If you are like most firms you will have a range of charge rates in your firm. Normally charge rates range from $100 – $350 per person depending on salary & experience level. If this is the case then your Average hourly rate (AHR) or net firm billing rate for client hours will be around $150-$200.

It’s pretty pathetic to think that is all you believe you are worth! This is such a silly system for pricing.

I think you are worth much more but you have to believe it and you have to change the way you price projects.

There are 2 measures of Average Hourly Rate.

1) AHR – client hours. Take your revenue (let’s say $2M) and divide by client hours billed (let’s say 10,000). In this case it is $200.

2) AHR – hours worked entire team. Take your entire team (incl. partners, admin & professionals) and multiply by the working hours in a year to get total hours worked (say 12 people X 1750 hours each = 21,000 worked hours). Now divide revenue ($2M) by total hours worked (21,000). In this case it is $95.

It’s important to look at both of them. You can have a fantastic AHR for client hours (>$400) yet very poor on all hours worked (<$150) because of the productivity, people mix & administration process. The ultimate measure is to be focussed on AHR – hours worked entire team. It’s this one that will ultimately drive your profit before partner salaries.

If you are pricing projects up front then there are only 4 ways you can dramatically increase your AHR.

1) Charge more for the same project – straight price rise
2) Be more efficient and have less time on each project
3) Sell higher value projects based on value created
4) Change your administration mix and get more out what you have got

Your AHR should be improving every single month. If it is then that is a reflection on your pricing / sales prowess and your efficiency of throughput.

If it’s not improving (or going backwards) make sure you mention this to our coaching team when they do your Business Performance Review.

I have written an extensive report on Accounting firm performance. You can download the full report here with all 12 KPI’s in it.

Enjoy video # 4

It’s very easy to increase profits in an Accounting firm. Simply have the most senior people (partners) charge more time. The partners generally have the highest charge rates and theoretically the most experience.

Yes you will increase profits but for the short term only.

David Maister, author of many outstanding professional services firms’ books said it best:

“What you do with your billable time will determine your income.
What you do with your non-billable time will determine your future”

Assuming that the partners of the firm are partners for the right reasons (not a glorified / expensive senior Accountant with the title of Partner) then the partners should only be doing 3 things:

1)     High end advisory work for a small percentage of time <30% of time. 2)     Nurturing existing clients making sure each client has every service they need to satisfy their goals in life. 3)     Acting in a leadership position – driving performance, winning new clients & innovation. If Partners spend 2 hours analyzing phone bills and scrutinising the colour of the receptionists new chair - not a good use of partner time. If Partners spend 2 hours doing compliance work for $200 per hour. Hmmm - not a good use of time. If Partners can spend 2 hours in a client meeting and bring back a $10,000 project with a 75% margin then I would consider that a good use of partner time! Enjoy video no. 3

In today’s Australian Financial Review, Accounting journalist Agnes King puts forth an argument that (first line) “Accounting firms have no business being on social media”.

She continues “Honestly, what do social media campaigns actually offer the clients of accounting firms? They might be a cheap way to distribute monthly newsletters but that’s hardly revolutionary.”

C’mon Agnes – get with the times!

That is like saying that in the 80’s Accountants should not have a fax machine, in the 90’s they should have not had a computer on every desk and in the naughties every person in an Accounting firm need not have a website or individual email address!

We’re in the social & community re-building age – every firm needs a social media strategy and every firm needs to embrace it.

The esteemed (and very one sided in this matter) journalist continues:

“Most accounting firms profess an increased investment in social media. When pressed, however, they’re just as likely to admit they don’t understand it. But they also know they can’t ignore it. Admitting this seems to be a horrifying sign of weakness. The sooner they get over this notion, the better for all concerned as they can start focusing on the value again. Don’t ignore social media but consider it a research and development exercise until it proves itself to be something more”.

Research and Development – is that it? It will be something more if firms want to make it something more.

I thought journalists were not supposed to have an opinion. Weren’t  they supposed to give a balanced view of the subject at hand?

Her argument is fundamentally flawed because she does not understand how these new communication tools can enhance the relationship between Accountant and business client.

If the Accountants of this world are supposed to be the ‘trusted adviser’ and their clients look up to them for leading business advice then surely this medium is a way to distribute information and enhance the experience of dealing with the firm.

Surely a sign of ‘being modern’ and ‘keeping up with the times’ is that leading firms MUST have a social media presence & active and ever evolving presence.

The social presence must add value to clients otherwise it will be like the first ‘static’ websites of old where it was an online brochure with 10 year old pictures of the partners!

The beauty of a social presence is it is alive, interactive and very easy to use.

Here’s an example (and a cracking idea if I do say so myself):

Just imagine if a Proactive firm (one of my members perhaps!) started a ‘closed’ or ‘private’ group on LinkedIn or Facebook. They invited all of their clients to participate. Their employees participated as well and the Accounting firm lead discussions about topics. They started a ‘forum’ just for their firm where they brought their clients together. They stimulated clients thinking by offering case studies, testimonials, wins, content, discussion and tools. They updated everything through the closed group. The firm’s clients could do business with each other and interact with the people in the firm more. They could even offer ‘concierge’ service – connecting people to other people.

