Ten Action Steps for Adding Value to Your Firm

By Pamela Q. Weaver, DBA, CPA

Ask any real estate professional how to maximize the selling price of a home and he or she will tell you to clean up the property, fix any obvious flaws, and showcase the positive elements. Whether you plan to sell your practice, merge with another firm, or offer a buyout opportunity to existing staff, using the house-selling analogy can help you achieve the greatest value for your firm. The large number of baby boomer CPAs planning to retire in the next five to 10 years will likely create a buyers’ market. The following action steps can help you add value to your firm and help the firm become a more attractive candidate.

  1. Review your client base.
    Do you spend large amounts of time on clients who do not bring a lot of value to the firm? If so, consider alternative fee arrangements to cover those “quick” questions and projects. You may wish to transition clients unwilling to pay for your time out of the firm.
    Are many of your business clients also nearing retirement age? We often tend to attract clients who are our peers. If your clients are aging along with you, target some younger clients who will replace those retiring.
    Review the industries represented by your business clients. Do the industries require a lot of specialized knowledge that may be difficult to keep up with or find trained staff to work on the projects? If the cost of maintaining the specialized knowledge outweighs the benefits, consider transitioning the client.
    Finally, think about how well your business clients will assimilate into another CPA firm. You need to build a CPA firm that people will buy, considering it will be a buyers’ market. For many firms, the individual client base relates primarily to the business client base. Strive for a balanced client base that includes both business-related and independent clients.
  2. Maximize client services.
    Are there additional services that you could be providing your clients? Make a list of possible projects for each client and discuss these projects with the client. You may find that your clients appreciate the additional attention and are willing to pay for work that is meaningful to them. Do not lose sight of the fact that CPAs are an important trusted advisor to many clients.
    Evaluate all firm services for efficiency and profitability. Are there less profitable services you provide that you could subcontract out, freeing up staff to work on and bill for more productive work? Make sure you are using your staff (and yourself) for the highest billable service for their ability.
  3. Increase billable time.
    How often do you pick up the phone and hear “I have a quick question for you”? Four hours later, you have an answer, but find it hard to bill the client for this seemingly minor matter. Consider that two additional hours per week at $200 per hour equals $20,800 per year per professional. Reconsider “free” projects. If the “quick question” cannot be answered in a few minutes, it is complex enough to be a project. To avoid the appearance of nickel and diming clients, you may wish to establish a quarterly fee to cover these projects and review the use periodically.
    Think about ways to streamline administrative time. Should your senior staff be standing at the copy machine? Many firms hire high school or college students during busy season to perform simple administrative functions and to run errands. Keep your highly paid staff members working on tasks that generate revenue.
    Lastly, reduce unproductive meeting time. Often staff meetings are a recitation of current projects and not really a value-producing activity. Think about another, less costly way to disseminate information. One option is a weekly firm newsletter sent by email and compiled by an administrative staff member.
    For essential meetings, make an agenda and distribute the agenda before the meeting. Set up the expectation that meetings begin and end on time, and that staff should be prepared for the meetings. If you have food at essential meetings, determine whether the food adds to or detracts from the efficiency of the meeting.
  4. Focus on quality and not quantity.
    It is easy to become caught up in adding more clients each year. After all, in theory, the more clients you have, the more money you can make. If you take an honest look at this expanded client base, though, you may find that many of the clients have uncomplicated situations that use professional time but do not generate sufficient income.
    By focusing on clients that need and will pay for your technical competence, you will use your professional staff more efficiently and effectively. Embrace your technical expertise, provide excellent service, and adjust your fees accordingly. Not only can this approach make your firm more solid financially, but it may also be more satisfying for both you and your staff.
  5. Evaluate staff strengths and weaknesses.
    Periodically reviewing the strengths and weaknesses of each staff member can help make sure you have the right people working on each assignment. Outline a training plan for each employee that addresses his or her individual weaknesses. Training could involve working with another staff member in a mentoring situation or sending the employee to seminars or specialized classes.
    For efficiency in terms of professional time, match assignments with employee strengths. Target new clients or suggest additional client projects to use underutilized strengths. At the same time, avoid having one staff member as the only expert on a particular topic. Have other staff members work with the “expert” or have them review the expert’s work to facilitate cross-training.
