An Accountant’s Top 10 for Professional Service Providers
1. Forget the timeclock. Ask a client why they came to you and they won’t say to buy hours. Whatever you value in your office is what your staff will emphasize. If you stress that all staff time should be chargeable then they will make sure all their time is billed but their emphasis will be on billing time rather than solving client problems.. However, if you ask the client what they want, they want results. Hours have very little correlation to results. If you start measuring success the way the client measures it, then your staff will put their efforts to accomplishing that. Another problem in the current model is when we bill a client for little things that have no relation to what the clients want such as billing for copies, long distance, etc. When you go to Wal-Mart you pick an item off the shelf and you say I am willing to pay the marked price for this item. You agree on value and go on. Compare this to the service industry, which says we can help you but that will be $500 per hour plus expenses. If you expect the bill to be $1,000 then estimate it at $1,300 and take the unknown out of the picture for the client. Now they agree on what they are paying for the result they want. You get a premium price because you took the risk and they get a fixed price, which they are comfortable with. Why is that concept so hard for service firms to grasp?
2. Measure client excitement by number of referrals. An excited client tells many, a happy client tells few, a satisfied client tells no one, an unhappy client tells everyone. Consider rewarding staff for referrals from clients. What you reward is what staff will emphasize. Very few clients will refer someone they are not excited about. Therefore, by simply rewarding referrals you will encourage staff to do all the things necessary to make a client excited. Send the client a little special gift thanking them when they refer someone. Clients love it when you appreciate what they do. On the other hand if you have to beg them for referrals, they are often uncomfortable because they equate this with all the high pressure door to door sales they have experienced in life. If you aren’t getting referrals you need to look at your services, how you deliver them and reinvent your business. More on that in item 8 below.
3. Do what is important, hand off the rest. Most professionals got in business because they were good at their profession and that does not necessarily translate to being good at running their own business. When you started your business you had to do it all because there was no one else. As you grow, you have to step back and ask yourself what is most important to the growth of your business. There are typically just a few key things that the “rainmaker” in the business does to drive the business. Once you identify those key drivers you need to hire or contract with others to get rid of all but those key tasks. The true cost is not what you pay to outsource day-to-day tasks. The true cost is what it costs in lost profits by you diverting your time away from the key drivers of your business.
4. Contract with someone to harness the power of the web. SEO, key words, social media, etc. Professionals are slow to change so your competition isn’t doing it YET. The older you are, the more afraid you are of the internet and that is good when it comes to professional service firms because most are not very creative or open to change. That means the first one to embrace change gets the biggest piece of the pie at the lowest cost. Many industries stay on the leading edge in technology but professional service firms are usually late adopters. When it comes to driving business via the web look for someone who has been successful. I recently started working with a web firm that ran an analysis and predicted a 7 to 1 return for the fees they charge me. That is an easy decision. If they can deliver then I gain $7 in new revenue for every $1 I spend with them. Once you start looking in this area you will be bombarded but narrow your search to those who are willing to deliver a return on your investment and have some track record you can check out.
5. Find an accountant who can read the tea leaves in your financials to you. Your financials tell a story of where you’ve been and where you need to go if you will just read the book. Numbers are pretty boring and most professionals like to get their financial statement and stick it in the drawer. I always tell people everyone makes mistakes but we try and not make the same mistake twice. If you don’t understand what your financials are telling you, how can you avoid repeating the same problems you had in the past? The numbers in your financials can help you spot trends, compare to industry standards, see where costs are out of line, predict your ability to take on new debt, predict the value of your business, tell you when labor costs are out of line and lots of other things. If you don’t understand the numbers, find someone who does and pay them well to help you use the numbers to manage your business.
Join un next Monday, November 29th, for the conclusion of this series.
Photo credit by bredmaker.