Episode 116:Business Puberty
Summary
Nick and Kai walk through the growth stages of a solo practice, framing the freelancer-to-consultant shift as ‘business puberty.’ They cover the recurring blind spots at each stage: erratic deal flow, administrative debt, and the jump from implementation work to strategy work with executives.
Highlights
- Don’t let incorporation questions block you from taking clients. Kai ran as a DBA for three years without issue. Nick says hire a lawyer and accountant early, a good one will tell you the right structure and wave you off if incorporation isn’t warranted yet.
- Word-of-mouth alone is not a marketing plan. Kai says pick two or three channels, work them consistently, and learn them well enough to improve over time.
- Nick warns about whale-client dependency: if one big client disappears and you haven’t been selling in parallel, you won’t remember how to close deals. Always be working the next sale.
- Kai calls it ‘administrative debt’, the COO, CMO, and CFO work that piles up while you’re heads-down on billable work. The E-Myth model applies: write a job description for each role you fill yourself, then hire or delegate up from there.
- Nick’s two blind spots on reaching consultancy: email automation and segmentation for education at scale, and learning to operate at the strategy level with executives rather than on implementation.
- Kai added PipeDrive when the inbox got unmanageable at scale. The broader principle: when something causes ongoing worry, find a tool that owns the tracking so you stop carrying it mentally.
- Kai says positioning is worth mapping explicitly, write down where you are now and where you want to be in three years, then take only work that moves you toward that destination.
Read the transcript
So before this episode, Nick and I were chatting about, based on a reader question, challenges that people experience. As a freelancer, challenges that people experience as a consultant. And we were discussing different ways to approach this episode when the idea came to us. Well, the solutions to the challenges that a freelancer experiences Are kind of the recommendations we’d give to a consultant. And so there really isn’t a distinction between, oh, these are freelancer problems and these are consultant problems, but it’s more like You’re going through business puberty. Changes are happening. You don’t understand exactly why they’re happening and what to do, but you’re looking for a path forward and to understand, okay. what exactly is going to happen to my business next? And I think it’s an apt metaphor for what we go through as independent business owners as we start off as contractors or freelancers and over time move to more strategy focused work, less implementation focused work, our business is sort of changing around us, and that implies a lot of different things.
I think there’s like a bunch of things that change as a freelance practice grows or an independent or solo practice or whatever you want to be calling it. And let’s just kind of lay out what the key changes are and what the biggest blind spots are at each level of them. And I think that it makes the most amount of sense, just as a caveat. to go up to like Nick D and Kai level, because I have no idea what the blind spots are when you’re at like Ramit Seti level, right? When you have like a staff of 20. I have no idea what it looks like when you have a step of twenty, so I don’t know what the problems would be. But I think you can get pretty far the way that we would be laying it out right now. And hopefully, it’ll be useful to people that are kind of just starting out. Does that make sense?
It does. It does. As with everything, I’m always wondering where to jump in. But I said we just jump in and jump in at the lowest end.
See what happens.
So, growth starting at the beginning, I’d say one thing that often trips people up is hey, they aren’t an official business yet. They aren’t incorporated. They aren’t set up as a capital B business. Is this something they need to be concerned about? Is this something they need to fix? My honest answer is, it’s something you should fix. It’s something you should be working on, but it shouldn’t be a block to taking money from people, to getting client number one or two, and starting to. Work on projects. I was a DBA doing business as for my first three years as a freelancer, and it worked out perfectly fine for me. there’s tax implications whether you’re a corporation or a DBA or something else. But that’s often one of the early things I see and hear people struggle with. And I don’t think it’s necessarily something that needs to be struggled with. It’s something that you could pay money to a lawyer to solve for you quickly, or you could just deal with and sort of push down the line a year or two and resolve at that point. What are your thoughts?
I think that getting a lawyer and an accountant are some of the first things that you should do, and a lot of novices don’t. And whatever your incorporation status is, they will probably advise you on the proper and correct thing that you should be doing. I would trust the people that you choose to surround yourself with more than you would trust yourself. And I think that there’s a default laziness that occurs when you just start out and think, well, I don’t need to worry about being compliant on these things. And then either you’re wrong or you’re caught blindsided later by what it actually needs to be, which is a different form of being wrong. So I would recommend retain a lawyer, retain an accountant. Do those things as quickly as humanly possible at the beginning of your business. And they’ll, you know, if they’re qualified, they’ll tell you what to do. Do keep in mind that lawyers have like you know, at least some sort of financial investment in filing in corporation fees and doing all that kind of paperwork for you. But a good lawyer will waive you off of it if they believe that it’s not a good idea.
