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AIA

Profitability strategies that work

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20th Oct 2014
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As part of the continuing Practice Excellence Programme, SAP and its business partner IIS have sponsored the publication of a whitepaper on profitability strategies.

“Balancing business development with billable time can always be a challenge,” says Morgan Browne, managing director of IIS.

The whitepaper is designed to strengthen IIS’s relationship with accountants, but as the managing director of a fast-growing organisation himself, many of the points raised in the guide struck a chord with Browne.

In the first years of his organisation’s growth, IIS invested heavily in structures and systems that would help sustain it over the long term. “Coming out the other end we knew the business would be profitable as a result,” he said.

Some of the time and resources should be devoted to defining repeatable processes within the organisation. “If you can define what differentiates you in the way you delver your service, you can use that in a repeatable way,” he explained.

“That means you don’t have to rewrite documents or reinvent the wheel when you get a new client.”

Browne can see clear parallels with professional services: “We took time to get the culture of the business focused on utilisation and the individual’s contribution to the bottom line. It costs money to get people thinking that way.

“As you grow it puts pressure on your most profitable resources and you’ve got to scale up without impacting on the bottom line too much.”

As IIS expanded its team, Browne put in place different levels of billability, so the people at the top would have a lower billable hour percentage and those lower down would have to carry out more day-to-day activity to maintain the billable rates. That shift allowed the person at the top to supervise and develop the business.

“You may need to devote 20% of your time to growing the business and will end up with 20% less billable time. But in the long run it will yield greater profits as the business grows,” Browne said.

As part of IIS’s involvement with the Practice Excellence Programme, Browne acted as a judge for the growth category in the Practice Excellence Awards. He was impressed by the way most of the entrants had very clear definition of what their unique selling point was.

“That means everybody is on the same page about what the business is about and what their values are - so everybody can go into the market and talk about firm in ways that attract their prospects. Their people are able to talk effectively about the firm and act as salespeople,” said Browne.

When reviewing the firm’s progress, Browne advises accountants to evaluate not just what they should be doing, but also what they shouldn’t. “As our business grew, we had to let some clients go and stop doing certain things every year. Often through sentimentality you may hold on to someone who isn’t the right fit for your business any more. As our customer size grew, we just couldn’t serve some of the smaller clients as well. It was a tough decision, but an important one to make.”

The Profitability Strategies whitepaper includes case studies from previous Practice Excellence Award nominees illustrating similar points around practice agility, client focus and continuous improvement. Download your copy now.

SAPThe 2014 Practice Excellence Programme is sponsored by SAP and its business partners, including IIS Group: “We know exactly how important accountants are to helping businesses grow and we want to do all we can to support that. That’s our business too and we’re focussed on developing technology innovations that not only help businesses run like never before, but also improve the lives of people everywhere.”

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