While I've posted something useful earlier today, I thought I'd take this opportunity to announce that my first Novel is well on its way to a first draft. It's a little unusual... as the hero (or heroes) is/are Accountant(s)!
I am yet to come across any novel where a CA or CPA is the hero, and in this book they're anything but boring, I assure you!
I am announcing this because I'd like your help.
I am looking for a few CAs and CPAs to review the first draft and give me some critical feedback to make it a better product.
Please contact me if you'd like to be involved.
Friday, October 30, 2009
Seven Steps To Seven Figures (Part Two)
Last issue we lookedat the first three steps to building a seven-figure billing practice and I promised you we’d take a look at the other four steps this time.
So, without further ado, here we go!Remember last issue, we covered;1. Innovation & the Use of Technology2. Staff Selection, Training & Delegation3. Client Selection
The remaining steps are;1. Valued-Added Services2. Pricing3. Financial Acumen4. Marketing
So, let’s look at these four steps now...
Value-Added Services
I have just returned to the office after two weeks on the road with CCH.
During the road show, I have had the privilege of working with Mark Holton, an Aussie, who pioneered the use of CCH Profit Driver down under, and was on tour with us as the ‘Profit Driver expert’. And it’s a title he deserves. As a user of Profit Driver myself, it was amazing to see Mark in action, showing accounting firms just what this amazing piece of software can do.
There are alternatives out there – Principa (Ric Payne’s network, he of Ran ONE fame) offer a similar financial dashboard tool, but Profit Driver is, in my opinion, easier to use and thus my weapon of choice.Clients come to us as practitioners to buy something that, in all honesty, they don’ really want, but have to have – the compliance package that we prepare for them every year – the financial statements and tax return.And every year, we deliver the same old package of information.
It looks exactly like last year’s package, the only difference being that the numbers and dates have changed. And every year we have to charge a little more for this service.
However, while the client is coming to you for this service each year, that’s not what they want from you!What clients really want, is help to be more successful or more profitable, and they look to you for help and advice in how to do so.
But in most cases, every year, we let them down.
Why?
Because we’re too busy to be able to spare the time to sit down with our better clients and talk with them about their goals and aspirations for their business.
Especially during tax season, when we get to see the majority of our clients, we simply have to get each client in and out as quickly as possible because the next client is waiting in reception to see us and we often feel that we’re on a treadmill, and it’s not fun.
Value-Added services are the way forward for the profession.
Imagine sitting down with a client and being able to show them the financial impact of any business decision they’re about to make, BEFORE they make that decision.
Do you think that is something they’d like to be able to do?
Do you think your clients would make better decisions if they did?
You bet!
Discussing situations like ‘what would happen if I put my prices up by 5% but lost 10% of my volume as a result?’ or ‘If I changed my policy and paid my payables one week later, what impact would that have on my cash flow, bank overdraft and interest charges, even if I lost my early settlement discount as a result?’
What about ‘how many extra units do I need to sell to make an extra $100,000 profit?’
Ladies and gentlemen, these are the big ticket questions your clients have but are afraid to ask, as they’re working under the impression that you’re just too darn busy already!
Every seven-figure practitioner fires their bad clients to create the time to offer value-added services to their better clients, and once they’ve done it, they never look back!
Pricing
Many practitioners have a fear of pricing, and so we run back to the old method of using our time and billing system as a pricing tool. Wrong!
Our time and billing system has nothing to do with pricing.
It is an activity based costing tool, NOT a pricing tool!Better to talk with a client and ask ‘What would it be worth to get.... done?’ (You can fill in the blanks depending on each client’s situation.)
The client will then tell you the value of the project as it appears to them, and you can price accordingly.
Now, of course, you can’t do that on every client project – that’s crazy – but you absolutely can do so on the ‘special work’ that we generate each year.Because of a bad pricing policy, most practitioners leave money on the table, and that holds them back from achieving seven figures.
Financial Acumen
You might think that, as accountants, we have a lot of financial acumen. Not necessarily so when it comes to running your own business.
Many firms I see still have huge piles of unfinished files in Partner’s offices.This is equivalent to covering your floor with money – unfinished files that are causing a bottleneck in getting work finished and billed.
We need to deploy a great financial acumen if we’re going to get to seven figures.
Marketing
Finally, we need to market ourselves far better. The seven-figure firms all do it well, bar none.Take a look at your web site, your logo, your business card. Do they excite the reader and get them interested in finding out more about your firm?
I’d wager that they don’t.
When did you last take out a Banker, a Lawyer, an Investment adviser to lunch and try to get to know them better and explain what you’re trying to do in your firm?
