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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