  6. Develop staff at all levels.
    Because of the continuing professional education requirements for professional staff, most firms concentrate their training budget on the professional staff. However, training at all levels provides a good foundation for your organization. Make sure your administrative staff has proper training in time management, organization skills, and techniques for answering the phone and greeting clients.
    For emerging leaders, supplement technical training with seminars and classes on leadership, business management, conflict resolution, and rainmaking. Junior staff members benefit from training in techniques for client management and work paper organization. Developing these skills in addition to technical expertise helps strengthen the organization and may help promote staff retention.
  7. Master your software and technology.
    How often have you spent hours trying to make your software work correctly? Multiply this answer times the number of staff members in your organization and the result can be a lot of wasted time. Investing in training can improve efficiency and save valuable time, especially during busy season.
    When possible, let the software do the work for you. Develop a library of master spreadsheets that can form the basis of your work papers. This approach not only promotes consistency, but also can save hours of time.
    Even if you use a consultant for your computer and networking needs, train an internal person for simple technology problems. Oftentimes, a quick fix is all that is needed and using someone on your staff can save time and consulting dollars. Don’t skimp on technology. Replace computer equipment regularly to avoid losing valuable time due to breakdowns.
  8. Develop a strategic vision and supporting goals.
    Business consultants will tell you that one of the keys to running a successful business is to set a vision for the company and align short-term goals toward achieving that vision. A vision is simply a visualization of what you would like your business to look like several years in the future. When developing a vision, ask yourself what the focus of your work will be, what type of staffing you would like, and what type of clients you prefer to service, among other considerations.
    The next step is to set three to five challenging yet attainable goals that will help your firm work toward achieving your vision. For example, if your vision is to become the go-to firm for small manufacturers in the aerospace industry, then your goals might include (a) attracting a certain number of clients in the industry over the next two years, (b) implementing a training program for staff at various levels regarding issues affecting the industry, and (c) attracting a new professional staff member with experience in the sector. The important point is to align the goals and firm actions with the vision. You can then evaluate performance against those goals. The vision and supporting goals should not be static, but revisited regularly to make sure they represent the optimum course of action for the firm.
  9. Have good documentation.
    Good documentation and organization are essential to building an effective and efficient firm. Failure to focus on this aspect of the firm can result in wasted time, errors, and missed opportunities. Make sure work papers are complete and fully support all numbers and positions. If you group numbers together, make note of the underlying numbers of each grouping to facilitate review and preparation in future periods. Include a memo or other documentation summarizing pertinent research supporting positions taken to avoid repeating the research in future years. Memos can also apply to other clients in similar situations.
    Create a mini top file for all business clients to cover (a) what the business does, (b) the sector and geographic region in which the client operates, (c) the names and contact information for the owners and key staff, and (d) any important notes about the client. Each file should include documents needed for a reasonable understanding of the client’s business. Use a similar approach for individual clients and update all information annually.
  10. Share best practices.
    Create an organization that is conducive to learning and regularly share best practices. Set up files by topic on your network to post shared information. Set aside part of staff meetings for best practice discussions. Finally, consider standardized work practices for certain services and file set-up.

In conclusion, when you think about ways to add value to your firm, remember the house-selling analogy. Clean up, eliminate clutter, organize, and make necessary repairs. The goal is to showcase positive aspects to attract buyers, merger candidates, or existing staff to buy out your interest. Why wait until the last minute to make these changes? Adding value to your firm today can not only make your firm more profitable, but a better place to work for your employees.

Pamela Q. Weaver, DBA, CPA specializes in tax and business consulting services and is the chair of the CSCPA Federal Income Taxation Committee and a member of the CSCPA Advisory Council. Weaver holds a Doctor of Business Administration degree focusing on optimizing business performance and leadership. She is also an adjunct faculty member at several local colleges and universities. She can be reached at pweaver@pqweavercpa.com.