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Practice Excellence: Lessons for start-ups

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22nd Oct 2012
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AccountingWEB has already reported on the winners of the ‘new practice’ award, Accountancy Advantage, and how they do things differently. In this article I will offer a personal reflection of the entries that reached the second stage of the awards process, explains Mark Lee. 

This involved the judges comparing and discussing the shortlisted entries which had been anonymised to avoid any possibility of favouritism.

The judges focused on five key areas: Mission statements, client care, financial performance, growth and process improvements. The views below are mine alone and may or may not be shared by my fellow judges.

Mission statements

Entrants were invited to share their firm’s mission statement or, what it would be if they had one.

The approach adopted by most start-up practices seemed to be either to summarise their target clients (e.g.: contractors) or their ‘promise’ to clients. I admire those who have really thought about this and then stick to their promises and targets. I suspect they will go on to build more successful practices faster than those who are less focused. 

However, it does seem to be more common to simply start-up and to take on whatever clients one can find and doing whatever work they want. I have explored the consequences of this approach in previous articles on AccountingWEB. For more on mission statements, see: 10 tips to guide your firm.

Client care

Entrants were invited to explain what they had done to help clients be more profitable and what effect this had on client retention and referrals.

Each entrant shared a range of activities to which they attributed high levels of retention and referrals.

Examples include:

  • Encouraging clients to have regular management accounts
  • Regular meetings with clients
  • Fixed fee arrangements to include unlimited general advice
  • Business review and cost cutting exercises
  • Business workshops to enhance and grow their business experience
  • Cross-referring clients
  • Helping clients identify KPIs to use when reviewing their business performance
  • A free tax saving report for prospective clients
  • Identifying and quantifying tax savings
  • Giving clients access to cloud computing with real-time access to key figures and accounts information – for improved financial efficiency
  • Joint ventures with wealth management and insurance companies
  • Cashflow planning for growth
  • Working through business plans to enhance client decision making

Clearly all of the above examples go beyond simple bookkeeping, accounts preparation and tax compliance work. I wonder what proportion of start-up practices focus only on these traditional areas of work? Incidentally I was pleased to see references to the quantity of tax savings secured for clients by one entrant. I have long advocated the benefits of doing this and of reporting back to clients how much tax they have saved as a result of them following your advice.

Financial performance

Entrants were invited to reference the improvements in their financial performance over the last year.

Most had relatively modest turnovers in their first year but the figures for their second year ranged from £36k to £152k. As accountants we know we should not focus on turnover alone but the figures are still worthy of comparison.

Profitability was even more varied and was of course impacted by whether any staff were employed, the extent to which work was outsourced and, in the case of those operating as a limited company, the level of the founders’ salaries.

Growth

Entrants were invited to outline what initiatives they had taken to win new clients and how successful these had been.

Identified activities included:

  • Active networking in the local area
  • Mentoring new start-up businesses through local council funded business enterprise schemes
  • Reciprocal referrals with introducers without any payment either way
  • Formal commission payment arrangements with key introducers
  • Offering valuable information for free – with a facility for the prospect to secure billable advice thereafter
  • The use of telemarketers to fix up sales meetings with new leads that the accountant then converts (at the rate of at least two per month)
  • Being pro-active on tax savings and up-selling and cross-selling in this area

As has already been reported (in ‘Tools of the trade’) I was less impressed by the references to use of social media by start-up practices. They rarely seemed to be focused on the right metrics or able to identify which activities were proving to be of value.

Indeed I think it is fair to suggest that few entrants were able to identify which of their various initiatives had had most impact on their firm’s growth.

Most firms also made the almost ubiquitous reference to growth being achieved through referrals from existing clients. However only one entrant referenced any plan or system to maximise such referrals. And even in that case it was more of a reward for referrals; I wonder whether the reward really impacts the rate of the right type of referrals for the practice? For more on how to secure referrals see: How to get recommended.

