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The 3 Powerful Elements Your Strategic Plan Needs

The 3 Powerful Elements Your Strategic Plan Needs

Does it feel like there’s a long, difficult road between creating and implementing a strategic plan that fits your firm’s unique goals, vision and mission?

If you said yes, you’re not alone.  

A 2013 survey of 587 global senior executives by The Economist, 61 percent acknowledged that their firms often struggle to bridge the gap between strategy formulation and its day-to-day implementation.  The struggle is real, and it continues to be a hurdle for many firms to cross.

There are numerous factors at play here— inability to change, weak buy-in, bad leadership, lack of accountability.  But there’s another reason why some firms fail.

They didn’t make a strategic plan that was unique to their firm.

So we spoke with Heather Townsend, founder and author of The Accountants Millionaires’ Club for some perspective. Heather has worked with hundreds of firms to help them develop plans that don’t follow the herd.

Meaningful plans that include leaders and staff

Q. How can firms ensure that their plans are unique?

All too often we can get swept up into a ‘let’s do what they’re doing’ way of thinking when it comes to growth plans. For example, I’ve seen owners who think that because all of their peers are going for a $1 million practice, they should too. What they really should focus on is improving their bottom line so they can enjoy running their practice again.

Firms successful in growth planning make certain their plans are exciting and meaningful, not only to the owners of the firm, but also to the employees in the firm.

Meaningful plans tend to break into two time spans.  First, you want a very detailed three or six month plan, which is discussed weekly and monthly at a team and leadership team level. Second, a long term plan which doesn't look any further out than three years.

Why only three years? The world of accounting is changing very quickly, so old-style five or ten year plans don’t serve the way they used to. Within these growth plans, a growing accountancy firm should include a people plan, marketing plan and capacity plan:

  • The People Plan details how the firm structure will change, learning and development plans for individuals and the wider firm, and an indication of who needs to be hired and when.
  • The Capacity Plan is a rolling month by month plan for the next 12 months which identifies the capacity needed in the business to service the workload of the firm.
  • The Marketing Plan details how a firm will win new business and keep its existing business.

Q. What other elements should they consider in their plans to make them more actionable?

Your strategic plans should consist of goals that make the firm stretch, but they still need to be based in reality. I also find that there’s more buy-in to a plan when it involves the entire firm, not just the partners. And finally, the key stakeholders need to have a vested interest in the growth plan being implemented. Otherwise, they’ll just flounder.

Realistic goals grounded in your history

Q. For accountants who deal with numbers all day long, they sometimes have trouble knowing what goals to set. In fact, 64% of successful companies build their budget based on their strategy, rather than on past behaviors. How should firm owners decide on the numbers in their strategic plan?

I often see numbers plucked out of the air with no substance behind them for growth plans.

Some firms will simply say, “We want to double in size,” but there is no real thinking behind the intent. Either it is a case of keeping up with peers or something which sounds good to motivate the staff, or their ego is speaking. When I actually challenge them on what will that mean for the firm, or what has prompted them to go for this number, they don’t even know.

When we work with clients on their growth plans, we start with their personal aspirations for their life inside and outside of work.

We then explore with them how their practice is going to help them achieve their life goals. This starts to inform the firm owner’s growth plans and the numbers in their growth plans.

Once that happens, we’ll explore with them how realistic those potential numbers are. For example: if they’ve struggled to increase their revenue for the last two years and they decide to double the size of their firm in 12 months, I will challenge the thinking behind this.

Q. Across the board, it appears most accounting firms are creating strategic plans that span anywhere from three to five years. Do you think that works for all firms?

There is no ideal length of a growth plan. Too far out and they become a work of meaningless fiction. Too short and it leads to short term thinking and decision making.

There is so much rapid change happening in the profession now, and it shows no sign in slowing down. The firms doing five year or even longer plans are just wasting their time. I would even say a three-year plan is probably too long a time scale for what’s happening right now. The profession will likely look and feel very different in four years.  Your three-year plan will be out of date and future focused before it’s done.

