All posts from September 2010

5 Reasons Joining a Practice Development Group will Improve your Firm

by Ken Berry, CBI

A friend of mine ran a global consulting practice for a Big 4 firm in the 1990s. Eventually his firm spun off the consulting group and went public. After the IPO, he left to start his firm.

When he was with the larger firm in the 1990s, he frequently lost consultants who were finding work for more money. When he surveyed the independent consultants, he found most were leaving for lifestyle reasons.  They loved the autonomy and freedom to choose their projects and they liked having the ability to control their travel situations.  It was the dislikes that he found interesting.  Some of those issues were:

  • Isolation and loneliness
  • No career development
  • No role in a larger venture

The feelings of isolation and loneliness catch many newly self employed by surprise.  The inability to test ideas and having a mentor is often a challenge. Some even miss the day to day chatter and camaraderie.

Many independent professional services consultants combat isolation through networking or mastermind groups or other practice networks. This would work with tax and accounting professionals too.

Why should you consider this? Five immediate reasons come to mind:

Moral Support: Even if they have differing goals, members are there for support. 

Inspiration and Motivation: Active participation in the right group will challenge and inspire you through tough times.  It is easier to maintain a positive attitude when you have someone with whom to talk through issues.  

Differing Viewpoints:  Discussing different viewpoints with group members gives you varied perspectives on challenges and problems. This is your opportunity to test ideas. Even while disagreeing with others’ points of view, you can gain a better perspective and enhance your ideas.

Peer Accountability: Group members will hold you accountable for your actions helping to achieve your goals and objectives. Realizing you will be held accountable to your peers will also drive growth and development. The fear of letting down the group can be advantageous to your desires.

Wisdom and Experience: You can rely on the experience and wisdom of the entire group. Many heads are collectively smarter than one.

Whether a solo practitioner or a member of a larger firm which is compartmentalized, you can benefit from the right network or group. Many people find that they can stay on the right career track.  Others find that they are building a firm, rather than just creating a job for themselves. They are more likely to overcome marketing and business development challenges through the motivation, feedback and accountability from the group.

Have you ever felt isolated while building your firm?  What are some of the ways that you overcame those feelings? What would you add to this list?

Leave your comments below.

Comments (2) • Posted September 29th, 2010 at 11:32am

3 Steps to Increase Your Value Before an Accounting Practice Sale

by Rick Harrison

Whether it’s after next tax season, or five years from now, there are some simple steps you can take to make your practice more valuable to potential buyers…and you.  Over the years, I’ve looked at a lot of practices and there are common threads through most of them that keep the eventual price paid less than spectacular. The rules are simple, and, despite what you think current market conditions are, will help you to take away more money in a sale or merger.

First, raise your fees. I know: “The economy sucks.” “My clients are suffering.” “I’m already at the peak of the local billing scale.” Except for that last one, I’ve heard the others before. At the end of the day, you’re in business to make money, not to support your clients through reduced fees.  Let’s say you’re doing $200,000 per year and you raise your fees 10%. That immediately drops $20,000 to your bottom line. I know, I know, you’ll lose some clients. Let’s say you lose $20,000 in fees. Doesn’t that put you in exactly the same position you were before, except that now you have more time to do other things? At a hundred bucks an hour, you now have 200 more hours to play golf, smell the roses, or whatever. Long story short, increase your fees to current market rates and you’ll demand more of a higher price for your practice. You’ll also make more money in your practice.

Second, get rid of the dead weight. That means “D” clients. You know who they are. The ones that will probably go away if you do raise your rates (see above) and the ones that are more trouble than they’re worth.  You’ll be left with the more loyal and premium clients. You’ll have a practice that is a lot easier to sell and get a higher price for. That dead weight can also apply to personnel. I’ve also seen the practitioner that just can’t bring herself to let Good Old Joe go, even though Joe hasn’t pulled his weight around the firm in a long time. Do yourself a favor and let Joe go (probably after tax season, though).  Both of these “triages” will garner you more money for your practice when you sell.

Third, it’s the 21st century. That means bringing your practice up to date. Don’t be “pennywise and pound foolish”. You may not be totally paperless, but you should be working toward that goal. If you’re still doing your write-up work in 13-column ledger books, there’s probably no hope for you. You should be scanning documents and utilizing the newer software suites that are out there. If you’re upgrading on a regular basis, then the learning curve won’t be so steep.

So, these are the three simple fixes over which you have control (location, probably the biggest single factor, you can’t control).  These are the areas where can you implement short term changes that will maximize the value of your practice.

.

Comments (0) • Posted September 10th, 2010 at 6:10am