Yesterday I celebrated my 20 year wedding anniversary. It’s been a great relationship – complete with extreme lows and massive highs. The highs outweigh the lows by an order of magnitude – that’s why we are still together. We are still in love and looking forward to the next 50 years together.

As you can see by the photo I was very young. Guess my age in the comments.

Anyway, I got to thinking about how Accountants select their business partners. Being in a partnership is like a marriage. It’s an interesting process that you go through. You have employees who come through the ranks and then they are “made partner”. This is business by default. Often not much thought goes into the individual, what they will be doing and how they will be doing it. As a result of this very weak selection process we have a glut of partners who are overpaid Accountants!

And don’t get me started on mergers. It seems like a good idea at the time. However, in most cases you just end up with more of the same. Here is a 21 point checklist of the ideal business partners. See how many you can tick off for your current partners!

  1. Brings something to the table – complements existing partners
  2. Is a good cultural fit in the firm
  3. Is a good communicator at the partner level
  4. Is a good communicator with team members
  5. Is a good communicator with clients
  6. Is stable – emotionally and financially
  7. Is profit and growth motivated
  8. Has a good work ethic
  9. Is reasonably fit and healthy
  10. Is at the same stage in life mentally.
  11. Shares similar values and ethics
  12. Has an ability to respect other partners
  13. Knows what they want – goal orientated
  14. Is supportive of new ideas
  15. Is flexible in their thoughts and actions
  16. Is a good business builder
  17. Is fun to be with
  18. Shares the vision
  19. Walks the talk not just talks the talk
  20. Acts in the best interests of clients and the firm at all times
  21. Can bring in new business.

If your partners do not stack up then maybe you need a divorce. I don’t!

Rob & Nat April 26 1992 Wedding Day

Most Accounting firms exist by default not by design. Over the years they have just happened and here they are today. They have been poorly planned and they are often producing poor returns for the owners. You can change it. There are 4 key areas (and 26 sub points) an Accounting firm must focus on at all times to run a great firm.


1) Workflow

2) People

3) Revenue

4) Clients


All 4 must have attention every day. If you focus on just one the other three will falter. Do not start on any one of them first – do them all together at the same time – otherwise you’ll miss out on opportunities.

It’s your business – re-engineer it the way you want to run it. What I am writing about here is best practice based on 19 years advising Accounting firms around the world.

Clients

  • Client service. It seems the term ‘service’ has been forgotten by many Accounting firms. What’s it like in your firm? Do you…offer refreshments, promptly return communication, explain all of your work, run events, educate your clients, have pleasant people, smile, provide technology, offer additional services and so on. Ask your team what are some examples of great customer service. Emulate the great companies. Do something different. It’s a sea of sameness out there in the Accounting profession.
  • Niche markets. If you are attempting to be a generalist Accountant who works with any type of client type then you are being nothing to no body. Get focused on who you want to serve. When you pick your niche(s) make sure you like working with them, they are good people and they have the ability to pay.
  • ‘A’ class strategy. Because most firms exist by default not by design they have a mix of A,B,C & D class clients. What are you doing for the A class clients? They know people who might be an A class client as well. Make sure you have a defined strategy for the A’s.
  • Classification / Selection. There is an abundance of clients you can select from. Why do you take on anyone who walks through the door. You are not a community service or a charity – you are a business. Know who you want and be ruthless about it. If you have the attitude that you are selecting and not convincing then your entire persona will change. And so will your client profile.
  • Value Added Services. Here’s what annoys me most about Accountants. If I give you an income statement showing 3 years of progress & a balance sheet and ask you to brainstorm ideas of improvement for the client then you will come up with a host of ideas. Then why are you not doing that every single day with every client you meet!!! Your clients may be buying tax & compliance service but what they really need is: Profit improvement, Cash-flow management, Revenue improvement, KPI analysis, Planning, Monitoring, Health Checks, Cloud technology, Benchmarking, Strategy, Coaching & Wealth Creation services.

