A little story that has never been told before in this amount of detail.

I have been business coaching for 6 years. In my first year (2006) I did $975K in revenue. Every year since then it has been well into 7 figures:

2006 – $975K – just me coaching
2007 – $2.2M – just me coaching
2008 – $3.75M – me plus 1 part time coach
2009 – $4.75M – me plus 2 part time coaches
2010 – $5.75M – me plus 2 full time coaches
2011 – $6.5M – me plus 2 full time coaches

This year my business will do somewhere between $8M – $10M in coaching fees. There are 4 of us coaching this year and mid-year I will require a 5th coach in Australasia.

I was doing some research on the business coaching industry and it seems that if a coach can do $25K per month in revenue they are regarded as a super star. What a joke. My coaches do $165K per month (approx. $2M in annual revenue) – and they only work 60% of the year.

I even read of people who coach other business coaches and their claim to fame is that they might have done $400K in revenue in one year – and that qualifies them as a coach to the coaches. You have got to be kidding me. That only qualifies someone to advise on how to get a job.

There are even coaching franchises that you can buy for $50K – $200K. As I look at the numbers it seems that the individuals who buy the franchise are not the ones that are becoming wealthy. The only people who are getting wealthy are the franchisors.

Other professions are well entrenched in their business models – accounting, consulting, legal etc. And many of these professional service firms are gigantic organisations dating back decades.

The business coaching profession is relatively new and is very much a cottage industry. I invented a business coaching model that can create real wealth for the coach – the business owner.

The business model is very straight forward. It is 100% group coaching. It was originally called coachingclub and it has now ‘morphed’ into a formal network of Accounting firms – the Proactive Accountants Network. Here is my delivery model:

1. I have 8 businesses (of the same type) in each club
2. Each club meets 4 times per year face to face – with their coach.
3. Each club meets 4 times per year over the phone – with their coach.
4. A very cool online service is provided with loads of industry niche content, forum, cloud reporting system, success library, learning centre
5. An upfront fee is charged to join (2 day strategy session is delivered for this) of $3500 – $9000 – depending which service level is selected.
6. A monthly fee is charged for membership of $750 – $3000 – depending which service level is selected.

Now you have to be good for a client to pay you $10K – $30K per year. Very good in fact. And you must produce results for your clients. Our clients consistently rank in the upper quartile of results against their peers. We track their results every month via our cloud based monitoring solution. A client does not mind paying if they are getting value and their KPIs are improving every month.

So far my business has coached 525 clients and currently there are 290 active clients being coached. The average tenure of a client is 2.5 years and we are just about to roll out a solution which will keep them for double or treble that amount of time. With the clients who are currently ‘out’ of the program we are bringing them back in with different serviced offerings.

As I said each coach manages about $2M in fees and since starting 6 years ago I have billed $24M in revenue. Any business should create wealth for the owner.

Over the years I have had dozens of people ask me about the business model. I freely tell them – like I have told it here. But it will not work unless you know the 4 secrets that have been perfected. What I call the “Secret Sauce”:

1. The detail of what happens in the meetings. The accountability methods. The learning style and the group sharing.
2. The niche market (100% of my clients are Accounting firms) is important but more importantly than who is served it is the content that is delivered. The content MUST help improve the KPIs of the client. The content must be succinct and proven in that industry.
3. The finding and keeping client system. No point building a business unless you can find and keep clients.
4. The online experience. The meetings are one thing (and very important) but the online experience is equally important. Chat forum with their peers, learning centre with video based content, success library with templates and an online KPI monitoring service which benchmarks each client against their peers every month.

Why am I telling you this?

Real simple. I am going license my network and coaching model (for accountants) around the globe. I am looking for around 100 licensees who want to specialise in the accounting profession. My business operates in Australia and New Zealand only at this stage.

You might be a business coach, a consultant or a partner of an accounting firm looking for a new career. Ideally you know how accounting firms work. You need to be a business developer who is great at client relationships. With 1.5M accounting firms in the world we want to make a massive difference to the accountants and their clients. We think the market has capacity for about 600 licensees.

We are looking at English speaking countries first with one licensee per (approx.) 2500 accounting firms. No one in the world does what we do for accounting firms. No one gets the results for the profession and no one gets the results for themselves.

We love business success and our company purpose is to “Get business owners addicted to the thrills of success”.

We believe the right accountants can step up and make a difference to business.
We believe it is the accountant who is the natural trusted advisor.
We believe accountants can make a difference to their clients if they have the right tools, coaching and training. We have all of that – including new advice tools like cloud based KPI monitoring where we consolidate data of SME business right to the accountants desktop or mobile device.

If you are interested in pursuing this opportunity then send a direct email to me (rob.nixon@nixonadvantage.com) with your CV and reasons why we should consider you. We only want the highest quality licensees to represent us around the world.

