Leverage is a term used to describe the use of something to maximum advantage.
It's a concept that applies to various aspects of business and life.
In the business world, opportunities abound, and the world is one of unconditional abundance.
As such, pricing and pruning are happening at all firm levels, from national firms to large regionals and local firms. This exercise has a number of implications, including the fact that local firms are getting bigger and more opportunities are arising.
In order to obtain leverage in our firms, there are three places to focus on: price, technology, or people.
As we work on transforming our firms to the Succession phase (where you or someone else wants the firm), leverage becomes critical. It is important to consistently examine where we are getting leverage as we work on improving and growing our businesses.
I recently had a conversation with a well-known M&A consultant to our industry who pointed out the challenge with local firms merging into large firms: the partners don’t have enough leverage. He explained that average charge rates aren’t high enough and partners aren’t doing enough of the right kind of work.
This highlights the importance of examining where we are getting leverage in our firms.
Before taking on a new client, it's essential to renew your business model and ask a few key questions:
· Does this client meet our business model/client selection criteria?
· Where are we getting leverage from this client?
· What does it require of us?
· Additionally, it's important to ask a bonus question: Will my team be excited we are taking this client on?
Leveraging is crucial to achieving maximum advantage and growth in business. By focusing on price, technology, and people, we can obtain leverage in our firms and, in doing so, transform our businesses and achieve success in the long term.
Taking Action:
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About the Author:
Shannon Vincent has dedicated his entire career to working with accountants in various capacities. He has consulted with Top 100 firms to Sole Practitioners, helping them create sustainable and profitable businesses. A member of the California Society of CPAs, he received a Bachelor’s Degree in Economics with an emphasis in accounting from University of California, Santa Barbara, and now resides in the San Francisco Bay Area. Shannon is passionate about helping accounting firms plan and enact better business practices so that they can thrive into the future.
About Renew Group:
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