What Stage of Business Are You in?

What Stage of Business Are You in?

Technology has allowed just about everyone to start their own businesses.  We can do something part-time, full time, or in between.  We can start and stop our businesses.  We can be successful at lots of different business models.   And we can go through stages of our business.

If you want to grow exponentially, or even linearly, you’ll need to progress.  And before you can do that, it makes sense to figure out where you are now.  Here are five stages of business so you can see where you are now and where you want to go.

Stage 1: Contractor

Most professionals and technicians start out in this stage.   You’re doing everything yourself: serving clients, marketing, if any, billing, appointment-setting, customer service, and even answering the phone.  Your practice is less than half full, but you feel like you are starting to have a time problem.

The contractor stage doesn’t last very long if we are good at what we do.  We grow out of it fairly quickly and move into the next stage where we have more clients.

Stage 2:  Clients

The clients stage is where we have just about all the clients we can handle by ourselves.  It’s very similar to the contractor stage, except we’ve gotten a lot busier.  The problem now is if we are going to grow, we need help.  And we also feel a little unorganized.

Stage 3:  Staff

If you have employees, you fall into this stage or higher.  You attract a large number of clients, more than you can handle yourself, so you are building your team.

For me, there were many years that I did not want employees.  But looking back, I realize that my reason for making that decision was all wrong for me.  Now I’m thrilled to be surrounded by people who are willing to help me implement my vision.  No way I could do it without them.

If you want to play big, you need staff.

Stage 4:  Systems

In this stage, the company begins to run without you.  Your company begins to develop value to the marketplace.  If someone quits, it’s not a crisis.  You can recover fairly quickly.  You start to feel more supported and more organized.

Stage 5:  Saleable  

It doesn’t matter if you’re in or not.  Your clients get taken care of.    Everything gets taken care of except the highest level decisions.

In this stage, your company is finally an asset that can be sold.   If you’re banking on the proceeds of the sale of your practice to fund your retirement, we recommend you get your company to this level.

What Stage Should You Be In?

The good news is accounting firms can be profitable in any of the five stages.  Each stage requires different skills.  Each stage has their plusses and minuses.  The first three stages all have significant limits.

The most important thing to know is where you want to go.  If you thought you had a pretty good business and you find yourself in Stage 1, then that might be fine if Stage 1 sounds like Nirvana for you.  IF it doesn’t and you realize you’re stuck, that’s when it’s time to figure out how to get to the level you want to aim for.

What stage is right for you?

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