At The Capacity Crossroads: 3 Visions For Scaling Your Advisory Firm

At The Capacity Crossroads: 3 Visions For Scaling

5 MIN READ

#XYPNLIVE 2021, XYPN's first-ever hybrid event, is our most customizable conference ever—passholders have the opportunity to vote on key details of the event, helping shape the event one vote at a time. The first round of voting determined the topic of the keynote presentation delivered by none other than Michael Kitces, co-founder of XYPN and the man behind Kitces.com. After tallying the votes, the winner is (drumroll, please!)...At The Capacity Crossroads: 3 Visions For Scaling Your Advisory Firm.

But what is the capacity crossroads, exactly? And what does Michael have in mind when it comes to the three different visions for scaling your firm? I had the privilege to sit down with Michael and ask him—today, I’m going to let you in on all the details. Whether you haven’t launched quite yet or you’re busy scaling your business, this presentation will offer invaluable advice for infusing your firm and your own journey with intentionality, and ultimately, personal fulfillment.

The Capacity Crossroads

When you’re a new firm owner navigating the early stages of business, the typical reality is that you have a lot of time but not a lot of clients. So, the business is pretty forgiving in that you have time to cover your bases and take care of everything you need to and want to. As your firm grows and you get more clients, you find yourself in the opposite situation, one where you have a lot of clients but not a lot of time—you bump up against a capacity limitation. What you've been doing isn't going to work anymore because you’re running out of time relative to your number of clients. You’re at a fork in the road—this is the capacity crossroads. 

At this point, if your firm continues to grow without you altering your approach, Michael explains that you will push yourself beyond your limits, drown in things like stress and anxiety, and ultimately, burnout. Instead, you have to make decisions about whether you will hire, outsource, or stop growing. This decision is deeply personal and should depend entirely on the vision that you have for your firm’s future—and your place in it. Whether the capacity crossroads is far off on your horizon, or it’s staring you in the face, it’s time to think seriously about the vision that you have for your firm so that you can intentionally move forward towards a future you want to live. In Michael’s own words

“...the best way to build a practice that maximizes your own happiness as an advisor isn’t by allowing growth to dictate the role you fill in the business, but by intentionally setting a vision for the type of business you want to build in the first place.”

On the other hand, if you navigate the capacity crossroads without being conscious about your vision for the future, you can end up going down a path that you are going to regret in the long run. Michael shared this quote from Stephen R. Covey: 

“If the ladder is not leaning against the right wall, every step we take just gets us to the wrong place faster.”

But how do you choose which direction to go at the fork in the road? Which vision for your firm best aligns with your long-term goals? Which is the right wall for your ladder? In this presentation, Michael will be presenting three visions for scaling your firm and offer guidance when it comes to knowing which vision is the right one for you and the life of your business. It’s up to you to decide which vision for your firm’s future drives you, but Michael will give you the information and rich industry insight you can use to inform that decision. Here’s a quick overview of each of the three visions:

Solo Advisor

An advisor that wants to remain a solopreneur doesn’t hire. They outsource. These firm owners choose to put a cap on their capacity because they aren’t interested in hiring or managing people and all the responsibilities that come along with that. As such, they actually spend most of their time focusing on whether they've got the right clients on board in the first place. If you can only have a certain number of clients, you want to make sure that they’re ones you’re thrilled to wake up every day and serve. 

Boutique Firm

The second vision is to become a boutique firm. Bo Burlingham calls these the small giants: companies that want to be great, but not necessarily big. The biggest driving forces for boutique firm owners are people and purpose. Boutique firms tend to be very much defined by the purpose and mission of their business and attracting other people who want to be a part of that particular purpose and vision. This means you have to get really clear about defining your culture and your core values to make sure you get the right people on the team—because you’ve decided to have a team and all that comes along with managing one. 

Enterprise Firm

Just about everything is different for enterprise builders—it's all about rapidly growing and scaling your organization. While the boutiques may grow at 10% a year, enterprises try to grow at 1,000%. And growing 1,000% is very, very different than growing 10%. When you grow 1,000%, everything breaks and has to be rebuilt. And that is actually a driving factor and something that excites enterprise builders. As you grow and scale an enterprise, that becomes your job. While you have to deal with reworking and reimagining things some as a small giant, you don't go near this territory as a solo advisor.

So ultimately, it's essential to reflect on these three visions and their sometimes very stark differences. As Michael explains, when you consciously recognize those differences, you tend to pursue different paths and use different strategies. The vision that drives you changes how you go about driving in the first place. 

And here’s a key point: It’s never too early to start thinking about your vision for your firm and shaping your decisions—or too late. If you know from an early stage what your firm is building towards in the first place, you can actually approach the capacity crossroads in a much more constructive way and usually navigate it easier, with less pain, than if you run full steam into it like a wall. But conversely, it’s never too late, and truthfully, most advisors don’t get to a point where they consider their options until they are at the capacity limitation that makes them slow down and consider their vision. 

So, what’s your vision for your firm? This year’s #XYPNLIVE keynote presentation is all about fostering intentionality as you go about scaling your business. You’ll get advice and guidance from Michael himself regarding each of the three visions outlined above. He’ll offer guidance for which path is best for which types of advisors and how to make the right call regarding your firm's future by asking yourself the right (sometimes hard) questions and having all of the information you need. Whatever stage of firm ownership you find yourself in, as you climb, this is an opportunity to have your ladder leaned against the right wall—we’ll see you at #XYPNLIVE. 


Untitled design (5)About Emily Campbell 

Emily Campbell is Associate Editor on XYPN's Marketing Team. She is passionate about language and writing, swoons over an illustrative alliteration, and she can't believe she gets the opportunity to communicate with the world about the XYPN movement. When she's not looking for her next chance to use an em dash, she spends her time with her rescued pit bull named Dog, coexists with spiders as an extension of her vegan values, and engages with the (mostly dead) philosophers that live in her head.

 

 

8 Questions to Help You Choose Your Niche as a Fee-Only Advisor: 8 Questions to Help You Choose Your Niche as a Fee-Only Advisor:
Your Guide to Form 8606 as an Advisor Your Guide to Form 8606 as an Advisor
How the Entrepreneurial Operating System (EOS) Can Make Your Firm Thrive How the Entrepreneurial Operating System (EOS) Can Make Your Firm Thrive
Send Better Emails Using These Free (or Almost Free) Tools Send Better Emails Using These Free (or Almost Free) Tools
Choosing a Small Business Retirement Plan from a Tax Perspective Choosing a Small Business Retirement Plan from a Tax Perspective

Subscribe to Blog Notifications

Let's Connect

Interested in learning more about how XYPN can help you start, run, or grow a successful financial planning firm?

Schedule a Call