Scaling with purpose: 3 principles for growing your accounting firm with intention

Over the last two decades, I’ve been fortunate to work with thousands of accounting firm leaders around the globe as they navigated the sometimes treacherous waters of growing their business. I’ve been inspired by their grit, talent, and business acumen as they overcame scaling plateaus and built the firm of their dreams.

As a result of my experience, I’m blessed to have a unique set of observations about what it takes to successfully scale a service business.

And that’s what inspired me to co-author a book with Jason Blumer, Founder and CEO of Thriveal CPA Network.

‘Scale with Purpose’ is the culmination of our decades of work observing, coaching, and running professional service businesses. It shares the stories of the owners and entrepreneurial leaders of firms from across the globe, the recipes they used to leap forward, and how you too can leverage your single most important resource: human capital.

In addition to our years of insight, we conducted qualitative one-on-one interviews with over a hundred entrepreneurial leaders of service organizations, used the ongoing long-term Practice Excellence cross-sectional study, and produced a qualitative survey to validate and substantiate our findings.

Here is a brief overview of the key elements of the book. I encourage you to get your copy for a more in-depth exploration of the insights, methodologies, anecdotes, templates, and examples.

What is intentional growth for accounting firms?

Intentional growth means knowing exactly what you want out of your business, what the goals are, and what it actually takes to run it, before you start scaling.

From the organizational design, to the strategy, to the execution, do you understand what it takes? What do you consider ‘success,’ and how will you measure and report on that?

Intentional growth is not about making more money, hiring more people, delivering more services. It’s a thoughtfulness about what you, as a firm owner, ultimately want to achieve.

Strategies for intentional growth

Not all firms need to grow. But for those that do, firm leaders need to be thoughtful about how they approach it. Drawing on each part of the book, here are some of my key takeaways on achieving intentional growth for accounting firms.

Part 1: Leadership and culture

Don’t underestimate the importance of organizational design. It’s the foundation for how everything at a firm gets done.

Typically, firms operate on a flat structure. As they progress through each phase of growth, they might move from a flat to a hybrid to a hierarchical structure. It’s important for firm owners to conduct a proper assessment of what their business needs, based on their unique goals.

Ask yourself: what seat do you have on the bus? Where is the rest of your team sitting?

If your roles are misaligned, you might need to restructure your firm before you progress to the next phase of growth.

The goal is to have the right people in the right places doing the right work at the right time.

Part 2: Capacity and planning

People aren’t machines. They have good and bad days. When we talk about capacity planning, it’s not just about how much time somebody can spend at work. 

There are other factors you have to take into account, including mindset, emotions, location, and time. This is called the M.E.L.T theory for capacity planning.

For example, someone on your team might be caring for a family member at home, which means their mind and location won’t necessarily be on (or at) the business. 20% of their time might go towards supporting that family member. Other factors, like their emotions, might further reduce their capacity. For this example, let’s assume another 10%. Thus, with M.E.L.T, we need to reduce their capacity by 30% taking their standard 40 hour work week down to only 28 hours of available time.

Using this framework, firm owners need to look at what their team can and can’t produce, and plan accordingly.

Part 3: Execution and value

Traditionally, firms have measured themselves on revenue and firm size. As they’ve started to modernize, those metrics have evolved. But profitability has always been top-of-mind.

As an entrepreneur, one of your highest profitability times is when you’re just working by yourself. When you add people, you lower your profitability because you have administrative overhead.

In order to reach the maximum amount of profitability, you need to be thoughtful about your production costs and deliverables. Chad Davis, Co-Founder & Partner of LiveCA LLP, found that his highest profitability was when he had a team of 60, so he  downsized from 120 employees, and that led to the right delivery of culture and optimal profitability for his company. 

Ultimately, intentional growth is a very personal decision that changes depending on how each firm owner wants to lead their business.

AI and intentional growth

Beyond ‘Scale With Purpose,’ I’m doing research on how AI influences growth. 

My hypothesis is that AI will enable new firms to stave off scaling plateaus, allowing them to run more efficient systems and maximize productivity, so they can focus more on the more nuanced challenges of running a human-based business. It will also usher in a new category of highly efficient and smaller firms (<12 employees) that maintain a flat organizational structure and higher revenue per employee.

In this way, AI becomes an accelerator and essentially a team member, acting as a conduit for faster communication, better collaboration, and more information at your fingertips.

AI will ultimately make accounting firm growth more intentional. 

Start with your purpose

Every entrepreneurial firm owner has their ups and downs, but they’re all just doing their best. Even the most successful ones have made mistakes along the way.

My hope is that ‘Scale With Purpose’ supports firm owners to have clarity on how to run an effective firm, adopt tools and strategies that empower them to achieve whatever they desire, and ultimately feel that they’re not alone. 

You can purchase your copy of ‘Scale with Purpose’ and learn more about the process and our experience via our site.