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Why firms should discover their purpose

7th Apr 2017
Editor AccountingWEB
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Find your purpose
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“Does your purpose permeate through everything you do?” asks Rob Nixon, CEO and founder of Panalitix.

For practitioners, Nixon said, a sense of why they’re doing what they’re doing should be woven into every area of growing their firm: whether that's inspiring people, marketing or choosing ideal clients.

And now more than ever accountants need to communicate their purpose. The looming legislative changes brought on by Making Tax Digital will change how people view the role of the accountant. Nixon believes this wave of technological disruption will force accountants to change their business model.  

“For the accountant, 87% of their revenue is tax compliance and audit,” Nixon told AccountingWEB. “The government will eventually bypass the accountant and go straight to the accounting system of the client. Which means the accountant themselves have to become relevant.”

Finding your why

Panalitix’s Perfect Firm tour stopped by Bristol’s Marriot hotel last week. A group of accountants escaped the inclement spring weather to find out how to remain relevant, what being a perfect firm entails, and the opportunity disruption brings.

Nixon stopped by the AccountingWEB offices before the event and explained why it's important for accountants to find their purpose. 

Paul Dunn, 2015’s Practice Excellence outstanding contribution award winner, framed the day in a video where he encouraged accountants to differentiate their business through 'finding their why'.

Simon Sinek popularised the 'knowing your why' phrase. As discussed in various Ted talks, and in this case a recorded conversation with Dunn, Sinek explains that every organisation on the planet knows what they do, some know how they do it through their value proposition, but few know their why.

“When you know your ‘why’, your ‘what’ has more impact,” said Dunn. As a way to direct attendees into finding their purpose, Dunn prompted them to complete the following sentence: “I get up every morning to…”

If Dunn’s words didn’t register, Nixon’s instructions on how to implement a well-developed firm provided a more structured approach.

Leading the seminar with a relentless enthusiasm reminiscent of Tony Robbins (who Panalitix has recently struck a deal with), Nixon energised the room with his vision of how a perfect firm operates; all fuelled by his purpose.

“I want help my clients build success and build a great business so that they can build great economies,” said Nixon.

Permeate your purpose through your whole business

Understanding the motivating factor of why you get out of bed each morning informs how you approach every facet of running a firm. Nixon separated the rest of the day into three sections: profit, capacity and growth.

In each section, Nixon selected a host of strategies (eight for capacity, 11 for profit and 11 for growth) so practitioners can score their firm out of 10. The key is for practitioners to be brutally honest. 

I want help my clients build success and build a great business so that they can build great economies

Up until this point, the Panalitix tour had attracted an eclectic selection of firms, with scores ranging from the UK high of 186 to a Dublin firm that rated every strategy as one.

Development Scorecard

Throughout the day, Nixon explained how implementing each strategy and steering clear of administrative tasks would ultimately lead to growth. The ingredients of a well-developed firm such as automation, value-added services, and upfront pricing are likely to strike a chord with practitioners familiar with the rainmaker practice mode. 

Profit. Firstly, how do you price? Do you scope projects before the job starts? Value pricing and upfront pricing feature strongly in this section. 

  • Pricing takes courage. How do you do it? What’s your method?
  • Have you got a people development programme to educate the team to become more profitable faster?
  • How do you measure client service? Have you implemented a structured process? How often do you meet clients in person or speak over the phone?
  • Do you grade clients? This is where a firm’s ‘why’ reverberates through their client selection. “We determine the rules: this is what a client looks like to us.”

An important strategy under profit is how firms serve clients. Nixon goes into more detail in these videos.

Capacity. MTD will likely cause capacity issues. What workflow processes have you implemented?

  • Nixon believes accountants should stick to what they’re trained to do: be accountants and not distract themselves with admin work. To avoid this, they should hire a client service manager.
  • Have you got at least 80% of your clients on the cloud?
  • Nixon shared a story about a firm who cracked their workflow management by using a whiteboard. Every morning the firm would gather around the whiteboard and carry out a daily huddle. The team would apply self-imposed deadlines on jobs, and list them on the board.  
  • Have you got the right people in the right roles? Ask yourself: would you enthusiastically rehire your team members? 

Growth. Growth comes through knowing your client, knowing where to find them and understanding how to price.  

  • Do you concentrate on a niche market?
  • Again, Nixon emphasised that accountants should concentrate on what they do best: accountants are great advisers, not marketers. So accountants should hire a marketing person to gather leads and dominant the web.
  • This leads on to brand development. How known are you in the accounting space? Do you promote your success through case studies?
  • Referrals. Prospective clients are not going break away from an accountant who has financial intimacy over them. How do you break that? You need to build trust through personal relationships and social proof. 
  • “Being a trusted adviser is making sure every client is buying what they need,” said Nixon. Do you goal set with every client?

