Grow and scale your firm. Have an incredible team and amazing clients. Go on a long vacation each year. Successfully exit and sell your firm when ready.
Take one look at social media or the news and you see proof of firm owners doing this all the time. But how are they doing it? More importantly, how can you do it, too?
Well, it starts with creating the right business model, one that enables you to scale your firm.As I was building my firm, there was always the thought that I might sell it at some point. However, my initial business model wasn't built around this prospect. At the start, I simply wanted to get clients, pay the bills, and live life.
However, I reached a point where I began rebuilding my business model, which made running my firm and eventually selling my firm a success. Let's look at why you should build or rebuild your business model and how to do it so that you can properly scale.
Why build or rebuild your business model?
You can build or rebuild a business model that helps you scale, but why would you do this?
- Increase your overall efficiency and productivity.
- Create a model to scale the firm as new partners, staff members and clients are added.
- Adopt a business model to potentially sell the business in the future.
When running my firm, rebuilding my business model allowed my firm to run more efficiently, my staff to be more productive, and my clients to be better served. Upon selling my firm, having this new business model led to a higher sales price and a smoother transition. Having the right processes and workflows in place meant the new owner could replicate the firm's success and step into the owner position with much greater ease.
Standardize your offerings
What you offer now may not be what you want to offer in your new business model. You don't need to do anything and everything. Clients pay for specialists. Standardize your offerings by packaging together your basic services. Don't allow clients to piecemeal your services or split apart your fee down to specific services.
Next, you'll want to create a list of your special services that you'll charge a premium fee for, such as integrating niche-specific software, training, etc.
Finally, consider niching down. A niche can be industry-specific or service-line-specific. Think about the clients you love serving and what services you enjoy providing the most. Having a niche enables you to package and standardize offerings more easily, generate more revenue as an expert and better serve your clients.
When you standardize your offerings, it leads to a well-run, efficient, and high profit-margin firm. Next, it's time to look over your processes.
Standardize your processes
Standardizing processes makes your business easier to scale and more valuable if you plan to sell. You should review all of your processes and create a standardized way to complete jobs and tasks.
Yes, a certain client may be an exception to the rule and pay more for this convenience, but you should always try to minimize the need for client-specific processes when handling services. The right processes will help you lower error rates, improve efficiency, and provide an overall better experience for both your clients and team members.
At the end of the day, if a client doesn't fit into your processes, it may mean they are not a good client for your firm.
Set client criteria
When you run a firm — or any business for that matter — there's a common belief that you have to take on every client who walks through the door. Surely, you can't turn away business, right? Wrong! Working with the wrong clients can be more costly than imagined. These are the clients who eat up more time and resources than they are worth. Ultimately, when it comes to clients, quality trumps quantity every time. Quality clients are:
- Happy and willing to pay for the value you provide;
- Are responsive, respectful and easy to communicate with; and
- Respond to document requests and questions in a timely manner.
They communicate proactively and are on top of the actions they need to take in order to make working with your firm a success.
Outline the criteria for your ideal client. Doing so will help you weed out the clients who don't value your time and have to be chased down for every invoice or task.
Revamp your pricing and collections
Standardizing your processes and getting clear on who your ideal clients are can streamline your workflow and ensure your firm is working with the right people. However, you still need to consider your pricing and how you're collecting payments.
Adjust your pricing
First, sit down and analyze your fees. Are you pricing your services based on what you think people will pay, or what they're actually worth? It's important to remember you provide a valuable service, and you should be paid accordingly. So, adjust your pricing to what your services are worth.
If you're concerned about adjusting your pricing, remember that the cheapest clients tend to be the most work. Clients respect you when they pay you. If they recognize your value (and they should), they will stick around. Consider if you want to price based on a fixed fee or use value pricing. With a fixed fee, a few things you can base this fee on include: the number of transactions, the number of accounts, or estimated time.
With value pricing, you're basing the fee on what the service is worth to the client. For example, how much is it worth to your clients that you're helping them make sound financial decisions or grow with greater ease?
Optimize collections
You've adjusted your pricing accordingly, but what are your processes for getting paid? Sit down and analyze your current setup. There's a good chance your current process could be improved. To optimize your collections process:
- Set up automatic invoicing and autopay options. Automatic invoicing will help you get paid faster, which will improve your cash flow immediately.
- Collect fees in advance. Have clients pay for services ahead of time, so you never chase invoices and wait for late payments.
The goal should be to have your firm operating with zero accounts receivable.
Utilize technology
There is a lot of technology on the market today that can support your scalable business model. Apps can help you standardize internal processes, simplify communication with clients, and improve teamwork and collaboration.
Final thoughts
Building or rebuilding your business model will make it easier and less stressful to scale or sell your firm. Having standardized processes and offerings will keep your operations running smoothly and make it easy for someone new to join your team, become a client, or step in to run the firm. Setting client criteria, adjusting your pricing, and optimizing your collections will ensure that you maintain a high-quality client base and a healthy cash flow.
