Investing and Taxes

The E-Myth Accountant Series – Planning

CPA Blog |

The second topic in the book “The E-Myth Accountant: Why Most Accounting Practices Don’t Work And What To Do About It” by Michael Gerber and M. Darren Root, CPA is all about planning.

Michael Gerber shares that an accountant lacking a vision is simply someone who goes to work every day. Someone who is just doing it, doing it, doing it. Busy, busy, busy. Maybe making money, maybe not. Maybe getting something out of life, maybe not. Taking chances without really taking control.

He explains that there are numerous books and seminars on the subject of practice management, but they focus on making you a better accountant. What he focuses on is something else that you’ve never been taught before: how to be a manager. It has nothing to do with conventional practice management and everything to do with thinking like an entrepreneur.

So how do entrepreneurs think?  

He shares that the trouble with most companies owned by accountants is that they are dependent on the accountant because they’re a practice—the smallest, most limited form a company can take. Practices are formed around the technician – the accountant.

However, the company called a business depends on other people plus a system by which that business does what it does. Once your practice becomes a business, you can replicate it, turning it into an enterprise.

So the question you need to consider is, is your accounting company going to be a practice, a business, or an enterprise? Planning is crucial to answering this all important question and a Planning Triangle is what he suggests:

  1. Business Plan – who you are (the business)
  2. Practice Plan – what you do (the specific focus of your accounting practice)
  3. Completion Plan – how you do it (the fulfillment process)

Your Business Plan should include:

  • The business you are creating
  • The purpose the business will serve
  • The vision it will pursue
  • The process through which you will turn that vision into reality
  • The way money will be used to realize your vision

Your Practice Plan should include:

  • What services will I offer and what niches will I offer them to?
  • What do I need to know?  What are the expectations of clients, staff, etc.?
  • What do I need to have? Money, training, employees, time, etc.
  • What do I need to do? Objectives, standards, benchmarks, etc.

You Completion Plan should include:

  • How are you going to perform your initial customer assessment?
  • How are you going to communicate your recommendations?
  • How are you going to educate a customer about the changed processes you are recommending?
  • What is your operations manual?

The primary purposes of the three critical plans:

  1. To clarify precisely what needs to be done to get what the accountant wants from his or her practice and life
  2. To define the specific steps by which it will happen

Michael Gerber shares that because many accountants are control freaks (ie, control enthusiasts), 99 percent of today’s accounting firms are practices, not businesses.  This is why accountants spend so much time putting out fires – they overlook the basic message of creating a plan because of the chaotic nature of running a firm.

Remember, you are the architect of your firm, so it is within your power to create the business you truly want, to lead staff and clients where you want them to go, and to work less in the business and more on the business.

Source – “The E-Myth Accountant”