Imagine this hypothetical scenario:
It’s three years into the future and you wake up and the government has used advances in technology to abolish all need for business tax compliance work done by accountants.
What would that mean for your business?
My guess is that it would change your business radically.
Would it put you out of business?
Do you have the ability to offer something else of value that some or most of your clients would continue to pay for?
That potential nightmare for most accountants isn’t that far out of the realms of possibility that it can be easily dismissed. The probability is that this scenario will play out in the near future.
The real question is, what are you doing strategically to prepare your accountancy practice for the coming tsunami of change?
What is Your Practice About?
Let me ask you to a question about your practice.
How would you describe what it is you do and what would you say about the purpose of your practice?
I usually see two perspectives with the answers to that. Typically, there will be either a me/us focus or client focus.
Which way did you answer?
How we think about our business determines our level of success.
If we are inwardly focused, we place limits on our ability to relate to clients. When our focus is on what we do, we tend to interact with our clients at a transactional level.
We think about what we do as providing a service. We can even be very noble about this, wanting to ensure that our service satisfies our clients. This is a very normal model of a professional practice. It is understandable – it is the same model as that used by the oldest profession, as David Maister once observed.
Think about it.
What are the norms of practice in the oldest profession?
As far as I am aware:
- A service is provided for a fee. Time is money, so the more services that can be provided, the more income is made. More is better.
- There is no discretion about who the client is – the service is provided to anyone willing to pay the fees.
- There is no desire to create a relationship with the client – the focus is on the transaction.
- There is no real care for the client – as long as the client is satisfied, or the immediate need is met, the fee is paid.
- Management is old and tired, workers are young and eager, not yet jaded from their experience.
How much does your practice sound like that?
Would you be open to a learning a different approach?
The Strategic Relationship Business Model
During my time working with one of the Big 4 firms, one of the partners referred to the Managing Partner of my division as “not having a strategic bone in his body.”
As he said that, his tone suggested that it wasn’t a matter to be concerned about.
However, it worried me, and it worries me more that so many owners and principals of accountancy firms obviously don’t think strategically about the future of their firm.
The typical accountancy practice is set up to deal with tax compliance and financial reporting. The strategic accountancy practice is focused on helping clients succeed.
Check this comparison.
|Traditional Practice||Strategic Practice|
|Practice based on service and transactions||Practice based on Value and Relationship – helping clients succeed.|
|Compliance Based Tax / Financial Reports||Reports/Advice for Business Performance Management and Compliance|
|Service seen by client as a necessary evil||Service is a valuable contribution to excellence in performance|
|Service is regarded as an unwanted cost||Service is regarded as a beneficial investment|
|Intent is to minimise tax for clients||Intent is to maximise performance and results and then ensure client pays no more tax than required|
|Not selective about who to take on as client||Select high potential clients who match business objectives, philosophies and values.|
|Charge fees based on time/cost||Charge fees based on value of service|
|High level of debtors – annual fees are often carried for many months in debtors ledger – high costs of recovery and disruption to cash flow||Low level of debtors – many fees paid in advance or on completion of service, fees paid on monthly basis by automatic payment|
|Work completion highly dependent on principal or partners.||Work completed by others with minimal input from principal or partners.|
|Workflow planning and timing of service provision is reactive, driven by when client brings work in.||Workflow planning and timing of service provision is driven by proactive marketing and client relationship management.|
|Practice is characterized by a large gap in experience and expertise between senior people (principal or partners) and inexperienced juniors, with succession options negligible.||Staff experience levels across the range, with reasonably experienced sub-partner levels to support principal or partners.
Also utilise effective alliances with strategic alliance partners for service delivery.
|Practice operation creates high stress, low morale, high staff turnover, low job satisfaction.||Practice operation generates enjoyment, high morale, low staff turnover, high job satisfaction.|
Creating your strategic business model requires that you think differently about your business. You cannot afford to go on in a business-as-usual manner. The writing is on the wall for the old business model. It’s just a matter of time.
You must differentiate your business and remove it from the commoditised mass of accountancy practices that look almost identical. If you aren’t sure about that statement, just do a Google search on accountants in your city and see if, other than the practice name, you can spot the difference.
As an accountant, you are probably the first person your clients will turn to when they have business related challenges. Instead of seeing the coming tsunami of change as the potential wave of destruction your practice may be caught up in, get ahead of the change and see what your clients really want from you and your firm and then develop your strategies to deliver that.
When you look at the reasons most businesses fail or struggle, over 75% of them are areas where accountants can have a direct input, as they are within the range of knowledge and skills accountants learn at university and in getting higher qualifications, and in growing their own practices.
I urge you to use this transitional period as the catalyst for converting your practice and your business model into the strategic relationship model and becoming the trusted business strategist for your clients.
If you would like more information about this transitional process, please download our free report, A Matter of Trust, here.