Accountancy Firm Case Study.... #24

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This case study will discuss my experience of coaching and consulting the owner of

an Accounting firm.

Overview

Ted started his accountancy firm ten years ago and it was performing more or less how he had planned it to. He had a well functioning and dedicated team of multiple assistants and accountants under him. Over the previous years he had achieved consistent revenues and profits, and for him, they were at a satisfactory level. In recent times things had started to change.

Ted got his touch with me because he wanted to grow and expand (read more). The past years had experienced a drop off in revenues, customer acquisitions and retention. He needed to turn things around, but new technologies and automation were a big problem for his business. Things had changed rapidly from when he had first started off his Accountancy firm and he needed some advice on where to go from here.

He also realised that at a certain point in time he would want to step back, spend more time with his family and on himself, but still have a functioning and profitable business. He knew this was not an unrealistic vision but he needed some guidance to realise these goals.

I was very optimistic about working with Ted because I could see that he was extremely focused, dedicated and motivated. He was aware that his business had room for improvement and also the potential to be working for him, without him. This was encouraging.

My task was to make his business grow with accelerated profit. After looking at his figures and getting to know all about his business I knew this could be achievable. There were many ways to improve, develop and grow. Growth has a different meaning for different people. To many business growth means doubling the size of your firm, hiring more staff, taking on more clients and so forth.

In Ted's case he also wanted to grow his business with respect to automating it. This would mean he could spend less time at work and also become more profitable. It would take too long to mention all of the strategies that were implemented into Ted's business. Instead I will give a brief overview of the most important processes that were applied in order to make the accountancy firm grow with accelerated profit.

First things first

Initially we segmented the business and broke it down into 7 key areas. This would allow focus and improvements in specific areas, which would contribute to the prosperity of the whole. This business, just like the top 500 businesses in the world, and any other business, can be separated into 7 vital processes. Their functions are vital to the prosperous, efficient and effective functioning of the whole

1. Valuable Offer- product /service

2. Creating demand - Marketing / Lead Generation

3. Completing the transaction - Sales / Conversion

4. Delivering on the promise - Fulfilment

5. Accounting - analysing and knowing your numbers

6. Feedback, Development & Innovation

7. Strategies

Any owner can make their business grow by diving their business into these core processes and developing each of these areas. An integral part of this formula is to introduce blueprint frameworks to drive each of these systems. This results in a predictable, effortless and profitable business where the owner has complete control from the top down. The business will work without relying on the presence of the owner, and this is exactly what Ted wanted to achieve.

A basic outline of what we did follows. Remember, each and every business in the world can achieve similar results and outcome. Get in touch now to start you business coaching and journey to achieve your goals. (click here).

1. Valuable Offer; your product /service

Successful businesses solve problems for people. An accountancy firm is no different. We analysed what were the most common problems accountants can solve. This highlighted the services that their customers need and want. Offering these services would prove highly profitable and mean Ted's business could eliminate the less profitable and more time consuming services.

i. Cash flow problems

Cash flow is a huge problem for countless small businesses. Businesses go bust because they run out of money not because they run out of ideas. Cash is what keeps a business alive. Accountants can ensure that businesses will have good credit control and cash management policies. They can ensure that all the possible funds and information are available to you. Accountants help businesses solve these problems.

Cash is the fuel that keeps a business running. Cash flow is very important for your business, without sufficient cash even a highly profitable business will collapse. A company should generate adequate cash flow from its business in order to survive, allowing it to cover expenses, make payments and expand the business. Every business needs to generate cash and also manage it in order to meet its immediate and long-term objectives. Ted's firm started to make consolidated efforts to communicate that they offer this service and why it is so important for small businesses to have this under control.

ii. Help you reduce workload

Workload and time management are big issues for every small business out there. Ted's firm increased emphasis on how they can help businesses with this problem. Accountants can save you time on tax, compliance and bookkeeping so you can do the things to improve and grow your business. Also, as your business finances become more complex you will certainly need outside help.

iii. Provide you with a scoreboard and the vital statistics of your business.