When did you last say no ‘thanks, but no thanks’ to a potential new client because they didn’t match the profile you’re looking for in new clients?When did you last hold an entertaining and informative seminar for clients and prospects?
While your web site might look boring, I bet that the content is often worse! Clients won’t be excited by the new budget summary being uploaded, but they might be inspired to hear a success story of one of your clients.
Do you have a marketing plan and budget? I guess most of you won’t. Yet the seven-figure firms do!Go figure!
Conclusion
In the time and space constraints of a column, I can only give you a taste of what can be achieved, but those who deploy some of these tactics in their strategy will be the ones who achieve success.
Firms who decide what their ideal client looks like and goes after that type of business, who categorize their clients into, for example, A, B, C and D, and then systematically fires their D clients case by case, who offer value-added services to their better clients and price them accordingly, based on value – these are the firms who will be tomorrow’s seven-figure firms.
Good luck to you all.
So, without further ado, here we go!Remember last issue, we covered;1. Innovation & the Use of Technology2. Staff Selection, Training & Delegation3. Client Selection
The remaining steps are;1. Valued-Added Services2. Pricing3. Financial Acumen4. Marketing
So, let’s look at these four steps now...
Value-Added Services
I have just returned to the office after two weeks on the road with CCH.
During the road show, I have had the privilege of working with Mark Holton, an Aussie, who pioneered the use of CCH Profit Driver down under, and was on tour with us as the ‘Profit Driver expert’. And it’s a title he deserves. As a user of Profit Driver myself, it was amazing to see Mark in action, showing accounting firms just what this amazing piece of software can do.
There are alternatives out there – Principa (Ric Payne’s network, he of Ran ONE fame) offer a similar financial dashboard tool, but Profit Driver is, in my opinion, easier to use and thus my weapon of choice.Clients come to us as practitioners to buy something that, in all honesty, they don’ really want, but have to have – the compliance package that we prepare for them every year – the financial statements and tax return.And every year, we deliver the same old package of information.
It looks exactly like last year’s package, the only difference being that the numbers and dates have changed. And every year we have to charge a little more for this service.
However, while the client is coming to you for this service each year, that’s not what they want from you!What clients really want, is help to be more successful or more profitable, and they look to you for help and advice in how to do so.
But in most cases, every year, we let them down.
Why?
Because we’re too busy to be able to spare the time to sit down with our better clients and talk with them about their goals and aspirations for their business.
Especially during tax season, when we get to see the majority of our clients, we simply have to get each client in and out as quickly as possible because the next client is waiting in reception to see us and we often feel that we’re on a treadmill, and it’s not fun.
Value-Added services are the way forward for the profession.
Imagine sitting down with a client and being able to show them the financial impact of any business decision they’re about to make, BEFORE they make that decision.
Do you think that is something they’d like to be able to do?
Do you think your clients would make better decisions if they did?
You bet!
Discussing situations like ‘what would happen if I put my prices up by 5% but lost 10% of my volume as a result?’ or ‘If I changed my policy and paid my payables one week later, what impact would that have on my cash flow, bank overdraft and interest charges, even if I lost my early settlement discount as a result?’
What about ‘how many extra units do I need to sell to make an extra $100,000 profit?’
Ladies and gentlemen, these are the big ticket questions your clients have but are afraid to ask, as they’re working under the impression that you’re just too darn busy already!
Every seven-figure practitioner fires their bad clients to create the time to offer value-added services to their better clients, and once they’ve done it, they never look back!
Pricing
Many practitioners have a fear of pricing, and so we run back to the old method of using our time and billing system as a pricing tool. Wrong!
Our time and billing system has nothing to do with pricing.
It is an activity based costing tool, NOT a pricing tool!Better to talk with a client and ask ‘What would it be worth to get.... done?’ (You can fill in the blanks depending on each client’s situation.)
The client will then tell you the value of the project as it appears to them, and you can price accordingly.
Now, of course, you can’t do that on every client project – that’s crazy – but you absolutely can do so on the ‘special work’ that we generate each year.Because of a bad pricing policy, most practitioners leave money on the table, and that holds them back from achieving seven figures.
Financial Acumen
You might think that, as accountants, we have a lot of financial acumen. Not necessarily so when it comes to running your own business.
Many firms I see still have huge piles of unfinished files in Partner’s offices.This is equivalent to covering your floor with money – unfinished files that are causing a bottleneck in getting work finished and billed.
We need to deploy a great financial acumen if we’re going to get to seven figures.
Marketing
Finally, we need to market ourselves far better. The seven-figure firms all do it well, bar none.Take a look at your web site, your logo, your business card. Do they excite the reader and get them interested in finding out more about your firm?
I’d wager that they don’t.
