I think you’ll agree the game has altered significantly in the past decade and I am starting to see evidence in the P&L of firms that have kept up and those that haven’t. I’ve never cried ‘Chicken Little’ about compliance or subscribed to the fear marketing rhetoric that is rife in the industry. I don’t believe in the first and the second just isn’t my style. Over the years I’ve met with more than 1,000 firms, reviewed their financial performance and discussed what they would like their future to be. In 2017 I’m seeing more firms in decline than ever before. So there is an important message I’d like you to take away:
Congratulations to all the firms who take action, work on their businesses, review and implement new technology, help their clients do the same, up-skill their teams and are real world examples of continuous improvement.
Guess what? There is a cohort of firms who have sat back over the past decade. They didn’t invest the time or money that it takes to change technology, educate clients on moving to the cloud, up-skill their team, launch new services or target a niche. Their website remains pre-2010 and if somehow they managed to launch social media, they have single digit followers and radio silence on their feeds. In many cases these firms have enjoyed quite good profit per partner over the past decade because they haven’t invested time and money in these activities.
However, 2017 is seemingly the year that inaction is taking its inevitable toll.
I recently met with four accounting firms in one day and it was a snapshot of all my conversations in 2017 rolled in to one.
The first firm expressed that they were exhausted by the amount of changes that they had implemented in their business in the past 24 months. They had launched financial planning with mild success and many headaches, they had restructured their team and changed practice management software. They had grown revenue at 10 per cent per annum. Profit hadn’t changed but was set to perform well over the years ahead with financial planning now beyond break-even and smart marketing investment starting to pay off.
The second firm was not happy with its financial performance in the past 12 months. The firm had declined by more than 20 per cent and was free falling in front of me. I was shown a questionnaire that the owner had sent out to clients to see if the causes could be identified and fixed (the survey had been sent in the mail).
The third firm was a sole-practitioner who launched his firm in 2010. He was excited about the future and spoke about the growing sophistication in his client base. Now that he has access to even more data, he is able to be a key adviser in their business and life. He was proud of the team he had attracted to his firm. Interestingly, he operates without a fixed office address. His team sees reviewing new technology as part of their day job, both for the accounting firm and in some cases on behalf of clients. When they decide to implement a new product or offer a new service it’s more Red Bull cliff diving championship style than dipping the proverbial.
The final meeting was in very flash, expansive offices of a $10 million firm, although now they are down to $8.5 million. The decline is coming from all angles: ageing client base, team members are leaving and taking fees with them, clients are attending events held by competitors about ‘moving to the cloud’ and subsequently leaving. Referrals that were once a regular stream have vanished. It’s important to note their service and services have not changed. They are top quality, technically proficient and truly care about their clients. They’ve just made little to no effort to keep up with the change that has been happening outside their firm. Arguably they are rapidly declining due to inaction over the past five to eight years.
So, if keeping up with the pace of change is exhausting then take a moment to acknowledge what you’ve done and know that justice is being served to those who have let others pave the way and widen the road.
Here are my three tips to help you prosper during the changes ahead:
- Reset your perspective. A lot of the developments and product launches have the ability to further help your firm to massively assist your clients. Be excited about the future and adopt a culture of continuous improvement
- Check that you have adequate fire-power in project selection and execution. I find a lot of $2 million-$5 million firms would significantly benefit from a business manager, GM or CTO. Smaller firms could productively redeploy some admin time from repetitive tasks that can now be automated to special projects
- Make sure you are implementing the right projects. I’ve met firms who are half way through due diligence on a merger but when I ask the partners individually what they want, none of them need to merge to achieve it. Just because you can, doesn’t mean you should.
Sharon McClafferty, director, Slipstream Coaching
