There are a couple of problems plaguing accounting firms today which makes succession planning a challenge. Number one, baby boomers are retiring as one of the largest work-forces in history. And second, there is a staffing shortage. These two issues feed each other.
In my experience as an accounting practice sales intermediary, I have found building a desirable practice with selling in mind creates an environment that attracts key staff. You have to focus on building a firm you enjoy working in. If you don’t enjoy it-no one else will either. Culture matters and it matters more today than ever.
(Note: This is a summary version of our article published in Accounting Today titled “The Four Pillars to Effortless Succession Planning” You can read the full article here.)
There are 4 key tips for creating a desirable firm for succession and staff retention:
- Focus on service offerings. You can’t be all things for all clients. It’s less helpful for everyone if you take on work that you don’t do often. For one, it takes more time to do work you don’t specialize in, costing you and your staff hours of labor, learning and frustration to get it done. Not to mention, it might not be the best work the client could have received. It’s a disservice for everyone and you will struggle to find talent that has a deep scope of knowledge in all areas of accounting, nor will you be able to properly train staff effectively on too many service offerings.
- Be Selective about your clients. Audit your client list annually. Figure out who are your favorite clients to work with and what makes them so desirable. Use those characteristics to build a profile of your ideal client. This can be a joint effort by your whole team. As a team, you can brainstorm ways to offer those ideal clients the best service. On the flip side, you need to let go of your worst clients and set new expectations for those “b and c” clients you want to keep. Your staff will thank you for removing those difficult people and it will help create capacity to focus on better clients.
- Be picky about hiring. We have all made a bad hire. My advice -even in this market – is to stick with the cliché, fire fast and hire slow. Be careful to check previous employers and culture fit. You do not want just warm bodies in your organization to get through the crunch. You can teach skills, but you can’t teach the culture fit. Write down what that firm culture is. Hire with your firm vision and values in mind.
- Price your services appropriately. If your prices are too low, you may not be able to afford the team you need. If you don’t have the right team and enough revenue coming in, you won’t have the luxury of not being overscheduled to make up for the shortfall. Too much work and too little capacity puts more work on your plate, increasing your owner hours. Remember, most people are service sensitive, not fee sensitive. Value pricing instead of hourly billing is your best bet to price services correctly.
It’s easy for me to see what needs changing, but firm owners get caught in inertia. Making big changes is daunting. Accountants don’t always believe there’s a different or better way than how they are running their firms. Too often it takes a crisis to make changes. Someone leaves or the internal successor decides not to buy. If you wait until that crisis, it may be too late to change. But if you have already built your firm on these four suggestions, this is only a temporary setback.
If you focus on these four tips, succession becomes easy when you are ready. You will have built a firm people want to work in.
PS: Here are 3 ways we can help you:
- For more practice management resources check out our helpful tools, e-books and whitepapers on our APA Resources Page.
- If you are gearing up for a sale, please visit our Seller’s Resources Page.
- 3. If you are looking to buy an accounting firm, please visit our Practice Marketplace.
