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Make your new firm a success

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1st Oct 2012
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Mark Lee explores some less wellknown measures that accountants can use to determine the success of their practices

One of the first things any consultant to the accountancy profession needs to accept is that everyone has their own definition of success.

Not all accountants are looking to multiply the size of their practice or even to grow their client base. Some are very happy with the status quo. Start-up practices are different, of course, but they will still each have their own definition.

I recently met an accountant who seemed quite successful. He claimed to make a good living, having built up his practice over the past 20 years. He has three long-term contractors working for him on an outsourced basis (so no staff or employment issues to worry about), he plays golf 3 times a week and has no obvious cause to worry about negligence claims or the imminent loss of clients to his competitors.

When I congratulated him on what he had accomplished he was reluctant to agree he was successful. As far as he was concerned he was not a success as he doesn’t enjoy running his practice, he doesn’t really like the type of clients he has and he cannot see how or when he will be able to retire.

I have my own definition of success. I think you can claim to have a successful practice when you can honestly tick most, if not all, of these boxes because your practice:

  • is sufficiently profitable
  • is not hemorrhaging clients
  • is sufficiently rewarding from a professional perspective;
  • is not giving you regular cause to worry about staff, clients or HMRC
  • allows you to plan for your retirement (if this is likely to be within the next ten years); and
  • is sufficiently fun (in that you enjoy what you do).

If you are planning to set up on your own, do your plans reflect any of these measures of success?Are there any others I have missed?

Sufficiently profitable

This is of course a relative measure. Have you set yourself a target? Are you en route to achieving it on a regular basis? Do you know which type of clients will really contribute to your profitability and which will simply be a drain?

Are you based at home because you want to be or because you cannot afford to move to an office? AccountingWEB published a topical article last April on the pros and cons or operating from an external office.

Some accountants (not all) are constantly on the look out for new clients to grow their practice. Others are happy to simply gain as many new clients as they lose each year. And the more successful practices do not lose many clients.

Consistent client base

If you have a number of good, profitable clients then chances are that they will be attractive clients for other accountants in your area.

As you build your practice you must also ensure you continue to pay your initial clients sufficient attention. You want to be confident that they will rebuff any enticements from other accountants’ marketing efforts.  In this regard you may want to review whether you are providing them with sufficient added value.

Professionally rewarding

Will you be happy if your practice results in you simply completing a couple of hundred personal tax returns each year? Or if you are simply completing the bookkeeping and accounts for what we used to call ’brown paper bag clients?

Do you dream of more varied work than your current marketing and networking efforts are generating for your practice? Might I suggest here that you review the series of Networking articles published on AccountingWEB over the summer? The second one is especially relevant here.

Causes for worry?

We all have worries from time to time. So the question is whether you feel that things are going sufficiently well to not spend most of your time worrying about one thing or another. One key tip here is to have an arrangement in place to provide you with technical back-up so that you know where to go when clients occasionally need help, support or advice that goes beyond your existing level of knowledge and experience.

The accountants who have cause to worry about potential negligence claims are typically those who knowingly take chances and think they need to make out they know everything. The more experienced you are, the more you know that’s never the case. 

Retirement planning

As I get older I realise more the importance of thinking about the future – from a retirement perspective. I am also aware of plenty of accountants in the 55-70 age range who are making an adequate (for them) living but who do not have an adequate retirement pot. I am not sure it is right to consider yourself successful if you can see the day coming when you will run out of money.

Enjoying yourself

This is related to the “professionally rewarding” point noted above. But here I’m thinking about your general motivation to work each day, to go to the office (if you have one), to spend time with clients and so on. However much profit you are making, if you don’t feel good about it, that’s not much of a success in my book.

Are you able to express your enjoyment when talking about your practice? I wish more accountants could do this. Then perhaps we might move more people away from the idea that accountants are boring or bog standard.

Success or Excellence?

Last year I wrote a piece What ‘excellence’ means to accountants in which I reviewed Steve Pipe’s book ‘The UK’s Best Accountancy Practices’. As I said then, not all accountants will want to follow all of the ideas presented. There is a key difference between satisfying someone else’s definition of an excellent practice and satisfying your own definition of success.

What is your definition? What will it take for you to consider your start-up practice a success?

Mark Lee is Consultant Practice Editor of AccountingWEB and writes the BookMarkLee blog to help accountants who want to understand social media and to avoid being seen as Boring.  He is also chairman of the Tax Advice Network of independent tax experts.

Replies (114)

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By Bob Harper
12th Oct 2012 10:45

Sweet

@John - there is no place for your definition/understanding of selling but there is for mine.

