One of the most endemic ‘business practices’ with Type 1 (Reactive) Accountants is the way they charge for their expertise and service. They charge you on a ‘time basis’ (after the work is complete) and based on who worked on your job and how much time they took will determine the amount they charge you. It’s a really bizarre way of doing things. The assumption (to get to the price) is that the time taken was correct and the price per hour was correct – and nothing could be further from the truth

With this ‘time billing’ practice (where the price is set at the end of the work) the firm is directly rewarded for making mistakes and going slower. You pay more the more inefficient they are! I do not think that is fair on you. I would imagine that you, (like most businesses), offer an agreed price for your product or service before the customer agrees to buy. But Type 1 (Reactive) Accountants continue to charge you whatever they want and you have to pay it. And you know how that feels — it’s like a grudge purchase every time.

Against that, consider the way the Type 2 (Proactive) Accountants work with you. They give you a fixed and agreed price before the work begins. You have a chance to understand the value they are adding and the scope and price of the work before it starts. It’s a fairer (and some would say) more ethical way to do business.

Accountants have a lot to offer. They are (in the main) very smart people and many are experts in finance, profit improvement, asset protection, cashflow enhancement and tax minimisation.

It’s really simple for you to decide what sort of Accountant suits you. If you are content with your financial position then pick a Type 1 Accountant. If you are not content with your current financial position then pick a Type 2 Accountant.

When you have the right Accountant they can seriously improve your financial position. For example, in my case I switched (4 years ago) from a Type 1 (Reactive) Accountant to a Type 2 (Proactive) Accountant and my net wealth has increased dramatically – and my new Accountant played a big part in that increase. I am not an isolated case. Many of the Type 2 firms I get to deal with cite case studies of how they have helped their clients become wealthier.

In the past 17 years I have met approximately 5,000 partners of Accounting firms and tens of thousands of their employees. I have also had the opportunity to interact with thousands of their business clients through small meetings and seminars.

Over that time, some things have become abundantly clear —there are 2 types of Accountants that you can choose from.

TYPE 1: Those that wonder what happened with you. These types are recorders of history. They are reactive in nature — they only do what they have to do with you based on Government mandates. They do tax / compliance / audit work on an annual basis and they advise you on additional matters only when you initiate the request for more assistance. Reactive accountants typically charge for every communication they have with you and they believe that ‘time is money’. And they charge you as such.

TYPE 2: Those that make things happen with you. These types are history makers. They are very proactive and they work closely with you to help you become more successful. This group communicates more frequently with you and they proactively offer additional ideas and services to add value to your business. Often they do not charge for additional communication and they understand that they should be paid for the value they add – not every minute of time spent delivering things.

Sadly, the vast majority of the Accounting profession are in type 1. Even if this group have an inclination to be proactive they often are not. They talk about doing things and helping their clients but they do not follow through.

Which Accountant is yours? If you are an Accountant – which one are you?

Many Accountants think they are proactive but they are not. Most are reactive, yet your clients want you to be proactive.

In my personal research (1,077 SMEs interviewed on behalf of 129 firms) they all said they wanted you to be more proactive with them. They wanted more help, they wanted to be contacted more frequently and many where prepared to buy additional value added services from you.

So what’s the difference between reactive and proactive? Here are 20 definitions – I am sure there are more. See how many you can honestly tick all of the time.

Proactive is sending the client service coordinator out to the premises of the client to collect missing information. Reactive is communicating with clients about missing information and waiting for the client to send it in when they are ready.

Proactive is sending your own news no later than 8am the following morning of the country budget. Reactive is waiting for the newspaper or other media outlets to tell your clients about the budget results.

Proactive is advising your clients in writing of the scope and price of the project before you start. Reactive is pricing your services after the service has been completed – and making it a surprise to the client.

Proactive is running regular ‘client advisory boards’ where your clients advise you on what they are looking for and how things can be improved. Reactive is waiting for clients to leave and when you ask them why you find out they are unhappy with the service/value/services.

Proactive is getting paid before you start. Reactive is chasing debtors.

Proactive is working closely with your clients so they are successful. Reactive is waiting for your client to call and say ‘help, the bank has just called and I need to refinance/budget/cashflow etc by Tuesday’.

