Is growing your firm overrated? Are you wrestling with the age-old question: Should I grow my firm, or should I create a lifestyle practice? Ultimately, some may want to grow their firm. However, growth is not everyone’s goal. And that’s OK. QuickBooks help you find out if building a lifestyle practice is for you.
Growing your firm vs building a lifestyle practice
Nicole Davis, founder and CEO of Butler-Davis, a tax and accounting firm, spoke with serveral firm owners that asked themselves similar questions, and learned that growth can be overrated.
For this article, a lifestyle practice is usually owned and managed by its founder or solopreneur.
A lifestyle practice may not grow in terms of revenue or head count. The primary goal of this type of firm is to minimise overhead and maximise the take home pay for the owner. A lifestyle practice can be rewarding and offers benefits exclusively to the owner.
There are many reasons why one should build a lifestyle practice, but there are three that Intuit QuickBooks highlights.
Reason #1: A lifestyle practice is more agile
If you’ve ever worked for a big firm or company, then you know how difficult it is to change an app, system, or process. There is usually a lot of red tape and levels of approval that must be obtained before you can change something as simple as the brand of toilet paper in the restrooms. That is a bit of an exaggeration. However, larger organisations tend to be “set in their ways”.
A lifestyle practice can innovate and implement much faster due to its flexibility. A lifestyle practice only has one level of management, so the decision-making process is shortened. This allows for the firm to readily adapt new technology or change the way things are done so that the interests of the owner are achieved. This is highly desirable due to the rapidly changing environment that we live in. A firm must be able to take advantage of opportunities as they come along and pivot, when necessary, to survive or thrive.
Reason #2: There are fewer complexities in a lifestyle practice than there are in a growth-oriented firm
The complexities of growth can be crippling for smaller firms with limited resources. As you grow, you have to build out your infrastructure, which includes hiring more people, investing in better technology, and developing more streamlined processes.
Sure, growth will help you attain your revenue or profit goals, but it does not come without its drawbacks. A very popular hip-hop song called “Mo Money Mo Problems,” by The Notorious B.I.G., has these lyrics: “It’s like the more money we come across, the more problems we see.”
Raise your hand if you feel this is true.
Growth is usually equated to generating more revenue or more money. The problems that you experience as a lifestyle practice do not go away because you have more money. The problems only expand or get bigger. An inefficient process in your firm today will be a highly inefficient process in your future larger firm if you have plans to grow.
Of course, part of building a lifestyle practice is identifying those inefficient processes so that you can work to eliminate them, in line with getting work done as efficiently as possible, so that you free up time to spend on whatever lifestyle goals you’re chasing.
Another complexity of growth is controlling costs and profit margins. Growth often requires additional capital. Many times, service-based businesses do not have access to bank loans or financing that help fuel growth, and the owner has to rely on cash generated by the business or personal funds. There may be months where expenses exceed cash, and you operate at a loss. That is a consequence of growth. Growth then turns into a bootstrapping endeavor that can hurt your bottom line and lifestyle.
Reason #3: A lifestyle practice owner can focus on what matters most–family
The general consensus among firm owners is that they start firms because they want greater control over their time. The ability to work as little or as much as you’d like is a much sought-after benefit in the entrepreneurial space. A lifestyle practice tends to only have a few stakeholders and affords the owner the ability to spend more time at home with family, if that is what they choose to do. We talked about growth requiring additional capital in reason #2 above, but growth also requires a time investment. That investment in time comes at the expense of family time.
A lifestyle practice is a great option for someone that wants flexibility in operations, while minimizing complexities and time away from family. Sometimes, growth can be overrated when it doesn’t align with the goals or wants of the firm owner.
The key to building a lifestyle practice is ensuring your systems and processes work as effectively as possible, reducing time-consuming manual inputs, and automating wherever possible. You’ll find a wide range of tips and guidance to help you do just that on our Efficiency Hub.
Want more resources to help you grow?
Visit the QuickBooks Growth Hub to browse our selection of free guides that can help you find more clients, add new revenue sources, and build a future-fit business.