Are You Worrying About Scale Before You Even Have A Scale Problem?: Kitces & Carl Ep 140
Jun 13, 2024
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In this podcast, the hosts discuss advisors' premature worries about scaling, debunking myths about inflated costs. They address hesitations in scaling, highlight the importance of balancing technology and growth, and emphasize the value of focusing on key questions and running small experiments for business growth. The conversation also explores problem-solving as a spiritual practice, emphasizing self-reflection and continuous improvement.
Scale worries can mask hiring and autonomy concerns, hindering business expansion.
Profitability doesn't always scale with business growth, focusing on client value is crucial.
Deep dives
Understanding the Inherent Worries about Scaling
Worries about scaling often surface in business decisions, leading to concerns about profitability and client workload. A common dilemma arises in setting the right prices and anticipating the expanse of workload tied to growth. Businesses sometimes camouflage genuine concerns about hiring and autonomy under the guise of scale challenges, creating a barrier to expansion. The notion of scalability can be misinterpreted, blurring the need for efficient growth strategies and pricing structures.
The Notion of Scale and Financial Realities
The association between scale and profitability in businesses can be misleading, particularly in advisory firms. While there is emphasis on scaling for cost efficiency, the actual profitability margins tend to remain consistent across different revenue brackets. Many firms do not experience significant efficiency improvements as they grow, indicating that scaling might not always translate to enhanced profitability. Focusing on client value and pricing adequacy can be more pivotal than pursuing unyielding scalability models.
Navigating Business Growth and Problem-Solving
Solving the right problems in business evolution is crucial for sustainable growth. Identifying the core obstacles hindering progress and directing efforts towards meaningful solutions are paramount for success. Entrepreneurs often face the challenge of discerning between real business issues and distractions. Swiftly realigning focus towards addressing the fundamental business hurdles is key to optimizing growth potential and driving impactful change.
In our 140th episode of Kitces & Carl, Michael Kitces and client communication expert Carl Richards discuss what's likely behind the common problem of advisors prematurely worrying about scale.