How Husband-Wife Firm Transformed with Offshore Accounting
In the dynamic and highly competitive finance and accounting world, the journey of a husband-wife duo who turned their struggling accounting firm into a thriving and hyper-profitable entity stands as a remarkable testament to the transformative potential of offshore accounting.
From 2018 to 2023, this duo harnessed the power of offshoring to overcome daunting challenges, improve efficiency, and redefine their business strategy. In this in-depth exploration, we delve into the intricacies of their journey, the steps they took to achieve success, and the impressive results they obtained, shedding light on the role of offshore accounting staff in their remarkable transformation.
Introduction: The Pioneers of Transformation
In an industry where precision and accuracy are paramount, the husband, skilled in accounting and bookkeeping, and the wife, an Enrolled Agent (EA) specializing in taxes, embarked on a journey to realize their vision of an accounting firm that offered more than just financial services. This dynamic duo, driven by a shared dream, managed a clientele mostly made up of small to mid-sized businesses.
However, they encountered numerous challenges that threatened to impede their path to success. These challenges included slim profit margins, an overworked and stressed-out team, and the elusive pursuit of offering advisory services. Their clients, cost-sensitive small and mid-sized businesses, only added to the pressure.
Despite the significant potential of their accounting firm, the couple found themselves at a crossroads, aware that a substantial change was required to turn their dreams into reality.
The Game-Changing Plan: Crafting a Vision for the Future
The initial step in their transformational journey was to develop a comprehensive and well-defined plan that outlined their goals over different timeframes – one year, three years, six years, and ten years. Their plan scrutinized the "Why," "What," and "How" of their business, leaving no aspect untouched. This was when they decided to fully embrace offshore accounting solutions as a core component of their firm's operations.
The Steps to Transformation: A Systematic Approach
While their journey to success was not without its share of challenges, the husband-wife duo approached it systematically, implementing a series of steps to foster efficiency and drive their transformation:
Documentation of Process: The partners embarked on a process documentation and refinement journey. This meticulous approach ensured that their operations were streamlined and each process was executed with clarity and consistency.
Tech Stack Setup: They digitized their operations by recognizing the need to embrace technology. This enhanced the client experience and ensured the seamless day-to-day functioning of their operations.
Offshoring, the Success Pillar: They outsourced roles such as data entry, initial reviews, and transactional client communications to offshore professionals. By 2021, offshore managers were independently handling clients, leading to a remarkable boost in efficiency.
Onshore Focus: With offshore staff taking care of transactional tasks, the onshore team redirected their efforts towards more strategic activities, such as client advisory, tax planning, and relationship management. This shift in focus allowed for more meaningful client interactions and added value.
Revamped Pricing: In a strategic move, the firm transitioned to a value-based pricing model and introduced consistent fee revisions. This approach ensured a fair and competitive fee structure while maintaining profitability.
Redefining Roles: Team roles were streamlined to maximize efficiency. The core team now comprised two partners and four managers (two onshore and two offshore). Clients were categorized by revenue to simplify operations further, and the reporting structure was refined.
Competitive Compensation: Recognizing the value brought by their managers, the couple introduced competitive compensation packages, fostering talent retention and motivation.
Guidance from Shawn Parikh played a pivotal role in ensuring the success of these transformative changes.
While the husband managed the accounting and bookkeeping, the wife, an EA, took charge of taxes. They functioned as two halves of the same whole. One an optimist and the other a skeptic, they kept each other grounded.
But the firm's problems were real. Tight deadlines, high staff turnover, seasonality, and client service challenges took a toll on their well-being and the firm's profitability.
The Game-Changing Plan:
Determined to turn things around, the couple laid a structured plan outlining their goals for the upcoming 1, 3, 6, and 10 years. They focused on the "Why," "What," and "How" of their business. Their decision to fully embrace offshoring, not just for overflow needs but as an integral part of the firm, was pivotal.
The Steps to Transformation:
- Documentation of Process: Both partners personally documented and refined processes.
- Tech Stack Setup: The firm went digital, enhancing client experience and ensuring smooth operations.
- Offshoring, the Success Pillar: Roles like data entry, initial reviews, and transactional client communications were outsourced. By 2021, even offshore managers independently handled clients.
- Onshore Focus: Strategic client advisory, tax planning, and relationship management remained onshore activities.
- Revamped Pricing: They transitioned to value-based pricing and introduced small, consistent fee revisions.
