As I am giving a testimonial for my space flight Richard creeps through the bushes and scares the living daylights out of me. About 1.10min in. Enjoy!
I have been asked by an editor of a publication to answer 2 questions on the accounting profession. In case my words are twisted, deleted or otherwise changed – here are the 2 questions and my direct answer.
What kind of a year was it for the CPA profession in 2011?
The accounting profession hardly moved in performance due to the fact that (in general) it did not start being proactive with marketing and servicing their existing clients with value added services. If the only strategy is to reduce costs then, yes, profits will increase, however new clients and much needed services to existing clients will not eventuate. The profession could be wiped out by internet based accounting systems. It needs to step up and take it’s rightful place as the trusted advisor
What kind of a year are we expecting in 2012, given that the year is half over already?
The proactive firms are doing well. They always will. The reactive firms will always turn in a mediocre result. This year will be a ‘same same’ year as last year. The profession makes too much money too easily and as such apathy creeps in. I think most partners of firms are lazy – especially when it comes to servicing clients properly by offering value added services. A tsunami of change is on the way with internet based accounting systems. Firms need to get ready for a reduction in annual tax work over the next few years. I am a big believer that this needs to happen. To remain relevant innovation and new services must be introduced – otherwise many firms will go the way of the dinosaur.
Very quick 4 day trip from Australia to the USA. Arrived Wednesday afternoon on Qantas (via LAX) and then right into tourist mode. Went down to the world famous Fisherman’s Wharf for a quick bite and then dinner out with the world famous Alex Goldfayn & Freda Valassakis.
On Thursday did lunch with the world famous Simma Leiberman and John Weathington, bit of work then dinner out with some lovely guests from North Carolina (Steve & Karen Moss) and some old work buddies from the 90’s. It was awesome to dine with the world famous Natalie Nixon, Colin Dunn, Wendy Gleeson & Shannon Vincent.
The reason I was here was for Friday when I presented my “7 figure business coaching” model to a bunch or people who had flown in from all over the country. The feedback was awesome – they loved what I do – and more importantly a bunch of them want to do what I do – 7 figure business coaching.
On Friday night I booked a private room at ‘The Boulevard” restaurant for 8 of us. Truly magical to be with many including the world famous David Lingle.
On Saturday it was all being a tourist. Met up with our dear friends and the world famous Mark & Molly Smith to spend the day together. We dined, went on the rocket boat, cable car, union square, out to dinner at an awesome restuarant then caught the live show of Christopher Cross (Sailing, Ride like the wind, Best that you can be) – simply awesome.
Sunday was very subdued, lunch at Fisherman’s Wharf then a taxi out to the world famous Cliff House restaurant on the Pacific Ocean.
Time to go home knowing that what we do in Australia is directly transferable to the USA. Very cool few days. Enjoy the pics.
Why do you lose a client and why do you win a client?
The answer is the same. I am talking to business people and Accountants every day and the answer is one or both of these:
- Service. Customer service, limited relationship, rude, not proactive, not returning calls/emails/correspondence, no love, no phone calls, visits etc
- Services. Range of services, value for money, didn’t know how much it was going to cost, don’t know what it all means, I need more help etc
They are the same 2 reasons they leave you. Just ask the next one that leaves. Or ask the next new one you got – “why did you leave your current Accountant?”
If they say “they are too expensive.” That is not the real answer. The real answer is “they did not value add to what I am already paying”.
You can stop the bleed by focusing on service and services. You can gain new clients by being an ace at service and services. At the end of the day your clients do not know if you are a good Accountant or not. They just know if they know you, like you and trust you!
Last week I was in Bahrain at a leadership conference for Entrepreneurs Organisation (EO) for 4 days – well the conference was 1.5 days. I am proud to be a board member of the Brisbane Chapter of EO. The Brisbane chapter is one of the fastest growing chapters in the world. In Bahrain we had 350 EO leaders from around the world gather to learn and share experiences. I had never been to Bahrain before so I was looking forward to it.
I flew over on Etihad business class which was ontime, pleasant, flat bed seat but nothing real remarkable. By the time we got to the Hotel – 21 hours after leaving Brisbane – it was 10am local time. So off to a massage at 10:30 and then hit the golf course for a 1:30pm tee off at the Royal Golf Club Bahrain. It was very weird playing golf with oil pipes running past the fairways and oil pumps actually pumping oil when you are playing. The course also had the worlds biggest bunkers! I shot 82 off the stick which included 3 birdies so I was happy with that. I won the day and the money!
We pushed through the jetlag as acclimatized to local time. That night I met up with some other EOers and had dinner and few drinks.
My mate Matt and I were able to book a charter boat and “dive guide” to go pearl diving with scuba gear on. By the time we had gotten to our destination (30 minutes off shore) we had seen dolphins, sting ray, a US Aircraft carrier and countless oil tankers. It was an awesome experience hunting for pearls. They grow in wild oysters so we were literally hunting on the ocean bed for them. We caught about 100 oysters, shucked them and got absolutely zero pearls. I have a feeling we went to the wrong spot – particularly when our guide told us afterwards that this was the first time she had been pearl diving!
We got to see a bit of the architecture which is just amazing. I suppose when money is no object you can build what you want.
We got back to base just in time for the conference to start at around 3pm. The conference was at the Bahrain International Circuit – home of F1 in Bahrain. After the opening sessions we had a cocktail party / dinner then “after hours” – which means a drink (or 5) at the bar.
