Stages of business growth for newer tax preparers
What stage of business growth are you at as a tax professional? Understanding the stages of business means you’ll be able to identify your current stage, which will enable you to focus on the key tasks.
A common pitfall of building a tax business is doing your business-building tasks in the wrong order. Many tax preparers will be diligently working away on a task that is best designed to happen at a later stage … and then wonder why things aren’t working for them.
Im going to help you learn the four phases of business growth, so you can identify which phase you’re in right now, what you should be focusing on, and what the success factors are for each stage.
STAGE #1: Pre-Startup or Pre-Revenue
Phase number one is called Pre- startup or it can even be referred to as pre-revenue. This is when you bring your tax business into existence. In this phase, you, as the owner, ARE the business. There are no plans yet, no contractors, no staff, no team.
In the Pre-Startup phase, you feel overwhelmed, because there are too many things to do. You’re working hard, but you haven’t seen any reward yet. As in no money! And yet, you’re juggling everything and trying to squeeze in the tasks that will help to get you going. The trouble is you don’t really know what to do first, and you don’t have a systematic plan. This means, you may be building a shaky foundation…and that’s a danger zone for failure and disappointing results.
At this stage, you’re creating a lot of things. You’re creating a lot of your services, your brand, you’re setting up all your business structures, and it’s a very difficult phase to be in because there’s lots to learn and lots of work to get done.
The main tasks for this stage…
Build all your foundation pieces in a timely but effective way–but try not to get tied down here, because this is a tough place to be! Most entrepreneurs get STUCK here.
This is the stage when you need to ensure cash flow from another source so you can actually do the work that’s required to get everything set up, without utter desperation setting in, because you can’t pay your rent.
The potential pitfalls and traps of this stage…
Starting to market too soon
Getting very distracted by all the shiny objects out there
Not having a step-wise system to follow, and feeling overwhelmed because there are a lot of things to take care of in this phase
To be honest, this is where a lot of tax preparers struggle and stall…because they just don’t know how to put together a solid foundation for their business, and they’re not making any money yet, and they’re frustrated, and that sense of hopelessness sets in. Yikes!
So the success factors in this phase…
Be very disciplined with your time because you have to be focused in order to get everything done with the amount of time that you really have.
Your very next step forward is to…
Give yourself the time and space to properly build your foundation
Get all the groundwork laid, so you can then grow from there
Invest in expert guidance to help you get this groundwork laid as quickly and as effectively as possible is your best way forward, so you don’t waste a ton of time trying to figure it all out by yourself, or worse, build a shaky foundation that’s going to set you up for a lot of frustration and disappointment down the road, and having to backtrack
STAGE #2: Early Startup (Survival)
The survival phase generally starts once you’ve built your foundation, and you have an existing business.
You’ve started to get some income, but you’ve definitely got that fight or flight pattern .. which leaves you feeling worried that this “isn’t going to work” and you’ll “never make enough money to replace your day job”. In this stage, I typically see tax preparers hustling hard…but they’re not seeing the results or the rewards that they were hoping for.
In this phase, you probably had some clients you either got by chance or through a marketing campaign that actually worked for you. You have a little bit of income but you’re still doing everything yourself, you have no team no contractors, or maybe one VA or an administrative assistant who’s working for you a couple of hours a week or month but nothing steady and consistent.
This is when you need to take your business from an expensive hobby to a profitable business with regular clients coming in, and consistent income.
It’s called survival for a reason because you are literally in survival mode as a business owner.
The main tasks and goals for this stage are to…
Get a basic marketing framework in place, and have a process for testing and choosing the most strategic marketing strategies for YOUR particular business
If things really aren’t working, it may also be a matter of going back and revising or refining your business foundation, because it’s possible things were built on a shaky foundation, which of course is going to cause a problem
For example, if your niche isn’t specific enough, or your messaging is off and you’re not really connecting with your potential clients on an emotional level…then you’re going to have a disconnect
There are a couple of potential pitfalls and traps of this stage…
Often, when people are at this stage, they’re not really even sure which marketing strategies to start with…and that can be paralyzing
When they’re in the middle of this stage, there can be a whole lot of exhausting hustle…and not enough consistent income…and that can be very frustrating and discouraging
In terms of success factors, there are three:
Consistent lead generation. You’ll want to focus your marketing efforts on making sure that you have built a sales funnel that will bring you more leads consistently, and ultimately clients.
