Finding the Sweet Spot: Determining the Right Size for Your Boutique Professional Service Firm

Finding the Sweet Spot: Determining the Right Size for Your Boutique Professional Service Firm

Dear Collective 54 Insights Subscribers,

In boutique professional service firms, there’s often a tug of war between those who chase relentless growth and those who prefer a more cautious, risk-averse approach. But finding the optimal size for your firm is essential for long-term success and personal fulfillment. In this article, we’ll explore the three critical factors that can help you determine the right size for your boutique professional service firm.

    1. Define Your Income Goal: Your income goal serves as the cornerstone for building your firm. Start by asking yourself, “How much money do I want to make?” This figure will enable you to reverse engineer your financial targets. Establish a profit target that aligns with your desired income and calculate the revenue required to meet that goal. Hint: “more” is never the correct answer. Put a dollar figure on the income goal.

For example, if your income goal is $500,000 per year and you aim for a 20% profit margin, your firm needs to generate $2.5 million in revenue. This simple equation allows you to define the size of your firm based on your income aspirations.

    1. Assess Your Workload Tolerance: Your firm’s size is intrinsically linked to how hard you’re willing to work. Consider the trade-off between the size of your firm and the amount of effort you’re willing to invest. A founder striving for a $100 million firm will undoubtedly work ten times harder than someone aiming for a $10 million firm. Hint: no one ever said on their death bed “I wish I spent more time at the office.”

For example, we all have the same 24 hours in a day, seven days in a week, and 52 weeks in a year. Reflect on how much of this precious time you’re willing to dedicate to work. Your desired workload will directly impact the scale and growth trajectory of your firm.

    1. Determine Your Impact: The size of your firm also influences the number of lives you can touch. Smaller firms typically have a limited client list and a smaller employee roster, which can limit their reach. Conversely, larger firms often serve a broader client base and employ more people, allowing for an opportunity to touch more lives.

For example, let’s compare my time as the founder of SBI and Collective 54. During my time at SBI, with a small client roster and a limited employee base, I touched a few lives intimately. However, at Collective 54, with hundreds of members in the community, I am making an outsized impact by touching many lives. While at SBI, I was driven by money, not impact, and my approach to sizing my firm reflected that. I purposedly chose a business model that had very few clients with each client contributing large profits. In contrast, today I am driven by touching as many people’s lives as I can, and therefore, my approach to sizing Collective 54 reflects this. I have chosen a business model based on lots of members with each member contributing small profits, just enough to invest in the community. I am optimizing for impact, not money. And this dictates the optimum size of Collective 54.  As you can, by comparing these two examples, the optimum size of your firm is determined by the goals of the Founder. You.

In conclusion, determining the right size for your boutique professional service firm is a strategic decision influenced by your income goals, your willingness to work, and the level of impact you wish to achieve. Finding the balance between these factors is crucial for your success and satisfaction as a founder.

If you’re ready to explore this further and join a community of like-minded founders who can support you on your journey, we invite you to apply for membership at Collective 54. Together, we can help you define and achieve the perfect size for your boutique professional service firm.

Don’t miss this opportunity to grow smarter, not just bigger. Apply to Collective 54 today and embark on a path towards a more fulfilling and prosperous future for you and your firm.