Most CPA practice owners, even if they are doing a few million a year in revenues, particularly if doing less than a million, cannot usually afford to work ON their practices 100% of the time. They have client and employee responsibilities.
The problem however, is that often they are so client-centric that they work IN their practices. Even though it seems counter-intuitive to many of us that we need to carve out time away from client services, failure to do so causes many problems and severely impacts growth.
It would SEEM as though the right thing to do would be to put client needs and demands above all else. By doing that, one would expect to be very successful and even though it can seem this way, focusing on clients almost exclusively, makes it impossible to scale your practice. Of course, in start-up mode, an owner can meet every client demand on a fairly immediate basis. However, the effort to continue to do this (when an owner gets up to few hundred thousand a year in billings) becomes increasingly difficult and the continuous attempt to do so severely inhibits the rate of growth.
Most practice owners spend 5-10% of their time being entrepreneurs, 10-15% of their time being managers and 75-80% of their time being Technicians/workers. This is true of most other small businesses too - perhaps because higher education tends to turn out more workers and managers, than entrepreneurs.
So what does working ON the practice and being an entrepreneur actually look like? It involves:
- Planning; i.e. having a plan to reach the next milestone in growth
- Implementing steps from that plan; i.e. client development, which is likely to be part of any plan for growth(as well as assessing hiring needs)
- Planning improvements in operations to increase efficiency, etc.
There are lots of other non-billable functions that an owner can wind up with in the practice, such as billing, collecting, administrative functions to do with technology updates etc., but these are not working ON the practice as an entrepreneur, they are management tasks, and as much as possible, should be delegated out.
Part of the Strategic Plan for growth should actually include how to extricate the owner from being his own best employee, i.e. a cog in the wheel of his own practice. Many devote a minimal amount of time before tax season to make some plans but that is like a receptionist who only answers calls part of the year, and lets the phone ring out the rest of the time! One wouldn't expect good results if this were the case. Time needs to be carved out weekly for this majorly important hat or otherwise over the lifetime of a practice, it will not experience the higher levels of billings it could have. This is because the person in the practice most motivated to build it, is always going to be the owner.
Since CPAs are very good at handling finances, a good analogy might be -- if you only save the money you have left over after you spend your earnings, there will not be any or very little! So similarly, if you only spend the time you have left over, on your "owner hat" after helping every client who needs you, there will never be any or enough time left over!
So my recommendation, for the health of your practice, is to take time off the top to draft a Strategic Plan for your goals and then commit a certain time-slot each week, to implementing this plan. The plan itself should take into account what needs to happen to ensure you to wear your "owner" hat, on an ongoing basis – even during tax season, when there are tons of opportunities for the owner who is not too overloaded.
The % of time working IN your practice should reduce, exactly in proportion to how big your practice gets – or if not, there is something amiss with the way it is organized. As a start, if you can free up even 10% more of your time, to work on implementing a great Plan, you'll see significant growth! Don't get lost in the workload to the detriment of your practice! Admittedly, it is a difficult transition to make and that is why the HOW of working less hours IN your practice, must be first figured out; and planned out before it is put into practice.
It’s actually the same argument that most CPAs make when pitching a business client for their bookkeeping business - and it’s a very valid one. The business owner does not need to be spending time doing his own bookkeeping when he could be implementing plans to take his business to the next level.
Ciara MacMahon
Author Bio: Having worked with accounting practices since 1998, and prior to that working as an attorney in a set-up, very similar to a CPA practice, Ciara MacMahon, CEO of Phase Two Management Consulting, has successfully boosted revenues of accounting practices by 3 – 4X, while allowing the owner to take more time out of the practice. Accounting practice owners are faced with endless deadlines and the challenges of managing workflow, finding the right staff, staff training as well as securing the acquisition of quality new clients! They are also often tasked with the not too pleasant responsibility of imparting bad news regarding taxes due, that the unprepared client is unhappy enough about, to oftentimes ‘shoot the messenger’!
As no two practices are the same and each owner has his own vision for what he/she wants, the first step is a Planning Session to work out the owner’s goals and a strategy to obtain them, in the fastest time period, and for the highest return. To schedule your one on one complimentary practice analysis and consultation, email Ciara MacMahon at consultantciara@gmail.com today. www.PhaseTwoManagement.com