How sustainable is your firm? Meaning, if the Partners were not there, how would it perform? Would it make money? Would it lose money? Could it continue to grow without you?
Here’s a simple but sobering equation:
Take Partner revenue delivered (your personal billable time / dollars) away from your profit (before Partner salaries) and see what is left.
The reason I say take it away from profit is because Partner revenue is nearly all profit. If the answer is a loss, then the question needs to be asked ‘why do I need the rest of the team & infrastructure?’ You could work from home, look after your clients, have less hassle, and make more money. If the answer is a small profit, then the observation is the same.
If you want to get really critical, take Partner billed time away (revenue delivery) AND take Partner sales (revenue production) away and see what you’ve got left. Hmmm. Time for a rethink.
I once heard that the purpose of a business is to sell it – whether you want to or not. That means it’s always ready to sell. That means it works without any key people. Or if the key people departed they could be quickly replaced and the business would continue regardless.
If you have a firm that is heavily reliant on you (low sustainability) then you don’t have a business but a paid job – hopefully a well-paid job. Now that maybe OK if that is your strategy. If that’s your strategy, you have to realize that there is ZERO business value in a well-paid job – just cash value.
If your objective is to build an Accounting business, then you need to think leverage. You need people / machines doing the work not you as the business owner. You’ll need marketing people and sales people. You’ll need to have a systemized business that follows process. You’ll need a recurring revenue model that ticks along and grows every month. You’ll need a leadership team who power on with or without you.
The ultimate goal is that you could take three months (or longer) vacation and the business still performs. You’re not missed at all. I think financial retirement is the goal. That means that you have assets that produce cash to support your ideal lifestyle and going to work is a choice – not a must. Your Accounting business could be one of those assets. You’ve probably got clients who own a share in multiple businesses and they produce a return yet they spend little or no time in them.
Why can’t you be that person. You’ve built your Accounting business, systematized it, leveraged yourself out of it and you keep it as an asset. Now that’s sustainability.
Rob NixonCo-founder at PANALITIX
About the Author
Rob Nixon is the world’s foremost authority on how accounting firms can achieve peak performance. Since 1994, he has been running businesses that specialize in helping Accountants run better, more profitable businesses. His speaking work has taken him around the world where he has spoken to in excess of 170,000 Accountants. Currently, his landmark strategies and products are used by Accountants in over 30 countries.
On average, clients increase profit by 75.5%, enhance capacity by 30.6% and achieve sustainable revenue growth of 52.1% - in just 12 months.
Rob is the author of two best-selling books “Accounting Practices Don’t Add Up – why they don’t and what to do about it” – and “Remaining Relevant – the future of the accounting profession”. Both have received rave reviews from Accountants and industry professionals from around the world.
Rob’s latest book “The Perfect Firm: Your Playbook for Building a Perfect Accounting Business” aims to help Accountants build their perfect accounting firm.
In 2005, he created the revolutionary coaching model called coachingclub. The coachingclub model enabled firms to be accountable, to consistently learn and to share ideas amongst their peers. So far, over 800 accounting firms have graduated from his coachingclub program. The vast majority of firms have doubled or tripled profits because of the program.
Rob is a keen golfer (single figures) and adventurer (he is ticket holder 293 on Virgin Galactic to go into space). He lives in sunny Brisbane, Australia with his lovely wife Natalie and three children.