Below, Nixon expands on how a well-developed firm approaches marketing.

Rounding up the day, the practitioners calculated their scores. The results spread from those just moving the needle (52) to those who have made significant strides (167) but with still plenty to implement if they want to stand shoulder to shoulder with the 250+ elite implementers. 

 

Has your firm developed a mission statement or spent time developing a ‘why’?

Replies (34)

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Man of Kent
By Kent accountant
09th Apr 2017 09:56

What a load of bollox.

We're bloody bean counters not philosophers!!!

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Replying to Kent accountant:
By Bob Harper
10th Apr 2017 17:54

@Kent - do you honestly believe that accountants can maintain their revenue levels and margins doing compliance?

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Replying to Bob Harper:
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By johnjenkins
11th Apr 2017 10:31

Ah Bob,
Good to know you're still up for a challenge.
OK Bob, a prediction for you. MTD will show all what is bad about the increasing reliance on "the cloud". This will increase the client Accountant relationship and give all you fantasising sales people the "bringing down to earth" you need.
Kent Accountant is spot on.

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Replying to johnjenkins:
By Bob Harper
11th Apr 2017 11:09

@Kent - Yes, it looks like MTD is going to cause quite a bit of work for accountants over the next few years.

I have three predictions for you...

1) Over the coming 5 years technology will do all the data entry, coding and submissions so well that bookkeepers/accountants will not need to be involved in the year.

Xero is piloting this now and have you met Cleo?

Here is a link https://meetcleo.com/

2) HMRC will keep pushing cash accounting so that accountants will not be required at the year end for most of their clients.

Why not make cash accounting compulsory?

3) Accountants will be needed for software on-boarding, tax enquiries and accounts work for complex/larger businesses. But, unless they change their business model and solve new problems (like low productivity) they will be left fighting over less work.

Only time will tell.

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Replying to Bob Harper:
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By johnjenkins
11th Apr 2017 11:25

Bob, you're getting worse. You're actually starting to believe your own spiel.
MTD will never work at present nor in the next 10 years, unless, of course, the small business becomes extinct. Then, Bob, you will have no one to sell to as the big boys will have it all tied up. Be careful what you wish for, Bob.

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Replying to johnjenkins:
By Bob Harper
11th Apr 2017 13:19

@John - Yes, I see major challenges with MTD, under the current rules.

Wouldn't it be much simpler/easier if small businesses did a quarterly filings on the cash accounting basis. It would then just be a few adjustments for drawings etc and job done.

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Replying to Bob Harper:
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By johnjenkins
11th Apr 2017 13:45

That is a non sales question which I will make a non sales micky taking answer to.
Bob, how would, could, it be easier to submit 6 returns (4 quarterly, an adjustment figure and then a declaration, than one yearly with all information on it?
Business is different Bob. There are even differences in the way Painters and decorators work with the same turnover. There are too many variations to be able to do what MTD wants to do. I'm a realist, Bob. If I think something has a chance and is worthwhile I will look at every which way to make life easier. MTD, in its present form, cannot work unless HMRC make it a rule that all business has to be VAT registered (which I'm not against).
Let's look at what HMRC are going to do with the 1/4 updates. Sweet FA ([***] Adams - aweb). Will they be tying the 1/4 updates to the final figure? No.
So, Bob, there is no real reason for business to go on the cloud or get rid of the annual tax return. Eventually someone with a bit of common will realise it.
Cash Accounting - mandatory. Small builder does porch £10k just before year end. Buys all materials before year end but doesn't get paid till after year end. Cash Accounting, absolutely ludicrous.

Thanks (1)
Replying to johnjenkins:
By Bob Harper
11th Apr 2017 14:01

@John - if MTD was cash accounting then there would only be four returns. The key is data.

We are at a position now with feeds and automatic coding so the return/submission is really just a click of a button.

As for your example on Cash Accounting - £10k materials would create a loss in one quarter to be carried forward and set against revenue in the next quarter.

What's ridiculous is forcing small businesses to apply (and pay for) GAAP rules. At the end of the day it's just a timing difference between cash and accruals.

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Replying to Bob Harper:
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By johnjenkins
11th Apr 2017 14:20

Yes Bob you make a loss and lose the PA. Great tax planning.
It's not a question of timing, Bob, it's a question of allocating expenses to the sales they represent. In your scenario your creating an artificial loss which could cost the client a lot of money. (If you check my post I said year end not quarter end)
Bob, I'm not being rude but you're best off sticking to sales. Accountancy just isn't your forte.

Thanks (1)
Replying to johnjenkins:
By Bob Harper
11th Apr 2017 14:48

@John - MTD is not about saving people tax.

However, business owners could plan the timing of transactions/when they book work in but like they do now with pre-year end tax planning.