Roadmap 4

Revenue

  • Branding / Leads. The function of marketing is to generate high quality leads – either from new or existing clients. Branding is very important as well. However when you get involved with marketing and hire marketing people make sure the money you are spending gets a return. Your brand probably needs a makeover and you also need to do activities that actually generate enquiry. Your marketing activity should make you money not cost you money.
  • Services productised. Every day you generate IP in your firm. What happens to it? it more than likely gets locked in a client file somewhere never to be seen again and then started again from scratch the next time that type of work needs to be done. I am being facetious! I know you have templates and processes for compliance and tax work. What about everything else? The more you productise your services the more efficient you can be, the better service you will deliver and the more money you will make.
  • Sales process / skills. Accountants are lousy at marketing but good at sales. Once we teach you. Think of sales as servicing. Making sure each client has what they need from you to achieve their goals and objectives. You do need skills in interviewing, language & questioning techniques. You also need a predictable sales process. Think of sales like workflow management – step by step process.
  • Value Pricing. To price a job upfront is not value pricing. Value pricing is setting a price based on your contribution to the clients outcome. If you can save the client $250K in tax paid (and you know that in advance) then what’s wrong with charging $25k to do that? A 10:1 return is a great return in anyone’s language. Charging by the day or the hour will keep you in the poor house.
  • Retention rate. There is no point in getting loads of new clients if you cannot look after the ones you already have. You must work out ways to retain your clients for the long haul. If you have a client that pays you $10k per year and refers 1 client per year that is worth a similar amount then that direct client is worth $200K over a 10 year period – plus inflation! You need to look at the lifetime value of each client – not just this months transaction.
  • Average project value. Each time your client buys a project from you is an opportunity to add value, up-sell, and make sure the client is paying an appropriate price based on the value you provide. Pricing remains a hidden gold mine in an Accounting firm. 99.9% of firms undercharge for what they do. The right price is just before “NO, I do not want to pay that amount of money for that”. What your client is really saying is they do not see value in what you are proposing. It’s not until you get a lot of push back do you know if you have hit the threshold. Do not assume what the right price is – test it and listen.
  • No. of projects / client. Accountants can offer huge amounts of value to their clients. If you have done your job right then your clients will be buying a large range of services from you each year. Most clients buy around 2 projects per year from their Accountant. Based on what clients need and what Accountants can provide that number should be an average of 4 or more.

Roadmap 3

People:

  • People mix / selection. You’ve probably heard the term ‘get the right people on the bus in the right seats on the bus’. Nothing could be truer. There are hundreds of thousands of great people you could employ – they just currently don’t work for you. The better your people the better your business. Do not accept anything but the “A” team. Get rid of the cancerous terrorists on your team. They will want to recruit others into their little gangs. Give everyone a chance to be coached – then fire fast if they are not with you.
  • Capacity model. Are you building capacity before you need it? Most Accounting firms do not. They seem afraid to hire the $100K plus person in fear of no work to get a return on the salary. A $100K person is really only $400 per day in hard costs. With the amount of opportunity out there and the amount of low level work that a partner does I am sure you could find $2k per day in work for this person to do! Hire the good ones and you’ll generate the work.
  • CSC Admin team. Most firms run their administration team at 10-15% of their total headcount. Somehow partners have a belief that because the administrators are not ‘charging time’ then they are a cost and therefore ‘not worthy’. My research shows that Accountants spend around 20% of their day doing administration work. If you hire more administrators (what I like to call Client Service Coordinators – CSCs) and delegate those tasks to them – then the Accountants capacity can increase and you can do more work for less cost. Some of the most profitable firms I know have their administration headcount at 30% – 40%.
  • Training / Development. Your professional bodies/associations demand 30-40 hours each year of ‘professional development’ and nothing on personal or business development. This is crazy. It is breeding more technical accountants but not better people skills or business skills. Make sure you invest heavily (weekly) in non technical training. Your business will better off for it.
  • Implementation process. An idea worthy of implementing should be implemented. Many Accountants have great ideas and they just go by the by. To implement any idea you must allocate the time and do it. You need a structured process. A list of actions, to do’s and projects is just that. Yes, start there but do not FTI – fail to implement. They will not implement on their own. Give the worthy idea to someone on your team to implement. Most partners of Accounting firms are lousy implementers. They are best seeing clients and selling.
  • Management / Leadership. Q. Where did a partner of an Accounting firm learn how to manage or lead? A. Hmm – from the partners they worked for. So where did those partners learn how to manage or lead? You guessed it. From the partners they worked for. Management is not leadership and leadership is not management. Leaders need to inspire by being inspiring. Accountants are supposed to be the leaders of business. Would you like to be lead by you?
  • Team performance. It’s very simple to see how well a team in an Accounting firm is performing. Just look at the revenue per full time equivalent person (FTE). That is a measure of the entire team – including administrators and partners. Most firms have revenue per FTE at around $125k – $175K. That’s very very low. If the leadership, people mix, methods, pricing, services, efficiency and clients are close to right then revenue per FTE should be well over $300K person. What’s yours?

