By: Brannon Poe
Why You Should Build a Practice That You Can Sell (even if you never plan to do so).
The easy answer to this question is that you will build a far superior practice. Allow me to suggest a couple of thought-provoking questions to help make the point:
- Every day you choose not to sell, you are essentially choosing to keep (or buy) your practice. If you were to look at your practice from the point-of-view of a buyer of an accounting practice, what would you specifically notice?
- What would you pay for it?
- What would you change or improve upon? Does the owner have a good life/work balance? Are the employees a plus or a minus? Are there any practice areas that could be eliminated or expanded? Etc…
Smart accounting firm owners plan ahead in getting their practices ready for market. If you start to take action sooner rather than later, the improvements you make not only make the practice easier to sell, but also make the practice easier for you to own.
Here are 5 powerful questions to ask yourself if you want to dramatically improve your accounting practice:
- What is the revenue by area of practice?
- Who are the top 20 clients and what makes them so great to work with?
- What is the estimated profit contributed by area of practice? (factor both billable and the proper amount of non-billable time by practice area)
- What practice area do I most enjoy?
- What services should I work to eliminate from my practice?
If you are like many accounting practice owners, your most limited resource is your time. It is counter intuitive, but for most the best place to start improving your practice… is by cutting the unwanted and the unprofitable from your firm before even thinking about growth. This will free up your time to spend with your top clients and your best practice area(s). Once you have cut, then you can grow more intentionally, more profitably, and have a lot more fun owning and running your practice.
Brannon Poe, CPA is the founder of Poe Group Advisors, a leading-edge practice brokerage firm. He is the author of Accountant’s Flight Plan; which talks to firm owners on how to make more with less effort while improving the value of their practice.