#TaxTwitter on X (formerly Twitter) can be a crazy place.
Here’s a tidbit from earlier this week
What Does It Take
4 Days ago, Moshe Mindick posed a question on #TaxTwitter about how much revenue a solo operator could make before having to make that first hire:
Catch the whole thread here.
One comment popped up about doing $750K with one admin/bookkeeper and under 1,500 hours per year.
And that it all comes down to pricing and systems.
There is some banter back and forth with some folks demanding to see a framework for such numbers.
The frameworks came out:
50 clients @ $1,250/ month, or
40 clients @ 1,562/month, or
30 clients @ $2,083/month
These simple frameworks offer calculations of how a $750k scenario could play out.
While I agree that pricing and systems are the keys to achieving these scenarios, it is worth breaking down these frameworks to see where the leverage actually exists.
Pricing
Pricing is powerful when it comes to unlocking leverage.
Much of the advice I dole out when I see how a firm is pricing is that they’re not charging enough.
Prices can be increased from one day to the next and make a profound impact on the existing firm.
However, pricing is the mechanism to enable growth rather than the mechanism for growth.
In the equation of 50 clients @ $1,250/month some get stuck thinking the constraint is the pricing; finding 50 clients who will pay $1,250 per month.
No, the constraint is delivering $1,250 of value in 2.5 hours (1,500 hours / 12 months / 50 clients) per month.
And that’s not 2.5 billable hours at $500/hr, but total time per client doing everything in your firm.
The only way to deliver $1,250 of value is to remove you from the process and create a well-defined offer in a tight system.
Systems
Systems are the way things get done in your firm.
It is not the firm software.
It is not the team members.
It is how and when we make assignments and how we use software.
If you don’t remember anything else from this newsletter, remember this:
You can’t optimize a system without first standardizing it. You can either automate 10 things 15% of the way or automate two things 90% of the way.
THIS is how firms make ‘crazy’ scenarios work.
They commit to doing a small set of things and then do them well.
I ran a Tech + Workflow clinic yesterday about client onboarding.
The plan laid out how once an engagement letter is signed, the next thing you (or your success manager) will have to do is accept an invite to a QBO file and attend the introduction call.
The system takes care of the rest.
The system reminds the client about forgotten steps in a two-day cycle but is dynamic enough that an eager new client can onboard themselves in a few days.
Here’s part of the Lucid workflow diagram I shared:
These systems aren’t simple, but the magnitude of their leverage is the highest of ANYTHING you can do in your firm.
They chop off weeks of time.
They are the growth mechanism.
Every quarter, I take on just a few clients and do a deep dive into their systems.
This isn’t a coaching program, but a blunt look at where you’re at and what the next key thing you can do to chop off weeks of time.
If you’re interested, reply ‘Systems Audit’ to audit@firmnexus.com, and I’ll send you the details.
Mark