Business is numbers. Unfortunately far too many business owners neglect their numbers with disastrous consequences. One of the most important things to do with your business is to continually track the numbers, no matter what business, what industry (read more). These numbers can be used to determine if your business is operating as you intended and if the results are sufficient. This crucial process of a business cannot be overlooked. This is another area where Ted and his firm can help business owners. No one is better suited to keep your business scoreboard up to date and provide you all the vital statistics needed to run successful business. Ted introduced initiatives to ensure more emphasis was placed on these services.

iv. Help you manage growth & sustainability

Knowing the numbers can help you identify where your business is losing money and also show what products /services are making you the most money. It will help you have a clear understanding of how much your business needs to earn to meet it’s objectives. It will also provide a clearer understanding of how you can increase profits (read more). Accountancy firms can help you with this. For example performance reports and financial forecasting will enable you to manage and develop your business effectively. How else can you do this without knowing and understanding your numbers?

v. Provide valuable business advice

Financial analysis can be used as a foundation to make decisions such as how to allocate money, time and resources. Accounting ensures data used for finance decisions is as accurate as possible. Every business owner needs to be involved with their business accounts where possible. It gives greater control and understanding when it comes to decision making in your day to day business activities and operations. In reality many business owners struggle with this and Ted's Accountancy firm can solve this problem for you. They are able to provide you with the valuable business advice needed to stay one step ahead.

vi. Help to stay ahead of trends and regulations

Trends are always fluctuating and regulations always changing and evolving. Accountants are always up to date with these and are the best suited to keep you ahead of the game.

vii. Helps to improve cost efficiency.

Functions like managing cash flow and reducing business expenses will help your business grow exponentially. An accountant can provide you with a financial map , which will help you decide which costs to keep and which to cut, which costs can be improved, which are too expensive and which have better alternatives in the market. Further cost reductions can be achieved through tax deductions . Cost improving will impact the bottom line positively (read more). It will improve profits which will increase the value of a business

viii. Help process payroll

Businesses with employees need to operate payroll effectively and in-line with payroll regulations. Not doing payroll properly can result in fines, unhappy employees and huge backdated tax bills. Payroll compliance is crucial for running a business. In order to do payroll properly, you should hire a good payroll specialist or an accounting firm. If you are unsure about how the payroll process works, it is advisable to seek help from an expert. Ted's firm are again here to help with these issues.

To make Ted's business much more efficient we increased the number of highly profitable services and reduced the number of time consuming low-value services. Very simple yet highly effective from the get go. We discussed this at length and analysed data to determine the most profitable activities.

It's all about the customer

2. Creating demand - Marketing / Lead Generation

Ted's marketing activities had to be fine tuned. His communication message had to be adjusted so that it highlighted the benefit to the prospect; namely that his firm could save them time, money and improve their business. Here is a brief summary of how we improved marketing, got his business more attention and generated more leads.

i. Strategic focus on building a brand

When markets are saturated it is difficult to get noticed and to stand out from the rest. The accounting service market is saturated and branding is an effective way to make sure you are recognised and remembered. Logo, slogan, design are all elements of a brand which convey what's special about a business. Ted's branding activities were tailored in a visual and conceptual way to encourage people to view his firm as the best choice. His branding efforts were now designed communicate their competitive advantage and show why the customer should spend their money with them. The goal was to evoke an emotional and motivational response. Effective branding helps to attract and retain customers and Ted's branding efforts was now geared towards this.

ii. Use social networks

In many cases too much emphasis is placed upon the importance of social media. This perception is often driven by those with a vested interest. Whilst it is not as important as you'd be lead to believe, it is highly advisable to establish a presence. Research has shown that over 90% of buyers conduct online research before making a purchasing decision and this trend will continue. This is why a 'digital brand' and digital footprint is undoubtedly important. It's because customers will often make their decisions based on this criteria. Ted had to bring his firm on par with the rest of his industry, with the aim of becoming a leader in this aspect. The strategy involved being genuine, active and helpful through blogging and on sites such as LinkedIn, all to establish a presence and foothold within their market.

iii. Referrals

Accountants have the opportunity for highly effective and free marketing. There are opportunities that are right in front of them. Referrals, through current customers is one of the most effective form of marketing. The only cost is a small amount of your time. If a client has recommended your business, it is likely that the prospective client will know about your best services, communicate well and pay on time.

