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How to Set the Growth Strategy for Your Firmby
In the second of a series of articles on how you can take the right steps to truly add value to your clients and transform your firm, author, CA and Founder of Spotlight Reporting Richard Francis helps you to decide the right strategy for your firm’s growth.
In addition, he helps you to come up with a plan and discusses some specifics on the types of growth plans you could employ.
Once you have visualized your firm’s business model and designed compelling services, it’s time to put your strategic building blocks in place. It’s time to flesh out the business model and make important decisions.
It is a truism of starting a journey that you need to choose a direction to head in. If you’re on a launch pad to somewhere impressive and a bit scary, then you’d better make sure you have clear co-ordinates set.
Aiming the rocket-ship at a destination where you have the types of clients you want to work for is key. Earlier, you visualized your business as you want it, and that process should have explored what types of clients are your desired target.
Process Creates the Plan
Just as every good strategy has some key elements, every good plan needs a process; in fact, I think the process is often just as important as the plan itself. I heartily recommend a strategic planning retreat with the key players; find a beach, lake or vineyard, incorporate some intellectual lubrication and set an agenda.
The key elements in a good strategy normally incorporate:
- Objectives - short term, long term
It doesn’t need to be much more complicated than that, but do invest the time and effort in doing this right. A value-add strategic model will need considerable fresh thinking, debate, research and late night conversations. Enjoy and embrace the process and you should end up with a good outcome.
Which Growth for You?
In crafting your strategy, think very carefully about the type of growth objectives you want to set. All too often, there is an assumption that advisory practices are all about expansion growth; expansion in fees may not necessarily be a key priority for you, or it may be for just a defined stage of your business journey.
Growth can be one of these four:
- Revenue growth - accelerating gross fees
- Profit growth - the search for better margins and ‘bottom line’ outcomes
- Value growth - building demonstrable value, ultimately for return on investment
- Personal growth - doing more interesting or challenging work, growing your own expertise and maybe work/life balance too.
At our practice, we adopted a typical revenue growth footing in the first 2-3 years to achieve a commercially sustainable level of fees for a boutique firm. Thereafter, we looked to have managed growth and then an increased emphasis on quality and depth of engagement.
During our journey at Francis Consulting we had matured to a position after the revenue growth phase to where we could maintain healthy incomes - after a few years, my wife also joined the practice and managed a portfolio of clients - whilst working reasonable hours and maintaining family time. We wanted smart margin and profit growth thereafter, with some holistic growth thrown in for good measure.
In maturing our growth model, we kept faith with these aspirations:
- A high Effective Hourly Rate (value-based pricing as mechanism)
- A heavy weighting towards interesting Advisory work (Advisory > Compliance Fees)
- Managed churn (undesirable Clients exited each year)
- Lowered compliance resourcing (outsourced work + automation tools + small team)
- Smart business advisory resourcing (New tools + better processes + upsell).
Our practice, though small, gave us the time and resources to innovate and launch new businesses because we’d only grown our advisory practice to the size that made sense to us. We focused on smart profit and personal growth goals rather than expansion by default.
Here are some final action points for you:
- Consider which personal definition of ‘growth’ makes most sense
- Craft your strategy and actions around the growth profile you have adopted
This extract is part of a serialisation of Richard Francis CPA's new ebook Transform! - his accountant playbook for adding value and seizing opportunity in this exciting time of industry change. Richard is founder and CEO of Spotlight Reporting, an award-winning performance reporting and cash-flow forecasting toolset designed to empower accountants to have great client conversations and deliver real impact.