The Internal Machinery for 4X Growth
January is a month for resolutions, both personal and professional, and no goal for accounting firm owners is more common this time of year than a resolve to scale your practice.
Whether you’re a sole practitioner or a partner in a large firm, there have never been more opportunities to expand your services or grow your client base. The trouble is, most firm owners begin their growth plan with sales and marketing, while in reality, sales and marketing should be their final step.
Exponential growth requires a different kind of machinery than incremental growth and without this foundation, any attempt to accelerate client acquisition will be in vain. So before executing against your firm’s 2018 growth plans, let’s make sure you can tick the following boxes first.
Fully Adopt the Cloud
“Cloud adoption” has become almost a cliche among progressive accounting firms, but because it is so fundamental to any plan for growth, it must be mentioned. In order to truly scale, your firm must have fully adopted cloud technologies - both for internal firm operations as well as your clients’ accounting systems. Achieving scale is about removing bottlenecks.
If a process cannot be completed without accessing a local file, meeting a client in person, or waiting on a staff to email a report to a manager, you have a bottleneck. The only way to minimize or eliminate process bottlenecks is with a fully integrated, cloud-based system through which your team and your clients can collaborate.
If you don’t have one, start here. My firm happens to use Xero as the G/L and the practice management and add-on tools that surround it. There are other cloud ecosystems to choose from, too - the trick is picking one you’re comfortable with and fully embracing it.
Build a Repeatable Service Engine
I’m a big fan of the book, The E-Myth. If you’ve not read it (and you should), the main thesis is to build a business reliant not on remarkable individuals to do remarkable things, but rather on systems and processes that enforce consistent, excellent service every time.
Hyper-growth is like a pressure cooker, and when your “ways of doing things” are variable or ad-hoc, they’ll surely cave under the immense pressure of growth and cause your service quality to deteriorate. Start by mapping every process in your service delivery - which we call “first touch to first month” - and ask yourself, “do I have a system that ensures each one of these processes is delivered the same way for every client?”
If the answer is no, then start building. Consider service manuals, workflow tools with dependent tasks, and a system of quality control checks for each process. Until you’ve truly built a self-sustaining “machine,” you’re not ready for scale.
Build a Platform for Training and Development
One element of the operational machinery is a process for recruiting and training talent. In order for your system to work, your team needs to understand how and why the system exists, and they need to internalize their role within that system.
It’s also important to remember that training isn’t a one-time exercise. The processes that power your firm must be dynamic to the needs of your clients and the opportunities in the market.
As a cloud-based practice - your role is twofold: you’re an accountant and you’re a technologist. In order to remain an expert in either, you must have a mechanism for continuous learning and improvement.
Develop a Clear Identify
Once you’ve built a repeatable service engine, it’s critical to truly define who you are as a firm and the kinds of clients you’re in business to service. Certainly any accountant with a plan for growth has heard the advice to “pick a niche,” and it’s the right advice for two reasons:
- You can’t be an expert in everything. As other firms with cloud-strategies are building their own 5x growth plans, geography is becoming less relevant. Businesses that once engaged a generalist accountant they found in the yellow pages are switching to competing firms that eat, breathe, and live their industries. Your clients are looking for an expert to give them an edge, and if you can’t, they’ll find someone who can.
- The broader your marketing message is, the less impactful it becomes. What’s more compelling - “We’re a small business accounting and tax solution” or “We’re a full service accounting solution for single-owner dental practices?” If you happen to be a single-owner dental practice owner, I’d venture to guess the latter is more likely to catch your eye.
Practice Up or Out
As difficult as it is for accountants to admit, not every client is a good client. In your practice as in most things, the pareto process applies - 20% of your clients will absorb 80% of your focus and your time. Don’t let them!
Implement a system - at least annually, but ideally quarterly - to internally evaluate each client and each engagement as a team. For core clients, this is a great opportunity to discuss service quality and proactively look for ways to grow the account. And for the bottom 20%, this is your chance to find ways to “rightsize” the economics or terminate the engagement.
We accountants are often great at valuing tangible costs and lousy evaluating intangible ones. But remember, every decision carries an opportunity cost. Is the $500 per month from a bad client worth the $2,000 per month you could earn in the same time from good clients? Of course not.
The Path Forward
Hyper-growth in any industry is no easy task, and accounting is certainly not an exception. The path to 4x growth requires discipline, focus, and most importantly, patience. If you expect to reinvent your processes and redefine your identity overnight, any changes will be superficial and the initiative dead on arrival.
My recommendation - and the recommendation we give to other firm owners we work with on their own growth plans - break your plan into digestible steps and make progress against them every single week. Positive momentum is infectious, however small, so be realistic and set aside the time.
|This article is bought to you in association with Receipt Bank as part of their mission to provide the tools and the know how to drive practice growth and transformation in the American accounting firm. Click here to find out more about our our free webinar which explores how you can prepare your practice for 4x growth in 2018.|
Ryan Watson is co-founder and principal of cloud-based firm Upsourced Accounting and a Xero Ambassador, Midwest.