Matt Richards, Director of Accounting North took a risk and decided he wanted to be an owner of Accounting business. He decided to buy a practice and turn it into a business.

It was a small ‘lifestyle practice’ of $550,000 in fees and Matt turned it into an ‘enterprising business’ of $1.47m in fees….in just 2 ½ years - at the same time taking his personal chargeable time down to just 13%.

Since taking over the firm Matt has grown it from $650,000 (yr 1) to $970,000 (yr 2) to now $1,487,060 (yr 3) and next year Matt is on track to do $2.3m in revenue. And Matt told me he intends to be at $2.3m with no additional people! Even in the last 12 months Matt has increased his profit by 69%. He was previously a ‘median result’ firm and how is in the ‘upper quartile’ of results. He also in the last 12 months eliminated all write offs (previously about 10%). And all of this has been because he decided to make some changes.

Anne Barry Accountancy  

Anne Barry was a typical suburban sole practitioner who has gone from a profit of $207k to $403k in just 12 months. In 2004/05 she made a profit of $153k. In 2005/06 she made a profit of $207k. This current financial year she is on track to make a profit of $403k.

The 2 partner firm of Baker & Affleck on the Gold Coast has increased profit per partner from $340,000 to $625,000 in the past 18 months. They were already a successful business before joining our coaching club program.

They had healthy productivity (76% for the Accounting team) and like most accounting firms they had write offs (-5%) and ‘lowish’ average hourly rate of $136. These days they have write ons of about 10% and average hourly rate of $220.

Previously this 15 person firm had revenue of $1.8M. Now with 16 people they will do over $3M in revenue.

Baldry & Sanford  

Auckland firm of Baldry & Sanford have increased their average hourly rate (client charged hours) from $128 in 2007 to $223 (so far) this year!

They do not use charge rates as a method of pricing (all charge rates were removed on February 1 this year) and every person in the firm is on $1 per hour. They still keep time sheets for tracking purposes. They price every job in advance and more importantly, they tell their clients how much the job will be before they start.

Last year, their 8 person Accounting firm did $1.1M in revenue. This year they are well on track to do $1.5M in revenue. Most Accounting firms struggle to do $110k per full time equivalent person including all directors and administration team. This firm is doing close to $180k per person. The 2 directors (Clinton Sanford and Paulette Baldry) have their personal productivity at around 35% and they have team productivity at around 75%.

Brennan Sloan Leahy (BSL) are a 2 partner firm in Perth and they were doing quite well before they attended our ‘7 Keys to building a successful accounting business’ workshop last year. BSL were making good profits (in 06/07- 47% profit and $387K each) by industry standards and they already had director productivity at 13%.

Director productivity is still at 13% however this year they are on track for 52% profit margin and $550k each. Along with the increased profit comes increased valuation. They were valued at $2.3M in the 06/07 year and this year valued at $4M.

So without increasing director productivity (they also have dropped 2 fee earners in the process) they will grow their revenue by $500k this year and increase their profit by 42% at the same time.

Elliotts  

Matt Schlyder is the CEO of the 3 director, 20 person cutting edge Brisbane Accounting Business - what this firm is thinking about, and more importantly doing, will set the pace for future performance in the profession.

They have transformed their business from a traditional partnership model to a full corporate model. They have a Business manager (most would call the role a Practice manager), a Human Resources manager and a Marketing coordinator. The results of changing their model have been awesome.

Most firms ‘write off’ about 8% before charging and Elliotts used to be like that. Just last year they made a decision to ‘write on’ every invoice by a minimum of 5%. And they are achieving it. They wiped out write offs with a decision. Most firms have pretty ordinary productivity. The average target for the Elliotts accounting team is 85%. Most firms struggle to have their average hourly rate over $125. Elliotts are just about to nudge $200 per hour. Since starting their new wealth management division in January 2007, they already have over $15M in funds under management.

A 2 partner firm in Wanaka, New Zealand - Findlay & Co, have grown their revenue by 49.8% this year. A remarkable achievement in the current financial situation.

Their average in 2007 was $88,178 per month and in 2008 it is $132,129 per month!  As costs have not increased that much, this has flowed through to their profit.

They do not use charge rates as a method of pricing (all charge rates were removed earlier this year) and every person in the firm is on $1 per hour. They still keep time sheets for tracking purposes. They price every job in advance of doing it and more importantly they tell the clients how much the job will be before they start!

