Art of Accounting: Growing your practice
Recently, I’ve received some calls from partners seeking some guidance about growing their practices. I started four practices in my career — one as a sole practitioner, and three with two other partners — and I also became a partner at Withum when we merged into them 14 years ago. So I have some experience with this and also have advised others on expanding their practices, so here are some observations.
I usually start by letting the callers tell me what they want to do. They all have grand ideas and I commend them for that. When they are finished, I ask them if they have a projection of the business they hope to get, how it will grow, the clients they will service, and if they have sufficient staff with qualifications to handle that work. And then I hear an “Uh...”
Ambitions are admirable and should be encouraged, but they need thought and direction; that is what most of my colleagues seem to lack. I suggest they do the very same things they would advise a client to do who wants to grow their business. It is also what I did and what I have seen excellently done at Withum. The following is the process that I think should be followed:
1. Decide what you want to accomplish.
2. Decide what you would like as the end result after five or so years.
3. Prepare a projection of the types of services and revenues per client that will get you there.
4. If you will be offering new services, you need to be clear how you will obtain the expertise.
5. Draw up a timeline of sales of the additional and new services and how they will be generated. I suggest a five-year timeline, year by year. This is simply a sketch of what you want to do. You do not need to get crazy with detailed projections, but you need to commit to a written plan for starters. As things develop, you can make any necessary changes.
6. You need to consider what staffing levels you will need and the number, if any, of additional staff, how they will be recruited and trained, and if you have adequate office facilities.
7. You need to prepare a cash projection of what is needed and when, and if necessary where the funds will come from.
8. Most growth plans require an investment. Figure out what it might be and decide if you are willing to commit to that.
9. You need buy-in from your partners. Without that, success is a long shot.
10. You need to get started. Planning is necessary, but it is the first step of a journey. Start!
I pretty much did the above step by step many times by myself and with three groups of partners, and was quite successful. Not everything worked, but the wins were much more frequent and significant than the losses. We just kept going forward. It was not unusual to have several initiatives and programs going simultaneously.
In my practices, I always had two partners (except when I quit my job to start my own practice), and it was easy to get a consensus and move forward. The way it worked was that after all the planning, agreement and financial commitment, one of us became the leader of that practice project. You always need a leader, but it needn’t always be the same person.
At Withum, I saw a different view. Here the ideas were developed and presented with the full plan (as described above) to either the partner in charge of the office, the niche leader, or the management committee, depending on when it was done. We have changed significantly since I joined the practice. And the “champion” of that project led it forward, with periodic benchmarking updates.
Growing your practice is admirable but it's hard work and needs focus, buy-in, a driving force…and a plan. I know it works because I did it with my partners and have seen it done at Withum in a much grander form. If you have any hesitation, contact me at email@example.com for a brief discussion and maybe some prodding.
I posted a related column on getting started with marketing, which also presents a plan that could be adopted, so check that out too.
Edward Mendlowitz, CPA, is partner at WithumSmith+Brown, PC, CPAs. He is on the Accounting Today Top 100 Influential People List. He is the author of 24 books, including “How to Review Tax Returns,” co-written with Andrew D. Mendlowitz, and “Managing Your Tax Season, Third Edition.” Ed also writes a twice-a-week blog addressing issues that clients have at www.partners-network.com along with the Pay-Less-Tax Man blog for Bottom Line. Ed is an adjunct professor in the MBA program at Fairleigh Dickinson University teaching end user applications of financial statements. Art of Accounting is a continuing series where Ed shares autobiographical experiences with tips that he hopes can be adopted by his colleagues. Ed welcomes practice management questions and can be reached at (732) 964-9329 or firstname.lastname@example.org.