As the year draws to a close Accountants all over the world should be thinking about what they are going to do in 2012 and beyond. Here is an article I wrote for our monthly newsletter which you might find useful.
In the accounting profession today there are many opportunities that you could (and should) pursue. As an observer to the industry and having the opportunity to speak with your suppliers, alliances, hundreds of firms and your professional bodies I get to see what is going on from a ‘vendor neutral’ point of view.
I have 11 key points that you should plan/fix/alter/stop doing/start doing/implement and make happen…immediately:
1) Cloud Accounting. My estimate is there are (currently) 3.5% of SME’s in the western world who have an internet (cloud) based accounting system instead of a server or CD based system. Although a small number this is not a passing fad. This is like internet banking 10 years ago. Back then we had cheque (check) books and passbooks and people were unsure and concerned that their information was unsafe and vulnerable. Now, what’s a cheque book?
What does this mean for you as the Accountant? Whether you like it or not this will gather in speed at a rate of knots and the way you interact with your clients will change. They will have real time information and you will as well. Once the client is ‘on the cloud’ your processing will be faster (for compliance) and you will be more efficient – some estimates are 30-40% less time for annual compliance. Will you 1) downsize the team, 2) reduce your costs to your clients or 3) refill your new capacity with value added work? I suggest all 2 & 3. Whatever you do start promoting it to your clients. It’s a good thing and the right (ethical) thing to do.
2) Generation Y. The next partners are currently 20-30 years old. Some of them in the past couple of years have already branched away from the staid traditional firm. They are sharp, technology savvy and they want faster results and are less patient. Is your firm geared up for them? If you are an old ‘fuddy duddy’ firm that is stuck in the dark ages do not expect to keep them. They will use you as a training ground and then leave to start their own firm. If you are a firm that offers modern solutions, modern environment (please please bring in an office planner to help here) and a career path then you may keep them. I found out that the average age of a partner (in Australia) is 57 right now. They are your succession plan.
3) Your current team. Many partners I meet do not truly value the intellect & creativity of their current team. Yes, they may be quiet and reserved but they have some great ideas. They just need to have a forum where they are asked, listened to and heard. If you have the team engaged and on board it makes your job so much easier. Don’t shut them down, let them speak, share the numbers and you’ll be amazed what they come up with.
4) Your own client base. This is an obvious one however one over looked and not systematically focussed on. And that is, how do we ‘put a fence’ around the client so they do not leave. That means that you analyse what they are buying from you now, you work out what services you have to offer and then systematically promote what you have to offer to existing clients. Your goal would be to have the average fee per client well over $20,000 pa and that they only ever buy (on average) less than 30% from you in total. That means you are continually innovating new services. The table below is something you can develop and analyse (with your services of course). Oh, BTW, make sure all new services are sold on value based fees – not time (what a waste of time that is to sell on time!)
5) Value added services. In line with point 4 you need offer (to all clients) 7 key services over and above government regulated compliance services. We call it “the awesome 8” – the 8th one is an output of the rest. Offering help with 1) Growth of revenue or wealth, 2) Profit improvement, 3) Cashflow management and improvement, 4) Asset protection, 5) Tax minimisation, 6) Succession planning or selling, 7) Financial retirement. And then if you do that you’ll help your client leave a lasting legacy. All services should be productised so team members other than the partners are delivering them.
6) Being curious. Why is it that Accountants do not ask many questions about their client’s background, objectives, motivations & problems? A cynic in me would say that you are supposed to know the answer to everything. Mind you, I think I am right! You seemed to be trained to provide answers to clients rather than dig for the real problem / opportunity. Try spending more time ‘zipping it’ and asking open ended questions rather than jumping straight to the ‘how’.
7) Trusted advisor status. This one gets me going. You have this implied status of being the trusted advisor. You have studied hard, you have a certificate on the wall, and you’ve been aloof (generalising here) and a bit standoffish, you’ve been reactive and offered little value to your client base – yet you still have the status. In my view this status is by title only and not earned. If you want to be the trusted advisor you need to live it, demonstrate it and actively promote it. The trusted advisor (and their business) should be running a better business than those that they advise. Are you?
8. Unmotivated accountants. What an opportunity to buy cheap fees from ‘older’ practitioners who have had enough. If the average age is 57 for a partner and they have $750K in fees with a $150K profit then offer them $500K (or less). Surely the valuation should be a multiple of profit. Many firms will close shop because of cloud accounting. Great. They shouldn’t be there in the first place.
9) Value based fees. Time based billing in arrears (I have written about it before) is a highly unethical behaviour. Team members ‘pad out’ their time sheets, they fill the available time with what work they have to do and you as the partner are incentivised to ‘drive up productivity’ – which means taking more time than needed to do the task. You will never realise your potential charging by the hour – or any unit of time – and you will not be motivated to do the task in the least amount of time (better for client) possible. Charging for the value that you bring to the table is the only way. You work out the ‘value add’, you articulate this to your clients, and you charge an appropriate fee based on your contribution to the clients financial and/or emotional results.
10) Roof top marketing. Accountants are some of the best kept secrets in the world. You do amazing work for your clients (too often when you are asked) yet very few clients know of the results you achieve for your clients. You need to shout it from the roof top how good you are. You need to continually promote how good you are via the success of your clients. You need case studies, testimonials, stories and examples of other clients you have worked with. If you are selling me something new I need social proof that you can do it. Stories help build trust. Remember this phrase “promote how good you are via the success of your clients”. Bring in some expert help (we can guide you) to do your marketing.
11) Limiting Self-beliefs. There have been 10 good ideas listed here and as many accountants read it they will nod in agreement with the concept and at the same time many (you?) will have a lot of ‘chatter’ going on in your head.
Like… “I/We could never do that we are not in the right location”. “I/We could never do that we do not have the client base”. “I/We could never do that we do not have the skills”. “I/We could never do this we are too busy”. “I/We could never do this we do not have the right team.”
Blah blah blah. Whatever is going on in your head is just an excuse. It erodes self-esteem and confidence. Self-confidence is a killer in this industry and I am convinced time based billing is the root of the issue. You have to shake out of your current belief system and become proactive. Your clients need you, they do not know what you do and if you are the least bit proactive they will think you are awesome.
A final word:
I am SOOOO excited about the accounting profession. It is at a cross roads right now. Based on our research there are 5 key things you are looking for 1) Cashflow, 2) Profit, 3) Growth, 4) Happiness & 5) Lifestyle improvement. Focus on these 11 points and get from where you are now to where you want to go. My coaching team are here to help.