Taking steps “little and often” works, but you have to get started.
By Martin Bissett
Passport to Partnership
A big concern in recent years has been how the incoming partners will purchase equity or fund the capital account and exit of a retiring partner.
Much has been written that examines the mathematical complexities of this topic but the bottom line is simple. Would-be partners in the age demographic of 28-42 are part of a generation who are already heavily borrowed in the form of credit card debt, mortgage debt and other forms of personal loans.
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Their capacity to borrow in the current economy is extremely limited and it would appear that this will be the environment for the foreseeable future. In turn, banks’ willingness to lend has also been largely withdrawn in recent years.
This has produced a cash impasse that has forced partners to consider gifting equity, especially on the basis of time served in the firm. There is not scope within this piece to give full examination of best practice within this area except to highlight that 72 percent of partners surveyed highlighted that a senior manager’s ability to “buy in” to the firm and assume responsibility for funding the retirement plans of exiting partners was among their top three concerns about passing their practice on to existing employees.
Some partners also connected the tenacity to raise funds with the desired level of ambition that they were looking for from those to whom they were to hand the practice over in the future.
Those without such ability need not fear, however. The cash principle was underpinned by the following disclaimer from several respondents we spoke to: “Clear and regular displays of talent and ambition from our senior staff while salaried will always trump whether they have cash or not in our deliberations.”
So if the potential partner doesn’t have or doesn’t need cash to buy equity in the firm, what do they need? They need to understand what a partner goes through.
Have you ever thought about what a day is like in the life of an accounting firm partner?
Imagine coming in earlier than everyone, leaving later than everyone and being paid last.
Imagine having to deal with
- the personnel disputes,
- the three who have called in sick when work in progress needs to be freed up,
- the major client who advises that they are moving to the competition,
- the lack of new business opportunities being created by marketing,
- the failure of referral sources to return the favor of introducing work to your firm in the way you have done for them,
- the major fallout with another partner over his department’s productivity and apathetic attitude toward billing,
- the changes in audit legislation leaving you wondering where the money is coming from over the next few years …
and it’s not even 9 a.m. yet!
So, when you become a partner and become responsible for handling some or all of these real-life and real-time issues, will you choose to just do what it takes to survive or to thrive?
Survive or thrive?
There was a particularly good (and rare) piece of television here in the UK called “Call The Midwife.”
I hadn’t been aware of the series that preceded it and thought it was a one-off. However, in this episode, two nurses discuss a particular case and one mentions that the death certificate of an individual who slaved away in a workhouse the entire career read “Cause of Death – Failure to Thrive.”
This got me thinking about our practices. Are our firms likely to die this year? I most certainly hope not. In life though, we must progress and grow; that’s the point of all this effort after all.
So if growth is on our agenda for any given year in terms of fees, clients, number of people employed etc. and we don’t achieve what we had planned to, our firm won’t have died necessarily, but another year of opportunity will have.
I then thought about all my meetings, numbering into the several thousands, with senior partners, managing partners, partners with particular portfolios, senior managers and practice managers over the years, where they had explained to me why they weren’t seeing the growth in the firm and the level of personal progress and remuneration that they’d wanted. I saw patterns emerge over and over again.
Here for you then are the top five reasons (you decide if they are excuses or not) why firms don’t thrive and the recommended solutions.
1. We’re just too busy.
This is one I confess to never having fully understood. It is a reason we’d never use in any other central area of life. If something is critical or vital to us, we make time for it. If we are dog lovers, are we too busy to feed or walk the dog? No, because the dog suffers otherwise, their growth is harmed and we don’t want that. If our child is bullied in school, do we find the time to go and see the principal to ensure our child’s safety? Of course we do. Our child suffers otherwise, their growth is harmed and we don’t want that. So presumably, if we don’t want our business to suffer either, we don’t harm growth by claiming to be too busy.
What we’re actually saying is that for some reason, growth and what it takes to achieve it is less important than dealing with what we already have on our plates now. If this is true, I’d advise you to stop hurting yourselves by paying lip service to wanting to grow. If it is not true, then I’d recommend a re-evaluation of why we’re actually in practice and what would really happen if we allowed some client work that is both time-hungry and profitability-impoverished to find a new home and free us up to build something better.
