Article excerpt from The Good, the Bad and the Ugly® of the Accounting Profession, 2010 benchmarking report

Tiffany Carter - Thursday, December 09, 2010 - Comments (0) | Trackbacks (0) | Permalink

Following is an excerpt from an article written by Michael 'MC' Carter for the accounting benchmarking publication ‘The Good, the Bad and the Ugly® of the Accounting Profession’, 2010 edition. The online report will be available for purchase in the coming weeks on this page of the businessfitness™ website.

This is Part One of a Three Part series.

3 ‘Blind Spots’ Holding Back the Growth of Australian Accounting Firms, and the Obvious Solution Many Firms Fear

2008 marked the first year in the history of the Good Bad Ugly® survey that ‘Growth’ ranked as the most frequent response to the question, “Please rate your Top 3 current challenges”, with one in every four firms citing it as a Top 3 challenge.

That marked a significant shift in the accounting industry because in the decade prior firms were prospering simply by focusing on ‘getting through the work’ in the wake of the Goods and Services Tax introduction in Australia.

Since 2008, the trend towards a growth orientation has continued at a record rate, with 31% of firms in 2009 and 37% of firms in the recent 2010 survey identifying Growth as one of their Top 3 challenges.

That’s a 6% increase year on year.

No challenge has ever grown in importance as much in such a short period of time.

Growth is clearly THE issue facing the accounting profession in Australia.

Looking at the 10 most commonly cited Top 3 challenges in the table below, another two items also relate to growth, with ‘Introducing New Services’ and ‘Getting New Clients’ ranking 5th and 8th respectively.



Notice there’s a new entrant in the Top 10, with ‘Client Relationships’ increasingly becoming a concern. (Later in this article we’ll discuss how this is directly affected by the 3 growth-related challenges.)

When most business owners—accounting firm principals included—think of growth, most tend to think “we need more customers/clients”. That is the most difficult and most expensive way to grow a business.

It’s a natural tendency to overlook the growth potential in the firm’s existing clientbase. Even if a firm does acknowledge that it makes logical sense to look at growing their own clients first before looking for new clients, many practitioners don’t know where to start.
What do we mean by ‘marketing’ and ‘selling’ in the context of an accounting firm?

We define marketing as the one-to-many communication of value to clients, and selling as the one-to-one communication of value to clients.

Note that both are about communication.

In our experience, the key differentiator between firms who stagnate and firms who grow strongly, is in their ability to communicate value to clients.

When you consider that


... it quickly becomes obvious that the key element in that equation is Benefits.

Benefits are the results that a client perceives. In light of that, no firm ever truly has ‘fee disputes’ (that is, ‘price disputes’). They only have ‘value disputes’. This is where the client has not perceived that the benefits they received warranted the price they were charged.
There was another crucial word in that previous sentence: ‘Perceived’

Marketing and selling—and indeed, managing client relationships—is about managing client perceptions.

The only way to do that is through effective communication, which is what marketing and selling are all about.

But for many practitioners, ‘marketing’ and ‘selling’ are not only foreign to them, they are stigmatised words, beneath them as professionals.

“I don’t sell anything to anyone,” is a phrase I have heard over the years, spoken proudly by accounting firm practitioners.

This phrase is symptomatic of three factors holding back the growth of the accounting profession:

1. A lack of education and training in marketing,
2. A lack of education and training in selling, and
3. A lack of awareness that items 1 and 2 above even matter!

There are 4 levels of mastery when learning any new skill. The first level is called Unconscious Incompetence. This is the stage where “you don’t know that there are things you don’t know”.

Think back to the first time you were taught how to hold a golf club, or a tennis racquet or perhaps a musical instrument. There are very important aspects of such a skill that at first seem strange and totally unnatural.

And this is when the learning begins, when you move to the next stage of mastery called Conscious Incompetence. This is where “you know you don’t know”, but it is this realisation that makes it possible to learn and grow.

When it comes to marketing and selling skills, the accounting profession as a whole is at the level of Unconscious Incompetence. Most practitioners “don’t know what they don’t know.” There is a very low level of awareness of these crucial business skills, let alone competence in them.

If this seems a sweeping generalisation, consider these 3 areas of evidence:

1. Industry surveys and statistics;
2. The low attendance at ‘soft skills’ sessions at industry conferences, and
3. The structure of most small and medium accounting firms.

...

Stay tuned for Part Two and Three of this article (updated each week), which will delve deeper into the three areas of evidence and what you can do to ensure you’re not holding back the growth of your accounting firm.