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Outsourced Marketing vs. Buying An Existing Practice

An effective practice development system is SUPERIOR to buying a practice. In other words, building is far less expensive than buying and the quality of the practice can be far superior if you know how to make this happen.

Should I Build an Accounting Practice or Buy a Practice?

That depends.

If you want immediacy, then buying a practice will provide you with an infusion of clients. It�s much quicker if you ultimately manage to persuade the seller to accept your purchase offer over other prospective buyers. However, the price will be higher and the quality of the practice will be lower if you buy someone else�s practice.

Many prospective buyers have a false sense of security associated with buying another person�s practice. Clearly, buying a practice is more tangible but far more dicey than most people realize.

Typically, buying someone else�s practice will deliver lower retention rates. After the seller exits, a certain portion of the clients will leave the practice. This is a fact of life. And, many of the remaining clients will be closer to retirement as well (after being loyal clients of the seller for many years). Simply, accountants who sell their practice tend to have older clients that are closer to retirement, which means you will retain them as a business client for fewer years. Conversely, younger accountants running their own practice do a more effective job of attracting younger business clients.

Based on our experience, here are the key differences of buying versus building.

Key Factor	Acquire practice from someone else	Build practice using BYF Outsourced Marketing Program
Time required	1-4 months to buy. Fast.	Three years. Slow and gradual.
Cost	Generally 1.2 � 1.3 times gross sales.	Generally 0.6 � 0.7 times sales. About 50% less expensive.
Retention Rate	Very low. Questionable.	7-8 years. Higher with a niche. Clients are more loyal to you.
Legacy Issues	Absolutely.	None. Start with a clean sheet of paper. No baggage.
Pace of Growth	All at once. Front ended.	Gradual over three years.
Profitability	Average. 30% - 40%.	High. 50% - 70%.
Valuation	About what you paid. Typically 1.2 � 1.3 times gross fees.	Higher. 1.3 � 1.5 times gross because practice yields higher margins and far more efficient. Easy to sell because work is done by staff (not you).

Based on this assessment, we firmly believe that Build Your Firm�s Outsourced Marketing Program will not only help you acquire new business less expensively, but it will also enable you to develop a superior accounting practice. By superior, we mean the quality of the clients will be higher, the profit margins will be higher, you will retain clients longer, the clients are acquired gradually (not all at once), and your work flow will be far more efficient. The final result is a higher multiple, when you ultimately decide to sell, which means you�ve built a better asset and it will be easier to sell. And, all of this can be accomplished with a �balanced lifestyle.�

Our company, and our employees, firmly believe that our partnership program will help you �Work Smarter, Not Harder.� Isn�t this what life is all about??

If you have an accounting practice and want a higher multiple when you ultimately sell it, then consider this three year program. Call us at 888-999-9800 x1 to discuss your situation or simply complete an application to be considered further.

Outsourced Marketing vs. Buying An Existing Practice

Should I Build an Accounting Practice or Buy a Practice?

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