Module three: Building and growing your firm
Transcript of Module three: Building and growing your firm
Mod
ule
Building and Growing your Firm
3
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This Guide to Practice Management for Small- and Medium-sized Practices was prepared by the International Federation of Accountants (IFAC) with support from its Small and Medium Practices Committee. The committee represents the interests of professional accountants operating in small- and medium-sized practices and other professional accountants who provide services to small- and medium-sized entities.
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ISBN: 978-1-60815-350-3
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CONTENTS
3.1 Introduction ....................................................................................................................... 147
3.2 Developing a Business Plan for Your Firm .................................................................... 147
3.2.1 A Simple Business Plan Outline .............................................................................. 147
3.2.2 SWOT Analysis ....................................................................................................... 148
3.2.3 The Organization Chart ........................................................................................... 148
3.3 Assessing Growth Requirements and Developing a Growth Strategy ........................ 151
3.3.1â BenefitsâofâGrowth,âandâSustainabilityâ .................................................................... 151
3.3.2â ShouldâtheâFirmâGrow,âand,âifâso,âbyâHowâMuch?â ................................................... 153
3.3.3â InternalâGrowthâStrategiesâ ...................................................................................... 154
3.3.4â ExternalâGrowthâStrategiesâ ..................................................................................... 158
3.4 Strategies for Coping with Increased Regulation and Competition ............................ 164
3.4.1â IncreasedâRegulationâ .............................................................................................. 164
3.4.2â IncreasedâCompetitionâ ............................................................................................ 165
3.4.3â CopingâwithâPricingâPressuresâ ................................................................................ 165
3.5 Creating a Culture for Your Firm ..................................................................................... 166
3.5.1â BuildingâaâProductiveâCultureâ.................................................................................. 167
3.5.2â CustomerâRelationshipâManagementâSystemsâ ....................................................... 167
3.6 Identifying Target Clients and New Service Opportunities ........................................... 168
3.6.1â BusinessâAdvisoryâServicesâ .................................................................................... 170
3.6.2â OtherâEmergingâServicesâ ........................................................................................ 173
3.7 Building a Brand, Marketing and Promotion .................................................................. 173
3.7.1â BuildingâaâBrandâ...................................................................................................... 173
3.7.2â MarketingâandâPromotionâ ........................................................................................ 175
3.7.3â SocialâMediaâMarketingâ........................................................................................... 177
3.8 Putting Your Plans into Operation .................................................................................. 178
3.8.1â TheâImportanceâofâImplementationâ ......................................................................... 178
3.8.2â HowâtoâImplementâYourâPlanâ................................................................................... 178
3.9 Financial Management ..................................................................................................... 180
3.9.1â TheâCapacityâBudgetâ .............................................................................................. 180
3.9.2â TheâFinancialâBudgetâ .............................................................................................. 180
3.9.3â TheâCashâFlowâForecastâ ......................................................................................... 183
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3.10 Conclusion ...................................................................................................................... 184
3.11 Further Reading and IFAC Resources .......................................................................... 184
Appendixâ3.1âRelationshipâManagementâActionâPlanâ .................................................................. 185
Appendixâ3.2âCaseâStudiesâ ......................................................................................................... 186
Appendixâ3.3âSummaryâIncomeâStatementâBudgetâ(byâMonths)â................................................. 189
Appendixâ3.4âBalanceâSheetâBudgetâ(byâMonths)â ....................................................................... 190
Appendixâ3.5âGrossâRevenueâAnalysisâWorksheetâ ..................................................................... 192
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3.1 Introduction
Thisâmoduleâlooksâatâplanningâandâdevelopingâyourâfirm,ârecallingâsomeâofâtheâthemesâcoveredâinâModulesâ1âandâ2.â Itâgoesâdeeperâ intoâ issuesâsuchâasâdevelopingâaâgrowthâstrategy,âbuildingâaâbusinessâadvisoryâpractice,â copingâ withâ increasedâ regulationâ andâ competition,â marketing,â pricing,â managingâ yourâ clientâportfolio,âandâhowâtoâenhanceâtheââcultureââofâyourâfirm.âTheâmoduleâconcludesâbyâconsideringâaspectsâofâfinancialâmanagement.
3.2 Developing a Business Plan for Your Firm
TheâimportanceâofâhavingâaâbusinessâplanâwasâcoveredâinâModuleâ1.âThisâsectionârecapsâtheâmainâpoints.âTheâphilosophyâbehindâaâbusinessâplanâisâsimple.âAtâitsâheart,âthereâareâthreeâkeyâelements:
a. Whereâisâtheâfirmânow?
b. Whereâshouldâtheâfirmâbeâgoing?
c. Howâwillâitâgetâthere?
Theâmostâimportantâisâ(b).âTheâanswerâtoâthisâquestionâidentifiesâtheâkeyâobjectivesâofâtheâfirm.âItsâsignificanceâcannotâbeâoveremphasized.âUnlessâyouâknowâwhereâyouâareâgoing,âyouâwonâtâknowâifâyouâareâonâtheârightâtrack.âIfâthereâisâoneâthingâaboutâtheâbusinessâplanningâprocessâthatâyouâmustâdo,âitâisâthis:âclearlyâdefineâwhereâyourâfirmâisâgoingâandâwhatâitâwillâlookâlikeâwhenâyouâgetâthere.
Youâthenâneedâtoâsetâaboutâansweringâ(c),âwhichâidentifiesâtheâstrategiesâyouâwillâemployâtoâachieveâyourâobjectives.
Yourâbusinessâplanâmustâanswerâtheseâthreeâquestions.âIfâitâdoesnât,âitâsânotâreallyâaâplanâandâwillâmostâlikelyânotâbeâeffective.
3.2.1 A Simple Business Plan Outline
Yourâbusinessâplanâidentifiesâtheâobjectives,âkeyâstrategiesâandâindicatorsâofâsuccessâaimedâatâconsolidatingâandâgrowingâyourâfirmâandâitsâservices.
· Executive summary:âWriteâthisâlast.âItâsâjustâaâpageâorâtwoâofâhighlights.
· Company description:âThisâincludesâlegalâestablishment,âhistory,âstart-upâplans,âandâaâsummaryâofââwhereâtheâfirmâisânow.â
· Key objectives:âDescribeâtheâkeyâobjectivesâofâtheâbusiness:âaâclearâstatementâofââwhereâtheâfirmâisâgoing.â
· Service description:âDescribeâwhatâservicesâyouâreâoffering.âFocusâonâclientâbenefits,âandâhowâyouâcanâsatisfyâtheirâneeds.
· Market analysis:âYouâneedâtoâknowâyourâmarket,âclientâneeds,âwhereâ theyâareâandâhowâtoâreachâthem.
· Strategy and implementation:â Beâ specific.â Includeâmanagementâ responsibilitiesâwithâ datesâ andâbudgets.âIdentifyâtheâresultsâyouâcanâtrack.
· Management team:âDescribeâtheâorganizationâandâtheâkeyâmanagementâteamâmembers.âIncludeâanâorganizationâchartâwithâkeyâareasâofâoperation.
· Financial analysis:âMakeâsureâtoâinclude,âatâtheâveryâleast,âyourâprojectedâprofitâorâlossâandâcashâflowâtables.
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3.2.2 SWOT Analysis
OneâofâtheâmostâeffectiveâtoolsâtoâuseâwhenâyouâundertakeâyourâbusinessâplanningâisâaâSWOTâanalysis.âSWOTâ standsâ forâ âStrengths,âWeaknesses,âOpportunities,â andâThreats.ââOpportunitiesâ andâ threatsâ areâexternalâtoâtheâfirm,âthatâis,âhavingâtoâdoâwithâtheâenvironmentâwithinâwhichâitâoperates,âwhileâstrengthsâandâweaknessesâareâ internal.âWhenâappliedâ toâyourâfirm,â theseâwordsâpromptâ thoughtsâandâdiscussion.âTheâanalysisâenablesâfirmsâtoâidentifyâstrategiesâtoâmatchâtheirâresourcesâandâcapabilitiesâtoâtheâdemandsâofâtheâenvironmentâinâwhichâtheyâoperate.â
Theâfirmâregularlyâneedsâtoâconsiderâtheâopportunitiesâbeforeâitâandâdevelopâstrategiesâtoâtakeâadvantageâofâthese.âItâisâalsoâessentialâtoâregularlyâidentifyâanyâthreatsâandâputâinâplaceâstrategiesâtoâminimizeâtheâimpactâofâtheseâthreats,âorâtoâpositionâtheâbusinessâoutsideâtheirâeffect.
Strengths
Aâthoroughâunderstandingâofâstrengthsâ isâvitalâasâ itâallowsâyouâtoâbecomeâawareâof,âandâbuildâon,â theseâattributes.âTheâstrengthsâtypicallyâhighlightâwhatâisâpositiveâaboutâtheâfirmâasâaâworkplaceâandâwhatâitâisâgoodâatâdoing.
Continuallyâmonitorâyourâfirmâsâstrengths,âtoâensureâtheyâremainâthatâway.
Weaknesses (or areas to improve)
Theseâareâtheâareasâwhereâyouâdoânotâperformâsoâwellâandâthatâyouâneedâtoâworkâon.âIfâleftâuntreated,âtheseâweaknessesâcanâdevelopâintoâmajorâconcerns.âItâisâvitalâtoâidentifyâandâunderstandâtheseâissues,âandâputâinâplaceâplansâtoâturnâthemâaroundâandâimprove.âAnâopenâdiscussionâwithâyourâteamâisâaâusefulâwayâtoâidentifyâtheseâareas;âtheyâwillâoftenâsuggestâwaysâtoâimproveâorâovercomeâtheâweaknesses.
Opportunities
Thisâisâwhereâitâgetsâexciting!âOpportunitiesârepresentâtheâvastâuntappedâpotentialâsittingârightâthereâinâfrontâofâyou.âOpportunitiesâ representâwhatâ âcanâbe.ââ Inâorderâ toâmoveâ forward,âyouâneedâ toâunderstandâwhatâtheâopportunitiesâare,âthenâdetermineâtheâmostâappropriateâstrategiesâandâactionsâthatâallowâyouâbestâtoâcapitalizeâonâthem.
Opportunitiesâbringâwithâthemâanâenergyâsourceâofâtheirâown.âTheyâalsoâcreateâenthusiasmâandâexcitementâasâtheâfirmâmovesâintoânewâareas.
Threats
Itâisâcriticalâtoâunderstandâtheâthreatsâfacingâyourâfirm.âTheseâareâtheâissuesâthatâcouldâdestroyâit.âItâmayânotâbeâpossibleâtoâcompletelyâovercomeâtheâthreats,âbutâitâmayâbeâpossibleâtoâidentifyâalternativeâstrategiesâandâsetâcontingencyâplansâinâplaceânow.
3.2.3 The Organization Chart
Theâorganizationâchartâprovidesâtheâstructureâandâframeworkâforâtheâfirmâtoârunâeffectively.âItâhasâtwoâkeyâbenefits.âFirst,âitâidentifiesâtheâkeyâareasâtheâfirmâwillâoperateâin.âSecond,âitâwillâleadâtoâaâclearâallocationâofâresponsibilitiesâonceâitâisâproperlyâimplemented.âKnowingâwhichâpersonâisâresponsibleâforâwhichâareaâleadsâtoâaccountability.âThisâhasâaâmajorâinfluenceâonâwhetherâorânotâtheâfirmâwillâachieveâitsâobjectives.âIdeally,âtheâorganizationalâchartâshouldâaddressâtheâstructureâofâtheâoperationalâteams,âforâexample,âDoâteamsâoperateâinâsilos?âOr,âdoâteamâmembersâbelongâtoâmoreâthanâoneâteam?âThisâwillâbecomeâobviousâwithâaâwell-definedâorganizationâchart.
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Key functional areas of the organization chart
Theâkeyâ functionalâ areasâofâ anâorganizationâ chartâmayâbeâbrokenâdownâ intoâ smallerâ components.âThisâallowsâforâresponsibilitiesâtoâbeâallocatedâtoâeachâlevelâandâforâspecificâstrategiesâtoâbeâidentifiedâforâeach.âTheseâareasâareâasâfollows:
· Marketing;
· Operations/administration;
· Finance;
· Humanâresources;â
· Technology;âand
· Futureâplanning.
Marketing
· External
· Advertising,âpromotion,âandâsponsorship
· Networkingâandâevents
· Website,âsocialâmedia,âandâreferralsâ
· Marketingâcollateralâ
· Internal
· Increaseâservicesâutilizedâbyâexistingâclients
· Offerânewâservicesâtoâexistingâclientsâ
· Increaseâcharge-outâratesâ
Operations
· Compliance
· Audit
· Taxation
· Financialâreporting
· Pension planning
· Wealthâcreation/financialâplanning
· Specializedâservicesâ
· Businessâvaluationsâ
· Dueâdiligence
· Managementâreporting
· Businessâadvisoryâandâconsultingâ
· Successionâplanningâ
· Officeâadministrationâ
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Finance
· Monthlyâfinancialâstatements
· Budgetâandâcashâflowâforecast
· Revenueâperâfull-timeâequivalent
· Capacityâcalculation
· Complianceârequirements
· Accountsâreceivableâ
· Accountsâpayableâ
· Payroll
· Bankâfacilitiesâandâfundingâarrangements
· Insuranceârequirementsâ
· Facilitiesâandâresourcesâ
Human resources
· Competencyâandâtraining
· Culture
· Staffingârequirementsâandârecruitment,âcurrentâandâfuture
· Occupationalâhealthâandâsafety
· Anti-discrimination
· Sexualâharassmentâandâworkplaceâbullyingâ
· Safetyâandâemergencyâproceduresâ
Technology
· Technologyâstrategyâofâfirm
· Technologyârequirements,âcurrentâandâfuture
· Technologyâimplementationâandâtraining
Future planning
· Business plan
· Marketingâplan
· Operations plan
· Financialâplan
· SWOT analysis
Theseâareâtheâkeyâareasâofâtheâorganizationâchart.âTheâsizeâofâyourâfirmâwillâdetermineâhowâmanyâofâtheseâcanâbeâdealtâwithâandâwhatâresourcesâcanâbeâallocatedâtoâthem.âLargerâfirmsâwillâbeâableâtoâaddressâallâareas,âwhileâsmallerâfirmsâshouldâdealâwithâtheâareasâtheyâdeemâmostâimportantâtoâtheirâsituations.
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Whenâtheâkeyâareasâofâtheâfirmâareâidentified,ârolesâandâresponsibilitiesâcanâbeâallocated.âOnceâthisâhasâbeenâdone,âthoseâresponsibleâcanâbeâheldâaccountableâforâtheâachievementâofâtheirâgoals.âTheyâcanâputâsystemsâandâproceduresâinâplaceâforâtheâareasâoverâwhichâtheyâhaveâresponsibility.
Theâorganizationâchartâisâoneâofâtheâmostâimportantâstructuresâinâtheâfirm.âAâfullyâfunctioningâorganizationâchartâwithâclearâreportingâlines,âandâclearâgoals,âwillâassistâyourâfirmâtoâgrowâandâachieveâitsâbusinessâplanâobjectives.âInâAppendixâ3.2,âCaseâstudyâ3.1âillustratesâhowâaâfirmâcanâdevelopâitsâorganizationâchart.
3.3 Assessing Growth Requirements and Developing a Growth Strategy
Inâorderâ toâassessâyourâgrowthârequirements,âyouâneedâtoâreviewâtheâbusinessâplanâandâreflectâonâyourâfirmâsâobjectives.âTheâplanâshouldâmakeâclearâwhatâtheâgrowthâobjectivesâareâforâtheâfirm,âandâshouldâclearlyâidentifyâfeeâandâprofitâtargets.
Itâisâimportantâtoânoteâthatâtheâfocusâmustâbeâonâprofitable growth,ânotâjustâgrowthâforâgrowthâsâsake.âManyâfirmsâ fallâ intoâ theâ trapâ ofâ chasingâ newâ feesâ inâ orderâ toâ reachâ growthâ targets,â yetâ theâ newâ feesâ areâ notâprofitable!âThisâwillâ actuallyâ damageâ theâ firmâandâ itsâ financialâ sustainability.â Itâ isâ difficultâ toâ supportâ anyâargumentâthatâencouragesâunprofitableâfeeâgrowthâforâsmallâtoâmediumâfirms.
Thereâmayâbeâcertainâoccasionsâwhereâaââlossâleaderââstrategyâisâappropriate,âbutâthisâneedsâtoâfitâwithinâanâoverallâmarketingâandâpricingâstrategy.âThisâisâcoveredâinâmoreâdetailâinâSectionâ3.7.
3.3.1 Benefits of Growth, and Sustainability
Thereâareâaânumberâofâreasonsâyouâmayâbeâaimingâtoâgrowâasâaâfirm,âsuchâasâto:
· Improveâyourâabilityâtoâattractâandâserviceâclients;
· Replaceâclientsâlostâdueâtoânaturalâattritionâorâretirement;
· Attractâandâretainâstaffâasâtheâfirmâprovidesâaâgreaterâvarietyâofâwork;
· Maximizeâreturnâonâinvestmentâonâfixedâoverheads,âsuchâasârentâandâtechnology;
· Provideâaâmoreâvariedâworkplace;âand
· Hitâcriticalâmass,âtoâmeetâfixedâoverheadsâandâprofitâtargets.
Growthâprovidesâaâlevelâofânaturalâregenerationâinâyourâfeeâbaseâandâsmoothsâoutâeventsâoverâwhichâyouâmayâhaveânoâcontrol.âItâhelpsâyouâinâyourâresourceâmanagementâandâinâmanagingâtheâcapacityâissuesâwhichâimpactâonâfirmâprofitability.
Feeâgrowthâcanâcomeâfromâaârangeâofâareasâincluding:
· Acquisitionâofânewâclients;
· Greaterâlevelâofâutilizationâofâyourâservicesâbyâexistingâclients;
· Introductionâofânewâservices;âand
· Increaseâinâyourâfeeârates.
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Table 3.1 Levelsâofâfeeâgrowth
Annual Rate of Fee Growth Impact
Upâtoâ5% Shouldâmanageâinflationâandâprovideâaâsmallâlevelâofânaturalâgrowth.
5%âtoâ10% Aâsteady,âmeaningfulâlevelâofâgrowth.
10%âtoâ15% Likelyâ toâ causeâ resourcingâ pressures.â Yourâ firmâ willâ needâ toâ beâ veryâorganized.âThisârateâofâgrowthâisâalsoâlikelyâtoâcauseâliquidityâpressures.
15%âplus Aâ highâ levelâ ofâ growthâ isâ likelyâ toâ causeâ aâ wideâ rangeâ ofâ issuesâ andâpressures.âItâisâunlikelyâtoâbeâsustainableâinâtheâlongâterm.
Tableâ3.1âshouldâbeâtakenâasâaâguideâandâanâindicatorâofâlikelyâimpacts.âTheâobservationsâmadeâapplyâtoâtheâlonger-termâviewâwhereâtheâfirmâstrategyâisâtoâseekâaâsustainedâgrowthârate.âTheâratesâofâgrowthâneedâtoâbeâconsideredâinâtheâcontextâofâtheâcurrentâeconomicâsituationâofâyourâlocalâenvironmentâandâwillâvaryâamongâeconomicâregionsâandâdevelopingâeconomies.
Theâkeyâmessage:âtheâhigherâtheârateâofâsustainedâgrowthâyouâareâseeking,âtheâgreaterâtheâpressuresâinâtheâareasâofâresourcing,âliquidityâandâfirmâmanagement.âTheâsecretâisâtoâworkâtowardâgrowthâratesâthatâareâbothâmanageableâandâsustainableâforâyourâfirm.
Oneâusefulâmetricâisâaâfirmâsâsustainableâgrowthârateâ(SGR).âInâbasicâterms,âtheâgrowthâofâanyâbusiness,âaccountingâfirmsâincluded,âisâoftenâlimitedâbyâtheâamountâofâequityâinâtheâbusiness.âTheâmoreâequityâtheâfirmâhas,âtheâmoreâpotentialâtheâfirmâhasâforâgrowth.âHowever,âifâaâfirmâgrowsâtooâfast,âthenâthereâmightânotâbeâenoughâequityâtoâsustainâtheâgrowth.âIfâaâfirmâgrowsâtooâslowly,âthenâitâmayâstagnate.âTheâSGRâshowsâhowâfastâaâfirmâcanâgrowâusingâinternallyâgeneratedâassetsâwithoutâissuingâadditionalâdebtâorâequity.âTheâSGRâprovidesâaâusefulâbenchmarkâforâjudgingâaâfirmâsâappropriateârateâofâgrowth.âAâfirmâwithâaâlowâsustainableâgrowthârateâbutâlotsâofâopportunitiesâforâexpansionâwillâhaveâtoâfundâthatâgrowthâviaâoutsideâsources,âwhichâcouldâlowerâprofitsâandâputâaâstrainâonâtheâfirmâsâfinances.âGrowthâinâitselfâcanâpresentâaâdilemmaâsinceâwithâgrowthâcomesâanâincreasedâneedâforâincreasedâworkingâcapital.
