, to become very much a two-way street. "The community helps mould the character of the business, just as the companies play an important role in the life of the community." The concept of terroir is the direct opposite of conventional business expansion plans that seek to create national or international consistency and remove local variations, he adds.

A fourth crucial element of mojo, Mr. Burlingham discovered, is that the small giants pursue more than just good service for customers or perks for employees. They actively cultivate an intimate relationship with their customers, employees and suppliers. "Small giants know instinctively how to develop relationships that build mutual trust and loyalty."

It's not just about morale. Nor is it just about compensation, perks and benefits. There's something else shaping the work environment, something else that promotes a profound sense of belonging, of psychic ownership. "By intimacy, I mean a relationship so close that the employees never doubt that the company, its leaders and the other people they work with care about them personally and will stand by them through thick and thin as long as [the employees] hold up their end of the bargain.

"These leaders care for people in the totality of their lives," Mr. Burlingham says.

Loyal employees, accommodating suppliers and -- most of all -- happy customers reward this trust.

Thinking along the same lines, Mr. Mund's next project will be to build a larger studio and showroom that includes a small apartment for an apprentice potter, so he can offer low-cost housing to student potters in an apprenticeship program connected to a local college. "That way, students can afford to study with me. They couldn't if they had to pay their own way."

The fifth secret of small giant mojo is -- perhaps inevitably -- to stay privately held.

Once a company is publicly traded or held by outside shareholders, Mr. Burlingham notes, the moral and ethical obligation to act in the best interests of stakeholders shifts to the best interests of entities outside of the company.

This naturally puts the financial interests of investors ahead of all other obligations -- and removes many of the options for creative development open to a small company's management.

"Staying privately held seems to encourage a level of creativity and adaptability in the management structure that you lose as soon as you go public. If there's another thing that all small giants have in common, it's flexible, responsive management. These companies structure themselves in a way that works for them; they have the freedom to experiment."

Does your business have mojo?

Here are five key elements that foster mojo, the corporate equivalent of charisma.

Author Bo Burlingham says companies with mojo have a quality that makes people want to be part of them. Be the best. Founders have an absolute passion for what they do. They work within a context of an overriding purpose or goal that takes its form as their product or service.

Know yourself and your full range of options. It takes personal clarity, confidence and a sense of purpose to limit the growth of your successful business to what you can handle well.

Stay in synch with your local community. This is more than simply "giving back" to your community or funding local sponsorships. It's a highly responsive feedback loop that shapes the character of the company.

Cultivate intimacy in your relationships with your customers, employees and suppliers. Be open to the emotional connections that build trust and loyalty.

Stay privately held. Resisting the lure of selling your company to outsiders can mean tremendous freedom to experiment and grow a workplace environment and management structure that suits you best.

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