With the 2010 practice ownership transfers wrapping up, our upcoming blogs will be addressing methods of increasing value and developing business. To start, we would like to highlight several key areas a practice owner should focus on to increase the value of their practice. First though, we would like to make it clear that this is a seller’s market for the sales of tax and accounting practices. However, it is ultimately buyers in your market that set the value of each individual practice. Just like the old quote “beauty is in the eye of the beholder” the value of the practice is in the eye of the buyer(s). Therefore, practice owners should take a long hard look at their practice, years in advance, to increase revenues, profitability, efficiency and value before listing the practice for sale.
Here are three steps you can take to help increase the value of your firm:
- Implement a new business development process
- Stop discounting and selling your services on price
- Train your staff to become more profitable
Implement a business development process
High quality practices do not become successful by accident. They are built by prudently developed plans to create as much value as possible for the practice, both now and over the long-run. Successful practices develop a culture of practice development, or rainmaking.
Stop discounting and selling your services on price
Most buyers base their decision process on factors other than price. Only a small percentage of buyers make their decision based on price alone, and those clients will be the least loyal and most likely to move to another firm with lower rates. Furthermore, the economic factors that are creating more price pressure mean that it’s more important than ever for accountants to utilize a business development process. There are only three things you can offer a client, quality, service and price, but you can only provide two of these. Which would you choose?
Train your staff to become more profitable
While it may seem counter-productive to take people away from billable work or sales calls, the return on investment can be valuable. At a minimum, ensure that your team understands and can articulate the value of your services. Training in the business development process enables your team to focus the customer’s attention away from price and onto value.
If you are serious in your desire to increase value of your practice, implement these steps and watch the potential impact to your bottom line.