My partner and I opened our own CPA practice in 2003. We had both been working at a larger “old school” firm which had fallen behind on technology and education. Convinced we could do better, we decided to strike out on our own.
In our new practice, although we had plenty of business, we were completely disorganized. As a result, we could not get the work done and out the door on time. As we grew, the load got harder and harder to manage. There were piles of unfinished work stacked on our desks with no systems in place to manage it.
During tax season, everything was 100 times worse. There were no assigned functions, no delegation, and no workflow; it was a free-for-all. If a client came to see us in February and more information was needed to complete his return, we would shelve it until he re-contacted us to see if we were done yet. Because my partner was more disorganized than I was, his clients started calling me to finish his work. I had to spend time fixing his emergencies in addition to my own. We were so backlogged that we had to file extensions for some clients who were late only because of us. People complained and we lost some business. We also lost two good staff who threw their hands up in the air and quit. It was very frustrating because we wanted to deliver quality service but didn’t know how to accomplish that. These were things they hadn’t taught us in college.
Profits were slim due to intentionally underbidding our contracts. Because we wanted to be nice guys and liked by our clients, we priced our fees too low and sometimes didn’t charge at all.
In our first year, we discovered Sterling and signed up for their customized consulting program. We took their courses and learned their management principles which had been tested in the real world. With our consultant’s help and direction, we organized the practice. Everyone was assigned specific duties and a smooth workflow pattern was established. All of this information was laid out on an organizing chart which we hung up in the practice. Sterling’s management by statistics system enabled us to track the practice performance overall and by staff member. It included step-by-step formulas to use to when statistics were going down or to keep rising statistics going up. We were back in control.
My partner, who was losing interest in the business, started to veer off into a different direction. In 2007, we decided to go our separate ways. Although the split was a nasty one, we came to a mutual agreement; I retained 60% of the clients, all of the staff and all of the debt, even though his leaving meant my income would be cut in half.
Between my personal life and the business, my finances were overwhelming. I felt like I was like starting over but now I had a staff to support in addition to making payments to my former partner. To help me pull through the split, my consultant went into overdrive.
The first priority was to increase solvency and sales and reduce debt. Although we had never had a shortage of business, with nearly half of my clients being given to my former partner, I was forced to put more attention on sales. At the same time, I was overloaded due to my partner leaving. To free me up, my consultant directed me to delegate more. What used to occur is when the work came in, I would do it myself. If I did delegate it, I would just hand some work to my staff with no instructions and tell them to figure it out. The staff didn’t like that and it didn’t work. Now when I pass work to my staff, I include any instructions or relevant information in writing so they can get the work done efficiently. Delegating more freed me up to produce more billable hours.
We also did an analysis of my flat-fee clients. Sterling’s statistical management system enabled me to track each client’s profitability and I was able to raise prices that were too low.
With my partner gone, I needed another executive in the practice so I sent my office manager to Sterling for management training. This increased her production and put us both on the same page.
In the end, we weathered the storm and emerged better than ever. My practice production and collections are up by 60% since starting with Sterling and highest since we opened our doors. Profitability has also increased.
My Sterling consultant has become more than a consultant. She is a business partner, a confidante and a good friend. She keeps me focused on what I need to focus on and is genuinely dedicated to my success. I feel certain that were it not for her and Sterling, I would not be in business today.
Rick Beam, CPA
