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What Happens if Your Firm Doesn’t Move to Advisory?
Posted on 31st August 2017 in Advisory
Written by Freya Hughes
“And I wonder if you know, How it really feels To be left outside alone,” sang 00’s pop diva Anastacia. You won’t have to imagine too much longer, though, if you don’t take the leap into advisory. It’s the only way to be running your firm – and it’s 2017 so you know the pitfalls of automation taking over. If you’re still digging your heals in, this blog will hopefully change your mind. These are the top, and scariest, things that will happen to your practice if you don’t make the change into the advisory space.
We know what can happen when you try to move your firm to advisory: staff can be resistant and clients may not want to embrace the cloud. But what happens if you just ignore the whole industry evolution? Not to be too negative, but it’s not going to go well for you…
When speaking to our clients, we’re noticing that some say their clients are hunting out accountants that will give them advisory services. Business owners are out there looking for management accountants, advisors, VCFOs, because they need help with growing their business. They’re no longer interested in looking at a wall of numbers and it all going over their heads – now it’s all about selling your knowledge. Any accountant can make them compliant, so now it’s a race to provide the best value-added services. Emma Fox was voted Xero’s Bookkeeper of the Year in 2016, and along with running Fresh Financials, knows her way around the industry. Read the full case study here. With 20+ years of bookkeeping experience, Emma told us:
“I’d say business owners are now making the decision that they want their accounts to work in this particular way. Then they find someone who will do management accounting, as opposed to ‘I need a bookkeeper, what does a bookkeeper do?!’ They’re definitely looking for it.”
Meanwhile, Sam Wood, Lead Client Manager at Blu Sky Chartered Accountants, thinks that embracing advisory is such a no-brainer, it’s no longer a USP for a firm. Read the full case study here. Blu Sky have gone the whole nine yards, white labelling the FUTRLI platform to present it as their own, so they have more time to spend with clients, building lasting relationships which has upped their client retention massively. He told us:
“In a world of change, clients need to be guided through the changing accounting landscape by an advisor confident of their own offering with strong software partners behind them.”
Forming relationships through advisory is essential. Think of it as when you go to your local shop – the server is likely to remember you, and you might have a chat while you’re buying the newspaper. You’ll get to the point where they’ll know your order, eventually even what your family are up to. It’s nice to walk into a place where you’re known, and that level of customer service makes you keep going back. This is no different. While clients may seem to the point, taking a few minutes to speak to them as people, rather than as transactions, will make a huge difference to your client retention.
But on with the task at hand. Here are the main things that will go south for your firm if you don’t embrace innovation.
You’ll never be able to help clients grow their business
Sticking with traditional compliance services basically means ignoring the future. Any business owner in the world would chew your ear off if you asked them about where they want to be in the future, or even the next month or two. So really, you’re ignoring your clients’ needs. If you were a business owner would you want to spend hard earned cash on a firm keeping you compliant, or would you rather pay slightly more for that, and have direction and strategic planning?
Business owners begin their ventures to succeed. Almost everyone dreams of early retirement, or at least a slower pace of life when they get older, so starting and maintaining their business is going to be one of the most important things in their life. Many will have begun their company so that they can sell up at the right time, so growing their business will be at the top of their priorities. If you can’t get this right, you can wave goodbye to referrals, and quite possibly your clients.
You’ll miss out on revenue
I’m thinking you got into accountancy to make money, and if you’re the firm owner, then you certainly need to be turning profit. Anyone in the working world is in it to earn money to fund the things they love doing (unless your hobbies become your work, in which case well done!), so seize the opportunity to get the cash rolling in.
While taking on advisory might seem like a big job, it’s actually simpler than it looks. There are many continuing professional development (CPD) schemes you can look into, including the FUTRLI Advisory Certification course we made specifically for you. We know it can be hard getting started with any change, so we’ve divided everything you need to know into six digestible sections, comprised of 25 modules.
We researched what millennial clients expect (and want) from their accountants a little while back, and the majority of the respondents prefer monthly set billing. This may come as a surprise, but as the report dictates:
“More than half support monthly at rates and 31% prefer fixed fees, compared to 14% who prefer hourly billing.”
And why is this the case? There are two key benefits to monthly set billing – one will help clients, the second is great for your firm:
- Your clients will know exactly how much to budget for your services, which will simplify their forecast. Having this monthly amount accounted for and planned for will placate some of their worries of their outgoings. For you, this is brilliant! You can wave goodbye to hourly billing, which can be quite detrimental to your firm as you may spend many hours preparing their admin on clients behalf.
- You’ll earn more – you could be missing the mark with how much you should be earning per client. Adopting a monthly payment scheme will benefit your firm as you’ll be able to rely on MMR (monthly recurring revenue). So long as these monthly clients are being looked after to the best of your firm’s ability, you’ll notice you’ll have extra time to work on your referral count and hunting down new leads.
Staff and client retention will drop
Keeping your staff excited about work can be a challenge. Performing the same monotonous tasks day in, day out is going to bore your team to tears after a while. Of course, advisory services won’t suit absolutely every one of your team, but the vast majority are going to be keen to spread their wings and get out and about. While to you the firm is everything, your team might not feel the same way. It’s a bitter pill to swallow, we know, but you must get real about how killer losing staff is.
It’s great to try and make your staff happy to try and make them stick, but make sure you understand that satisfied staff are not the same as engaged staff. Satisfaction usually stems from an understanding flexible boss, who listens to their employees’ pain. For example, you might let an individual leave early or come in late if they have family obligations. Engagement, however, is what happens when your employees really care about your firm and want to do the best they can to help it grow. Usually there’s an emotional commitment and high-level loyalty to the business, wanting it to do well. The team will go above and beyond for you because they believe in what they’re doing.
If your staff don’t believe in what they’re doing, they won’t put everything into each task. This could eventually impact your bottom line if clients are receiving slapdash work, and lose you customers.
You give competitors space to take over
We’ve heard from our community that before advisory, the race was on to provide the lowest prices for clients, as the industry is so competitive. Now, though, those in the know are deserting this old battle to make a long-lasting change to their practice. And this change cannot be matched or beaten by a quick price alteration.
You really do need to embrace advisory if you want to stand a chance against other firms. As we heard earlier, clients are actively looking for strategic support so this is your chance to evolve the firm you’ve been working so hard to keep going. Do you think Blu Sky or Fresh Financials thought twice about making the chance? No, they didn’t, because the owners understood that it was a choice – a quite literal ‘do or die’.