The approach that I believe in is where the salesperson does not pitch. They build high levels of trust and credibility with the client. They do this by asking great questions and listening - REALLY listening.

Most people in business rarely experience someone REALLY listening to them, some may feel they are not heard outside business!

 

Only after they have a deep understanding of the business environment, critical business drivers, and high priority issues AND thoroughly validated that their understanding AND believe what they have is a compelling business case do they ask for the business.

And, when they ask for business they develop a bespoke solution with a budget that fits the context and a definition how success of the solution will be evaluated and defined.

By the way, next time your in company with a young kid ask them if they would prefer to choose sweets based on how long they took to make or how nice they tasted.

Bob Harper

Crunchers Accountants

 

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By johnjenkins
12th Oct 2012 11:17

@Bob

You've obviously never taken a child to a sweet, chocolate or rock making factory. If you had you wouldn't need to ask that question.

Selling is selling Bob. Hide it, disguise it, smother it with sweeties, it's all the same.

It's psychological Bob. If a mind is in sales mode, that will always come to the fore and overide everything else. Don't ask me why cos I don't know but it is a fact. There must be some chemical given off in the brain that says sell sell sell or it could be that with all the amusing adverts we are brainwashed.

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By Bob Harper
12th Oct 2012 11:28

Help

@John - in your world selling is about taking, in mine it's about giving. Rather than sell, sell, sell my mind goes help them, help them, help them.

You're looking through the telescope through the wrong end.But, it's not your fault, someone obviously brainwashed you many years ago when you were training that you sell time and sales is evil.

Bob Harper

Crunchers Accountants

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By johnjenkins
12th Oct 2012 12:10

I'm very poud

of my training. It taught me many things, including to have an open mind, always ask questions and listen to what others say, but above all never to stop learning.

I don't have an evil outlook on selling. Cold calling is great and I admire people who do that.

I'm sure bankers were saying, help them, help them, help them when they were mis selling PPI etc. You see Bob that is what happens when selling comes to the fore, everything else is forgotton. You may interpret selling as helping. Again psychological.

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By Bob Harper
12th Oct 2012 13:00

Training

@John - it's your psychology that's interesting - you don't seem able to process that there are two types of selling.  

You seem to think that the sales person gets paid for making a sale, in my world they get paid fro making a positive difference. That's why they put up objections and say no!

Your training installed a belief system in you and you seem happy to support this by focussing on only what you want to see. If you ever dared to take your blinkers off you'd discover your on the wrong racecourse, the game is changing.

Bob Harper

Crunchers Accountants

 

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By johnjenkins
12th Oct 2012 13:19

@Bob

I don't know why I keep putting @ Bob as there only two of us on this thread. There are many types of selling Bob, but my point is that there is no room for any type of selling in the Accounting profession. My dentist is doing botox. Bankers are selling all sorts of goodies and that is why people can't get mortgages and business can't get the money for expansion. Seeing and rejecting Bob, is not the same as not seeing. I have seen values and respect disappear over the last 15 years. In fact I can pinpoint it to the riots of the poll tax. So Bob, if you think that the change to greed will ever dominate then you're in the wrong stable.

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By Bob Harper
12th Oct 2012 14:02

Any type

@John - I know you don't believe there should be any selling in the Accounting profession. What about the selling to get clients to do their bookkeeping correctly? What about the type of selling that motivates the client to send their information in so you can do their tax return?

Perhaps you don't want this type of selling because you will spend less time on the client and your fee will go down.

I could have guessed that you would say that values and respect have disappeared. Once again you're wrong, respect and values have changed. You haven't.

One of the reasons why businesses can't get money for expansion is too many accountants have spent too much time recording time, rather than focussing on the issue. 

Bob Harper

Crunchers Accountants

 

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By johnjenkins
15th Oct 2012 10:56

oh Bob Bob Bob Bob Bob

You don't sell bookkeeping or Accounting packages to your clients. You discuss the options and they choose what's best for them.

My clients decide the fee. Some will want me to spend more time some won't.

Your right Bob. Respect and values have changed, for the worse. Last years riots was a typical example. The police stood by and used CCTV, after the event. Too late for some who lost their business. However hope is on the horizon.Victims of crime can now fight back without fear of being taken to court. Yes, Bob, some values are returning.

Do you know Bob, I've read through your posts and really it's not me that's blinkered It's YOU. If you can't see what selling did to the banking industry then I shudder to think what would happen to the Accountancy profession if anyone of substance agreed with you.

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By Bob Harper
15th Oct 2012 11:31

Blinkers

@John - this will be my last post on this thread because you are clearly not even prepared to contemplate that there is a style of selling that is different to your preconception. 