Roadmap 2

Workflow:

  • WIP / Debtors. The objective is to have the minimal amount of work in progress and debtors (receivables) at all times. With profit, low WIP and debtors will guarantee great cashflow. Ideally WIP and Debtor days combined (lock up) should be well below 40 days of revenue.
  • Productivity / Average hourly rate. Traditional firms focus on productivity (charged time into available time) and this it WRONG to focus soley on this. It typically means the more productivity you have the slower you are going. Average hourly rate should be increasing every month. It is a function of how much you charge and how efficient (not productive) you are. If you have productivity at around 75% per Accountant you’ll be doing well. AHR should be over $400 per hour – but not based on charge rates.
  • Write on’s. Traditional firms who price in arrears will have write offs. It is discounting before billing. What advise would you give a client about this? STOP IT. It is complete waste. Price the job upfront, put an hours budget on each job and drive the time down – you’ll achieve write ons every time.
  • Systems / Technology. You should not have paper files. Every system you run should in the cloud. The technology is here today where you can run your firm from a mobile device. How good are your systems? How cumbersome is your current system of doing work? Spend the money and get the results.
  • Pricing up front. You know how much the job is worth. So price it upfront and tell the client. It’s common courtesy. Send them an email, a letter or have them sign a form that indicates the scope of the work and the price. If the scope changes you can always go back. Once you have priced the job then (as well as being great client service) you are now directly incentivised to be super efficient. Every project, no matter how big or small – MUST be priced up front.
  • Policy / Processes. As the owner of the firm it’s your business – not your teams or your clients. It’s your name on the building, lease, mortgage, loan, credit card or insurance papers. You are taking the risk. As such you should set the rules. If you want to be paid upfront then go for it. If you want to fly first class and your team in coach – then do it. If you chose not to start a job until all the information is in – then set the rule. The one who makes the rules wins the game.
  • Efficiency model. Most Accountants over engineer jobs. Do you really need the report and the extensive preparation at the start? Do you need to fill in a 20 page checklist. If you are focused on charging time and productivity then logic says to pad the job out and do more than needed. However, not a good look for the client. They pay more! Price the job upfront and then get rid of time wasting activities and “bin” excessive tasks.

Roadmap 1

Since May 1994 I have been advising Accountants on how to run a better business and how to help their clients run better businesses. I am not an Accountant (that is an advantage) and over the years I have come to respect an Accountants place in society.
There are many competing forces coming at Accountants these days. It seems everyone wants a piece of the Accountants action. Including… coaches, consultants, banks, lawyers, internet advisers, cloud computing, financial planners, insurance agents and even real estate agents – just to name a few.
For the Accounting profession to remain relevant it needs to step up, get proactive and make a difference.
Here’s what I believe about Accountants.
  1. You are the trusted advisor
  2. You are the natural business leader
  3. You can add serious value
  4. You should be the hub of business success
  5. You can make a massive difference to your community
  6. You need to be proactive rather than reactive
  7. You have a business to run – not a practice
  8. You need to stop focussing on writing up history and start making history

Go on! I know you can do it and live it.

At our annual conference we awarded stellar performance to 8 key firms in Australasia.