TheâSGR,âappliedâtoâanâaccountingâfirm,âisâtheârateâatâwhichâtheâfirmâmayâgrowâitsâequityâ(netâassets)âusingâonlyâincreasesâinâretainedâearningsâtoâfundâtheâgrowth.âGrowthâbeyondâthisâamountâwillâforceâtheâfirmâtoâobtainâadditionalâfinancingâfromâexternalâsourcesâtoâfinanceâgrowth.
Theâstepsâandâformulaâforâitsâcalculationâareâasâfollows:
Step 1 â Calculate the return on equity (ROE)
· Calculateâ theâ ROEâ byâ dividingâ theâ firmâsâ netâ incomeâ byâ itsâ equity.â Forâ example,â ifâ theâ equityâ isâ$1,000,000âandâtheânetâincomeâisâ$200,000âthenâtheâROEâwouldâbeâ20%â($1,000,000/$200,000âxâ100)âorâ0.2.
Step 2 â Calculate the dividend payout ratio (DPR)
· Determineâtheâproportionâofâtheâfirmâsânetâincomeâpaidâoutâasâdividends.âUsingâtheâexampleâabove,âifâ$80,000âofâtheâ$200,000âwereâpaidâout,âleavingâ$120,000âreinvested,âthenâtheâDPRâwouldâbeâ40%â($80,000/$200,000âxâ100)âorâ0.4.
Step 3 â Calculate the sustainable growth rate (SGR)
· Theâformulaâwouldâbe:âROEâxâ(1âââDPR).âTherefore,âwithâtheâexampleâabove,âtheâcalculationâwouldâbeâasâfollows:â0.2âxâ(1â0.4)â=â0.12.âTheâSGRâisâ12%.
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3.3.2 Should the Firm Grow, and, if so, by How Much?
Theâdiscussionâsoâfarâhasâbeenâonâtheâ importanceâofâgrowthâtoâyourâbusinessâplan.âHowever,âyourâfirmâneedsâtoâtakeâintoâaccountâpracticalâfactorsâsuchâas:
· Physicalâconstraintsâofâcurrentâpremises,âsuchâasâfloorâspace,âstaffâparking,âetc.;
· Infrastructureârequirements,âsuchâasâtechnology,âofficeârequirements,âetc.;
· Budgetârequirementsâtoâfundâmarketing,âadvertisingâandâpromotionalâactivities;
· Fundingâcostsâforânewâstaffâuntilâtheyâareâbillingâandâproductive;âand
· Impactâonâbreak-evenâposition.
Itâisâalsoâimportantâforâyouâtoâconsiderâyourâpositionârelativeâtoâtheâeconomicâandâenvironmentalâfactorsâatâtheâtime,âorâinâtheâforeseeableâfuture.âGrowthâmayâbeâinappropriateâatâaâparticularâtime.
Otherâreasonsâyouâmayânotâwishâtoâgrowâinclude:
· Youâareâoperatingâatâfullâcapacityânow;
· Growthâisânotâinâlineâwithâyourâbusinessâobjectives;
· Growthâmayâcauseâconflictâwithâworkâlifeâbalanceâobjectives;
· Thereâisânoâdesireâforâtheâincreasedâstressâassociatedâwithâgrowth;
· Currentâfeesâandâprofitabilityâareâsustainableâandâcomfortable;
· Theâpractitionerâisânotâconcernedâwithâtheâfutureâofâtheâfirm,âorâitsâfutureâvalue;
· Thereâisâconcernâthatâincreasedâgrowthâwillâmeanâtheâpractitionerâspendsâlessâtimeâwithâlonger-termâclientsâwhoâhaveâbeenâloyalâtoâtheâfirm;
· Thereâareâphysicalâlimitationsâandâpracticalâconstraintsâonâtheâabilityâofâtheâfirmâtoâhandleâandâmanageâgrowth,âsuchâasâsizeâofâofficeâpremises,âwithânoâalternativesâavailable;
· Theâfirmâmayâhaveârecentlyâgoneâthroughâaâperiodâofâstrongâgrowthâandâisânowâseekingâtoâconsolidateâandâsettle;âand
· Theâage,âorâhealthâofâtheâpractitioner.
Veryâfewâfirmsâmanageâtheirâgrowthâonâaâconsistentâandâsustainableâbasis.âItâisâmoreâlikelyâtoâcomeâinâfitsâandâstarts,â followedâbyâsomeâsettling,â thenâresurgence.â Itâ isâalsoâaârealityâ thatâsomeâfirmsâexperienceâaâreductionâinâfeesâatâtimes.âYouâneedâtoâbeâawareâofâthisâpossibilityâandâitsâconsequences.
Someâquestionsâyouâshouldâconsiderâwhenâthinkingâaboutâgrowthâissuesâinclude:
· Whatâdoesâtheâfirmâsâbusinessâplanâsay?
· Whatâisâtheâcurrentâresourceâcapacityâposition?
· Canâtheâfirmâgrowâwithoutâanyâlossâinâquality?
· Doesâtheâfirmâhaveâadequateâstaffingâtoâmanageâgrowth?
· Willâgrowthâimproveâtheâfirmâandâaddâtoâitsâvalue?
· Ifâtheâfirmâisâplanningâtoâgrow,âbyâhowâmuch?
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Inâansweringâtheseâquestionsâyouâareâreflectingâonâthreeâcriticalâissues:
· Isâgrowthâpartâofâtheâfirmâsâoverallâstrategy?
· Isâtheâfirmâwellâpositionedâtoâgrow?
· Whatâisâtheâoptimalâgrowthâobjective?
Considerâeachâofâtheseâissuesâinâsettingâyourâgrowthâplans.âGrowthâforâtheâsakeâofâgrowthâsimplyâdoesânotâmakeâsense.âYouâneedâtoâunderstandâwhyâyouâareâgrowing,âwhetherâyourâfirmâcanâmanageâtheâgrowth,âandâwhetherâgrowthâwillâaddâvalueâtoâyourâfirm.
Onceâyouâhaveâ identifiedâ thatâgrowthâ isâ indeedâpartâofâ yourâ strategy,âmakeâsureâ thatâ yourâ firmâhasâ theâcapacityâtoâdoâso.
Carefullyâconsiderâtheâfollowingâstatement:âResources should be put in place in anticipation of growth, not as a reaction to it.âTooâoften,âfirmsâgrow,âthenârushâaroundâtryingâtoâputâresourcesâinâplace.âTheâbestâwayâtoâgrowâeffectivelyâ isâ toâ identifyâyourâresourceârequirementsâandâ thenâputâ themâinâplaceâ toâsupportâyourâgrowth.âObviouslyâthisâwillârequireâbudgetâconsiderationsâtoâfinanciallyâsupportâsuchâaâmove.âHowever,âthisâapproachâreducesâtheâriskâofâfallingâqualityâcontrol,âandâgivesâyouâtheâgreatestâopportunityâforâsuccess.
Onceâyouâhaveâdecidedâonâexpansion,âtheânextâquestionâbecomes,âhow?
Broadlyâspeaking,âthereâareâtwoâtypesâofâgrowth.âOneâisâorganicâgrowth,âwhichâisâtheâprocessâofâexpansionâdueâtoâanâincreaseâinâfeesâwithinâtheâcurrentâstructure.âTheâotherâisâgrowthâbyâacquisition,âwhich,âasâtheânameâsuggests,âmeansâexpansionâdueâtoâmergers,âacquisitionsâorâsomeâotherâactivityâseparateâfromâtheâfirm.
Thereâareâaânumberâofâoptionsâwithinâtheseâtwoâtypesâofâgrowth,âwhichâareâdiscussedâbelow.
3.3.3 Internal Growth Strategies
Theâfirstâ typeâofâ organicâgrowthâ isâ internalâ growth.âEssentially,â internalâ growthâ isâ aboutâ increasingâ yourâfeeâbaseâfromâyourâexistingâclients.âIndeed,ârecentâIFACâGlobalâSMPâSurveysâfoundâthatâoneâofâtheâmostâimportantâdriversâofâpracticeâgrowthâforâsmall-âandâmedium-sizedâpracticesâ(SMPs)âisâadditionalârevenueâfromâexistingâclients.
Thereâareâthreeâmainâwaysâtoâachieveâthis:
· Increaseâtheâuseâofâyourâexistingâservicesâbyâyourâexistingâclients;
· Introduceâaânewâserviceâtoâyourâexistingâclients;âor
· Increaseâyourâfirmâsâcharge-outâratesâorâintroduceâaâvalueâpricingâmodel.
3.3.3aâ IncreaseâExistingâServicesâtoâExistingâClients
Thisâisâaâfundamentalâyetâoftenâoverlookedâmethodâofâincreasingâgrowth.âTheâkeyâquestionâis,ââAreâallâofâourâclientsâusingâallâofâourâservices?ââIfânot,âthereâisâanâopportunityâtoâincreaseâtheââtakeâupââofâyourâservicesâbyâyourâexistingâclients.âTheâfactâyouâalreadyâhaveâaârelationshipâwithâthem,âandâtheyâhaveâexperiencedâtheâserviceâandâqualityâofâyourâfirm,âwillâmeanâtheyâareâmoreâamenableâtoâyourâsuggestionsâtoâtakeâupâfurtherâservices.
Preparation work
Inâorderâ toâprovideâmoreâofâyourâexistingâservicesâ toâyourâexistingâclients,âyouâfirstâneedâ toâknowâwhichâclientsâareâusingâwhichâservicesâatâthisâcurrentâpointâinâtime.âReferâtoâTableâ3.2.
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Table 3.2 Identifyingâwhichâclientsâuseâwhichâservices
Step Action Completed
1 Listâallâofâyourâexistingâservicesâacrossâtheâtopâofâtheâworksheet.
2 Listâallâofâyourâexistingâclientsâdownâtheâsideâofâtheâworksheet.
3 Forâeachâservice,âmarkâonâtheâworksheetâwhichâclientâisâutilizingâthatâservice.
4 Completeâthisâforâallâclientsâ(orâclientâsegment).
5 Onceâcomplete,âreviewâtheâworksheet.
6 Theââunmarkedââclientsârepresentâopportunitiesâtoâwhomâyouâcanâmarketâadditionalâexistingâservices.
7 Determineâanâappropriateâmarketingâstrategyâforâtheseâclients,âwithâactionsâandâtimeâframesâallocated.
8 Implement the plan.
Yourâclientsâalreadyâknowâyou,âlikeâyouâandâtrustâyou.âIfâtheyâhaveâbeenâhappyâwithâtheâserviceâtheyâhaveâreceivedâinâtheâpast,âtheyâwillâbeâopenâtoâyourâsuggestionsâforâadditionalâservices.
Onlyâsuggestâservicesâthatâareâofâbenefitâtoâtheâclient.âIfâyouâselectâwisely,âpresentâtheâadditionalâserviceâinâaâcontextâthatâwillâbenefitâtheâclient,âand,âasâyouâhaveâprovidedâyourâcurrentâservicesâinâanâaccurate,âtimelyâandâprofessionalâmanner,âitâsâlikelyâthatâtheyâwillâtakeâupâmoreâofâyourâservices.
Byâfocusingâonâyourâexistingâclients,âyouâareâbroadeningâtheârelationshipâyouâhaveâwithâthem.âThisâ inâturnâincreasesâtheâlikelihoodâofâreferralsâfromâtheseâclients,âwhoâhaveânowâbecomeâadvocatesâforâyouâandâyourâfirm.
3.3.3bâ IntroduceâaâNewâServiceâtoâExistingâClients
Thisâisâanotherâsuccessfulâmethodâforâincreasingâgrowth.âTheâkeyâquestionâis,ââWhatâotherâservicesâcouldâtheâfirmâprovideâtoâitsâclients?â
Onceâagain,âtheâmainâreasonâthisâisâsuccessfulâisâthatâyouâalreadyâhaveâanâestablishedârelationshipâwithâyourâclient.âIfâtheâpastâexperiencesâwithâyourâfirmâhaveâbeenâpositive,âthenâtheyâareâhighlyâlikelyâtoâtakeâupânewâservicesâyouâofferâthem.
Inâfact,ânotâonlyâareâtheyâlikelyâcandidates,âbutâyourâexistingâclientsâshouldâbeâyourâfirstâtargetâsegmentâforâintroducingânewâservices.âThisâisâbecauseâofâtheâexistingârelationshipâyouâhaveâwithâthem.âTheyâareâmoreâlikelyâtoâprovideâyouâwithâhonestâfeedbackâonâtheânewâservice,âandâmakeâsuggestionsâforâimprovementsâifârequired.âTheyâwillâthenâbeâcuriousâtoâseeâwhetherâyouâhaveâincorporatedâtheirâsuggestionsâintoâyourâfinalâoffering.
Preparation work
Someâfirmsâstruggleâwithâ theâ ideaâofâ introducingânewâservices,âasâ theyâ feelâuncomfortableâ learningâandâimplementingânewâideas.âButâitâdoesnâtâhaveâtoâbeâhard.âOneâofâtheâbestâwaysâtoâidentifyâaânewâserviceâisâtoâdoâanââinformationâandâknowledgeâauditââonâyourselfâandâyourâteam.âMostâpractitionersâandâstaffâhaveâaâwealthâofâknowledgeâandâexperienceâtuckedâaway,âwhichâtheyâonlyâbringâoutâwhenâprompted.âNowâisâtheâtimeâtoâdrawâitâout.
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Completeâtheâfollowingâsteps:
· Sitâdownâwithâeachâteamâmemberâandâgainâaâfullâunderstandingâofâtheirâknowledgeâandâexperienceâinâbusinessâandâinâlife;âtogetherâassessâhowâthisâmightâbeâconvertedâintoâaânewâserviceâoffering.
· Discussâotherâserviceâareasâthatâmightâbeâofâinterestâtoâyouâandâyourâteam.âExamplesâmightâincludeâbookkeepingâ services,â budgetsâ andâ cashâ flowâ (ifâ notâ alreadyâ consistentlyâ provided),â successionâplanning,âbusinessâconsulting,âbusinessâvaluations,âfranchiseâspecialization,âdueâdiligence,âbusinessâcoaching,âpayrollâservice,âdebtorsâfollow-upâandâcollection,âfinancialâplanningâorâfinanceâbroking.
· Onceâyouâhaveâidentifiedâtheâareasâofâinterest,âidentifyâanyâknowledgeâgapsâbetweenâyourâcurrentâlevelâofâknowledgeâandâtheâlevelâofâknowledgeâyouâexpectâwouldâbeârequiredâtoâprovideâtheânewâservice.
· Undertakeâadditionalâtrainingâasârequired.
· Decideâonâtheânewâserviceâoffering.
· Decideâonâtheâpriceâorâpricingâmodelâtoâbeâused.
· Determineâwhatâmarketingâcollateralâwillâbeârequiredâtoâpromoteâtheâservice.
· Prepareâsupportingâmaterials,âworkâpapersâandâanyârequiredâinformation.
· Discussâtheânewâserviceâofferingâwithâoneâorâtwoâclientsâwithâwhomâyouâhaveâaâcloseârelationshipâandâwhoâareâsupportiveâofâyourâeffortsâtoâintroduceânewâservices.
· Meetâwithâtheseâclientsâandârunâthroughâtheânewâserviceâonâaâtrialâbasis.
· Takeâonâanyâfeedback,âandâimplementâanyâchangesâthatâmayâbeârequired.
· Reviewâtheâlistingâofâallâyourâexistingâclients.
· Identifyâwhichâclients,âorâclientâsegment,âtoâtargetâforâtheânewâserviceâoffering.
· Determineâtheâappropriateâmarketingâstrategyâforâtheseâclients,âwithâactionsâandâtimeâframesâallocated.
· Implement the plan.
3.3.3câ IncreaseâYourâFirmâsâCharge-OutâRatesâorâIntroduceâaâValueâPricingâModel
Theâmostâstraightforwardâwayâtoâgrowâyourâfeeâbaseâisâtoâincreaseâyourâcharge-outârates.âWhileâthisâmayâbeâaâsimpleâprocessâtoâcalculate,âitâmayâproveâdifficultâtoâimplement.âCareâneedsâtoâbeâtakenâthatâclientsââexpectationsâareâmanagedâandâthatâtheyâperceiveâanâincreaseâinâvalueâwithâtheâincreaseâinârate.
Increase fees
Theâcommonâincreaseâtoâfeeâratesâisâatâleastâtheâannualârateâofâinflation.âThoseâfirmsâseekingâtoâincreaseâratesâoverâandâaboveâtheâinflationârateâneedâtoâbeâpreparedâtoâhandleâinquiriesâfromâtheirâclientsâasâtoâtheâreasonsâforâtheâincrease.
Aâsimpleâ increaseâ inâcharge-outâ ratesâ inâ tougherâeconomicâ timesâcanâoftenâbecomeâaâdifficultâexercise,âparticularlyâifâtheâclientâperceivesânoâcorrespondingâincreaseâinâtheâvalueâtheyâreceive.
Accordingly,âdiscussâwithâyourâteamâwhatâvalue-addedâservicesâyouâcouldâincludeâalongâwithâyourâusualâservices,âtoâincreaseâyourâclientsââperceptionâthatâtheyâareâcontinuingâtoâenjoyâgoodâvalueâforâtheirâmoney.
Itâmayâalsoâbeâusefulâtoâconsiderâchargingâdifferentialâcharge-outâratesâforâdifferentâtypesâofâservicesâandâperceivedâvalue.â Ifâyouâdoânotâalreadyâdoâso,â identifyâ theâdifferentâ typesâofâworkâyouâandâyourâstaffâdo.âConsiderâwhetherâitâisâappropriateâtoâchargeâdifferentialâratesâforâtheseâdifferentâtypesâofâwork.âWhenâyouâworkâthroughâthisâissue,âitâusuallyâbecomesâclearâwhichâareasâofâworkâcanâbeâchargedâatâdifferentialârates.
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Airlinesâworkedâthisâoutâlongâago.âTheyâhaveâfirstâclass,âbusinessâclassâandâeconomyâsections.âEachâsectionâprovidesâdifferentâlevelsâofâservice,âandâtheâpricesâforâeachâsectionâdifferâmarkedly.âYetâtheâpassengersâallâgetâtoâtheâsameâdestination.âItâsâtheâlevelâofâserviceâtheyâreceiveâonâtheâjourneyâthatâmakesâtheâdifference.
Theâsameâthinkingâcanâbeâappliedâtoâyourâpractice.âSomeâofâyourâclientsâwillâappreciate,âandâpayâfor,âfirstâclassâservice.âOthersâwillâpreferâtheâeconomyârate.âTheâpointâis,âyouâhaveâtheâopportunityâtoâbeâflexibleâinâyourâthinkingâandâcreativeâinâyourâdelivery.âYouâcanâprovideâtheâlevelâofâserviceâyourâclientsâwantâandâappreciate.âDifferentialâcharge-outâratesâmayâbeâquiteâappropriateâforâtheseâlevelsâofâserviceâyourâfirmâprovides.
Consider introducing a value pricing model
Accountingâ firmsâ whoâwishâ toâ increaseâ revenueâ andâ productivityâmustâ establishâ pricingâ strategiesâ thatâsupportâtheseâgoals.âTraditionalâtime-basedâcharge-outâratesâdoânotânecessarilyâcaptureâvalue.âIntroducingâaâvalueâpricingâstrategyâmayâallowâyouâtoâincreaseârevenueâandâclientâengagement.
Clientsâlikeâtoâknowâwhatâaâserviceâisâgoingâtoâcostâandâwhatâvalueâtheyâwillâreceiveâupfront;ânoâoneâlikesâsurprises.âProfessionalârelationshipsâcanâbeâdevaluedâwhenâtheâclientâknowsâtheirâaccountantâisâchargingâinâtime-basedâincrementsâandâthatâtheâclockâstartsâasâsoonâasâtheyâpickâupâtheâphone.âThisâ isâoftenânotâconduciveâtoâbuildingâtrustedâadviserârelationships.âProfessionalâaccountantsâneedâtoâavoidâpricingâmodelsâthatâimpedeâandâdevalueâtheâservicesâtheyâareâproviding.
Manyâfirmsâuseâsomeâformâofâtimeâandâbillingâsoftwareâtoâtrackâtimeâandâexpenses.âForâmanyâfirms,âthisâhasâalsoâbeenâusedâforâbillingâpurposes,âallowingâtheâpracticeâtoâpriceâtheâservicesâbasedâonâtimeâplusâaâmargin.âTheâchallengeâofâtheâtraditionalâbackâofficeâsystemsâisâthatâtheyâfailâtoâcaptureâupfrontâknowledgeâandâpriceâforâclientâmanagementâandâengagementâsystems.
Theâ traditionalâ time-for-serviceâpricingâmodelâ looksâatâ service,â cost,â priceâandâclient,â andâ rarelyâdoesâ itâconsiderâvalue.âTheâvalueâpricingâmethodâlooksâatâclient,âvalue,âprice,âcostâandâservice.