Proactive is not charging for phone calls / emails / quick meetings and your clients call you more frequently – what an opportunity! Reactive is charging for these small ‘units’ of time – and as such your clients do not call you.

Proactive is scheduling all incoming recurring work a year in advance. Reactive is waiting for clients to drop off their work when they are ready – completely ruining your planning process.

Proactive is managing your workflow on your terms. Reactive is letting your clients manage your workflow on their terms.

Proactive is having a detailed ‘menu of services’ where everyone your firm knows it backwards. Reactive is where your clients do know of all services and nor do your team.

Proactive is constantly promoting all services to all clients by a multitude of marketing methods. Reactive is doing no marketing and hoping that the clients will ask you for things that they think they need – or they may leave because another firm promoted to them.

Proactive is developing your client facing team in relationship building, communication and sales techniques. Reactive is sending them to ‘technical’ based skills training only.

Proactive is firing clients who do not fit your profile or who are difficult to deal with. Reactive is accepting and putting up with all clients who walk through your door.

Proactive is planning for capacity with equipment, people and process. Reactive is getting busy and then wondering how you are going to deliver the work.

Proactive is educating your clients what Accounting software to use and how to use it. Reactive is letting your clients decide.

Proactive is asking and listening. Reactive is telling & talking.

Proactive is visiting & communicating with your clients on a regular basis with a structured communication program. Reactive is waiting for your clients to communicate / visit you

when they are ready.

Proactive is communicating very frequently and building enduring relationships with you clients. Reactive is when you see / speak with them once or twice per year.

Proactive is constantly searching for new ‘value added’ services to take to clients. Reactive is only offering services that the government tells you to offer.

Proactive is developing your own unique brand and identity. Reactive is buying the ‘off the shelf’ website & newsletter service.

Being proactive is all about being on the ‘front foot’ and controlling your business success – on your terms. It’s your business not your clients business.

Which foot are you on most of the time?

Today I took my 11 year old to the circus for her birthday. I hadn’t been for 25 years so I was keen to see how it had changed. It had not.

The acts were the same lame acts. The sound system was so bad you could hardly hear the introductions. There was no air-conditioning in the big tent – a very hot day. The food was still horrible and the music was from 20 years ago as well.

The big top had a capacity of 608 seats and if it was 50% full it would be lucky. Overall a tired and poor performance that will go by the way of the Dinosaur if it does not re-invent. With major acts like Cirque Du Soliel operating amazing shows around the world it is no wonder this old tired business is not succeeding.

How relevant is your business? Are you re-inventing and staying up with the times? Are you listening (really listening) to your market? Are you technologically savvy? Are you up with the latest trends from around the world. If you are not re-inventing then you will superceded by faster, hungrier players. The world has moved on – have you?

What’s your Ferrari?

To do what you want means you need to be living your dreams. Whatever they may be. You must first work out what you want from your life.

Ferrari – part 1

I was in Naples Florida at a worldwide consultant’s conference and over dinner one night our host (Alan) told a story of how a friend of his always wanted to buy a Ferrari but never did. The friend was severely injured in a BBQ explosion and the friends’ wife said to Alan ‘you know, he never did buy that Ferrari’. At that point in time another dinner guest (Mark) said to the table ‘so what’s your Ferrari?’

And around the table one at a time we were engrossed in stories of everyone’s inner most dreams and ambitions. It was an electrifying discussion. Fast forward to our annual coachingclub conference (Queenstown, NZ) and we had a very special ‘presenter’s dinner’ with all of the Speakers and Accountants who were presenting on stage over the 4 day event.

We were in a private room at an upmarket restaurant and Alan (being one of our guest speakers) was there. Alan told the story again and again we went around the table asking each Accountant (and other speakers) what their Ferrari was. It was amazing that deep down there were dreams not yet fulfilled and goals not yet met. One of the guest speakers (a Business Manager of a successful firm, Sean) leaned over to me and said ‘this is the best night of his life’.

Ferrari – part 2

At our next coachingclub conference (Hawaii, USA) I decided to do something more elaborate with this Ferrari story. In my opening keynote address the room was dark and I appeared on the big screen driving a racing Ferrari in full racing suit. Once the film was over, smoke appeared and I came through the smoke in my racing suit and helmet.

