If you're a CPA firm leader looking to take your firm to the next level of growth, it can be daunting to think about all the potential strategies and opportunities that exist. However, the right approach is essential for finding success in an ever-changing market. Instead of just focusing on what has worked before, it's critical to explore new ways of thinking and planning to advance business objectives.
Today, let's discuss how a holistic view of your firm's growth strategy can help create sustainable changes and positive results.
Short-term strategies aren't the answer
Often, firm leaders focus on the wrong things when they want to fuel growth. Instead of taking a holistic view of their growth strategy, they look for quick wins that may not have a long-term impact. For instance, many firm leaders will look to bring in more clients. The problem is the team is already at capacity, and bringing on new clients puts additional stress on staff.
In the past, firms could simply hire their way to greater capacity, but with today's talent shortage, that's not always possible (or affordable).
Instead of looking for quick fixes, a better approach is to take a holistic view of your growth strategy. This means considering all the aspects of your firm's growth plan and finding the most effective ways to reach each goal.
Step 1: Start with your vision
It is essential to start with a vision when planning for your firm's growth. This gives you a clear picture of where you want to go. A vision provides focus and direction to meet your objectives. It also serves as a guiding light to help you make decisions and prioritize activities.
Step 2: Strategic plan (updated annually)
Next, your firm needs a strategic plan. A well-thought-out, comprehensive plan provides a roadmap for achieving growth objectives and aligns the firm's goals with its economic engine.
Remember, your strategic plan isn't someone you create once and never consult again. You should review and update it annually to realize the benefits of having one. By regularly refreshing your strategic plan, you can stay ahead of changing trends and capitalize on new opportunities.
Step 3: Revenue goal
A firm's traditional approach to partner compensation is to focus on top-line revenue, pay all necessary expenses, and then let the partners take what's left. A better approach is to determine what the partners want to make and add estimated expenses, then determine how much revenue you'll need to get there.
When you start with what partners want to make, you'll have a clearer view of the strategies and personal revenue goals required to get there. For example, you'll quickly see that bringing on additional 1040-only clients won't help you reach your goals, but offering higher-value advisory and consulting services to your existing clients, raising your rates by 20%, or acquiring another firm will. With that information, you can develop a clear roadmap for how the firm will increase profits.
Step 4: Client filtering
Firms often take on any client with a pulse and a checkbook to increase their revenues and grow their business, but this approach can be detrimental to their growth objectives.
Taking on the wrong clients not only hinders growth but can also lead to employee burnout and high levels of turnover. Instead of simply taking on any client, establish clear criteria for client selection and filtering. This will ensure that you're taking on the right clients and maintaining a healthy balance for your team.
Step 5: Monitor progress
Once you have your vision and strategic plan in place, it's essential to monitor progress to ensure that you're progressing toward your goals. This includes tracking key performance indicators (KPIs) such as revenue growth, client retention rate, and average revenue per client. Regularly reviewing these metrics can help you stay on track and quickly identify any issues that may arise.
You can create sustainable changes and positive results by taking a holistic view of your firm's growth strategy. But it starts with a clear vision and a strategic plan.
Recently, we developed a tool to help firms work through this process. We call it The Growth Predictor™, and it can help firm leaders visualize the revenue growth they can achieve when they bring on more of the right kind of clients and phase out those that won't contribute to sustainable growth.
If you'd like to see it in action, please reach out. We'd love to show you how taking a holistic view of your firm's growth plan can help you stay ahead of the competition, capitalize on new opportunities, and ensure long-term success. Ultimately, investing in your firm's growth strategy will result in greater profitability and a healthier bottom line. Think-Plan-Grow!
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L. Gary Boomer, Visionary & Strategist of Boomer Consulting, Inc., is recognized in the accounting profession as the leading authority on technology and firm management. He consults and speaks around the globe on several topics including strategic and technology planning; mindset, skillsets and toolsets for the future; change management and developing a training and learning culture. He also acts as a planning facilitator and coach to some of the accounting profession's top firms.