Ted started gathering referrals from existing clients in order to build his practice. We selected a group of clients to target and gave them a reason to refer the practice to a business associate, friend or family member.

In general, the most ways to get a customer talking about you are:

Providing a valuable service

Save Clients money

Engage with their business

Increase the frequency of your communication with them.

Provide help and advice

Make them feel special

Proactively add value to their business

Once Ted’s clients were marketing on his behalf, his business became more profitable. This is why referrals are important. They will not provide the volume of leads that other forms of marketing can. However, they will provide high quality prospects that are already interested in your business. After Ted’s client’s endorsed his firm, he found the prospective customers were far easier to convert.

3. Completing the transaction - Sales / Conversion

When talking about Sales many business owners feel uncomfortable. They feel that if their product or service is good enough it will sell itself. Sales is often regarded as an unnecessary, time consuming interaction that hinders workflow. Sales is almost a dirty, unethical word for most of us. This is how Ted felt about ‘sales’.

As a leader of a business, it was necessary to change Ted’s mindset. His perspective needed to shift. I started by asking what is wrong with starting a conversation about a service he could provide? A service that would add value to the prospect's businesses. Will he not be helping them out? Is there anything wrong with you providing a valuable and profitable service for people?

Selling is about approaching a client with a value proposition. Ted knew the value he could add to their relationship. He had evidence of how it had helped other clients in similar situations. He was not speculating whether or not he could help his customer. He knew he could because he had a vast experience in doing so.

I encouraged him to always show empirical evidence of how his proposition adds value. He not selling in a sleazy or dishonest way, so there was no reason for him, or others in his frim, to feel awkward about it. He was helping his clients by showing that he can add value, and they, like any good small business owner, will be interested in the offering.

When we reduce selling to its basic premise, we realise it’s not actually that scary and it is certainly not underhanded when done ethically and honestly.

With the mindset shift complete we set about solving the problem how to find new clients. The processes are highlighted below

• Identify ideal clients

• Partner with other qualified & trusted professionals & businesses.

• Establish strategic alliances with other trusted professional and exchange mutual referrals

• Actively seek and ask for referrals

• Cross- Sell & Upsell complimentary services by mentioning the additional benefits

• Effective networking

• Doing business with like minded people

• Strategic cold calling and visits

• Using speaking engagements and seminars to raise your profile

• Extending reach with social media, blogs and content marketing

• Genuinely understanding your client’s business

4. Delivering on the promise - Fulfilment

The most important work of any business comes after the sale has been made. Delivering over and above what you promise is a guaranteed foundation of business success. I encouraged Ted to find out more about his clients’ business, their challenges, as well as industry trends. When your understand your clients’ goals, objectives, challenges, opportunities you are in a better position to be able to help them and make a real difference in their lives. This should be the ultimate goal for any business.

Research shows the up to 40% of new business generated by top accounting firms comes from expanding relationships with existing customers. Ted started to make the conscious effort to strengthen client relationships and promote loyalty to the firm. He introduced an ethos of striving for excellence and developing deeper and broader relationships. This helped to encourage cross-sell and upsell opportunities because they made the effort to truly understand their client’s business. Any business has the obligation to give the clients the most value possible.

Keeping a client is far more cost effective than acquiring a new one. Businesses with satisfied customers typically have higher revenues as a result. Ted developed deeper relationships by encouraging his clients to utilise the breadth of his firm’s service offering. We segmented customers by services to identify opportunities and to provide more value, by offering them tailored made services, suited to their needs. He would outsource activities where he could not directly solve their problems and be of use indirectly.

