If the initial stages of building a firm are mostly about survival and prospecting, and the middle stages are about scaling teams and processes, then the latter stages of the firm become about determining what is “enough”. This is especially true as the firm is able to do more complex work for higher-paying prospective clients, meaning that each new client can pay a not-insubstantial amount… to say nothing of the headline-grabbing promises of acquisition multiples from private equity.
Given that firm revenue (and valuation) can have such meaningful consequences, advisors may be reluctant to slow their firm growth. After all, even if they personally feel that they have ‘enough’, advisors may (reasonably) be reluctant to leave money on the table. In this 198th episode of Kitces & Carl, Michael Kitces and client communication expert Carl Richards discuss how to navigate the urge to grow for just a ‘little’ longer against the real-world multiples. After all, the issue is less maintaining growth for a year or two… but that advisors may continue to move the goalposts to justify growing for a “little more” before they dial their work back. This can create a perpetual cycle where the advisor is ‘almost’ to the end all the time.
Advisors can start with clarifying their business purpose and their end goal. There is nothing wrong with continuing to build a larger business – or even enjoying the challenge of growth – so long as advisors are clear with themselves as to what they are building towards. There can always be another tier of clients, fees, team, and revenue to reach – so advisors must carefully consider where they direct their energy. This mindset can be especially clarifying when presented with new business opportunities as advisors consider what will move them closer or further from their goal.
Ultimately, after a certain point, advisors must clarify within themselves what purpose their business growth ultimately serves. Whether that purpose is building a legacy, helping as many families as possible, or spending more time in the community, that in turn can be used as a guiding light… not the promise of ‘more’. In the end, advisors who can be discerning and consistent may find themselves building a practice that enables them to live more of the life they imagined!
