Accountant and CPA Practice Management
Like accounting, successful CPA practice management is based on its own set of principles and procedures. When these principles and procedures are known and put to use, an accounting practice thrives and prospers. When they are not, growth can stagnate, staff conflicts can arise and revenue and profitability are likely to suffer.
I started my own practice with dreams of being successful, of making a good income, being in control of my life and having the freedom to pursue my own goals.
After sixteen years of hard work and long hours, I was far from successful. The practice was small, disorganized and inefficient. I had trouble getting the work out the door, I was not making money commensurate with the hours invested, It had finally reached the point where I was ready to close the practice and leave public accounting, since I could make more money working for someone else than I was making working day and night for myself.
Before giving up, however, I decided to give it one more shot and signed up with Sterling. I did Sterling’s program so I could learn the right way to run my business before suffering through another grueling tax season. I found out how to motivate the staff, organize the office for more productivity and reduce the stress. The information I received from Sterling was not readily available to me from college or from our
professional practice management seminars. It was unique and effective.
Applying what I had learned produced an immediate and dramatic improvement. Morale in the office improved. Staff stopped bickering and started working together as a team. They started taking more responsibility for the quality of their work rather than leaving it all up to me to find and correct their mistakes. In that very first tax season, I already started cutting way back on my hours, while making a lot more money. By the next tax season, I was going home at 6:00 pm despite preparing far more returns than previously.
The practice has continued to grow ever since. Our gross is now more than three times what it was when I started with Sterling, but because of increased efficiency, we have accomplished that without adding any personnel. It has gone from making modest money to being very profitable, in spite of today’s economy. More important than just the money, however, is that using the Sterling program has given me back control over my life.
As a result, I can live a more balanced life. I make a very good income and still have the time to spend with my family and to do what is important in life. Even during the tax season, everyone in the office gets enough sleep rather than running themselves into the ground.
What I have learned is that being a competent accountant and hard work are important ingredients in having a successful practice, but they do not guarantee success… Sterling taught me what I had been missing and got me on the road to living the life I dreamed of when I first decided to open my own practice. Now I am having fun.
Robert Naugler, CPA, Idaho
After years in the workforce, I decided to get my accounting degree and open my own CPA practice. I liked accounting and working with people, but I didn’t know managing a practice would require much more. I was understaffed and reluctant to delegate. So, I wound up doing almost everything myself.
I barely survived the hectic, high-stress tax seasons. When I wasn’t working, I was sleeping. When I did sleep, I dreamt about working. After every tax season, I thought about selling the practice. I was making money, but not enough. Because I worked so many hours, I worried about taking on new clients. Stuck, I was unable to grow.
I had an acquaintance who owned a CPA practice which I watched grow. I asked her how she she did it and discovered she was a Sterling client. She suggested I check into their program. I watched their management DVD which hit the same points I wanted to address, such as the
small return on my long hours. After an initial consultation, I signed on as a client.
Sterling organized the office, reduced inefficiencies and helped me find the right staff. With better staff, I was more willing to delegate knowing the work would get done correctly. Before Sterling, I would randomly hand out bonuses after tax season. My consultant showed me why
this method would not boost production. Instead, she and I devised a monthly bonus plan based on each staff member’s productivity, including the accounting staff . Everyone knew what was expected and could control their bonuses by being more productive. This meant a
whole lot more to the bottom line.
My practice has grown every year since starting with Sterling. Sales have increased by 316% and net profit by 604%. Most importantly, I have a life again. Since my staff run the practice, my husband and I have been able to travel to China, Italy and Quebec while my practice continued to achieve its revenue goals.
Sterling helped me create a much more valuable practice…They are like an experienced outside partner who stayed with me to build my business.
Sandy McIlvain, CPA, Texas
Some CPA firms cannot get their work done and out the door on time. At my firm, we couldn’t get the work done at all. I bought the practice in 2006 and despite being a competent staff accountant, I had no management experience. Once I took the helm, the practice spiraled out of control. We couldn’t find files, we couldn’t find past returns to do current returns, and we couldn’t find the bookkeeping to do Workers’ Comp audits.
I had three bookkeepers who were not accountable for anything. When they completed their work, they wouldn’t tell me and they wouldn’t ask for more. Instead, they waited for me to give them more and did nothing until I did. Everything fell to me. During the off-season, I worked 60 hours a week. During tax season, I worked from 6 am to 11 pm every day. Although we had a lot of business, I was personally making very little money. After three years of rarely being home, my husband filed for divorce. In my absence, he had developed a close relationship with my teenage daughter who now hated me. That was my wake-up call.