Valueâpricingâhasâprovenâtoâbeâmostâsuccessfulâwhenâproductsâorâservicesâareâsoldâbasedâonâemotionsâ(fashion),âinânicheâmarkets,âinâshortages,âforâindispensableâadd-ons,âandâcustomizedâorâbespokeâsolutions.âItâisâbecomingâstandardâpricingâpracticeâforâmanyâUSâCPAâsâ(Baker,â2009)1
Aâvalueâpricingâmodelâisâbasedâonâtheâperceivedâworthâofâservicesâtoâtheâclient,ânotâtheâaccountant.âItâ isâputâinâplaceâbeforeâtheâengagementâcommences.âItâestablishesâaâsellingâpriceâonâtheâperceivedâvalueâtoâtheâclient,â ratherâ thanâ theâactualâcostâofâ theâservice,â theâmarketâpriceâorâcompetitorâprice.âValueâpricingârecognizesâtheâclientâisâtheâultimateâarbiterâofâvalue.
Aâfirmâshouldâalreadyâhaveâanâunderstandingâofâ theâcostâofâprovidingâcoreâservicesâdealingâwithâclients,âoverheadâcostsâandâprofitâmargin.âAnâunderstandingâofâupfrontâcostsâisâtheâfirstâstep.
Theâsecondâstep,âwhichâpresentsâaâchallenge,âisâdeterminingâhowâvalueâisâexpressedâinâmonetaryâterms.âAâgoodâstartingâpointâmayâbeâaskingâaâclientâsomeâsimpleâquestions,âwhichârequireâtheâclientâtoâthinkâofâtheâvalueâofâtheâsolution.âSubtleâbutâpowerfulâquestioningâwillâallowâtheâclientâtoâunderstandâhowâtheâserviceâwillâhelpâthem.âIssuesâthatâmayâbeâofâconcernâtoâtheâclientâbecomeâmoreâclearlyâdefinedâandâunderstood,âaâsharedâunderstandingâformsâonâmattersâofâurgencyâtoâtheâclientâandâtheâdiscussionâbecomesâmoreâfocusedâonâtheâsolutionânotâtheâcost.
Itâisâimportantâtoârecognizeâthatâtheâvalueâmetricsâwillâbeâdifferentâforâeachâengagement.âSometimesâitâwillâbeâspeedâandâefficiencyâofâdeliveryâofâtheâservice,âsometimesâitâmayâbeâtheâqualityâofâtheâserviceâlevel,âandâotherâtimesâitâmayâbeâanâinnovativeâsolution.âEachâengagementâneedsâtoâbeâpricedâforâtheâindividualâ
1ââBaker,â Ronaldâ J.â âPricingâ onâ Purpose:â Howâ toâ Implementâ Valueâ Pricingâ Inâ Yourâ Firm.ââ Journal of Accountancy,â Juneâ 2009.â www.journalofaccountancy.com/Issues/2009/Jun/20091530.html.
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valueâdriversâofâtheâclientâforâthatâparticularâengagement.âOnlyâbyâdiscussingâwithâtheâclientâwillâtheâfirmâbeâableâtoâascertainâwhatâtheseâvalueâdriversâmightâbe.âByâhavingâaâsharedâunderstandingâofâtheâpurposeâofâtheâengagement,âchallengesâandâclientâsâvision,âyouâcanâpriceâbasedâonâtheâvalueâofâtheâsolutionâtoâtheâclientâratherâthanâtheâmechanicsâofâtheâbillableâhours.âAsâpartâofâtheâconversation,âyouâmayâalsoâidentifyâadditionalâservicesâtheâclientâmayâneed.
Asâtheâobjectiveâisâtoâincreaseârevenue,âyouâalsoâwantâtoâmaximizeâyourâproductivityâandâfees.âThinkâaboutâyourâcoreâoffer,âtheâadviceâandâtheâsolution.âHowâcanâyouâreuseâtheâadviceâorâsolutionâforâotherâclients?
· Identify a client whoseâbusinessâhasâgrownâbutâyourârelationshipâhasâremainedâunchanged.
· Arrange a meeting andâholdâaâconversation.âIfâyouâhaveânotâbeenâinâcontactâwithâtheâclientâregularly,âcallâ itâ aâ âbusinessâ healthâ checkâ;â theâ objectivesâ ofâ theâ firstâmeetingâ areâ simplyâ toâ listenâ andâ askâquestions;âyouâareânotâthereâtoâsell.
· Inquire as to client satisfaction.â Seekâ feedbackâ onâ theâ servicesâ yourâ firmâ hasâ provided.âAskâquestionsâthatâdemonstrateâaâdesireâtoâunderstandâtheâbusiness,âlong-termâgoalsâandâchallenges.âBeâpreparedâandâshareâbenchmarkingâdataâonâtheâclientâsâindustry.
· Close the meeting.âAtâtheâendâofâtheâmeeting,âhelpâtheâclientâunderstandâhowâsolvingâtheâproblemâorâansweringâtheâquestionâwillâhelpâtheirâbusiness.âRememberâtheâvalueâpricingâmodelâisâbasedâonâtheâclientâsâperceptionâofâtheâvalueâofâtheâserviceâyouâhaveâprovided.
Youâthenâexploreâtheâopportunityâtoâpriceâandâtailorâyourâservicesâbasedâonâtheâclientâsâperceivedâvalue.
Alternativeâfeeâmodelsâincludeâofferingâaâyearlyâengagementâfee,âlikeâaâretainerâagreement.âTheâproposal,âinâadditionâtoâsettingâoutâtheâscopeâofâtheâtaskâtoâbeâundertaken,âmayâincludeâsoftwareâaccountingâsupportâservices,â unlimitedâ phoneâ callsâ andâ email,â improvedâ access,â quarterlyâ orâ half-yearâ businessâ planningâmeetings,âandâmonthlyâinvoicing.âTheâfocusâisâonâofferingâclient-focusedâaccountingâandâbusinessâsolutions.
Bundle services
Anotherâwayâtoâincreaseâyourâfirmâsâeffectiveâcharge-outârateâisâtoâbundleâservicesâtogether.âThisâwayâtheâindividualâfeeâforâeachâserviceâisânotâseparatelyâidentifiedâonâtheâclientâinvoice,âwhichâallowsâyouâtoâincreaseâtheâfeesâforâtheâentireâbundleâofâservices.âThisâmayâbeâanâeasierâwayâtoâmarketâtheâincreasedâfeesâtoâyourâclientâandâallowsâyouâtoâofferâaâbroaderârangeâofâservicesâforâaâlargerâfee.
Increase recovery rates
Whileânotâstrictlyâanâincreaseâinâcharge-outârates,âanotherâwayâtoâincreaseâprofits,âandâthereforeâachieveâgrowth,âisâtoâworkâdeliberatelyâonâincreasingâtheâfirmâsârecoveryârate.âEssentiallyâthisâmeansâaâreductionâinâwrite-offs.
Theâbestâwayâtoâdoâthisâisâtoâimproveâtheâproductivityâmanagementâofâtheâfirm,âandâitâisâoutsideâtheâscopeâofâthisâmodule.âHowever,âinâbrief,âtheâkeyâisâtoâholdâweeklyâproductivityâmeetingsâwithâstaffâtoâcheckâonâtheâworkflowâthroughâtheâoffice,âandâclarifyâoutstandingâissuesâasâtheyâarise.âAnyâissuesâwithâclientâmattersâcanâbeâraisedâinâaâregularâandâtimelyâmanner.âThisâallowsâthemâtoâbeâaddressedâandâresolvedâpromptly,âwithâlessâtimeâlostâonâeachâjob.âThisâthenâleadsâtoâimprovedâworkflowâthroughâtheâoffice,âmeaningâmoreâefficientâcompletionâandâinvoicingâofâjobs.âThisâthenâleadsâtoâimprovedâprofitabilityâperâjob,âandâincreasedâprofitabilityâforâtheâfirmâoverall.
3.3.4 External Growth Strategies
Externalâgrowthâ isâallâ aboutâacquiringânewâclientsâ forâ theâfirm.âRecentâ IFACâGlobalâSMPâSurveysâhaveâstatedâ theâmostâpressingâchallengesâ facingâSMPsâ includedâattractingânewâclients,â keepingâupâwithânewâstandardsâandâregulations,âandâdifferentiatingâfromâtheâcompetition.âTheâneedâtoâattractânewâclientsâsuggestsâ
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SMPsâoughtâtoâconsiderâmoreâintensiveâmarketingâandâpromotion,âandâexpandingâtheirâserviceâofferings.âAânumberâofâstrategiesâcanâbeâimplementedâtoâacquireânewâclients.âTheâmostâpopularâareâoutlinedâbelow.âEachâ representsâaâ triedâandâ testedâstrategy,âandâsomeâofâ theâkeyâstrategiesâareâexaminedâ inâdetail.â InâAppendixâ3.2,âCase studyâ3.2âillustratesâhowâaâfirmâcanâdevelopâaâgrowthâplan.
Theârealâpowerâcomesâwhenâaânumberâofâstrategiesâareâusedâsimultaneously.âThisâharnessesâtheâmomentumâofâyourâmarketingâeffortsâandâisâmoreâlikelyâtoâbringâattentionâtoâyourâfirm.
Mostâbusinessesâinâtheâmarketâalreadyâhaveâanâaccountant.âInâtheâmajorityâofâcasesâthatâmeansâthatâinâorderâtoâgrowâyourâfirm,âyouâwillâneedâtoâwinâclientsâawayâfromâotherâfirms.âAndâinâorderâtoâdoâthat,âyouâmustâofferâthem a compelling reason to change.
Externalâgrowthâstrategiesâforâprofessionalâservicesâfirmsâinclude:
· Advertising;
· Seminars;
· Sponsorship;
· Newslettersâ(email/printed);
· Publicârelations,âwritingâarticlesâandâeditorials;
· Events,âclientâfunctions,âcocktailâparties;
· Telephoneâdirectoriesâandâprospectâdatabaseâlists;
· Telemarketing;
· Firmâpromotionâthroughâmarketingâmaterials;
· Mail-outâofâpromotionalâbrochure;
· Leafletâletterboxâdrop;
· Websites,âlinksâandâsearch-engineâoptimization;âand
· Teamâmembers:âencourageâtoârefer.âOtherâstrategiesâforâgrowthâinclude:
· Networking;
· Referrals;âand
· Acquisitionsâandâconsolidation
Eachâofâtheâaboveâshouldâbeâconsideredâinâlightâofâyourâcountryâsâlawsâorâprofessionalâregulations.
GuidanceâonânetworkingâandâreferralsâareâincludedâinâModuleâ2.âOptionsâforâconsolidations,âmergersâandâacquisitionsâareâexaminedâinâModuleâ8.
3.3.4aâ Advertising
Advertisingâisâoneâofâtheâmostâpowerfulâwaysâofâgettingâyourânameâandâmessageâoutâ inâtheâmarket.âButâbeware:âitâisâcrowdedâoutâthere!
Inâorderâtoâgetâtheâbestâvalueâfromâyourâadvertisingâspending,âthereâareâsomeâfundamentalârules:
· Target group:âYouâmustâidentifyâtheâtargetâgroupâorâmarketâsegmentâatâwhichâyouâwillâbeâaimingâyourâadvertisement.âTheâshotgunâapproachâdoesnâtâwork;âyouâmustâbeâspecific.
· Client need:âYouâmustâidentifyâtheâclientâwantâorâneedâthatâyourâserviceâwillâsatisfy.
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· Client benefit:âYouâmustâmakeâitâabundantlyâclearâhowâyourâserviceâwillâbenefitâtheâclient.âYouâmustâappealâtoâtheirâself-interestâwhatâsâinâitâforâthem?
· A unique benefit:âItâisâbetterâtoâfocusâonâoneâparticularâbenefitâthanâtoâuseâaâbroad-brushâapproach,âwhichâdilutesâtheâimpactâandâconfusesâtheâmessage.
· Credibility and sincerity:âTheâadvertisementâmustâringâtrueâandâconveyâprofessionalâcredibilityâandâsincerity.âYouâmustâavoidâwild,âexaggeratedâorâunsubstantiatedâclaims.
· The headline:âItâmustâcaptureâtheâattentionâofâtheâreaderâandâencourageâthemâtoâreadâon.
· Call to action:âThereâmustâbeâaââcallâtoâaction,ââwhereâtheâreaderâisâtoldâtoâtakeâaction,âtoâcall,âvisitâorâcheckâyourâwebsite.
· âYouâ andâYourâ:âTheseâwordsâgiveâyourâadvertisementâaâpersonalâimpact,âparticularlyâwhenâusedâinâtheâheadline.
· Clarity of purpose:âYouâmustâbeâclearâinâyourâmindâasâtoâtheâpurposeâofâtheâadvertisement.âIsâitâtoâinform,âpersuade,âremindâorâmakeâtheâsale?
· Choice of media:âYouâmustâ research,âandâ thenâuse,â theâmostâappropriateâmediaâ forâ yourâ targetâaudience.âAdvertisingâisâexpensive,âsoâitâisâimportantâtoâgetâgoodâvalueâforâtheâmoneyâyouâspend.
3.3.4bâ Seminars
Seminarsâcanâbeâanâeffectiveâformâofâmarketing.âAânumberâofâformatsâcanâbeâused:
· Run your own seminars, and be the keynote speaker.âThisâgivesâyouâaâreasonâtoâadvertiseâandâpromoteâ yourselfâ andâ theâ firm.âTakingâ theâ roleâ ofâ keynoteâ speakerâ allowsâ youâ toâ beâ seenâasâ theââexpertââonâyourâchosenâtopic.
· Run your own seminar, but use a guest speaker.âThisâgivesâyouâaâreasonâtoâadvertiseâandâpromoteâyourselfâandâtheâfirm.âItâallowsâyouâtoârunâaâseminarâevenâthoughâyouâmayânotâenjoyâpublicâspeaking.âItâallowsâyouâtoâbeâseenâasâproactiveâbyâassociatingâyourselfâwithâtheâguestâspeaker.
· Speak at seminars hosted by others.âThisâ isâwhereâyouâspeakâatâsomeoneâelseâsâseminar.âTheâfirstâstepâisâtoâgetâyourselfâonâtheâspeakersââlist.âItâgivesâyouâtheâchanceâtoâpromoteâyourselfâandâfirm,âandâalsoâyourâtechnicalâexpertise.âBeingâtheâspeakerâallowsâyouâtoâbeâseenâasâtheââexpertââonâyourâchosenâtopic.
Inâeachâcase,âyouâcanâfollowâupâtheâseminarâwithâanâarticleâforâtheâlocalâpaper,âorâsocialâmedia,âwithâkeyâpointsâfromâyourâpresentation.âClientsâcanâbeâinvitedâandâencouragedâtoâbringâaâbusinessâassociateâ(non-client).âYouâcanâalsoâuseâ theâkeyâpointsâ fromâyourâpresentationâ inâyourâ firmâsânewsletter,âpostâ itâ onâ theâwebsite,âandâuseâitâinâsocialâmedia.
3.3.4câ Networking
âWordâofâmouthââisâoftenâregardedâasâoneâofâtheâbestâformsâofâmarketingâandâisâeffectivelyâachievedâthroughânetworking.
Networkingâisânotâaboutâtryingâtoâmakeâaââsaleââtoâtheâpersonâyouâmeet;âinstead,âyouâwantâthemâtoâreferâothersâtoâyou.âDonâtâfeelâyouâhaveâtoâimpressâtheâpeopleâyouâmeetâwithâyourâcharm,âwitâorâtechnicalâknow-how.âBeâyourself.âThisâgivesâthemâtheâchanceâtoâgetâtoâknowâyouâandâseeâifâtheyâareâcomfortableâdealingâwithâyou.âIfâtheyâare,âtheyâareâmoreâlikelyâtoâreferâothersâtoâyou.
Haveâaâplanâforâyourânetworkingâandâanâobjectiveâforâtheâtimeâyouâreâinvesting.âThisâallowsâyouâtoâcheckâthatâyouâareâgettingâaâreturnâonâyourâinvestment.
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Tryâtoâmeetâtwoâorâthreeâpeopleâyouâhavenâtâmetâbefore,âandâgetâtoâknowâthem.âUnderstandâthemâandâwhatâtheyâareâlookingâfor.âItâsâeasierâtoâstayâinâcontactâwithâthemâafterwardâifâyouâfeelâaâconnection.
Butâhowâdoâyouâhaveâaâconversationâwithâaâtotalâstranger?âWhenâyouâmeetâsomeoneâforâtheâfirstâtimeâthereâareâatâleastâthreeâthingsâyouâcanâtalkâabout:
· The venue or occasion:âThereâisâsomeâcommonâreasonâwhyâyouâhaveâbothâattendedâthisâparticularâevent.âThatâsâanâeasyâplaceâtoâstart.âAskâopen-endedâquestions,âandâlistenâtoâtheirâanswers.âThisâwillâgiveâyouâaâclueâasâtoâhowâtoârespond.
· Themselves:âGivenâaâchoiceâbetweenâtalkingâaboutâthemselvesâorâsomeoneâelse,âmostâpeopleâareâmoreâcomfortableâtalkingâaboutâthemselves.âAskâopen-endedâquestions,âinâaâlight,âgentleâmannerâdonâtâmakeâitâanâinterrogation!âTheyâwillâanswerâyourâquestionsâandâwillâmostâlikelyâaskâyouâaâquestionâaboutâyourselfâandâwhatâyouâdo.
· You:âThisâisâtheâchanceâtoâletâpeopleâknowâaboutâyou,âandâwhatâyouâdo.âItâsâimportantâtoâhaveâaâbriefâanswerâinâmind,âwhichâsuccinctlyâexplainsâwhatâyouâdoâandâtheâareasâyouâlikeâtoâworkâin.âOftenâcalledâtheââelevatorâpitchââ(becauseâitâtakesâaboutâtheâsameâamountâofâtimeâasâaâchatâinâanâelevator),âitâsâimportantâbecauseâitâalsoâletsâpeopleâknowâtheâbenefitsâtheyâcanâgetâfromâdealingâwithâyou.
Donâtâexpectâtheâpersonâyouâmeetâtoâbecomeâyourâclient.âItâmightânotâbeâthem,âbutâitâcouldâwellâbeâsomeoneâtheyâknow.âThisâtakesâtheâpressureâoff,âandâyouâcanâjustârelaxâandâchatânormally.âYouâdonâtâhaveâtoâtryâtoâimpressâorâsellâtoâtheseâpeople.âGetâtoâknowâthem,âletâthemâgetâtoâknowâyouâandâseeâifâyouâcanâhelp.
3.3.4dâ Referrals
Word-of-mouthâreferralâisâtheâbestâformâofâadvertisingâforâtheâprofessionalâaccountingâfirmâreferralsâfromâexisting,âhappyâclientsâareâaboutâasâgoodâasâitâcanâget.âTheseâshouldâbeâactivelyâsoughtâandâcultivated.âTheâbestâtimeâtoâaskâaâclientâforâaâreferralâisâwhenâyouâhaveâjustâcompletedâaâjobâorâprojectâforâthem.âAsâtheyâareâbaskingâinâtheâglowâofâanotherâjobâwellâdone,âitâsâeasyâforâyouâtoâsay,ââIfâyouâknowâofâanyoneâelseâwhoâmayâappreciateâourâwork,âweâreâalwaysâhappyâtoâtakeâonâreferrals.ââThisâletsâtheâclientâknowâthatâyouâareâopenâforâreferrals,âandâthatâyouâareâlookingâforânewâclients.
Anotherâwayâtoâobtainâreferralsâisâtoâworkâthroughâaâstructuredâprogramâofâmeetingsâwithâpotentialâreferrers.âOftenâreferredâtoâasââPeopleâofâInfluence,ââtheseâcontactsâincludeâbankâmanagers,âlawyersâandâpeopleâinâcomplementaryâbusinessesâsuchâasâfinancialâplanningâorâfinanceâbroking.
Firmsâthatâsuccessfullyâfollowâaâstructured,âformalâapproachâsetâasideâaâregularâtimeâtoâmeetâwithâpotentialâreferrers.âForâexample,âtheyâarrangeâlunchâmeetingsâwithâaâdifferentâbankâmanagerâeveryâWednesdayâinâaâmonth;âtheânextâmonthâtheyâmayâmeetâwithâaâdifferentâlawyerâeachâWednesday.âTheâfollowingâmonthâitâ mightâ beâ financialâ plannersâ orâ financeâ brokers.â Thenâ theâ cycleâ startsâ allâ overâ againâ withâ theâ bankâmanagers.
Thisâallowsâforâaâsystematicâapproachâtoâworkingâthroughâaâcontactâlistâandâalsoâallowsârelationshipsâtoâbeâbuilt.âItâisâfromâtheseârelationshipsâthatâreferralsâwillâcome.
Youâhaveâtheâflexibilityâtoâmixâupâtheâroutineâofâwhomâyouâmeetâandâwhen.âYouâmayâalsoâwishâtoâbuildâdeeperârelationshipsâwithâcontactsâyouâmayâhaveâmetâthroughânetworking,âorâotherâprofessionalâcontactsâyouâhave.