Process improvements

Entrants were invited to identify what their firm had done to improve efficiency and the quality of service delivered to clients.

This may have been a tad optimistic as most start-up firms take a while to determine their ‘standard’ approach which inevitably evolves over their first couple of years in practice. Nevertheless entrants’ responses may be instructive:

Identified activities included:

  • The use of cloud accounting and info storage solutions – allowing partners to work anywhere and to respond instantly to client queries, allowing clients to upload their own documents into their own online folders and to access data there too
  • The introduction of checklists that enable junior staff to follow step-by-step guides for the more straightforward activities so that partners can spend more time with clients
  • Planning workflows on a daily, weekly and monthly basis to ensure nothing is missed, scheduling meetings, requests for info and agendas for client meetings – keeps non-chargeable time to a minimum
  • Reviewing all work done to determine whether it could be completed quicker and better if approached in a different way
  • Spending at least one day a week visiting clients, for coffee, formal meetings or to return records
  • Offering a three-tier accountancy service with the option of monthly, quarterly or annual bookkeeping and accounts processing service
  • Engaging a trained cloud  bookkeeper to import client data into the in-house accounts system for optimum time saving
  • Adopting a paperless office structure

If your start-up practice is working well make a note to enter the Practice Excellence awards 2013!

Mark Lee is consultant practice editor of AccountingWEB and writes the BookMarkLee blog for accountants who want to overcome the stereotype of the boring accountant – in life, in practice and online. He is also chairman of the Tax Advice Network of independent tax experts.

Replies (6)

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By johnjenkins
23rd Oct 2012 11:03

@Mark

Has any, or will any research be done on the sustainability of these winners?  Will their progress be monitored? I must admit I started out with all the focus on what I was trying to achieve but found flexibility and common sense being replaced by compliance and rigidity. No doubt the winners have been bought up with these constraints. The writing on process improvements would really only refer to a larger practice cos there is no way you could implement that sort of process with 300-400 clients, unless you were charging them a fortune.

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Mark Lee headshot 2023
By Mark Lee
23rd Oct 2012 11:35

@johnjenkins

I think those are questions for John Stokdyk. I was simply a judge.  This is a serious evolving project for AccountingWeb and I know that John is keen for it to continue to improve and become more robust each year.

Mark

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Man of Kent
By Kent accountant
23rd Oct 2012 23:33

Natural development?

@johnjenkins - being a new practice I have found that process development is essential to streamline activities and increase efficiency. It is very easy to get bogged down with process and also getting to know new clients.

I'm finding in my second year that for client's whose accounts I did last year for the first time, I'm now able to complete the work in the second year far quicker.

I also spend far less time on fee quotes, engagement letters etc as I have a templates I'm happy with and am more confident.

I also find that the rose tint has faded and has been replaced with practicality.

I'm more interested in providing a good service, earning decent fees, getting a steady flow of referrals from happy customers and will leave the touchy feely stuff to others.

 

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By Robert Lovell
24th Oct 2012 12:50

AccountingWEB mentoring.

@johnjenkins and @KentAccountant - why not take a look at the AccountingWEB mentoring project

There's some great advice for practice development and a number of blog posts which take a "year one, year two, etc." approach to monitoring progress.

Thanks (1)
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By debbie pearce
24th Oct 2012 15:24

Thanks Mark, I am just about finished my first year and looking forward to the next.

There are some points raised that I will put some effort into thinking about, some that I see as point scoring to a judge and not particularly real (am I too cynical?), and some that I can compare myself to and pat myself on the back (or not!) and identifiy where I can improve

Reading articles likes this helps to keep focus and a business overview instead of being bogged down with the day to day activities. 

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Replying to jaffe123:
Man of Kent
By Kent accountant
24th Oct 2012 22:01

Spot on

debbie pearce wrote:

There are some points raised ... that I see as point scoring to a judge and not particularly real (am I too cynical?), 

Nope

 

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