Steve Pipe’s take on the best and worst
April 30, 2008
When I saw Steve Pipe’s analysis of practice performance my initial reaction was ‘thank goodness, someone gets it.’ Now I’m not quite so sure. Here’s what he said about the worst and best performing practices and action for the future:
On the supply side, many firms don’t make full use of leading edge systems and technology for managing and running their businesses. So their productivity is too low, their costs are too high, and their turnaround times are too slow.
And on the demand side of the equation, many firms simply aren’t giving their clients enough of what they really want – ie proactive input that makes a real difference to clients businesses and bank accounts - and low fees, low growth and low profits are the market’s way of punishing them for it.
Research shows that, more than anything else, business owners want their accountant to be more proactive. And because it is what clients want most, being more proactive is also the most fundamental and essential key to sustainable profit improvement…Rather than leaving proactivity to chance, the real breakthrough comes when you develop systems for identifying and sharing proactive ideas, suggestions, advice and input so that every single client benefits fully from them.
All of this should be fairly obvious stuff - except perhaps for the last part. However, he misses one thing - the manner of billing. Nowhere is there mention of pricing models that dispense with timesheets. A closer look at the numbers might indicate why. In all cases, whether good, bad or indifferent, the reported margins are in the range 31-34%. That hasn’t changed in years. However, I know of practices making margins closer to 40% and in one case, a margin of 48%. They don’t use timesheets.
Steve also doesn’t give any clues about the best practices used to generate quality income. That’s easy. Start with communications. Get conversations going with clients to figure what it is they need. We have the tools and technology, it’s just a matter of putting it into practice.
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Timesheets will be the death of those professional organizations who do not see that billing by the hour is destined for the ash heap of history. We at the VeraSage Institute have declared victory based on this –> http://davidmaister.com/blog/5.....g-Services
Enjoy!
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I like the fact that Steve sees low fees as an “effect” of doing business poorly, not the “cause” of why business at a professional firm might be done wrong. It took me a long time to understand cause and effect in business. And I keep having to relearn this weekly, it seems. Oh, well.
But I’m with you on this topic. Systems don’t solves the problem. Look at your last two sentences of your post. THAT is the sum total of what really works–get out of your chair and go talk to someone. Be humble, shut your mouth, listen, say “Thank you.” Astonishing things happen.
This relates back to a post you did a few days ago. It’s all about getting things done, not about the latest coolest software. I’m busily looking for every edge (software and otherwise) I can find. Now I’m wondering whether this is a mug’s game. Still king in my world? A paper tickler file set up the way David Allen suggests.
I personally think that systems and technology and software in the billing arena are God’s way of invoking the Ghost of Charles Darwin in the business world. If you’re running a business and working on billing software then you’re trying everything you can do to avoid actually, y’know, talking to people. Business = Soylent Green = people. Ultimately a human being writes the check, authorizes the wire transfer, or hands you a Visa card. Always a human. ALWAYS. That’s where the action is. And if you’re not where the action is, well, you’re wondering what’s for dinner.
I abandoned hourly billing because the software was getting in the way of getting work out the door. Billing time doesn’t work.
Interesting to see Ed Kless comment here. I am taking much of my learning cues from verasage.com though the site does suffer (sorry Ed) from a bit too much hyperventilation and hyperbole. Dragnet. Just the facts, please, and less self-congratulation. But thanks Verasage for pushing me over the edge to use non-hourly methods. Once I abandoned the quaint notion that i should do non-hourly billing “right” (whatever THAT is) I was a free man.
I am beginning to take exception to the need for edge technologies. Go talk to clients if you want to generate best practices? Pay me flat fee of $100x and I’ll do your work? Where’s the AJAX in that?
I’m glad I found your blog. It has helped (and continues to help) me with my (small) enterprise IT. Many thanks, Dennis.
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