There are many issues, threats & changes (aka opportunities in disguise) in the Accounting profession right now. Some are short term some are long term. They are happening all around the globe and to ignore them will be to your detriment. Your role is to work out how you can capitalise on each one as you shape your firm over the next 5-10 years. In no particular order…
Bookkeepers. They will fall into 2 categories. Dinosaurs or competitors. Why would any business pay $60 per hour for a service they can get done for $7 per hour off shore? It doesn’t make sense. Cloud accounting nearly eliminates the need for them. However, if they are half smart they will evolve into business advisers with snazzy software and content to help your clients. A threat looms!
MOOCS. Massive online open courses. Almost every major university on the planet offers a free course that you probably paid $100K for – minus the certificate. You can learn anything you want for free via consolidators of university content. In 15 months the leading content consolidator (www.coursera.org) has amassed 3.6M students. A business owner or start up entrepreneur can learn content that you currently know. A threat to your IP base looms!
SMSFs. Self-Managed Super Funds (Australia only). If you have been charging $3K+ to set up a fund and $3K to audit it – forget it. Those days are gone. Online providers are charging as little as $800 to set one up and similar for the annual compliance. Unless you are adding value to the fund it’s a commodity. An opportunity to get real on pricing!
Graduates. Statistics are showing that Grads’ are not getting placed in firms as quickly as they normally are. Nor are they getting the high 1st year salaries of the past 3-5 years. Why? Low level roles are getting outsourced for a fraction of the labour cost. An opportunity to add value!
Succession. Right now in Australia 50% of all partners are over 55 years old. The average age of a partner in New Zealand is 58 and in the USA 50% of all partners are over 60 years old. The next 10 years will be a huge succession planning era. Time to retire for a big chunk of the profession globally. What an opportunity to buy firms and consolidate!
Social change. A new KPI for you – how many of your team aspire to be a partner? Probably not many. A new model is needed – a corporate model. What an opportunity.
Internet advice. Uncle Google can answer just about anything I need to know. Why should I pay you for hints, tips, skills and strategies when I can get them for free by searching? To remain relevant you’ll need to offer more than a search engine can. Big opportunity!
Time X Rate. The old model of charging clients is dead. If you are still pricing in arrears based on the time taken multiplied by the rate per hour (which is derived from a salary cost multiple – bizarre!) then you are living in the dark ages. Get with the program and give a fair price for the scope of work – in advance. Big opportunity – however new skills will be needed.
Globalisation. I have a friend in Australia ($3M pa business) who hires a 6 year experienced CPA in the Philippines to be his CFO. For $12 per hour! There are millions of people currently employed in Asian countries (who you might call outsourcers) who are doing the work for Western companies. Tens of thousands of Accountants doing the same work that local people charge 4-6 times more for. It’s an opportunity for the firm to lower their labour cost and a threat to ‘processing’ accountants who offer little value to clients.
Lite data. With internet technology comes ‘lite’ data. Data that can be easily transported (its’ only a login) to any location. I no longer need to send in the stick or disk to the Accountant. I can email my login details to someone in another location (or country) for them to review and process. That’s cool. With it comes commoditisation and intense competition. You no longer own your geographic area. A threat and an opportunity!
Technology convergence. The hype is around ‘cloud’ accounting. It’s not just that. It’s the convergence of accounting, logistics, CRM, warehousing & point of sale that is the big opportunity – and a threat. It means that a super computer is doing a lot of the checking of data (which Accountants used to do) and it means for more accurate reporting. Another friend has just introduced an app for his distribution business that manages all stock, ordering, invoicing and accounting – and he doesn’t need to employ 12 people in the future! More accurate data means less compliance costs. What an opportunity to add value.
Switching costs. We all hate changing banks, lawyers and dentists due to ‘switching costs’. What about Accountants? Should we stay with the same one that has their head in the sand and is totally reactive? I hope not. It’s easy to change Accountants. Find a new proactive one that is progressive and savvy and ask them to send a letter (called an ethical clearance letter) to your new one and let them deal with it. You shouldn’t need to put up with slack service that is expensive because it adds no value to your business.
