Should clients sack their accountants?
Mark Lee interviews Robert Craven who kicked off a storm of comment when he suggested that companies should sack their accountants if they were not contributing to their business growth.
The AccountingWEB posting Is Robert Craven right when he says clients should sack their accountants? created a quite a stir. As luck would have it, I roomed with Robert during Netski 2011 so was able to get him to explain the thinking behind his remarks as quoted by Steve Pipe.
I first heard Robert speak when we were both on the programme at last year’s annual conference for CIMA members in practice. I was impressed by his commonsense approach. For those who don’t know him, Robert has been described by the Financial Times as “The Entrepreneurship Guru” - though that may enough to damn him in some people’s eyes before he’s said a word!
Steve Pipe quoted Robert’s comment that “If you are not delighted and ecstatically happy with your accountant, and you don’t think your accountant is helping you to get more customers, get more sales, get more profits, get more cash into your business then you should change accountant. It’s as simple as that.”
For many accountants this statement was a bit like a red rag to a bull.
In Craven’s view there is only one direction for successful companies - and that’s forward.
“It’s why start-ups often succeed at first – they are focused on their future, on their destination – and it’s also why so many companies stall after a few years, losing their momentum, and focusing on the past more than the future. (“Business was really good a few years ago”)
“That’s why all companies, especially owner-manager businesses, need help to maintain a forward direction and focus.
“So the question is this: How many accountants really help their clients grow their businesses?”
The answer to Craven’s question, of course, is that some do and some don’t. During Netski 2011 he told me about his struggle to find a decent accountant himself. He has formed the opinion that there are essentially two very different sorts of accountancy firm: accountant historians and accountant entrepreneurs:
Accountant Historians (AHs)
“As their name suggests, these people focus on the past, on analysing it and preserving it. But what do they then do with that information? Often, very little. When asked by clients what the figures might mean for the future, they don’t feel comfortable making predictions – and rightly so. In truth, they know very little about their clients’ businesses.”
Craven continued, “To be fair, that works for many companies – and many firms of accountants. It’s horses for courses, but the fact is that clients tend to hold AHs in comparatively low esteem. They want to minimise costs, so AHs get paid less. What’s worse, the AH service is commoditised – “anybody can do that” think the clients, so will go to a cheaper competitor. Not only do AH’s, therefore, earn less, their clients churn more rapidly, and they have to spend more time and money winning replacement clients.”
I’m not sure that the churn is typically as bad as Robert suggests. If it were I think more accountants would embrace the advice that Steve Pipe and many other marketing professionals promote. But it is certainly wise to think in terms of the lifetime value of clients.
Craven agreed: “The ideal is long-staying, high-spending clients, and the nightmare is low-paying, short-staying clients.”
“Are a very different kettle of fish with very different attitudes towards the contribution they can make to their clients’ businesses. They do the basics as well as anybody else, but they know information is power, and use it to help their clients – and earn themselves higher revenues. They use their knowledge of many companies to provide a real world, really current perspective for clients. They know what has worked for other companies – and what hasn’t. They earn the respect – and the fees – accordingly.
“They earn more, and keep their clients longer, so the average lifetime value of their clients is considerably more than the AHs. They also get new business opportunities, and tend to be retained even when companies really take off.”
Given Craven’s focus on advising entrepreneurs I wasn’t surprised that this word figures in one of his two categories of accountants. And I could also anticipate the answer to my final question. Can an accountant historian ever hope to become an accountant entrepreneur?
“Absolutely. It is a matter of attitude, of a little training, some practice, and the enthusiasm born out of successful attempts to change the way you approach clients,” he replied.
And of course I agree. We can all change, if we want to and we receive the right training and support. The question, as I suggested above, is whether we want to change. If you were losing loads of corporate clients you would either look to secure that training and support or you’d get out of the profession. But how true is that - what would you do?