Sage on the Stage or Guide on the Side: Why Understanding the Distinction Matters a Lot to You

Dear Collective 54 Subscribers,

In the dynamic world of small service firms, where scaling is the ultimate goal, it’s essential to know what business you’re truly in. Are you the “Sage on the Stage,” orchestrating a multitude of employees to provide assistance, or are you the “Guide on the Side,” offering unique wisdom and advice to your clients? Understanding your place in the wisdom industry can be the key to unlocking your firm’s true potential.

Many of you are already familiar with the concept of being the “Guide on the Side.” You run niche boutique professional service firms where your expertise is the driving force behind your success. Clients turn to you because you possess knowledge and insight they lack, allowing you to advise them on how to tackle complex issues. Your firms are known for their ability to provide unique solutions, making you the go-to experts in your chosen field.

So, what sets you apart from those in the assistance business, the “Sage on the Stage”? While both types of firms may appear similar on the surface, they operate in fundamentally different ways.

The Guide on the Side:

1. Focuses on Wisdom: Your business is built on the foundation of knowledge and wisdom. Clients come to you for your expertise and insights, not just additional labor.
2. Scalability: The beauty of the wisdom business lies in its scalability. You can expand without the need for a massive workforce because your value is tied to the quality of your advice, not the number of hands you have on deck.
3. Margin Dollars: Your success is measured by the profitability of your engagements, not the headcount. You can achieve significant margins with a relatively small team, which is often the hallmark of wisdom-focused firms.

The Sage on the Stage:

1. Assistance-Based: These firms provide assistance, often through extra pairs of hands or staff augmentation. Their value proposition is in the execution rather than the wisdom they provide.
2. Labor-Intensive: Scaling in the assistance business typically means hiring more employees, resulting in increased complexity and overhead.
3. Employee-Centric: Success is often equated with the number of employees these firms have, rather than their profit margins.

Reflecting on your own business, are you in the wisdom business, or do you find yourself in the assistance business? Do you provide clients with unique insights and guidance, or do you primarily offer additional manpower?

I can personally attest to the power of being in the wisdom business. During my time owning and operating a boutique firm, we generated $16 million in annual EBITDA with only 30 employees. We were not in the assistance business; instead, we thrived by providing clients with unique insights developed over years of focusing on specific problems.

In conclusion, understanding your role in the wisdom industry is crucial for the growth and scalability of your small service firm. As a “Guide on the Side,” your potential is limitless, driven by the quality of your advice and the value you bring to your clients.

I invite you to take the next step in your journey by enrolling your executive team members into Collective 54’s mastermind community. Here, they’ll have the opportunity to connect with like-minded professionals, gain further insights, and unlock the full potential of your wisdom-focused firm. Have them join us today and continue your path to success in the wisdom business.