Thereâareâaâfewâpointsâtoânoteâwithâthisâtypeâofâmarketing:
· Beâpreparedâtoâtalkâaboutâyourâbusiness.âThisâisâyourâchanceâtoâletâpeopleâknowâaboutâwhatâyouâdo,âsoâbeâpreparedâwithâsomeâusefulâinformationâaboutâyourâfirm.âItâhelpsâifâitâsâsomethingâthatâmakesâyouâaâbitâdifferent,âtoâstandâoutâfromâtheâcrowd.
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· Rememberâtoâlisten,âtoo.âItâsâvitalâthatâyouâalsoâunderstandâwhatâyourâcontactâisâlookingâfor.âYouâmightâbeâpayingâforâlunch,âbutâreferralsâareâaâtwo-wayâstreet.âLookâtoâgive,âasâwellâasâreceive.âFindâoutâaboutâthem,âandâwhatâwouldâhelpâthemâwithâtheirâbusinesses.
· Itâsâmoreâthanâjustâaâsocialâcatch-up.âThereâneedsâtoâbeâaâpurposeâforâtheâmeeting,âmoreâthanâjustâtheâsocialâcomponent.âYes,âtheâpurposeâisâtoâbuildâtheârelationshipâsoâtheyâareâcomfortableâinâreferringâpeopleâtoâyou,âbutâyouâneedâtoârememberâyouâareâthereâforâaâreason,âtoâbuildâyourâfirm.
· Limitâalcoholâconsumption.â Itâsâ importantâ toâstayâ focusedâonâ theâ taskâatâhand,âwhichâ isâ toâpresentâyourselfâprofessionallyâandâbeâworthyâofâreferrals.âOver-indulgenceâmayâmakeâthisâimpressionâdifficultâtoâconveyâandâreflectâpoorlyâonâyourâimageâandâreputation.âIndeed,âsomeâreligionsâandâculturesâdoânotâallowâorâacceptâalcoholâconsumption.
Theâ tableâ inâ Appendixâ 3.1â isâ anâ exampleâ templateâ thatâ providesâ aâ usefulâ structureâ forâ settingâ yourâappointmentsâandâforâcontactâplanning.
3.3.4eâ AcquisitionâGrowthâStrategies
Thereâareâaânumberâofâreasonsâfirmâmayâconsiderâaâmergerâandâacquisitionâstrategyâoverâorganicâgrowthâasâaâwayâofâgrowingâtheâfirm.âTheseâreasonsâinclude:
· Synergies:âTheâcombinedâfirmâcanâoftenâreduceâitsâfixedâcostsâbyâremovingâduplicateâdepartmentsâorâoperations,âtherebyâincreasingâprofitâmargins;
· Cross-selling:âTheâabilityâtoâcross-sellâspecializedâservicesâfromâeachâfirmâtoâclientsâofâtheâother;âand
· Economies of scale:â Theâ combinedâ largerâ firmâmayâ benefitâ fromâ purchasingâ economiesâ dueâ toâincreasedâorderâsizeâandâassociatedâbulk-buyingâdiscounts.âAlso,âwhereâ largeâvolumesâofâspecificâservicesâareâprocessed,âitâsâpossibleâtoâmaximizeâtheâinvestmentâinâstaffâtrainingâandâtechnology.
Theâtypicalâformsâofâmergerâandâacquisitionâactivityâwillâbeâdiscussedâbrieflyâbelow.
3.3.4fâ PurchasingâaâParcelâofâFees
Thisâisâwhereâaâseparateâandâidentifiableâparcelâofâfeesâisâpurchasedâfromâaâvendor.âTheâpurchaserâshouldâundertakeâsomeâformâofâdueâdiligenceâonâ theâ feesâ toâbeâsatisfiedâ thatâ theâ feeâparcelâ representsâgoodâvalue.
Theâpurchaserâcanâusuallyâreduceâtheâriskâassociatedâwithâtheâpurchaseâbyâpayingâtheâvendorâinâquarterlyâinstallments,âwithâ theâfinalâpaymentâ reducedâ forâanyâ lossâofâclients.âTheyâmayâalsoâ reduceâ theirâ riskâbyâhavingâaââclawbackââclauseâinâtheâpurchaseâcontract.âThisâallowsâtheâpurchaserâtoââclawbackââsomeâofâtheâpurchaseâpriceâifâsomeâofâtheâclientsâinâtheâfeeâparcelâdoânotâtransferâacross.
3.3.4gâ MergingâwithâAnotherâFirm
Aâmergerâisâtwoâfirmsâcombiningâtoâmakeâoneâlargerâfirm.âItâworksâbestâwhenâtheâtwoâfirmsâareâofâsimilarâsize;âotherwiseâitâtendsâtoâbeâmoreâofâaâtakeover.âTheâequityâinâtheâcombinedâfirmâisâtypicallyâbasedâonâtheâproportionateâvalueâofâtheâfeesâgoingâin.âKeyâissuesâthatâtypicallyâariseâtendâtoâfollowâfromâtheâmixâofâfirmâcultures,âworkflowâpatterns,âITâsystemsâandâleadershipâstyles,âetc.
3.3.4hâ BuyingâoutâAnotherâFirm
Oneâfirmâbuysâoutâtheâotherâfirm,âusuallyâinâtheâformâofâpaymentsâmadeâtoâtheâprincipalâorâpartnersâofâtheâvendorâfirm.âThereâisâoftenâaâtimeârequirementâtheâvendor(s)âareârequiredâtoâstayâonâtoâfacilitateâtheâhandoverâofâclientsâandâsettleâstaffâintoâtheânewâfirm.âTheâvendorsâtypicallyâagreeâtoârestraintsâofâtrade,âwhereâtheyâ
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agreeânotâtoâstartâaânewâfirmâinâcompetitionâwithâtheâpurchaserâwithinâaâcertainâdistanceâandâwithinâaâcertainâtimeâframe,âorâjoinâanotherâfirm.
3.3.4iâ HeadhuntingâaâPartnerâofâAnotherâFirm,âWhoâBringsâorâAttractsâOwnâClients
Individualâpartnersâalreadyâworkingâinâfirmsâareâidentifiedâandâapproachedâtoâleaveâtheirâfirmâandâjoinâanotherâfirm.âThereâisâusuallyâsomeâreasonâtheyâareâidentified,âsuchâasâspecialistâknowledgeâinâcertainâareas,âorâexistingâclientâbase.âThereâneedsâtoâbeâaâstrongâincentiveâforâtheâpartnerâtoâleaveâtheâcurrentâfirmâandâjoinâaânewâfirm.âThisâincentiveâisâusuallyâfinancial,âhowever,âthereâcanâbeâotherâconsiderations,âsuchâasâculture,âworkâlifeâbalance,âorâlocation.
3.3.4jâ HeadhuntingâaââRainmakerâ
Similarâtoâtheâaboveâstrategy,âanâindividualâwithâuniqueâabilitiesâisâidentifiedâandâapproachedâtoâjoinâanotherâfirm.âTheâkeyâdifferenceâhere,âirrespectiveâofâwhetherâorânotâtheyâhaveâaâclientâbaseâthatâwillâmoveâwithâthem,âisâthisâindividualâhasâtheâabilityâtoâcreateâaânewâclientâbaseâorâgenerateâfeesâwellâinâexcessâofâtheânorm.
3.3.4kâ UsingâtheââTuck-InââModel
Thisâisâaâstrategyâusedâbyâsomeâmid-tierâfirms.âSmallerâfirmsâ(typicallyâsoleâpractitioners)âareâtargetedâbyâlargerâfirmsâtoââtuckâinââtoâtheâlargerâfirm.âTheâlargeâfirmâoffersâtoâlookâafterâtheâbackâofficeâadministrativeâtasksâofâtheâsmallerâfirm,âwhichâfreesâupâtheâpractitionerâtoâfocusâonâservicingâhisâorâherâclients.âTheâsmallerâfirmâaccessesâtheâinfrastructureâandâsupportâofâtheâlargerâfirm,âandâtheâlargerâfirmâgainsâaâhighlyâmotivatedânewâpartner.âTheâ clientsâ ofâ theâ smallerâ firmâ becomeâ partâ ofâ theâ clientâ baseâ ofâ theâ largerâ firm,â andâ theâprincipalâbecomesâaâpartnerâinâtheâlargerâfirm.
3.3.4lâ Affiliating
Independentlyâownedâfirmsâ joinâ togetherâunderâoneâbannerâandâpresentâ themselvesâ toâ theâmarketâasâaâsingleâfirm.âThereâareâaânumberâofâbenefitsâforâeachâfirm,âincluding:
· Appearingâbiggerâthanâeachâindividualâfirmâisâseparateâfromâtheâgroup;
· Developingâ andâ sharingâ knowledge,â systemsâ andâ intellectualâ propertyâ withâ otherâ firmsâ inâ theâgroup;
· Servicingâlargerâclientsâwithâaâneedâforâmultipleâofficeâlocations;
· Attractingâandâretainingâstaffâdueâtoâincreasedâopportunities;
· Benefitingâfromâeconomiesâofâscaleâinâtraining,âpurchasing,âconferencesâandâsoâon;âand
· Accessâtoâfinancialâandâotherâresources.
Asâyouâcanâsee,âthereâisâaâwideârangeâofâstrategiesâwithâwhichâtoâgrowâyourâfirm.âDecideâonâtheâstrategyâorâmixâofâstrategiesâyouâplanâtoâimplement,âandâputâinâplaceâaâworkableâplanâthatâbringsâitâallâtogether.âTheâkeyâcomponentsâofâtheâplanâare:
· Yourâmarketingâobjective;
· Yourâmarketingâstrategies;
· Yourâteamâmembersâ(whoâwillâbeâresponsibleâforâaction);âand
· Theâtimeâframesâwithinâwhichâtheyâwillâbeâworking.
Puttingâyourâplanâintoâoperationâisâdiscussedâlaterâinâthisâmoduleâ(Sectionâ3.8).
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3.4 Strategies for Coping with Increased Regulation and Competition
3.4.1 Increased Regulation
Thereâhasâbeenâanâenormousâincreaseâinâtheâamountâofâregulationâunderâwhichâtheâaccountingâprofessionâoperates.âThisâhasâ comeâ fromâbothâgovernmentâ andânon-governmentâ regulatorsâandâ showsânoâ signâofâslowingâdown.
Onâoneâhand,âthisâmeansâthereâwillâbeâaâcontinuedâstrongâdemandâforâaccountantsâandâbusinessâadvisers.âOnâtheâotherâhand,âmanyâpractitionersâwonderâhowâtheyâcanâstayâabreastâofâallâtheâchanges.âInâadditionâtoâtheâpressuresâthatâcomeâfromâkeepingâupâwithânewâregulationsâandârequirements,âthereâwillâbeâongoingâpressureâonâhowâtoâattractâandâretainâstaff.
Thereâareâinternalâandâexternalâstrategiesâforâcopingâwithâincreasedâregulation.
Internal strategies
Theâkeyâinternalâstrategyâisâregularâtrainingâforâyourâteam.âThisâtrainingâcanâbeâdoneâin-house,âorâwithâaâthird-partyâtrainingâorganization.âManyâofâtheâprofessionalâaccountingâbodiesâprovideâtraining,âandâsomeâprovideâtheâoptionâofâtrainingâon-site,âorâlectureâstyleâatâanotherâvenue.
On-siteâtrainingâisâbecomingâincreasinglyâpopular.âItâisâalsoâbecomingâpopularâforâaânumberâofâsmallerâfirmsâtoâjoinâtogetherâforâtrainingâsessions,âthusâsharingâtheâcostsâofâtheâtrainerâandâfacilities.âItâallowsâtheâtrainingâtoâ focusâmoreâ tightlyâonâ theâneedsâofâ theâgroup,â ratherâ thanâ theâbroad-basedâstyleâusedâ inâ lecture-typeâsituations.âAnotherâadvantageâofâ thisâ typeâofâ trainingâ isâ thatâ itâcanâbeâhighlightedâ inâ jobâ interviewsâwhenârecruitingânewâstaffâasâoneâofâtheâbenefitsâprovidedâbyâtheâfirmâtoâemployees.
Otherâin-houseâtrainingâstrategiesâincludeâonlineâlearning,âwhereâtheâinformationâisâwebcastâorâdownloadedâtoâtheâstaffâmemberâsâdesktopâwhereâtheyâcanâlearnâatâtheirâownâpaceâandâatâaâtimeâthatâsuitsâthem.
External strategies
Thereâareâaânumberâofâexternalâstrategiesâforâdealingâwithâincreasedâregulation:
· Utilize your professional association:âMostâprofessionalâassociationsâhaveâtechnicalâdepartmentsâthatâwriteâ technicalâbriefingâpapersâonâmostâregulationsâasâtheyâareâ issued.âEnsureâyouâmaximizeâyourâmembershipâandâtakeâadvantageâofâtheâresourcesâavailableâtoâyouâasâpartâofâyourâmembership.
· Form alliances with specialists:âAâfirmâcanâbuildâcloseârelationshipsâwithâotherâprofessionalsâwhoâhaveâspecialistâtechnicalâknowledgeâinâcertainâareas.âTheseâprofessionalsâcanâbeâcalledâonâtoâassistâwithâspecificâclientâmattersâasâtheyâarise.âTypicallyâtheâspecialistâinvoicesâtheâfirmâforâworkâdone.âTheâfirmâthenâcanâchooseâeitherâtoâpassâtheâfeeâonâtoâtheâclientâorâtoâabsorbâitâinâtheâfeeâtheyâeventuallyâchargeâtheâclient.
· Join professional networks:âAânumberâofâexternalâprofessionalânetworksâoperateâcommercially.âTheyâ areâ typicallyâ operatedâ andâ resourcedâ byâ accountingâ firms,â whichâ useâ themâ asâmarketingâvehicles.â Theâ informationâ theseâ networksâ provideâ isâ usuallyâ ofâ highâ standardâ andâ isâ internallyâgenerated.â Itâ isâ essentiallyâ aâ broader-basedâ approachâ toâ theâ allianceâ withâ specialistsâ modelâdiscussedâabove.
· Build âbuddy networksâ:âSmallerâfirmsâcanâcheckâwithâeachâotherâonâissuesâbeforeâescalatingâclientâmattersâtoâtheâhigherâlevelâ(andâcosts)âofâspecialistâadvisers.âTheyâtendâtoâbeâbasedâonârelationshipsâestablishedâthroughâprofessionalâassociations.âTheyâmayâmeetâregularly,âorânotâatâall,âdependingâonâtheâneedsâofâtheâgroup.âThisâisâaâhighlyâeffectiveâstrategy,âbutâallâparticipantsâneedâtoâcontributeâfairlyâequally;âotherwise,âthoseâcontributingâcanâfeelâtheyâareâcarryingâtheâgroup.
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· Join business associations:âBusinessâassociationsâcanâprovideâinformationâandâsupportâinâotherâbusiness-relatedâ areas,â suchâ asâ humanâ resourcesâ orâ occupationalâ healthâ andâ safety.â Examplesâincludeâchambersâofâcommerceâandâ industryâbodies.âTheyâalsoâprovideâanâopportunityâ toânetworkâandâbecomeâknownâinâanotherâcircleâofâbusinessâpeople.
3.4.2 Increased Competition
Notâonlyâareâaccountingâfirmsâunderâpressureâfromâincreasingâregulationsâandârequirements,âbutâthereâisâalsoâpressureâfromâincreasedâcompetition.âThisâcompetitionâcomesâfromâaânumberâofâsources,ânotâjustâotherâaccountingâfirms.âMoreâandâmore,âfirmsâseeâcompetitionâfrom:
· Overseas;
· Largeâpublicâcompaniesâandâinstitutions;âand
· Non-professionals.
Inâaâfreeâmarketplaceâyouâcanâtâpreventâcompetition.âTheâkeyâtoâyourâongoingâsuccessâisâhowâwellâyouâretainâyourâexistingâclientsâandâgrowâyourâfirmâatâtheâsameâtime.
Yourâabilityâtoâretainâclientsâisâdirectlyâlinkedâtoâyourâabilityâtoâserveâtheirâneedsânowâandâinâtheâfuture.âIfâyourâclientsâareâgrowing,âtheirârequirementsâareâalsoâgrowing.âThisâraisesâquestionsâthatâmayâimpactâtheâstrategicâdirectionâofâyourâfirm:
· Howâwillâyouâcopeâwithâyourâclientsââincreasingârequirements?
· Whatâifâtheyâoutgrowâyou?
· Whatâwillâthatâmeanâfinanciallyâforâyourâfirm?
Ifâyouâcannotâcontinueâtoâserviceâyourâclientsâasâtheirâneedsâgrow,âyouâwillâloseâthem,âbecauseâtheyâwillâseekâtheâassistanceâofâothersâwhoâcanâhelpâthem.
Asâforâincreasedâregulation,âoneâwayâtoâdealâwithâthisâisâtoâbecomeâbigger.âButâunlessâyouâmergeâwithâanotherâfirmâorâtakeâonâspecialistâpartnersâ(inâallâdisciplinesâofâbusiness),âyouâwillâbestâbeâservedâbyâincreasingâyourâassociationsâasâoutlinedâabove.
Takeâadvantageâofâ thoseâwithâspecialistâadvice,â joinâaâprofessionalânetwork,âorâbecomeâaâmemberâofâaâbusinessâassociation.âLetâyourâclientsâknowâthatâyouâhaveâtheseâassociationsâandâadditionalâresources,âlestâtheyâthinkâtheyâhaveâoutgrownâyouâandâlookâelsewhereâforâprofessionalâadvice.
3.4.3 Coping with Pricing Pressures
Theârecentâuncertaintiesâinâglobalâeconomiesâhaveâincreasedâtheâpressure,âespeciallyâonâSMPs,âtoâreduceâfees.âTheâfollowingâeightâ tipsâcanâhelpâSMPsâcopeâwithâ theâpressureâwhileâpreservingâ theâqualityâofâ theâprofessionalâservicesâtheyârender:
1. Expect fee pressures to continue.âTechnologicalâadvances,âglobalizationâandâ theâbenefitsâ fromâoutsourcingâ toâ cheaperâ offshoreâ contractorsâ mayâ promptâ clientsâ toâ keepâ upâ theâ heightenedâ feeâpressureâ longâafterâ theâglobalâ economyâhasâ recovered.âAlso,â clientsâmayâbeâdeterminedâ toâ keepâtheirâbillsâdownâandâmayâfeelâthatâallâprofessionalâservices,âincludingâlegalâandâaccounting,âmayânotâwarrantâtheâfeesâtheyâpaidâbeforeâtheâeconomicâdownturn.
2. Adopt new approaches to pricing.âInsteadâofâbillingâanâhourlyârate,âsetâpricesâforâservicesâsuchâasâbusinessâadvisoryâservicesâbasedâonâtheirâperceivedâorâestimatedâvalueâtoâtheâclient.âAlso,âpackagingâmoreâdesirableâservicesâwithâservicesâthatâareâessentialâbutâlessâdesirableâallowsâforâaâbroaderârangeâofâservicesâforâaâlargerâfee.
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3. Stress the value of services offered.âTalkâtoâclientsâregularlyâaboutâtheâbenefitsâofâtheâservicesâtheyâreceive.âCommunicationâisâanâimportantâpartâofâvalueâpricing.
4. Focus efforts on most valuable clients.âEvaluateâclients,âgroupâthemâandâofferâdifferentâserviceâlevelsâtoâdifferentâgroups,âespeciallyâforânon-auditâservicesâsuchâasâbusinessâadvisoryâorâtax.âThisâtechnique,âreferredâtoâasâyieldâmanagement,âisâusedâinâtheâairlineâindustryâtoâpriceâseatsâbyâtheâlevelâofâserviceâinâfirstâclass,âbusinessâclassâorâeconomyâsections.âSomeâclientsâwillâappreciate,âandâpayâfor,âfirstâclassâservice.âOthersâwillâpreferâtheâeconomyârate.
5. Leverage technology.âMaximizeâtheâuseâofâtechnologyâtoâimproveâprocessesâandâlowerâcostsâinâtheâfaceâofâstagnantâorâdecliningâfees.âCloudâcomputingâsolutionsâdeliverâtheâsameâservicesâlikeâpayrollâandâbookkeepingâforâlessâcost,âemailâcostsâlessâthanâregularâpostalâservices,âandâSkypeâisâcheaperâthanâtelephoneâorâin-personâmeetings.
6. Re-examine service offerings.âConsiderâcombiningâvalueâwithâadditionalâservicesâforâlittleâextraâcost,âorâprovideâtheâsameâforâlessâcost.âToâsetâtheâpracticeâapartâinâtheâmarketplace,âconsiderâspecializingâinânicheâmarketsâorâservices.âForâothers,âprovidingâaâbroadârangeâofâadvisoryâservicesâandâofferingâvalueâpricingâmayâproveâprofitable.
7. Find cheaper sources of supply.âReviewâtheâpracticeâsâsuppliersâandâlookâforâcompetitorsâofferingâbenefitsâtoânewâclientsâthatâmayâwarrantâswitching.âCompetitiveâpricingâandâchoiceâofâsuppliers,âfromâInternetâserviceâprovidersâtoâcomputerâhardwareâvendors,âmayâhaveâimprovedâconsiderablyâsinceâtheâpracticeâfirstâchoseâitsâsuppliers.