Part of this whole process involved equipping and training staff to be able to deliver the experience that wows the client. It's a long process but a necessary one and started it with Ted. Leading by example he made a commitment to embrace and prioritize customer experience. Where too many firms lose clients because of poor and reactive services, Ted’s approach would strengthen client retention and strengthen his brand and business. Focus on truly serving your customer. When businesses are immersed in the clients’ business they are more likely to not only keep them, but also expand business with those clients. Success depends on listening to the market place and the clients.

• Deliver what is promised and more

• Strive for excellence

• Recognise the importance of customer experience

• Nurture Client Relationships

• Develop the ethos that you’re in this together

• Be aware of the clients' problems, wants and needs

• Develop deeper relationships with new offerings

• Personalise client engagements

• Equip and train staff to deliver an experience that wows clients

• Acknowledge and embrace your role as client advisor

• Know your client and their preferences

5. Accounting

As a financial professional Ted naturally understood the importance of knowing his numbers so he could accurately assess the performance and functioning of his business. Even with financial experts it helps to go through their books and analyse it from an outside perspective, with a fresh set of eyes. We did so and were able to cut various costs and expenses. We also went through the Account Receivables in the effort to settle and re coup as much as possible.

We implemented relationship analytics software to prioritise clients based on the quality of the relationship and the return on investment. Unresponsive clients are a massive burden and drain on resources. It is more efficient to spend time cultivating the more profitable clients and prospects instead of spending too much time with clients with a low ROI. A strategic focus was placed upon making room and accommodating the more profitable clients. The introduction of the new software made the whole process much more effective and efficient because it seamlessly analyses the network of the entire firm and identifies mutual connections, measures relationship strength and monitors activities. Insights are generated that help accelerate sales velocity by leveraging the right relationships.

6. Feedback, Development & Innovation

For any business it is always important to get feedback on every process, initiative and activity. Feedback is necessary for development and progress because it drives change and innovation. I encouraged Ted to analyse his business from this perspective because feedback highlights both problems and opportunities. It was then our task to find innovative way to solve those problems and seize the opportunities in order to develop his business.

Feedback driving innovative development

We implemented a significant drive to gather feedback from Ted’s clients. Results showed that one of the top concerns were client cashflow struggles, beating all other issues such as meeting tax payments and keeping up with Government policy. With this in mind Ted initiated services to provide continued support with monitoring and improving cashflow, as well as building their clients’ resilience against unexpected future events.

Innovating business decisions

Becoming more data informed results in making more sophisticated business decisions. We dug into the data and analysed the principal sources of business. Client billings and engagements were reviewed. This revealed areas and product lines that lead to greater client retention, loyalty and profitability. By understanding what their most profitable and loyal clients value, Ted could strategically focus on developing new product lines and new business.

Based on feedback and data, Ted decided to take innovative steps in the management of his business. To improve customer experience he introduced accounting features such as data insight, smooth billing and accounting cycles, security and privacy. His firm started offering set packages of services and started to take a more consultative, value-added approach to client engagements. His firm started to offer boutique-style, value-priced “packages” to clients. For example, we implemented and introduced tiered tax services where:

Silver basic preparation with a 15-minute consultation after preparation

Gold which had an additional one-hour tax and financial planning consultation

Platinum which adds unlimited, year-round phone and email access and financial representation for any issues.

Developing customer loyalty based on feedback and positive client experience is crucial. In Ted’s case it helped provide a better and more effective service whilst strengthening customer bonds.

Developing services and business practices

Feedback and data can be utilised to learn all about clients and unearth opportunities to make relationships more productive. Ted used feedback to identify tax clients who would benefit from accounting and auditing services. He achieved 27% revenue growth in 6 months just through existing clients.

