Tips for building a firm to the right size for you
Lessons learned from a practice seeking to grow better but not always bigger.
A single-minded pursuit of growth can lead to arbitrary revenue goals, constant pressure, and burnout. When growth becomes a holy grail, other important needs in a firm are often sacrificed. It doesn’t have to be this way.
Intentional growth, pursued carefully, helps a firm thrive now and in the future. Achieving growth sustainably takes a careful balance between expanding the business and maintaining core values and lifestyle.
I knew early on that growth at my firm would have to be controlled. I wanted to travel and spend time with my family. I wanted to work with clients I enjoyed and respected for more than the revenue they generated and the referrals they provided. I wanted to work with a team of accountants who didn’t have to prioritize work over living.
The lessons I learned along the way taught me what to do (and what not to do) to grow a firm to the right size for me. This article covers the four keys to our success so far — tips that other firms may use to try to find the right growth model and goals for them.
LESSONS LEARNED: 4 KEYS TO SUCCESS
I started Little Fish Accounting in Washington, D.C., in 2018, and I realized that I would have to determine what success meant for the company. Hiring internally and externally for support and making friends in the profession helped me find the right size for my firm and take the appropriate steps to reach it. In our case, the right size turned out to be the result of finding the right mix of clients and services that our team could support with excellence while always having time to innovate and rest.
KEY NO. 1: TRACK, EVALUATE, CHANGE
Originally, Little Fish provided back-office accounting services as part of a virtual CFO package designed to cover all of a client’s accounting and tax needs. This meant the firm not only took care of monthly and quarterly deliverables, but also handled weekly invoicing, biweekly payroll, and contractor payments. As the workload rose, it became more difficult to take time away from work. Ultimately, I opted to sunset all the back-office services that required Little Fish to act on behalf of the client. So we stopped offering payroll, accounts receivable, accounts payable, and contractor payment services.
That decision was made possible because the firm tracked key metrics for each service line, evaluated performance based on those metrics and staff feedback, and then were willing to make changes.
As the team and I started thinking about what to change, we asked ourselves these questions:
- Who are our ideal clients? We narrowed down our best clients and determined what they had in common — specifically in how they work within our packages. That led us to focus on professional service providers with one owner and teams of fewer than 10 employees.
- Why do clients choose us? We heard again and again how comfortable we made clients feel and how easy it was to work with us. So, we decided to double-down on the client experience because we knew that how it felt to work with us was just as important to our clients as the deliverable provided.
- Are we charging the right price given what we currently offer? We quickly realized that we were underpaid. When we dug into why, we realized our service offerings had changed, but our legacy clients were still paying the original price.
- What areas of the business earn the most revenue? Having financial statements that detailed our revenue by service level made it easy to determine, and we looked at year-over-year comparisons to see how changes affected those numbers.
After our second year, we stopped offering annual tax prep and bookkeeping as stand-alone services in favor of year-round partnerships. The small businesses we wanted to serve needed more than just an annual check-in, and we could provide more ongoing support by taking fewer clients at a higher price point.
KEY NO. 2: HAVE A STAFFING STRATEGY
When you work alone, you are only as productive and successful as the work you can handle by yourself. Overwork can grow faster than your business. So, the answer is to get some help.
First, I hired an administrative assistant because I was overwhelmed with extraneous tasks like contracts, invoicing, and follow-up emails. She did so well, I started giving her operations duties. But expectations weren’t properly set, and neither of us was happy with the result.
After hiring multiple replacements for that role, I finally decided to create an ideal job description for what I needed. I had to pause taking on new clients, but doing so allowed me to build the back end to a business at which everyone involved would be better served.
Once I completed the job descriptions for current roles, I built an organizational chart for what the company would ultimately require to be fully staffed. It helped me realize the firm would stay small but that I needed more people than I thought.
I wanted to run the firm and be completely out of client work. The firm currently consists of six staff members and me. To meet and maintain a seven-figure goal for annual revenue, the firm is expected to need a staff of 10. This includes more management levels, such as directors to take on higher-level reviews and work “in” the business so that I can focus solely on working “on” the business.
