Finance and Accountancy Briefing
Who is driving your practice?
Probably the easiest route for anyone to take is to carry on doing what they did yesterday. Anything that involves serious change needs serious thought. It will need you to stop what you’re currently doing and re-examine the whole basis of how you’re carrying out your work. The same also applies to your personal side of life. That is of course a different issue. The reality is that so many of us reach some sort of comfort zone, which means we can turn up for work, do the job and go home. We don’t necessarily have to think about it, other than deal with the customer requirements. Do you ever actually stop, sit down and re-examine the whole way you’re working, why you’re doing it, see where the best results are coming from, where the profit is and where the losses are? It’s something that few rarely ever do. Hence the title, ‘Who’s driving this thing?’ I suspect the vast majority of practices out there are driven by their customer needs and wants. Of course, you as a practitioner wish to make money. That probably by now isn’t the issue. The only issue in relation to that is how much you are making. The amount of practices that I get to see that have carried out any sort of self-examination and are restructuring, are very small in number. The only real changes that have taken place have been ones forced on practices either by government legislation or by institute requirements. The actual day-to-day management of the business has been more a case of “Well we always did it this way”.
Once you’ve been in a comfort zone for some time, change is difficult to manage. I have however, watched with great interest, a number of practices go down the route of change. Some have been successful, others haven’t. The successful ones have almost in every case, been driven by one particular partner who has had enough energy, perseverance and will power to drive other partners, and make those changes. They are however few and far between. Most have done it in the first instance to reshape the profitability of the practice in order to ensure that the day’s work is paid for properly, and that the value of an accountant is not given away.
The second driving force, which is now only becoming apparent, is the re-organisation of the practice and its focus, in order to ensure its eventual sale. Note the lack of word ‘merger’; whether this is two partners or twenty partners, the principle will remain the same. Not only does it need to make itself attractive to potential acquirers, it needs to make itself attractive to essentially two types of partner. The first is those that are going to leave the practice, and hopefully be bought out for a reasonable cheque. The more profitable the practice is at this point, the better the price obtained for the ‘goers’. Just as importantly however, the practice needs to be in fine shape so that the ‘stayers’ are happy with their profit earnings, and that there is a ready demand for the practice itself and will provide a good future for the partners who are a long way from retirement.
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