The conference room had a Ferrari theme to it and I told the Ferrari story complete with a slide show of potential ‘dreams’ that the audience may be interested in. I covered housing, travel, charity, sports, health, toys and overall lifestyle improvement. Once I was finished I gave the audience instructions to leave the conference room (this was only 15 minutes into a 4 day conference) with pad and pen and go and write down every conceivable dream, goal, aspiration and ambition they had and then come back in 1 hour.

The audience (all Accountants remember) came back buzzing. We had some of the audience share what they had written down – applause and tears followed. Then each person wrote a detailed plan to achieve their goals.

Each and every Accountant in that room has a much higher propensity of achieving their dreams because they have committed to writing them down and coming up with a plan to achieve them. They are also held accountable to their plans through our coachingclub process.

So what is your Ferrari?

Spend some time working out what you want to achieve in your life. Write everything down. Let your mind run free. Be creative and remember all the things you wanted to achieve when you were younger. If you need some inspiration buy some magazines or lifestyle books. There is a plethora of books available on goal setting – go and absorb them and come up with a definitive list.

I am very goal orientated – diligently writing them down since I was 17. After years of goal setting I have worked out a number of personal systems that work for me. This system keeps me on track and focused on living the life I want to live.

  • My life mission and purpose – this is a statement like a company mission statement
  • My eulogy – I have a written statement that I want people to say about me after I am gone
  • My inspiration – I look for inspiration through magazines, TV programs and dreaming
  • My people – I only associate with positive, goal orientated, forward thinking people
  • My electronic goals – I type my goal list into an electronic file
  • My written goals – I physically write every goal into my special ‘dreams and ideas’ book
  • My dream board – I have a cork board where I stick pictures of what I want to achieve
  • My focus – I have broken my goals down to life, 3 years, 1 year and 90 days
  • My accountability – each month I meet with my mastermind buddies to keep me on track
  • My achievement – as I fulfill a goal I cross it off and put it in the achieved list

With all of my goals I follow the tried and tested S.M.A.R.T formula – with a twist.

Specific – the goal must be very specifically stated

Measurable – the goal must be able to measured somehow

Audacious – the goal must stretch you and excite you

Realistic – the goal must be realistic at the same time

Timebound – the goal must have a completion date on it

One of my favourite achievement models is: Decisions + Actions = Results

The model says that if you want a different result then make some different decisions and then follow through with the appropriate actions. Sounds simple enough. You set a result that you want to achieve, you decide what needs to happen or change and then you go about implementing the action.

Here is what typically happens – YOU DON’T IMPLEMENT!

Why is that? When all the planning took place, the painstaking process of decision making and then you don’t follow through. The ‘action’ part is definitely the tough part and most people do get distracted during the implementation process.

Here’s my theory as to why the action bit doesn’t happen. Action does not happen because the result you wanted to achieve was not big enough or inspiring enough to motivate you into action.

If you had bigger, more audacious goals you will be more motivated to implement.

A correctly structured Accounting business that is run well is a vehicle to achieve whatever result you want to achieve in your life. As one of our coachingclub members said to me one day ‘I know of a 4 partner firm in Asia where one of the partners is a billionaire through the Accounting firm’.

You have the right business vehicle. The question is do you have the motivation. Do you have the dreams and goals to drive you forward?

This is an excerpt from my new book “Accounting Practices Don’t Add Up” – why they don’t and what to do about it.

© Nixon Advantage – all rights reserved

I have decided to give away some of the content of my new book “Accounting Practices Don’t Add Up” – why they don’t and what to do about it. The book will be available for purchase from my main site a few days time.

Here is an excerpt from chapter 5.

Chapter 5 – Put your own oxygen mask on first

No doubt you have been on an airplane and endured the mandatory safety briefing. Every safety briefing has the ‘oxygen mask’ discussion. On very flight I have ever been on they say (or infer) the same thing: ‘make sure you put your own oxygen mask on first before helping others’.

What they are saying is that if you are calm, relaxed and in control you can help others survive. The same applies to the Accounting business. If you (as the advisor) are healthy, fit, relaxed, in control, successful and wealthy then you can help others to be the same.