8. Tackle overhead.âSeekâtoâminimizeâwasteâandâmakeâtheâmostâefficientâuseâofâhumanâandâenvironmentalâresources,âincludingâworkspace,âenergyâandâconsumables.âToâoptimizeâutilizationâofâexpensiveâofficeâspace,âpracticesâmayâencourageâstaffâtoâperformâworkâatâclientsââpremisesâorâatâhomeâandâpre-bookâaâdeskâspaceâwhenâinâtheâoffice.âSimilarly,âpracticesâcouldâseekâtheâmostâefficientâuseâofâstaffâthroughâimprovedâworkloadâdistribution,âadequateâplanningâandâsupervisionâofâengagementsâandâdelegatingâworkâ toâ theâappropriateâ levels.âFlexibleâworkingâhoursâmayâavoidâstaffâ redundancies,âwhichâerodeâmoraleâandâmakeâitâdifficultâtoârecruitânewâstaff.âShiftingâroutineâworkâtoâmoreâjuniorâstaffâcanâalsoâhelpâcutâcosts,âbutâstaffâassignmentsâneedâtoâbeâmanagedâcarefullyâtoâkeepâupâtheâqualityâofâtheâresultsâandâavoidâdamageâtoâtheâpracticeâsâbrand.
3.5 Creating a Culture for Your Firm
Aâgoodâworkplaceâcultureâmeansâyouâandâyourâteamâenjoyâcomingâtoâworkâeveryâmorning.âMostâpeopleâoverlookâtheâfactâthatâeachâfirmâalreadyâhasâaâcultureâofâitsâown.âTheâquestionâis,âdoâyouâwantâtoâhaveâsomeâinputâintoâculture,âorâwillâyouâsimplyâletâitâlookâafterâitself?
Aâsupportiveâworkplaceâcultureâhasâbeenâassociatedâwithâaânumberâofâbenefitsâforâtheâemployeesâandâtheâfirmâincluding:
· Higherâlevelsâofâcommitment;
· Lowerâintentionsâtoâleave;
· Higherâlevelsâofâjobâsatisfaction;âand
· Lowerâlevelsâofâstress.
Ifâtheâcultureâisâright,âyouâhaveâtheârightâplatformâtoâbuildâtheâgrowthâyouâareâlookingâfor.
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3.5.1 Building a Productive Culture
Thereâareâmanyâwaysâtoâbuildâaâproductiveâcultureâinâyourâfirm.âLookâatâyourâcurrentâsituationâandâseekâwaysâtoâimproveâtheâcultureâbyâchangingâpeopleâsâattitudesâtoâtheirâenvironments,âeachâotherâandâthemselves.
First,â identifyâ anyâ deficienciesâ thatâ causeâ negativeâ attitudes.â Theseâ couldâ includeâ favoritism,â lackâ ofârecognitionâorâdifferentâsetsâofâstandardsâforâdifferentâemployees.
Thoseâwhoâgetâtheâbestâfromâtheirâteamsâinspireâaâpositiveâworkplaceâculture.âSomeâpositiveâinfluencesâinclude:
· Fairâandâequalâtreatmentâofâallâemployees;
· Openâandâhonestâcommunication;
· Achievementsârecognizedâandârewarded;
· Clear goals set out;
· Regularâtraining;
· Open management style;
· Regularâfeedback;âand
· Equalâopportunitiesâforâallâemployees.
Soâtakeâtheâchallengeâandâlookâtoâbuildâaâpositiveâworkplaceâcultureâinâyourâfirm.âTheâresultsâwillâsupportâyourâinitiative,âandâyouâwillâenjoyâworkâsoâmuchâmore.â(Caseâstudyâ3.3 in Appendixâ3.2âspecificallyâillustratesâworkplaceâculture.)
3.5.2 Customer Relationship Management Systems
Itâisâcriticalâforâfirmsâtoâestablishâlong-lastingârelationshipsâwithâtheirâcustomersâandâtoâcaptureâallâinteractionsâifâtheyâareâtoâprovideâtheâbestâcustomerâservicesâandâaddâvalue.âIntegratedâcustomerârelationshipâmanagementâ(CRM)âsystemâfunctionalityâisâbecomingâaâstandardâfeatureâofâaccountingâsystems.âNevertheless,âitâdoesâseemâthatâtheâadoptionâofâCRMâbyâtheâaccountancyâsectorâhasâbeenâlaggingâotherâsectorsâandâthereâisâstillâsomeâscepticismâasâtoâitsâvalue.
IntegratedâCRMâsystemsâcanârecordâallâinteractionsâwithâclientsâandâsetâalertsâforâwhenâaâclientâneedsâtoâbeâcontactedâorâanâactionâforâtheâclientâisârequired.âAâCRMâsystemâcanâprovideâgreaterâtransparencyâacrossâaâfirmâandâreduceâriskâbyâensuringâkeyâstaffâcanâaccessâtheârequiredâdataâandârespondâtoâcustomerârequestsâinâaâtimely,âprofessionalâmanner.âForâanâaccountingâfirm,âthisâhelpsâmanageâtheâriskâofâkeyâstaffâleavingâandâlosingâtheâclientâknowledgeâandâhistory.âItâalsoâallowsâforâmanagingâclientârelationshipsâduringâtimesâofâabsence.
CRMâsoftwareâtoolsâallowâdailyâworkâprocessesâtoâbeâstandardizedâandâworkloadâtoâbeâreducedâbyâavoidingâtheâneedâforâdataâre-entryâandâduplicationâbyâlinkingârecords.âAnâintegratedâCRMâsolutionâcan:
· Manageâyourâcustomerâdataâcentrallyâandâallowâ itâ toâbeâaccessedâfromâanywhere,âeliminatingâ theâneedâforâemailâsystems,âaccountingâsoftwareâorâspreadsheetsâtoâmanageâbusinessâcontacts.âCloud-basedâsystemsâfacilitateâthis;
· Manageâ documentsâ andâ knowledgeâ transferâ efficiently,â fromâ engagementâ letters,â contractsâ andâquotesâtoâdocumentedâadvice;
· Increaseâefficiencyâwithâautomatedâworkflows;
· Manageâcustomerârelationshipâdatabases,âincludingâsendingâtargetedâemailsâtoâcustomersâbasedâonâpreviousâtransactions;
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· Saveâ timeâ byâ pushingâ invoicesâ fromâ yourâ accountingâ systemâ automatically,â orâ establishâmonthlyâpaymentâarrangementsâ(thisâalsoâimprovesâcashâflow);
· Enableâe-businessâfunctionalityâbyâconnectingâyourâshoppingâcartâtoâyourâsoftwareâtoâcreateâaccountsâandâinvoicesâandâpaymentsâautomatically;
· Reduceâdoubleâentryâandâhumanâkeyingâerrors;âand
· Personalizeâemailsâtoâaâgroupâofâselectedâcontacts.
ToâgainâtheâbenefitâofâaâCRMâsystem,âyourâfirmâneedsâtoâensureâthatâallâinteractionsâbyâpartnersâandâstaffâareâcaptured.âManyâfirmsâstruggleâtoâestablishâsuchâaâcultureâandâreapâtheâbenefits.âAâfirmâneedsâtoâfirstâconsiderâwhetherâitâneedsâaâCRMâsoftwareâtoolâand,âifâitâdoes,âthenâcarefullyâanalyzeâtheâdifferentâofferings.
Manyâwillâ rightlyâargueâthatâ theyâdoânotâneedâsoftwareâsinceâtheyâkeepâtrackâofâclientârelationshipsâasâaâmatterâofâcourse.âHowever,âtheârealâquestionâis,âareâyouâreallyâasâclient-centricâasâyouâcouldâbe?âAndâifânot,âasâisâlikely,âhowâcouldâtechnologyâhelpâyou?âSoleâpractitionersâandâveryâsmallâfirmsâmayâfindâtheyâcanâkeepâabreastâofâclientârelationshipsâperfectlyâwellâwithoutâspecializedâsoftware.âButâforâlargerâpractices,âsayâwithâ30âclientsâorâmore,âspecializedâsoftwareâisâlikelyâtoâbeâtheâbestâwayâtoâhelpâmanageâclientârelationships.
WhenâchoosingânewâCRMâsoftware,âthereâareâcertainâfactorsâtoâconsider,âincluding:
· Budget:âMoneyâshouldânotâbeâtheâsoleâfactorâinâtheâchoiceâofâaânewâsystem.âTheâphraseâyou get what you pay forâisâcompletelyâtrueâinâmanyâsituations,âandâespeciallyâwhenâconsideringânewâsoftware.
· Brands:â Thereâ areâ hundredsâ ofâ applicationsâ inâ theâmarketâ andâ someâ areâmoreâwell-knownâ thanâothers.âAvoidâchoosingâsoftwareâbasedâonâbrandâaloneâaâknownâbrandâmayânotâbeâtheârightâchoiceâforâyourâfirm.âLookâforâwhatâitâcanâdoâforâyouâandâyourâfirm.
· Advice:âIfâyouâseekâadviceâfromâanâadviser,âbeâsureâtheyâhaveâdirectâexperienceâofâsoftwareâsolutions.
· Competitors and peers:âAskâwhatâyourâpeersâorâcompetitorsâuse,âespeciallyâthoseâyouâmostâadmire.
· Assess needs:â Identifyâ exactlyâwhatâ itâ isâ youâ needâ andâ doâ notâ restrictâ yourâ searchâ toâ accountsâsoftware.âAâslightlyâdifferentâsolutionâmayâenableâyouâ toâ integrateâyourâCRMâwithâworkâ inâprocessâmanagement.
· Scope:âAskâtheâsoftwareâproviderâtoâshowâyouâhowâitâwillâlookâonceâitâisâimplemented.âEstablishâaâplanâtogetherâsoâthatâyouâareâbothâonâtheâsameâpageâandâtheyâdeliverâonâyourâexpectations.
Firmsâthatâignoreâoneâorâmoreâofâtheseâimportantâfactorsâriskâmakingâaâcostlyâmistake.âSomeâfirmsâhaveâdiscardedâsoftwareâafterâ lessâ thanâ twoâyearsâbecauseâ theyâdidânotâevaluateâproperlyâandâsubsequentlyâfoundâitâdidânotâmeetâtheirâneeds.
3.6 Identifying Target Clients and New Service Opportunities
Whileâgrowthâisâimportant,âitâisâalsoâimportantâthatâyouâlookâtoâachieveâtargetedâgrowth.âThisâmeansâtargetingâtheâsortâofâclientsâyouâwishâtoâworkâwithâandâbecomingâmoreâselectiveâwithâtheâclientsâyouâtakeâon.
Inâtheâearlyâstagesâofâaâfirmâsâlife,âmanyâfirmsâtakeâonânearlyâallâclients.âThatâsâbecauseâtheâneedâforâbuildingâtheâclientâbaseâisâmostâimportant.âHowever,âasâyourâfirmâmatures,âyouâcanâbeâmoreâselectiveâaboutâthoseâyouâworkâwith.
Asâyouâplanâyourâgrowthâstrategies,âyouâwillâbeâlookingâforâgrowthâthat:
· Comesâfromâaâtypeâofâworkâyouâspecializeâin,âorâpreferâdoing;
· Producesâaâsuperiorâlevelâofâprofitability;â
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· Comesâfromâaâpreferredâtypeâofâclient;âandâ
· Isâsuitedâtoâyourâfirmâandâteamâmix.
Matureâfirmsâshouldâbeâworkingâ towardâ refiningâ theirâ clientâbaseâbyâ increasingâ theânumberâofâclientsâofâyourâpreferredâtype.âWhenâthisâapproachâisâsuccessfullyâimplemented,âitâtypicallyâproducesâhigherâlevelsâofâprofitability,âhigherâlevelsâofâworkâsatisfaction,âlowerâlevelsâofâstressâandâpressure,âandâtheâabilityâtoâincreaseâyourâlevelâofâspecialization.
Canâyouâidentifyâyourâfirmâsâtargetâclient?âOfâcourse,âthereâisânoâcorrectâanswer.âDifferentâfirmsâwillâhaveâtargetâclientsâwithâdifferentâcharacteristics.
TheâquestionsâinâTableâ3.3âareâusefulâwhenâdecidingâonâwhetherâtoâacceptâclientsâintoâtheâfirm.âAccountantsâtypicallyâassessâclientsâbyâtheirâprofitabilityâpotentialâ toâtheirâfirm.âHowever,â thereâareâotherânon-financialâcriteriaâthatâshouldâalsoâbeâapplied.
Table 3.3 Assessingâprospectiveâclients
Question Answer/Comment
1. Doâweâlikeâworkingâwithâthem?
2. Doâtheyârespectâus,âourâopinions,âourâworkâandâourâteam?
3. Doâtheyârepresentâaâriskâtoâourâbusiness?
4. Canâweârelateâtoâthem?
5. Doâtheyârelateâwellâtoâusâandâourâteam?
6. Willâtheyâutilizeâaânumberâofâourâservices?
7. Willâtheyâpayâtheirâbillsâonâtime?
8. Willâtheyâworkâco-operativelyâwithâusâwhenârequired?
9. Doâtheyâcauseâusâstress?
10. Willâitâbeâaâculturalâgoodâfit?
11. Canâweâaddâvalueâtoâtheirâbusiness?
12. Willâtheyâaddâvalueâtoâourâbusiness?
13. Wouldâweâbeâproudâtoâintroduceâthemâasâclientsâofâourâfirm?
14. Wouldâtheyâbeâproudâtoâintroduceâusâasâtheirâaccountants?
15. Doâtheyâobserveâethicalâbusinessâprinciples?
16. Willâtheyâaskâusâtoâcompromiseâourâethicalâvalues?
17. Isâitâjustâaboutâtheâmoney?
18. ConsiderâinâlightâofâISQC 1 andâISAâ220.
Hereâareâsomeâofâtheâwaysâyouâmightâidentifyâyourâtargetâclients:
· Business sector:â forâ example,â publicâ companies,â smallâ businesses,â not-for-profitâ organizations,âfranchises,âinvestors;
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· Industry sector:âforâexample,âagriculture,âconstruction,âretail,ârealâestate,âhealthâservices;
· Size of business:âforâexample,ârevenueâofâgreaterâthanâ$2âmillion,âorâstaffâlevelsâofâgreaterâthanâtenâemployees,âorâsubcontractors;
· Minimum fee level:âforâexample,âminimumâfeeâlevelâtoâtheâfirmâofâ$2,000âperâannum;âor
· Services utilized:âforâexample,âclientsâwhoâutilizeâatâleastâthreeâofâyourâservices.
Thereâisâanâalmostâunlimitedârangeâofâpossibilities.âYourâtargetâclientâmayâbeâanyâbusinessâthatâsuitsâyourâfirmâandâaddsâvalueâtoâit.
Theâkeyâisâtoâidentifyâyourâtargetâclientâandâthenâplanâyourâmarketingâaroundâthatâclientâtype.âAlwaysâfocusâyourâmarketingâonâorâaboveâyourâtargetâclient,âneverâbelow.
Youâwillâattractâclientsâtoâyourâfirmâwhoâdoânotâfitâyourâtargetâclientâprofile.âTheyâwillâcomeâbecauseâofâreferral,âotherâadvertising,âorâchance.âYouâwillâneedâtoâchooseâwhetherâtoâtakeâthemâon,âandâthatâisâaâseparateâdecision.
Itâisâimportantâthatâyouâinvestâyourâmarketingâdollarsâinâareasâthatâwillâattractâyourâtargetâclientâtype.âYouâdonâtâwantâtoâinvestâyourâmoney,âtimeâandâenergyâinâattractingâclientsâthatâareâoutsideâyourâareaâofâfocus.
Whileâitâisâdesirableâtoâhaveâaâtargetâclientâandâtoâgrowâyourâfeeâbaseâthroughâtheseâclients,âyouâdonâtâneedâtoâexcludeâallâotherâclients.âInâfact,âitâisâoftenâaâgoodâideaâtoâhaveâaâmixâofâclientsâinâtermsâofâsize,âcomplexityâofâworkâandâfeeâlevels.âThisâspreadâcanâprovideâyouâwithâtheâscopeâforâdevelopmentâofâyourâteamâandânewlyâqualifiedâaccountants.
Thisâappliesâtoâbothâareasâofâworkâcomplexityâandâbuildingâclientâserviceâexperience.
Onceâyouâhaveâidentifiedâyourâtargetâclient,âyourâmarketingâshouldâworkâtowardâbuildingâtheâprofileâofâyourâfirmâwithinâthoseâtargetâclientâcommunities.
3.6.1 Business Advisory Services
Theâ IFACâ SMPâ Committeeâ hasâ longâ recognizedâ theâ growthâ potentialâ ofâ thisâ serviceâ lineâ andâ activelyâencouragedâtheâglobalâSMPâconstituencyâtoâseriouslyâconsiderâbuildingâtheirâbusinessâadvisoryâactivities.âRecentâ IFACâGlobalâSMPâSurveysâ haveâ foundâ thatâ practiceâ feeâ revenueâ fromâadvisoryâ andâ consultingâservicesâareâgrowingâ fasterâ thanâ traditionalâcomplianceâservicesâ likeâauditâandâaccounting.â IncreasinglyâSMPs,â likeâ theirâ largerâ counterparts,â areâ establishingâ orâ expandingâ existingâ advisoryâ andâ consultingâservices.âMoreover,â IFACâ researchâ (The Role of SMPs in Providing Business Support to SMEs: New Evidence)â suggestsâ thatâprofessionalâaccountantsâareâwellâplacedâ toâprovideâsuchâservicesâbecauseâofâtheirâreputationâasâbeingâcompetent,âtrustworthy,âandâresponsive.âTrustâ isâtheâkeyâtoâsuccessâinâbuildingâthisâserviceâarea.âTheâclientâneedsâtoâbelieveâthatâtheâaccountantâsâadviceâwillâhaveâpositiveâconsequences.âInâthisâcontext,âtrustâhasâthreeâdimensions:âcapability,âwhichârefersâtoâtheâclientâsâbeliefâthatâtheâaccountantâhasâtheârequiredâexpertise,âskills,âandâcompetencesâtoâperformâtheâjobâeffectively;âhonestyâorâintegrity,âorâtheâclientâsâbeliefâthatâtheâaccountantâwillâkeepâhisâorâherâpromisesâandâadhereâtoâaâsetâofâprinciplesâthatâtheâclientâfindsâacceptable;âandâbenevolence,âwhichâpertainsâtoâtheâbeliefâthatâtheâaccountantâisâinterestedâinâtheâclientâsâwelfare.
Businessâ advisoryâ servicesâ canâ beâ usedâ toâ expandâ theâ serviceâ offeringâ ofâ aâ firmâ beyondâ traditionalâaccountingâservicesâsuchâasâtaxâandâaccountsâpreparation.âTheseâservicesâareâsometimesâalsoâreferredâtoâ asâ consulting,â managementâ advisoryâ orâ outsourcedâ solutions.â Businessâ adviceâ isâ consideredâ toâ beâsignificantlyâenhancedâwhenâprovidedâbyâanâaccountantâwhoâhasâgainedâknowledgeâandâ insightsâ intoâaâclientâsâfinancesâandâbusinessâenvironment,âasâaâresultâofâhavingâprovidedâtraditionalâaccountingâservicesâpreviously.â Indeed,ânewâadvisory/consultingâclientsâareâoftenâdrivenâprimarilyâbyâexistingâcustomer-clientârelationships.âRecentâ IFACâGlobalâSMPâSurveyâfindingsâ identifiedâtheâmostâ frequentlyâprovidedâservicesâ
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wereâ taxâ planning,â corporateâ advisoryâ (includingâ adviceâ onâmergersâ andâ acquisitions),â valuations,â andâmanagementâaccountingâ(includingâplanning,âperformance,âandâriskâmanagement).
Businessâadvisoryâservicesâareâbecomingâaâgrowthâareaâforâfirmsâwishingâtoâgrowâtheirârevenueâeitherâfromâtheirâexistingâclientsâand/orâbyâattractingânewâclients.â
PreviousâIFACâsurveysâhaveâindicatedâthatâmostâofâtheâgrowthâinâfeeârevenueâwasâexpectedâtoâcomeâfromânewâclients.âHowever,âtheâsurveysârevealedâvariousâimpedimentsâtoâexpandingâservicesâinâthisâarea,âmostânotably,âinsufficientâpartnerâtimeâandâmarketingâservicesâtoâclients.
Itâmakesâsenseâtoâaâbusinessâforâanâaccountantâtoâconsolidateâexistingâinformationâandâdevelopâaâbusinessâorâpersonalâfinancialâplanâorâstrategyâthatâcanâenhanceâbusinessâperformance.
