Last week I led a coachingclub group of Accountants (8 firms in the room who act as a non-exec board of directors to each other with a coach/chair) and I sensed that they were uneasy about 5 key strategies I was suggesting they implement:

  1. Price every job – not matter how big or small – up front and in writing
  2. Increase all prices immediately
  3. Asking clients for a deposit (as a minimum) or the full amount before commencing work
  4. Visit every client proactively and promote additional value added services
  5. Asking some clients to leave the firm who are not suited to the new vision/direction

When I put these on the board I could see more than uneasiness – it was F.E.A.R. So I dug a bit and found out they were scared of the following: My comments are in brackets….

1. “What if I get the price wrong?” (You will – all the time. The price is always wrong while ever they say yes. With practice and courage you’ll get better)

2. “What if they say ‘no’ to my new prices?” (Guess what? Some will – get over it. You have been too cheap for too long. You are not a charity or a community service and you do not sell commodities. You are worth more. Once you believe it you’ll put your prices up)

3. “We have never done that before” (And that’s one of the major reasons your cash-flow is up the gazooba (technical term) – what other people think of you is none of your business. Give it a try – you’ll be pleasantly surprised)

4. “What will they think?” (So let me get this straight. You are under-servicing your clients and many are willing to buy additional services from you – and you are wondering what they think of you …. give me a break. At worst these visits are a good customer service call)

5. “But they have been clients for the last 10 years”. (yes they have and for all those years you have been writing the job off and putting up with the clients BS. Life is too short to put up with clients who do not fit your ideal client profile)

F.E.A.R

False

Evidence

Appearing

Real

C’mon. It’s time to toughen up. It’s not your clients business. It’s your business. You’re taking the risk with your butt on the line – it’s you who should be setting the rules.

Thee who makes the rules, wins the game.

One of the most important business building strategies that every Accountant (or any professional service firm for that matter) needs to understand is LEVERAGE. Specifically leveraging in 5 key areas:

  1. People. You can leverage your people by making sure the ratio of “people per partner” is high. The more people you have per partner (say at least 20) then then the more profit you make per partner. There are way too many partners in the Accounting profession. Many are there for retention reasons not good business reasons.
  2. Price. You will get zero leverage on the model of “time X rate in arrears”. The ONLY model for price is to price in advance with as much value articulation and courage that you can muster.
  3. Process. You can leverage your time and literally ‘find time’ by pricing up front, then working out how to take labour out of jobs. The objective is to reduce the labour input on each task. Most Accountants over engineer projects because they are looking for perfection all the time – not success.
  4. Promotion. You can leverage your promotion by getting more people in the seminar room, asking all of your clients for a referral and increasing the size of your marketing database. Every firm who does marketing needs a database of at least 10,000 names.
  5. Product. Are you leveraging what you know? I would imagine most firms ‘re-invent’ the wheel all the time instead of systemising your services into product. If you systemise your services into a repeatable process then you can have other people deliver the product.

It’s all about the leverage. If you get all 5 working together you will create extraordinary profits. Profit before partner salaries should be running more than 50% all year round – without the partners doing all of the client work!

5 Ps of Profit

I am humbled by these responses from some of the most admired people in the global Accounting profession. You can review and buy a copy of my book here.

“This book is full of enormously useful, practical and profitable ideas and insights. It will take courage to follow all of its advice – especially the brilliantly challenging section on how to reward partners – but if you do you will have a much better practice and a much better life.”
Steve Pipe FCA – AVN Founder and Head of Research and author of The UK’s best accountancy practices

“This is a powerful and profoundly important book. Rob Nixon brings 17 years of making a difference in the profession into a laser-like focus. It burns away the myths and unlocks the real secrets of creating a practice that does great things brilliantly.”

Paul Dunn, Author of The Firm of the Future (previously Chairman Results Accountants’ Systems and creator of the Accountants Boot Camp)

“Accounting Practices Certainly Don’t Add Up! – In his excellent book, Rob Nixon captures the essence of what is wrong with the traditional accounting firm model. But, unlike many who moan that things aren’t right, Rob is different – he provides the reader with a wealth of ideas and inspiration to help them redesign and rework their business model. I wish this book was around when I was in public accounting, but for that to have happened Rob would have to be MUCH older!