While I am still happy for a 40-year-old owner to have a big long term goal, such as selling their business at 50 and having enough to live off the proceeds when they’ve sold, their actual detailed growth plans to achieve this I would counsel against being more than three years out.

You have to determine for your industry and your goals what’s best.

Drivers unique to your firm

Drivers both internal and external can impact your potential and your growth.  Many strategic plans don’t take into consideration what elements must be considered.  A good old fashioned SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis is a place to start, but you need to look deeper at the drivers that fill those buckets.

Q. What internal drivers do firms need to look at in order to draft a successful plan?

These are drivers you need to understand when deciding your growth plans:

  • Profitability, e.g. EBITDA, wages + software costs as a percentage of revenue
  • Practice efficiency, e.g. amount billed in any one month divided by amount of available hours that month
  • Talent management - what does the firm need to do to keep its best people
  • Clients - what are clients telling the firm that they want or don't want
  • The partners’ individual goals - what does each partner hope to achieve within the firm

Q. What external drivers do firms need to look at in order to draft a successful plan?

We typically use the STEEPLED framework for external drivers:

  • Social: How are the current and future social norms going to change how we operate, e.g. move to virtual working, social media?
  • Technological: What changes is technology bringing to the marketplace, e.g. cloud?
  • Environmental: What environmental concerns will change how we do things, e.g. going paperless and plastic-free?
  • Ethical: What ethical considerations will change how things are done, e.g. the change in public attitude to aggressive tax planning?
  • Political: What political drivers are there for change, e.g. Trump's policies, Brexit in Europe?
  • Legal and regulatory: What legal or regulatory changes are likely to come in?
  • Economy: How is the current and future state of the economy going to impact us and the marketplace?
  • Demographics: How is the changing demographics going to change things, e.g. aging population and people working longer?

Q. There’s a lot of discussion within the industry on focusing on a specific niche or firing old clients vs. hiring new clients. How should firms decide from where their growth should come?

It all depends on the firm’s appetite for growth. For example, if they only want a small incremental amount of growth, then it's probably worth just targeting existing clients. If they want rapid growth, then they need to focus on new clients in addition to growing their existing client portfolio.

As for niches, the decision on what part of the client portfolio to grow should always be taken as a result of market research, "i.e. which sectors, segments or niches have more opportunity to grow" in conjunction with a client portfolio analysis.

Firms need to ask themselves these questions:

  • Where do we have opportunities to grow our current client portfolio?
  • Where are we maybe underrepresented?
  • Which parts of our client portfolio are the most profitable for us?

One of our club members initially said she worked with "anyone.” She had a rough three months in her personal life which meant she took her eye off her business, and her pipeline dwindled to nothing and she lost about five clients. She had recruited ahead and was now running at a loss.

So we helped her identify that her ideal client which was consultancies. She actively connected with local business owners of consulting firms on LinkedIn, e.g. planning consultancies, marketing consultancies, IT consultancies, etc. She used LinkedIn to strike up a conversation.

After just purely four weeks of this strategy she had won two new clients, each worth over $750 a month in fees, and had four qualified leads in her pipeline each worth over $1200 a month.

A unique plan is more actionable.

Your vision for your firm is your own. By formulating a plan that excites both partners and staff, setting goals grounded in reality, and examining the internal and external drivers that are unique to your business, you’re on the path to a successful strategic plan.

 

February 12, 2019
Jeannie Ruesch
Senior Marketing Manager, Accountant Channel, Bill.com
Jeannie has over 20 years in brand creation and strategy, design, social media development, demand gen and customer marketing. She has taken companies perceived as local businesses to attention-grabbing national and global brands. She’s a tech geek at heart and loves finding ways to help customer solve problems. Jeannie is also an author and award-winning graphic designer.