Save content
Have you found this content useful? Use the button above to save it to your profile.

Practice Tip: Get a real job

10th Mar 2005
Save content
Have you found this content useful? Use the button above to save it to your profile.

After one of the recent articles I wrote on practice planning an accountant in practice wrote to me to say that most of the people who he met who were in practice lacked entrepreneurial flair. They wouldn't, he thought, cull any of their clients, they wouldn't develop a practice strategy and they would carry on practicing in the same way they always had until they dropped dead or retired, which ever came sooner because they would not take the risk of doing anything else.

I admit I am slightly more optimistic than was my correspondent. I think there is hope that some people will get out of their rut and will practice in more interesting ways, or I'm wasting my time writing some of the stuff I do. But I do agree with him that entrepreneurial spirit is not alive and well amongst many of the accountants that I see, meet and speak to. I'm sorry, but it's true.

What evidence do I have? Well, the most obvious evidence is that most accountants do not run their businesses as if they were commercial enterprises. But it goes further than that. Many give little clue that they know how to run a commercial enterprise. Which isn't surprising, because running a professional firm is not like running any other type of business, so if that's all they've done how can they really understand the commercial problems other people face?

Now a claim as big as this has to be supported, but let's be honest here. Accountancy firms don't really have to market themselves. Once the ball has started to roll, the work just keeps on coming in and a steady referral base for added value work is always available. So for many accountants the question of how to market, what work to bid for, how to pitch for work, or even anxiety that the cash flow might dry up for lack of it is just not an issue. Yet for normal commercial enterprises this is very often the day to day problem of life.

Nor do accountants have a problem of controlling gross margins. There is no product, as such, to manage. There are just people. And even they aren't like most staff in most companies. They are treated as important because they're fee earners, many have some self respect and motivation as a result and some are even professionals in their own right. Compare that with the average motivation factor in the average small business and the personnel issues are entirely different.

But there's another difference which explains why the entrepreneurial spirit is not present. And that's because most accountants in most small practices of anything but very modest size in the UK have never set up a business, even though they might be involved in running one. They got promoted through the ranks of a firm until one day someone asked them to join the firm as a partner, and told them they were now self employed. That's not the way entrepreneurs do it. They go out, take a risk, put up some capital, have a mad idea they want to test on the market, they make mistakes, beg for people to buy from them and some of them even manage to make ends meet despite that. The temperament that does this is nothing at all like that of the person who fills in tax returns and completes accounts in accordance with the rules of the game and by ticking all the right boxes until they become a partner.

So is it surprising then that accountants are not as entrepreneurial as they might be? No, not at all. Our system of training, qualification and partnership does not promote people like that. And yet we claim to be the premier business advisers and then read with surprise on AccountingWEB that more small businesses talk to banks about raising money than do to their accountants. I'm not surprised, although I expect them to get even less help from the bank manager, if that's any comfort to accountants.

So what can be done about this? My solution is simple, but I hope, effective. As part of your CPD programme for this year write down that your objective it to learn how to run a real business. Then say the best way to do this is not to go on a course, but to actually do it. Then go out and offer yourself as a partner, director or even just manager of a real business. Make the offer part time, of course, so the practice can continue, but make the time commitment big enough to ensure you have to really get involved with the business you have offered your services to.

You'll be amazed what it feels like to sit the other side of the desk. Buying accounting services is not like selling them. Making real decisions on pricing is not like offering advice on them. Deciding when to hire and fire, and actually doing it on a seasonal basis is not as easy as saying that someone needs a flexible workforce. Deciding in reality whether to lease or buy an asset is frequently harder than offering advice on which is better for tax. In fact, sometimes it's very very difficult to make such decisions because you have no idea at all whether the cash flow will ever come in to cover the costs.

This is what it's really like to run a business. And until you've done it it's hard to be a really good business adviser. You learnt to be an accountant on the job. Learning about business has to be done on the job, and since running an accountancy practice is not like running any other business, it can't be done on that job. So you need another, part time one. And if you agree to be paid on a risk basis related to performance you might also find out what being an entrepreneur is really like.

Give it a go. You won't regret it.

Richard Murphy
[email protected]
AccountingWEB contributing editor Richard Murphy is a sole practitioner chartered accountant but was previously senior partner of a firm for 11 years. He has also been chairman, chief executive or finance director of 10 SMEs. In addition to accounting, writing and lecturing Richard develops and markets software tools and guides to help accountants in practice systematise their operations.


Replies (6)

Please login or register to join the discussion.

By mikebrod
11th Mar 2005 18:13

Bang On!
It's an essential, in my view, to "get some muck on your wellies". Unless you get involved directly it's impossible to comprehend, and, thus,deal with the myriad of problems that arise. Office bound is not an answer to claiming "specialisation in the SME sector".

Thanks (0)
By User deleted
11th Mar 2005 16:39

If It Aint Broke Richard Will Try And Fix It!
I never read any of opinionated Richard's 'desperately playing devils advocate for hits columns' any longer. But if it aint broke...unlike Richards Practice Tip pieces, dont fix it!

To me it is perfectly obvious that being a professional in public practice is not the same as being an entrepreneur in the free market. There are different constraints for starters.

Thanks (0)
By AnonymousUser
11th Mar 2005 14:14

Same Wave Length
Hey Richard, at last you and me on the same wave length.
My own view about why entrepreneurial flair is lacking differs from yours (not too much).
I have had another business apart from my practice and it hasn't made any difference to my train of thought.
Business has changed dramatically since the sixties. Prior to the crash (early nineties) there was the stable business which started off family owned and grew yearly but didn't get too big to be impersonal. There was also the boom and bust companies where the entrepreneurs tried their hand at different projects. Jobs were also pretty secure. Now jobs are not secure and business is not as stable. Banks are not forthcoming with cash for the entrepreneur. Compliance is making people cover their backsides so decisions take ages or even no one can decide who should make a decision. Where compliance and ridgidity have replaced flexibility and common sense, stagnation will replace flair.

Thanks (0)
By muganga
11th Mar 2005 12:41

Accountants and Entrepreneurs
As a serial entrepreneur (10 companies to date) I totally agree with this article. In fact I can go further. I have recruited graduates in the past who really wanted to be lawyers or accountants but treated their time with my company (normally one to two years) as a form of post university gap year(s) and then went on to their chosen profession.

They had all been to university and learned the theory of the trade they wished to follow, all were astonished at how different the real world was, the compromises that had to be made - the inability of small companies to do things by the book (there simply isn't the time). All really enjoyed their time and in dealing with them later in their careers it was clear that they had something (an insight perhaps) that their colleagues simply didn't.

I believe that just like teachers should go and get real jobs for at least two years before teaching, so should accountants and lawyers. They would be much more valuable to their clients as a result.

Thanks (0)
By Piglett
11th Mar 2005 13:01

Completely right
When I left the large practice I'd trained with and worked for for 10 years two things gave me credibility with clients - firstly, the experience of starting up my own accounting business, and secondly the fact that I was FD of an entrepreneurial business (not accounting!) for a couple of days a week.

I very soon found out that my commercial nous outstripped that of the partners in my old firm which, at that time, proclaimed a specialism in SMEs!

Thanks (0)
By rlatchana
11th Mar 2005 12:45

He's Right
I think I agree with the comment. That's why I like receiverships as a good source of knowledge. You not only get the oppertunity to run a business but you get to pump new ideas into one that appeared dead.

Thanks (0)