Becoming the first choice for business advice

Accountants need to be the people businesses turn to first and trust most. Here’s how they can achieve it.

If practices don’t work closely with their SME clients to plan and manage their needs, then they may start to look elsewhere for commercially switched-on advice. This is important both in the short term to take advantage in the pending upswing in the economy and the long term to plan for a secure and prosperous future.

What SMEs need

If the 80s saw a boom in SME’s, expect to see a similar boom in exits over the next decade, posing succession and retirement issues.

Here’s where practitioners can step up to become trusted advisers.

Many business owners give little or no consideration to retirement or succession planning. Wealth protection and tax mitigation are of utmost importance for directors looking at a sale of the business to fund retirement. They will also need help in getting the business into the best possible shape to maximise its market value and make it more attractive to a buyer.

Even businesses that have a succession plan should be encouraged to review it regularly, given that the ideal exit strategy five years ago might not be today.

As the economy recovers, belt-tightened SMEs might now need to consider investing to take full advantage of the economic upswing. This could include raising finance, capital investment or a merger or acquisition. Alternatively a client might benefit from having its current management systems evaluated and updated to take anticipated growth into consideration.

A practice doesn’t need to provide every service, but they should know what is required and be able to recommend trusted third parties with whom they can form ongoing mutually beneficial strategic alliances.

It starts with culture and attitude

Becoming a trusted adviser offers additional fee generation opportunities by providing added-value services. It can also make the clients more secure, which can only be a good thing for a service provider.

However, for this to be realised, it’s all about becoming the most trusted adviser, not just an adviser, says Phil Shohet FCA, a senior consultant with Foulger Underwood. “I think practices ought to be developing strategic plans, with staff buying into a culture of helping clients, first-year trainees up to managing partner, a culture focused on improving and expanding client services.”

“When you consider most accountancy firms — compliance work, regularly recurring income — it’s absolutely fantastic,” said Shohet. But this is a great foundation from which to add value to clients, build deeper relationships and be an indispensable business partner.

In some ambitious practices, the recurring work can be 60% of revenue and 40% from advisory, because they are leveraging off the bedrock of the recurring work and consider the other services their clients might need, which can be a varied list at the end of the day.

“It could be acquiring businesses, HR, technology advisory,” said Shohet. “The problem is that practices sometimes lack the entrepreneurial mentality of their clients. For example, an audit partner will talk to their clients about audit, but most clients don’t want that conversation, they want to talk about the future of their business.”

Getting the internals right

Establishing the right culture inside a practice should take a hands on, open and honest approach. Such actions can include:

Key performance indicators (KPIs): A regular (eg quarterly) process involving KPIs to benchmark a firm’s progress in areas such as business development, technology, training, client relations, diversity & inclusion, sustainability, remuneration – whatever a practice has deemed measurably important from its strategic vision.

Client and staff advocacy: An extension of the KPIs. Asking staff and clients what they think about the service the firm is delivering. “You need a bit of courage to do this,” said Shohet. “A lot of people are using third parties to do it in a tactful way, so as not to make the client feel unnatural.” Likewise for staff, do it sensitively and anonymously and you’ll get some truly honest and insightful opinions, while at the same time promoting the desired culture of people — staff and clients — mattering.

Inward investing: Shohet mentioned a firm that has successfully taken its ratio of compliance to advisory work to 50/50 from 80/20 and they’re enjoying healthy growth (see case study below). One of their actions has been to invest a whopping 12% of revenue into staff training (technical and non-technical), healthcare (general and mental) and working from home. This is improving their reputation, especially when it comes to recruitment, with the firm being viewed by quality candidates and recruiters as strong career move and not just a stepping stone.

Showcasing the “new you”

Practices solve problems and face challenges, so being able to provide services from the full spectrum is achievable. But to get to the absolute bottom line with clients requires trust. “They need help with their future, but you need them to tell you what’s keeping them awake at night. If you look at building your clients’ business success, it’s about asking, not telling, it’s about listening, not talking. As a practice, don’t go in there and tell them what they should be doing, talk to them, get their opinion. And that will open a floodgate of services you can help them with,” said Shohet.

Case study

Shohet’s example is a mid-tier firm that was very traditional, doing around 80% compliance work. Now this is down to 50% and the balance, which he said is enormous for a practice, is advisory. “That’s a huge tipping of the scales. Often you get 80/20 or 90/10 in favour of compliance, but when you can get 50% simply compliance and the rest advisory, that is absolutely enormous. They just got it right and they’ve grown on the back of that, because most of the gross has been in the advisory work and more people coming to them because of their extending reputation for compliance work.”

This firms also spends around 12% of its revenue on technical and non-technical training and healthcare for its staff. “That is massive. But of course they get value for money because suddenly they have a different product in their staff, who are technically trained in areas other than regulatory work, and the firm itself recognises that staff need help.”

Meanwhile, the firm’s growing reputation means the recruitment market and agencies know candidates are going to a “really, really special practice, that works very, very differently. It’s a strong career move, not just a step of a couple of years to get a name of a firm of accountants on your CV,  it’s also a place to train. And you might stay on if you’re any good and make Senior Manager or Partner. It’s only a small firm, but it’s worked for them really well”.

Neil Johnson is a freelance business journalist who contributes regularly to trade publications and member organisations, covering employability, recruitment, business trends and industrial analysis.