Five Examples of What Does and What Doesn’t Work at Accounting Firmsby
In the context of growing and developing a firm, there are hundreds of strategies and ideas to implement that work, and an equal amount that do not.
For the past 24 years I have coached Accounting firms and built businesses that serve the Accounting profession. I have interacted with over 175,000 Accountants across the globe and directly coached 434 firms adding over $850M in new profit to those firms.
Getting so intimate with the profession means I’ve seen a lot of what does work and a lot of what doesn’t. To narrow it down to ‘the BIG 5’ of each is hard, but here goes….
- Understanding clients’ goals. I believe the action of being the trusted advisor is that ‘all clients are buying every service from you that helps them achieve their goals’. Systematically meeting with clients to discover what they want to achieve, documenting it and then matching services.
- Embracing automation. In Finland there is technology that accounting firms can use that reduces the labor needed (at the accounting firm end) by up to 80%. That’s 80% less people or 80% more capacity. The right technology can drive efficiency that drives capacity - or less humans. Find your version of automation.
- Hiring more non-chargeable people. Most firms have around 15% of their headcount in Administration. The most successful firms I see have up to 40%. Client service coordinators, business managers, marketing & sales people. Accountants spend up to 3 hours per day (per person) doing administrative jobs associated with the project. Get the Accountants focussed on Accounting work - not admin.
- Focusing on niche markets. If you want to grow your client base than focus on a niche sector, become an industry expert, get a list of them, market to them and find new ones. The specialist makes the money - not the GP! It’s much easier to target clients if you know exactly who you’re going for.
- Pricing on value. How on earth can a ‘rate per hour’ value what you know? If your project has value contribution than price it on value - not on time. A 10:1 return is a good return for your client.
What doesn’t work
- Being obstinate. Technology is rapidly changing. Social behavior has changed. Client knowledge is changing. Access to information has changed. Team expectations are changing. Are you changing with it? The pace of change will only escalate. Believing the strategies that got you here today will serve you well in the future is so wrong.
- Pricing the old way. Time-based billing by the hour in arrears not only DOES NOT value your intellect, it’s actually an unethical method. You’re incentivized to go slow! How can that be good for the client? The time-based billing model is a ‘labor for hire’ business model. You don’t sell time, you sell what you know. Price everything up front, get client sign off and then be super-efficient.
- Scarcity mentality. So what if you lose a client? Probably time for them to go anyway. So what if one says no to you. So what if a team member leaves. With a scarcity mentality you’ll be upset. With an abundance mentality you’ll realize that clients can be anywhere in the world, every no you get brings you closer to a yes and great people are everywhere. It starts with the right attitude.
- Accepting mediocre people. Here is the ‘litmus test’ on your current people. Would you enthusiastically rehire them? If not, then you have some mediocrity in your team. Why do you put up with this? Probably because of point 3 above! There are hundreds of thousands of great people in this profession. It’s your marketing process that finds them. Never say ‘we can’t find enough good people’ unless you’ve exhausted every marketing angle available.
- Focusing on projects that do not drive the numbers. As the trusted advisor I expect you to be running a great business. That means it should be growing. The right numbers should be growing. If you want to grow the right numbers, you need to look at the key activities that drive the numbers. Most Accountants I have met spend too much time ‘sweating the small stuff’, procrastinating or doing ‘nice’ things. The right activities (projects) drive the results.
As I said, focusing on just five of each is hard. Maybe it’s time to face the facts that the profession is changing and you need to change with it.