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Why you should do a health check on your practice

Do you have an in-depth understanding of your own business following the ravages of coronavirus? If not, this is the time to take action.

6th Jul 2020
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Health check
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We are accountants, so we understand the purpose and value of audits, but most of us would never think of auditing our own businesses.

However, in the current climate where coronavirus has reeked literally unknown havoc on society, the economy and the world of commerce, perhaps it is time to turn our skills on to our own activities.

Most of us are still probably clearing up the mess after the metaphorical bomb that has devastated our lives.

We are worried about the kids’ education, paying rent for an office that is not in use and tirelessly trying to rescue some clients that might not be able to continue, even when social distancing reduces to one metre, which might well feel more like a gimmick than the universal panacea projected by government ministers and publicans.

Three months ago, most accountants would have had a really good knowledge of their clients and the dynamics of their practices. Today, everything has changed.

What should be obvious to those of us who have been trained into having analytical minds is that the best way of consolidating and building our businesses is to understand them.

Without carrying out what I’m calling a client audit, this is going to be impossible. Strangely, the principle should have been part of standard operations in the past, but now it has become a necessity.

The starting point must be to establish your client base. The ravages of coronavirus may regrettably have taken away some of your private clients forever.

In a parallel but less cruel fashion, there is every chance that a number of corporates will either have ceased trading or could have significant changes in personnel as a result of the pandemic.

If you are running at 130% of capacity, this might be really good news. However, it is sod’s law that you may well have lost the good clients and retained the less desirable.

There will be a further category of client who can continue to trade in the coming months but not to pay their accountants’ “exorbitant” (aren’t they always?) rates or, in some cases, anything at all.

Given this background, it seems imperative to carry out that audit and, in doing so, discover the clients that are going to be of greatest value, those that need care and attention and those that have either disappeared or need to be (very politely) shown the door.

At the same time, this exercise might shine a light on opportunities that have arisen in the last few months, either as a result of the pandemic or purely where you have missed them in the past or circumstances have changed.

If you were running at 130% of capacity, then a little bit of relatively ruthless pruning will pay dividends. On the other hand, if you discover that your practice was previously running at 90% and the signs are that you have now dipped to somewhere between 60% and 75%, then it is time to take drastic action.

This could mean marketing like mad, merging, selling the business, or just retiring to take away stress and enjoy a happy, healthy future pursuing hobbies, staying safe and forgetting all about the rat race.

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By johnjenkins
07th Jul 2020 11:50

What has come to the forefront during this pandemic is how many business are in trouble over just a short period of time, which leads me to believe that the way society has been going these last few years was far less than stable. I do think that the uncertainty of Brexit, 3 general elections and the constant change of leadership has taken it's toll. I just wonder if other countries are experiencing similar problems. We know that the EU has problems. I suppose a good guide will be how quickly USA gets back on track.
So Phillip, something like this certainly makes you think, however it will only be the business that have suffered that will, perhaps, change direction. I have noticed that with my own clients some have done well some have not, but luckily none have ceased trading.
The worrying thing for me, which I think needs looking at in depth, is if we have another lockdown (perhaps early next year or even yearly). When the whole world locks down then you know there is something very wrong. Until we get to the bottom of what really happened and what we have to deal with, then uncertainty will reign again. Now this post comes from an optimist.

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