How sustainable is your firm? Meaning, if the Partners were not there how would it perform? Would it make money? Would it lose money? Could it continue to grow without you?
Here’s a simple but sobering equation.
Take Partner revenue delivered (your personal billable time / dollars) away from your profit (before Partner salaries) and see what is left.
The reason I say take it away from profit is because Partner revenue is nearly all profit. If the answer is a loss, then the question needs to be asked ‘why do I need the rest of the team & infrastructure?’
You could work from home, look after your clients, have less hassle, and make more money. If the answer is a small profit, then the observation is the same.
If you want to get really critical take Partner billed time away (revenue delivery) AND take Partner sales (revenue production) away and see what you’ve got left. Hmmm. Time for a re-think.
I once heard that the purpose of a business is to sell it – whether you want to or not. That means it’s always ready to sell. That means it works without any key people. Or if the key people departed they could be quickly replaced and the business would continue regardless.
If you have a firm that is heavily reliant on you (low sustainability) then you don’t have a business but a paid job – hopefully a well-paid job. Now that maybe OK if that is your strategy. If that’s your strategy, you have to realize that there is ZERO business value in a well-paid job – just cash value.
If your objective is to build an Accounting business then you need to think leverage. You need people / machines doing the work not you as the business owner. You’ll need marketing people and sales people. You’ll need to have a systemized business that follows process. You’ll need a recurring revenue model that ticks along and grows every month. You’ll need a leadership team who power on with or without you.
The ultimate goal is that you could take 3 months (or longer) vacation and the business still performs. You’re not missed at all. I think financial retirement is the goal. That means that you have assets that produce cash to support your ideal lifestyle and going to work is a choice – not a must. Your Accounting business could be one of those assets. You’ve probably got clients who own a share in multiple businesses and they produce a return yet they spend little or no time in them.
Why can’t you be that person. You’ve built your Accounting business, systematized it, leveraged yourself out of it and you keep it as an asset. Now that’s sustainability.
Want to know more? Download a copy of my newest book; The Wealthy Accountant for more detail on improving your partner profit and driving down partner hours.