If you did ask you'd know that modern selling is about giving the clients options and letting them decide. But, instead of sitting on the fence watching the time you'd be prepared to take responsibility and be accountable.

Your stuck in the past, where selling was about the close. Today it's about the opening and by that I mean open questions to help the clients see new perspectives.

My blinkers were taken off a few years ago. I've been where you (recording time and thinking I was selling time) but I've come out of the woods. You've never tried to work differently, you won't even consider a different view.

Selling skills didn't do anything to banking, greed did. Like I said before guns don't kill; people kill people. 

You won't like this but your dislike of selling is based on a lack of knowledge. Your unwillingness to learn makes you ignorant and the only people who are proud of that are arrogant.

Bob Harper

Crunchers Accountants

 

 

 

 

 

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By Ken Howard
15th Oct 2012 11:36

Just having my car serviced

Bob,

Just had a phone call from the garage which reminded me of this thread.  The car was in for service and MOT.  Apparently, there's some problem with it.  If not resolved it will fail it's MOT.  

Now, the garage could sit down with me, discuss my need for the car, discuss how much it's worth to me to keep it on the road, compared with the potential loss of business and personal pleasure if I can't drive it and end up walking or using public transport anywhere.

Or, they can tell me that the parts will cost £x and it may take an hour or two extra labour to fit them.

I think you know where I'm going with this.

I now have a choice - tell them to do the work and pay their hourly rate for however long it takes them, OR, collect it and take it to another garage who I hope may either charge a lower rate or do it quicker.

Same with accountancy.  

Whilst your "value pricing" would undoubtedly work if all accountants operated the same way - i.e. no-one doing it on a time basis, it is fundamentally flawed.  This is because the client can walk away and go to another accountant who will do it time-based.  So, whilst, yes in theory, I could give advice to save a client thousands of pounds that they would, in theory, be willing to pay me a couple of thousand to give,  they can also get the same/similar advice from Fred down the road who charges £90 per hour for a couple of hours work.  Whilst the client may be content at the time to pay me a couple of K for saving them thousands, they are going to go ballistic when they find out that someone else got the same advice for £180 from a different accountant and that's the end of our working relationship isn't it?  They'd never trust me again.

Carry on doing that and your reputation will be shot.  You'll get no repeat business and no referrals, so you'd end up constantly chasing new clients and effectively conning them with smart sales-speak to over charge.  Will undoubtedly work short term, but not long term.

I don't want to work like that.  I nurture long term business relationships.  I want a client to remain a client for a decade or two.  That I achieve by honesty and integrity and not treating the client like a money pit.  There's many times when I've been in a position to really fleece a client but I've always refrained and the clients respect you for it, thus stay with you, recommend their family & friends, etc. - it's worth far more than a quick buck.

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By justsotax
15th Oct 2012 11:46

I have to say

my experience of time based billing is that the actually time recorded is generally never charged....this is often adjusted for a variety of reasons (junior in training/experienced staff completing task very efficiently etc).

 

But i think Ken says the critical thing, for most of us with a client base, the important thing is actually retaining the clients.....and clearly if we are not giving the right advice at the right time then we will lose those clients.......(whether we value price or otherwise).

 

 

 

 

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By johnjenkins
15th Oct 2012 11:46

@Bob

I don't dislike selling. I dislike mis-placed selling and the banks clearly did that. There is no place for selling in the professions. It clouds judgement. You won't understand that because you are a salesman first and an Accountant second. Yes Bob, I am proud of my arrogance when it comes to Accounting.

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By Bob Harper
15th Oct 2012 18:31

Focus

 

@Ken – I saw your post and (despite not continuing the discussion with John) I thought I’d reply because a) I think your comments are what others are thinking b) there is one really interesting point in your post.

It’s clear to me (like with John and selling) your comments show a fundamentally lack of understanding of Value Pricing.

Despite what some firms are doing (and what you may have heard from other consultants) Value Pricing is not about charging a high price for one-off work and carrying on the same for the other work. It totally changes the firm's mindset.

For example, lower value work (like compliance service) is done for a lower price, or even passed to a strategic partner. A Value Pricing firm becomes obsessed with value so they develop/innovate new solutions to take to their clients.

Your desire to have clients for a decade or two says it all; the longer the relationship the better for you but what about your client?

Under your pricing model you get rewarded for clients existing rather than being successful. 

Bob Harper

Crunchers Accountants

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By johnjenkins
16th Oct 2012 12:25

@Bob

You're doing it again. Understanding and rejecting is not the same as not understanding.

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