I have this little test I do with Accountants to see if they are servicing their clients properly. Here it is.

Grab any clients’ income statement for 3 years, their balance sheet for 3 years and then explain the ‘story’ of the client to 2 other Accountants in your office. So tell them what the client does, how they do business, what their structure is etc. The other 2 Accountants are then to brainstorm (and you can be part of it as well) the answers to these 8 questions:

  1. What ideas do you have to help this client grow revenue or wealth?
  2. What ideas do you have to help this client increase their profit?
  3. What ideas do you have to help this client understand and improve their cashflow?
  4. What ideas do you have to help this client protect their assets?
  5. What ides do you have to help this client with succession planning or selling their business?
  6. What ideas do you have to minimise tax for this client in the future?
  7. What ideas do you have to help this client to financially retire?
  8. What other opportunities are there to provide extra services to this client that they are not already using?

Don’t spend more than 30 minutes  per client brainstorming. When you do I can guarantee that you have ideas (services) that you can take to your clients that will help them in some of these 8 areas.

These are all needs (services they should be buying) that are currently unmet. They do not know that you know the answers. The client certainly does not know what you know – otherwise they would have done it.

When you do this with all of your clients you will find that 100% of clients have unmet needs. Does it mean they will buy them from you? Not necessarily – but at least you should give them a shot at buying the service(s). Not offering additional services to your clients (especially when you know they need them) is doing your clients a complete dis-service.

You must service your clients properly. If you do not then there are plenty of ‘hungry’ accounting firms that will.

The glory days of the reactive Accountant who makes $300K plus profit (per partner) are coming to a grinding halt. Unless of course you know of the signs and you do something about it.

In the past it has been ‘easy’ to make a good living in the Accounting profession. Clients have been loyal. There has been little competition. The government has kept the profession in business with legislative changes. The costs of operation have been low and you really have not needed to market and sell.

It’s all about to change. And fast.

There are 3 current impending threats and if you do something about it they can be 3 wonderful opportunities.

1) Internet based (Cloud) Accounting.

There is a groundswell going on with business based accounting systems. There is a massive push to take accounting systems mobile – in the cloud. It makes total sense. Every other type of information is going mobile through tablet PCs and Smart phones. It was just a matter of time before accounting information caught up. Cloud based accounting is brilliant for the business owner. Real time everything from wherever you are. Debtors, Creditors, Revenue, GP, Profit, Cash-flow – all on your mobile device.

Because of the ‘realtimeness’ of the data and because it is already connected to the internet the time taken to have the annual compliance completed drops. It is estimated that it takes around 30-40% less time at the accountants end to prepare the compliance accounts when the client has cloud based accounting. This means fee pressure from your clients for compliance as compliance becomes a commodity. This is already happening. It also means (for you) much more capacity as well. So you either downsize your team or have capacity to offer value added services. Please choose the latter!

Cloud accounting reminds me of internet banking 8 or so years ago. Some early adopters and a lot of naysayers. Now? What’s a cheque book?  The same is happening with cloud accounting. Jump on it and promote it. If you don’t someone else will promote it to your clients.

2) Client education.

Clients are more savvy these days when it comes to dealing with accountants. The days of ‘Dad used XYZ firm so we should as well’ are numbered. Clients are asking more questions of their accountants and expecting more. They are interviewing a number of firms before switching. Clients are more connected than ever to information and the business press is promoting more and more ‘what your accountant should be doing for you’.

Are you going to stay on the back foot and react or get on the front foot and market your firm? Are you going to just stick to compliance based services or are you going to actively seek out products and services which can make a difference to your clients?

In the western world there is (approx.) 1 accounting firm per 2,500 head of population. That’s a lot of accounting firms. The issue is that it’s a sea of sameness out there with the accounting profession. For you to differentiate you must differentiate.

3) Other ‘professionals’.

Bank managers, financial planners, insurance agents, consultants, business networking groups, industry associations, real estate agents and business coaches all need to develop new products and services to remain relevant. And they know that you are the gatekeeper to businesses. They know that to remain relevant they must offer ‘value added services’ – not just what they have been doing in the past.

They can buy financial analysis software, attend the course and overnight they are a financial whizz. With the new information they can provide cash-flow analysis, KPI reporting, benchmarking, planning and even management reports to their (or your) clients. THIS IS YOUR SPACE. Do not let them erode the value that you can provide to your clients. Get on the front foot and offer these services – NOW.

Take the positive approach to these 3 threats and use them to your advantage. There are 3 great opportunities here if you act now.

I was asked a question last week as to when an Accountant should be using Value Based fees or value pricing. Simple answer – 100% of the time.

Let me explain. Let’s start with a definition from the guru of VBFs and my friend Alan Weiss.

“A value based fee is a fixed fee that represents your contribution to the value your clients receive, representing a dramatic ROI for them and equitable compensation for you”

So if that is the case then in an Accounting firm you are always contributing value. Even with compliance and audit work you are contributing value.  The trick is to determine (with your client) what the value is that you are contributing. You need to get creative and work out the tangible or intangible value you are offering.

Here are some examples:

Tax planning service VE (value equals) knowing how much to pay and maybe a reduction

Compliance service VE the ability to make better management decisions, basis for planning & keep out of gaol

Systems audit VE knowing what to do to improve efficiency levels

Cashflow management VE Understanding and freeing up cash

Audit VE accuracy of records for better management decisions

Valuation VE ability to realise wealth

Personal income tax return VE tax refund (potentially)

And so on.

If you can work out the value you are contributing then you can work out what is a fair ROI for the client and then you can work out a fair fee for you. You will never work out a fair fee with a time X rate model. How do you know if the price is too low or too high?

The only right price (and it MUST be a fixed price) is just before the client says no. If they keep saying ‘yes’ then the price is tool low. Let the market place determine your value – with their payment or their feet.

You have to remember that without your expert help as an Accountant your clients cannot realise all of their potential. You have to believe that. And that’s the first sale – to your self.

Today is the first day of Spring in the Southern Hemisphere. Time for a spot of business spring cleaning. You know what it’s like when you clean out your wardrobe or your garage – it just feels good.

The same applies for your business.

Today is a good day to make some decisions and get rid of some baggage that might be holding you back. As my buddy, Michael Sheargold, is fond of saying “A breakthrough often happens after a breakwith”.

What do you need to breakwith in your business?

  • A system?
  • An attitude?
  • A piece of furniture – or the entire ensemble!
  • A product or service?
  • A supplier?
  • A team member or team members?
  • A business partner?

Business is a bit like monkey bars – you progress by letting go.

Monkey Bars Small