Why did you set up or buy your accountancy firm: good income, choice of clients, work-life balance, pension pot?
Too often, partners get stuck after item one – salary. They are running a business that supports a good lifestyle but miss out on other valuable rewards.
Day-to-day demands leave them trapped in a cycle of doing a 'job' when they would rather spend time building their business into an asset.
By 'asset,' we mean a firm with solid financials, efficient operations, scalability, quality customers, a good reputation, and a strong management team.
These attributes attract a higher multiple when selling the business (pension pot). They also make your near-term career more satisfying (work/life balance).
Since 2007, SKS has grown by helping our member firms and outsourcing clients transition from job providers to assets. Here, we share the common habits of asset builders.
'The cobbler's children are the worst shod,' so the saying goes. The same is true for accountancy firms. While advising their clients about best business practices, they rarely pause to evaluate their operations.
Analyzing productivity and costs is the first step to becoming an asset, starting with employees, premises, and software.
Employees are typically an accountancy firm's highest cost. It is essential to evaluate the cost of each staff member as a percentage of revenue.
A common mistake that pushes this figure up is when fully qualified accountants waste their (expensive) time on junior tasks, such as chasing client records. This is why asset builders ensure their senior accountants' time is dedicated to high-profit services.
The challenge is how to do this. At SKS, for example, we assign our clients team members based in India who solely specialize in bookkeeping or payroll. These cost less than a qualified accountant and also have the focus and capacity to keep abreast of the latest developments within their area of expertise. The surprise is that accuracy often improves if a task is performed by a focused individual rather than an in-house accountant whose attention is pulled in all directions.
The global pandemic has shaken up the role of the office. In the age of video calling, your firm may no longer need a shopfront in a prime city center location. Likewise, if your staff are working from home, do you need as much space?
It is easy to fall into the comfort zone of using the same SaaS provider or trial new services and forget to cancel the subscription.
Asset builders regularly review their technology, looking at the pricing model, functionality, and what it delivers in terms of cost and time savings.
Have you ever had a client throw in a complicated tax question when they are calling about another matter? Too often, accountancy firms fall into the trap of giving away advisory work for free alongside bookkeeping and annual returns.
Asset builders set firm boundaries as to which services are included in their fee structure.
If you are a senior accountant or own your firm, stepping back from clients may seem counterintuitive in a relationship-centered industry.
It is typical for accountants to win life-long customers early on in their careers at a stage when they are still the go-to for questions about bookkeeping entries or lost files. However, often, they do not evolve this relationship in line with their growing expertise and experience. From fear of losing the relationship, senior accountants remain the go-to for their clients' junior accountancy tasks.
A move away from this way of working need not damage client relationships with the help of a good CRM (Customer Relationship Management) system that triages client inquiries to the right level of employee. The relationship can even benefit as the client receives faster responses to basic queries and gets valuable face-time with their senior accountant when genuinely necessary.
As well as creating a rewarding working environment, asset builders start planning the sale of their business early to attract the highest multiple possible.
The good news is that, unlike business owners in other industries, accountants already have the skill set to prepare financial information for due diligence.
However, investors look at more than financials. They will seek scalable processes, a happy company culture, a good reputation, and a resilient client list.
Adopting the above habits of asset builders will free up management time to build these, delivering your early dream of what running a practice is all about.