Ted, as all other accountancy firms, face ever increasing competition from the virtual sector. Automation is also a concern. Firms must improve their services and business practices to stay ahead of the game. With this in mind I encouraged Ted to adopt some of the latest technologies to help improve processes, deliver data insights and open up new revenue streams. His firm had to take advantage of these opportunities. Examples included adopting tools like tax prep software, document management systems, workflow management and CRM automation. This resulted in improved operational efficiencies, spotting high-probability opportunities faster and more easily and gaining relevant client insights that help craft the business and development strategy.

For Ted’s firm, the development of his business involved a proficiency in critical skills such as financial forecasting, financial analysis and cash flow projection. His accountancy firm placed strategic emphasis in becoming proficient in these skills in order to stay ahead in the game. It was also important that they were able to create dynamic financial and business reports to help clients identify exactly what they need to achieve key objectives.

Innovation Technology

The core services of all financial firms will be affected by new technologies. Services like audit, bookkeeping and tax prep are likely to be reshaped along with the role of accountants. Feedback gathered by Ted identified that this was a problem for his business. More clients were demanding lower prices. Automation, DIY tax & accounting software were all contributing to this problem. Few customers understand the value that accountants provide. Most see tax returns and audits as a cost, so they always select the least expensive option. He had to position himself and his colleagues as true trusted advisors who could save business owners time and money. To free up time he incorporated technology to automate low value and repetitive work. He also outsourced much of this work all with the result of significant time savings. This in turn allowed his team to add value for their clients by offering more advisory and consulting services. The firm introduced new services such as;

· Helping clients raise equity, expand into new markets, or go public

· Estate planning and gifting strategies

· Industry-specific consulting

· Strategic planning

· Succession planning

· Mergers and acquisitions

· Technology consulting

Feedback identified a shift in what clients want from their accountant. Accurate bookkeeping, tax returns, and financial statements was no longer enough and Ted knew it. He developed his business so that his firm could provide more value to the clients by bringing new ideas to the table and helping them reach their goals.

Implementing new technologies helped reduce costs and increase productivity. Equally as important is that Ted leveraged the technology to allow his firm to get better at what clients want most – providing proactive insight, analysis and guidance. Judgment and wisdom is what the clients really value and this cannot be replaced by technology.

7. Strategies

Every business needs a strategy for growth and profitability, and Ted’s firm was no different. We segmented Ted’s business into 7 main functions with the aim of focusing and improving each element, so they work in unison for the benefit of the whole. Part if this process involved the introduction of systems to measure output and performance within each segment. This is because feedback drives innovation and both are vital to business development, growth and profitability.

After segmenting Ted’s business into 7 vital functions, strategies were implemented for each. This has already been discussed. There were also a number of important strategies, specific to Ted’s accountancy firm. A few will be highlighted below

Adaptability Strategies

The accounting industry is changing constantly and rapidly. We have discussed how technology and automation has affected many of the bread-and-butter services of accounting. The role of the accountant is becoming more of an advisory one. Clients have new expectations, and Ted shifted focus to collaborate and work with their customers in real time.

New technology continues to make inroads in accounting and results in constant change. Ted’s firm has to be future proof to stay ahead of the game. His firm needs to be able to adapt quickly and react to whatever curve ball is thrown at them. Technology is the foundation of new business and this had to be recognised and embraced by Ted’s firm.

Technology became Ted’s number one investment because the new generation of client is looking for services online. Going forward he would have to embrace the right technology for their needs, get web savvy and embrace social media. The was a realisation that technology won’t replace people and relationships rather it would complement and enhance them. It will make the accountants job more important because the data that technology calculates needs to be translated and applied. A strategy that embraces adaptability is crucial in today’s world where location matters less than the right services.

We must all continue building knowledge. Mastery is a never-ending process. Take note of news which will affect your industry, gain new skills and never stop learning!

Cyber Security Strategies

Accounting firms are experiencing ever increasing hacking and fraud incidents. Internal and external accounting system threats are very prominent because of the wealth of information they store. They are an attractive target because they store bank account numbers, credit card information, personal data, social security details and much more. Smaller firm in particular are targeted because they often have less sophisticated security systems.

