How Do I Make More Profit Without Hiring An Employee?

How do you hit half a million in profit in an accounting firm without hiring a single employee? This is a great question I got from one of my students, Zeb Smith from Colorado in the US And I thought I'd share some thoughts on how you might achieve it. This is an issue of scale. How do we scale accounting firms? In this video I'm going to share with you some some thoughts on how you do that.

Way back in 1996, I started my accounting firm. I was ambitious. I wanted to grow it big. I want to scale it. And so I started in May 96. I hired my first employee. A few months later, I hired two trainees. We just kept growing. It was great fun. In the early days, I loved growing my accounting firm. When we were a team of three, four, five people, we felt like a really close knit team. We spend time together, we were friends, it was fun. But then things started to change. After two, three years of running my accounting firm, it grew, which is what I wanted. We hired more people. And at its peak, I think four years in, I had 12 employees, employees. And at that point the fun went out of the business. I was the thing that I was enjoying. I was getting into consulting work, advisory work. I was really enjoying working with clients and doing high level work, helping them build their business. But I had 12 other people back in the office. And what I found was once it went from kind of five or six people to 10, 11, 12, the dynamics changed. Suddenly there was all sorts of internal politics, there was problems, challenges with hiring people. I remember once I had one of my junior members of my team love technology. And this was in the late 1990s when technology wasn't as it was today.

He'd set up for me the network of computers so we could all talk to each other on the computer system. And one day he came into the office and said to me, I had a problem. At the time the server had crashed. He says, I'm not going to fix it unless you give me a pay rise. Just like that. I was shocked. And it was instances like that where I just thought, I just don't enjoy managing people. I love the client work. I love helping people with advisory consulting work. But managing this team of people sometimes is a pain. So I can relate to the question from Zeb, how do I build a practice with half a million in profits without hiring somebody? So how do we do that? Well, the challenge of course, is the nature of an accounting firm or a bookkeeping firm. In our business, we tend to work one to one with Clients, we do one tax turn at a time, one payroll at a time, one set of books and records at a time. And so in effect we're kind of swapping time for money. We do something for a client, they pay us money. So how do we grow it to that half a million profit without scaling through hiring through employees? So here's some thoughts on that. Firstly, we could get round the problem, or at least mitigate the problem through systems workflows, using technology. And that's a great thing to do to systemise our firms. We should be systemizing and creating those efficiencies wherever we possibly can. But to do that, we also have to think about our strategy. We have to be really laser focused on who is the right type of client. For example, we want clients that fit in with our systems because let's say you do bookkeeping and you have one client is on QuickBooks Online, another one's on QuickBooks Desktop, another one uses Sage, another one Xero. Every single process piece of technology has some, some different terminology or different ways of doing things. And you have to learn all these systems and that creates inefficiencies. And so we have to set the rules. We have to be really clear about how we're going to run our business. Every client must be on this system, providing the information in this way. We have to be very, very specific about that so that we can start to benefit from the efficiencies of systemization. But at the end of the day, that only helps with the problem. It doesn't solve the problem because there will still be a ceiling that you'll reach even with the best systems, the best technologies. Because of the very fact that we are working one to one, essentially doing one client piece of work at a time, we're going to hit at some point a ceiling. We can raise that ceiling through better use of systems and workflows, technology, but it'll always be there. Another thing that we can do if we don't want to hire employees, consider outsourcing. Outsourcing can be extremely successful, but it does need a real focus. And again, systems are really important and communication with the people that we're outsourcing to. So that's a possibility. And a third one before we get on to the big one. The third one is if the goal is to increase profits without hiring somebody. The third area is how can you focus on the most valuable, highest value, top level services and charge a premium price? Because if you think about it, if you can solve big problems for clients, it may be that you can solve tax problems through tax, high level tax planning. It may be that you can frequently save people half a million in taxes because you've got the right clients with the right opportunities. Or it might be that you're really into marketing and something like Facebook ads and you've cracked the code and can help clients, your clients, your business clients win and grow faster and win more customers using your marketing techniques that you've developed. Or perhaps advisory and consulting work. And you've got some proven processes for adding cash flow, increasing bottom line, when you can get big results, when you can help somebody take a business from 50,000 in profits to 200,000 in profits, you can charge very premium fees for doing that. And when you focus on that type of practice, high value stuff, whether it's tax, advisory, consulting, whatever it might well be when you deliver high value and charge high prices, then again, that can help you to build an extremely profitable firm, but without you having to hire people. So there's some possibilities. Now, there is one more thing that you can do, and this is based on what I do in my business. So my business is over a million. And what I do is I teach the accounting profession how to build a more successful accounting firm. I run the Value Pricing Academy and I run the Bookkeeper's Pricing Academy. And I don't work one to one, I work one to many. I teach through video, I teach through online sessions, through mentoring and training. And I've built up this business over the last five years of over a million. And there's myself, there's my partner Sarah and her daughter Emily. And that's it, there's the three of us. And so you could do a similar thing when you recognize that the big problem with building an accounting firm is this working one to one with clients. If we can shift to work one to many, that opens up interesting possibilities with scale. How might you do that? Well, let's take business advisory as an example. It may be that one of the things you do is you run some advisory processes where you help clients to come up with ideas, you help them to come up with plans, strategies to grow their business. And normally in an accounting firm we might do that one to one. We'd sit down with a client, we'd ask them what their goals are, what their targets are, and start to ask some questions to help uncover some strategies that we could follow. But why couldn't you do that with a group? Why couldn't you get four or five business owners together, perhaps on a zoom meeting, and you charge A fee and you work with them as a group, A little bit of teaching training, do some exercises with the group and what you'll find is that whilst you lose some of the benefits of one to one work, what you get gain instead of that is by bringing together business owners into an online forum. Or it could be a physical event. By bringing people together, there's additional value from the individual businesses getting to work with each other, to network with each other, to share ideas. It's not just you coming up with ideas and so on, it's the power of a group.

And if you start to think about this and do the math, let's imagine that you ran a business club on Zoom once a month, you spend perhaps 90 minutes once a month.

And you get a group of, let's say 10 business advisors, business clients together every month. And they pay you a fee for doing that. Let's say for argument's sake that it's a hundred dollars, one hundred pounds every single month they pay you. Then with ten of them, that becomes a thousand. And that thousand every month is for you running, let's say a 90 minute online session, plus some little bit of follow up and perhaps some preparation in advance. It might end up being with the preparation and so on. It might be a day's worth of work, 10 clients, 100 each, that's a thousand every single month. But if you could do that, what happens if you could then find another 10 clients to join that group, your group goes from 10 to 20. The income goes from 1,000 to 2,000 every month. But how's your work changed? It's the same preparation, you're on the same 90 minute session, the same follow up. Unlike working one to one, there's no additional work whether you run a session with 10 people in the virtual room or 20 people in the virtual room. That's how I started my business. Back in 2014, I started the Value Pricing Academy. I started off with six people and now I have over 500 people and it's growing all the time. Think what might be possible if you could do a similar business model and build that in as part of what you do in your accounting firm. So I hope those thoughts help you and give you some ideas, some food for thought of ways that you could scale faster your accounting firm. If you like this video, please give it the thumbs up. Please subscribe to the channel if you've not already. If you've got any questions, stick them in the comments below and I hope to see you soon on another video. Goodbye for now.