Commonâbusinessâadvisoryâserviceâmodelsâinclude:
· Businessâ managementâ andâ profitâ improvement,â includingâ businessâ analysisâ andâ strategy;âmanagementâinformationâandâcontrolâsystems;âcostâanalysisâandâreduction;âcashâflowâanalysisâandâforecasting;âidentifyingâalternativeârevenueâstreams;âfinancingâadvice;âdebtâconsolidation;âmergers;ânegotiationsâtoâbuyâorâsellâaâbusiness;âandâinventoryâmanagement;
· Corporateârestructuringâand/orâcompanyârescue;
· Outsourcedâfinanceâdepartmentâservices,âincludingâbookkeepingâservices,âpayrollâandâsoftware;
· Outsourcedâhumanâ resources,â includingâ remunerationâpackaging,â shareâoptions,â bonusâ schemesâandânon-cashâbenefits;
· Assetâ protectionâ services,â includingâ structuralâ adviceâ (includingâ trustsâ andâ tax),â riskâ assessment,âdisasterâplanningâandârecovery,âpensionâplanningâandâinsurance;
· OutsourcedâCFOâservices;
· Successionâplanningâsolutions;âand
· Businessâmentoringâorâcoaching.
Thereâareânumerousâopportunitiesâavailableâtoâfirmsâwishingâtoâstepâoutsideâtheirâtraditionalâserviceâareasâandâexpandâtheirâserviceâofferingâ intoâbusinessâadvisoryâservices.âThisâdemandâisâbeingâdrivenânotâonlyâbyâfirmsâwishingâtoâincreaseâprofitability,âbutâalsoâbyâclientsâwhoâneedâtoâcompeteâinâaâglobalizedâbusinessâenvironmentâ andâ communitiesâ demandingâ higherâ levelsâ ofâ businessâ sustainabilityâ reporting.âWhileâ theâconceptâofâprovidingâconsultingâservicesâpresentsâaâchallengeâtoâpractitioners,âmanyâhaveâcomeâtoârealizeâthatâclientsâvalueâadviceâonâgrowingâtheirâbusinessâmuchâmoreâthanâtraditionalâaccountingâservices.
TechnologyâisâenablingâSMPsâtoâworkâinâaâglobalâeconomyâwhereâbordersâareânoâlongerârelevant.âOutsourcedâorâ offâ shoredâ complianceâ servicesâ canâ oftenâ beâ accessedâ atâmuchâ lowerâ pricesâmeaningâ thatâ thereâ isâincreasedâpressureâonâsomeâfirmsâtoâexpandâtheirâserviceâoffering.
Aârelativelyânewâbutâfastâgrowingâserviceâareaâforâaccountantsâisâthatâofâsustainabilityâreportingâandâadvisingâbusinessesâonâhowâtoâbeâmoreâsustainable.âManyâorganizationsâareâkeenâtoâknowâhowâtoâdoâmoreâwithâlessâasâthisâmayâimproveâtheâbottomâline.âAccountantsâcanâadviseâonâtheâbenefitsâofâreducingâenergyâcostsâandâpollution,âfromâsimpleâbehavioralâchangesâaimedâatâeliminatingâwaste,âtoâinvestmentâinânewâequipmentâandâalternateâsourcesâofâenergy,âtoâdevelopingâanâenvironmentalâmanagementâsystem.âAccountantsâcanâalsoâ assistâwithâ theâ preparationâ ofâ sustainabilityâ andâ integratedâ reportsâ andâ theâ provisionâ ofâ assuranceâthereon.âEnvironmentâmanagementâsystemsâ(EMS),âmeanwhile,âallowâbusinessesâtoâidentifyâandâcontrolâtheâenvironmentalâimpactâofâtheirâactivities,âproductsâandâservices;âsetâandâachieveâenvironmentalâtargets;âandâdemonstrativeâthatâtheâtargetsâhaveâbeenâachieved.âTheâIFACâSustainabilityâFrameworkâ(2011)âprovidesâaâstartingâpointâforâfirmsâwishingâtoâexploreâtheseâservicesâfurther.
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TheâfollowingâsevenâtipsâcanâhelpâSMPsâbuildâorâlayâtheâgroundworkâforâaâbusinessâadvisoryâpractice.
1. Modify your mission statement, vision and plan:âWhenâexpanding,âorâchangingâtheâdirectionâofâyourâpractice,âsetâoutâaâclearâvisionâforâtheâfutureâandâaâroadmapâforâhowâtoâgetâthere.âYouâshouldâalsoârevisitâyourâmissionâstatementâandâadjustâitâasâneededâtoâreflectâyourâpracticeâsâmodifiedâorâexpandedâserviceâofferings,âsuchâasââWeâareâdedicatedâtoâaddingâandâsustainingâvalueâforâfamiliesâandâtheirâbusinesses.â
2. Educate and train your people:â Providingâ high-qualityâ businessâ advisoryâ servicesâ demandsâ aâdifferentâskillsâbaseâthanâthatâtoâprovideâtraditionalâaccountancy-basedâservices.âYouâcanâdevelopâtheâcapacityâforâbusinessâadvisoryâbyâexpandingâbothâtheâtechnicalâandâsoftâskillsâofâexistingâstaff.âSomeâaccountantsâcanâmakeâtheâtransitionâtoâbusinessâadviserâthroughâexperienceâandâself-development,âwhileâothersâmayâneedâtrainingâorâcoaching.
3. Focus on a specific industry sector or specialization:âFewâSMPsâwillâbeâableâtoâgainâandâmaintainâtheâknowledgeâandâskillsânecessaryâ toâbeâcompetentâ inâallâareasâofâbusinessâadvisory.âTherefore,âSMPsâ shouldâ considerâ carvingâ outâ aâ nicheâ andâ participatingâ inâ aâ referralâ networkâ ofâ SMPsâ thatâcanâ provideâ theâ otherâ services.âAâ commonâmodelâ isâ toâ focusâ onâ aâ specificâ industryâ sector,â suchâasâ hospitality,â orâ toâ developâ aâ specialization,â suchâasâ sustainableâ businessâ practices,â inâ orderâ toâdifferentiateâyourâpracticeâfromâtheâcompetition.
4. Develop relationships with other firms:âReferralânetworksâofferâmanyâpotentialâadvantages,âsuchâasâhelpingâyourâpracticeâ increaseâ itsâclientâbase.âParticipatingâ inâaânetworkâ isâanâeffectiveâwayâ toâsatisfyâtheâincreasingâbreadthâofâdemandsâfromâSMEâclientsâandâcanâhelpâdemonstrateâtoânewâclientsâthatâyouâhaveâtheâcapabilityâofâaâlargerâpractice.âReferralânetworksâcanâextendâbeyondâaccountancyâtoâareasâsuchâasâlegal,âHRâandâIT.
5. Promote the practice to existing and new clients:âPromotingâandâmarketingâyourâpractice,âandâtheâvalueâofâyourâservices,âwillâbeâcrucialâtoâsuccess.âThereâareâaânumberâofâreasonsâwhyâSMEsâchooseâSMPsâtoâprovideâbusinessâadvisoryâservicesâincludingâtheirâreputationâforâtrust,âcompetencyâandâresponsiveness.âSMPsâshouldâleverageâtheseâqualitiesâbyâpromotingâthemâtoâpotentialâclients,âwhoâareâoftenâunawareâthatâtheirâprofessionalâaccountantâcanâprovideâtheseâservices.âAsâaccountantsâoftenâhaveâlittleâorânoâexpertiseâorâexperienceâinâpromotionâorâmarketing,âyouâmayâwantâtoâhireâaâmarketingâconsultantâorâtrainâanâexistingâemployeeâtoâdoâthis.âYourâmarketingâexpertâcanâhelpâyouâdetermineâifâyouâneedâtoâchangeâtheâwayâyourâservicesâareâmarketedâandâhelpâyouâexploreânewâchannels,âsuchâasâsocialâmedia.
6. Change your business model:âBusinessâadvisoryâservicesâmayârequireâaâdifferentâbusinessâmodelâfromâthatâofâtraditionalâaccountancy-basedâservices.âForâexample,âbusinessâadvisoryâservicesâmayâbeâbetterâsuitedâtoâaâbusinessâmodelâbasedâonâsellingâintellectualâcapitalâratherâthanâtime.âThisâlendsâitselfâtoâvalueâpricing.âToâsupplementâthis,âyouâmightâwishâtoâemulateâtheâairlineâindustryâmodel,âwhichâdividesâtheirâclientâbaseâintoâpremiumâandâeconomyâandâoffersâaâdifferentâvalueâpropositionâtoâeachâforâtheâpremiumâclients,âaâhigh-endâservice,âatâaâcorrespondinglyâhighâprice,âandâforâtheâeconomyâclients,âaâbasicâânoâfrillsââserviceâthatâfreesâupâtimeâtoâdevoteâtoâtheâpremiumâclients.
7. Embrace technology:âAdvancesâinâtechnologyâpresentâaâsignificantâopportunityâforâSMPsâtoâoperateâmoreâ efficiently,â reduceâ costs,â andâ offerâ additionalâ value-addedâ services.â Cloudâ computing,â forâexample,âallowsâSMPsâtoâmoreâactivelyâengageâwithâtheirâSMEâclientsâinâaââreal-timeââenvironmentâandâofferâservicesâsuchâasâvirtualâCFOâcostâeffectively.
IFACâsâGood Practice Checklist for Small Business canâbeâusedâbyâpractitionersâtoâhelpâthemâdetermineâwhatâ typeâofâassistanceâaâclientâmayâneed.â IFACâalsoâhasâaâseriesâofâ videoâ interviewsâofâpractitioners,âhostedâonâtheâGlobalâKnowledgeâGateway,âofferingâtipsâonâbuildingâaâbusinessâadvisoryâpractice.âTheseâshortâinterviewsâprovideâanâopportunityâforâaccountantsâtoâcompareâandâcontrastâdifferentâapproachesâandâtoâinformâtheirâownâthinkingâwhenâcontemplatingâexpansionâintoâtheâbusinessâadvisoryâspace.
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3.6.2 Other Emerging Services
Givenâ theirâfluencyâwithâfinancialâmatters,âaccountantsâareâwellâplacedâ toâofferâadviceâ toâhighânetâworthâindividuals,âwhoâmayâthemselvesâbeâbusinessâowners,âonâmanagingâtheirâwealth.âWealthâmanagement,âorâfinancialâplanning,âcanâproveâaânaturalâextensionâtoâtheâservicesâcurrentlyârenderedâtoâclients,âforâexample,âtaxâplanningâtoâowner-managedâsmallâbusinesses.âWealthâmanagementâisânotâaboutâsales,âbutâratherâbeingâaâtrustedâfinancialâ(orâprivateâclient)âadviser.âJustâasâwithâbusinessâadvisory,âtrustâisâtheâkeyâtoâsuccessâinâbuildingâthisâserviceâarea,âarguablyâevenâmoreâsoâasâoneâisâdealingâwithâindividualsâratherâthanâorganizations.
Firmsâconsideringâmovingâintoâwealthâmanagementâwillâneedâtoâcarefullyâexamineâanyârelevantâregulationsârelatingâtoâfinancialâservicesâinâtheirâ jurisdiction.âInâsomeâjurisdictions,âtheâmostâpopularârouteâchosenâbyâaccountantsâ hasâ beenâ toâ formâaâ jointâ ventureâwithâ aâ regulatedâ financialâ servicesâ company.âOneâ ofâ theâdrawbacksâofâthisâapproachâisâthatâtheâfirmâmayâlackâtheâabilityâtoâexerciseâqualityâcontrolâoverâtheâfinancialâservicesâadvisersâputâinâfrontâofâitsâclients.âAnâalternative,âlocalâregulationsâpermitting,âisâforâtheâregulatedâfinancialâservicesâbusinessâtoâbeâhousedâinâaâseparateâlegalâentity,âwhichâisâfullyâownedâandâcontrolledâbyâtheâfirmâsâpartners.âHowever,âthisâstructureâisânotâwithoutâitsâchallenges,âoneâbeingâthatâofâcombiningâtheâdifferentâculturesâofâaccountancyâandâfinancialâservices.
Inâ addition,â accountantsâmayâ haveâ aâ roleâ toâ playâ inâ theâ provisionâ ofâ eldercareâ services,â especiallyâ theâfinancingâaspect.âEldercareâservicesâmeetâ theâchangingâneedsâofâanâagingâpopulationâandâaimsâtoâhelpâolderâcitizensâliveâindependently.âInâmanyâwesternâcountries,âtheâelderlyâpopulationâasâaâpercentageâofâtheâtotalâpopulationâisâgrowingâfastâandâsoâtheâdemandâforâtheseâservicesâwillâ increase.âTheâservicesâaimâtoâassureâthatâtheâfinancial,âmedicalâandâresidentialâneedsâofâtheâagingâpopulationâareâmet.
3.7 Building a Brand, Marketing and Promotion
3.7.1 Building a Brand
Brandingâisâanâimportantâareaâofâmarketing.âToâmakeâyourâmarketingâasâeffectiveâasâpossible,âyouâneedâtoâbeâsendingâoutâclearâmessages.âTheseâmessagesâneedâtoâencompassâyourâbrand.âTheyâshouldânotâonlyâbuildâonâit,âbutâleverageâitâasâwell.
Youâmightâthink,ââIâmâonlyâaâsmallâfirmâisâbrandingâreallyâthatâimportantâtoâme?âIsnâtâitâonlyâforâbigâbusiness?ââBrandâisâimportant,âparticularlyâifâyouâareâplanningâtoâgrow.
Manyâcompaniesâinvestâmillionsâofâdollarsâinâbrandâdevelopment.âIfâyouâlookâatâsomeâofâtheirâadvertising,âyouâwillânoticeâthatâtheyâdonâtâadvertiseâaâsingleâproductâorâservice.âTheyâpromoteâtheirâbrandsâasâaâwhole.âOneâreasonâisâtheâcostâofâacquisitionâofâbusiness.âThisâisâaâmajorâissueâforâmatureâbusinesses,âandâtheâcostâtendsâtoâbeâonâtheâincreaseâdueâtoâtheâlevelâofâcompetition.âInâbuildingâtheirâbrands,âtheyâtryâtoâestablishâaârelationshipâwithâtheirâclientâbaseâandâbroaderâmarketâthatâencouragesâpeopleâtoâdealâwithâthem.âTheâbrandâandâtheâfeelings,âemotionsâandâconnotationsâthatâcomeâwithâitâareâpowerfulâenoughâtoâinfluenceâconsumerâchoice.
Youâcanâseeâ thisâwithâmajorâ internationalâ companiesâ likeâCoca-Cola,âMcDonaldâs,âKelloggâsâandâVirgin.âEachâ investsâheavilyâ inâ itsâ brand.âTheyâ realizeâ thatâ ifâ theyâareâ successfulâ inâ buildingâ theirâ brand,â itâwillâtranslateâintoâincreasedâsalesâandâanâincreaseâinâtheâvalueâofâtheirâgoodwill.
Lookâatâyourâownâprofessionalâbody.âYouâmayâseeâthatâitâhasâinvestedâheavilyâinâbuildingâitsâbrand.âDoneâwell,âbrandingâcan:
· Bringâyourâmarketâtoâyou;
· Driveâdownâtheâcostâofâacquisitionâofânewâclients;
· Openâupâbusinessâopportunitiesâbasedâonâmarketâperceptions;
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· Reinforceâtheâconfidenceâandâcomfortâlevelsâofâyourâexistingâclientâbase;âand
· Buildâtheâvalueâofâyourâgoodwill.
Yourâbrandâisâtheâmessageâaboutâyourâfirmâthatâyouâwantâtoâsendâtoâtheâmarket.âItâpervadesâallâareasâofâyourâfirm,âandâgoesâbeyondâyourâlogoâandâletterhead.âItâcoversâtheâservicesâyouâoffer,âtheâwayâyouâdealâwithâclients,âtheâimageâofâtheâfirmâyouâwantâtoâconvey.âItâbecomesâtheâbannerâthatâyouâmarketâandâsitsâoverâallâtheâservicesâyouâoffer.âBrandingâincludesâyourâcommunication,âyourâpresentationsâandâyourâstyle.
Specifically,âitâmeansâtheâwayâyourâwebsiteâlooks,âtheâuniformsâyourâteamâwears,âtheâgraphicâdesignâworkâandâlogosâusedâinâyourâcommunicationâandâpresentations.âItâalsoâincludesâtheâwayâyouâinteractâwithâclientsâandâstaff,âevenâdownâtoâtheâwordsâusedâonâtheâphone.
Byâbuildingâandâpromotingâyourâbrand,âyouâareâestablishingâexpectationsâatâaâhighâlevelâinâtheâmindâofâtheâmarket.âWhenâyouâthenâdeliverâtheâactualâserviceâforâinstance,âtheâfinancialâstatementsâorâtaxâreturnsâtheâaccuracy,âpresentation,âandâlookâandâfeelâofâyourâmaterialâneedsâtoâbeâconsistentâwithâtheâexpectationsâyouâhaveâset.âYourâclientsâwantâtheâdeliveryâtoâmeetâtheirâexpectationsâexpectationsâwhichâyouâhaveâset.
Onceâyouâhaveâresolvedâyourâbrandâidentity,âyouâneedâtoâensureâyouâhaveâabsoluteâconsistencyâinâyourâbrandâmessage.âEverythingâwithinâyourâfirm,âandâallâtheâmaterialâthatâcomesâoutâofâyourâfirm,âneedsâtoâhaveâbrandâconsistency.
Theâfollowingâchecklistâprovidesâyouâwithâaâguideâtoâapproachingâtheâissueâofâbrandâidentity.
Table 3.4 Brandingâchecklist
Brand Item Answer/Comment
Doâweâpresentâourâbrandâconsistentlyâwith:
1. Our logo
2. Letterhead,âbusinessâcards,ââwithâcomplimentsââslips,âfonts
3. Theâreportsâweâpresentâtoâclients
4. Theâwayâweâspeakâandâengageâwithâclients
5. Theâwayâweâspeakâandâengageâwithâourâteam
6. Ourâofficeâpremises
7. Ourâansweringâmachine/voicemail
8. Ourâemailsâandâsalutations
9. Ourâattire,âdressâstandardsâandâuniform
10. Ourâscreensavers
11. Allâwrittenâcommunicationâwithâclients:âletters,âreports,âproposals,âquotations
12. Allâverbalâcommunicationâwithâclientsâorâprospects
13. Seminarâprogramsâandâmaterials
14. Marketingâandâadvertisingâmaterial
15. Clientâfunctionsâandâevents
16. Teamâmeetingsâandâgatherings
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3.7.2 Marketing and Promotion
Marketingâisâaâpowerfulâtoolâthatâcanâtransformâbusinessesâandâsignificantlyâaddâtoâtheâgrowthâofâaâfirm.âHowever,âmarketingâ isâundergoingârapidâchange,âwithânewâtechnologiesâalteringâhowâfirmsâconnectâwithâtheirâclients.âFurthermore,âwhileâtheâultimateâaimâofâmarketingâandâpromotingâprofessionalâservicesâmayâbeâtoâgetânewâclients,âgrowingâaâsuccessfulâfirmâisâaâfunctionâofâkeepingâaâfirmârelevantâtoâtheâchangingâneedsâofâtheâclienteleâ(Marcus,â2012).2
Theâaimâofâmarketingâisâtoâacquire,âretain,âandâsatisfyâclients.âWithoutâtheirâclients,âaccountingâfirmsâdonâtâexist!âCompaniesâthatâareâmostâsuccessfulâhaveâsevenâkeyâcharacteristics:
· Aâgoodâunderstandingâofâtheirâclients;
· Stronglyâdefinedâmarkets;
· Theâabilityâtoâmotivateâemployeesâtoâprovideâhigh-qualityâservicesâforâclients;
· Anâemphasisâonâtheâbusinessâtoâserveâandâsatisfyâclients;
· Aâstrongâbrandâfocus;
· Theâabilityâtoârespondâtoâclientâneedsâandâdriveânewâinnovations;âand
· Theâabilityâtoâattractâandâretainâclients.
Marketingâneedsâtoâcoverâallâaspectsâofâtheâfirm.âAâfirmâwithâaâmarketingâfocusâwillâconcentrateâon:
· Client orientation: attentionâtoâtheâneedsâofâtheâclient;
· Sustainable competitive advantage: differentiateâtheâfirmâfromâtheâcompetition;âand
· Long-term profit: aâclient-orientedâcompanyâbalancingâtheâeffortsâtoâsatisfyâclientsâwithâtheâneedâtoâgenerateâprofitâoverâtheâlongâterm.
Traditionally,âmarketingâactivitiesâwereâcommonlyâreferredâtoâasâtheâ4âPsâandâwereââfirm-centricâ/inward-looking:
· Product;
· Price;
· Promotion;âand
· Place.
However,âtheâemphasisâisânowâchangingâtowardâaââclient-centricâ/outward-lookingâfocus:
· Client solution: theââproductââorâservice;
· Client cost: theâprice;
· Convenience: theâplace;âand
· Communication: theâpromotionâandâongoingâengagement.
Differentiation
Whatâisâitâthatâmakesâyourâfirmâdifferent?âWhyâshouldâsomeoneâchooseâyou?
Theseâareâtwoâveryâgoodâquestions.âIfâyouâdonâtâhaveâveryâgoodâanswers,âthenâreadâon.âThisâwillâbeâaâveryâimportantâsectionâforâyou.