Number two you really need to take care of client satisfaction. If your clients aren’t happy, they’re not getting the results they’re expecting, this is going to cause a lot of trouble.
And the third is outsourcing. You’ve been doing everything yourself, and that is not sustainable and is not going to support growth, so you need to hire people to do things for you so you can work in your zone of Genius as much as possible and let other people do all the other important things that need to be taken care of.
So if you identify with the Survival stage of business, your very next step forward is to…
First of all make sure you’ve got your foundation set up right (take an honest look at your niche, your service offerings, your pricing, your business model, etc)
Then, you need to liberate yourself from the day-to-day minutiae and outsource some tasks
And you need to create a smart marketing framework for your business so you are getting consistent client leads coming in every single month. You need a roadmap for how to find and get clients, how to market yourself without losing your mind, and a plan for how to move toward consistent yearly clients and income
You also need to analyze your leaks and broken chains! (Are people asking about your services and not following up? Are people referring to others? Or are you not getting enough clients? Or something else?
STAGE #3: Late Startup
Phase three is called Late Startup.
I call it this because now you are finally getting some success, and some benefit from all your hard work. You have consistent clients, you have profit in your business, and you maybe have a small team or a few contractors that are helping you with the day-to-day activities in your business.
But you are perhaps still doing a lot of things manually. Your business still perhaps requires a lot of YOU in it, you being visible, being present in social media, maybe doing live webinars, doing seasonal events that require a lot of hustle and effort.
In the Late Startup phase, is when you start to focus more. As your business grows there are going to be more and more projects and activities that you will want to take care of. And it’s not about you doing it all yourself. It’s about you learning to delegate and hire the right people, and manage them effectively. The more you can automate things, the better. The more you can create systems and processes, the better.
This is what will help you move into an even more profitable business that truly gives you the lifestyle you desire.
Now that you’ve figured out what works, need to put SYSTEMS in place to ensure consistent income & growth
STAGE #4: GROWTH
Phase 4 is when things get really interesting.
You have hit certain income milestones, whatever those are for you, and you are ready to make an even bigger impact in the world.
Maybe you’re going to scale by growing your team, big time. Maybe you’ll hire other tax preparers, an office team, so you can serve more people. Maybe you’ll scale up into JV partnerships if you haven’t done that already. Maybe it’ll be building a lot of leverage with webinars, or live events. Whatever it is for you, this is also about you getting removed from the day-to-day stuff and moving into more of a visionary or CEO role.
The success factors of this stage…
Continue to hire, and get really good at managing your team, whichever team members you are hiring, and what makes sense for you
It’s also about delegating tasks so you can stay free to think about where you want to go, where the business needs to go, and make the right decisions for your company and get it to the next level.
and it’s about taking those steps into scale and leverage, moving out of a 1:1 model and into a much more sustainable model with unlocked income potential and a much greater impact on the world
Which is a super exciting place to be.
RECAP:
Okay, so there you have it, the 4 stages of business. Let me just recap:
The Pre-Revenue phase, when you’re just at the beginning, and you have to build everything from the ground up, and although you need to move through this phase as quickly as you can, so you can get on to the good stuff of making money and working more consistently with clients, you really do need to build a proper foundation, or else you are setting yourself up for a big mess down the road, or failure to launch, to be honest.
The Early Startup phase, when you’re starting to make some money, but it’s fight or flight and you’re getting burned out and overwhelmed and also frustrated. This can be a scary place too, where you feel like your hair is on fire because you’re doing all the things.
The Late Startup phase, which is a great place to arrive at, because this is the phase when you need to get things really set up into nice automated systems and a smoothly functioning team so your business can start to run like a well-oiled machine.
The growth phase, which is when things get really fun, and this is when your income level can start to take off, and you’re building out more leveraged income streams, and scaling your service offerings, and growing your team even more.
Okay, there you have it! So tell me: where are you? Which stage are you in?
Did you find that you are in one of these stages and ready to invest into getting help moving you through that cycle? Schedule a strategy session with me so that we can get you unstuck in your tax business.
To Your Success!
Kimberly E. Fowler
Tax Business Coach, Tax Professional, Entrepreneur