No, completely agreed. I think another sort of stumbling block and another stumbling block that people can experience as they move from Freelancer to consultant is having a solid marketing pipeline, moving from it’s kind of word of mouth and referrals and question mark to Okay, these are the three systems I’m using to attract leads. And maybe it is word of mouth referrals and something else, but you’re at least taking it with intention rather than saying Ah, sometimes clients show up, sometimes leads show up, sometimes they don’t. I can’t figure out why. The answer is: market yourself more aggressively. Pick a few things, do them consistently. Read a few books on the topic, learn how to do them a little better and a little more consistently. And over time, you’ll be amazed just having two or three marketing channels bringing new leads, bringing new prospects, spreading awareness about your services. Can be enough for you to grow from freelancer to consultant.
I think that you once you start to have a consistent deal pipeline, you start moving from freelancer to like Comfortable freelancer, you know? And so the big, you know, challenge with being a freelancer is Making sure that you have a deal flow at the same time as you’re actually committing your practice, right? You should always be thinking about the next sale and always thinking about your plan B. And if you’re not doing that, I think it can actually be quite dangerous. And it’s what a lot of freelancers do, they end up having their pipeline dry up or they get like in jobbed where they have a whale client and then their whale client goes away. And they don’t remember how to do sales, right? So I think that the next step is, and you get blindsided by this all the time because you come to rely on income. and you’re used to that as a W two gig. You’re used to having stable, durable income. When you’re a freelancer, that never happens, right? So And it’s very easy to lull yourself into the optimistic and incorrect belief that it will. So I think that the next level up is to get over that mindset and start to actually think about how how you’re going to be closing the next client, how you’re actually going to be committing a deal flow, creating closed ended gigs, always talking with other people, doing education and outreach, those sorts of things. Always, always super helpful.
One trap I’ve seen a lot of people, myself included, fall into as they grow their business is you don’t necessarily realize it when you’re starting out as a freelancer, but Over time, you are suddenly the CEO, the chief operating officer, the chief marketing officer, and the chief financial officer for your business. And that’s a lot of hats to wear. And you wake up one day and you’re like, I’m just doing my thing. But there’s a pile of administrative work that suddenly needs to be taken care of. And that could often be an unexpected trap. Your time is being pulled in another direction. And you sort of have this concept of administrative debt, if you will, where, hey, we’ve just sort of let these admin things pile up over time, what a true operating officer might be taking care of for us, and we just haven’t had the time and space to tackle it. And Sooner rather than later, I think it’s valuable to say, okay, I’m running a business here, not a side hustle. Because of that, I need to be paying attention to these core areas. You know, acting as the CEO, the COO, the CMO, et cetera. Okay, what does that look like? This parrots a little bit of what they advocate in the e-myth, where You grow your business by identifying the jobs you’re doing and then essentially writing a job description for that job and hiring for it. So you start off essentially doing Sales development work. You’re at the bottom of the ladder. You are doing fulfillment. You are doing sales. You are hustling. You are rain making. And then you hire a salesperson and you elevate yourself from salesperson to sales manager. And so I think it’s very valuable, even if your intention is to stay independent forever, identify the different areas of your business that fall into, say, marketing, or finance, or operations, or executive vision. And make sure you’re spending time working in those areas or thinking about, hey, what’s the three year vision of this company? What exactly am I doing here? Regularly. Otherwise, you’ll find yourself in a spot where it’s like, oh, you know what? We haven’t really taken care of any of that paperwork for the last nine months. We better get on it. Or, hey, we haven’t thought about what exactly we want to be doing in the next five years if this business continues. What do we do now? So, there’s a lot of value in realizing you are wearing these multiple hats as CEO, CMO, et cetera, and making sure you’re dedicating the appropriate amount of time to managing those activities.
Yeah, it feels a little bit like you’re doing two things at the same time because you’re used to just having one job. So I think that one of the big blind spots is not being willing to wear a lot of different hats. Some of those hats you might not be necessarily comfortable with, right? Like, I am historically lousy at promotions. And I know that sounds crazy because I’ve just gotten off a bunch of promotions. But by historically, I mean like they will actually write how bad I am about promotions in history books. I am that bad about promotions. And I know that, but I also had to learn that, and it was tremendously painful. So, like, I think that one of the biggest blind spots people have is they start to grow beyond having a deal flow. Is that they don’t understand all the different hats they need to wear and they don’t understand how to skill up or even find the motivation to do that.
Mm-hmm. Yeah, I think you’re absolutely, absolutely right there. So, continuing it on, we’ve talked about sort of that growth stage from freelancer to consultant, from consultant forward. What are the sort of puberty-related challenges or the changes you’ve noticed in your own business, say, over the last four years?
