In-Depth

They Might Not Be Giants

Staying small is an unconventional business strategy -- but for some Microsoft partners, it's exactly the right choice.

• By Anne Stuart
• May 01, 2006

That motto may not be carved into your company's cornerstone or embossed on your business cards, but if you're like most organizations, it's your real mission statement.

After all, it's a given that just about every company -- regardless of age, industry and current size -- wants to get bigger. You could reasonably argue that, in most cases, it's the executive team's duty to expand the company as much and as quickly as possible.

But as business journalist Bo Burlingham describes in his new book, Small Giants (see "To Grow or Not To Grow"), many companies are getting off the growth treadmill. In some cases, they simply postpone or slow down their expansion plans for a while; in others, they decide to stay at a certain level indefinitely. Whatever the timeline, such companies typically adopt the strategy so they can focus on other business goals such as developing new products, creating an ideal work environment or deepening their relationships with their existing customers.

While the slow-growth (or no-growth) strategy may initially seem seriously out of whack with Microsoft's own aggressively expansion-oriented culture, some Microsoft partners say the approach works just fine for them. Following are insights from several successful small partners who have consciously chosen goals other than growth for growth's sake.

Mark Mulvany, Swifttrain, Ireland
For Mark Mulvany of County Meath, Ireland, staying small is a matter of quality control.

Mulvany left a Dublin-area IT firm to start his own business in 2001. His one-man company, Swifttrain, offers IT training and network consulting for small and midsize businesses, primarily other Microsoft partners.

Although he's regularly offered more business than he can handle, Mulvany doesn't want to staff up or outsource any work. "Fifty percent of my business is training, and that's very hard to replicate with a junior employee because you're relying on your own reputation," says Mulvany, a Microsoft Registered Member. "The other 50 percent is consulting. On that side, if I sent a junior [technician] in to resolve a customer's problem, I'd get into a lot of trouble because their own techs probably would have already done anything that my junior employee would do."

He also enjoys his niche: working with other Microsoft partners, who, he says, are generally knowledgeable enough to qualify as a consultant's delight. "I get really good partners telling me exactly what the problem is, where it is and what they've done," Mulvany says. "It's not just, 'Oh, our system crashed.' I'm dealing with people who know what this business is like, and it's spoiled me."

The downside to keeping a governor on his company's growth? "The work-life balance is hard to get right," says Mulvany, who runs Swifttrain from a converted garage next to his home. "It's very hard to close the door on the business." When a customer has a middle-of-the-night IT crisis, he can't delegate the work. "I always answer their phone calls," he says. "I can't close the door on that, either."

Still, he doesn't see adding any employees in the foreseeable future, especially because his wife has taken over some of the accounting and administrative work. "I'm looking all the time to see if there's a part of my business that I can delegate off," he says. "I haven't been able to see any so far." As for partnering with somebody: "I've had discussions with people -- but I haven't found the right match," he says. So for now, Mulvany will continue to choose to accept the jobs he wants and pass on the rest.

Michael Klein, Computer Directions Inc., Searingtown, N.Y.
As a long-time student of martial arts, Michael Klein knows that a smaller competitor can use leverage and strategy to overcome a much larger opponent. "You try to do the same thing with business," says Klein, president of Computer Directions Inc. of Searingtown, N.Y., another Microsoft Registered Member. "You're not going to be taking on big companies on their own terms. It's unrealistic. You don't have the resources. So you use their size against them."

For that reason, he's kept his 19-year-old IT and management consulting firm small so that it can remain nimble enough to run circles around larger, slower competitors.

Just one example: When clients call a large company's help desk, "they talk to the least qualified person" -- typically, whoever answers the phone, Klein says. That person may well be someone across the country or overseas who knows nothing about a particular customer and who's evaluated on the number of calls processed per day. When customers call back, they're unlikely to reach the same rep twice. When customers call Computer Directions, they'll talk to Klein or one of his three employees. "Our people not only know the technology, they know the client's business and they know the people at the business," says Klein, interviewed while driving to a customer's headquarters.

Another differentiator he fears losing to growth is his own ability to provide up-to-date expertise. "As businesses grow, the people at the top tend to lose touch," he says. "The technology marches on and suddenly they're managing technologies they no longer understand. That is a very dangerous place to be."

At the same time, Klein understands that he can't specialize in everything. So when his customers need help with issues outside his own areas of expertise, he turns to his "black book," crammed with information on knowledgeable contractors. "Computers these days are more specialized than medicine," he says. "You have to know what you know and know what you don't know. So I bring on talent for this job here or a job there. Then you don't worry about what you're going to do with that talent until the next job comes along."

Why not just staff up by hiring more specialists, especially because he's already working double-time himself? "My family was in the food business in New York for a couple of generations," he recalls. During that time, the family's company supplied many fine restaurants--and Klein saw first-hand what happened when some of those businesses expanded too quickly: "It wasn't same anymore," he says. "The quality was gone."

That's a mistake Klein doesn't intend to repeat. "This is the Information Age and knowledge is power," he says. "You can be a small company and still have a lot of power and influence. You can still have large companies coming to you. You don't need to open the door and see bodies sitting outside in cubicles to do that."

Patricia and Dennis Schumaker,
Schumaker & Co., Ann Arbor, Mich.
When Patricia Schumaker founded her eponymous IT and operations consulting firm in 1986, the company had just two employees (the second was her husband Dennis). They're keenly aware that they're selling their reputations. "When you have your last name tied to the business, people expect something different in the way of service. We're not XYZ Corp.," says Patricia Schumaker, the company's president. "It's much easier to control your reputation when you're a 10-person firm than when you're a 50-person firm."

For that reason, they've kept the company relatively small. Over the past two decades, the company, a Microsoft Certified Partner, has employed up to 15 people; currently, eight full-time equivalents handle the firm's work.
Dennis Schumaker, the firm's executive vice president, calls the current payroll the perfect size for the collaborative culture that's been a company hallmark. "When you're all working in one big room, there's no need to have staff meetings. You all know what's going on," he says. "As you grow, you start to get involved in office politics."

To keep headcount low, the Schumakers require all employees to share in administrative tasks. "Our philosophy has been that you can work people down, but you can't work them up," Dennis Schumaker says. "You can take consultants and have them do their own copying and word processing, but you can't take somebody who just does word processing and make them a consultant." They also require all employees to contribute billable hours, he adds: "We're a consulting firm, you don't make money when people are in the office. They have to be out at client sites."

The fastest-growing consulting firms tend to concentrate on serving just one or two big accounts, and "if those clients go away, they crash and burn real quickly," Dennis Schumaker says. So Schumaker & Co. maintains a stable of customers in different industries, including state government, utilities and telecom companies. That diversity allows them to weather periodic downturns without cutting staff. When business is booming, they bring in contractors.
The Schumakers haven't ruled out the possibility of increasing headcount to 20 or even 25 employees, "but so far, we've opted not to do that," Patricia Schumaker says. "If we do go that route, it will be controlled growth."