The nature of accounting means that established practices rarely suffer violent swings in performance.
But business turnaround specialist Michael Fingland argues that accounting practices are at risk of slow decline – and principals need to be focused on the factors that will keep their businesses growing and in step with the marketplace. That applies even to businesses that are performing well.
Fingland, director and CEO of business transformation specialist Vantage Performance, counts among his awards the title of ‘Australasian Turnaround Professional of the Year’, from the Turnaround Management Association.
He says the first trap for existing accounting practices is allowing their brand to become “tired”. “Accounting firms have traditionally had a boring number crunching image, but today that does not work,” he says. “You need to give your brand some character.”
Socially active
An easy and effective way to evolve your brand image is engagement with social media – “personal LinkedIn accounts for the team, a Facebook page or a Twitter account and writing blogs”.
This form of engagement builds your brand image in several ways at once. Young people use social media disproportionately, and the right sort of social media presence will help a firm attract and retain staff by building a forward-thinking image, argues Fingland.
Social media conveys the same progressive image when you use it to engage with clients. It also brings new efficiency: replacing printed newsletters with blogs, for instance, reduces set-up costs and ongoing expenses. Fingland recommends a blog dedicated to up-to-date information that can act as a first stop for clients.
Retaining key staff
Employing and retaining the right staff are critical issues for accounting practices, as losing staff can be extremely disruptive to the business. A highly placed staff member could be servicing perhaps 30 clients.
Departing staff generally can’t take clients with them as their contracts generally include restraint of trade clauses, notes Fingland. “But you still have to service those clients and introduce them to a new client manager they haven’t met before.” Accounting clients often see themselves as “having a personal relationship with the individual who services them, not the firm”, he says, and may drift away following the departure of that staff member.
Replacing departures with new staff involves a lot of work building new client relationships and is also costly to the firm. “It always takes a new hire in commercial services about three months to start making money,” he says.
Hiring the right staff helps avoid that sort of disruption, but many smaller accountants are not going about the hiring process correctly, according to Fingland. “Too often, accounting firms hire people with good qualifications who perform well in the interview. They don’t ask more probing questions – [about their values, motivations and how they want to make a difference in the world,” he explains.
The result is hiring employees who don’t fit in. “That’s why people leave,” says Fingland. “It’s not generally about money – it’s realising they don’t fit with the firm’s values.”
Staying relevant Client service demands are changing and many small firms, particularly in the one-to-four partner bracket, are struggling to keep up with that. “They are really only providing advice on tax and personal financial structures,” states Fingland.
To be relevant in the current environment, he says accountants must be able to offer strategic business advice that can guide clients either out of difficulties or through new stages of development. To do that, accountants need to hire “someone who is a business strategy expert who can develop a real and strategic business plan”.
Similarly, small firms need to offer services like financial planning, finance broking and insurance broking, either through hiring skilled operators or using joint venture arrangements that share databases and profits.
“It’s about leveraging your database,” says Fingland. If you don’t offer these services, your practice can wither as clients seek them elsewhere.
Accounting firms also need to look at growth by merger and acquisition to extend their geographic and service footprint. This not only delivers new clients but also allows firms to grow with the business needs of their clients and the career development needs of their staff.
Again, culture is vital in choosing a merger partner. “All accounting firms can get within 2 per cent of each other’s valuation; it’s a formula-driven process,” says Fingland. “They need to spend real time looking at the values of the people involved and the culture they generate.”
If the cultural fit is not there, he adds, then the merger is unlikely to produce the hoped-for results. If it is, the business may take another step towards growth rather than decline.
Focus: Five steps to renovate your business
Is your business on the slide? These strategies can help reverse the trend
1.Keep your brand fresh – use social media to modernise your image.
2.Hire new people who it with the firm’s values-you need to keep existing clients when familiar faces leave.
3.Offer strategic business advice – hire a business strategy expert is necessary.
4.Leverage your client base with add-on services – hire or partner to deliver financial planning loans and insurance.
5.Watch for merger and acquisition opportunities-cultural it matters here too.