All this can be done for free right now.

It’s about building a community. Standard communities are deteriorating around the world due to media hyping up the next killing/abduction/robbery or car crash. The media has driven fear into the local community of old with their sensationalism, insinuation (it’s not safe to go outside kids) and negative driven news service. Just watch the news at 6pm tonight, or read tomorrows paper and count the negative to positive ratio of stories!

Social media used properly can re-build communities. They’re just different communities – a place where people feel like they belong.

On a final note. No one deals with a business, we all deal with people. It’s not business to business – it’s people to people. I do not deal with the Accounting firm because of their offices, pretty logo or brochure. I deal with the people in the Accounting firm – just as they deal with the people in my business.

Social media platforms are about bringing people together. To share, debate, exchange, inspire & communicate. Period.

I am humbled to be selected as the Queensland Entrepreneurs Organisation “Entrepreneur of the year”. It is an absolute honour.

The award is in honour of a past EO member, Darren Mullins, who was a founding member of EO in 1996/97 of the Brisbane chapter. Darren was in his mid 30’s with a wife and children and the world at his feet. One afternoon he felt a pain in his arm, had a massive heart attack and died at St Andrews Hospital here in Brisbane. In honour of his memory the Entrepreneur of the year award was started. The award is to recognize an individual who has best represented the values of EO throughout the year and endeavoured to promote EO Brisbane, just as Darren did many years ago when launching our fledgling chapter.

Thank you Darren – your legacy lives on. And thank you to everyone who voted for me. It’s the first thing I have won since I won a gold medal as Australian junior Archery Champion! In 1987!!!!

You can see by the first photo I was unable to accept in person at the gala function last weekend. So I got the official photo with the QLD chapter president – Jason Rechenberg.

EO award winner - not there

EO award winner

The relationship between profitably and ‘productivity’ (or ‘utilization’) in the old revenue model has always been about ‘billable hours’. How many can be charged to the client/project. As mentioned previously driving billable hours is a ludicrous business model.

Many partners of firms want to drive billable hours and they are quite proud of the fact that they, a team or team member has more than someone else. WARNING! Excessive focus on this metric promotes the wrong behaviour. Team members ‘hog’ work, they ‘pad out’ time sheets and are generally inefficient.

If you want to be as efficient as possible then price the project up front, have an hours budget on the project and then drive the time down – thus running out of work and creating capacity.

The measure is simple – charged time into available time. So if there were 40 hours in a (working) week available to charge and your team member ‘charged’ 30 of them then that would equate to 75%.

If there is plenty of work to do and you have sufficient team members then a healthy mix of ‘productive time’ is expected –around 75% of a normal working week. But not much more.

Enjoy video no. 2

This year I am embarking on my 20th year working ‘on’ the Accounting profession. In that time I have influenced Accountants in 38 countries, had over 85,000 Accountants attend seminars / webinars and personally coached over 500 firms to success.

Although not an Accountant, for nearly 20 years of my professional life has been about Accountants and their success. I started working with Accountants when I was 24 (yes, I know I look younger than that!) and have loved every minute of it.

Some people like science or making things. I like Accountants. In fact I love Accountants!

Accountants can offer so much value to their client base and therefore their community. They are an integral part of the success of business. They are the natural business leader and the true trusted advisor.

They offer an immense amount of value to their clients and they are seriously smart. Yet, they don’t make much money!

If profit per partner is one measure of success then only 2.5% of the profession is earning more than $1M per partner. Most partners of accounting firms make around $350,000 per year. I think it’s a paltry sum for the contribution they make.

The problem is their self-esteem and the business model that they operate under. My business is the Proactive Accountants Network and through our membership and coaching program we help Accountants to:

 Maximise their cashflow
 Run a more efficient business
 Increase profitability
 Utilize their team better
 Delight clients with value added work
 Work less hours
 Grow their revenue & wealth
 Live a better lifestyle

This video series is a ‘secrets revealed’ report focusing on how to revolutionise the financial performance of an Accounting firm. It’s based entirely on what our ultra-high performing firms are doing to achieve success and revolutionary financial performance. As you’ll discover, I do not pull any punches – I just tell it the way it is.

Enjoy getting focused on revolutionising your revenue, profit and cash!

Check back here often for each installment or sign up for RSS feed so you are notified immediately.

Here is video # 1 – enjoy.

In 1989 Stephen R Covey wrote the seminal book “7 Habits of Highly Effective People”. It has sold 25+ Million copies and has been rated one of the 25 most influential business books of our time.

He died just a while ago after complications with a bicycle accident.  He was 79 years young.