- Redefining Roles: Team roles were streamlined. The core team had two partners and four managers (2 onshore and 2 offshore accounting staff). Clients were categorized by revenue, and they refined their reporting structure to simplify operations.
- Compensation: Recognizing the managers' value, they set competitive compensation packages.
- Coaching by Shawn Parikh: To ensure the success of these changes, the duo sought guidance from Shawn Parikh.
The Outstanding Results:
Within five years, the changes were evident. Partners' work hours reduced drastically while profitability surged. Onshore staff enjoyed better earnings, and the firm had transformed into a hyper-profitable entity, supported by a lean team of 12 offshore and 3 onshore staff members, along with the two partners.
The journey of this husband-wife accounting firm is a testament to the power of offshore accounting and strategic planning. While they faced numerous challenges, their decision to integrate offshoring as a core pillar of their business, combined with a clear vision and relentless determination, turned their dreams into reality.
The journey of this husband-wife accounting firm is a testament to the power of offshoring and strategic planning. While they faced numerous challenges, their decision to integrate offshoring as a core pillar of their business, combined with a clear vision and relentless determination, turned their dreams into reality.
By sharing their story, we hope to inspire other firms to explore the potential of offshoring and believe that no challenge is too difficult to overcome with the right strategies.
The results achieved by the husband-wife accounting firm highlight a tale of transformative growth and smart management. Their choice to incorporate offshoring as a central pillar proved immensely beneficial.
Here's a deeper look at the changes they achieved:
1. More Personal Time, Same Results:
Partners' Workload: The duo initially put in an average of 48.75 hours per week. By integrating offshoring, they slashed their working hours, with the average work week coming down to 30 hours. This drastic reduction, nearly 40%, awarded them more personal time, fostering a healthier work-life balance.
Onshore Team Workload: Likewise, the onshore team experienced a significant workload reduction. Their average work week reduced from 42.5 hours to a more manageable 32.5 hours, emphasizing the efficiency offshoring brought into the picture.
2. Improved Profitability:
The Profit Before Tax (PBT) percentage indicates a company's profitability. The firm's PBT percentage soared from an average of 34.38% to 52.68%. This substantial uptick reflected the firm's more efficient operations and strategic changes in its pricing and client management methods.
3. Efficient Time Management:
Partners: Their hours worked annually decreased from 2,340 hours to just 1,440. While they put in fewer hours, they didn't compromise on the quality or volume of work.
Profit Time Measure: This metric, representing the average hourly earnings by the partner, witnessed a whopping increase. It skyrocketed from $84.36/hour to $329.61/hour. This 4.5 times increase signifies higher profitability and the efficiency of each hour.
4. Enhanced Earnings for Onshore Staff:
Recognizing the value and effort of the onshore team, their average earning went up. The team's average earnings increased from $95K annually to $130K, demonstrating the firm's commitment to sharing the success.
5. Successful Firm Structure:
With a lean and efficient structure of 12 offshore staff, 3 onshore staff, and two partners, the firm emerged as a "Hyper-profitable" entity. This lean model, coupled with strategic decisions like client categorization and defined roles, enhanced their service delivery without expanding the team in size drastically.
The firm's journey from 2018 to 2022 shows increased efficiency, improved profitability, and an enhanced work environment. These results underline the potential of integrating offshoring into an accounting firm's operations and strategy.
Conclusion: A Beacon of Hope for the Accounting World
The journey of this husband-wife accounting firm serves as a beacon of hope for the accounting world, inspiring other firms to explore the possibilities of offshore accounting. It showcases the transformative power of offshore accounting services and proves that no challenge is impossible with the right strategies in place.
As the accounting world continues to evolve and adapt to changing landscapes, this success story provides invaluable insights into the potential of offshore accounting solutions in streamlining operations, fostering efficiency, and achieving remarkable profitability.
The husband-wife duo's journey from 2018 to 2023 is a testament to the power of strategic planning, relentless determination, and the transformative influence of accounting offshoring in redefining the future of accounting firms. This success story is a shining example of the possibilities that await those willing to embrace change and explore the transformative power of offshore accounting.
Entigrity™ is a trusted offshore staffing partner to 725+ accountants, CPAs, and tax firms across the US and Canada. Our flexible and transparent hiring model 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 the least to worry about compliance, payroll taxes, overheads or any other benefits.