To all in public accounting – BUY THIS BOOK! Read it, absorb the concepts and ideas and then get to work ON your business rather than IN it, and reap the rewards.”
Steve McIntyre-Smith – Leading consultant to the Canadian Accounting Profession.

Hello Rob,

Sincere thanks to you and your fabulous marketing team at Nixon Advantage for extending Entica with an invitation to witness the Launch of the Proactive Accountants Network program.

We at Entica are extremely proud of the new relationship we have with Nixon, and felt further privileged to join the PAN ‘family’ in witnessing your dynamic Webinar earlier this week.

We enjoyed the experience thoroughly, and found it equally informative, entertaining and relevant.

As members of a professional service delivery business, we too often hunger for opportunities to; build networks with like-minded colleagues, discover strategies for creating greater efficiency/profit/cash flow, capitalise on other companies experience and to be ‘led’ to reflect on the value in our own enterprise.

So we offer a hearty Congratulations to you Rob – the PAN program is clearly already a success, but would appear to be poised to draw out more of the very best Accountancy enterprises from across the country; to share, grow and profit collectively.

Entica is excited to be onboard the Nixon ‘member benefit’ express……..and look forward to the opportunity to creatively collaborate with some of these innovative, successful and dynamic Accountancy firms in Australia. So bring them on……

We wish you and Nixon all the best with the PAN program, and with the many exciting activities you have planned across the Nixon Advantage schedule for 2011/12.

Yours sincerely, Peter

Peter Lynch
Managing Director
Entica

230 harcourt street
post office box 696
new farm, qld, 4005

http://www.entica.com.au

For my 40th birthday my wife bought me a trip into Space on Virgin Galactic. Pretty cool present. I am no. 293 in the world to fly and no. 13 in Australia to sign up for it.

Here is a sneak preview from a test flight yesterday.

SO HOW CAN YOU TELL THE DIFFERENCE BETWEEN A TYPE 1 & TYPE 2 ACCOUNTANT?

I had the pleasure of interviewing 1,077 business people on behalf of 129 Accounting firms. The meetings were all about what the clients (you) wanted from their Accountant. The clients overwhelmingly said they wanted their Accountant to be more proactive with them. They said they did not know what additional services their Accountant delivered and they wanted higher (and more frequent) levels of communication. Maybe you are the same?

I had a good hard look at the research and and worked out what the 1,077 business owners where telling me. They told me there key frustrations when dealing with Type 1 (Reactive) Accountants and they also told me what they wanted from Type 2 (Proactive) Accountants. 

SEE HOW YOUR CURRENT ACCOUNTANT STACKS UP WITH THIS LIST OF 20 WISHES FROM 1,077 BUSINESS OWNERS.

1) You (business owner) call them when you have an issue VS They (Accountant) call you and ‘check in’ on how you are going – at no charge!

2) You visit them only when you have to VS They visit you at no charge

3) You only see or hear from them when something bad has happened VS You hear from them frequently about all sorts of issues, ideas and new opportunities

4) They do not have a regular communication program – it’s almost a surprise when they contact you VS They have a structured communication program (that does not cost you anything)

5) They charge you for nearly every phone call, email and quick meeting – in 6 minute ‘units’ of time VS They do not charge you for these small matters because they know that it annoys you

6) They do not understand your business or situation and take little interest in you VS They do understand your business or your situation and are very interested in your welfare

7) They give you a bill after the work is done – often a big surprise VS They price the project before starting and advise how much it will be and what is involved

8 You receive surprise bills that you do not understand from the tax department VS They have advised well in advance of the forthcoming tax bill and it is no surprise to you

9) They never ask their clients what they think about their service levels VS They ask for your opinion on how they can deliver a higher quality service

10) They talk more than you do in meetings – always offering solutions before the real issue is uncovered VS They listen more than you do in meetings and always ask probing questions to get to the heart of the issue – then offer the solution

11) They tell you what to do VS They tell you what to do and how to do it

12) They do not advise you what to send in each year and in what format VS They send you checklists and work with you to get all the information needed in one go

13) They only offer you what you legally have to buy – compliance services that add minimal value VS They offer a range of business improvement and wealth / asset services that are suited to your goals

14) They let you send in your work whenever you are ready VS They advise you when you need to send in your work so it can be done in a timely manner

