Many clients share with me that they want to take their digital services business to the next level, and don't know how to do it. They fall into two categories:

Independent contractors who want to build a larger organization, by hiring or contracting with digital professionals. These individuals want to hit the $1,000,000 revenue mark.

Or,

Owners of 5-15 person firms who want to "clone themselves" with an executive team that leads the organization into a new phase of growth. They know that once they make this leap, there is almost no limit to how big their organization can get. These entrepreneurs want to break through to $5 - $10 million in sales.

This article describes the challenges of these two critical stages in the firm's life cycle, the challenges involved, and how to succeed.

Stage 1: From Independent Contractor to Million-Dollar Digital Services Firm

Independent contractors who want to grow their firm to the million-dollar mark face three challenges:

• Challenge 1: They are excellent at providing technical services, but perhaps not so good at attracting clients beyond a one-person practice. To go to the next level, they need to spend less time serving clients, and more time marketing.
• Challenge 2: At the same time that they focus on developing business, they also need to become skilled at attracting, training, creating standards for, and leading other digital professionals. They need to do this so that the firm provides a consistent level of service to clients. Many digital professionals � especially the techies - may lack the skill and patience required to manage and lead other people.
• Challenge 3: Every independent contractor who makes the leap to building a firm faces a "valley" - or a period of lean times while he or she builds the firm. That's because it takes 3-5 contractors or employees to replace the revenue that the independent contractor was able to make alone. Therefore, there will be a few months, even a year or two, when the independent contractor may make LESS money than they would on their own. It takes courage, a leap of faith, and skill to stick with marketing and selling during this time.

With these challenges in mind, independent contractors need to take the following steps to build a million-dollar firm:

• Step 1: Market, market, market. Your new job becomes marketing, and it is essential that you become skilled at attracting clients and closing business. To grow your firm, you need to attract enough clients to hire out multiple contractors/employees. Instead of doing what you know best (you�re actual job), you need to focus much more of your time on marketing. This includes everything from choosing a focused target market to developing strong marketing messages, creating solutions that are deeper than what you could offer on your own, forging partnerships, becoming visible to your target market, and establishing your firm as an expert.
• Step 2: Develop systems for attracting, training, and retaining top digital professionals. Your other new job is as the HR leader of your emerging firm. Your clients still expect a consistent, excellent level of service and results. So, your responsibility is to create a consistent set of standards and procedures for your employees/contractors to follow. You become a coach, educator, and mentor - as well as a leader who can attract the best people to your firm, and reward them for performance.
• Step 3: Be fiscally savvy. Making the leap to a firm requires financial sense, especially because you will probably experience a period when you make less money than you could as a sole independent contractor. Most of my clients who have successfully made the leap have done it wisely. They hire contractors that they only pay when there is work. They ramp down their own time as a billable contractor gradually (or keep their day jobs), so that they have some income coming in while they market their firm. And they make sure to have enough reserves to make the leap.

Stage 2: From Small Firm to $5-10 Million and Beyond

The second stage comes when owners of 5-15 person firms want to "clone themselves" with an executive team that leads the organization into a new phase of growth. They know that once they make this leap, there is almost no limit to how big their organization can get. These entrepreneurs want to break through to $5 - $10 million in sales.

They usually face three major challenges:

• Challenge 1: They are the "head honcho" in their firm, and may not have the skill or will required to give away control to other people who can grow the firm. They are used to doing things their way, and don't trust other people to be able to achieve the same results. Or, they have invested too much ego in their enterprise to be willing to give away control and credit. Finally, they may not know how to hold non-technical people (e.g. marketing and sales, human resources) accountable for results, or to motivate and coach them the way that they can with their technical staff.
• Challenge 2: It is expensive to hire or promote executives to help build the business - both in terms of base salary and possible exchange of equity ownership. These new leaders take time to show a return on their efforts. As in Stage One, the owner of the firm faces a lull in profits before seeing results. In fact, it is common for the owner to have to go through a cycle of firing and hiring executives before they feel that they have made the correct choice.
• Challenge 3: Typically, only rudimentary systems exist in terms of client methodologies, marketing and sales systems, management systems, and human resources. That's because most of the "systems" exist in the owner's head, but are not yet codified. Without explicit systems, the firm will not make it to the next level.

Given these challenges, the owner of a Stage Two firm needs to take the following steps:

• Step 1: Develop leaders. The classic book Built to Last shows that the best CEOs develop leaders, and consider this job to be their number one role. Likewise, your primary job at this stage is to recruit and develop a team of leaders so that they can build the business for you. To do this, you may need to develop new skills yourself, because it is not easy to know when to trust and monitor, when to coach and support, when to direct.
• Step 2: Develop systems. At the same time that you build a leadership team, you need to work with your team to develop systems for marketing and sales, client methodologies, budgeting, human resources, and training.
• Step 3: Be financially savvy. It will take a financial investment in order to break through to the next level. Therefore, as in Stage One, it requires financial smarts - and patience - to manage cash flow until results start to show. Most importantly, any new hires should have explicit goals, incentives, and job descriptions that directly support profit and growth. Avoid creating administrative overhead wherever possible.
• Step 4: Crank up marketing. To reach this new level in sales, you need to become a master of marketing. You may need to create a brand image for the firm as a whole - not based only on your reputation. You may need to do a better job moving up the food chain with larger clients in your target market, or of penetrating additional target markets. And almost everyone in your firm will need to be focused on attracting new clients, new projects, and add-on work - which may take additional skills and training.

About Andrew: Andrew is the Senior Editor of �The Accelerator,� a newsletter that helps IT professionals get all the projects that they can handle. He received his MBA from Harvard Business School in 1991. His Website is at www.itprosuccess.com