In January 2013, I signed up for Sterling consulting to untangle the chaos in my practice. They began by getting us organized, assigning specific duties to the staff and creating job descriptions for each of them. We implemented Sterling’s statistical management system which allowed me to objectively measure staff productivity. Some of the people I thought were high producers were not. Since they were nice, I assumed they were good staff. My consultant had told me the technical staff should be billing an amount equal to 3 to 5 times their pay. When we examined the numbers, we saw they were not even producing twice their pay in billable hours. Using Sterling’s personnel testing, I replaced the low-producers with motivated, upbeat staff—people might be able to fool me but they cannot fool the tests.
In the short time I have been with Sterling, my practice production has increased by 23% and better yet, my profitability has increased by 600%. Now I am earning the money I should have been. These days, we get our work done and out the door on time. The staff are motivated and come to me with ideas to improve our service. I am happier and less stressed. We are about to open a second location which would have been inconceivable just a year ago.
The most valuable benefit, though, has been one I never expected: my relationship with my daughter has completely turned around. We get along great. I attribute the change in her to the change in me. I thank them (Sterling) for giving me back my life.
Kimberly Furrh, CPA, Oklahoma
Disillusioned with the CPA firm where I had been a partner, I opened my own practice so I could control my destiny. I hadn’t given much thought to running the business; I just assumed everything would fall into place. But that was not to be the case. As it turned out, personnel was my biggest problem.
The office felt like slog due to staff inefficiency and mistakes. I figured since I was the one with the answers, I should be the one to fix their work. As a result, I was always cleaning up their messes, In fact, I spent so much time doing their jobs, I didn’t have time to do mine, which stymied the firm’s growth.
I couldn’t seem to find good staff. And because we were in a rural area, I didn’t expect to. For that reason, I settled for whoever happened to apply. Working long hours, I was frustrated and exhausted with little energy for other areas of my life. These were the issues I struggled with when I requested a copy of Sterling’s management DVD. Watching it, I was struck by their explanation of the different types of staff and their effects on the practice. That’s when I became a Sterling client and started to turn my practice and my life around.
It wasn’t one aspect of the Sterling program that had impact, it was several. For instance, based on the program principles, I began to pay the staff based on the work they actually did, such as billable hours. One of the CPAs who was initially concerned about this change, increased his billable hours by 50% the first year and doubled them the next. My office manager, whom I paid based on an increase in collections, became a pit bull on bringing in the income.
I also learned that doing the staff’s jobs wasn’t solving the problem, but promoting it. Although it’s still a work in progress, now when my employees bring me a problem, I insist they also bring a solution. Finally, Sterling trained me on how to find good people in the first place. Their hiring techniques and testing have made all the difference.
Our annual billings have almost doubled, and are still rising since starting with Sterling eight years ago. I am freed up to act as a business consultant, which I love. And I am definitely working fewer hours and taking advantage of that. Thanks to Sterling, life is fun again.
Mark L. Granger, CPA, Maryland
I opened my CPA practice in 1996 and after years of hard lessons, I realized being a good CPA is not the same as being a good business owner.
Since I didn’t have much help early on, I had trained myself not to delegate. As I added staff, I became a control freak and had everything in the office come across my desk. During tax season, I’d work until 3:00 am and be back by nine the next morning. Because past attempts to bring in good staff had failed, I was afraid to add more.
Like many CPAs, I had never learned how to really communicate. To avoid conflicts, I’d write down clients’ fees rather than bill for the work we had done. If our fees totaled $2,300 but we had invoiced the client $1,000 the year before, I’d just bill them $1,000 again. I was “too busy” to listen to complaints or explain the price increase.
In 2004, after a brutal tax season, I looked at the revenues and my financial condition and realized, despite killing myself for three months, I was no further ahead. Devastated, I began searching for answers. That was my frame of mind when I watched a practice management DVD from Sterling and became a client.
We first tackled the client fees head on. Sterling taught me the value of unflinchingly dealing with these issues and our clients and how to confidently do that. We also addressed the ambiguity in our office of who was responsible for which tasks. Things wouldn’t get done or would get done inefficiently. Sterling helped us create an organizing board that spelled out each employee’s responsibilities and our expectations for them. During this process, I discovered there were functions we should have been doing but weren’t, like marketing. We began to promote our business and have seen tremendous results.
For a CPA, hiring can be intimidating because no one wants to make a mistake. Sterling taught us how to attract quality staff and helped administer personnel testing with our applicants. These systems provided us with the insights and confidence to make the right hiring choices.
The reason why I’ve been a Sterling client for 13 years: Our billings and profitability have more than tripled, even though I work fewer hours each year… Because of my relationship with Sterling, I’ve become a much better business owner. Because of the consulting, training and real-world experiences Sterling provides for me as a business owner, I’ve become a much better CPA.
Don Franty, CPA, Pennsylvania