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Replying to Bob Harper:
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By johnjenkins
11th Apr 2017 14:58

No Bob, MTD is about destroying small business including Accountants.
"However, business owners could plan the timing of transactions/when they book work in but like they do now with pre-year end tax planning". Really, Bob, you do make me laugh.

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Replying to johnjenkins:
By Bob Harper
11th Apr 2017 15:22

@John - I think we agree that MTD is the beginning of the end for accountants who rely on compliance fees from the smallest of businesses.

I really can't see how MTD will destroy businesses. They just need to do their bookkeeping properly and send data to the tax office.

I appreciate this will be a change and a challenge for some.

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Replying to Bob Harper:
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By johnjenkins
11th Apr 2017 15:51

Bob, you remind me of the QuickBooks ad.
You can't see how MTD will destroy business because you're not an Accountant, you're a salesperson.
You can't buck the markets and you can't buck human nature. You've only got to look at Brexit and Trump.

Thanks (1)
Replying to johnjenkins:
By Bob Harper
11th Apr 2017 16:06

@John - accounting (whether it be MTD or SA) is not a driver of business success or failure.

I'd argue your world view is finance focused because you're an accountant.

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Replying to johnjenkins:
Glenn Martin
By Glenn Martin
12th Apr 2017 21:26

I didn't think he was a salesman either, his accounts show a gross loss, I am no Wolf of Chester le Street but that sound pretty [***] poor selling to me.

I don't he sold many of them Crunchers franchises either, not to be mistaken for the successful Crunch operation although he did rip the branding off.

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Replying to Bob Harper:
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By RobertD
11th Apr 2017 15:54

Bob Harper wrote:

@John - MTD is not about saving people tax.

However, business owners could plan the timing of transactions/when they book work in but like they do now with pre-year end tax planning.

MTD according to HMRC is about eliminating error. They agree that error works both ways. By that rationale, MTD will, according to HMRC, save some people tax.

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Replying to RobertD:
By Bob Harper
11th Apr 2017 16:08

@RobertD - I know there are mistakes that cost them tax but MTD is about closing the tax gap and I think that needs radical simplicity i.e. cash accounting.

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Replying to Bob Harper:
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By johnjenkins
11th Apr 2017 16:26

So Bob, radical simplicity :- kill all Muslims etc. so you end extremist terrorism eh?

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Replying to RobertD:
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By johnjenkins
11th Apr 2017 16:08

PML. You want to listen to yourself from my end.
"HMRC reckon MTD will save some people tax". PML
So putting a car into motor expenses instead of capital allowance (an error) will be brought to light if the business does his figures 1/4 instead of a year will it? When are you, HMRC and all the other sales orientated people out there gonna realise you're dealing with a mentality that is geared to earning a living not sifting through paperwork and having to pay for something that is not wanted and not needed.

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Replying to johnjenkins:
By Bob Harper
11th Apr 2017 16:38

@John - two things:

1) Wouldn't intelligent software pick up that error? Xero is piloting automatic coding now.

2) MTD could make it compulsory to used simplified expenses for cars.

Next?

Thanks (0)
Replying to Bob Harper:
Stepurhan
By stepurhan
11th Apr 2017 16:54

Bob Harper wrote:

@John - two things:

1) Wouldn't intelligent software pick up that error? Xero is piloting automatic coding now.

How? Just stating that "intelligent software" will be able to do something is akin to saying "a wizard did it". It's an excuse not to give a real answer. Explain how intelligent software will pick up ALL miscodings if you are going to cite it as the answer.
Quote:

2) MTD could make it compulsory to used simplified expenses for cars.

Just to be clear. You are saying a system that would leave some people out of pocket (because a simplified system, by its very nature, is going to be at best average car expenses) should be made compulsory? That flies in the face of people being taxed on what they've ACTUALLY earned. You really haven't thought this through have you. Back up and try again.
Quote:

Next?

Address the questions you've already been given properly before asking for more. Hiding your vegetables under "intelligent software" does not entitle you to dessert.
Thanks (5)
Replying to stepurhan:
By Bob Harper
11th Apr 2017 17:11

@stepurhan - I'm not being rude but if you do some research on Machine Learning and listen to Rod Drury of Xero this should answer your question on intelligence software.

Yes, there may be some winners and some losers with a simplified system. However, why can't intelligence software could work out the actual cost per mile of a specific car based on GPS?

Whose the one not thinking?

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Replying to Bob Harper:
Stepurhan
By stepurhan
12th Apr 2017 09:43

Bob Harper wrote:

@stepurhan - I'm not being rude but if you do some research on Machine Learning and listen to Rod Drury of Xero this should answer your question on intelligence software.

You are being rude, and you're evading the question.

