Working longer hours is not going to do it. If you are a CPA running your own solo practice, then working longer hours is actually hurting you. Why? Because you:
Risk loosing it all: When you are so busy keeping up with the daily work, you have no time to update your business processes for changes in market expectations, competitive landscape, and technology tools. Even tracking regulation becomes a burden. There is no time left to pursue opportunities and fight emerging risks. A single change in any of those variables could put your entire revenue stream at risk.
Are leaving money on the table: When you are too busy doing what your clients need you to do, you have no time to grow your firm in the manner that benefits you. You are not building an expertise niche or brand that will command premium pricing. You are not taking advantage of efficiency through repeatable processes in your area of specialization.
Suffering a slow personal Loss: Working long hours is hurting you as an individual. Beyond the family sacrifices and loss of freedom, you are unlikely to be able to grow and learn in areas that excite you and give you satisfaction from work. And it is well known to worsen your health, increasing your risk of heart disease and diabetes. Many people can experience symptoms such as reduction in quality and quantity of sleep, fatigue, anxiety, depression, increase in gastrointestinal disorders, and increased risk of spontaneous abortion, or low birth weight. So much so, that the Center for Disease Control (CDC) has issued official receommendations for it. It will eventually backfire.
Ask yourself: Is your business growing in the way you want it to? Are you getting the type of clients you want or just accepting any leads that happen to come your way? How many of your clients are seeking high value work? Are you carving out a specialized niche that helps you stand out from the competition and command premium prices?
You may have helped your clients put together business plans for their financing applications, but honestly, do you have a business plan for your own practice? Most solo practitioners, be they accountants or other independent professionals, start on this common path: get more work, do more work, and continue to work harder and harder as they grow. Its a never ending vicious cycle. There is no light at the end of the tunnel.
But there are other successful professionals who work less and less as their firm grows. That's right, they make more money and have more time for themselves. They key is to think strategically about growing your firm rather than simply keeping up with the growing work.
Rather than letting the in-coming work dictate growth, you explicitly control how you grow. Imagine you have hired a CEO whose sole focus is the strategic thinking required to grow and run your practice. He or she does not do any of the actual accounting work. How can you hire such a CEO without breaking the bank?
Without Breaking the Bank
Here is how you can hire a CEO without increasing your payroll costs by a single penny.
It starts with time management. This simple trick works in three steps:
Step 1: Org Chart
The first step is to build an org-chart for your firm. No, not the organizational hierarchy that you might have seen at the big 4 or another large industry organization you may have worked for earlier.
As a solo practitioner, you need the simplest org chart with four roles: CEO, VP-Administration, VP-Accounting, and VP-Marketing.
The goal for creating this org chart is to understand the responsibilities of each role very clearly:
VP Marketing: Increases the firm's visibility, generates leads, and gets new clients. Showcases the firm's expertise and targets the right niche.
VP Administration: Makes sure incoming clients are the right fit for your firm. Delivers a stellar customer experience for every client. Ensures that a professional legal contract, statement of work, or letter of engagement is used and the right expectations are set (incorrect expectations are often the root cause of customer dissatisfaction). Establishes the workflow of how the client will interact with your firm and on-boards them to the right front-end systems. And, makes sure and the client has all their questions answered.
VP Accounting: Delivers the accounting services, be it book-keeping, tax-prep, reports, 990s, payroll, audits, business valuation, assistance with loans/financing applications, or any other service that you provide.
CEO: Makes sure all the VPs are doing their job well and solves any problems they bring up. The CEO also improves and updates the firm's strategy, based on experience gained so far, changes in market expectations, competitive landscape, technology opportunities, and regulations. The CEO makes sure that your practice has a strategy and that the strategy is working.
Step 2: "Recruit" Your Time
"Recruit" your time for each of the above positions. You divide how much time you will spend wearing each of those 4 hats. Use the following as a starting point:
VP-Accounting: If you are just starting, you may only have zero to a few clients. Also, this is something you are good at and can do fast. So, 0-15% of your time should suffice for this role. (If you already have a large number of clients this percentage could be higher, but never more than 50%.)
VP-Admin: Again, if the client volume is low in the beginning, 0-10% of your time should suffice here. The key is to make sure this work is happening and not skipped.
