There’s no question that many sole practitioners are feeling the heat.
They feel under constant pressure to retain their clients and build their business. It’s a difficult thing to do when clients simply aren’t prepared to pay what they used to for tax compliance services.
They’re struggling to find the right staff with the experience and motivation to help them in growing their practice. Sometimes it seems that all the good staff want to go to ‘greener pastures.’
There’s a constant bombardment of noise from the marketplace telling them that ‘compliance is dead’ and they need to change their focus to advice beyond accounting (whatever that means).
I hear these messages from sole practitioners every week and I ask, is it still worthwhile being a sole practitioner in public practice?
Recently, I read a blog article from a sole practitioner working, as she put it, ‘in the trenches.’ She suggested that being a sole practitioner was ‘both the hardest and most rewarding thing I have done professionally. Knowing that ultimately I am responsible for my own success or failure and the satisfaction of having the freedom to choose the course of my life is worth every minute I spend getting this practice up and running.’
I really believe that the sole practitioner is as essential to the life blood of public practice accounting as SMEs are to the lifeblood of the Australian economy. Sole Practitioners build businesses from nothing, they support great people who don’t necessarily want to work in a partnership or large firm environment. They have the freedom to be as responsive to their clients as they wish (which can be both a blessing and a curse).
And, most importantly, they have the ability to change quickly in response to changing market conditions. It’s agility and flexibility that have the potential to give sole practitioners real control over their businesses and their marketplace. Even though it often feels that as a sole practitioner you’re all alone, rejoice in your freedom and use your strength and agility to make your business whatever it can be!
There are many smart sole practitioners out there achieving net profit bps of 40% or more, getting revenue growth of 20% or more and attracting quality clients. What can you learn from what they are doing well?
Secrets of Successful Sole Practitioners
1. Successful Sole Practitioners see the digital ‘revolution’ as an opportunity and a challenge, not as a threat or distraction. They’re busy changing the way their practices collect, process and interpret client data – through client portals, cloud accounting, single ledgers and better reporting systems.
2. They’re taking control of client relationships to stop the cycle of write-offs and undercharging in ways many traditional firms are reluctant to consider – by really engaging clients up front (not just asking them to sign a piece of paper), letting clients decide what level of service they need and want, and communicating up front when scope of work changes.
3. Successful Sole Practitioners recognise the value of clear branding and service differentiation. This is reflected in the way these firms communicate their value proposition creatively and emotionally through websites and online marketing activities. Social media is increasingly being used successfully by smaller firms to target quality prospective clients that might otherwise go to larger firms.
4. They see real value in specialisation. They understand that being everything to everyone simply doesn’t work effectively as a business model for small businesses. Whether it’s a focus on industry sectors or service specialisation, they see the strength in going beyond ‘good all-round service’ to ‘innovative and specific solutions.’
5. Successful sole practitioners understand the value of effective leverage to free up their time to add value to clients and the firm. They understand that staff, when given the opportunity and structure to grow, will often exceed expectations. They’re not afraid to delegate workflow and client relationship responsibility as they understand this is the only way to grow the firm.
6. They look for quality professional relationships, understanding that client needs are best serviced through collaboration with external partners. By focusing on the quality of these partnerships, they are able to provide clients with an integrated, personalised service at a level often superior to that offered by larger firms. Lack of size is no longer a constraint to expert advice in a range of areas.
7. Successful sole practitioners spend less time at their desk and more time out of their office working with colleagues, talking with clients, acquiring new capabilities and exploring new opportunities through attendance at leading events and conferences. They put time and effort into specialist training to ensure that they’re at the leading edge with the advice that they give.
Of course, this sounds straight-forward. But, when you’re caught up in the day to day issues of running a practice, it can be difficult to find the time to even think about what needs to change.
Where to start
You need to do some strategic planning up front. Consider all aspects of your business. Write your ‘manifesto’ and then ask for external feedback.
Key factors to consider:
1. The financial objectives you want to achieve for the business
2. The services you want to provide and how they will be delivered
3. The type of client you’d like to attract (industry, type, interests)
4. The way you engage and communicate with clients
5. Current perception of the firm (from both staff and client perspective)
6. Current and potential marketing / growth activities
7. Current and future staff capacity and capabilities
8. Your leadership style and the culture of the firm
You can’t do it on your own. Enlist external support in sorting out all the potential opportunities and actions to focus on what’s important as well as what’s urgent. Ensure that you’re accountable to someone – even the most successful business people use external business advisors to help them plot their future course, it’s a worthwhile investment.
The Sole Practitioner as a ‘species’ of accountant in public practice will continue to thrive as long as they are prepared think strategically and adapt to the new digital age of professional practice.
Don’t be afraid to PUNCH ABOVE YOUR WEIGHT!
Also published on Medium.