The most successful practices are only slightly better at what they do compared with their competitors, according to Gordon Gilchrist of 2020 Group.
At Accountex last month Gilchrist revealed some of the secrets of the ‘Slight Edge Theory’ to implement in your practice.
“Their KPIs are always slightly better than average, they have higher chargeable hours, lower recovery rates, higher charge out rates, higher fees per partner, quicker turnaround times, lower lock-up, to name just a few,” Gilchrist said.
But he said the most successful firms weren’t miles better, they’re just consistently slightly better, and the bottom line is “JDI” – a “just do it (and see what happens)” mind-set.
In Gilchrist’s fast-paced session he said clients don’t want to pay a lot for compliance work and now they don’t have to.
Firms are coming up with systems to up-sell and cross-sell tax planning, business advisory, profit advisory and wealth management, he said.
“If you’re doing a million today I guarantee you can make another half with wealth management. It sits very comfortably with accountants now.”
He suggested looking at the upper quartile firms and what they’re doing when it comes to offering a wider range of services.
Bookkeeping is now profitable, particularly if you embrace technology from firms like Bankstream and Xero, he said.
He also talked about “PITA” clients, or “pain in the arse” clients, and turning the focus on the more profitable and cooperative ones.
On getting referrals from clients, he suggested that next time a client asks “how’s business?”, to tell them: “Business is great, and we’re looking for more.” Never just say it’s “busy”, he said.
Gilchrist also advised taking a look at the client’s sales ledger and purchase ledger, and asking for a testimony. “Clients are happy to help grow your business.”
Coming up with a gimmick or something funny can also help drive more client referrals.
When it comes to your own practice, he said every team member should have business cards and they need an expense account so that they can to take people out for coffee.
Teaming up with a legal services provider, such as the Legal Services Guild, can also add a lot of value to your practice.
“Wills, powers of attorney and probate are another string to your bow,” he said. Ask them: “What happens to your money when you die? Let me go through what you’d like to do with your money,” he suggested.
Gilchrist also said that in five years’ time there’s not going to be enough accountants to service demand, and there are signs that it’s already happening now.
“PwC are now recruiting in the lower sixth, offering them £24,000 from leaving school,” he said. “And if you’re a tax person you’re very valuable. What are you doing to recruit these people and then retain them?” Gilchrist finally put to the Accountex audience.
Here’s a short video clip of Gilchrist explaining the Slight Edge Theory: