There is no feeling like earning your first dollar in your career of choice, but for those lucky enough to earn a million, it is safe to say the feeling is even sweeter. To grow an accounting firm into a million-dollar business, it will take more than just counting money. It calls for a strategy focused on adding value that contributes to the clients’ success, while ultimately adding to the firm’s success. This strategy will be bigger than the numbers, it will be about transforming the firm into more of a consultancy -- and building a business model that keeps clients in the firm’s office month after month … not just when financial crisis strike, or for taxes and compliance work.
Building a CPA empire will take time, but lessons can be learned from others who set out to do the same. Here are five ways to get closer to achieving your first million in 2017:
1. Determine the services the firm wants to offer, develop workflows to support them, and use tools to help get the job done. What I’m finding as I talk with both new and established CPAs is that they have not found a way to effectively prioritize their processes and workflow over the needs of individual clients. A CPA’s history of being a partner and owning a book of business is tried and true, but if today’s accountants can pivot and start thinking about their service offerings in terms of business processes and products, it would make a lot of changes – especially to profit margins. The ability to have clients who are consistently paying a fixed fee every month for packaged services will grow a firm faster than any other initiative.
The first step to making this business model change is figuring out what services to offer across the spectrum of the firm – whether it’s taxes, audits, strategic advisory, or perhaps even something more specific. Once these services are identified, then you can pick the toolsets to support them. These should not only allow the firm to get the job done well, but also to communicate to its clients. For instance, there are video services that will enable the firm to send five-minute briefings directly to clients. It will record you going through all their numbers, you can identify points to consider as they review, then offer a follow-up call to review as needed. It’s simple, but time-efficient and extremely effective.
2. Turn service offerings into products that can be described and marketed to current and prospective clientele. Once you determine the services you want to offer and have both your staff and toolsets in place to support them, this is when the mindset truly changes and the firm transforms its service offerings into products.
Let’s compare this to a typical trip to the bank. If you are looking for a loan or a refinance, the teller will say, “Let me show you the products we offer.” They won’t talk about them as one-off loans, but rather as products, because that allows them to constrain all the rules internally (interest rates, fees, etc.) and they can easily market those products to their clients across multiple platforms.
CPAs should be setting up their service offerings in the same way, because they can talk about products, they can describe and market products, they can have internal processes for products – and, the be-all and end-all, they can determine the growth margin for each of those products. Don’t sell hours; that’s too limiting.
3. Always double-check profit margins and identify products that have the greatest return on investment. Once the firm has a developed its suite of product offerings and started offering them to clients, it can begin to track profits and growth margins to know where to focus time and resources. There are a variety of business planning tools that allow you to analyze different scenarios that could potentially affect revenue. For instance, if the firm’s tax solutions bring in a surge of extra cash throughout the first quarter, you can create a forecast that will show where to focus your resources in the second quarter so that your profit margins can remain level and don’t take a substantial hit. Refreshing this analysis year after year will help ensure that the firm remains on its upward trajectory, getting closer and closer to that $1 million mark as the days, weeks, and months go by.
4. Network to find the right connections -- and more clients. When evaluating different networking opportunities, there are trade conferences accountants can attend, alliances they can join, social groups they can subscribe to, and more. The biggest difference when evaluating the options is that some are designed to introduce accountants to new connections, while others will focus on best practice offerings or even more so on training.
That said, it’s up to you to determine what you’re looking to get out of your networking strategy. There are associations like the Rainmaker Alliance that are great for those who want to learn about best practices directly from their peers. Being involved in a range of networking opportunities may also open you up to strategic partnerships, or even more clients, along the way. If networking opportunities are more difficult to find where your firm is located, see what conversations are happening online. There are helpful forums and resources readily available on the Internet within professional social media pages.
5. Establish growth scenarios and use forecasting tools to map a plan to achieve them. Once this new business model is in place, the firm needs to be sure to track it against its own financial roadmap to grow. This is another area where business planning tools can help – for some of them offer “what-if” scenarios that let users compare an hourly billing model versus a fixed-fee billing model and really see the differences in revenue and margins. What you’ll find is that the adoption of a fixed-fee billing model is how you’re really going to be able to maximize revenue and grow your firm.
Don’t hold back, be forward-thinking, and let the numbers do the talking. The key to making more money is being efficient, hiring the right staff, and getting the exact right toolsets to support the service offerings the firm wants to pursue. Why? As an ongoing consultant, you’ll soon find that efficiency equals growth margin, growth margin equals profit, and profits will lead to that first million.