15) They do not ask when you need information or jobs completed – they just assume VS They have an agreed deadline with you when the information / project will be completed

16) They ‘pre-judge’ what services you need VS They ask questions to determine what you need

17) You do not have a very good relationship with them VS They make an effort to enhance the relationship with you

18) You have no idea what value they add VS They articulate the value that they add

19) They do not explain your work to you – often they just send / mail it to you with no explanation VS They sit with you and step you through what it all means, where the money went and help you interpret your situation

20) They virtually say ‘good luck, you’re on your own’ VS They really help you step-by-step to achieve your financial goals

NOW YOU HAVE BEEN THROUGH THE LIST YOU NOW HAVE SOME QUESTIONS TO ASK YOURSELF:

1. How does your current Accountant measure up?
2. What is missing from your current Accounting relationship?
3. What sort of relationship do you want?

If you like your current Accountant (and you see potential in them) then speak to them about improving their service levels and service offering to you. And perhaps give them the benefit of the doubt to start with – many Accountants have problems keeping up with what the government requires them to do with you.

If you would like your current Accountant to improve, they are ways they can do that. One of the most powerful ways is to refer them directly to the Proactive Accountants Network. They will see precisely how to help you more proactively with coaching, training and new tools.

If, on serious reflection (perhaps based on some of the things you’ve looked at here) you would prefer to sever your relationship with your current Accountant then make an enquiry to one of the accredited ‘proactive’ Accountants. Each firm listed has passed stringent tests to prove they are proactive.

It’s your business and your future. The selection of the right Accountant will make the world of difference to your financial future.

One of the most endemic ‘business practices’ with Type 1 (Reactive) Accountants is the way they charge for their expertise and service. They charge you on a ‘time basis’ (after the work is complete) and based on who worked on your job and how much time they took will determine the amount they charge you. It’s a really bizarre way of doing things. The assumption (to get to the price) is that the time taken was correct and the price per hour was correct – and nothing could be further from the truth

With this ‘time billing’ practice (where the price is set at the end of the work) the firm is directly rewarded for making mistakes and going slower. You pay more the more inefficient they are! I do not think that is fair on you. I would imagine that you, (like most businesses), offer an agreed price for your product or service before the customer agrees to buy. But Type 1 (Reactive) Accountants continue to charge you whatever they want and you have to pay it. And you know how that feels — it’s like a grudge purchase every time.

Against that, consider the way the Type 2 (Proactive) Accountants work with you. They give you a fixed and agreed price before the work begins. You have a chance to understand the value they are adding and the scope and price of the work before it starts. It’s a fairer (and some would say) more ethical way to do business.

Accountants have a lot to offer. They are (in the main) very smart people and many are experts in finance, profit improvement, asset protection, cashflow enhancement and tax minimisation.

It’s really simple for you to decide what sort of Accountant suits you. If you are content with your financial position then pick a Type 1 Accountant. If you are not content with your current financial position then pick a Type 2 Accountant.

When you have the right Accountant they can seriously improve your financial position. For example, in my case I switched (4 years ago) from a Type 1 (Reactive) Accountant to a Type 2 (Proactive) Accountant and my net wealth has increased dramatically – and my new Accountant played a big part in that increase. I am not an isolated case. Many of the Type 2 firms I get to deal with cite case studies of how they have helped their clients become wealthier.

In the past 17 years I have met approximately 5,000 partners of Accounting firms and tens of thousands of their employees. I have also had the opportunity to interact with thousands of their business clients through small meetings and seminars.

Over that time, some things have become abundantly clear —there are 2 types of Accountants that you can choose from.

TYPE 1: Those that wonder what happened with you. These types are recorders of history. They are reactive in nature — they only do what they have to do with you based on Government mandates. They do tax / compliance / audit work on an annual basis and they advise you on additional matters only when you initiate the request for more assistance. Reactive accountants typically charge for every communication they have with you and they believe that ‘time is money’. And they charge you as such.

TYPE 2: Those that make things happen with you. These types are history makers. They are very proactive and they work closely with you to help you become more successful. This group communicates more frequently with you and they proactively offer additional ideas and services to add value to your business. Often they do not charge for additional communication and they understand that they should be paid for the value they add – not every minute of time spent delivering things.