2âMarcus,âBruceâW.âProfessional Services Marketing 3.0,âNewâYork:âBayâStreetâGroupâLLC,â2012).
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Competitionâisâincreasing.âThousandsâofâaccountantsâprovideâsimilarâservices.âThenâthereâareâallâtheâotherâserviceâprovidersâwhoâwouldâlikeâtoâworkâwithâyourâclientsâinâtheâotherâareasâwhereâyouâmayâprovideâservices.âThereâareâmanyâbusinessesâpromotingâthemselvesâandâcompetingâforâsimilarâmarketâsegments.
Yourâclientsâandâpotentialâclientsâwillâneedâ toâdecideâwhomâtheyâengageâ toâactâ forâ them.â Inâmakingâ thisâdecision,âtheyâareâmoreâlikelyâtoâbeâinfluencedâbyâdifferencesâbetweenâyourâfirmâandâyourâcompetitorsâthanâbyâsimilarities.
Whyâ doâ youâ buyâ fromâ theâ businessesâ youâ buyâ from?âAreâ youâ influencedâ byâ price,â quality,â experience,ârelationshipâorânovelty?âItâisâlikelyâtoâbeâoneâofâtheseâfactors.âWhateverâtheâreason,âitâmeansâyourâsuppliersâhaveâmanagedâtoâdifferentiateâthemselvesâinâsomeâwayâfromâtheirâcompetitors.
So,âifâaâpotentialâclientâasksâyouâtheâquestion,ââWhyâshouldâIâengageâyouâasâmyâaccountant?,ââwhatâwillâyourâanswerâbe?âWhatâmakesâyourâfirmâdifferentâfromâtheâotherâfirmsâinâyourâarea?âIfâthereâisânoâdifference,âyouâmayâstruggleâtoâsecureâthisâclient.âYouâareâmerelyâoneâofâmanyâfirmsâofferingâsimilarâservicesâwithâsimilarâqualityâstandards,âpriceâandâdelivery.
Havingâaâpointâofâdifferenceâhelpsâyouâstandâoutâfromâotherâaccountingâfirmsâinâyourâarea,âatâleastâinâtheâmindsâofâyourâclients.âButâthisâisânotânecessarilyâanâeasyâtask.âAfterâall,âfirmsâdeliverâsimilarâservicesâandâoperateâunderâaâsimilarâcodeâofâprofessionalâethics.âFirmsâoftenâpriceâtheirâservicesâinâaâsimilarâway,âandâmayâevenâbrandâthemselvesâinâaâsimilarâway.âManyâfirmsâalsoâprideâthemselvesâonâtheirâprofessionalism,âconfidentiality,âcommunicationâstyleâandâtheâpersonalitiesâofâtheâprincipalsâandâtheirâteam.âSoâhowâdoâyouâmakeâyourâfirmâdifferent?
Differentiationâcanâbeâachievedâinâaânumberâofâways,âsuchâasâthrough:
· Theâwayâyouâcommunicateâandâengageâwithâyourâclient;
· Theârangeâofâservicesâyouâprovide;
· Theâdepthâofâspecializationâyouâhaveâinâaâparticularâarea;
· Theâwayâinâwhichâyouâprovideâservices;
· Yourâaccessibility;
· Yourâpriceâandâyourâpricingâstructure;
· Theâappearanceâandâfeelâofâyourâoffices;
· Theâwayâinâwhichâyouâpackageâyourâwork;âand
· Theânetworkâthatâyouâcanâconnectâyourâclientsâinto.
Youâcanâprobablyâaddâtoâthisâlist.âYetâmostâfirmsâspendâveryâlittleâtimeâseekingâtoâdifferentiateâthemselves.âAsâaâresult,âtheyâignoreâaâpowerfulâmarketingâtool,âoneâthatâcouldâgiveâthemâaâcompetitiveâadvantageâwhenâtheyâareâseekingâtoâattractâaâtargetâclient.
Considerâtheâfollowingâdifferentiationâmessages:
· âBecauseâyouâareâbusy,âweâcomeâtoâyou.â
· âOurâbreadthâofâservicesâprovidesâyouâwithâaâone-stopâshopâforâyourâaccounting,âtaxationâandâfinancialâneeds.â
· âWeâareâspecialistsâinâtheâmedicalâprofession.â
· âWeâareâavailableâtoâyouâtwenty-fourâhoursâaâday.âHereâareâallâourâcontactânumbers.âIfâyouâneedâus,âweâareâonlyâaâphoneâcallâaway.â
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· âThroughâourâbusinessâconsultingâworkâweâaddârealâvalueâtoâyourâbusiness.âOurâaimâisâtoâworkâwithâyouâtoâhelpâyourâbusinessâgrowâprofitably.â
· âWeâpackageâourâfeesâintoâanâagreedâfixedâfee,âcoveringâallâofâourâwork;âyouâcanâspreadâtheâpaymentsâoverâtheâentireâyear.â
· âOurâcontactsâincludeâhigh-qualityâlegal,âfinance,âinsuranceâandârealâestateâadvisers.âWhenâyouâdealâwithâus,âyouâhaveâaccessâtoâourânetworkâanâadvisoryâteamâthatâworksâtogetherâforâyou.â
· âYourâworkâwillâalwaysâbeâmanagedâbyâaâpartner,âandâyouâwillâalwaysâhaveâaccessâtoâthem.â
· âWeâcommunicateâinâdown-to-earthâlanguageâthatâyouâcanâunderstandâandârelateâto.â
Theseâmessagesâclearlyâstateâaâfocusâforâtheâfirmâandâidentifyâitsâpointâofâdifference.âNoticeâthatâtheyâdoânotâfocusâonâtheâqualityâofâtheâworkâorâtheâprice.âInâreality,âitâisâveryâdifficultâforâaâclientâtoârecognizeâaâdifferenceâinâqualityâofâworkâorâadvice,âunlessâtheyâhaveâhadâaâbadâexperienceâinâtheâpast.
Generally,âclientsâexpectâtheirâaccountantsâtoâdeliverâaâqualityâproduct,âandâpriceâisânotâanâareaâwhereâyouâwantâtoâtryâtoâdifferentiate.âPriceâcompetitionârequiresâaâvolumeâmarketâtoâbeâprofitable,âandâtypicallyâtheâdeliveryâofâprofessionalâservicesâisânotâanâareaâofâhigh-volumeâtransactions.
Differentiationâisâlikelyâbestâachievedâthroughâtheâservicesâyouâofferâandâtheâwayâyouâdoâit.âThereâisâampleâscopeâtoâidentifyâwhatâyouâdeliverâthatâwillâbeâmeaningfulâtoâyourâtargetâmarket.âOnceâyouâhaveâdoneâthis,âyouâcanâbuildâaâpartâofâyourâmarketingâprogramâandâmessageâaroundâyourâpointâofâdifferentiation.
3.7.3 Social Media Marketing
Theâ growingâ popularityâ ofâ socialâ mediaâ isâ rapidlyâ changingâ theâ wayâ companiesâ doâ businessâ andâ howâtheyâ interactâ andâ communicateâwithâ theirâ targetâ audiences.âBusinessesâareâ leveragingâ socialâmediaâasâaâsuccessfulâmarketingâandâcommercialâbrandingâtool.âSuccessfulâpracticesâareâembracingâsocialâmediaâandâusingâitâtoâengageâwithâclients,âattractânewâclients,âpromoteâtheirâservicesâandâattractâstaff.âThereâare,âhowever,âreportsâthatâmanyâfirmsâhaveâyetâtoâcomeâtoâembraceâsocialâmediaâ(Roxburgh,â2012).3
Socialâmediaâisâaboutâbuildingâaâcommunity.âSuccessfulâsocialâmediaâstrategiesâreinforceâthatâpeopleâlikeâtoâdealâwithâpeopleâtoâcreateârelationships,âratherâthanâbusinesses.âWhileâsuccessfulâstrategiesâareâoftenâbuiltâaroundâtheâindividuals,âitâisâtheâbusinessâthatâreapsâtheâbenefits.âEngagingâyourâpartnersâandâstaffâinâyourâsocialâmediaâcampaignâisâaâgreatâstartingâpoint.
FirmsâcanâuseâLinkedIn,âFacebookâandâTwitterâ toâ inviteâ theirâclientsâ toâ receiveâupdates,âparticipateâ inâdiscussions,âshareâcaseâstudiesâandâexperiences,âpostâtestimonials,âestablishâclosedânetworksâandâallowâclientsâ toâconnectâwithâotherâclients.âBloggingâ isâanotherâwayâofâsharingâ timelyâupdatesâwithâclients;â itâcanâalsoâdriveânewâclientsâtoâyourâwebsiteâtoâfindâoutâmoreâaboutâyouâandâyourâbusiness.âAlwaysâtryâtoâincludeâlinksâbackâtoâsomethingâyouâhaveâpublishedâonâyourâownâwebsite:âthisâwayâyouâdriveâtrafficâtoâyourâwebsite.
Smartâ accountantsâ areâ recognizingâ thatâ theâ preferredâ methodâ ofâ gettingâ trustedâ referralsâ isâ fromâ theirâbusinessânetworks,âfamilyâandâfriends,âandâsoâareâembeddingâsocialâmediaâintoâtheirâwebsiteâandâbusinessâpractices.
Startingâaâsocialâmediaâstrategyâcanâbeâfairlyâstraightforward.
3ââRoxburgh,âHelen.â âHowâdoâaccountancyâfirmsâfareâ inâsocialâmedia.ââEconomia,âJulyâ2012.âhttp://economia.icaew. com/Business/July12/How-do-accountancy-firms-fare-in-social-media?.
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· Monitoringâsocialâmediaâallowsâyouâtoâseeâwhatâclientsâareâsayingâaboutâyou.âUseâaâGoogleâsearchâonâyourânameâandâyourâaccountingâfirmâsânameâtoâseeâwhatâyourâclientsâareâsaying.âThenâdoâaâsimilarâsearchâonâcompetitorsââwebsites,âblogsâandâonlineâcommunities.âThisâprovidesâaâstartingâpointâ toâdevelopâyourâindividualâstrategy.
· Rememberâsatisfiedâclientsâhelpâyouâattractânewâclients,âsoâencourageâyourâclientsâtoâpostâtestimonialsâorâprovideâpositiveâfeedbackâonâaâsocialâmediaâsite.
· Makeâsureâyourâsocialâmediaâprofilesâareâupâtoâdateâandâincludeâaâphoto.âYouâneedâtoâbeâengagingâandâmakeâsureâyourâsocialâmediaâprofilesâareâinterconnected.
· Ensureâyourâfirmâhasâconsistentâbrandingâguidelinesâthatâareâappliedâacrossâyourâwebsiteâandâsocialâmediaâplatforms.
· Establishâyourselfâ asâaâ contentâexpertâ andâ thoughtâ leaderâbyâwritingâblogsâorâpostingâaâvideoâonâYouTube.
· Useâ toolsâ likeâSocialâMentionâ trackâandâmeasureâwhatâpeopleâareâ sayingâaboutâ youâorâ yourâ firmâacrossâsocialâmediaâsites.
Socialâmediaâshouldâcomplementâbutânotâtotallyâreplaceâtraditionalâmarketingâtechniques.âRemember,âbeforeânewâclientsâcontactâyou,âtheyâtypicallyâcheckâyouâoutâonâsocialâmediaâsitesâorâsearchâforâyourâorganizationâusingâGoogleâorâotherâsearchâengines.
3.8 Putting Your Plans into Operation
3.8.1 The Importance of Implementation
Onceâyouâhaveâcreatedâyourâmarketingâprogram,âtheâmostâimportantâstepâisâthatâyouâimplementâit.
Aâ lotâofâenergyâandâeffortâ goâ intoâ theâdevelopmentâofâaâmarketingâplan.âAâ realâ senseâofâachievementâcomesâfromâthatâdevelopment,âbutâthisâwillâcountâforânothingâunlessâtheâplanâisâimplementedâproperlyâandâcompletely.
Manyâ firmsâ undertakeâ theirâ planningâ sessionsâ atâ theâ beginningâ ofâ theâ yearâ orâ financialâ year.â Theyâ setâplansâandâgoals,âfullâofâgoodâintentions.âHowever,âasâtheâyearâgetsâunderway,âtheâpartnerâsâtimeâisâquicklyâconsumedâwithâclientâdemandsâandâ theâoperationalâ requirementsâofâ theâfirm.âAsâmomentumâbuilds,â theâeasiestâthingsâtoâletâslipâareâtheâbusinessâandâmarketingâplansâsetâinâplaceâearlierâinâtheâyear.âThisâhighlightsâoneâkeyâpoint:âtheâimplementationâprocessârequiresâdisciplineâandâcommitment.
3.8.2 How to Implement Your Plan
Ifâyouâhaveâcompletedâtheâdocumentationâofâyourâmarketingâplan,âyouâhaveâidentifiedâwhatâyouâareâgoingâtoâ do,âwhoâwillâ championâ theâ projects,â howâmuchâ itâwillâ cost,âwhenâ itâ needsâ toâ beâ completed,â andâ theâresultsâyouâanticipate.âThisâminimumâlevelâofâdocumentationâisâcritical.âItâwillâprovideâyouâwithâaânecessaryâreferenceâpoint.âItâwillâalsoâserveâasâaâconstantâreminderâofâtheâobjectivesâthatâhaveâbeenâsetâforâtheâfirm.âThisâisâpartâofâtheâdisciplineârequired.âIfâyouâareânotâpreparedâtoâdocumentâyourâmarketingâplan,âandâcommitâtoâit,âyouâareânotâreallyâseriousâaboutâit.
Tableâ3.5âshowsâhowâtoâsuccessfullyâimplementâyourâmarketingâplan.
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Table 3.5 Implementingâaâmarketingâplan
Suggestion Comment
1. Donâtâattemptâtooâmanyâprojectsâatâonce.
Ifâyouâareâusingâinternalâandâexternalâstrategies,âyouâshouldâprobablyâhaveânoâmoreâthanâfourâtoâsixârunningâatâanyâoneâtime.
2. Makeâsureâyourâobjectivesâareâachievable.
Setâthemâsoâtheyâareâreasonableâandâpractical.
Ifâyourâexpectationsâareâunrealistic,âyourâteamâisâlikelyâtoâloseâinterestâbeforeâtheyâgetâstarted.
3. Allowâtimeâforâtasksâtoâbeâcompleted.
Allowâemployeesâtimeâinâtheirâworkâprogramâtoâachieveâtheâmarketingâtasksâyouâhaveâassignedâtoâthem.
Ifâyouâdonâtâallowâtheâtime,âitâbecomesâanâeasyâexcuseâforânon-completion.
4. Spreadâstrategiesâacrossâtheâyear.
Whenâyouâareârunningâmultipleâstrategies,âitâworksâbestâtoâspreadâthemâacrossâthe year.
Thisâallowsâeachâtoâbeâfocusedâon,âandâkeepsâtheâlevelâofâinterestâhigh.
5. Allowâanâadequateâbudget.
Anâinadequateâbudgetâcanâfrustrateâtheâfulfillmentâprocessâorâlessenâtheâenthusiasmâofâthoseâinvolved.
6. Measureâtheâresults. Youâneedâtoâbeâableâtoâassessâtheâeffectivenessâofâeachâprogramâandâstrategy.
Youâshouldâalsoâcelebrateâtheâwinsâyouâhave,âandâlearnâfromâanyâmistakes.âThisâwillâencourageâandâmaintainâtheâenthusiasmâofâtheâteam.
7. Reviewâregularly. Reviewâyourâmarketingâprogramâatâeveryâmanagementâmeeting.
Regularâreviewsâwillâhelpâtoâkeepâtheâprogramâonâtrackâandâkeepâtheâmomentumâmoving.
8. Set milestones. Ensureâyouâhaveâmilestoneâeventsâwithinâyourâprogram.
Thisâwillâallowâyouâtoâmonitorâyourâprogressâasâyouâgoâandâcheckâthatâyouâareâonâtrack.
9. Allowâforâchange. Ifâaâprogramâorâstrategyâdoesânotâappearâtoâbeâworking,âacceptâtheâfact,âbeâpreparedâtoâadaptâandâchange.
10. Keepâtheâmomentum. Onceâyouâhaveâsomeâmomentum,âkeepâitâgoing,âevenâifâitâmeansâanâongoingâmarketingâprogramâwhereâyouâaddâadditionalâprojectsâasâothersâareâcompleted.
Momentumâisâtheâmostâcriticalâfactor,âandâwillâbuildâonâitselfâifâpromoted.
Someoneâmustâtakeâtheâresponsibilityâtoâensureâthatâtheâplanâisâimplemented.âHowever,âthisâoftenâbecomesâtheâtaskâofâtheâpractitioner,âwhichâisâdifficultâespeciallyâforâsoleâpractitioners.
Inâsomeâcountriesâitâisâbecomingâpopularâtoâengageâtheâservicesâofâaâmentorâorâbusinessâcoachâtoâassistâwithâtheâimplementationâprocess.âTheâkeyâwordâisââaccountabilityâ:âhavingâtoâanswerâtoâsomeoneâelseâforâyourâactions,âorâbeingâaccountableâforâyourâlackâofâaction.
InâallâofâyourâmarketingâactivitiesâitâisâimportantâtoâconsiderâtheâInternationalâOrganizationâforâStandardizationâ(ISO)âStandards,âwhichâcoverâquality,âenvironment,âethics,âandâotherâissues.
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3.9 Financial Management
Elementsâofâfinancialâmanagementâforâaâgrowingâfirmârelateâtoâthreeâkeyâareas:âcapacityâbudget,âfinancialâbudget,âandâcashâflowâforecast.âEachâisâbrieflyâdiscussedâbelow.
3.9.1 The Capacity Budget
Thisâisâanâestimateâofâtheâpotentialâincomeâgeneratedâforâtheâfirmâifâallâavailableâhoursâwereâbilled.âThereâareâaânumberâofâfactorsâtoâconsider,âincluding:
· Additionalâstaffâjoiningâtheâfirm;
· Salaryâincreases;
· Availableâhours;
· Timeâoffâforâstudyâleaveâandâtraining;âand
· Increaseâinâcharge-outârates.
Forâaâtypicalâprofessionalâaccountant,âtheâavailableâhoursâwouldâbeâcalculatedâasâinâTableâ3.6.
Table 3.6 Targetâbillingsâcalculator
Criteria Weeks
Weeksâinâyear 52
Annualâleave (4)
Publicâholidays (2)
Sickâleave (1)
Training (1)
Availableâweeks 44
Hoursâworkedâperâweek 37.5
Availableâhoursâperâyear 1,650
Expectedâproductivity 80%
Targetâbillableâhours 1,320âhours
Charge-outârateâperâhour $150 per hour
Target billings $198,000
Thisâtargetâbillingsâcalculationâshouldâbeâappliedâacrossâtheâfirmâforâallâproductiveâstaff.âTheâtotalâtargetâofâallâbillingsâisâreferredâtoâasâtheâcapacityâbudgetâforâtheâfirm.
Pleaseânoteâthisâisâonlyâanâexampleâofâaâbillingsâcalculatorâtool.âYouâshouldâamendâtheâfiguresâtoâsuitâyourâlocalâenvironmentâtoâbeâasârelevantâasâpossible.
3.9.2 The Financial Budget
Theâfinancialâbudgetâusesâtheâcapacityâbudgetâasâexpectedâincome,âandâalsoâincorporatesâtheâbudgetedâoperatingâexpensesâofâtheâfirm.âAnâexampleâformatâisâshownâinâTableâ3.7.
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Table 3.7 Anâexampleâformatâforâaâfinancialâbudget
Budget 20XX/XY
ActualâPosition BudgetâForecast
20XW/XX 20XX/XY 20XX/XY
+5% +10% â5% â10%
$ $ $ $ $
Income
Fees
Audit
Compliance
Consulting
Disbursementâreconciliation
Otherâincome
Total income
Cost of sales
Directâwagesâ(chargeableâstaff)
Disbursements
Total cost of sales
Gross profit
Expenses
Accountingâfees
Bankâfinance,âfeesâ&âcharges
Commissionsâpaid
Consultingâ&âprofessionalâfees
Communication
· Telephone
· Courierâcosts
· Print,âpostageâ&âstationery
Generalâ&âadministrative
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Budget 20XX/XY
ActualâPosition BudgetâForecast
20XW/XX 20XX/XY 20XX/XY
+5% +10% â5% â10%
Insurance
Informationâtechnology
· Softwareâlicense
· Computerâhardwareâ&âmaintenance
· Printersâ&âphotocopiers
Marketingâ&âpromotion
· Advertising
· Entertainment
Motorâvehicle
· Carâmaintenance
· Parkingâ&âtolls
Occupancyâcosts
· Cleaningâ&âtrashâremoval
· Electricityâ&âutilities
· Rent
· Repairsâ&âmaintenance
· Security
Staffâamenities
Trainingâ&âdevelopment
Wages
Total expenses
Net profit
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3.9.3 The Cash Flow Forecast
Theâcashâflowâforecastâutilizesâtheâinformationâinâtheâfinancialâbudgetâtoâanticipateâwhenâtheâtimingâofâtheâcashâassociatedâwithâtheâincomeâandâexpensesâwillâaffectâtheâbankâaccountâbalance.âAnâexampleâformatâforâaâcashâflowâforecastâisâshownâinâTableâ3.8.
