From £50k to £250k: Six steps for practice growthby
Small accountancy firms that want to grow need to focus on more than just sales and marketing. AccountingWEB Live Expo Heather Townsend shares six steps to grow your firm’s annual revenue from £50k to £250k.
At AccountingWEB Live Expo on 1-2 December, I will be hosting a panel on coping with sudden growth. If your firm is like panallists Glenn Martin's and Jeri Williams' and have experienced rapid growth, here are six steps to ensure you continue to grow and hit the next step in your revenue target.
The Live Expo will be full of sessions, seminars and workshops designed to help you supercharge your practice and reach your revenue targets. Register now to save your place.
What happens when your firm grows from £50k to £250k?
Where you spend your time needs to change. If you are a small accounting firm owner, it is essential that you have time for blue-sky thinking. This is where you work on activities that will help your business in the long time term.
For accounting firms, this might be things like business planning or rethinking your marketing strategy. However, as you grow your business, your time for blue-sky thinking will be squeezed as client work takes over. As you get around £50k in annual income per year, it's time to bring in trainees/apprentices/assistants so that you can shift some of the client work over to them. This will free up time for you to take on more clients or work fewer hours.
Your team, rather than your clients, are now your top priority
When you have a team, one of the largest shifts for you as a small accountancy firm owner is to recognise that your first priority as their boss has shifted from client work and handling all those unexpected problems to helping them perform at high levels. This takes time, which we often don’t have at this stage of our accountancy firm growth. That's why small accounting firms will take on an apprentice or go with outsourcing, or hire a part-time member of staff as there normally isn’t the money available to pay for an experienced full-time accountant.
Your team needs priority over your other work. If it isn’t given the attention and care then some or all of these things could happen:
- You have a revolving door of staff.
- Your staff seem to not want to take the initiative.
- You hire poor quality staff just to get a ‘bum on a seat’.
- You run low on capacity and start over-trading.
You have to learn to trust your team to get the work done
If you're a small accounting firm owner, it can be hard to transition from doing all the client work yourself to assigning client work to your team. Some small accounting firm owners never make this transition.
In the wake of Covid-19, more and more accounting firm owners are allowing their staff to work remotely. However, it's easier to trust your team when they're sitting next to you in your office, rather than in another location. Getting this level of trust takes time, plus investment in practice management software, communication, team culture, dashboards and reporting.
You will need to bite the bullet and put up your prices
Low pricing is very likely to be what helped you attract your first clients. However, if not addressed, it will slowly choke the growth of your firm.
If you don’t adjust these low prices, you are likely to become the lowest-paid member of your practice. Despite working long hours, you may find your firm struggles to break even. As your firm’s revenue increases so do the wages, office rent and software licences. This means that the net profit margin reduces.
You will need to increase existing clients’ fees
The best way to make sure you can pay yourself enough is by increasing your existing clients' fees. You know the ones who really need it. They are likely to be the clients who came on board in the early days of your firm. However, you will need to silence that loud voice of fear telling you not to commit commercial suicide by putting fees up.
If you are still pricing at the same level as when you started your practice, now is the time to revisit those fees. We often find with our members that most wish they had repriced much earlier. Their fears of losing large parts of their client base by repricing were largely unfounded.
Additional software will be needed to increase your practice’s efficiency
As you grow through your team, your practice’s efficiency will come up on your priority list. This tends to mean rethinking your software stack, eg:
- Doing a software audit to see what is really required.
- Looking for where you can eliminate duplication or manual entry with improved usage of your current software or replacing your existing software.
- Looking for practice management software that will automate your processes and reduce manual entry.
- Finding solutions which will automatically notify clients when you need their information.
Your focus on marketing and sales will shift more to keeping existing clients happy
In the early days of running your accounting firm, it all came down to winning more clients. To get from £50k to £250k in annual revenue still needs a focus on winning new clients' work.
However, if your firm looks after current clients well, then generating new business should come naturally through them wanting more services from your firm or recommending you to others. Our members, who focus a reasonable amount of their marketing on existing clients, eg regular conversations and sharing relevant information with clients, typically find that at least a third of their business growth comes from existing clients.
Heather Townsend will be speaking at AccountingWEB Live Expo on 1-2 December 2021 alongside such guests as Rebecca Benneyworth, Peter Rayney, Paul Aplin, Anita Monteith, Carl Reader, Steve Collings, Reza Hooda plus representatives from HMRC.
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Heather Townsend is Founder and Author of The Accountants Millionaires’ Club. She is the author of six books, including The Go-To Expert, and Profitable Pricing For Accountants. The Club has 50+ members and helps its members grow their practice, the low stress way. It will give...