TFYW#028 The Key To Increasing Your Firm’s Capacity

Mar 24, 2023

This week we are getting into capacity control.

At times, we confuse our firm’s capacity with our personal capacity.

As a finder leader, how you spend your time determines how well your firm operates.

You are the most valuable player in your firm – not for your billable hourly rate, though, but for the support and focus you provide.

If you don’t remember anything else from this week’s newsletter, remember this:

 

If you’re personally at capacity with billable work, I can assure you the rest of your firm is not at capacity. 

Your personal capacity and your firm capacity are inversely related.

Understanding how to reduce your busyness is vital to getting more out of your firm.

Above is my phone. Seeing how the phone’s storage is used is helpful.

My phone has an obscene about of photos and videos, thanks to my two youngest, who are wanna be YouTube stars.

The phone supplies instructions on how to remove junk and increase my phone’s capacity.

Our firms don’t come with a nice capacity bar, but I created instructions below to unlock your capacity so that you can maximize your firm.

 

Eliminate, Automate + Delegate

Passing everything all firm activities through these three gateways will help you control your time and, ultimately, your firm’s capacity.

Here are two examples: One strategic and the other tactical.

 

Strategic: Payroll Services

Many firms jump into doing payroll without planning how that will impact their business. It’s an easy add-on for many firms. It seemed like easy revenue for me, and I thought it was required to keep my clients happy.

What I have experienced and seen is that most firms undercharge for payroll services. Payroll can be simple if the clients have low employee churn and salaried employees. Otherwise, payroll can get complex and time-consuming quickly.

Eliminate – Stop offering payroll services.

Any decent margin I made with payroll one month was lost the next when the client either forgot to send hours on time or made mistakes in the process.

I can honestly say that payroll was never profitable for my firm.

Automate – Leverage a payroll tool, like Gusto or Wagepoint.

A fancy spreadsheet may do the trick, but they are limited with creating reports and filing year end forms. They also require maintenance.

If you do use Gusto or Wagepoint, ensure you charge enough. This is a service that is delivered on immovable dates. There is no adjusting payroll services to fit your schedule.

Delegate – Utilize a third-party payroll provider. There are great third-party solutions that support 1000s of businesses already. Your margins on this service will be much smaller or even zero, but you won’t get caught doing low leverage work at a loss.

 

Tactical: Client Communication

Your clients judge you more on your communication than anything else. You can deliver a perfect tax return or set of financials, but if your communication is slow or unclear, the client’s experience will still be bad.

Investing in communication improves client retention.

Eliminate – It is not possible to eliminate all communication with clients (that would be nice, though!). You can reduce the logistical communication with pre-scheduled emails and drips around deadlines. See Automate below.

Automate – Email templates can speed up how fast you and your team respond while maintaining high-quality communication.

In my firm, I had a templated email for every step of each engagement type. The initial email template was sent on the kick-off date, and the other engagement templates were used as needed.

If you used Clickup for your practice management tools, an email template function already exists.

For Karbon, include the email content in the work item step to easily cut and paste into an email.   

For Gmail users, templates are easy to create and access. Same thing for MS Outlook users. 

When leveraging fractional talent, pre-prepared templates are powerful in maintaining communication quality.

Delegate – Remove yourself from as much client communication as possible. Onboarding clients should identify their point of contact, and it should not be you.

Introduce new team members to your clients quickly. Only get involved when your team needs you.

If your firm uses a messaging tool like Slack, include your team on the client channel where you can see the ongoing communication without responding to every inquiry.

 

Highest Leverage + Highest Value

We need look at our work through a leverage and value lens.

Leverage is determined by the amount of output generated from the input. The greater return on the input, the better the leverage.

Value is determined by current and future profits. The more potential profit the higher the value.

As the firm leader, you want to spend as much time in the High Leverage and High Value quadrant as possible.

 

Client work | Low Leverage + Mid ~ high Value.

For all client work, leverage is low. We are working on a one-to-one basis. Value is mid to high as we are generating revenue to cover expenses and profit for ourselves while meeting the expectations of the clients.

Good work and communication maintain client relationships. We all know it is 10X more expensive to land a new client than to keep an existing one.

 

Team Training | High Leverage + Mid Value.

Training is high-leveraged work because it expands the amount of work you can do. If you were to train a trainer and altogether remove yourself, that would be the ultimate leverage of your expertise.

Team training is a mid-value work as it maintains the status quo of profit generation. Training is an investment, so the training aims to improve firm capacity and competency must be clear.

 

Marketing | Low/ High Leverage + Mid/ High Value.

Not all marketing is high leverage. Networking at an event takes significant effort AND can only be leveraged once. A focused digital marketing campaign is a high leverage activity, as your efforts are amplified through technology which you can reuse several times.

The value of marketing fluctuates as well, given that a niche client who pays for advisory services is more valuable than a general client who only wants compliance support.

 

Low to High Leverage

In our firms, it takes time to increase the overall value of our work. It requires repositioning the firm in a niche market or changing the services that we offer. These things cannot be done overnight.

However, we can start to increase the leverage of our work immediately.

Templates – Create templates for absolutely everything. If you do something once, you’ll probably do it again, and having a starting point allows you to leverage past efforts.

Content – Create long-form content and then split it into smaller pieces. I went over this in detail for newsletter Issue #025. Write something once and use it multiple times.

This newsletter was part of a broader content play.

On YouTube, Instagram and Tik Tok:

As well on LinkedIn:

SOPs – Updating standard operating procedures should be a common practice. Tech is changing quickly so reviewing steps of how things are done should be reviewed at least annually.

The best way to prepare SOPs are:

  1. Video: Tool of choice is Loom or ScribeNow – Easy to record and store in a library of training content. You can record while you actually complete the work.
  2. PDF: Use Tango, a google chrome extension, to make step by step pdf documents -The only thing I don’t like is when processes change a new pdf is required.
  3. Google Doc: This is great for creating more dynamic client profiles and firm info. You can set the doc as a read-only at any time so details cannot be changed by accident.

Leveraging your experience is only as good as the documentation you’ve created with it.

**

Thank you for using some of your personal capacity to read this. I hope you leverage this time to improve your firm’s success.

Build The Firm You Want.

Mark

P.S. Email Mark@FirmNexus.com with something that you want me to talk about. I’ll add it to the list. 

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