When I consult with accounting firms, my major focus is ‘future proofing’ operations and management. This means they can not only ride out unforeseen environmental changes, but profit from new opportunities as they arise.
I believe that these ‘firms of the future’ must focus on several key areas to improve current levels of service, cash flow and profitability. Even the firms who are already focusing on these have no room for complacency. Technology and innovation will continue to revolutionise the business marketplace and force the accounting industry to keep up with evolving client demands or face profit erosion and busy-ness.
These are the five critical areas that will determine the success of firms of the future:
1. How do top firms reduce their WIP and Debtors while improving fee generation and cash flow?
Short answer: client education.
When the conversation about payment occurs as part of the initial engagement, it becomes embedded into the relationship from the beginning.
The best firms have service packages and VAS products that are already predetermined and priced accordingly thus their discussions are about payment methods. eg. direct debit or credit card.
2. How do they increase revenues 10 times from top 25 clients?
Short answer: Packages and products.
Define your offering into the 9 offer concept of packages and products – simplifying your offer makes it easier for clients to understand and for your team to find and sell opportunities.
NB.The best firms in our industry are already innovating by providing advanced value add services. They know that their clients expect monitoring as part of the standard offer (Package), and are seeing it as a commodity.
3. How do they improve retention and attraction of quality team members?
Short answer: Create career paths for individual genius.
This requires a mindset shift from ‘process orientation’ towards ‘genius skill sets’. The shift enables team members to move into service offering areas without them having to become partners. All it takes is for you to find out what they do really well and let them do it.
(Read more: Finders, Minders & Grinders TA58)
4. How do they reduce turnaround time by 50% over 3 years?
Short answer: Implement a ‘Premium Practice Model’ to improve client engagement & service delivery, while ensuring future improvements.
There are three fundamental steps to reducing turnaround time on jobs:
- Police how info comes in. (Remember, this requires strict client education.)
- Analyse how you do the job. (Flowchart the process, and implement accurate measurement of time & issues associated with each element of the process.)
- Commit to continual improvement. (Build regular reviews into your management, and dedicate the firm to consistently utilising technology and faster methods to produce results.)
5. How do they focus on higher-value client services, rather than the recurring work?
Short answer: Divide your teams into processing hubs that match revenue streams.
Dividing revenue streams into separate departments enables the creation of ‘process centers’ for delivery. This allows you to improve efficiency and build your capacity to take on more VAS. It also has the positive side effect of stopping you from overloading your best people.
This also makes it easier to schedule VAS work as a priority over compliance work.
I believe that these areas are critical in determining the success of accounting firms over the next decade. Together they provide a formula for not only weathering unforeseen changes to our environment, but offer a roadmap to increased efficiency and profits. They are a formula for building Firms of the Future.
The Premium Practice Model can ensure you become a Firm of the Future
Enhance your service, build cash flow and increase profitability
Growing your firm and its profitability should not be a mystery. Nor should your plans for future-proofing against further, inevitable industry forces.
The Premium Practice Model can be used by any firm willing to apply practical methodology in order to unlock greater profits. Specifically, it helps you:
- Build a strategic organisational structure for maximum leverage;
- Divide services into profitable revenue streams (thus unlocking the true potential of VAS);
- Harness the powers of systemisation & automation to drive your profitability;
- Build strong teams, attract great people & reward individuals with promising career options; and
- Drive repeatable business by implementing Products & Packages (& gain efficiency).
You can talk to me directly about how your firm can unlock the Premium Practice Model by using the link below, or get more information about the next workshop coming up.
Andrew Robertson | TwentySix Group