TFYW#087: Solve These 5 Things In Your Growth Plans

May 10, 2024

This week, I’ll give you five steps to start building and executing on plans to grow your firm.

Walking In Circles

This past Monday, I completed an adventure race in northern Ontario, Canada.

It was a challenging 35 km (22 Miles) of trail-blazing, wading through lakes, and trying to find 34 checkpoints.

My teammate was an experienced adventurer racer, having won races all over the world.

With his experience, he was in charge of navigating for our team.

My initial idea for this newsletter was to explain how well we did – but that’s not how Sunday turned out.

We completed the front course really quickly – no mistakes. We were in the top five teams.

Then we started the back half of the course, and all hell broke loose.

We got to a checkpoint; all we needed to do was head straight south.

We veered right, misread the map and ended up spending 1.5 hours wandering around out of bounds.

The purple-hatched area on the map is out of bounds.

A section that should have taken us 20 minutes took us 5x longer.

I don’t know what happened, but regardless, our plan fell apart, and we didn’t get close to our goal.

The Best Way To Plan

Too many firms don’t know where they’re going. I was guilty of this.

We might have goals to double revenue over the next 5 years, or to add $100K of new client work.

However, the lead generation, team structure, and types of clients that will get us there are mysteries.

Most firms are built randomly, and randomness is impossible to plan for.

My firm’s first $100K was generated via referrals and one-off encounters. I could not have repeated the same process because it happened outside of my control.

Mapping out what you want is the first step in taking control and executing a plan.

Determine these plan components:

  1. Who You Will Serve
  2. Set your minimum price point
  3. Calculate the number of clients you’ll need.
  4. Determine your cost of delivery
  5. Build a lead generation system

1. Who You Will Serve

‘Who you will serve’ is the second thing to figure out.

The first thing is, what problem are you good at solving?

From there, who you will serve in what niche becomes more apparent.

There is no secret trick to finding the niche where you can simply unlock the value.

I know some niches are more profitable than others, but that’s not how niches work.

Niches are only valuable based on the expertise and know-how that you bring to them.

When you use external identifiers as your niche, like ‘small business,’ you’re entering an established niche with many players and lots of noise.

The best niche for you is one where you are alone. You’ll never have to compete on price, and your clients will see you as a partner, not one of many service providers.

When we start talking in solutions ~ I solve inventory disasters for ecomm companies with 300+ SKUs ~ you’ve separated yourself from the rest of the firms that serve ecomm clients.

The more specific you get, the greater the distance between you and the rest.

You can either be a solution to help them or be the solution.

 

2. Set Your Minimum Price Point

I was on a panel in 2023 discussing pricing for small firms.The question came up about how to set your prices.

My fellow presenters and I responded: Whatever you want it to be.

The thing is, if you let the client decide what they want from your menu of services, your price will be tethered to their sense of value.

If you decide who you serve, the problem you solve, and the solution’s value, you’ll be in control of the price.

3. Calculate the number of Clients you’ll need

Here’s a quick calculation from one of the trainings from my Firm Nexus community.

If you use the benchmark of 3% of revenue should be allocated to the accounting function in a business, you can work backwards from there:If you want to take home $300K, you’ll need $900K in revenue.

If your minimum for your services is $2,200, then you’ll need 34 clients who are making at least $880k, who should allocate 3% or $26,400 for accounting/advisory services.

This is just an example, but it provides a framework to create your plan and project your profits.

4. Determine your cost of delivery

The other part of the equation is the cost of delivery.

Predicting your revenues is nice, but predicting your profits is game-changing.

Once you know what you’ll be charging and the margins you want, you can plan the cost of delivery.

Continuing with the example above.

If each client generates $26,400 in rev with a cost of delivery of $14,705 ($500K / 34 clients), then you can breakdown service delivery.

Keep in mind that $500k for direct costs was an estimate based on what I’ve experienced and seen. Yours may be different.

We usually don’t invest enough to understand our costs, but then we wonder where our margin is going.

5. Build a lead generation system

The last piece to make the plan work is to invest in finding clients who will pay you $2,200 per month.

When I ran my firm, I had no lead generation system.

I worked really hard to land every prospect because I needed every one of them.

 

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

 

If you don’t have a system to generate more leads than you need, you’ll never be able to execute your plan.

 

You’ll need more leads than you think.

Without the right quantity and quality of leads, the plan falls apart, and you’ll retreat back to trying to be everything to everyone.

Bonus: Refine, Adjust and Correct

Finally, no plan is perfect.

Continually assessing your price, cost of delivery and lead generation are all essential exercises for growing your firm.

You’ll have to build time into your schedule to make sure that the refinement happens.

Most of us get buried in getting things done.

But we can lose sight of getting things right along the way.

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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