PROFIT STRATEGIES. A practical toolkit for accountancy practitioners. By John Stokdyk, Editor, AccountingWEB.co.uk SUPPORTED BY

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1 A practical toolkit for accountancy practitioners By John Stokdyk, Editor, AccountingWEB.co.uk

2 Introduction - what are you in practice for? For the past three years, AccountingWEB has surveyed more than 6,000 clients of accountancy firms as part of our Practice Excellence Programme. Their feedback has consistently shown that high ratings for client service correlate to profitable growth. This statistical insight confirms the simple formula that practice development experts like Mark Lloydbottom agree are the drivers of success in accountancy: Client focus + efficiency = profitability + growth The fundamental formula of Practice Excellence may be straightforward, but like most business rules, it allows endless variations when it comes to implementation. In his Practice Excellence whitepaper on client focus, Mark Lloydbottom will explain that the purpose of any business is to meet the needs of its customers. The extent to which it meets or exceeds those needs will produce a number of outcomes, including profits. But as AccountingWEB member John Jenkins points out, clients don t all fit in one box, nor do accountants. His practice development philosophy is to adapt to each client s different needs and priorities. That is the essence of Practice Excellence. Lloydbottom, who draws on 25 years experience advising accountancy practices on business development, elaborates: The World Cup showed us there s more than one way to score a goal. There is no one way to build a business, but there are certain core components that should be in DNA of any firm that s seeking to deliver a high quality, high value service.

3 Agility and focus must be rooted in your team According to Lloydbottom, the continuing pace of change will increase the need for accountants to examine their underlying business assumptions and approach. More people have the option of doing cash accounting and we re seeing the last remnants of the audit, he says. Compared to 20 years ago, more people can file their own tax returns. All of this is nibbling away at practitioners core services. What s happening is leverage is going down. Where 25 years ago you d have staff to one owner, now it s down to eight or less. Partners are doing more and more of the low-end work. And sometimes as a result, maybe they are not taking the necessary firm-wide steps to move away from compliance. To make a successful transition to higher value client work accountants need to develop new habits to make the changes sustainable. As well as planning and managing implementation effectively, Lloydbottom urges accountants to develop an armouring strategy to defend their initiatives from resistance and inertia. This needs to start from a proper understanding of your firm s position and good accountability processes within your team. Some of the top performing firms in AccountingWEB s Practice Excellence Programme offer convincing evidence to the holistic, peoplecentred approach to client care, both with clients and within the team. As Lloydbottom puts it: The successful firm of tomorrow will have to deliver an exciting environment where people can do meaningful work.

4 Case study Milsted Langdon Three-time winner PEA winner Milsted Langdon presented what could be a charter for client focus in its submission in the 2013 Large firm category: Many of our new clients have either come from smaller firms unable to offer our range of specialisms and levels of service, or from national firms whose focus tends to be on larger clients who generate bigger fees, rather than smaller, family businesses. To us, every client is deserving of the same level of care and attention, regardless of their size and the fees they generate. Our non-chargeable Client Spotlight sessions enable planning issues to be identified and acted on for all of our major clients. The findings of these sessions are fed back to the client quickly, which has a very positive impact on client retention, as well as generating additional fee income. Milsted Langdon founding partner and chairman Jonathan Langdon says of the firm s driving ethos: Everyone wants to continually improve so that the firm can keep succeeding, growing and achieving positive results.

5 The making of a trusted business adviser Making the transition from someone who does the accounts and tax returns to a true business adviser is the most fundamental change most practitioners have to face. And it can be one of the most difficult. Mark Lloydbottom makes the point that accountants already enjoy the trust of their clients. Your role and responsibility is to assess the client s situation, give good counsel, action and implement, he says. Business advisers need to ask the right questions - and listen. A great adviser knows how to explore the power of silence in a meeting, not feeling a compulsion to step in and speak while the client is pondering the last question, says Lloydbottom. To develop this aptitude and confidence means spending more time with clients. The average accountant in the UK, North America and South Africa typically spends less than 75mins with a client in a 12-month period. Just by increasing your time with them, you can take a small step into business advising, says Lloydbottom. Equip your practice for growth Another of the key lessons from the Practice Excellence Programme is that the best performing firms take advantage of new technologies at every opportunity to attract new clients and deliver a consistently high level of service. Where technology is really having an impact is with the outsourced finance team or virtual FD concept. Cloud accounting gives the firm direct access to the clients books. Having that insight provides a great platform for offering advice, particularly when backed by regular management reporting and strategy reviews.

