One of the most important business building strategies that every Accountant (or any professional service firm for that matter) needs to understand is LEVERAGE. Specifically leveraging in 5 key areas:
- People. You can leverage your people by making sure the ratio of “people per partner” is high. The more people you have per partner (say at least 20) then then the more profit you make per partner. There are way too many partners in the Accounting profession. Many are there for retention reasons not good business reasons.
- Price. You will get zero leverage on the model of “time X rate in arrears”. The ONLY model for price is to price in advance with as much value articulation and courage that you can muster.
- Process. You can leverage your time and literally ‘find time’ by pricing up front, then working out how to take labour out of jobs. The objective is to reduce the labour input on each task. Most Accountants over engineer projects because they are looking for perfection all the time – not success.
- Promotion. You can leverage your promotion by getting more people in the seminar room, asking all of your clients for a referral and increasing the size of your marketing database. Every firm who does marketing needs a database of at least 10,000 names.
- Product. Are you leveraging what you know? I would imagine most firms ‘re-invent’ the wheel all the time instead of systemising your services into product. If you systemise your services into a repeatable process then you can have other people deliver the product.
It’s all about the leverage. If you get all 5 working together you will create extraordinary profits. Profit before partner salaries should be running more than 50% all year round – without the partners doing all of the client work!