Success with new revenue streams outside compliance?

Success with new revenue streams outside...

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There are more than a few accountancy practice support services who claim that there is real money to made on revenue streams outside complaince work that we do. I have been hearing this for some time from the likes of AVN and 2020.

Examples of these non compliance services includes: fee protection insurance, management accounts, bench marking data, dodgy tax strategies (I see them as dodgy)  and others I cannot remember.

The cynic in me says they would say that since they went to sell their services. I could be wrong, hence the reason for this post in the hope of reading from people at the sharp end.

Does size of the practice matter when it comes selling non compliance service. Steve Pipe for some reason has not answered the question raised various times on AW - is AVN suitable for small and start up practices? 

I would be grateful if you could post your experience of selling new revenue stream services. Have you tried and has it worked?

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By Bob Harper
20th Oct 2010 11:17

Profound question

For me, this is the million dollar question because technology and outsourcing are eroding traditional revenue streams and increased competition is forcing down prices.

My take on this is that compliance support will always be required but margins and revenue will continue to fall. But, there is “real” money to be made with compliance. Have a look at SJD and TWD.

Fee protection is an easy one and closely linked to compliance and so is Tax Credit support, a number of firms have done well with this.

I believe bookkeeping management accounts is a massive opportunity and am working on a new report about how accountants can exploit this. The good news is that these traditional services lead on to business consulting.

My name for your "dodgy tax strategies" is advanced tax planning and this is suited to businesses with £100k net profit. So, it’s not the size of the practice but the quality of clients and size of the practice owner’s ambition. But, be warned, there are secondary costs to these schemes; I placed a friend into one and the implications are negative and starting to outweigh the tax saving which is potential because of the investigation.

A practice can be built on more than 50% of non compliance income; I have an audio recording of Paul O’Byrne of OBK talking before his death from Cancer about this. I’ll send you a copy – email me [email protected].

Yes, AVN recommend new services and yes they make money from providing firms with resources. I have great respect and time for Steve Pipe but it is not easy. In fact, I think the practice mindset/culture needs to completely change.

When I went to the AVN annual conference a few years ago, less that 10% of members were actively engaged with business consulting. Is this AVN’s fault? No; it is the accountants and there are a number of issues including weak/unfocussed practice leadership and a lack of commitment. It is still too easy to be comfortable with compliance.

New revenues mean a new business model and accountants are not good at new. If you are you can win.

Bob Harper

Portfolio Marketing
 

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By Steve Holloway
20th Oct 2010 11:38

Yep its all our fault!

We are a bit like the turkeys who refuse to buy in to the opportunities that Christmas could clearly bring if only they would 'engage' and show leadership.

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By Bob Harper
20th Oct 2010 12:22

Honest, not personal

@Steve - it is my honest assessment having had personal experience and speaking with many firms who have battled with this. And, it is not personal or negative.

Most accept that traditional revenue is being eroded.  And, most agree that introducing new (higher value) revenue streams is a good idea. But if firms are not being successful whose fault is it? Most blame their clients, the economy or some other excuse rather than looking at themselves.

However, if a firm accepted that it is their fault then they take control and are in charge of their own destiny. Isn't that better than an excuse?

My guess is that less that 5% of firms will be successful with new services. I hope/expect them to win the best clients and wish them well. These are the firms I enjoy working with.  The others who do not embrace change and bring in new services will continue to fight over less work at lower margins.

But, like I said...at the moment it is easy to be comfortable with compliance and it will be interesting to watch the change over the next few years with the budget cuts and to see how technology/outsourcing changes the game.

Bob Harper

Portfolio Marketing

 

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By Steve Holloway
20th Oct 2010 16:02

But what is 'just compliance'?

Clients (mostly) only have one accountant and that accountant is generally expected to have input on just about every aspect of that clients business/family/aged mother etc etc. Quite often we are the only professional they speak to in their entire working life. So, we bill for compliance work but that is quite often the starting point. In January this year I helped a client do a presentation to a customer who had put their main contract out to tender (we won!). Tomorrow I need to help another client complete a uni funding form as English is not her first language. We do funding plans for banks, mortgage apps, help people retire etc etc. Where do I draw the line ... I won't sell them anything!

 

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By Bob Harper
20th Oct 2010 18:01

Capturing value and perspective

@Steve – for me compliance is the business accounts and a tax return, the rest is added value including bookkeeping, training on financial systems and ad-hoc support like Tax Credits and completing funding forms. The question is; are you capturing the value either in the fixed fee or as an extra?

I also helped clients with grant forms, did mortgage references and signed photos for passports. I didn’t charge extra for these things because I explained that they were part of the service. That is how I agree a slighter higher fee than other firms.

By the way, if a client wanted a lower fee  than I recommended then anything other than the accounts and the tax return was chargeable event with a minimum £50, even signing a photo. Most clients agreed the fee recommendation.

I agree, the accountant is in a great position but don’t understand your comment about not selling clients anything.

What I would say is that if you can support clients in negotiating contracts or arranging finance then there is a potential billing opportunity for you and I think clients would have no problem paying you. In fact, I would argue that your clients would want (demand) you to sell them this capability.

Imagine one of your clients going bust or not achieving their potential because you didn’t sell them a service you could deliver. It is just a perspective.

Bob Harper

Portfolio Marketing
 

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