Why Accountancy Firms Stop Growing
An accountancy firm has three core components:
- Process
The mechanics by which an accountancy practice ‘produces’ its saleable services – compliance, support and advisory.
- Marketing and Sales
The generation of new clients, the retention of existing clients and the maximisation of client value.
- Management
The running of the business – its performance management, strategies and goals.
No single component is more important than the other two. Have the three functioning harmoniously and you have your perfect practice. Create an imbalance however, with too much focus in one area and neglect in another, then you have under-performance, increased risk and frustration.
For most practices, the focus, inevitably, falls on process. To create a more balanced and effective approach across the firm, strengthening marketing and sales and management without negatively impacting on process (in fact, improving efficiency in this component as well) it is necessary to create strategies that proactively improve the firm across the seven key areas that maintain balance within the three core components. This way, resources and growth are better spread.
These seven key areas of the practice we’ll call the Seven Pillars to your Firm.
The Seven Pillars
- Objectives
The fundamental aims and ambitions of the partners. Determines the coordinated actions and priorities of the practice in the short, medium and long-term. Active, targeted management of objectives will lead to greater goal achievement.
- Lock-up
The amount of practice cash tied up in debtors and work-in-progress. Active, targeted management of lock-up will lead to improved cash-flow and more profit.
- Recoverability
A measurement of staff and process efficiency and billing suitability. Active, targeted management of recoverability levels will lead to more profit and higher client satisfaction.
- Managing clients
Analysing the client base and how it is serviced. Active, targeted management of the client base will lead to improvement in every area of the practice.
- Client Satisfaction
Understanding the needs and views of clients. Active, targeted management of the firm ‘through the eyes’ of the client will change the culture of the business and lead to greater client and staff gains and retention.
- Partner Profit
The financial return to the owners of the practice. In most cases, usually the amount of money that drops out after everything else is settled. Creating targets and coordinating these with points 1-5 above will lead to more money and benefits for the owners.
- Non-Productive Partner Time
The time partners spend doing stuff that they don’t want to do. Some is unavoidable but most ends up on the partner’s desk through failure. Active, targeted management of partner time will raise performance and satisfaction levels.
The Multiplier Effect
The Seven Pillars are chosen deliberately because they each interlink across the three core components of the firm. Improvement in each doesn’t just impact on one component and so a better balance is maintained. Consequently, a small improvement in each Pillar has a multiplier effect when it comes to the impact on the practice as a whole. Look again at the Seven Pillars and imagine the impact on your practice of just a moderate 10% improvement in each.
