As a partner/owner of an Accounting firm you are always looking to make more while working less. None of this means increase your price, control your expenses etc. Experts have identified following 7 Characteristics of Happy & Performing Accounting Firms
A vast majority of Accounting firms owners and partners work for crazy long hours but don’t make anywhere close to what they are really capable of. In reality, they must be always looking to make more while working less and can actually make at least $1M profit per year while working less than 500 client hours. But, typically, around 80% of a day for CPAs is spent checking and processing historical data.
To run a high performing firm that yields an excellent profit is NOT about Partners and Team putting 'the hours in'. In fact, it’s quite the reverse. The Accounting firms that are consistently performing are working considerably less and earning considerably more.
To expand in more detail, we have identified 7 characteristics of high performing accounting firms. We believe they are crucial to all accounting firms as a benchmark to follow:
- Having business growth in 'Mid teens’ year over year.
- Client/government deadlines being met ahead of time, and not in a mad rush..
- Teams humming and working cohesively together - and not working (actually being at work) more than 1800 hours per year.
- Clients buy things they need that helps them achieve their goals.
- Employee growth commensurate with the growth of business.
- Partners not working long hours - their stress levels are low and...
- Profit before partner salaries are well above 50%
Now, thousands of firms all over the world use this strategy to speed up workflow, improve services and to create capacity.
Case Study of a Florida Firm
Back in 2017 we connected with an accounting firm based in Orlando, Florida. It was run by 4 partners (and still is). They already had a strategic plan in place, but they lacked the specific ‘how to’ on their plan. Before we started working with them, they had an onshore team of 16 people and the average work week was more than 40+ hours. It even went up as high as 48 to 52 hours during tax seasons. The revenue at that time they were making was $4.1M and profit before partner salary was around $1.2M and a client base of 1450.
When we first met, we got to know that the tax season was taking a toll on each of the partners and all other team members alike. We plainly suggested having offshore staff to help them cope up with the pressure. 2 partners seemed interested quite instantly, while the other two were half hearted whether to step in or not. Being into the discussion for few hours, all of them were convinced to go ahead with offshore staffing.
In the span of 3 years with offshore staffing, they added a 7-person offshore team with 15 onshore staff. By the end of 3 years they added nearly $5.6M of revenue (39% growth to what they made 3 years ago) to the firm. Their profit before partner salary almost doubled $2.3M (92% increase) even though there was a reduction in the number of clients from 1450 to 1310 (9.6%) during these 3 years. They focused on higher end work, and need not accept low prices.
Now not all of their new revenue was profit. They have invested in people, processes and infrastructure in 3 years to drive the revenue. Partner average work week decreased from 40.25 to 33.75 per week. The best thing of all, they have thought of having offshore team as a long term solution; tax season or not the onshore and offshore teams are pretty much occupied throughout the year.
** 4 weeks of vacation excluded
*** Profit Time measure is the measure of profitability per hour and also how well the firm operates without partners
The result of just a few key changes in 3 year in profit time measure changed from $157 to $360 which gained 130% increase in profit and a 39% increase in revenue.
At the current AHR (Average Hourly Rate) they’ll only need another 5 or so team members to achieve $10M in revenue. I think they’ll be there in 2 years or less.
Annual Client Survey 2019
We conducted a survey on our existing clients in the year 2019. Supported by the responses from the CPA firm owners, we found that they were able to add $61M/year to the firm's bottom line. Firms have also agreed that there has been about 21% drop in their Partners’ IN time which meant that now they are able to spend lesser time on client work, team management and other admin work.
There was also a remarkable 61% improvement in their profit-time measure which rose from an average of $112 to $118.
Having offshore teams also helped them in reducing the workload of the onshore staff by 18% (from 44 to 36 hours per week). The average annual revenue growth of firms was marked at 14.61% and overall average annual profit growth of the firms was raised by 43.34%.
In a nutshell, you’re charging for the value that you provide to the client, not the time you spent delivering it. As value can be harder to determine, it’s the reason why many Accountants find value pricing a bit complex.
Offshoring can work wonders for your growth.
Firstly, it’s getting increasingly hard and expensive to find local talented people. While the right team members could help you build the success you’re striving towards, they can be quite costly. This talent is certainly worth the money but that doesn’t mean that you can’t find talented people and save money at the same time. This is where offshore hiring with Entigrity comes into play.
It’s your own team working from our secured offices in India. You can delegate all the back-end and admin work to your offshore team while letting your local team focus on what they do best. Your A-team will have all the support it needs to focus on delivering exceptional value to the clients.
Entigrity as an accounting offshore staffing service provider can help in reducing operational costs, creating time for innovation, profitable activities, and ensuring a better work-life balance for CPAs and accounting professionals just like you. So, if you still haven’t, please do think about offshoring. As soon as you set it up, you’ll start reaping the many benefits that remote teams offer.
Entigrity™ is a trusted offshore staffing partner to over 500+ accountants, CPAs and tax firms across the US and Canada. Our flexible and transparent hiring model gives helps firms of all sizes to hire staff for accounting, bookkeeping, tax preparation or any other task for 75% less cost. As a firm 'run by accountants, for the accountants', Entigrity captures the hiring needs of accounting firms most precisely, providing staff that works directly under your control and management, still you are left with least to worry about compliance, payroll taxes, overheads or any other benefits.