- The 3 main things to improve to boost profitability.
- A super effective trick to cut down turnaround time.
- Why (and how) each partner should make $1M profit
- Rob's Company - Panalitix
- Rob's Workshop - Firm of Now (enter code jetpack to receive $50 Off)
- For Partners - "How to Handle Sales Objections and Close More Sales" [Podcast]
- Value Pricing - Making Value Pricing Work for your Firm [Podcast]
“Accountants work many hours with VERY little return” - Rob NixonThe 3 Pieces to Optimize to Increase Profitability Rob's passion has been to help grow firms. Most get lost in a hamster wheel of billable hours, low profits, and inefficiencies. Diving right in... Rob focuses on 3 major things to grow a firm:
- Stronger Profits
- More Efficient Capacity
- Increasing Revenues
“If you want to be a Firm of the Future, you have to do something NOW”To increase profits, you must focus on key metrics. Most firms still focus on the billable hour. With the focus on just “billing time” most firms will hover around 25-35% profitability. You can bring in more clients, but your profit will stay the same (you’ll have to hire more and more staff).
- Price every job UPFRONT
- For special projects --- use Value Pricing
- To be efficient with pricing upfront, set up communication with clients very early on (even before signing them as a client)
- KEY --- take “billable time” out of the equation as a metric for billing
“To change behavior, change the system”**Rob’s Tips To increase capacity in your firm
- Move every client onto cloud accounting (it’s proven to be 50-60% more efficient and frees up 4 hours of the day)
- Work under self-imposed deadlines: Accountants work best and most efficiently under pressure. Create internal deadlines. Set deadlines internally for when a project MUST be done and be reviewed. You might even put a deadline on the time. “Complete project in under 10 hours.”
DAVID’S TIP: Tell your team the amount of hours they can spend doing a project, and watch how suddenly they become more efficient!Increasing Revenues After the first two steps of profitability and capacity are clear, you can then take the next step in finding new clients. This works because as capacity opens up for team members, new clients can fill in the gaps. This allows you to grow without increasing staff (thus growing profit). The revenue generating activities of the firm should come from the partner level according to Rob. Partners should spend very little time doing compliance work as the profit just isn’t there because of how high their billable hour is. Before looking at the partner’s position, Rob recommends first hiring a full-time Marketing Coordinator. He sees in many firms they simply have another CPA doing the marketing part-time. Marketing is a full-time position. Once someone is full-time, they can invest their days in strategies that work:
- Content marketing
- Positioning as expert
- Direct response marketing
- Social proof
- Asking for referrals
“Capacity does not refill ITSELF!”A Partner’s Breakout of Their Time:
- 30% >>> High-end advisory work (with the top clients only)
- 60% >>> Sales --- 20 sales meetings per month per partner
- 10% >>> Leadership within firm and team members