What Type of Firms Are Achieving Real Growth

What Type of Firms Are Achieving Real Growth
As we head into another year, it is often a time of reflection for practitioners and practices on the year that has been as well as some preparation and planning for the year ahead.

What went to plan? What went well? What was the surprise event? What was the year’s pain point? What could have been performed better? All natural questions to pose when self-evaluating.

To assist you with this process, a question we are often asked is “what are successful firms doing?”

It’s interesting isn’t it?

It’s almost as though many firms are looking for a magic pill that will fix all their woes and make them suddenly successful. Let’s face it, who can blame them.

If only it were that easy but unfortunately it’s not; if for no other reason than everyone’s definition of success is different.

There is no doubt several options that firms might think lead to success, presumably of a financial nature. Probably the big three within the profession at present include:

Outsourcing or offsourcing
Cloud based computing, in particular Xero
SBR & its impact upon the future of accounting firms
Interestingly, we feel that the ‘jury is still out’ on the potential success of the first two options and the overall benefit to firms. Some firms are wildly positive about outsourcing and/or the use of software such as Xero. Some early adopters now suggest these trends are losing their shine. Certainly those who have set up their own operations in Asia or India tend to have found the greatest success when it comes to outsourcing.

Funnily enough, when we speak to some tech guys, even they’re not huge advocates for cloud based accounting. So perhaps it’s ‘each to their own’ when it comes to the overall benefit and success this provides to a firm.

However, at this stage we can’t definitively say that the utilisation, or not, of the first two approaches above lead to a more financially successful firm.

In respect of SBR, I tend to take a more conservative view when it comes to its potential impact upon the profession. We are hearing from many within the industry that all firms need to be working more actively on the advice side of their businesses and becoming less dependent upon compliance services. Whatever your thoughts, the one differentiator we see within firms who seem to be thriving and growing at present is the approach the practitioners take towards working with clients.

These practitioners are proactively meeting with clients at their premises. Clients are not charged ‘per say’ for this time, but more often than not, the principal will return to the office with additional work from that client. It provides the accountant with the opportunity to really understand the client and their needs. It also enables them to identify additional structuring opportunities or savings.

I recall one practitioner talking about visiting a new client and noticing some racking or similar within their warehouse. As it turned out, this hadn’t been accounted for in the correct manner by their prior accountant which ended up saving the client $100K. Don’t think the client didn’t appreciate that.

So these visits are all about underpinning client relationships and giving clients the opportunity to discuss matters that they probably wouldn’t necessarily pick up the phone to discuss. It also gives clients the opporutnity to chat about their goals, objectives and future direction. Sure, you’re probably not going to do this with all of your clients, so work out what annual fee size works.

Another approach that I discovered within another firm was the willingness to churn clients. Yes, it’s a term most practitioners would shudder at, the thought of actually replacing less desirable clients with better clients. That’s exactly what this practitioner did. As they attracted better clients, they told some of their less desirable clients, generally those who were problem payers, to find a new home. For them, this equated to a change of around 25% every couple of years within the client base.

So, if your firm is planning for the year ahead, consider whether either of these more proactive approaches have a place in improving your practice and its growth.