He will be long remembered for his words, inspiration and legacy. His 7 habits shaped my life and many others I know: (in brackets my definition)

1) Be Proactive (get on the front foot and lead the way)

2) Begin with the end in mind (start at the end and work backwards to today)

3) Put first things first (get focused on what matters now – not the trivial crap)

4) Think WIN-WIN (think of the other person when doing a deal)

5) Seek first to understand, then to be understood (listen first, then give your opinion)

6) Synergize (magnify you via others)

7) Sharpen the saw (measure twice and cut once – get the skills you need to not make mistakes)

My business is called the “Proactive Accountants Network” for good reason.

He will be sadly missed. Most off by his family. RIP Stephen R Covey.

I’ve been too busy to post every day since arriving into the UK on Monday night so here is a summary of a great 6 days in the Olympic city.

Day 1 – Tuesday. Started with a 7 hour breakfast with the world famous Thomas and Penny Power. Fabulous time catching up and solving the world. Then off to a cocktail party with Virgin Galactic. Busy first day.

Day 2 – Wednesday. Off to the Farnborough airshow as a guest of the world famous Sir Richard Branson. It was awesome to see the (replica) spacecraft that I will be going into space in. Richard announced some new space/satellite initiatives which had a swarm of press in a frenzy over. It was absolute hoot to meet some other “Future Astronauts” (FAs) like me. Around 120 of us FAs there + partners.

The airshow was a sight with a low flying A380 which was busting some moves over head. I’ve been on the A380 10 times and never knew it could move like the late Michael Jackson! Unbelievable. The other jets where impressive but the star of the show was definitely the Virgin Galactic spaceship.

Then off to a legendary Virgin party that night. Got to spend some time with Richard & caught up with his mum again which was cool. Mrs Branson told me her book is finished called – “Mums the word”. Full of juicy details she said.

Day 3 – Thursday. Wee bit seedy after a BIG night at the Virgin party. Off on a bus trip to get a behind the scenes tour of the Olympics. It was fascinating to hear how  the area where many of the games will be held (Stratford) had very little infracture 7 years ago. Today is has the largest shopping centre in Europe, new accomodation and 5 new sporting stadiums.

Our tour guide said that a train every 14 seconds will be arriving at Stratford International train station bringing spectators to the games. Also met with the world famous Giles Brennand who is interesting in taking our business to Hong Kong later in the year.

Day 4 – Friday. The world famous Colin Dunn & I did some market research and met with a bunch of  Accountants and would be licensees of ours all day. Great to know that our business is directly transferable to the UK – just need to find the right people.

The world famous Nat Nixon started her 3 day “how to be a great speaker” course with the equally world famous Joanna Martin today. We’re starting a charity next year, which Nat will head up, so she is learning some new skills.

Day 5 – Saturday. I flew up north to see my awesome (and world famous in Northumberland) Grandfather. He is 91 and we all reckon he has at least another 9 years in him yet. Still as whitty as ever. Great to see him and his wife of 24 years – my step grandmother (who too is world famous in Northumberland) – Nancy.

Day 6 – Sunday. Did very little. Nat was at her course all day (I did pop in and say Hi to the group and tell a quick story) so I was on my own. Had a very long breakfast, went shopping, had a massage at Harrods (that was cool) and then went to Hyde park for a walk. Off to dinner tonight at a swish restaurant with Nat. Looking forward to hearing all about the course.

Off back to Australia tomorrow. Nat is staying on for the Olympics. We have a friend competing. The very talented (and who actually is world famous) Natalie Cook. It’s Nat’s 5th Olympics in a row (Beach volleyball) which makes Australian Olympic history. She’s won gold before – time to do it again!

Grandad

Flying high over London

Richard and me

FarnboroughAir force muscleNice jetA380What a circusSpaceshipPowers

Our company theme for the year is “Revolution”. This is what we are getting all of our Proactive Accountants Network member firms around the world focused on.

Specifically revolutionise …

  • Your clients – only work with the clients you want to work with, make sure they are properly serviced and you are efficiently doing the work.
  • Your team – only have the “A” team on your team, make sure they are well looked after and in return make sure they perform.
  • Your time – as an owner of an accounting firm make sure your time is focussed on 3 things only 1) extremely high end work, 2) nurturing existing clients (sales) and 3) leadership – driving performance and looking for new opportunities.
  • Your cash – clean out your work in progress, clean up your accounts receivable and make profits (dare I say it obscene ones) that are in line with your intellectual property and value!

Are you ready for the challenge?

Revolution

    Below is the June 2012 and financial year to date results of a very high performing Accounting firm. Through our network of 300+ firms we monitor their performance every single month through our cloud based monitoring system. I have circled the keys to this firms success. It is a 3 partner firm in the suburbs serving small businesses.

    As you can see their ‘lock up’ needs some attention but other than than they are doing exceptionally well. Our strategies work for small firms and large firms. This firm is a shining example of implementing our strategies. Make an enquiry if you are looking to revolutionise your financial performance!

    High performing firm