Started the day with a photo on the start / finish line of the grand prix circuit. You don’t get to do that every day. Then it was into conference all day and then finishing with a gala dinner in the National Museum of Bahrain. We were the 3rd ever group to have a function there – very cool. Conference over. More “after hours” and little sleep.
Because of the riots a few months back the police station themselves (just before dusk) at every intersection and roundabout with massive SWAT type 4WD vehicles. That didn’t stop a fire bomb going off in front of some friends of mine in a taxi as they came back from the night club.
Decided to play another round of golf in the searing heat and howling wind. We were in the middle of a sand storm that had blown in from Saudi Arabia. Not at all pleasant – we gave up after 9 holes. That afternoon a bunch of us went go kart racing at the F1 track. As you’d expect I won the day and the money – bit of a pattern going on here! I am not sure that my very tall German friends appreciated been beaten by an Aussie!
We were about to head back to the hotel when we were able to talk our way into the neighbouring drag racing track. The security guard with the big gun was not that helpful but when one of our shuttle busses turned up we had some leverage to get in. This thing was amazing. It did 0-100km in 1.6 seconds. 1050 BHP and covered the 1/4 mile in 8 seconds reaching 250km at the end. It felt like your eyes were put in the back of your head as it accelerated. It was a 3 seater special with the driver at the front and then 2 passengers. They are planning a proper F1 car with 2 seats so you can experience real F1. Might have to go back for that one.
After 2 hours sleep it was wake up, limo to the airport and then fly Bahrain, Abu Dhabi, Singapore, Brisbane – another 20 hours or so to get home. Awesome trip. Full on but very enjoyable – and the conference was worthwhile as well. Enjoy the photo’s.
Accountants are notorious for it. Discounting before sending the bill out. Commonly called a “write down”. Why oh why does this happen? Are you not proud of your product? Do you not have the guts to face the client and tell them the price? Do you not believe your team did a good job?
Some firms are great at doing this particular activity. I was in a firm once and they had $2.7M in write downs. To make a point I found a picture of a house worth $2.7M and then said that if they burnt it to the ground it would be more fun. Get a slab of beer, sit around and watch it burn baby. That’s effectively what this firm was doing.
What are you burning each year? A house? An apartment? A luxury car? Or even a motor bike? That’s gotta hurt!
If you follow any of my material you will know that my preferred model is to give the client a price before you start the work. The have an hours budget on each job and drive the time down. In that case you get a ‘write up’ in most occasions.
If you are not pricing up front then you better not be ‘writing down’ the work at the time of billing. It’s just waste, loss of income and it says that you do not value what you do. STOP IT.
The other day I was in a retailer and they gave me a discount without even asking for it. I wonder if their Accountant advised them to do that because that is what they do!!!
This morning I delivered a short speech (25 minutes) to 150+ Accountants. At the start of the speech I asked the question “On a scale of 1 to 10 how relevant is the Accounting profession today”. The resounding response was 7 out of 10.
When I finished my speech 25 minutes later I asked the same question in a different way. My question the 2nd time was “If the profession does not change in the next 7 years how relevant will it be”?
I started at 10 and my first taker was at 6 as I went down one each time. The overwhelming response was about a 1 in terms of relevance. I was blown away – a 1 out of 10 in terms of relevance if no change occurs in the way the profession operates.
So obviously in 25 minutes I caused a stir. What was I talking about? I made 3 key points:
1. The commoditisation of compliance. With the ‘cloud accounting’ revolution well upon the profession this will drive efficiencies, margin squeeze and the rise of “the internet accountant”. The photo below depicts what it may look like. Not a good look!
2. The way accountants explain compliance (the history) to their clients. Just sending out the year end accounts with the inane ‘sign here’ stickers and not explaining what it all means is just not good enough. Clients do not understand and therefore the value of the history paper is useless. It’s also out of date – by at least 12 months! But the history paper does have value – if it is properly explained. Using technology and a process (we call the process PANalytics) to demonstrate the history makes more sense. Our new internet product (Proactive Success System) explains in laymen’s terms where the money went and what it all means. An example screen shot is below.
3. Adding value. To remain relevant an Accountant must add value to the history document and then help their clients make history. The making of history bit involves real time numbers (available in the pocket or brief case at all times) and the offering constructive suggestions on improving the numbers. Our new “Client Alerts” product tells the Accountant real time what is happening in their client business every day. Being proactive takes on a whole new level with this product & process. When something that you pick up in your client business is not going so well then make the call and explain what you have picked up and what the client needs to do about it. What great client service and what a great tool to sell additional services. See below.
I think the sweat shop above will exist in the future. But that is not the answer. To remain relevant the profession must add more value – plain and simple. It’s time for change. My audience this morning knows it. They are up for it. Are you?
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!
- Brings something to the table – complements existing partners
- Is a good cultural fit in the firm
- Is a good communicator at the partner level
- Is a good communicator with team members
- Is a good communicator with clients
- Is stable – emotionally and financially
- Is profit and growth motivated
- Has a good work ethic
- Is reasonably fit and healthy
- Is at the same stage in life mentally.
- Shares similar values and ethics
- Has an ability to respect other partners
- Knows what they want – goal orientated
- Is supportive of new ideas
- Is flexible in their thoughts and actions
- Is a good business builder
- Is fun to be with
- Shares the vision
- Walks the talk not just talks the talk
- Acts in the best interests of clients and the firm at all times
- Can bring in new business.
If your partners do not stack up then maybe you need a divorce. I don’t!
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.
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.
- 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.