KEY NO. 3: TALK TO YOUR PEERS
Asking for advice from people around you who are reaching for the same goals gets you there faster than doing it alone, and it helps to avoid the mistakes others have made.
When I started my firm, I didn’t know any other firm owners. I had no mentors and no peers. I only had internet searches, volunteer opportunities, and a few “best in class” accounting software opinions.
This allowed me to build a firm that was more forward leaning than most of the ones I ultimately encountered, but overall I didn’t have enough support within the profession to feel like I could reach my goals. I wasn’t sure what resources to trust when it came to new information, and I was spending too much time on trial and error when other accountants probably could have guided me through faster with their experience.
A couple of years ago, I started reaching out to the accounting community by joining X (formerly known as Twitter) and following other accountants and business owners. I was overwhelmed by the kindness and support of the people I met virtually. It was a safe space to ask questions, and it opened opportunities to meet new people in new spaces, like small group communities and conferences. As a result, I was able to move Little Fish in the direction of my goals with real guidance around the best ways to do so and support my team and clients along the way.
Adding to my peer network has helped me figure out logistics, and it has made the firm more profitable. Interacting with other firm owners helped me better understand how to provide more value to clients through advisory services and consistent improvements to the client experience. This allowed the firm to charge more and serve fewer clients better.
From talking to others, I gained hands-on demonstrations of the best firm management software and financial reporting options for the firm. Asking peers questions provided me with answers to common issues. I’ve also been able to act as a referral partner and add clients to our ideal client group.
KEY NO. 4: OUTSOURCE THE REST
Many accountants start firms thinking they would be accountants first and foremost. But they soon learn that they have to wear many hats, including marketing coordinator and human resources representative. It’s hard to do that along with the job you promise to clients, so it’s important that you work with other companies to provide those services.
I started by making a list of tasks and duties that were taking me away from my main focus, leading the firm to meet financial and operational goals. Next, I hired technical support to help the team with hardware and software issues, increasing security, and giving the team a point of contact that wouldn’t be a bottleneck to progress. Slowly, I added retainers for a law firm and an HR agency to free my time to focus on leadership and business development while the ancillary business needs are handled with care and excellence.
Hiring help doesn’t have to mean directly adding team members.
WRAPPING UP AND LOOKING AHEAD
From the beginning, I knew that I would have a small firm with a size limit that would protect the time and space of everyone who worked with me. But it took a couple of years to establish what services to offer and exactly how many team members the firm would have. Now, Little Fish can provide a limited number of clients with an amazing experience alongside deliverables — and still stay focused on having a team that works hard to meet our goals while respecting that they are human beings with lives outside the office.
Making the decision to build to a version of “enough” allows the firm to more easily reach the goal of creating deeper relationships with clients. We are able to say, “If something comes up, send it to us. If it’s part of our service, we’ll take care of it; if not, we’ll point you in the right direction.” That’s a much easier promise to deliver on when we are careful about how many clients we serve.
At the end of the day, we are the leaders of our businesses and always have the opportunity to change what’s not working so that we can aim for a balanced schedule — for us and everyone we work with.
About the author
Keila Hill-Trawick, CPA, is founder and CEO of Little Fish Accounting, a boutique firm in Washington, D.C., that serves singleowner businesses with small teams.To comment on this article or to suggest an idea for another article, contact Jeff Drew at Jeff.Drew@aicpa-cima.com.
LEARNING RESOURCES
Learn updates and tips for guiding small firms through today’s financial climate.
Dec. 13, 2 p.m. EST
AICPA & CIMA ENGAGE
With nine tracks of expert content, you’ll gain exclusive insights, develop practical skills, and walk away with tangible guidance to evolve at your own pace.
June 3–6, 2024, Las Vegas
For more information or to make a purchase, go to aicpa-cima.com/cpe-learning or call 888-777-7077.
AICPA & CIMA RESOURCES
Articles
“MAP Survey Shows Firms on Upward Trajectory,” JofA, Oct. 1, 2023
“Why Accounting Firms Need a Strong Strategic Plan,” JofA, June 20, 2023
“What Small Firms Need to Know About Succession and M&A,” JofA, Sept. 22, 2022
Tools
Websites
AICPA & CIMA Firm Practice Management topic page
