I often wonder what Partners of Accounting firms do all day. Sure they are busy – but are they effective? Accountants are good at time sheets so why not keep one for a couple of weeks on exactly where you spend your time. Once the log starts repeating itself stop keeping the log. Then go through an highlight the single ‘highest dollar productive’ activity over the past couple of weeks. Then highlight the 2nd highest then the 3rd. Stop at 3.
When you’re done I will bet that the best use of your time is something like:
- Doing high end advisory work – not compliance but value added work based on value based fees work
- Sales meetings with existing or prospective clients
- Leadership – driving performance or coming up with new ideas (reading this blog and implementing counts BTW)
Everything else is not a good use of time. The highest performing firms do not let Partners do anything else but these 3. How are you spending your time?
The term BHAG has been around a while. It was Jim Collins in his landmark book “Good to Great” who first coined the term. A Big Hairy Audacious Goal!
The late JFK had one in 1962. He said “by the end of this decade we’re going to put a man on the moon and safely bring him home”. That BHAG inspired a nation and many parts of the world.
What is your inspiring BHAG? It needs to inspire you, your team and (depending on what it is) your clients. It could be revenue – $XM in revenue in 10 years. It could be client centric – a Billion dollars of wealth in our client base. It could be service/client centric - every client to be financially retired.
Whatever it is it needs to be grand, amazing and inspiring.
Many Accounting firms I meet are just existing by default (not by design) and they have no goals or they have a SMAG…Small Minded Ambivalent Goals.
It’s your business - design it the way you want.
The last time I made 12 predictions for the profession was in 2010. They have all happened or happening! The market has changed and after copious amounts of research I am predicting 12 critical changes to the profession in the coming years. Here goes…
- Compliance will (already) become a commodity service that will be sold by the most efficient, lowest cost provider
- Around 90% of businesses will embrace cloud technology as their Accounting system – approx. 10% now
- Around 90% of Accounting firms will embrace cloud technology as their operating system – approx. 3% now
- Business coaches and consultants will embrace cloud financial analysis tools that enhance their credibility and take business away from Accountants
- Compliance clients will become more transient as their data is light and more portable – gone will be the local Accountant with 80% of clients in a 20km radius
- Cheap and very smart offshore labor and offshore based Accounting firms will process the majority of ‘back office’ based compliance for local Accounting firms and local businesses – the local firm will be customer facing and everything else will be done offshore
- The price of statutory compliance (what we know today) will plummet by more than 50% of the current price
- Marketing and Sales skills will be learned and implemented in the majority of Accounting firms
- Young people will not be attracted to traditional ‘staid & boring’ Accounting firms – instead opting for technology savvy and value adding Accounting firms
- Time based billing (the archaic hangover from the last century) will be replaced by packaged services with fixed fees – hopefully the fixed fee is based on your value contribution
- With compliance revenue plummeting Value Added Services will make up more than 80% of the revenue of an Accounting firm
- Clients who have been yearning for additional services will finally be served properly by their professional advisers
You may believe, you may not. You may be seeing and feeling them already. Your firm will need to adapt to capitalize on these. There is a tsunami of change happening. You can get wiped out or you can learn how to surf!
What are your views on my predictions?
Getting to the ‘right’ price is one of the major conundrums facing all Accountants and anyone who sells intellectual property and information products and services.
Certainly ‘time based billing’ does not even come close to valuing what you know and valuing the impact your IP has on your client. After years being involved in creating and selling information products and services (around $170M in sales so far) I think there are just 3 things to consider.
- Your value belief – how you value yourself and what you know
- Your value contribution – the difference you make to your client when they implement what you know
- Your clients value perception – the way you articulate your value to your client
If you have high value belief and high value contribution yet you do not explain to your client the impact you are making (area 1 in diagram) then you will not get to the right price. If you have high value contribution and you explain it well yet your self belief is low (area 2 in diagram) then you will not get to the right price. If you have explained your value to your client and you have high value belief yet what you do doesn’t really make a difference (area 3 in diagram) then you will not get to the right price.
The objective is to grow your self belief, make a difference to your client, explain eloquently the difference you are making and you’ll get somewhere close to the right price – area 4 in the diagram.
And the biggest thing in pricing IP based services/products to remember….the only right price is just before NO!
Last night there was yet another debacle in Australian politics. With 3 months before the election the ruling labour party decided to vote out the current useless leader and replace by another useless leader. Out with Julia Gillard and back in with Kevin Rudd. Wasn’t he Prime Minister before? Just 3 years and 3 days ago the same Julia Gillard tossed out Kevin in favour of herself and now the reverse has happened. Karma has a good way of catching up on you I say.
When Kevin Rudd first took over (in 2007) he inherited a very strong economy. Our previous great leader John Howard inherited $96 BILLION of debt when he took over the reins in 1996 and had it all repaid under his term + added another $90 BILLION to the coffers. So Kevin inherited a surplus of $90BN. What does it look like now – 7 years later? Close to $300 BILLION in Debt!
That’s a near $400 BILLION swing in 7 years. Very impressive spending (wastage) Labour Party. Very impressive! Where has it gone? Is the country better off for it? I don’t think so. We still have problems with roads, electricity, water, schooling, broadband speed and health care. We have also slipped in tourism and agriculture. The thing that is keeping the country afloat is our resources industry.
It seems the current muppets (pathetic leaders) are more interested in themselves then the country.
Why don’t we elect business people to the helm (who have run a big business before) and see what they would do. Here’s my initial checklist/thoughts/ideas …
- Hire a great CEO and pay them appropriately – say $5M with a bonus based on surplus. When you pay someone $400k to run an economy of $1.4 TRILLION … well, you pay peanuts and you get monkeys!
- Increase revenue by taxing spending – take GST to 12.5% immediately and then 15% in 3 years time
- Sell off all assets that are more efficiently run by the private sector – rail roads, electricity, water companies, hospitals, schools, postal office etc
- Keep business owners happy (the most important customer as they hire all the people) by abolishing payroll tax (what a stupid tax that is) and relaxing many of our daft industrial relations laws. Enable us to hire any type of person (let us advertise for exactly who we want) and fire people when we want.
- Put a broom through all wasted spending. Introduce an ROI indicator for every project. Each leader of a portfolio to present a proper business case with how the country is going to be better off for it, monitor the spending and keep the leader accountable – which means fire them if there is a blow out or the project doesn’t work.
- Relax the immigration rules (not admit the boat people – they need to be turned back) so we can increase the population by double in the next 2o years. We are a massive country and we can support a big population of 50M plus. More people means more opportunities.
It takes someone with big balls to make the big calls. Who is prepared to make the calls?