I'm aware of Machine Learning, but last time I looked it was still in its infancy. As for listening to a software house, I've done that before. They have promised the earth in the analysis that will be done automatically. I have also heard plenty of tales from a variety of sources that the truth is not remotely that neat.

If you want to convince me otherwise, provide a link to an independent source that shows the technology has advanced.

Quote:

Yes, there may be some winners and some losers with a simplified system. However, why can't intelligence software could work out the actual cost per mile of a specific car based on GPS?

Whose the one not thinking?

That would still be you. (It's "Who is" not "Whose" by the way)

As you acknowledge, there will losers under a simplified system. That being the case, what justification is there for forcing those who lose to use such a system? (since you said it would be compulsory). Again, people should be charged tax on their ACTUAL taxable income, which they won't under such a system.

As for your "actual cost per mile of a specific car based on GPS", how does that resolve the matter? Even assuming average cost data for a particular make and model to be readily available (know any sources? what about new models that don't have a cost history), that is still going to be an average (winners and losers again, though possibly with a narrowing of the range).

Unless by "specific car" you mean an actual individual car, in which car where is the data coming from? The actual costs of running that specific car? (i.e. not a simplified system at all)

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Replying to Bob Harper:
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By johnjenkins
11th Apr 2017 16:55

Next :- Bob, I'm off to Barcelona now for a few days. Thank you for making my "holiday mode" afternoon fly by.

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Replying to johnjenkins:
By Bob Harper
11th Apr 2017 17:20

@John - nice enjoy!

Did you book online or did you call a travel agent?

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By Ruddles
11th Apr 2017 16:19

Arguing with Bob is as pointless and frustrating as arguing that MTD should not happen. Tunnel vision only begins to describe the problem.

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Replying to Ruddles:
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By johnjenkins
11th Apr 2017 16:29

At least it made a "in holiday mode" afternoon a bit more lively.

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By ireallyshouldknowthisbut
11th Apr 2017 18:39

Hi Bob,

Its always nice to be told how to do things by someone who cant even make their own business work.

"More than numbers Ltd" (bobs company) has filed is 2017 annual accounts.

Very keen, that I wonder how busy you are?

And, LMAO folks, they have filed FULL accounts.

Yes!

Really!

Bob knows this much about compliance, he has filed full accounts.

You couldn't make it up!

A little look at the turnover figures are, erm, curious.

2017 £16,078 (on a 10 month accounting period)
2016 £27,143

No I haven't missed a zero. That is what, 12 clients you have there in 2016? Down from erm 20? Thats a massive churn rate, your client must be really annoyed ot jump ship like that.

Accumulated losses £44k

Class firm Bob, class firm.

All those shareholders must absolutely love what you have done.

Btw I would hire some competent accountants so you dont embarrass yourself by filing a full set of accounts when you don't need to.

https://beta.companieshouse.gov.uk/company/09569254/filing-history

Thanks (4)
Replying to ireallyshouldknowthisbut:
By Bob Harper
11th Apr 2017 20:39

@YouReallyShouldknow - did you look at the nature of the business?

Accounts show the loss/investment but they don't show what we've built http://goaldriver.com/

And, there are reasons to file full accounts
https://fairtaxmark.net/criteria/

Thanks (0)
Replying to Bob Harper:
Stepurhan
By stepurhan
12th Apr 2017 10:05

Bob Harper wrote:

Accounts show the loss/investment but they don't show what we've built http://goaldriver.com/

If you've built something that has value, it should be capitalised in the accounts. If it's entirely new, there is almost certainly something else you should do. If this website is about what you claim to have made, perhaps the value is right though.

As an aside, if this website is the company website, you are in breach of various other legal requirements. See here. https://www.gov.uk/running-a-limited-company/signs-stationery-and-promot...

You have made a gross loss. This implies either poor business practice (selling things for less than you bought them for), expenses in the wrong place (possibly some of those that should have been capitalised) or a failure to provide for stock/wip. Hard to tell which applies here, but no business should make a gross loss.

Also your depreciation does not match your policy. Given no purchases in the current year, and this being your second year, depreciation should be 1/3 of the cost figure (per your policies). It isn't.

Any reason you don't want the Fair Tax Mark for More Systems Limited? You haven't published full accounts there. https://beta.companieshouse.gov.uk/company/07015633/filing-history

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Replying to stepurhan:
By mrme89
12th Apr 2017 10:17

Just beaten to the draw re software capitalisation!

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Replying to Bob Harper:
By mrme89
12th Apr 2017 10:06

You've created software, and nothing to show on the balance sheet for it?

You are just showing how clueless you are.

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Replying to ireallyshouldknowthisbut:
Man of Kent
By Kent accountant
12th Apr 2017 08:32

Boom!!!

Have some of that!

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By sparish
12th Apr 2017 09:24

.

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