In my experience, if something is important enough to us, there’s no such thing as being too busy to attend to it.
2. We just don’t know how.
Here’s one that I completely understand. It is so frustrating to recognize the potential, maybe even see in detail what can be achieved within a business, and then have no idea how to go about making it a reality.
The disciplines and skill set required to grow the firm beyond the rate of referred work that comes in, minus annual attrition, is not always natural. It is a time commitment; it is uncomfortable. It is, however, still necessary. There are so many skills that we don’t stop learning because the first steps are daunting.
In fact, the greatest growth always occurs in the steepest learning curves. However, I’m sure when you studied accountancy and sat your exams as a soon-to-be-qualified accountant, the reality of being in practice was still something of a culture shock regardless.
If “we just don’t know how” is having a crippling effect in your firm, how about committing to nothing more than “baby steps” and making sure that progress is achieved little and often to effect great change over the longer term? It’s the commitment that’s the hard part. Beat that and we’re making progress already.
3. People just don’t want to change their accountant.
Well, we all know that’s not really true, don’t we?
If we think it through, it would indicate that almost no firm would ever grow because people never change.
People change all the time though, don’t they?
Perhaps a truer revision of that statement would be, “People have not seen enough value or reason to change from their accountant to our practice to cancel out the hassle and guilt they feel about changing from a firm they have been with for years, regardless of the quality of service they receive.”
It’s human nature for us to blame other factors or people for things not happening the way we want to. Rarely do we point the finger at ourselves and resolve to do something about it.
The reality is, it’s in our hands and if reason number 2 (“we don’t know how to”) is being addressed, this reason number 3 vanishes from our vocabulary.
Investing in understanding what and why people buy is something that most firms do at some point. Implementing what they learn, reviewing and improving their knowledge and ability on a regular basis is what puts them ahead of 95 percent of every firm they will ever come up against to win new work because that failure to implement and improve is where 95 percent of accounting firms fail in their business development efforts.
The summary steps then to ensure businesses change to your firm when they are not referred to you:
- Understand your prospect and their business.
- Understand your own value as it relates to them and their business.
- Link the two according to the prospective client’s goals for being in business.
- Take objections as encouragement that they care and are considering using your firm.
- Earn the right to ask for their business by handling each objection patiently. If all objections have been resolved to the client’s satisfaction, there is only one answer they can give.
Where are we taking our firms this year, down the 5 percent road of learning and implementing or the 95 percent road of learning or less?
4. We don’t want to upset the client’s relationship with us.
This reason seems to be trotted out whenever a firm contemplates increasing the level of service to an existing client and getting paid for it. According to the number 3 reason however, people don’t change their accountants so there’s nothing to lose by approaching them on additional services, right?
Because existing client revenue is the bedrock of every firm’s ability to meet their mortgages, overhead, payroll etc. the reticence here is easy to understand.
There are specific, non-threatening ways, though, of increasing a client’s understanding of the value we offer to them and non-pressurized ways of giving them the opportunity to take advantage of this value without them feeling cajoled to buy.
It is that commitment to learning the skill set required to do this that will set our practices on our way to increasing existing client revenues, sometimes quite dramatically.
The more we delve into common reasons for things not getting done, the more we understand that the heart of these matters is the central belief system and skill set that the practice/individual subscribes to. Often they are self-limiting beliefs and can only be changed by being challenged.
Who in the firm can perform that exercise?
5. We’re unsure and don’t know where or how to begin.
Bingo.
There’s every reason to be cautious about trying to develop something that requires us to become accomplished in areas that are currently unfamiliar to us, especially with the time investment required.
If this is the case with you and your firm, you’re one of the few who are being true to yourselves and facing reality. If you’d like to remove the fear of the unknown by doing something other than ignoring what needs to be done, it really is just a case of taking steps “little and often” to learn the skill set possessed by an accomplished business developer and try to implement that stage by stage until you feel comfortable, before moving on to the next level of development.
That means that when your website offers services that you can’t/have never provided, they don’t really differentiate you. The combination of your emotional investment and the true extent of the support and assistance that you can provide is your actual differentiator.
This need to be “all things to all businesses” often focuses us on telling our potential client everything that we can do and distracts us from building enough rapport and trust to have them feel comfortable in admitting what they actually want us to do.
