TFYW#085: The Three Seasons in Your Firm

Apr 26, 2024

This week is all about doubling down on the uncertainty of growth.

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From 2017 to 2021, while I ran my firm, there was little sharing and transparency on LinkedIn or other social platforms about how firms were growing.

The idea of sharing financial results was unheard of.

I didn’t know if my firm was growing slowly or quickly, and I had no one to compare it to.

Now, in 2024, there are many firm owners who are open to sharing their numbers.

There are plenty of 7-Figure firm owners who share their metrics and head counts.

Those tidbits of information are good for the profession.

However, we don’t get much of the backstory of most of these 7-figure firms, so we create it.

We sometimes get caught thinking they did it quickly, or their profit margins are banging.

We craft success stories that may not exist.

A few smaller firms have recently posted about their tax season earnings or full-year revenues. These firms are in the low six figures and growing.

And for me, their level of transparency is more important.

Most of us can identify with those numbers, which creates a relatable narrative.

They’re giving more of the story, which some might say is less glamorous.

But if we’re trying to benchmark our firms and adjust our perspective, we need the real stuff.

We need fair depictions to ground ourselves.

Scale or Nothing

When I started my firm, I wanted to scale.

For me, tech companies, sexy companies scaled.

I wanted to scale my accounting firm. I didn’t want slow, ‘traditional’ growth.

I wanted to discover the tool or tactic to get me to the scaling mode.

Spoiler: I was also naive; I had no idea what scaling a firm truly required.

But I’ve learned that building a firm includes three seasons.

Stagnation, Growth, and Scale.

I will not spend much time on stagnation, but that’s when we’re stuck.

We’re buried in client work and don’t know what our next move should be.

The most significant breakthrough moment for me was around growth and scale.

My definitions of growth and scale have evolved over the years. I used to think that growth was an inferior operating mode for firms.

I used to think that mediocre firms grew and top-tier firms scaled.

However, firms don’t either grow or scale; they grow then scale, often repeating that process at various points.

As an analogy, the season of growth is the planting of the seeds.

The season of scale is the harvesting of the work that’s been done.

I spent a lot of time just barely getting started in the season of growth for one reason: It contains a massive amount of uncertainty.

I resisted leaning into growth because the results were unclear.

I hesitated to plant seeds because I didn’t know if they would grow.

I was uncertain on many fronts.

    • Would narrowing my niche actually work?
    • Would investing in a marketing plan actually bring in good clients?
    • Would good talent actually pay for itself?
    • Would raising my prices actually help me take home money?
    • Would clients actually pay for $4,000 monthly retainers?

I was spinning my wheels, picking up mediocre clients, sticking to what I knew, and not getting the traction I wanted.

 

If you don’t remember anything else from this newsletter, remember this:

 

The avoidance of potential failure leads to the avoidance of success.

 

I used to think that the season of scaling was the only goal. But it’s not.

The season of growth is the defining milestone for every firm.

It’s wading into the uncertainty.

It’s embracing the truth and acting accordingly.

Most firms grow slowly.

Very few firms scale.

It is ok to be deep in the season of growth.

That means you’re:

    • Spending the extra time optimizing your practice management tool.
    • Paying more for higher-performing talent.
    • Trying to leverage offshore talent again after being burned once or twice.
    • Putting the skills that took years and $$$ to learn on the back burner.
    • Increasing the value you can deliver to your client.

Scaling can wait. In fact, it has to wait until we are willing to grow.

You’re ahead of most if you venture out of your comfort zone and do the uncertain work.

Build the firm you want.

Mark

 

P.S. Email Mark@FirmNexus.com with something that you want me to talk about. I’ll add it to the list. 

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