When did you last take out a Banker, a Lawyer, an Investment adviser to lunch and try to get to know them better and explain what you’re trying to do in your firm?
When did you last say no ‘thanks, but no thanks’ to a potential new client because they didn’t match the profile you’re looking for in new clients?When did you last hold an entertaining and informative seminar for clients and prospects?
While your web site might look boring, I bet that the content is often worse! Clients won’t be excited by the new budget summary being uploaded, but they might be inspired to hear a success story of one of your clients.
Do you have a marketing plan and budget? I guess most of you won’t. Yet the seven-figure firms do!Go figure!
Conclusion
In the time and space constraints of a column, I can only give you a taste of what can be achieved, but those who deploy some of these tactics in their strategy will be the ones who achieve success.
Firms who decide what their ideal client looks like and goes after that type of business, who categorize their clients into, for example, A, B, C and D, and then systematically fires their D clients case by case, who offer value-added services to their better clients and price them accordingly, based on value – these are the firms who will be tomorrow’s seven-figure firms.
Good luck to you all.
Sunday, September 13, 2009
Seven Steps To Seven Figures (Part 1 of 2)
Back in the day, the ‘Million Dollar Practice’ was a big thing; it was an achievement of note, setting the practitioner apart from his or her competitors.
A ‘million dollar firm’ would have been a practice that dominated its local marketplace and allow the owner to gain real financial freedom.
But almost twenty years after people like Dave Cottle and Chris Fredericksen first spoke and wrote about the million-dollar practice, seven figure billings are now being achieved by many progressive sole practitioners.
I have clients, for example, yes, sole practitioners, who bill over $2.5m in fees each year. How do they do it? Well, we’ll get to that a little later.
Funnily enough, all of these million dollar (plus) practitioners have seven key attributes in common. And today I will share them with you.
If a seven figure firm is relatively easy to build today, why do the vast majority of sole practitioners tend to ‘flat line’ at billings somewhere between $400,000 and $600,000 a year? What is needed to project a firm from 6- to 7-figures?
Well, let me explain…
I won’t pretend that it’s quick or easy, but it is definitely possible!
Before we look at the seven steps, there are 4 other things they (mostly) do which can be layered over all seven steps.
a) Planning
b) Monitoring/Recording/Keeping Score
c) Amending
First of all, each and every one of them that I know plans. They prepare a business plan for their firm, as they would for a client.
Then, they monitor their performance against the plan and look for areas where they did not achieve their goals.
Next, they then try to determine why that was, then they amend their plan for the next period (usually quarterly) and move ahead. Where goals were exceeded, they examine what went well and why and try to take any learnings from this that could be applied to other areas of the firm.
If you look at the seven steps, you will probably agree, that all three layers can apply to all seven steps.
So, let’s take a look at these steps now.
1. The Desire to Innovate & The Use of Technology.
Public accounting is not known for its ability to be creative. Indeed, it has been a long time since the profession introduced a new service to the marketplace. It was probably the ‘Review’ engagement if my memory serves me right.
However, some firms have been very innovative by bundling services together to create tangible ‘products’ from what were previously considered intangible services, and priced them accordingly.
The other side of the innovation step, is that all of the 7-figure firms were obsessively upgrading their software and hardware – fully embracing technology as a tool that enabled them to exist in the way they do, rather than seeing I.T. as simply another cost-centre, to be contained and reduced at all cost.
The savvy firms assessed each I.T. investment opportunity by saying to themselves “What will this do for us? What will it do for our clients? What does the cost/benefit analysis tell us?” before making any major decision, but if the numbers stacked up, they always invested.
All of the firms I know of now have scanning and auto-flow software for their clients’ tax return preparation, taking the prep time per tax return tumbling down.
2. Staff Selection, Training & Delegation
‘Will this person fit in around here?’ is how most potential employees are assessed at interview. There is little focus on their accounting or tax ability. To paraphrase Jim Collins in Good To Great, their mentality is ‘get the right people on the bus and together they will determine where to drive it.’
Then, the owner has to have the strength of character to delegate work to these people - preferably to their level of incompetence (A sort of twist on the ‘Peter Principle’).
In other words, give people work that they’ve never done before and they’ll learn new skills.
They’ll grow professionally and it will be a better place for everyone to work. Provide excellent training and coach and mentor your people – one of them has to become your successor!
3. Client Selection
This really is a major point. For the most part, 7-figure sole practitioners only work with clients that:
a) Actually want and appreciate your services
b) See the value in what you’re doing for them
c) Have the money to pay the level of fees you want to charge
d) Have an ability to make referrals to similar people
e) Are fun to deal with – they’re people you actually like
Some firms like to establish a niche market to establish ‘top-dollar-rates’ (see the section on marketing in the next issue) while others just want to be seen as the premier firm to deal with , and price their services accordingly.
