I heard this great story from a startup organisation with whom I’ve been in conversation. Sorry – they’re in deep stealth so I cannot name them. They’ve cut a deal with their lawyer to defer 75% of fees until they start achieving sales. Then there is a payback formula.
That is what I call professional innovation. How can they do this and make money?
- The initial work is low risk so not necessarily hugely draining on resources.
- They could take an immediate hit but the risk is known and has been assessed.
- Trust, trust and more trust.
- The reality is that with the right chemistry, the lawyers will make a justified killing. In time.
Can professional accountants do the same? Indeed they can. In this case, there are some very specific tax issues that need to be understood. But there are problems:
- Those issues are in a state of flux and uncertainty.
- The rules to which this issue relates could change radically in the next year or so.
- Any of these factors could put a serious dent in the business model.
It is therefore important to get the best worked out long term strategy in place. And ensure there are other routes to success. In other words, we’re planning for repetitive failure.
This will leave the founders with some interesting issues to tackle. It could lead the professional accountant, prepared to waive an element of fee, as a super star. As a professional, it leaves a number of interesting decisions and questions about your own business model and the way you deal with clients. For a start, it questions the value model of the hourly rate. There’s no point in pricing according to a historical clock. By the time you get paid, inflation will have rotted its value anyway. But you know all that.
So how about pricing according to the startup’s business plan and factoring in what you want to see as a return for such a sterling service. Thought about in those terms, it’s almost tempting to come sailing back into practice.
But there is something more interesting going on. One of the professional accountants in my network has already stepped up to the plate. The initial overview opinion has been received. FOC. The founders said: “WOW.” Networked effects are incredibly positive.
When you understand that, then it’s but a short step to sitting alongside the entrepreneur and figuring the whole thing out together. That’s where value is created, earned and mutually exchanged. And that is why it is so important to learn how to listen to those very smart startup people who have no money, live on credit card or a second job but whose passion for their project sends a light with which you could illuminate Moorgate Place.
That’s a message I hope those who are co-innovating from the relative safety of large organisations understand. They have a different set of issues to those who are living on fresh air and hope. They are related – but different.
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