6 Successful firms use CRM tools to manage their sales processes actively, and many of those shortlisted for Practice Excellence Awards have systems in place to smooth handovers between departments and ensure fast responses to client queries. Most of the profit strategies discussed in this paper are very peoplefocused, which is the correct way to align your priorities. But computer systems also generate a lot of data. For accountants, it should be second nature to look at the figures from accounts and CRM systems and to match them with survey data from both clients and staff to assess where the firm is working well, and where it can improve. Use this information wisely - as you would surely advise your clients. Information systems need to be easy to maintain and use, and to serve the needs of the business. The process of defining and reporting KPIs is an instructive one that forces you to understand the nature of your business, and the factors you should be concentrating on to ensure your success. When measured and presented in a dashboard, KPIs can give you an extra, accessible and visual way to sharpen your focus.

7 Case study Coalesco Certified Accountants Coalesco is a truly client-focused firm, but we make extensive use of technology to maintain that human touch, said Linda Frier, principal of the 2013 Practice Excellence Award small firm winner. That s how we are able to run a cost-effective small practice with lots of clients. The secret of Linda s strategy is the way that technology is used not just to streamline processes and cut costs, but to improve the quality of client service. Linda s team talk of the love clients have for her, which comes down to her ability to ensure she understands their business and personal needs, and makes them feel important. This is down to good communication. Like most firms shortlisted for Practice Excellence Awards, Coalesco holds regular face-to-face meetings with clients, and follows these review sessions up with action plans, pro-active telephone and contacts. A CRM database helps the firm to achieve this. Staff log when work is expected and when information is due, and the software automatically dispatches reminders if clients are slow to respond. The software also controls the internal flow of work within the firm to ensure deadlines are met and gives everyone a common view of what tasks have been completed and what still needs to be done. If a client calls, whoever handles the query can access an up-to-date view and respond appropriately, reinforcing the perception that Coalesco is on the ball and that the client matters to them.

8 Little things can make a big difference As you refine your client-focused strategy, it is worth remembering that none of the successful firms that have emerged from the Practice Excellence Programme were overnight successes. They got where they are through several years of determined, concentrated effort - and most of all a commitment to continuous improvement. Each little step in the right direction builds on your previous work and takes you closer to your goal. But as the ancient Chinese proverb would have it, your journey is just as important as your destination. You and your team should enjoy your work and that happiness and engagement will directly affect your clients and their satisfaction levels. The people you work with are an amazing problem-solving resource. Borrow their expertise to help improve the way your firm works and gather them together to review your processes, suggest and investigate improvements and put them to the test in their normal working environment. Some accountancy firms have now formalised this approach by adopting Kaizen ( good change ) principles, but whatever you choose to call it, collaborative and consultative initiatives have shown their effectiveness time and again among Practice Excellence Award nominees and winners. There is no such thing as a magic bullet to achieve practice profitability, but one thing Mark Lloydbottom urges accountants is to strain every sinew to reduce lock up because it achieves so many other things for the practice. It reduces the amount of capital and cuts the number of client bills that are paid late - which is also good for them, says Lloydbottom. It s about having an efficiency mind-set, an economic mind-set, and a determined mind-set.

9 Case study PM+M PM+M was shortlisted for the large firm category in the 2012 Practice Excellence Awards and caught the eye with a succinct and clear statement of its central vision: Great to work with, great to work for, great at what we do! The firm says it strives for greatness by listening to clients, understanding their goals, and investing in its people so they can be the best possible version of themselves to deliver exceptional client service. What marks PM+M out is how it backs these noble words with concrete actions - and has reaped the financial rewards with growth in both total fee income and profitability. Much of that growth came from an increased focus on family businesses, which are supported with a collection of packaged services including intensive care for those struggling in the economic downturn, plus initiatives for start-ups and businesses looking for help with the transition to real time information for payroll. PM+M strengthened its family business service line by launching the North West Centre for Family Businesses. But its success wasn t just down to clever packaging and promotion of existing services. To make the strategy work, PM+M also underwent a significant culture change in recent years that helped to release a huge amount of energy and successful sales activity. Client and staff surveys linked to key satisfaction and performance indicators hold the key to making PM+M such a client-focused practice. Each job is reviewed on completion to see how it might have been done better and performance reviews are carried out to discuss KPIs with team members on a quarterly basis. To top things off, an Extra Mile award reward was created to ensure those who go the extra mile to serve clients are recognised both inside and outside the firm.

10 The Practice Excellence whitepaper series For the past three years, AccountingWEB has surveyed more than 6,000 clients of accountancy firms as part of our Practice Excellence Awards programme. Their feedback has shaped the evolution of this initiative, which now encompasses on-going client satisfaction surveys, an annual conference and the whitepaper that you are now reading. Thanks to sponsorship from SAP and its business partners, we will be publishing a series of Practice Excellence guides covering key aspects of business development and growth. This paper presents an overview of the programme and introduces the topics that will be covered in future papers: Client focus How to become a trusted business advisor Equip your practice for growth Little things you can do to make a big difference Winning new clients