What’s the reason you turn up to work every day?
I mean sure, you probably love what you do (or at least I hope you do). But what’s the ultimate reason, what’s your end-goal?
For most practice owners, there will come a time when they sell their practice.
And when the time comes to sell, you want to maximise the returns you get in order to reward yourself for all the hard work you’ve put in over the years.
So, how do you go about increasing the saleability of your practice?
There’s a number of things you can do, but here are the 5 key points you should focus on:
It’s worth noting that even if you don’t have any plans to sell your practice in the near future, focusing on these 5 key points will dramatically improve the performance and profitability of your practice in any case…
1. Obsess over recurring revenue
Recurring revenue is the lifeblood of any successful business.
And as accountants, you are already in a fortunate position that the majority of the work you do recurs on at least an annual basis.
Your focus should therefore be shifting this annual recurring revenue into monthly recurring revenue, by moving all of your clients onto a monthly direct debit model where they pay for their services throughout the year.
Not only will this make your cash flow more positive, it will make the practice seem much more valuable to a potential buyer.
2. Grow your recurring revenue
There’s no doubt that ad-hoc projects that require value pricing are the most profitable.
And as a result, it’s very easy (and important) to focus on selling these where possible.
But, in the eyes of a potential buyer, these don’t increase the value of your practice as much as recurring revenue for 2 reasons:
- They might require you to do them. If you sell the practice, then you won’t be there to offer these more complex services.
- They are ad-hoc. There’s no guarantee that clients will want them again in the future.
So, whilst you should still focus on selling these additional services, there should be a much bigger focus on growing the recurring revenue part of your practice if you are looking to sell down the line.
The greater the value of your recurring revenue, the greater the potential buyer will be willing to pay.
3. Reduce the reliance on the owner
If the success of your practice relies on you turning up every single day, then that will seriously impact the saleability of it.
For a potential buyer, even if your practice is profitable, if it wouldn’t stand on its own without you there, then that is a huge concern for them.
Build great systems, build a great A+ team around you and let go.
4. Focus on your ideal client
Having a focus on an ideal client, or a niche, will make your practice much more valuable when it comes to selling.
A practice who does this will typically:
- Have very clear and targeted marketing
- Be well-known and have expertise in their chosen industry
- Receive regular referrals as a result
If your approach is to simply work with anybody who can afford you then that’s fine, but realise that the ideal client approach is much more valuable and profitable down the line.
5. Have a full blueprint mapped out
I always tell my clients that they should systemise with a view that they are going to franchise.
This doesn’t mean they will, but what it does it creates a systemised blueprint for the entire practice from sales through to production through to customer service.
And when you have this, for a potential buyer it’s very easy for them to come in and know exactly how your practice works, and what they need to do.
Helping your clients’ businesses become more saleable
All of the points above are relevant to making any business saleable, not just your accountancy practice.
So, once you have mastered them in your own practice, then you are in an incredible position to be able to help your clients do exactly the same.