Professional Advice Isn’t Scalable

Terms like “Pivot”, “Lean Startup”, “Minimum Viable Product”, “Product / Market Fit”, “Gazelles“, “Unicorns” and “Scale Up” are ubiquitous.

However that doesn’t mean that these concepts are key to each and every small business. In fact all of the writers, investors and academics that use these terms, seem intent on building a new, uniform kind of startup culture.

If every business was the same, they wouldn’t need professional advice, we’d just need to send everyone to one of a handful of startup boot camps.

As professionals, most CPAs know that each business is unique and that advice must be tailored to meet a client’s individual needs.

So What Is A Startup?

From the perspective of a company like Google or from a venture capitalist’s point of view, a startup is a company that was formed within the last 4 or 5 years and has grown to 20 – and sometimes as many as 50 employees.

I guess that is understandable, since what most practitioners think of as a startup wouldn’t register on the radar of most venture capitalists.

In British Columbia where I practice, every year BC Stats publishes a study called ‘Small Business Profile‘. Every year the studies show that only around 5% of companies have more than 20 employees. In fact companies with 50 or more employees are considered large companies (in BC at least) – which might seem to turn conventional wisdom on it’s head. In that respect BC differs from Canada, which has the cut-off for medium-sized businesses at 100 employees.

 

Note that “non-employer” businesses include 2.7 million self-employed Canadians – so that this table contains less that one third of all businesses in Canada in 2014.

So while a VC may think of a 6 year old company with 25 employees as a startup, the rest of us know better. A startup is really a company at the seed stage with a couple of founders and 4 or 5 employees at most. The difference between a seed stage company and one that is ready for a Series B round of financing, is as striking as the difference between a high school student and an infant.

Professionals need to nurture companies at a seed stage and avoid over-feeding (i.e. providing too many services).

For professionals, servicing startups is kind of like taking care of goldfish – feed them too much and you’ll kill them.

Startups need the right services at the right time – and their needs change very quickly.