Achieving Better Leverage in Your Firm
We all know that the secret to success is to work smarter, not harder, right? Yet we still get stuck in the day to day emails, client queries, file reviews, and activities that are highly important to others, but not necessarily to ourselves. Working smarter becomes a pipe dream as we can’t see the wood for the trees.
"It doesn't matter if the glass is half full or half empty... if you think you can make a better glass." #smartcuts
There are essentially only three ways to achieve greater leverage:
- Embrace more technology / systems: this increases efficiency and results in higher returns - if we don’t pass on this efficiency saving to clients (like we inadvertently do using a time-based fee model).
- Get more people to do the work: think of the traditional accounting compliance model where every one hour of Partner time is matched by 10 hours of team time.
- Sell services one to many: either online or via workshops and paid seminars; one person delivering and multiple people buying over time.
Dreaming of growing the business without a clear understanding of leverage is at best aspirational and at worst a nightmare. Unplanned growth too often requires more work from already stretched business owners, creating a time trap where we become locked in a vicious cycle of simply working harder.
This time trap ensures the more we work, the less time we have to devise ways to be more effective. We’re stuck. But, working harder just won’t cut it any more.
Conversely, when we take time to develop smarter ideas, better ways of working, and solutions to the problems and things roadblocking us, we ultimately work smarter, not harder. It’s counter-intuitive at first, but to work less (and think more) enables us to unlock higher returns. Consider The Productivity Pyramid below.
The activities at the bottom of the pyramid take more time to give us a return (growth). Conversely, the activities at the top give us a high return without needing a lot of our time.
So, working from the bottom to the top of the pyramid, we have these ways to grow:
- Get better at the work we’re doing: improve your skills and master your expertise. Initially, this step is essential. However, to move to the next level, we must eventually let it go, i.e. stop holding on to those annual accounting meetings and file reviews.
- Get more people to do what we’re doing: employing more people works well to a point. The larger your team becomes, the more important a clear business structure is, with defined and documented roles and responsibilities and set Key Performance Indicators (KPIs) measured and reported regularly.
Workplace culture, Core Values and leadership skills are also essential to get the highest level of engagement from your team. For example, let the team do the annual accounting meetings and the file reviews so you can work at a higher level. Don’t forget you can contract in expertise or outsource as well. No need to create an empire as this will suck your time too.
- Invest in new technology to increase your efficiency: adopting better systems and technology ensures you continue to make your business as efficient as possible. The trap here can be that, as your business grows, some systems and processes become redundant, but the team keep following them because ‘that’s what we’ve always done'.
So, when adopting more efficient systems, make sure you weed out the SNUPs - the systems that ‘Serve No Useful Purpose'. Don’t re-invent the wheel, there are so many excellent systems out there - with dedicated resources for ongoing improvement. You can only achieve leverage through the team if you fully systemise what you are doing (or you can end up back at level one - working harder).
- Invent a system or technology of your own: providing you avoid re-inventing the wheel where there is already a better system available (see step three). You may even be able to sell or license a system you invented. Perhaps you’ve created an industry-specific piece of content in the area you specialise in - there are likely to be other accountants who would be interested in that content if it is advanced. Don’t under-estimate the investment required here - as a start you’ll need resources in your Product Development department so that you don’t get distracted yourself (and end up back at level one again).
- Find better things to work on: this is the innovation step - and the most important step. It’s what you’ve dreamed of doing and you owe it to yourself, your team and your clients to get to this level. In The Achiever Matrix (from Stephen Covey’s book First Things First), this stage is truly in the quadrant of quality - true planning and re-creation.
So, if you really want to grow your business without blowing yourself apart you need to understand the three points of leverage, The Productivity Pyramid and The Achiever Matrix.
There are no shortcuts here.