Many accounting firms run up against the dreaded profit plateau for a simple reason: The owner is too involved.
All CPA firms start small, and that ultimately means the business — especially in its early stages — rests on the skill set of the owner. However, for accounting firms, the best way to grow is for owners to remove themselves from the key business processes.
An easy way to understand the role of a CEO or managing partner in a CPA firm is actually to compare it to the restaurant industry. Most restaurants are founded by chefs and cooks who have a slew of great recipes they want to sell. The restaurant starts small with the chef often doing everything: taking orders, cooking, serving, cleaning, managing finances and marketing the business.
Eventually, the business grows enough that some of that role can be delegated to others for pay. Maybe the chef hires a server or two. Maybe she hires a sous chef. But quite often, she's still in the kitchen, managing the day-to-day business, and still heavily involved.
So, what separates that small mom-and-pop restaurant from some of the more well-known multi-restaurant chefs like Wolfgang Puck? Knowing when it's time to hand over the day-to-day operations so you can focus on growing the business.
CPA firms are no different. When the MP or CEO's time is spent on billable hours and working with clients, there's effectively no one leading growth. And that's because the CEO's or MP's job should be laser-focused on navigating business growth. That's impossible to do when the CEO is still too involved in the processes that make the business run.
Think of it this way:
- The role of a CEO or MP is to navigate the market and drive business growth through strategic planning.
- The role of everyone else in the firm is to execute the specific operational and functional aspects of the business that are guided by the MP or CEO and the executive team (once you grow large enough).
For that to happen, the owner eventually needs to step away from working leads and opportunities, creating marketing material, and especially doing client work. Those are all things that can be documented, operationalized, trained and delegated.
Examine your task involvement, then delegate and hire appropriately
If you've determined that, yes, you're the bottleneck to growth in your company, it's time to take stock of exactly why. That begins by examining how deeply involved you are in the day-to-day operation of your firm and exactly what tasks need to be taken off your plate to give you more time to fill the role of a MP or CEO.
You can make that examination by asking yourself the following questions:
- What client- or account-facing tasks am I currently handling that could or should be delegated?
- How much of my time is spent on client work, versus strategic planning and business development?
- Am I the only person in the firm who can perform certain tasks or make specific decisions?
- What are the long-term goals of the firm, and what is my role in achieving them?
- Do I have a clear understanding of the strengths and capabilities of my team?
- What processes or systems can I implement or improve to make the firm more efficient without my direct involvement?
All of these are important questions to ask yourself, let's give some special attention to two of these.
First: "Am I the only person in the firm who can perform certain tasks or make specific decisions?" If the answer is yes to anything related to sales and client work, that's a big red flag and a problem you need to solve immediately. If the success of generating new business and working with clients rides completely on your shoulders, you can't grow. You'll never have time to do the work of a MP if you don't have anyone who is trained and capable of doing that work for you.
Second: "What processes or systems can I implement or improve to make the firm more efficient without my direct involvement?" This is your biggest and most important step to getting past the profit plateau that stunts the growth of so many accounting firms.
The next step in this process is the most important and possibly the hardest to do. Once you've identified which areas you can delegate, you must make sure everything you do that leads to success is properly documented and operationalized so you can easily step away and allow someone else to handle it.
Maybe that means promoting someone internally. Often, it means hiring someone to do certain tasks and fill certain roles. Keep in mind, nobody in the company's time is more valuable than yours. So, while it may seem like hiring someone is pulling away from profits, your goal here is getting past the profit plateau. You need to invest in your own time, and that starts by freeing up time to be strategic.