Brisbane, QLD

The owner of GM Accounting – Glenis Gassman – has lock up (WIP and debtors combined) below 20 days at any one time. In fact just the other day she sent me a report that said she had negative debtors (yes you read that right) and WIP at 9 days. Although a relatively small firm, ($600k revenue) the principals Glenis has put in place apply to any size accounting business.

Glenis joined one of our coaching club groups 10 months ago. Her profit for the 06/07 year was a paltry $100,650. This year she is on track for $300,000 profit. Her average hourly rate was $105 – it is now over $200. By creating some new systems, she has become so efficient, that she started to run out of regular work in March this year. Normally her compliance work would take her right up to June 30th – this year (and only after 1 year of being in one of my coaching clubs) she has effectively earned 12 months of revenue in 9 months.  Running out of work is a good thing! It means her business has excess capacity to serve clients properly.

Brian Hern is one of the nicest people you will ever meet. He loves his family, he is loyal to his team, and he is respectful and patient with his clients. I have spent many hours with Brian over the past 18 months and he is an absolute joy to spend time with. However, as Brian discovered (as do many other Accountants when they encounter cathartic programs such as joining my coaching club) he was a bit too nice and too easy going.  He had WIP and debtors blown out to 240 days in collective ‘lock up’, margins of $99 per hour charged and only made a profit of $154,000 on revenue of $454,000. Brian’s business (Hern Financial Group in Adelaide) was an easy going place to work. It was easy for clients, as they would send in their work when they were ready, and it was easy for Brian as well. Enter his new incoming partner who had different needs. Matt wanted to make a difference and when I first met them, one of the first things I said was “there is not enough profit in the business for both of you”.  They did make a lot of changes and the results speak for themselves. They have taken average hourly rate to $231 and this year, will improve profits to over $500,000.

Marc Loader was your typical country sole practitioner in Alice Springs. In 2005/06 he made a profit of $139k.  In May 2006 he decided to make some strategic changes and the results followed. In the 2006/07 he made a profit of $363k. This year the target is a profit of $737k.  Marc has a 7 person accounting firm (him plus 6 others) that has 4 fee earners and 3 administration people. He has taken the firms average hourly rate from $125 to $208 with very limited client resistance. He has taken productivity from 63% to 83% with very little effort. He used to have write offs of 4% (before the changes) – last year he had write ons of 6%. The target this year is an average hourly rate of $285 which includes 27% write ons. Last year Marc’s personal productivity was 44%. This year he is aiming for less than 35%. The labour market is tight in Alice Springs, the economy is the same as the rest of the country and there is plenty of competition from large local and capital city firms. There is nothing special about the location that Marc operates in. What is special is what they have done as a firm to change the way they do business.

22 July 2008

KMW accountants in suburban Brisbane, became so efficient that they ran out of work in the 07/08 financial year.

Their efficiency processes allowed them to free up capacity, service their clients better with the new capacity and take much needed holidays. The 2 directors (Janet Ward and Andrew Malins) were also able to get their personal chargeable time down to 9% as well. That is not a typo!

As well as being more efficient, they have increased their revenue by 81% (from $743K to $1.34M) and increased their profit by 159% (from $198K to $514K). In the 05/06 year they had an average hourly rate of $98 with write ons of 1%. In the 07/08 year they had an average hourly rate of $205 with write ons of 17%.

A typical suburban sole practitioner who attended our recent 7 Keys to Accounting Success event in May.  Steve Sudbury has since improved his business by:

• Finding the courage to charge
• Fixed fee services
• Eliminating write offs
• Use of administration people
• Paperless office
• Electronic workpapers
• Team bonuses
• Reducing debtor days
• Getting the team involved

31 October 2007     

A previous sole practitioner (now a 2 partner firm) who has increased profits by 161% and increased revenue by 41%.  All in the space of 12 months – and the best is yet to come! They are a regular accounting firm in Newcastle that has achieved irregular results. They are a typical tax and compliance business serving individuals and small with2 partners - Greg Valentine and Troy Wink. What I like about this firm is the approach they have taken in the past 15 months. The have been very focused on ‘sorting out the shop’ before looking to grow the business. They are now ready for rapid growth.