In this chapter I am going to explore what it means to be wealthy and what you need to do to look after yourself – first!

Real wealth

If you ask people about the definition of wealth most will say either: Lots of money, lots of free time, great health or enjoyable relationships.

Is it one of those or all of those?

Some people think being wealthy is just having a lot of money. Many people who have a lot of money do not have the free time to enjoy it and often they are overweight and unhealthy.

Others think that real wealth is having loads of free time. Unfortunately most people with a lot of free time do not have very much money – although they do have the time to be healthy and work on relationships.

Seeing this is an ‘opinion based book’ and it’s my opinion my definition of being wealthy is:

“To do what you want, when you want, with whom you want in a manner that you want”

This week I was at the ‘Growth Summit’ in Sydney. I got to spend some time with arguably the best business writer over the last 30 years. Tom Peters. His first book “In Search of Excellence” sold 3 million copies in the first 4 years. Now on book 16 and 2500 speeches he is still going strong at 68.

What’s interesting about Tom is he doesn’t have any original ideas. He will tell you he does not either. All he does all day is tell stories to make a point. He is telling example after example after fact after fact on what is going on in the world – and all the stupid management decisions that are made.

It was a fascinating way to spend a day. He is also moving to NZ soon as well. My favourite quote:

“The bottleneck is at the top of the bottle”


In another life I was the new GM of a company that just came out of a failed merger. The company had a loss of $340K versus profit the year prior of $1M. It had debt of $1.1M versus year prior of cash in bank. It had revenue of $3.4M versus $4.5M the year prior. A Complete mess.

My job was to turn it around and make it work. The upshot of 15 months work was:

  1. Profit went from $340K loss to $2.5M profit
  2. Revenue went from $3.4M to $6.7M
  3. Debt paid back in full
  4. Business got sold for many millions of dollars

Here’s what I did to turn it around.

  1. The general manager (me) was on very attractive incentive program
  2. We contained the cash outflow – put the cheque book in the draw
  3. all expenses scrutinised and reduced
  4. strict budget & cashflow – measured daily then weekly
  5. worked out what to stop doing, continue doing & start doing
  6. writing project plan of 149 initiatives – shared responsibility
  7. relocated the business – a breakthrough happens after a breakwith!
  8. hired above average people – total team of 17 FTE’s
  9. position descriptions, performance standards & career development process implemented
  10. non financial incentive programs implemented
  11. created a fun and success driven environment – people wanted to come to work
  12. involved team on decisions and shared all of the KPI’s
  13. increased training budget to 7.5% of salaries
  14. set up management structure with weekly “soft” & “hard” reporting
  15. hired a sales team with clear focus – sell
  16. invested heavily in IT to reduce downtime and speed up processes
  17. wrote extensive systems on “the way we do it here”
  18. increased client numbers by 11% with marketing initiatives
  19. increased price of one major product line by 36%
  20. created new product – responsible for $1m rev & $400k profit

I learned that a successful turnaround can happen if you have a plan, your are focussed, disciplined and the work you do is in the right area.

Towards the end of 2010 we conducted our largest Benchmarking Study on the Accounting profession yet. In total 373 firms from across Australia and New Zealand participated in the survey.

The report was released last Thursday and already over 13,000 Accountants have downloaded it.

Some of the highlights from this year’s Report are:

  • Two years ago the average profit per Partner was $211,050. This year the average of the 373 firms surveyed is $305,191 profit per Partner
  • The highest performer was $1.7 million profit for a Sole Practitioner
  • We are also starting to see revenue per Director get to decent levels – the top performer at $3.8 million
  • Revenue per full-time equivalent person (incl. Directors) peaked at $385,081 – you can make a good profit on those results
  • Average hourly rate averaged at $160 with a high of $356 – still not high enough for the value that you create
  • The lock up (WIP and debtors combined) average was quite poor at 92 days – but the best performer has -61 days in lock up

You can download a copy of the free Report here. You can also view the recording of the webinar we held about the Report on Tuesday.

The Report also outlines a number of recommendations on how any Accounting firm can make improvements to their results in the key areas surveyed.

It is all free with no strings attached. Enjoy the gift!