Accountants need to distinguish themselves from the herd

@Bookmarklee posted a very interesting item on his excellent Blog site, “No long term future for “Halfway house” firms of accountants. His points, as usual, were well made but I am prompted to add a few further comments.

Most mid-size accounting practices have very little to offer that distinguishes them from eachother. They will all boast excellent service, pro-active rather than re-active advice, value added input to their clients. I have used these selling points myself during my years in practice and I knew, even as I was repeating them that should the prospective clients visit half a dozen other firms, they would hear the same attributes being spouted by rote.

Looking back over my years in practice, I am convinced that the following are the key to a firm distinguishing themselves from the herd:

1. The overriding factor in any successful practice is the relationship between the Client and the relationship partner and staff. The brand of the firm is, in the long run, irrelevant. This point has been heavily highlighted in the events following the Vantis demise. In the long run clients were less interested in the collapse of the brand than they were in the welfare and continuing relationship of their partner and staff contacts. As a rule, Clients will follow the Partner they deal with (assuming they had received attentive and responsive service) and not the brand.

2. Practices need to distinguish themselves from their peers and offer a unique selling point, a “usp”. I am constantly amazed how content firms are to role out the same old Sage line as if that alone was the key to their success. In making presentations on online accounting I try and push home the point that if every firm in the area is offering the same thing, why should a client choose you. I have had many successes in winning “pitches” for new work because I was able to offer an online accounting solution which distinguished us from the competition. Apart from it being a more efficient way of looking after the client’s needs, it showed that I represented a practice which was innovative in its approach and prepared to use technology to the benefit of its clients.

3. Fees – at the end of the day price will play a major part in retaining and satisfying a client. Whilst most clients are willing to pay a fair price for a professional service well delivered, they are not prepared to be taken advantage of. Time sheets should not be the be all and end all of the charging process but merely a guide to the efficiency or otherwise of the service delivery. Charge a fair price for the work done – irrespective of what finally ends up on the time sheet – and the results will speak for themselves.

Many will take issue with what I have just written – and that of course is correct. But in the long run it is those firms that distinguish themselves from the rest that will benefit in this highly competitive world.

The Virtual Office

One of the advantages in setting up my new business, RFM Associates is that I now have the opportunity to practice what I have been preaching about setting up a virtual office.

Events have proceeded much quicker than I had originally anticipated and I now have Uzma Fatima working with me and running our ever growing outsourcing operation.

One of the challenges has been how we can easily work together and communicate, given that we are at separate locations. Fortunately the answer to this, as with many things, is in the Cloud.

There were a number of different aspects we had to address – email, file sharing, telephone were the main ones and we dealt with them as follows:

1. Email

As I have written elsewhere, Google Apps is gaining considerable ground as an alternative to the ubiquitous Microsoft Exchange. Set up was straight forward and well documented so even the slightly more technical aspects – such as changing MX records – were well explained and easy to follow. As it is designed primarily for a web interface (it can be used with Outlook if you want to) it requires no separate software installation – and. of course, can be easily accessed from any location.

2. File sharing

I have been using Dropbox for some time as a Cloud based drive for my files. Accessable via the web it is an excellent method for working on files when on the move. New files and amendments are synched to a Dropbox drive on the PC – in both directions – and works well for accessing via the IPad and IPhone. Folders can be shared with other users so using it as our “virtual” server seemed an obvious choice. We now have access to the same files and collaboration is easy.

Incidentally, files can also be shared using the Google Apps features.

3.Telephone

I wanted to ensure that I had a central phone number for RFM Associates but I did not want to get involved with expensive phone installations via BT. There is a wealth of Virtual Phone providers available via the web and I went with The Telephone Number Company where I was able to acquire a phone number and a virtual switchboard process.

The above are merely my particular preferences and there are many other solutions available which will work just as well – I would be interested to hear from you as to any other suggestions you might have.

The point of all this is that the Cloud provides a plethora of relatively low cost solutions – making Virtual the reality.

Vantis the downfall – lessons to be learnt

As the dust begins to settle on the implosion of Vantis, it is perhaps opportune to look back and consider some of the lessons that might be learnt from the unseemly fall of a top 20 accountancy firm. No doubt in time, we may learn more of what really caused its demise – Stanford was only part of the problem – but as someone who has lived through this twice (and Numerica’s end was dignified by comparison) I thought I would set out some of my thoughts on why I think the model of the consolidator is flawed and why – perhaps – it was doomed to fail.