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.

Opportunities Abound

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!)

Client service matrix

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.

Awesome 8

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.

To be a success in the Accounting profession you need to focus on increasing the average project fee per client. Not the total fee but for each transaction how much margin do you realise.

Here are 11 points to implement to increase the value of each project – without increasing the labour component.

  1. Realise and believe your services are worth more
  2. Find the courage to charge more
  3. Increase all prices immediately
  4. Offer additional services at the time of buying
  5. Have a standard menu of services and price list
  6. Price in advance not arrears
  7. Articulate the value of each project eloquently
  8. Get rid of low margin services and low margin clients
  9. Improve your language and sales skills
  10. Target more profitable clients & services
  11. Use value based fees – not time X rate!

Most firms plan their year by capacity.

They work out like this……We have X number of people this year, we expect X % of productivity (chargeable hours per person), the charge rates will be X each and the write offs will be X%. Less of course labour and overheads and hey presto – a budget.

It’s a really dumb way to plan. It is entirely internally focused (where is the client?) and typically charge rates are determined by salary levels, the method does not reward efficiency, there are write offs involved and as a result the firm does not improve it’s profit % as it grows in size.  Most times the profit % goes backwards over the years. This method will keep you in the poor house.

A better way is to focus on the clients.

No. of clients X Average project value X no. of projects per client per year = revenue.

If you focus on clients, marketing, sales & services then the revenue will look after itself. If you focus on value based fees, pricing up front and being super efficient then the margins will look after themselves.

Most firms know what their productivity, average hourly rate and write offs are. Yes it is important to know what these numbers are – but whatever you do – do not manage your business by these numbers.

Most firms do not know how many (exactly) clients they have. Fewer will know the average project value (hint: divide revenue by number of invoices) and fewer still will know how many projects (on average) each client buys from you each year.

Work out the new numbers and you will be astounded as to the results. From there set some targets in these 3 areas then introduce marketing, sales, services & efficiency to make it happen. Oh, make sure you price every job upfront and value price them if possible as well.

When planning the future of your firm you need to remember the following success formula for a thriving Accounting firm….

Success Formula

So what does that mean?

* LPP = Low partner productivity. Make sure partners are doing the right things. 1) High end chargeable work for a low percentage, 2) Nurturing Existing Clients, 3) Leadership – driving performance, new ideas, working ON, sales etc

* GP = Great people. There are no excuses for having anything but the A team on your team. There are that many great people hired in the profession – they just don’t work for you right now. Make it your mission to weed out the non-performers and handbrake team members.

* FP = Fabulous Products. Over and above compliance make sure that your products (services) are really adding value to your clients. After compliance products need  to be focussed on helping your clients in 7 critical areas: 1) Growth of revenue or wealth, 2) Profit improvement, 3) Cashflow Improvement, 4) Asset protection, 5) Tax minimisation, 6) Succession or selling, 7) Financial Retirement. Make sure your products are Easy to understand, Easy to buy and Easy to implement.

* M = Marketing. Without marketing your great products are going nowhere. Have a structured marketing plan that develops and promotes a wonderful brand and importantly a marketing plan that delivers new leads / enquiries

* S = Sales. After marketing comes sales. Make sure you follow through and you deliver on your promise. Sales is a skill that any person can lean – if you have the inclination. Sales is about asking the right questions, using effective language and listening.

* VP = Value Pricing. Your existing compliance work has typically been priced on time X rate system. Even if you are pricing upfront this is not value pricing. Value pricing is coming up with a price based on the value that you add to your client. The price needs to be a great ROI for the client and equitable compensation for you. Like sales, it is a learned skill that we can teach you.

* LC = Low costs. With cost control I am not talking about being an absolute ‘tight wad’ where the office facilities / equipment are below par. The main area that Accounting businesses blow out on is far too many people for the revenue they are doing. The old way of thinking would be about $150K per full time equivalent person – all people including partners and administration. We have many firms that are over $300k per FTE and many approaching $500k and $600k per FTE.

* CFM = Cash flow management. Great cashflow in an Accounting business is a function of high profit, low WIP balance and low debtor balance. We have many coaching clients with negative WIP and negative Debtors. It’s your business not your clients remember – you set the rules.

* FE = Fix Everything!

Make this year the year of fixing everything. If you need help go to the links below….

For marketing and sales training & events

For coaching help

Most Accounting firms do not plan to be a major success from the outset. It seems business just happens and over the years you end up with a collection of…

  1. Clients who are mis-match to who you really love working with
  2. Systems that are done differently by each person in the firm
  3. Pricing mechanisms that are all over the place
  4. Services that are at best a grudge purchase – aka compliance services
  5. No rules – on how you work with clients – they seem to control things
  6. People who are plodders and not high achievers
  7. Income streams that are not conducive with what you need to live a fulfilling lifestyle.

