The Real Reason Your Midsize Firm Isn't Growing

Also, they usually don’t have a management team at this stage that is able to share the heavy lift, because funding these human resources may not be economically logical or feasible. Thus, midsize firms often fail to achieve the valuation alpha that seems tantalizingly within their reach. 

To break the growth logjam, firm founders may want to consider hiring more executives. However, this doesn’t solve the need to clearly identify and compartmentalize what needs to be done to get the firm growing again. 

Many firm founders became successful by trusting their gut in making decisions. But to move on from the mid-lifecycle growth plateau, they also need to move on from this intuition-based approach. As their bandwidth becomes narrower, embracing clarity, focus and a disciplined approach becomes not only advantageous but also essential. 

Challenges and Implementation

Midsize firms tend to struggle with three key business planning areas. The first is building a growth strategy built on identifying the key performance indicator that your firm wants to move. This underlines the importance of data. 

While an organization’s initiatives and decisions may have been guided by intuition at an earlier stage, it’s critical to rely on high-quality information and data to build strategies going forward. Identifying the exact trend line you want to move will dictate the strategy you’ll need to deploy.

The second tricky area is management of the strategy — in other words, deciding precisely what steps your firm will take. Let’s say you target your firm’s close ratio as the KPI to move, seeking to increase the percentage of prospects that it converts to clients from 33% to, say, 50%. 

What strategy should it deploy to increase that ratio? There are lots of options, such as retraining advisors so they can close prospects in one meeting, rather than doing lots of uncompensated legwork and then trying to close. In addition to this step, how does a firm pick what’s best?

Finally, once a management strategy is decided upon, implementation becomes another tricky area. Who’s responsible for mobilizing and marshaling the people and resources needed to make the change? 

All these challenges lead us back to intellectual capital. Who on your team can make sure the right implementation happens? We have to keep in mind that the firm owner or owners already have plenty on their plate handling day-to-day operations. 

Carpenters like to say that they measure twice and cut once, to avoid wasting wood as well as time. The same principle applies to advisory firms. Unless owners have the capital to invest in extra talent, they must prepare well and then handle the heavy lifting of implementation. There’s no doubt that it’s the hardest stage of the process.

Firm owners often hope that the playbook that got them to the middle tier of the industry takes them to the next level. But what they really need is to ask for more help and to embrace a data-driven, more tightly focused leadership style. In other words, substantially expanding their leadership abilities is often the answer.