Background

I was contacted earlier this year by the owner of an accounting business (name withheld at the request of the owner) who was tired and fed up. Approaching retirement, he wanted to exit his business but knew that there was no-one in the company who was willing to take it on. He also knew that his business was not ready to sell even if he wanted to.

We sat down together and looked at where the business was at.

What are you biggest pain points in your business? I asked

Then it all came out:

❌ “I work too many hours”

❌ “I know that we are not as efficient as we could be – a lot of our processes and client files are paper-based”

❌ “We find it hard to track every client and have to manually send reminders out for information”

❌ “Our cash flow is lumpy”

❌ “I am worried that key staff members are going to leave”

❌ “Our profits should be higher and I know that we need to increase prices but I am worried that they will go elsewhere if we do”

They provided their services using whichever software solution that their clients already had – this meant that some clients used Sage, some Xero, some were on spreadsheets and some were on Quickbooks. They were a ‘jack-of-all-trades’ but a master of none.

No wonder he was tired and fed up.

But least now we knew what was required. This was a business with a turnover of £393k, it had 336 clients and an EBITDA of £94k – too low for this business.

Whilst they did use online accounting solutions everything else was paper-based. During a tour of the offices I could not help but notice how many filing cabinets that they had. It worked out to be 5 for every staff member

Improving The Business

I worked with the owner and we put together a list of the changes that needed to be made. It wasn’t going to be a ‘quick fix’ and it needed a lot of hard work to get it done – key to everything was that he was committed to making the changes.

Over a period of just over 7 months, we made a number of key improvements to the business:

✅Client base review: We identified the best clients, the good ones and the ones who were a pain in the arse (what I call PITA clients). All 39 PITA clients were moved on

✅Practice Management System Introduced: This was key to the efficiency of the business as it automated a lot of the manual systems that had previously existed. Now clients are automatically notified of key deadlines and information requirements. Time against each client could be tracked more accurately and all documents could be stored digitally in clients’ own personal portals

✅All Business processes were reviewed, updated and fully documented

✅Ideal client identified: Historically the business had accepted any client who approached them and this had to change. We identified who their ideal client was (sectors, size, client personality) and we then put in place the marketing campaigns to attract them

✅Clients moved to monthly direct debit: This significantly improved cashflow. Prior to introducing our solution, only 31% of clients paid on a monthly basis and debtor days were 89. Some clients pushed back but we were able to increase direct debit payments to 83%. As a result, debtor days are now significantly better at 31.

✅All client files moved to the cloud. This was time consuming but the results were worth it. Client files can now be accessed 24/7 and we reduced the number of filing cabinets down to 6

✅Accounting Software Focus & Accreditation. The decision was taken to focus on 1 main software solution and gain accreditation for it. This business is now a Xero-only silver partner with a programme of migrating clients across from other solutions. They are not there yet but are making good progress.

✅A Practice Manager was appointed to oversee day-to-day operations

The Overall Result?

As a result of the changes made, revenues are increasing and are expected to exceed £520k in the current financial year. This is thanks to the business having consistent enquiries as a direct result of the marketing solutions introduced.

Average fees per client are up too, with a plan to introduce new business advisory services in the near future.

The addition of the new Practice Manager means that the owner now only works 24 hours per week and he could work less if wanted to. He now plans to exit the business over the course of the next 24 months and enjoy retirement.

EBITDA has increased from 24% to (an expected) 29% – in monetary terms this amounts to around £152k

These are results that any accounting business can achieve. It will take time and a lot of effort but it will be worth it in the end.

Let’s Talk

If you are the owner of an accounting business with similar pains then I would like to help you. Contact me today and let’s set up a call to see how I can help.

To book a call: https://calendly.com/steverooms/accountancy