Table 3.8 Anâexampleâformatâforâaâcashâflowâforecast
Cash flow forecast for year 20XX/XY
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
Trading income
Cash inflows*
Cashâreceivedâfromâclients
Otherâcashâreceipts
Total cash received
Cash outflows
(detailsâfollow)
Surplus/(deficit)
Cumulative position
(addâtoâpriorâmonth)
*âCashâinflowsâwhenâtheâcashâisâactuallyâreceivedâfromâinvoicesâraisedâpreviously
Cash outflows
Disbursements
Accountingâfees
Advertising
Bankâcharges
Borrowingâexpenses
Capitalâexpenditure
Cleaningâ&âsanitation
Commissionsâpaid
Consultingâfees
Courierâcosts
Generalâ&âadministrativeâexpenses
Financeâcharges
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Cash flow forecast for year 20XX/XY
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
Insurance
Leaseâpayments
Motorâvehicleâexpenses
Parkingâ&âtolls
Print,âpostageâ&âstationery
Rentâ&âoutgoings
Repairsâ&âmaintenance
Trashâremoval
Securityâexpenses
Staffâtrainingâ&âwelfare
Pensions
Telephone
Wages
Total cash payments
Youâshouldâhaveâaâbudgetedâbalanceâsheetâsoâthatâyouâcanâattemptâtoâreconcileâtheâfinancialâbudgetâwithâthatâofâaâcashâflowâforecast.âAâsampleâofâtheâbudgetedâbalanceâsheetâcanâbeâseenâinâAppendixâ3.4.
3.10 Conclusion
Asâyouâcanâseeâ fromâ thisâmodule,â theâbusinessâofâbuildingâandâgrowingâaâfirmâ isâmulti-faceted.âCarefulâplanning,âparticularlyâ inâ relationâ toâyourâoverallâbusinessâplan,âandâensuringâ implementationâareâkeysâ toâyourâfirmâsâsuccess.
Overridingâfactorsâtoâconsiderâinâallâofâyourâmarketingâendeavorsâincludeâconsiderationâofâtheâprofessional,âethicalâandâqualityâpositionâyouâareâtakingâwithâyourâmarketingâandâtheâmessagesâyouâareâsendingâaboutâyourâfirm.âYouâneedâknowâyourâfirmâisâcapableâofâfulfillingâtheâexpectationsâyouâsetâinâtheâmarketâinâregardâtoâyourâoffering.
3.11 Further Reading and IFAC Resources
The IFACâGlobalâKnowledgeâGatewayâisâaâdigitalâhubâwhereâprofessionalâaccountantsâcanâeasilyâaccessâthoughtâ leadershipâ andâ resourcesâ fromâ IFAC,â memberâ organizations,â andâ otherâ notableâ groupsâ andâindividuals.
TheâGatewayâPracticeâManagementâsectionâincludesâadditionalâarticles,âvideos,âandâresourcesâtoâcomplementâthisâmodule.âWeâencourageâyouâtoâreviewâtheâcontent,âprovideâ feedback,âengageâwithâcontributors,âandâshareâyourâownâinsightsâonâcontemporaryâpracticeâissues.
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Appendix 3.1 Relationship Management Action Plan
Contact Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Note:âForâeachâreferrer,âincludeâtheâactivityâyouâplanâtoâundertakeâwithâthemâinâtheârelevantâmonth.
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Appendix 3.2 Case Studies
Case study 3.1
This case study relates to Section 3.2.3 (âThe organization chartâ) in Module 3.
Williamâandâ Indiraâ agreeâ onâ theâ importanceâ ofâ usingâ theâOrganizationâChartâ toâ assistâwithâ theâ internalâstructureâofâtheâfirm.âAfterâassessingâtheirâstrengthsâandâweaknesses,âWilliamâagreesâtoâtakeâresponsibilityâforâMarketing;âIndiraâagreesâtoâtakeâFinance.âEvenâthoughâtheyâareâbothâresponsibleâforâtheirâseparateâareasâofâworkâwithinâtheâfirm,âWilliamâtakesâresponsibilityâforâOperations,âandâevenâthoughâitâsâcurrentlyâaâsmallerârole,âIndiraâlooksâafterâHumanâResources.
Theyâagreeâthatâtheyâwillâmeetâeachâmonthâtoâdiscussâtheâfirmâasâaâbusiness,âandâeachâofâthemâagreesâtoâpresentâaâreportâtoâtheâotherâatâtheâmonthlyâPartnersâMeetingâforâtheirâareaâofâresponsibility.
AsâpartâofâtheâMarketingâresponsibility,âWilliamâdraftsâtheâmarketingâplanâtoâcoverâtheâkeyâapproachesâandâareasâheâconsidersâtheâfirmâshouldâdoâbusinessâin.âThisâplanâdetailsâtheâimportantâtopicsâofâtargetâclients,âkeyâservicesâtoâbeâofferedâbyâtheâfirm,âsuggestedâpricing,âasâwellâasâtheâspecificâmethodsâbyâwhichâtheâfirmâwillâmarketâtheseâservices.âAtâtheâPartnersâMeeting,âWilliamâdiscussesâtheâplanâwithâIndira.âAfterâconsideringâaânumberâofâchangesâinâdepth,âtheyâagreeâonâtheâplanâandâsetâaâspecificâtimelineâwithâspecificâactionsâwhichâeachâofâthemâagreesâto.
Asâpartâofâ theâFinanceâ responsibility,â Indiraâpreparedâaâdraftâbudgetâandâcashâflowâ forecastâ forâ theâfirmâforâtheâcomingâyear.âSheâpresentsâthisâtoâWilliamâatâtheâPartnersâMeetingâandâafterâdiscussionâagreesâtoâupdateâtheâreportsâtoâincorporateâtheâexpectedâincreaseâinâfeesâfromâtheâmarketingâeffortsâidentifiedâinâtheâmarketingâplan.âSheâwillâalsoâreviseâitâforâtheânewâmarketingâexpensesâidentifiedâinâtheâmarketingâplan.
Indiraâhasâalsoâpreparedâaâsetâofâmanagementâfinancialâstatements,âincludingâProfitâandâLossâStatementâandâBalanceâSheetâandâpresentsâtheseâatâtheâPartnersâMeeting.âSheâagreesâtoâupdateâtheâpresentationâofâtheseâreportsânowâthatâsheâandâWilliamâhaveâagreedâonâtheâbudget.âIndiraâidentifiesâthatâaâcashâshortfallâwillâariseâoverâtheâcomingâholidayâperiod,âandâtheyâdiscussâhowâbestâtoâdealâwithâit.âTheirâfavoredâapproachâisâtoâfindânewâclientsâandâraiseâtheâfeesâbeforeâtheâshortfallâhits.âHowever,âtheyâbothâagreeâtoâensureâthereâisâsufficientâbankâfinancingâavailableâtoâhelpâthemâthroughâtheâshort-termâdifficultâperiod.
AsâWilliamâsâresponsibilityâalsoâincludesâOperations,âbeforeâtheâPartnersâMeetingâheâhasâalreadyâobtainedâaâstatusâreportâfromâIndiraâinâregardâtoâherâteamâsâworkload.âHeâincorporatesâthisâintoâhisâteamâsâworkflowâsoâthatâheâcanâpresentâaâtotalâfirmâworkloadâandâcapacityâreport.âThisâallowsâthemâbothâtoâseeâwhatâcapacityâtheâfirmâhasâforânewâworkâpriorâtoâtheâholidayâperiod,âwhichâinâturnâgivesâthemâsomeâconfidenceâthatâtheyâmayâbeâableâtoâavoidâtheâupcomingâcashâshortfallâthatâIndiraâidentified.âHowever,âitâhighlightsâtheâimportanceâofâtheâmarketingâinitiativesâproducingâresults;âotherwise,âtheyâmayâstillâfindâthemselvesâinâaâdifficultâposition.
IndiraâreportsâonâtheâHumanâResourcesâissuesâcurrentlyâfacingâtheâfirm.âTheâkeyâpointâraisedâisâtheâneedâforâformalâperformanceâappraisalsâforâtheâstaffâtoâgiveâthemâfeedbackâonâtheirâperformance.âWilliamâagreesâwithâtheâapproach,âandâtheyâbothâagreeâthatâIndiraâwillâdraftâtheâperformanceâappraisalâtheyâwillâuseâandâbringâitâtoâtheânextâPartnersâMeetingâforâfinalâapproval.âTheyâalsoâagreeâtoâsetâtheâdatesâforâtheâperformanceâappraisalsâforâstaffâatâtheânextâmeeting.
WilliamâandâIndiraâthenâconfirmâtheâtimeâandâdateâforâtheirânextâPartnersâMeeting.
Case study 3.2
This case study relates to Section 3.3.4 (âExternal growth strategiesâ) in Module 3.
Asâpartâofâtheâmarketingâplan,âWilliamâhasâidentifiedâseminarsâasâoneâofâtheâkeyâmarketingâstrategiesâforâtheâfirm.
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Heâbelievesâthatâseminarsâwillâallowâtheâfirmâtoâraiseâitsâprofileâinâtheâlocalâbusinessâcommunityâandâgiveâthemâaâreasonâtoâadvertiseâandâpromote.âHeâplansâtoâinviteâexistingâclientsâandâreferralâcontactsâbutâalsoâconsidersâitâaâgoodâopportunityâtoâinviteâprospectiveâclients.âInâthisâwayâtheyâcanâmingleâwithâclientsâandâstaffâinâaânon-threateningâenvironmentâwhileâatâtheâsameâtimeâhearingâsomeâinformationâofâinterestâandârelevantâtoâtheirâbusinessâsituation.
Inâtheâpreparationâphaseâforâtheâseminar,âWilliamâspokeâtoâaânumberâofâclientsâtoâgaugeâtheirâ interestâ inâattendingâandâwhatâ topicâ theyâwouldâ likeâ toâhearâabout.âManyâclientsâwereâ interestedâ inâ theâstateâofâ theâeconomyâandâ howâ itâwouldâ affectâ theirâ businesses.âWilliamâdecidedâ toâ linkâ aâ generalâ discussionâ aboutâtheâcurrentâeconomicâenvironmentâtoâtheâspecificâeffectsâitâmightâhaveâonâtheâlocalâbusinessâcommunity.âHeâdiscussedâthisâwithâ Indira,âandâsheâwasâsupportiveâofâ theâ ideaâandâtheâtopic.âWilliamâthenâsetâaboutâpreparing his presentation.
Asâforâtheâlogisticsâofâtheâseminar,âWilliamâpreparedâaâchecklistâofâkeyâitemsâthatâhadâtoâbeâaddressedâtoâensureâtheâseminarâwentâwell.âItâincluded:
· Compilingâaâlistâofâfullânamesâandâaddressesâofâallâinvitees;
· Preparationâofâtheâinvitation;
· Ensuringâtheâinvitationsâgetâsentâtoâtheâinvitees;
· Preparationâofâtheâadvertisementâforâtheâlocalânewspaper;
· Bookingâtheâroomâinâtheâlocalâfunctionâcenterâforâtheâtimeâandâdateâofâtheâseminar;
· Payingâanyâholdingâdepositârequiredâtoâsecureâtheâroomâbooking;
· Sketchingâaâlayoutâofâtheâseatingâarrangementsâforâtheâroom;
· Decidingâonârefreshmentsâtoâbeâservedâbeforeâandâafterâtheâseminar;
· Ensuringânameâtagsâareâcompletedâforâattendees;
· Ensuringâstaffâmembersâareâavailableâtoâassistâwithâregistrationsâforâattendees;
· Ensuringâstaffâmembersâareâinvitedâtoâtheâseminar
· Ensuringâstaffâmembersâareâbriefedâonâtheâimportanceâofânetworkingâandâprovidedâwithâguidanceâonâhowâtoânetworkâappropriatelyâwithâclients,âpotentialâclients,âandâreferrers
· Providingâhandoutsâofâtheâkeyâpointsâofâtheâseminarâtoâattendees;âand
· Preparationâofâaâfollow-upâletterâtoâbeâsentâafterâtheâseminar.
· Ensuringâaâfollow-upâletterâisâsentâtoâattendees
Williamâthenâsetâaboutâallocatingâvariousâtasksâonâthisâlistâtoâvariousâteamâmembersâwithinâtheâfirmâtoâensureâtheâworkloadâwasâspreadâamongâtheâteamâandâdidânotârestâonâtheâshouldersâofâanyâoneâperson.
Asâtheâdayâofâtheâseminarâdrewâcloser,âWilliamâwasâactivelyâinvolvedâinâpromotingâtheâseminarâtoâasâmanyâclientsâandâprospectiveâclientsâasâheâcould.âHeâbelievedâthisâwouldâbeâaâgreatâwayâtoâliftâtheâprofileâofâtheâfirmâandâalsoâallowâhimâtoâincreaseâhisâpersonalâprofileâinâtheâlocalâbusinessâcommunity.âEvenâthoughâheâwasânotâthatâcomfortableâwithâpublicâspeaking,âheâwasâconfidentâenoughâthatâheâcouldâgetâby.âHeâpracticedâhisâpresentationâaânumberâofâtimesâbeforeâtheâseminarâasâaâwayâofâbuildingâgreaterâconfidenceâinâhimselfâandâinâhisâmaterial.
Twoâdaysâafterâtheâseminarâwasâheld,âWilliamâensuredâthatâeachâattendeeâreceivedâaâletterâthankingâthemâforâattendingâandâmentioningâagainâ theâkeyâpointsâcoveredâ inâ theâpresentation.âForâ thoseâwhoâwereânotâ
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existingâclientsâofâtheâfirm,âWilliamâmadeâaâspecialâoffer:âtheyâcouldâmeetâwithâhimâatânoâchargeâtoâdiscussâanyâspecificâpointsâthatâwereârelevantâandâwhichâmayârequireâfurtherâdiscussion.
Case study 3.3
This case study relates to Section 3.5 (âCreating a culture for your firmâ) in Module 3.
Case study: Firm culture
VictoryâAccountingâdecidedâtoâchangeâtheâcultureâofâitsâfirmâandâwentâthroughâaâtransformingâprocessâtoâachieveâthis.âTheâfollowingâisâaâsnapshotâofâtheirânewâculture.
VictoryâAccountingâfostersâaâhigh-performance,âfunâandârewardingâenvironmentâthroughâtheâfollowing:
Central operating principle: sustainability
Allâstaffâareâguidedâbyâourâcentralâoperatingâprinciple:ââToâcreateâvalueâforâVictoryâAccountingâstakeholdersâbyâbuildingâaâsustainableâaccountingâfirmâthroughâtheâ integrationâofâeconomic,âsocialâandâenvironmentalâconsiderationsâintoâallâVictoryâAccountingâdecisionâsupportâsystems.â
Core values
Weâbelieveâthatâtheâserviceâweâprovideâisâofâvalueâtoâtheâcommunityâandâsociety.âThisâisâunderpinnedâbyâtheâfollowingâcoreâvalues.
· Making sense:â Helpingâ peopleâ toâ understandâ theirâ accountingâ andâ taxationâ throughâ education,âassistanceâandâadvice.
· Always helping:âUnderstandingâpeopleâsâneedsâandâhelpingâthemâworkâthroughâfinancialâproblemsâandâissues.
· Trust and integrity:âBeingâreliable,âhonest,âandâprincipled,âandâengenderingâconfidence.
· Respect and encouragement:âValuingâdiversity,âassistingâeachâotherâandâmaintainingâaâpositiveâoutlookâatâallâtimes.
· Learning:â Anâ ongoingâ searchâ forâ knowledgeâ andâ skillsâ enablesâ Victoryâ Accountingâ toâ embraceâchangeâandâcontinuouslyâimprove.âThisâisâvitalâinâtheseâtimesâofâconstantâchangeâtoâregulationsâandârequirements.
· Quality:âStrivingâtoâdoâbetterâasâVictoryâAccountingâbenchmarksâitsâperformanceâagainstâtheirâhighestâstandards,ânotâagainstâcompetitorsâ.
Commitment to learning and development
Staffâmembersâ areâ encouragedâ toâ developâ theirâ skillsâ andâ careersâ withinâ VictoryâAccounting.â Theâ firmâprovidesâongoingâtrainingâandâdevelopment,âasâwellâasâfinancialâassistanceâandâstudyâleaveâforârelevantâcourses.
Involvement in our future direction
Eachâmonth,âweâholdâaâteamâmeetingâwhereâtheâfirmâsâperformanceâandâfutureâdirectionâisâoutlined,âandâteamsâareâgivenâtheâopportunityâtoâpresentâtheirâcurrentâprojects.
Community involvement
VictoryâAccountingâ isâ committedâ toâ helpingâ ourâ localâ communityâ andâ allowingâ staffâ theâ opportunityâ toâparticipateâinâvolunteeringâactivities.âAlliancesâwithâvariousâcharitiesâareâcurrentlyâbeingâdevelopedâtoâenableâstaffâtoâlearnâmoreâaboutâaârangeâofâcommunityâissuesâandâvolunteerâtheirâtimeâtoâhelpâthoseâinâneed.
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Appendix 3.3 Summary Income Statement Budget (by Months)
Monthly Budgeted Amounts
Description Prior Yr Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
Revenues
Grossârevenues
Less:âbillingâadjustments
Net revenue received
%âofârevenues
Expenses
Salaries
Professionalâstaff
Supportâstaff
Personnel expenses
Facilitiesâexpenses
Generalâexpenses
Other
Total expenses
%âofârevenues
Operating profit
%âofârevenues
Interestâincome
Interestâ(expenses)
Otherâincomeâ(expense)
Gainâ(loss)âonâsaleâofâassets
Net income (expense)
%âofârevenues
Incomeâtaxesâ(forâcorporations)
Net earnings
%âofârevenues
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Appendix 3.4 Balance Sheet Budget (by Months)
Monthly Budgeted Amounts
Description Prior Yr Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
Current assets
Cashâandâcashâequivalents
Unbilledâworkâin progress
Billedâaccountsâreceivable
Prepaidâexpenses
Otherâcurrentâassets
Total current assets
Non-current assets
Propertyâandâequipment
Less:âaccâdâdepreciation
Netâpropertyâandâequipment
Otherânon-currentâassets
Total non-current assets
TOTAL ASSETS
Memoâitemsâ(forâCashâFlowâForecast):
Capitalâadditions
Depreciation
Assetâdisposalâcost
Salesâproceeds
Current liabilities
Accountsâpayable
Accruedâexpenses
Short-termâdebt
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Monthly Budgeted Amounts
Description Prior Yr Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
Otherâcurrentâliabilities
Total current liabilities
Non-current liabilities
Long-termâdebt
Otherânon-currentâliabilities
Total non-current liabilities
TOTAL LIABILITIES
Partnership equity
Beginningâbalance
Current earnings
Total net assets/equity
TOTAL LIABILITIES& NET ASSETS/EQUITY
Memoâitemsâ(forâCashâFlowâForecast):
Debtâproceeds
Principalâpayments
Partnerâdrawings
Gainâ(orâloss)âonâdisposal
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Appendix 3.5 Gross Revenue Analysis Worksheet
Instructions:âItâisâusefulâtoâbudgetâgrossârevenuesâ(grossâchargesâbeforeâbillingâadjustments)âbyâworkâtypeâbasedâonâ comparisonâwithâpriorâ years.âTheâ followingâ scheduleâallowsâ theâ firmâ toâ summarizeâpriorâ yearâaccountingâ andâ audit,â taxâ andâ consultingâ revenuesâ onâ aâmonth-by-monthâ basis.âWhenâ preparingâ yourâbudget,âyouâshouldâconsiderâaânumberâofâ factorsâ inâbudgetingâfutureâgrossârevenuesâ inâadditionâtoâpriorâyearârevenueâamounts.âTheseâfactorsâinclude:
· Anticipatedâchangesâinâcharge-outârates;
· Workâthatâwillânotâbeârepeatedâduringâtheâupcomingâyear;
· Newâclientsâthatâwillâbeâservedâforâtheâfirstâtimeâduringâtheâupcomingâyear;
· Newâservicesâtoâbeâprovidedâinâtheâupcomingâyear;âand
· Theâeffectâofâanyâotherâknownâorâreasonablyâexpectedâdifferencesâfromâtheâpriorâyear.
Onceâgrossârevenuesâforâeachâworkâtypeâareâbudgeted,âtheâmonthlyâamountsâshouldâbeâtotaledâandâcarriedâforwardâtoâtheâSummaryâincomeâstatementâbudgetâatâAppendixâ3.3.
Gross Revenue Analysis Worksheet
Accounting and Audit Tax Consulting and Other Total
Month
Prior Year Reve- nues
% of Total
Current Year Budget
% of Total
Prior Year Reve- nues
% of Total
Current Year Budget
% of Total
Prior Year Reve- nues
% of Total
Current Year Budget
% of Total
Prior Year Reve- nues
% of Total
Current Year Budget
% of Total
1
2
3
4
5
6
7
8
9
10
11
12
Total