I’ve been discussing the four stages of maturity with accountants at trade shows, seminars, and conferences for so long that I’m not quite sure where I originally heard about them. They’ve stuck in my mind for all these years mostly because they’re fun to talk about. But I’ve found that they can also be a useful way to think about your business.

What stage are you at right now, and where would you like to be?

Stage 1: “I will do business with anybody.”

This is where most new firms start out. Hungry to get work from any clients (and in some cases, just plain hungry), you’ll take work from anybody, under any conditions.

Stage 2: “I will only do business with clients that actually pay me.”

Armed with the experience you gained in stage one, you are now able to look at potential clients and assess their ability to actually pay you for your work. Instead of asking, “How can I get this client to work with me?” you’re now asking, “Can I make money by working with this client?” This is the first step towards creating a sustainable firm, and it is the most important stage to progress to, if not through.

Stage 3: “I will only take on new clients that operate in my preferred business method.”

At this point, you’re becoming an expert at determining what kinds of work your firm will do best and how to run your business for maximum profit. And because you have a relatively stable client base, you can be a little more selective about which new business you choose to take on. Is there a certain software system you prefer your clients use? Do you like to bundle services in a certain way? Do you prefer clients who will work with you via online portal? At this stage, you can use your experience as leverage to move new clients to your way of doing business. It might sound a little presumptuous, but it often results in better service to the client, less hassle for you, and higher profits.

Stage 4: “I will only do business with clients that operate in my preferred business method.”

Though many firms never make it to stage four, it’s a great place to be. You have a strong client roster. You’re a respected expert in your field. And perhaps most importantly, the business model you established in stage three is working like a well-oiled machine.

Still, you probably have a few rogue clients hanging around from stages one and two. They don’t fit your business model and you’re dedicating a disproportionate amount of time to serving them. This is the time where you begin asking yourself whether it’s worth keeping them around.

You may be able to bring them around to your business model. Chances are they’ll be happier in the long run. But if they won’t adapt, it might be time to end the relationship. You probably know a few firms in stages one and two that would love to have the business.

There you have the four stages of maturity for an accounting firm. Getting to stage three or possibly to stage four can make life a lot easier and more enjoyable, but knowing all the stages can make it easier for you to think about the growth of your firm as you consider the types of clients you would like to attract and your stage of firm maturity. Not to mention giving you something fun to talk about at conferences and cocktail parties.

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