I must state at this point that these are my own personal opinions and I am sure that there will be many that might take issue – please let me know what you think.

Accountants as a whole have an almost unique business model in that they have the one asset to which virtually no other profession can lay claim – the renewable fee. As a whole accountants know that unless they totally screw things up, they can usually rely on a large proportion of their fee income to repeat every year.

This is an invaluable asset -and the price thereof is, that whilst most accountants in practice make a very good living they do not perhaps earn the same level of profits as – say – lawyers. But the knowledge that the majority of their top line is going to reoccur every year is worth the possible lower level of net income.

Now, if you then take that average practice, convert the partners’ profits to salary – add National Insurance on top and a level of administrative overheads that some obviously think are necessary for a public corporation – and then expect to make super profits on top of that, you require some pretty nifty management and a lot of special fees.

In the Numerica days, the concept was (maybe not officially) that general practice paid the bills and Corporate Finance – in the good times – and Corporate Recovery – in the bad – provided the super profits. Part of Numerica’s problems was that at the beginning of the millennium the economy was flat so neither of the  former parts of the business did particularly well.

I think Vantis’s problems were different. The core business was, and still is, very good with many excellent clients and more importantly, excellent staff and partners to service them. Apart from any questions of mis-management that might have occurred, I think the level of administrative overhead was far too high for a business of Vantis”s size. There were just too many people in areas such as HR, Marketing, PR and IT who whilst, individually, were no doubt valued employees and went about their tasks conscientiously, they added little or no value to the business itself.

However you fix it, 2+2 will not equal 5 – and if you try to squeeze more profit than the business can possibly generate, it is going to fail.

And I return to my earlier point about Accountants having the benefit of the renewable fee. There is a further price to be paid for this and that is a special relationship that accountants develop with their clients. Sure, some clients take liberties, but on the whole most of them value the services they receive and are willing to pay a reasonable price for it. Sometimes they might take longer to pay than other businesses might consider acceptable, but on the whole they do pay – and continue to do so year after year. You cannot commoditise that relationship and you cannot treat clients as if your are selling widgets. It just won’t work.

And so what of the future. Well most of the individual offices are now independent and I have no doubt that they will do well as a result. For those offices that have gone to RSM Tenon, I am sure, as the first and virtually the only consolidator left, they will learn from the errors the others made and flourish.

I certainly hope so.

The Cloud – it’s growing up!

I spent two days last week at the Cloud Computing World Forum at Olympia. I am grateful to David Terrar for arranging for me to chair two panel sessions.

Although the exhibition stands at the conference were heavily biased to the technical side of the cloud (I must confess to having asked one exhibitor what his company did. 10 minutes later after a somewhat detailed explanation, I was none the wiser!) it was fascinating to see so many well established companies that specialised in Cloud technology – and some of these companies were major corporations, not by any means enthusiastic start ups.

The conference itself was very well attended with many hundreds attending the sessions on each of the three days and the headline and panel sessions were illuminating. Some of the highlights for me were:

  • Currently $8 out of every $10 spent on IT is on infrastructure
  • By 2012 20% of companies will not own their own IT assets but will use hosted or Cloud solutions
  • Google have 2 million business users using their Google Apps
  • Jaguar saved £2 million annually by moving their 17,000 employees from Microsoft Exchange to Google Apps
  • The City of Westminster Council is planning to be IT infrastructure free (doing everything in the Cloud)  by 2015

The above is just a very small selection of the issues that were discussed – but take a few moments to digest these. They are not insignificant points. The City of Westminster moving its whole IT process into the Cloud is no small thing. Many corporations would be delighted to save IT costs by a relatively straight forward move to Google Apps. All of these are major statements and not what you might expect of a topic of which most IT users are still woefully ignorant.

Security was of course an issue that was discussed at some length – but the overriding conclusion was that the issue was very much one of perception than of reality. As one speaker said – many firms and businesses are quite adamant that they would not be prepared to store their email record in a Cloud Solution – all very well but they have no issue about sending confidential matters by email in the first place!

The overriding message was that the Cloud is a journey and that more and more businesses and organisations – large and small are embarking on it. To those sceptics out there – there is a whole parallel universe in the Cloud and its growing!