What Got You Here Won’t Get You There

Hey 👋 - Brandon here.

Happy Saturday to 1,787 growth-minded accountants.

Here’s one growth tip for you and your firm.

Today’s issue takes less than 11 minutes to read.

One problem I see in the accounting industry is many firm owners and partners erroneously think doing more of the same will move them forward.

Most of the time that means billing more hours.

But billing hours is a very low form of leverage. You can only charge as much as the client is willing to pay meaning, eventually, you lose leverage.

Higher forms of leverage are marketing, sales, technology, and leadership.

Below I’m going to share my thoughts as to the skills managing partners and those on the partner track, need to build per level of revenue:

$0 - $1M Book of Business

Managing partners

This is the solo-firm owner level moving into a few employees as you near $1M in revenue.

Ultimately you need to figure out how to bring clients in the door and deliver a good work product to them. So you want to spend time on business development, networking, meetups, and then learn how to manage workflow to produce high quality deliverables.

There are three things that keep firm owners from crossing $1M

• Bad pricing… to correct the economics of bad pricing you must work more hours, but you only have so many hours to work… bad pricing will hold you back

• Operating on referrals only (no business dev efforts)… great strategy for those who have 1,000 clients, not so great strategy for smaller firms if you are looking to grow as more than a snails pace

• Bad client experience… clients value urgency and proactive communications. To hit 7-figures you must operate with a sense of urgency. Every day is a sprint.

Employees on the partner track

Most employees are expected to bill 2.5-3x their salary so $0-$1M will be largely focused on sole production.

Employees should focus on developing a sense of urgency related to responding to clients and internal requests. This sense of urgency will make you stand out given that so few people operate with urgency. If people are having to follow-up with you to check on status, you are failing.

Additionally, focus on producing high quality work. BUT don’t let it slow you down. The magic is figuring out how to produce high quality work, urgently.

$1 - $3M Book of Business

Managing partners

This is where most firms get stuck.

By this point you have a small and growing team. You are probably feeling stretched thin because you are trying to keep all the balls in the air related to firm management and, on top of that, you have your own clients to deliver to.

To get past this, you must do LESS not MORE client service.

You need to learn how to delegate client relationships.

As you creep closer to $3M, work toward the following time split: 10% client service, 60% firm management, 30% marketing and sales.

Focus on systematizing your marketing and sales process and team. This system will enable you to continue growing year-over-year… do not neglect it.

P.S. if you make it to this level of scale and want to learn how to continue growing 20-40% per year without blowing up your firm, consider joining four15 - a community for firm owners doing $1M+ and one I wish I had when I was going through this.

Employees on the partner track

When you are managing a $1-$3M book for your firm, the most critical piece of advice I can give you is to “get out in front of it.”

To do this, you have to figure out how to optimize client service. Delivering good service, keeping clients happy, retaining clients, and retaining employees is “meeting expectations.” These are table stakes.

Your success here will be largely dependent on how well you delegate.

Great delegation + accountability = free time.

Bad delegation + accountability = constant fires, stress, failure.

With some of your time earned back, you can figure out how to cross-sell and up-sell clients.

If you want to manage more than $3M and be on the partner track, you have to show that you can effectively manage your book (table stakes) and also grow it or grow the firm.

Proving you can add revenue to the firm will confirm that you “get it” to firm leaders.

$3 - $6M Book of Business

Managing partners

If you make it to this level, you will find yourself needing to further hone your delegation skills and build leadership skills.

“Delegation” at lower levels of revenue looks like “can you please get this done by X” but at this level of revenue you are delegating entire service lines and big projects that can materially impact the firm.

You are now a steward of your firm’s needs and that is a heavy burden.

You will have to learn how to be comfortable in uncomfortable situations and make decisions that are in the best interest of the firm. You will need to learn how to be exacting, draw your line in the sand, and drive clarity into your firm as to what success looks like.

If you are unwilling to embrace this new challenge, you will struggle to grow beyond $6M.

Employees on the partner track

At this point you are likely on the partner track.

You will likely appoint a caretaker or three to help you manage your book. You will need to work on delegation and setting extremely clear expectations. You will also need to get comfortable having tough conversations to keep people on track.

These are all leadership skills and if you can’t develop them, you will be stuck.

Most accountants don’t want to develop these skills. They prefer to just bill more time to clients in an effort to show they can add more value to the firm. They do this because being a leader is hard, uncomfortable, and embroils you in weekly conflict.

But if you can’t develop these develop leadership skills, you’ll find you have a ton of leverage over you time.

You will be able to improve the client experience and increase annual retention rates. You will have more time to develop business and also have a platform to plug that new business right in to.

Partner material.

$6M+ Book of Business

Managing partners

When you make it to this level, all focus should shift back to your people.

You will have a decent-sized team at this point and getting results through your people will become the biggest levers to pull.

The most important thing you need to focus on is developing leaders.

You want to be in a position to delegate complete ownership over functions of your firm and know they will hit your expectations 95% of the time. The only way to do that is to develop leaders who can be trusted to autonomously run their teams.

The problem?

Part of developing as a leader is learning from your mistakes. At this point, you are likely a decent leader given that you’ve made every mistake under the sun. But how do you enable your leaders-in-training to make mistakes? Especially if they are the same mistakes you made previously?

That’s hard.

Employees on the partner track

At this point you are likely a partner.

The biggest challenge you will face is strategic planning. Can you learn how to predict the future, staff teams appropriately to drive toward the expected economic targets, and retain a strong system of client service?

It’s a constant process and takes significant time from your weeks and months.

To do this effectively you must have the time to dedicate. So again, hone your delegation and leadership skills. Make sure everyone on your team knows what success looks like. Entrust a few lieutenants to run the day-to-day so you can focus on the big stuff.

And for the love of GAAP, stop spending so much time serving clients.

That's all for this Sunday. See you next week.

Cheers,
Brandon

Ready to grow your firm? Here’s how I can help:

→ Apply to join four15, the community I launched for ambitious firm owners doing $1M+ in revenue (21/30 spots filled)

→ Book a demo to get accurate salary data from B4Transparency so you can always attract top talent by paying top of market (I own a minority stake)

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