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Why only 15% of firms successfully roll out business advisory services

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BACKGROUND

We all know the score; the entire world is banging on about how accountants need to roll out advisory services, how $400M of compliance income in Australia will be lost through direct lodgement, how financial planners and banks are converging on the Accountant's share of the pie, not to mention digitisation, offshoring and machine learning!

This perfect storm means accountants must evolve towards an advisory offering or bury their heads in the sand at their own peril - 

But what if only 10-15% of firms are capable of making the move, or even attempting it? 

What then?


 

THE GOAL

Accountants are the trusted advisors for their clients and, therefore, it’s common sense for them to embrace their opportunity with both hands!

The client wants the accountant to commit to being their “lead advisor.”


 

THE PROBLEM WITH THE GOAL

This goal requires courage, and a much broader responsibility in terms of the consideration of value adding.
               
Past behaviour predicts future behaviour. The law said accountants had to learn and administer GST, but that doesn't mean everyone got on board initially or grew the competence in a reasonable time frame. In fact it was a fundamental trigger for aging principals to retire at the time - and many did just that.

Nor did more than a fraction of the profession (at the time) seize the opportunity to offer BAS mentoring or advisory from the get go. 

Accountants told themselves they weren't bookkeepers, and never would be - then spent  the next decade complaining about how much corrective action and time they lost cleaning up management accounts - because the bookkeeping was not up to par.  

 


 

Don't rush to quickly into your new services, or you may find yourself too overwhelmed to continue.
 

YOUR DEFINITION OF SUCCESS

When entering the world of advisory services, we have to be careful regarding our definition of success and define a policy that will lead us in the right direction - rather than rushing into something that may not ultimately serve our long-term plans.

For example, it's easy to roll out a third-party or cloud-based advisory service, pat yourself on the back and, less than 12 months later discover that you aren't able to offer this to more than just a few clients. 

This is often because your own structure and scalability does not afford the time needed to properly implement the new service. And, when combined with a poor planning, means that the benefit of hindsight is somewhat frustrating on reflection.
 

THE SCALE CONUNDRUM

90% of accounting firms commence the journey to rolling out some form of advisory offering before they have considered their own capacity or the scaling capabilities of the value added service itself.

Every third party bolt-on or value-added offering has one or two bright and shiny key bullet points that sound extremely appealing and valuable to the end customer in the eyes of the accountant.

However, the time poor nature of smaller professional service firms means that the person evaluating the offering is often not skilled enough to know how the new service may impact their firm. Whether it be in terms of the drain on their own core accounting team, or the scalability of the offering itself.

So 90% of the time, a fairly poor quality decision is made in the identification and evaluation of what is going to work for the firm, and they only discover the consequences after implementation.


YOUR CAPACITY IS YOUR PROBLEM

Most of the time, the accounting firm’s mindset or that of its leaders is the problem. We hear that capacity is the issue which isn’t following the law of cause and effect that identifies a lack of capacity as the effect, not the cause.

Most firms are poorly structured due to the mindset of the leader(s) which forbids compliance staff to operate as a compliance services hub, without the leader’s heavy hand of involvement at every step in the process.

This mindset stifles growth of the team as well as grossly limiting the firm’s ability to build scalable advisory services.

 

SCALABILITY IS A RELATIVE TERM

The comfort zone and egos of the principals determines what level the glass ceiling will be set at, in terms of a conscious or unconscious decision, etc.

For example, a NSW-based firm recently complained of a lack of scalability because they had failed to maintain their once robust growth trajectory and had been stuck at $5M annualised revenues, for multiple years in a row. 

The issue of cause was unable to be discussed with any transparency because they “knew it all.”

To a smaller firm stuck at, say $750k annually, the $5M firm’s problems may seem sublime - yet the $5M firm was stuck due to exactly the same issues we're discussing here. 

 
When you get your roll out right, everyone benefits. 
 

WHAT TO DO ABOUT IT

Packaged offerings. 
    
If you're rolling out one advisory service at a time and you're likely to do a better job of mastering that offering itself, the danger is that you end up with a product that lacks the full commitment of you and your firm’s time.

Alternatively, whilst a more comprehensive offering is recommended, how you go about implementing it becomes critical so it doesn't totally consume your focus causing you to  look back and reflect in six months time on your WIP & debtors blowing out or your customer’s engagement levels fading away.
  

ADVISORY DOS AND DON'TS 

  • Pressure test your advisory offering on only a few "warm & friendly" clients.
  • Seek their constant feedback and input.
  • Take their advice rather than giving advice during this phase.
  • Reshape your offering around your customers’ advice.
  • Don't offer to all and sundry for at least 6 months.
  • Fine tune your pricing models as you go.
  • Draft, redraft and redraft again.
  • The design phase determines the quality of the final product.
  • Model your offering on other providers (competitors) you admire.
  • Stay in a “rookie” state (or learning state) for at least 12-18 months.
  • Keep going until you master this offering. 

 

Don't just implement quickly and then move on to the next offering. Doing this will mean you miss out on the gold in your own backyard.

Since 2011, Best Practice Foundation Program for growth and succession is where more than 540 accounting firms have elected to go to get their house in order and learn how to successfully implement value-added services.

For more information, contact the writer at your convenience.

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