How to Scale Advisory Services

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In the fifth article of a series on how you can take the right steps to truly add value to your clients and transform your firm, author, CA and Founder of Spotlight Reporting Richard Francis gives some basic steps to take, along with practical thinking, to help scale and monetize advisory services into your firm.

These days, accountants are increasingly encouraged to advise and move from being a recorder of past events to being an architect of future events. But scaling these services can be a challenge.

Advisory services will require micro, sporadic interventions. Often these will be client-instigated, but it is important that you provide some degree of ongoing decision-making support.

The opportunities to scale advisory services on a timetable planned by you are significant. Build ‘scale up’ into your thinking and see where client conversations lead you.

Monetizing Advisory

I am a big fan of having a monetization strategy for your practice, but this strategy is much more than “pricing,” and should articulate the following:

  1. Your monetization objectives (with linkages to your strategic objectives)
  2. The underlying pricing rationale (i.e. ‘value-based’ or ‘time-and cost’)
  3. The quantified value of key services offered (where possible)
  4. How monetization occurs (tiered packages, bespoke, retainers, etc.)

The monetization objectives for our practice were broadly to:

  • Have just a small number of clients at a high ARPC
  • Achieve a high effective hourly rate from effort and expertise deployed (ergo, to provide higher value advisory services in the main)
  • Only loosely package the services and fees charged (mainly due to the iterative nature of the opportunities that arose during any engagement cycle); and
  • Price upfront and with confidence

This mix of objectives allowed us to grow a small, successful practice. Earlier, a similar approach had allowed me to quickly expand fee revenue as Consultancy Services Manager at a large firm.

Be Confident in Your Value

Whilst the customer should be at the center of your business model, it is essential for the viability, success and ultimate value accretion of your business that you monetize with confidence.  Value transfer should be bi-directional, but do remember that each and every advisory interaction has to add value; the bar is higher than compliance, especially as the client is the ultimate arbiter of value perception.

Far too many accountants and bookkeepers agonize over charging their true worth, and subsequently under-charge or write-off.  I firmly believe that pricing only matters where value is weak. 

I used to take an approach of pricing with confidence, but looking to exceed expectation. Price-wise we would typically charge several hundred dollars each month, with additional charges if I was attending an advisory session to present and advise on other matters.

I’m a big fan of value-based pricing. Time and cost is an intellectually-bankrupt way of charging; only the value you create, the nature of the output and market norms - rather than the length of time (effective or not) deployed on it - should be your guide to best-fit pricing. 

At our practice we had some fixed fee packages, but weren’t set on these as the only way to monetize. Fixed-fee packages have certainly become far more prevalent in recent years, as they provide certainty for both provider and client, but need to be carefully monitored for exceptions (these should be charged ‘over and above’) and resource deployment (executing on the services effectively so that you maintain margins).

Monetization is part art, part science - you will need to test and iterate, consult and analyze.  However, the effort should ultimately pay off - if you are truly adding value - with higher margins and satisfied, loyal customers.

Service Opportunity Matrix

One gateway to successful advisory is right before you. It’s easier to sell to people that already know and respect you and your offerings, so begin by systematically identifying service opportunity gaps across your existing client base.

A Service Matrix spreadsheet can be used for this journey of discovery. The Matrix is basically a spreadsheet with possible service options listed across the columns, with client names listed in rows.

By ticking the boxes for services you actually provide and leaving blank the cells where you could (and probably should) offer more, you'll find plenty of opportunities to scale advisory fee streams from existing relationships of trust.

This extract is part of a serialization of Richard Francis CPA's new ebook Transform! - his playbook for helping accounting firm managers and owners to value and seize opportunity in this exciting time of industry change. Richard is founder and CEO of Spotlight Reporting, an award-winning performance reporting and cash-flow forecasting toolset designed to empower accountants to have great client conversations and deliver real impact.

Richard’s next article will address how (and why) you need to find the right people in order to fulfill your advisory service ambitions.

About Richard Francis

Richard Francis

Richard Francis, CA is Founder & CEO of Spotlight Reporting which offers advanced reporting, cashflow forecasting, dashboard and multi-entity analysis to accountants and organisations globally.

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