Sadly, the vast majority of the Accounting profession are in type 1. Even if this group have an inclination to be proactive they often are not. They talk about doing things and helping their clients but they do not follow through.

Which Accountant is yours? If you are an Accountant – which one are you?

On average I do over 100 flights per year all over the world. I have been doing this for 17 years or so – so probably 1700 flights and who knows how many different airport security checks.

This morning was different. I was at Newcastle (NSW, Australia) domestic airport at 5:40am ready for my flight back to Brisbane. I grabbed a coffee and then went to security fully expecting to toss it out before passing. I was still a bit sleepy I think!

I was pleasently surprised – as you can see – to be presented with a coffee holder to hold the coffee as it passed through the scanner thing. The security staff where cheerful (another simple concept so many airports forget) and even the explosive check guy was friendly as he swabbed my case and person. Never in my years of travelling have I experienced a level of service like this from an airport security team.

It was an overall pleasant and delightful experience for a weary traveller. If an airport can get it right for service – how about you?

Coffee-holder-newcastle-airport-

Many Accountants think they are proactive but they are not. Most are reactive, yet your clients want you to be proactive.

In my personal research (1,077 SMEs interviewed on behalf of 129 firms) they all said they wanted you to be more proactive with them. They wanted more help, they wanted to be contacted more frequently and many where prepared to buy additional value added services from you.

So what’s the difference between reactive and proactive? Here are 20 definitions – I am sure there are more. See how many you can honestly tick all of the time.

Proactive is sending the client service coordinator out to the premises of the client to collect missing information. Reactive is communicating with clients about missing information and waiting for the client to send it in when they are ready.

Proactive is sending your own news no later than 8am the following morning of the country budget. Reactive is waiting for the newspaper or other media outlets to tell your clients about the budget results.

Proactive is advising your clients in writing of the scope and price of the project before you start. Reactive is pricing your services after the service has been completed – and making it a surprise to the client.

Proactive is running regular ‘client advisory boards’ where your clients advise you on what they are looking for and how things can be improved. Reactive is waiting for clients to leave and when you ask them why you find out they are unhappy with the service/value/services.

Proactive is getting paid before you start. Reactive is chasing debtors.

Proactive is working closely with your clients so they are successful. Reactive is waiting for your client to call and say ‘help, the bank has just called and I need to refinance/budget/cashflow etc by Tuesday’.

Proactive is not charging for phone calls / emails / quick meetings and your clients call you more frequently – what an opportunity! Reactive is charging for these small ‘units’ of time – and as such your clients do not call you.

Proactive is scheduling all incoming recurring work a year in advance. Reactive is waiting for clients to drop off their work when they are ready – completely ruining your planning process.

Proactive is managing your workflow on your terms. Reactive is letting your clients manage your workflow on their terms.

Proactive is having a detailed ‘menu of services’ where everyone your firm knows it backwards. Reactive is where your clients do know of all services and nor do your team.

Proactive is constantly promoting all services to all clients by a multitude of marketing methods. Reactive is doing no marketing and hoping that the clients will ask you for things that they think they need – or they may leave because another firm promoted to them.

Proactive is developing your client facing team in relationship building, communication and sales techniques. Reactive is sending them to ‘technical’ based skills training only.

Proactive is firing clients who do not fit your profile or who are difficult to deal with. Reactive is accepting and putting up with all clients who walk through your door.

Proactive is planning for capacity with equipment, people and process. Reactive is getting busy and then wondering how you are going to deliver the work.

Proactive is educating your clients what Accounting software to use and how to use it. Reactive is letting your clients decide.

Proactive is asking and listening. Reactive is telling & talking.

Proactive is visiting & communicating with your clients on a regular basis with a structured communication program. Reactive is waiting for your clients to communicate / visit you

when they are ready.

Proactive is communicating very frequently and building enduring relationships with you clients. Reactive is when you see / speak with them once or twice per year.

Proactive is constantly searching for new ‘value added’ services to take to clients. Reactive is only offering services that the government tells you to offer.

Proactive is developing your own unique brand and identity. Reactive is buying the ‘off the shelf’ website & newsletter service.

Being proactive is all about being on the ‘front foot’ and controlling your business success – on your terms. It’s your business not your clients business.

Which foot are you on most of the time?