Welcome adventurers! Have you ever wondered what those 'practice advisors' actually do when they get inside a practice? Well here's your chance to try your hand at being one!
We've teamed up with Panalitix to create a realistic firm going through some challenging times and we need your input to help them out. Read the story and vote for which option you think our characters should choose - and then tune in for episode two to find out which option won out and how it all pans out. Choose wisely!
Max Draper and Rebecca Elliott started Horizons Accountants and Business Advisors in 2010 in Midtown, Illinois. They had previously worked together in a Big 4 firm in Chicago but were disillusioned with the culture of the office they worked in.
One evening, having drinks after work, Rebecca said to Max, ‘I don’t want to end up like the partners in this firm, working 80 hours a week and having an internal competition to see who can leave the office the latest.’ Max agreed and within six months they had left to start their own business.
Horizons was established to provide a boutique alternative to clients searching for professional help to improve their businesses. Max and Rebecca had a clear vision of what their ideal client looked like - a business owner with goals to grow their business prepared to pay a premium for external advice. However, like many young accountants starting their own firm, they needed to put bread on the table and so, understandably, they took all comers in the early days to build a client base.
Fast forward eight years. Horizons has revenue of $1.6M. Rebecca and Max remain the only partners and they have a team of five accountants and three administrators serving some 280 clients.
An analysis of the client base shows that approximately 15% of the client base would fulfill the criteria of an ‘ideal client.’ The rest are predominantly clients that use the firm for compliance services and the odd ad-hoc project. Many of them are perceived to be price sensitive and the firm suffers from poor cash flow because of clients dragging their feet on payment.
One of the clients, Jagger Components, has been with the firm since the very early days. Rebecca had worked closely with Jagger over the years to help them grow their business. With her help, they have evolved from a local operation to an enterprise serving markets around the world. This client is precisely the sort of client Rebecca and Max had in mind when they started Horizons.
The firm invoiced Jagger $190,000 in 2017 and expects the fee to continue to grow. It takes a huge amount of Rebecca’s time (last year, she charged 817 hours to Jagger) but she enjoys the work and considers it to be very profitable.
In 2016, sensing heavy dependence on Rebecca from Jagger and a couple of other strategically important clients, Max recommended hiring an experienced manager to reduce reliance on the partners for the delivery of high-level work. Rebecca agreed and they brought Vanessa Burns on board.
About Colin Dunn
Colin is Chief Innovation Officer at Panalitix, a cloud software company that helps analyse and monitor clients’ financial status all on one real-time dashboard. He is also a Chartered Accountant with 20 years’ experience in helping accountants develop and implement strategies to build better businesses.