Revolutionize your CPA firm with the surprising power of R&D
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Thinking about starting a CPA firm or making refinements to your current operations?
If you are, then it’s important to do the research and development (R&D) to understand your business model and approach first. This way, you can scale and efficiency is built into your firm’s DNA, rather than it being an afterthought. This strategic approach will give you an edge on your competition.
Then, with your R&D knowledge, you’ll be ready to roll out technology to solve challenges, like how to eliminate manual processes, drive greater efficiency, and increase your revenue.
As a recovering accountant and experienced firm owner myself, I know firsthand how investing in R&D can pay off.
When I co-founded Ignition in 2013, I was also running my own accounting firm. After the first three years, my practice was making over AU$2 million a year in revenue.
By the time we reached that milestone, I had moved from being an operator working inside the business to a shareholder with a team in place to run the practice.
None of it would have been possible if I hadn’t invested in R&D.
In the early days of owning my firm, I used to spend one day every month reconciling all of our accounts receivable. When it was 10 transactions it was easy, but when we were doing 200, it took forever.
I knew the practice couldn’t scale the way it was. It was simple – we had to invest time and effort into finding out what did scale.
So, within the first 18 months of running my practice, I hired an accountant, tax director and CFO, and stopped doing any client work myself, so I was free to focus on R&D.
While every firm is different, and you may not be able to replicate my approach, there are still practical ways you can make time for R&D within your day-to-day operations.
One way is to view it as a time requirement and build R&D into your weekly routine, just like any other essential task.
Take Growthwise, an Australian Client Accounting Services (CAS) and tax firm, for example. They used to have a ‘pens down’ session every Friday to spitball how to improve inefficiency, solve an internal efficiency problem and/or learn more about client business models and the best way to structure their reporting.
These initiatives not only save time, but also unlock the full potential of platforms like Ignition, saving you precious time and increasing revenue.
If handling R&D in your own firm seems daunting, partnering with firms like Dark Horse CPA offers a viable alternative.
In my recent podcast with the firm’s CEO and Co-Founder Chase Birky, and Chief Revenue Officer Justin Kürn, they explain how the firm’s centralized business model equips CPAs, who are starting their firms, with the essential support they need for growth.
Dark Horse CPA provides them with technology like Ignition, as well as infrastructure, compliance, staffing, branding, and marketing, but also a unique compensation structure.
CPAs receive a mix of both a traditional profit split and a salary structure, calculated through a class-based P&L system.
This approach allows them to focus on service delivery and building their client base without the admin headache – or the need to focus on scalability.