The good news you can change this – or if you are starting out you can change this from the outset. If you are prepared to treat your business like a how you progress on a set of monkey bars (clue LET GO) then you will have a big chance of success. As my friend Michael Sheargold says “A breakthrough often happens after a breakwith”.

Maybe you need to let go of some old habits, methods, people, clients, systems to be a big success. When you re-design your future think of these critical parts:

  1. What rules do you want your clients to play by – remembering it is your business not theirs
  2. What client types / classification do you want to serve?
  3. What geographical locations do you want to serve?
  4. What services do you want to deliver?
  5. What service delivery model do you want to follow?
  6. What pricing formula do you want to use?

It’s your business life and your risk that you are taking. You decide.

Monkey Bars Small

SO HOW CAN YOU TELL THE DIFFERENCE BETWEEN A TYPE 1 & TYPE 2 ACCOUNTANT?

I had the pleasure of interviewing 1,077 business people on behalf of 129 Accounting firms. The meetings were all about what the clients (you) wanted from their Accountant. The clients overwhelmingly said they wanted their Accountant to be more proactive with them. They said they did not know what additional services their Accountant delivered and they wanted higher (and more frequent) levels of communication. Maybe you are the same?

I had a good hard look at the research and and worked out what the 1,077 business owners where telling me. They told me there key frustrations when dealing with Type 1 (Reactive) Accountants and they also told me what they wanted from Type 2 (Proactive) Accountants. 

SEE HOW YOUR CURRENT ACCOUNTANT STACKS UP WITH THIS LIST OF 20 WISHES FROM 1,077 BUSINESS OWNERS.

1) You (business owner) call them when you have an issue VS They (Accountant) call you and ‘check in’ on how you are going – at no charge!

2) You visit them only when you have to VS They visit you at no charge

3) You only see or hear from them when something bad has happened VS You hear from them frequently about all sorts of issues, ideas and new opportunities

4) They do not have a regular communication program – it’s almost a surprise when they contact you VS They have a structured communication program (that does not cost you anything)

5) They charge you for nearly every phone call, email and quick meeting – in 6 minute ‘units’ of time VS They do not charge you for these small matters because they know that it annoys you

6) They do not understand your business or situation and take little interest in you VS They do understand your business or your situation and are very interested in your welfare

7) They give you a bill after the work is done – often a big surprise VS They price the project before starting and advise how much it will be and what is involved

8 You receive surprise bills that you do not understand from the tax department VS They have advised well in advance of the forthcoming tax bill and it is no surprise to you

9) They never ask their clients what they think about their service levels VS They ask for your opinion on how they can deliver a higher quality service

10) They talk more than you do in meetings – always offering solutions before the real issue is uncovered VS They listen more than you do in meetings and always ask probing questions to get to the heart of the issue – then offer the solution

11) They tell you what to do VS They tell you what to do and how to do it

12) They do not advise you what to send in each year and in what format VS They send you checklists and work with you to get all the information needed in one go

13) They only offer you what you legally have to buy – compliance services that add minimal value VS They offer a range of business improvement and wealth / asset services that are suited to your goals

14) They let you send in your work whenever you are ready VS They advise you when you need to send in your work so it can be done in a timely manner

15) They do not ask when you need information or jobs completed – they just assume VS They have an agreed deadline with you when the information / project will be completed

16) They ‘pre-judge’ what services you need VS They ask questions to determine what you need

17) You do not have a very good relationship with them VS They make an effort to enhance the relationship with you

18) You have no idea what value they add VS They articulate the value that they add

19) They do not explain your work to you – often they just send / mail it to you with no explanation VS They sit with you and step you through what it all means, where the money went and help you interpret your situation

20) They virtually say ‘good luck, you’re on your own’ VS They really help you step-by-step to achieve your financial goals

NOW YOU HAVE BEEN THROUGH THE LIST YOU NOW HAVE SOME QUESTIONS TO ASK YOURSELF:

1. How does your current Accountant measure up?
2. What is missing from your current Accounting relationship?
3. What sort of relationship do you want?

If you like your current Accountant (and you see potential in them) then speak to them about improving their service levels and service offering to you. And perhaps give them the benefit of the doubt to start with – many Accountants have problems keeping up with what the government requires them to do with you.

If you would like your current Accountant to improve, they are ways they can do that. One of the most powerful ways is to refer them directly to the Proactive Accountants Network. They will see precisely how to help you more proactively with coaching, training and new tools.

If, on serious reflection (perhaps based on some of the things you’ve looked at here) you would prefer to sever your relationship with your current Accountant then make an enquiry to one of the accredited ‘proactive’ Accountants. Each firm listed has passed stringent tests to prove they are proactive.

It’s your business and your future. The selection of the right Accountant will make the world of difference to your financial future.