Happy New Year!
I trust you have had an enjoyable break and ready to attack the new year with gusto.
Over the break I was thinking about what professional services firms (PSFs) should be focused on for 2013. I have 5 key areas of focus for every Accounting/Consulting/Coaching/Legal firm around the world – no matter how well developed you are!
- Add value to clients – help them improve their condition. This has to be the no. 1 area of focus. Your clients condition could be their wealth, profit & cash flow. Or it could be their peace of mind, comfort or security. How are adding value to every day transactions? Are you adding value to customer service? And is what you are doing really improving the clients condition or is it a commodity that you are providing. If a commodity then be prepared to be marginalised by converging technology.
- Increase the number of clients – of the type you want. Every business needs new clients to keep the client base fresh. Every business loses clients every year and the goal needs to be to increase the net client numbers by year end. Do you know the profile of client you want to attract? What are your proactive strategies to win new clients? What is your marketing plan? If you are simply ‘waiting’ for referrals to happen then be prepared to have net less clients at year end.
- Increase the average profit per client. It is pointless having hundreds of clients if the profit per client is low because you need so much labour to service it. Your profit per client should be in the form of ‘average hourly rate’ (AHR) per client. You may have a large ‘fee per client’ but the AHR is only $200. What’s the point of all that work for little return? Your AHR per client is worked out simply by fee divided by client hours taken to service the client. You will need pricing up front, collection up front, value pricing & new added value services to drive this number past $500.
- Increase the retention rate per client. Although retention rate is relatively high for Accounting firms in particular you still will have to focus on it and put strategies in place to maintain and increase it. One of the key things about retention strategies is not the number (%) but what it does as a result of the focus. You will achieve more referrals and more propensity to have the client buy the next service from you – thus increasing no. 2 & 3. What is your strategy for retention? If not focused on then you’ll lose more than you want.
- Reduce costs. Although most PSFs run pretty lean there is still room for improvement. Especially in the efficiency area. The goal is to get more revenue out of the labour you already have. What is your efficiency strategy for 2013? How much outsourcing are you going to be doing? Do you know how inefficient your firm is? Do you need all the people you have? How much capacity do you have now and when you are more efficient how much will you have? If you have 25% capacity now and can be 25% more efficient then you have twice as many people that you need!
That’s it. Just 5 key areas for the year. Yes Cloud technology, Team work, Cashflow, Workflow, Marketing, Sales, Productivity are all important but not as important as the above 5.
My new all day seminar (Remaining Relevant) is going to address these 5 topics in detail. The day seminar will cover the actual what to do and more importantly how to do it. Suitable for all levels (beginner to advanced development) of firms. It’s on in February and March (it’s my ’20 year anniversary’ tour) all over Australasia. It’s on …. Perth Feb 25, Adelaide Feb 27, Sydney March 5, Brisbane March 8, Melbourne March 12 & Auckland March 14. For more information and booking click here.