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Practice Tip ' Making a Profit

28th Nov 2005
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It's been fascinating to read recent comment both on this web site and others about where accountants will make their profit in the future, all of it no doubt in part inspired by Sage's recent survey on accountant / client relationships.

I have to say a lot of this comment sounds very familiar. I well recall the ICAEW's paper published some years back now which forecast the state of the profession in 2005. I think it a fair synopsis to say that it warned that unless professional firms changed the services they supplied and the way they supplied them then they would see their profits fall, and that they would fail to meet changing client expectation. What have Sage found? In a nutshell, that as far as client expectation is concerned that this is true, as far as I can see. I suspect that it may be the case that profits are suffering as predicted as well.

What's really depressing is the inevitability of this. It's glaringly obvious that in a world where much changes often, that those who do not change the way they work or the services they provide will see their profits decline. Despite that I am convinced that many firms have not:

1. embraced a culture of change;
2. created a strategy to deal with it;
3. sought to provide clients with the benefit it.

Communication is an example. It's staggering that large numbers of firms still do not communicate with their clients by email, both for specific issues and for routine updating on issues of importance. It's amazing that when clients want more communication that accountants aren't using communication tools, such as standard letters.

And it's not a little depressing that so poor is the communication that accountants so badly understand their clients that what accountants rank as the most important issue in the choice of an accountant (quality of service) does not even reach the top three of the client's concerns. The reason, of course, is simple ' the client assumes that they will get it and that the accountant is competent to provide it. The worry is that many accountants must not understand that and as such don't treat it as a lowest common denominator, which is what it should be.

What is encouraging though is that this survey says that the savvy accountant does have the chance to really meet their client's needs. They can do that by seeking to understand the client's business. Which, if I'm honest, is much as the ICAEW said in its 2005 report.

There's just one problem to be tackled though, and it's a big one. How can you understand a client's business if you don't understand your own, and how do you understand your own if you don't understand what people want of you? This, in a nutshell, is the challenge that accountants in practice now face. And if that nutshell is opened out only ever so slightly the things that an accountant must do if they want to really prosper are:

1. understand communication;
2. learn to listen;
3. be effective business people;
4. seek to supply innovative, but practical and cost effective solutions to client's problems, whether they relate to tax, business, IT, accounting, or whatever.

None of these techniques are emphasised in the syllabus of any of our professional institutes. That is because training remains technically focussed when what the client wants is solution focussed. Most CPD offerings are guilty of the same weakness, although that they be in response to the fact that few accountants put any emphasis upon these issues. And yet they're key to what people want of us.

Squaring that circle will be a challenge.

Richard Murphy
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. A collection of previous articles by Richard on practice management themes is available in Practice Management Zone


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By User deleted
06th Dec 2005 10:32

Are you in practice or in business?
This article reminds me of the old adages, “work on your business, not in”, or the other old favourite, “are you in practice or in business”? To operate as a business, accountants need to become better managers of their own processes. By managing process, practitioners would at a glance be able to understand their businesses, they could evaluate almost instantly what is working and what isn't. They can check if capacity is correctly planned and the pipe-line of fee opportunity is being correctly managed from inception of opportunity, to completion of work, collection of fee, and the creation/maintenance of a happy client.

If a practice creates the right processes, then fee-earners would be able to manage their businesses by exception. Imagine the huge time-savings if you could run a business by simply correcting the small minority of processes that are wrong, instead of consistently checking all the processes that are right. If you establish the right processes, and manage them by exception, all of a sudden a practice begins to "run itself" and substantial amounts of fee-earner time are freed up. What should be done with this time? Fee earners should establish relationships with clients, speak to them, understand their businesses, and help them grow. In other words, do all the things that help a practice generate fee opportunities for itself and which help a practice grow its own business.

If you want to grow your practice, be in control of it first - establish process and manage it by exception. Then you'll have the time for clients!

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