Clients who do not want to pay the extra because they do not see the value are clearly not the type of client that they will want to deal with so they have the courage to say ‘NO’ to these business people.
Imagine that!
Seriously, this is another very important point.
Indeed, if you have any existing clients you’d sooner not deal with, then you need to fire them before you have any real chance of moving forward.
The other 4 steps are:
1. Value-Added Services
2. Pricing
3. Financial Acumen
4. Marketing
And we will cover these issues next time.
Back in the day, the ‘Million Dollar Practice’ was a big thing; it was an achievement of note, setting the practitioner apart from his or her competitors.
A ‘million dollar firm’ would have been a practice that dominated its local marketplace and allow the owner to gain real financial freedom.
But almost twenty years after people like Dave Cottle and Chris Fredericksen first spoke and wrote about the million-dollar practice, seven figure billings are now being achieved by many progressive sole practitioners.
I have clients, for example, yes, sole practitioners, who bill over $2.5m in fees each year. How do they do it? Well, we’ll get to that a little later.
Funnily enough, all of these million dollar (plus) practitioners have seven key attributes in common. And today I will share them with you.
If a seven figure firm is relatively easy to build today, why do the vast majority of sole practitioners tend to ‘flat line’ at billings somewhere between $400,000 and $600,000 a year? What is needed to project a firm from 6- to 7-figures?
Well, let me explain…
I won’t pretend that it’s quick or easy, but it is definitely possible!
Before we look at the seven steps, there are 4 other things they (mostly) do which can be layered over all seven steps.
a) Planning
b) Monitoring/Recording/Keeping Score
c) Amending
First of all, each and every one of them that I know plans. They prepare a business plan for their firm, as they would for a client.
Then, they monitor their performance against the plan and look for areas where they did not achieve their goals.
Next, they then try to determine why that was, then they amend their plan for the next period (usually quarterly) and move ahead. Where goals were exceeded, they examine what went well and why and try to take any learnings from this that could be applied to other areas of the firm.
If you look at the seven steps, you will probably agree, that all three layers can apply to all seven steps.
So, let’s take a look at these steps now.
1. The Desire to Innovate & The Use of Technology.
Public accounting is not known for its ability to be creative. Indeed, it has been a long time since the profession introduced a new service to the marketplace. It was probably the ‘Review’ engagement if my memory serves me right.
However, some firms have been very innovative by bundling services together to create tangible ‘products’ from what were previously considered intangible services, and priced them accordingly.
The other side of the innovation step, is that all of the 7-figure firms were obsessively upgrading their software and hardware – fully embracing technology as a tool that enabled them to exist in the way they do, rather than seeing I.T. as simply another cost-centre, to be contained and reduced at all cost.
The savvy firms assessed each I.T. investment opportunity by saying to themselves “What will this do for us? What will it do for our clients? What does the cost/benefit analysis tell us?” before making any major decision, but if the numbers stacked up, they always invested.
All of the firms I know of now have scanning and auto-flow software for their clients’ tax return preparation, taking the prep time per tax return tumbling down.
2. Staff Selection, Training & Delegation
‘Will this person fit in around here?’ is how most potential employees are assessed at interview. There is little focus on their accounting or tax ability. To paraphrase Jim Collins in Good To Great, their mentality is ‘get the right people on the bus and together they will determine where to drive it.’
Then, the owner has to have the strength of character to delegate work to these people - preferably to their level of incompetence (A sort of twist on the ‘Peter Principle’).
In other words, give people work that they’ve never done before and they’ll learn new skills.
They’ll grow professionally and it will be a better place for everyone to work. Provide excellent training and coach and mentor your people – one of them has to become your successor!
3. Client Selection
This really is a major point. For the most part, 7-figure sole practitioners only work with clients that:
a) Actually want and appreciate your services
b) See the value in what you’re doing for them
c) Have the money to pay the level of fees you want to charge
d) Have an ability to make referrals to similar people
e) Are fun to deal with – they’re people you actually like
Some firms like to establish a niche market to establish ‘top-dollar-rates’ (see the section on marketing in the next issue) while others just want to be seen as the premier firm to deal with , and price their services accordingly.
Clients who do not want to pay the extra because they do not see the value are clearly not the type of client that they will want to deal with so they have the courage to say ‘NO’ to these business people.
Imagine that!
Seriously, this is another very important point.
Indeed, if you have any existing clients you’d sooner not deal with, then you need to fire them before you have any real chance of moving forward.
The other 4 steps are:
1. Value-Added Services
2. Pricing
3. Financial Acumen
4. Marketing
And we will cover these issues next time.
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