To beat these rising tides you need to know what is going on and more importantly have a strategy to combat it. Each issue is an opportunity in disguise for progressive nimble Accounting firms. The industry needs to beat these rising tides to remain relevant.
If you are an Accountant and want to remain relevant then you’ll need to attend my ground breaking seminar “Remaining Relevant” in June & July across Australia this year. If your Accountant needs a push then get them along to it and I will sort them out!
You can’t stop a rising tide. The next level is a tsunami!
Next week I start my “Remaining Relevant” seminar tour. My first tour in 18 months and I will be celebrating my 20th year working for the Accounting profession. We ave 600 Accountants booked in so it will be a great program. Below are 35 key questions that I will be asking the group. These are THE 5 biggest questions to ask of your firm in 7 key areas. At the seminar I will go into detail on the how to’s as well.
They are yes or no answers. You can only say ‘yes’ if the strategy is either documented, completed, part of culture or the entire team are aware of it!
See what score you come up with. Post a comment with your score. BTW, if the score is less than 25 then you need to attend the seminar. Click here!
1. Do you have a concise and exciting long-term (3-5 years) strategic vision that combats external forces?
2. Has your strategic vision been documented into a ‘one page plan’ and the entire team understands it?
3. Do you have a core purpose and BHAG that the entire team are excited about?
4. Do you have real core values & performance standards that guide your decision making and behaviour?
5. Is your strategy broken down to 3 years, 1 year, quarterly, monthly and weekly KPIs and projects?
6. Are all ‘recurring’ client projects scheduled at least 6 months in advance?
7. Do you have an ‘efficiency’ process (technology & visual management) that takes time out of jobs?
8. Does every client project have a ‘maximum hour’s’ budget – and are the hours always challenged down?
9. Do you have dedicated ‘client service coordinators’ who manage all client information and workflow?
10. Do you measure ‘turnaround time’ on every job and implement strategies to improve it?
11. Does every client know the price and scope of work before you start every project?
12. Have you abolished charge rates but kept time sheets?
13. Do you measure ‘average hourly rate’ on every invoice and implement strategies to improve it?
14. Do you ‘clean out’ WIP every single month?
15. Do you have an accounts receivable process that is documented and adhered to?
16. Do you have every team member as an ‘A’ player?
17. Does every team member know their 3-5 key priorities they need to focus on / implement each quarter?
18. Do you have a meeting rhythm of daily, weekly, monthly, quarterly and yearly meetings?
19. Do all of your team know their KPI’s and are they held accountable to them each week?
20. Do you have a regular and structured ‘soft skills’ training program for all of team members?
21. Has your brand (web, value proposition, collateral etc) been refreshed / overhauled in the last 2 years?
22. Do you have a reliable ‘enquiry generation’ process that delivers consistent enquiries every month?
23. Do you have a written, adhered to and structured client communication process?
24. Do you have a ‘finding opportunities’ process embedded into your end of job process?
25. Do you visit every business or high net worth client (that you want to keep) at least once per year?
26. Do you have a ‘pipeline management’ system for tracking opportunities and measuring success?
27. Have all of your ‘client facing’ team members had at least 2 days of sales training in the last 12 months?
28. Do you have a structured and scripted ‘meeting’ process for new and existing clients?
29. Do you actively maximise the number of projects each client buys from you each year?
30. Do you price every new project (outside of compliance) based on your value contribution rather than time?
Value Added Services
31. Have you documented all your services into a ‘menu of services?
32. Do all of your clients know about all of the services you offer?
33. Are your senior Accountants (and above) all trained in how to deliver business advisory services?
34. Do you present a 3 year historical ‘business performance review’ once per year with every business client?
35. Do at least 50% of your business clients have a live, working & reliable ‘budget & cashflow’ forecast?
So how did you score?
When Accountants first interact with my coachingclub process or my content and methods they often get very excited about their potential.
If you have had relatively modest growth / KPI improvement over the past few years then you hear about case study after example after case study that directly applies to your firm – you get excited. This is natural.
Just last week a multi-partner firm with flat revenue told me their goal was to double the revenue ($7.5m to $15M) in the next 3 years. That’s 26% per year of revenue growth. That can be done – however (without acquisitions) some major changes need to happen. This firm has a HUGE amount of untapped potential (>1200 clients who are under-serviced) but their behavior, decisions and actions were telling me that they would not do it. Not even close.