VP-Marketing: The biggest priority if you want to grow your firm is to get new clients. So this role deserves the most time. And because this is likely something you need to learn, you actually want to allocate even more time to this task than it deserves. About 65-80% is recommended but never less than 50%. If you need more than 50% of the time for other roles, you probably are at a stage where you need to hire staff or at least a bookkeeping vendor.
CEO: Another 5-10% of your time is needed for this. As CEO, you will assign tasks to and track the progress of each of the three other roles (hats). You must embrace your executive role, that may not have been part of your training. As your practice grows (i.e., as you get rich), this role will take majority of your time. Become good at it.
The time may be allocated on a daily basis (e.g. 6 hours as VP Marketing, 1 hour for client jobs, 30 minutes for administration, and 30 minutes as the CEO) or a weekly basis (e.g. Mondays, Wednesday and Fridays for marketing, Tuesday and Thursday mornings for marketing, Tuesday and Thursday afternoons for the other roles). Time scales larger than a week generally do not work for this.
Step 3: Execute
Carry out the responsibilities assigned in step 2. As the CEO, you are responsible for the resource allocation for your firm: you are the time-keeper for each hat. Every day, say at the end of the day, you will:
Verify that the sanctity of time allocation was respected. Any adjustments to the time allocations must be approved by you as the CEO. This means that such decisions must be made based on the priorities of all roles. Keep a close watch on your VP-Accounting. He or she should not use up more of your firm's precious resources (your time) while starving out the VP-Marketing, just because the accounting work and related learning happened to be more comfortable for you. If your VP-Marketing did not have a clue about what to really do, that is where your learning should be focused on. The AICPA provides several resources for small firms to market themselves.
Prioritize and assign the tasks for each role. Set realistic timelines for each task. Check daily if things are getting procrastinated or certain "boring" tasks are falling through the cracks. A daily check is a must, even if following a weekly time allocation.
Make sure they (you, in your other hats) are sticking to the strategy you have laid out. One of the common pitfalls is to create a marketing strategy, and when no early results are achieved, abandon that strategy and move on to the next cool idea. As CEO, your role is to make sure that each strategy is followed through. Based on the progress so far, you may have to adapt or refine it. But do not jump after every good idea, in search for that one best idea. Unless you finish the tasks, they will not yield results.
Tip: Download this free MS-Excel spreadsheet to automate your time use calculation, and see a visual chart of how your time was spent. Doing this for just a week will transform how you prioritize your work.
Prepare for Growth
There are only so many hours a day, and if you restrict yourself to operating solo, there will come a stage where there is no more room for growth. Or growth will come at the expense of work-life balance and family sacrifices. And even then, once you have maxed that out to reach a complete work-work "balance", growth will stop. From then on, you keep running to stay where you are.
An alternative is to plan for growth. As you become good at each of the above roles, especially the non-accounting related ones, you will have gained the expertise needed to hire and train others for those roles.
A reliable signal that you need to hire is when your accounting work starts taking up close to or more than 50% of your time despite your CEO's best efforts to enforce the sanctity of time allocation across the four roles.
Hiring is Scary
Hiring can be scary because it means letting go of your control and delivering work that maybe you could have done better. Realize this: hiring a highly qualified person and hoping they will magically do the job is not how it works. That is not what you will be doing. You will hire and train.
Hiring a qualified person means they are easy to train and may grow to perform the task even better than you can. But progress tracking and mentoring by you will be essential to ensure that the work is being done on time and the quality meets or exceeds your expectations. You release control as you build confidence in their abilities. So your time can be spent on tasks that yield a higher return on investment (ROI).
Hiring is Expensive
In the short term, hiring may seem like a big cost. Since work only grows in small increments, it is tempting to shave off 5% of the time from the executive or marketing hat to the accounting job hat. But that is a slippery slope. If you are not spending enough time on marketing and growth activities, how will your practice grow?
It is important to hire early. Hiring someone will not immediately free up all of your time spent on that task. Because you will spend time on training and tracking the new hire. So start hiring when you still have a buffer in your available time. This prepares your firm ahead of the growth. As the work grows, the new hire will reach their full productivity level. That is when you will reap the full ROI of hiring.
As more of your hires reach that stage, you will start taking home a higher income, after payroll expenses, than doing all the work yourself. And instead of being saturated, you will have put processes in place to continue to grow further.
How much time are you devoting directly to growing your practice?
Do you agree that 50% is the right goal for you? Why? Share your opinion in the comments below.