Why Aren’t You Delegating Yet?

The now ex-wife of my good “friend” (me) tried to give him (me) the boot from their house on April 9th about ten years ago. I’m pretty certain you suspect there was motive to the timing – tax season of course. People try to do all sorts of bad things to us during tax season, reasoning that we’re too tired and busy to fight back. This “friend’s” (my) ex-wife also liked to buy things during tax season – like cars and jewelry. She even shopped for a new house during tax season. My friend (me) thanks God that she couldn’t qualify for a mortgage on her own.

If you’re all alone as a sole proprietor, how do you survive a personal crisis during tax season? Depending on the severity of the crisis, your practice likely won’t survive. My business partner’s parents died during separate tax seasons all the way across the country. Without a well-trained staff behind him, tax season would have ended for him right then as it would have for my “friend” (me) when he was kicked out of his house by his ex-wife.

Sure, you can have a practice continuation agreement and have another overworked sole proprietor mostly ignore your clients in a crisis, but do you want that happening for something as simple as a divorce? Practice continuation agreements are great for crises where you won’t be returning to your practice, but they’re not so good for temporary crises. When you’re dying, you don’t so much care if your clients come back next year. But once my “friend’s” (my) divorce was over, he (I) needed clients to come back next year to cover the child support.

A couple days ago, a business broker friend of mine sent me information on a sole proprietor looking to sell her practice. Her annual revenue was about $150K, not so bad, but her net profit was only about $50K per year. Obviously, she wanted out, because she was working her butt off for very little. She wanted to see her family a few more times before dying of exhaustion.

What’s the solution? You need talent depth in your practice. When you’re all alone, you’re all alone. When something goes wrong, it’s just you and the family dog, and he can probably only handle really simple returns. Cats are more talented tax preparers, but managing them is tough – herding cats and all that.

If you are a sole proprietor, scared to death of risking money, start out by hiring admin help. An admin person gives you the resources to grow. There’s no reason in the 21st century for you to produce and deliver tax returns to clients or e-file the returns. You are a $50 per hour person doing $15 per hour work. Stop it – stop it right now! I’m waiting….

Your admin person leverages your efforts and lets you prepare more returns, but what does he / she do in terms of helping you weather crises? An admin person can at least stay in touch with your clients, while you take care of the crisis. That’s not a perfect solution, but it’s better than losing your practice entirely.

Hiring a staff preparer in addition to the admin person is a better solution. Start out hiring a part time preparer or maybe two. Pay them a percentage of their billings. Consider using a sole proprietor, who’s just starting out and doesn’t have enough clients to stay busy. Now you have some capacity to keep returns moving through your process if you need to be absent to handle a crisis.

But aren’t employees, even part time ones, a real pain where you sit? Won’t they make mistakes and leave you hanging when you need them most? Won’t they break your heart and flush paper towels down the toilet? Absolutely they will. There are days you’ll want to run down the hall swinging a baseball bat at anyone stepping outside his office. But in twenty-seven years, I have only needed the baseball bat a handful of times. That’s when having admin help is really useful. A good admin person will help you bury the bodies.

So now you know delegation requires a baseball bat and a shovel. There are a few other tricks as well – some of them are even legal in most states. Register for my webinar “Automate or Delegate – The Key to Small Firm Profits and a Saner Life” at www.nsacct.org. And while you’re there, join the Society. I did. It’s the best source for training and information geared to small firms.

Thanks for reading!

Frank Stitely, CPA, CVA

www.ClarityPracticeManagement.com

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