Once you start to shift from having a freelance practice to a consultancy like I have, Two main issues happen. One of them is education at scale and the automation issues that go around that. You start to be writing books, you start to be writing a blog. You do like podcast outreach, that sort of stuff. There’s a lot of challenges. And you have to do you have to learn like email automation. You have to learn like segmentation and personalization. Those sorts of things are really, really hard. The second thing is understanding strategy in a very consultative manner. You need to understand exactly how to work in a strategic way with executives. Because now you’re not really thinking about implementation, you’re thinking about what tactics fall out of the strategy and how to shift strategy. And nobody’s going to teach you that. It’s really, really hard. People teach you how to negotiate a deal that is focused on strategy, and then you’re like, now you’re doing strategy. And it’s like, what? You know, it can be like really jarring and difficult to think about it. But those are the two big blind spots that hit me. And it was a lot of just flailing around. And I wish I had had better better experience on it.
Managing the sales pipeline has been one for me as the business has grown. It’s sort of It’s easy for us to assume early on that, hey, I only get a few emails a day, a couple of them are prospects, as it scales, it’ll be fine. But then suddenly it scales and you have 100 emails in your inbox, and you’re just going, oh, holy crap, who am I supposed to respond to today? I found using a CRM like PipeDrive to be really, really valuable as you go through that growth stage, especially as you’re growing as a consultant or a, yeah, we’ll call it a consultant, as you’re growing as a consultant, because suddenly It defers the act of remembering who you need to follow up with and when on what topic to a piece of software. And so instead of saying, hey, I have a proposal out there, did they email me back? What am I supposed to check in with them? You have an activity set in your CRM that says, hey, in three days, send them an email checking in, and you don’t need to worry about it anymore. So for me, I think a large part of the growth as a consultant has come from And this gets meta here for a second, but it’s come from identifying the areas in my business where I have some uncertainty around. And then asking myself, asking colleagues, asking books, how do I eliminate this worry? How do I resolve this worry? And in the case of a sales pipeline, The worry might be, I think emails are just being lost or deals are being lost. Well, in that case, delegating it to a tool to manage the process Makes it that much easier. Similar to how you might delegate email automation to an email tool like Drip or ConvertKit Because you don’t want to have to bother managing it all yourself. Instead, it’s easier to pick a smart tool and say, okay, great, I’m going to have you run this for me. You’re a smart robot. Great. We’re done. I’ll check in and make sure nothing breaks.
Replacing yourself with robots is something you will eventually just start doing because you’re too busy and I wish I had done that sooner. I mean, we’ve talked about this on the assistant front, but like, man, that sucked, you know? And I wish I had done it sooner. But. That’s something that happened somewhere around Freelancer and extremely significant Freelancer right before I tilted into the consultant. There was a moment where I didn’t know how to use my assistant effectively. And learning it on the fly is something that I think was a blind spot that I wasn’t expecting. But it worked out. It’s fine.
Yeah, that the first and second hiring experience and what to actually expect when you have somebody working for you part-time, either as a contractor or an employee. There’s no amount of reading, there’s no amount of coaching, there’s no amount of preparation that really prepares you for it. It’s you get in it, and then you realize half of your assumptions were completely wrong and half were blessedly accurate. And You figure it out from there. There’s really nothing else I’ve discovered other than that.
Yeah. You’re kind of learning it the hard way in a lot of ways. And I think that gets us up to the kind of end of this. But what were the other like as you got into consulting? You said there was deal flow. Were there any other big blind spots that hit you?
I think this is a bit earlier than consulting, but I think it’s one of the pivotal points. As you grow as a freelancer towards a consultant, it’s understanding your positioning and understanding what your positioning currently is in the market and what you want your positioning to be in three years in the market. And I think that connects to the idea of doing more strategy focused work as well. Since if right now you sit down, look at your positioning and say, well, I do implementation of PHP things. And in your mind, you’re saying, well, hey, I’d much rather be doing like advising on how startups can XYZ. Okay, that’s a great goal. Identify where you are, identify where you want to be. And then start taking any gig and any opportunity and any connection that moves you closer to that destination, moves you closer to that outcome. So this is less of a pitfall and more just of How to figure out your own roadmap. There’s no real guide out there for your business, dear listener. You’re the only person who’s going to be able to come up with it. And the best way to do that often is sitting down with a cup of tea or a cup of coffee in a notebook and saying, okay, I’m here right now. Where do I want to be in three years? And just brainstorming, doing a mind dump, and seeing what exactly comes out of that process. And that more often than not. Gives you an indication of where the hangups or holdups are in your business, what exactly you’re experiencing as you go through business puberty, and where you want to end up in a few years. So you’re able to gut check decisions as you move forward and say, well, hey, Is this getting me closer to my goal or not? And if it’s not moving you closer to your goal, why are you doing it?