But it’s 3 years away will say some of the partners. Yes it is. To grow by 26% per year you need approx. 2% revenue growth PER MONTH. Month in month out. If you fall behind then next month better be a cracker.
Business growth takes focus & discipline. It’s no different to fitness. If you are fat and unhealthy don’t expect to be BUFF next month. Or to flip it around the other way…. you can’t fatten the pig the day before the market. It takes time.
There is no issue with setting goals that stretch you – you just need the right strategies put in place.
Next week (Wednesday January 30 @ 1:30pm Brisbane time) I am running a free webinar on which goals to set and more importantly how to achieve them. You can register here.
Below is a sneak preview of some of the goals we will be looking at.
Happy New Year!
I trust you have had an enjoyable break and ready to attack the new year with gusto.
Over the break I was thinking about what professional services firms (PSFs) should be focused on for 2013. I have 5 key areas of focus for every Accounting/Consulting/Coaching/Legal firm around the world – no matter how well developed you are!
- Add value to clients – help them improve their condition. This has to be the no. 1 area of focus. Your clients condition could be their wealth, profit & cash flow. Or it could be their peace of mind, comfort or security. How are adding value to every day transactions? Are you adding value to customer service? And is what you are doing really improving the clients condition or is it a commodity that you are providing. If a commodity then be prepared to be marginalised by converging technology.
- Increase the number of clients – of the type you want. Every business needs new clients to keep the client base fresh. Every business loses clients every year and the goal needs to be to increase the net client numbers by year end. Do you know the profile of client you want to attract? What are your proactive strategies to win new clients? What is your marketing plan? If you are simply ‘waiting’ for referrals to happen then be prepared to have net less clients at year end.
- Increase the average profit per client. It is pointless having hundreds of clients if the profit per client is low because you need so much labour to service it. Your profit per client should be in the form of ‘average hourly rate’ (AHR) per client. You may have a large ‘fee per client’ but the AHR is only $200. What’s the point of all that work for little return? Your AHR per client is worked out simply by fee divided by client hours taken to service the client. You will need pricing up front, collection up front, value pricing & new added value services to drive this number past $500.
- Increase the retention rate per client. Although retention rate is relatively high for Accounting firms in particular you still will have to focus on it and put strategies in place to maintain and increase it. One of the key things about retention strategies is not the number (%) but what it does as a result of the focus. You will achieve more referrals and more propensity to have the client buy the next service from you – thus increasing no. 2 & 3. What is your strategy for retention? If not focused on then you’ll lose more than you want.
- Reduce costs. Although most PSFs run pretty lean there is still room for improvement. Especially in the efficiency area. The goal is to get more revenue out of the labour you already have. What is your efficiency strategy for 2013? How much outsourcing are you going to be doing? Do you know how inefficient your firm is? Do you need all the people you have? How much capacity do you have now and when you are more efficient how much will you have? If you have 25% capacity now and can be 25% more efficient then you have twice as many people that you need!
That’s it. Just 5 key areas for the year. Yes Cloud technology, Team work, Cashflow, Workflow, Marketing, Sales, Productivity are all important but not as important as the above 5.
My new all day seminar (Remaining Relevant) is going to address these 5 topics in detail. The day seminar will cover the actual what to do and more importantly how to do it. Suitable for all levels (beginner to advanced development) of firms. It’s on in February and March (it’s my ’20 year anniversary’ tour) all over Australasia. It’s on …. Perth Feb 25, Adelaide Feb 27, Sydney March 5, Brisbane March 8, Melbourne March 12 & Auckland March 14. For more information and booking click here.
With 1 day to go before nearly every firm we have spoken with is closing for 2 weeks it’s time to reflect on 2012. As you plan 2013 there are 3 questions only that you need to ask yourself and your team:
- What are you going to start doing?
- What are you going to stop doing?
- What are you going to continue doing?
Ponder those 3 questions. Get a big long list and make it happen in 2013. We are looking forward to supporting you and helping you achieve what you want to achieve.
To you, your life partners, your children, your extended family and your team members have a wonderful break. It’s a time for giving, loving, forgetting and relaxing. Enjoy it.