Most Efficient Accounting Business – Clifton Accountants – www.cpaaccountants.com.au

Most Innovative Accounting Business – Hansens Accountants – www.hansens.com.au

Service Excellence in an Accounting Business – Selby Watson & Co – www.selbywatson.com.au

Best Client Result in an Accounting Business – Doyle Partners – www.doylepartners.com.au

Community Contributions by an Accounting Business – Jaques Stanmore Chartered Accountants – www.jaquesstanmore.com.au

Most Valuable Player in an Accounting Business – Ravi Sharma from PJT Accountants – www.pjtaccountants.com.au

Rising Star Accounting Business – Snelleksz & Co – www.snelleksz.com.au

Accounting Business of the Year – ZJL Partners – www.zjl.com.au

Congratulations to all. Much deserved. We’re very proud of you.

Wednesday was an amazing presentation on speaking / presentation effectiveness skills by one of the worlds leaders – Joanna Martin. All day she captivated the audience with how to command an audience, be more effective in team / board meetings and lead a seminar. She also taught them how to ‘sell from stage’. Either sell product, next step or something different. She actually demonstrated by selling to the audience. The RAN TO THE SERVICE DESK to sign up for her 3 day seminar. It was an amazing sight to see Accountants running to a desk to give money. What a skill.

Thursday was the grand finale. We opened up with the legendary Paul Dunn talking about how Accountants and Entrepreneurs can be a force for good.  I have known Paul for 25 years now and was simply outstanding. My business partner then took the stage and interviewed 3 firms about their success. We call it ‘Heroes Journey’ – always a hit. After that Colin & I revealed our revolutionary product which will give an Accountant real time client data on their phone/device/laptop/desktop. A staggering 100% of firms said they would use it with around 70% of their clients. We have been working very hard to get this solution finished.

It’s done, complete, finished and ready now. I’ll put some screen shots up next week.

The conference concluded with the ‘Accountants night of all nights’ – a Rio/Carnivale inspired gala dinner. We gave out a string of awards and everyone laughed and danced the night away until the wee hours of Friday morning.  It truly was a superb finish.

Thank you to everyone who attended this years conference. Delegates, Speakers, Event partners, my business partner Colin, my wife Nat  and especially our team who worked night and day to make it a HUGE success. Thank you!

That’s the conference for another year. That’s 5 in a row – every year is better – next year is the challenge to make it better than this one!

If you attended and you read this blog please comment on your thoughts/feelings/observations or words of praise. A few snaps below! By tech guru will fix up the distortion later.

Colin & the roudy lot

Nat Brenton Ben

Rob & Paul Dunn

It’s been a very busy 2 days at my annual conference.

On Monday we had Verne Harnish (@thegrowthguy / www.gazelles.com) speak all day. He captivated the delegates the entire way through. Never before have I had some great feedback from so many people regarding a speaker I have hired. The learnings, inspiration, stories and thought provocation will change a lot of Accountants – for the better.

Monday night was my annual ‘presenters dinner’. This is where I book a private room at a top restuarant just for people on stage during the week. So we had Verne, Naomi Simson, Paul Dunn, Colin Dunn (no relation), Phil Pitt, Nat, myself + 12 Accountants for the evening. It was a hoot. We drank superb wine, ate like kings and laughed and laughed the entire night. What fun.

Tuesday morning was fun activities. We had golf, scuba diving, sailing, frisbee throwing (one of my team is a world champion), snorkelling and a variety of other fun things for the delegates. I chose the golf – which was not the smartest decision after a BIG night out the night before. The first 4 holes were most untidy!

Tuesday afternoon we had the legendary Naomi Simson (www.redballoon.com.au) speak for 90 minutes on team engagement. Naomi is a previous winner of Business woman of the year (Australia), Entrepreneur of the year and ‘best place to work’ (Australia) winner. She shared her wisdom on how she attracts and retains people.

I then took the stage and gave a candid look inside my business. Then I interviewed 4 leading Accounting firms on how they have implemented Verne Harnish’s growth ideas into their firms.

Oh, we were also joined by Freddie Mercury (and back up singers) for a couple of quick numbers to warm the group up.

More photos coming later. Here a couple of the room. It’s quite a show!

CCC Av deskCCC crowdCCC crowd 2CCC Freddie and friends