Accounting firms have a responsibility to protect this data. To protect their customer and the firm’s credibility, Ted implemented new processes and tools to protect data.

· Ongoing employee training in cyber security. For example how to recognize phishing emails and why they should never open a link or attachment from suspicious emails.

· Periodic cyber security review covering the firm’s internal controls around data security, installing anti-malware and anti-virus software on all devices, ensuring the software is kept up to date etc.

· Enforce strict password policies, requiring staff members to use strong and unique passwords that are changed periodically.

· Encrypt all sensitive files and emails.

· Ensure your systems are backed up regularly

· Be sure to wipe clean or destroy old computers, laptops, hard drives, and printers that might contain sensitive client data.

Communication Strategy

Ted made a concentrated efforts so he and his colleagues were able and willing to interact with people across all mediums, from phone to video conferencing, email and even social media. Communication is now possible at any time and from anywhere in the world and Ted intended to capitalise on that with his communication strategy. This will build up trust, presence, recognition and reputation. Communication strategy emphasised the ability to relay information clearly and concisely especially when it comes to complex financial or technical discussions.

Differentiation strategy

After much analysis and discussion Ted believed his firm needed specialise in order to differentiate and have a valuable competitive advantage. He began to expand beyond traditional services and specialize in area such as international tax. He would also ass exclusivity by serving specific industries.

By adopting a specialisation strategy he would have distinct competitive advantages and be able to compete quite effectively even against larger firms. By focusing his activities his firm was able to achieve substantial growth with increased profitability.

Staffing up for Business Development

Ted had to have a strategy to staffing for business development. As and when needed, he knew he would have to hire experienced and motivated professionals. However, he knew the key was to train his existing staff. He strategically planned around this, involving them in decisions and recognising their efforts and achievements every step of the way. He highly valued his staff and was fully aware of their contributions and competencies. He knew they were critical components for his business development so he made strategic plans to ensure they were on board with all the new initiatives and endeavours.

Conclusion

This is an excerpt I wrote for Ted to use in his communications.

It describes the benefits and reasons why business owners should use an accountant. It is for their own benefit and success;

Accountancy is crucial for every business. Almost 90% of start-ups fail because they fail to keep track of their numbers. The numbers, that is to say your accounts, are the only accurate way to know and understand how a business is performing.

Every properly functioning business has to have goals, targets and objectives. Financial objectives, marketing objectives, sales, strategic objectives and so forth. Your accounts and numbers will tell you how the business is performing against these objectives. Anything else is guesswork, assumptions and conjecture.

An accountant will measure business performance. However, performance management is almost always neglected by businesses. This is exactly why so many businesses struggle. To clarify, performance management is analysing the functioning of the business. At its basic level how much is sold, the expenses and most importantly profit.

Setting objectives and measuring these against results such as customers acquired, revenue increased, complaints received, invoices are written off etc. can be key to determining if a business will succeed or fail.

An accountant can help develop performance evaluations to get a company to understand it’s actual performance against the objectives it set for itself. Using these evaluations, a business can understand its actual performance in terms of the indicators the business considers important for long term growth and sustainability.

Ted transformed his business to reach his goals. Once he was aware of the massive opportunities ahead of him, he became intensely client-focused and started to leverage relationships. Ted recognised that traditional work such as tax prep and audit was already starting to fade away. We strategically broadened relationships, to include not only accounting expertise as a foundation, but to layer on capabilities around strategy, business transformation, IT consulting, data analytics, outsourcing, cybersecurity and many other needs of the customer. This transitional was fundamental for his future growth and prosperity. A strategic decision was made do develop understanding about technology, automation, integration and business process in order to serve their clients successfully.

Technology has disrupted the industry but in doing so it has opened new doors and opportunities. Human capabilities such as judgement, insight, scepticism, courage and integrity are more important than ever. Ted embraced the need to develop new skills to stay competitive and even more relevant in his field.

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