By Hitendra Patil
Accountaneur: The Entrepreneurial Accountant
Did you feel the distinct feeling of one year ending and the next year starting? Not from the calendar change point of view, but that psychological feeling that you generally get when a year is over? If not, don’t worry; you may not be alone.
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It is natural to feel that the 2020 experience will continue, at least for some time in 2021. It is not unusual if you feel uncertain for now. It is okay to think that you cannot estimate when things will start turning around for the better.
But it is NOT okay to not even think of doing something different in 2021. You need to find ways to adjust your practice for 2021 and most likely for a few years in the foreseeable future.
In 2020, I spoke with and interacted with more than double the number of professional accountants than in 2019. That is a few hundred accounting firm owners, managing partners, CEOs and decision-makers from the top 10 firms to solo practitioners. The common themes arising from these discussions were intriguingly similar in each of the quarters of 2020. In the shock of the first quarter, what accountants shared was surprisingly positive. In the last quarter of 2020, accountants have definitely emerged to be a community dedicated to a higher human purpose than just what the word “accountant” brings to one’s mind.
2020 is over. Now what?
You cannot afford to ignore the practical reality of ensuring that accounting practices remain resilient, relevant and responsive to the seismic shifts in the economy and psyche of business owners and clients. 2020 is over. Now what? Based on unmistakable vital trends emerging from accountants themselves, here are the 21 ways to adjust your practice in 2021.
1. Focus on keeping clients in business.
Accountants did a phenomenal job of getting PPP loans approved for their clients. Whether clients are eligible for the next wave of PPP loans or not, accountants must do all they can to keep clients in business. It means providing as much guidance as humanly possible on optimizing expenses, controlling cash flows, prioritizing spend, analyzing and forecasting demand for clients’ services/products, ensuring clients leverage all tax-saving provisions and so on.
2. Treat every client as a startup.
Startups in their shoestring budget stages avoid non-essential resources. Apply a similar thought process to your clients’ businesses to guide clients to focus primarily on the essential business-survival/growing functions until the economy shows signs of a rebound. It is difficult to pretend not to have the money you have, i.e., spending can be a temptation even in hard times. If need be, ask clients to put “reserve” money in a separate business account for the time being and not touch that account until they get advice from you.
3. GIVE referrals as if it is a compliance requirement.
Compliance. You help clients to ensure compliance come what may. You do and help clients do what has to be done according to laws. Imagine and believe that “giving referrals” is a law. And that there are monthly deadlines for giving referrals. Keep a record of how many referrals you gave to clients each month as if you need to file that record with the state/IRS.
4. Find centers of networks and activate them.
Refer your clients to other clients of yours. Refer them to vendors. Refer them to every possible source/resource that can be useful for them. In other words, unlock your network. Each of your clients has vendors and customers. Your client is the center of his/her network. Discuss with your clients what you can do to guide their network. Ask your client if it is okay for the client’s vendors and customers to be referred to others in your network. Involve the client in making those referrals to his/her network.
5. Monitor clients’ business as if it is in ICU.
I wish and pray no one ever needs to be in ICU. But just as ICU means intensive care, think of giving intensive care to your clients’ businesses, assuming that their companies are in a financial ICU (even if they are not doing poorly). It will require you to monitor financial KPIs/dashboards weekly or even daily; monthly analysis is way too late. Like in a medical ICU, where the tolerance for deviation from standard parameters is very low, be sensitive to the degree of variations in your clients’ businesses’ financial trends.
6. Develop relationships with more funding partners.
There is an old wisdom quote, “Don’t dig a well when the house is on fire.” Hopefully, your clients won’t need much funding but be ready to shorten the time to help them obtain financing if they do. It is helpful to have relationships with multiple funding partners/companies and be familiar with their processes.
7. Find and share more trends and insights with clients.
You don’t have to pull off a massive research project to find trends in your clients’ businesses or their industries. Even if you diligently look into your clients’ financials more deeply than your usual practice, you can find critical insights to share with your clients. Look at inventory trends, payables/receivables trends, sales trends, etc., in each client’s business. Try to find trends in industries/professions that your clients operate in. Connect the dots. Apply your experience/education/wisdom to the information you uncover. Derive actionable guidance from such analysis and share it with your clients. You might find what’s working and what’s not in a given industry applies to/can be useful in another sector, i.e., ensure to discover fundamental principles from your findings.
8. Invest in making clients cloud-savvy.
There is enormous inefficiency on the islands of databases locked in desktop software. Such technology allows mostly for postmortem, not timely treatment. Cloud can help you guide your clients in near real-time. It will need you to train your clients on using at least some parts of your professional cloud solutions. Invest your time in such training.
9. Invest in making your firm more cloud-savvy.
You cannot train clients to be cloud-savvy unless your firm is cloud-savvy. It is advantageous to explore all options to integrate your cloud solutions, wherever possible, not just moving from desktop to cloud. Moving your firm and clients more onto the cloud also means adapting to client interactions and service processes to the cloud, e.g., sending reports by emails gives way to clients accessing reports online/real-time – which means you will need to keep client work more up to date to ensure data/information is not stale.
10. Relieve clients of accounting/payroll work.
Economic downturns demand each business owner focuses on what he/she does the best, i.e., the critical business processes. Accounting, payroll, sales tax, etc., are processes that are best left to professionals like you so that you help clients maximize their focus on business. To help clients let you do that work, you may have to offer some pricing relief, but it need not necessarily mean losses for you as you can leverage automation.
11. Ruthlessly automate your processes.
Modern software used by accounting firms has evolved to provide several opportunities to benefit from deeper integration and automation. Not just core accounting/payroll processes but also automated client services, alerts, notifications and even business analytics/advisory can be automated to levels never possible before. In other words, you want to release more quality time to yourself to help clients using your experience and wisdom rather than getting stuck more in managing data and information.
12. Standardize more, yet customize.
Automation is more powerful when you standardize your processes. It means less time, effort and cost to train your staff; more predictability and reliability; more accuracy; and fewer process problems to solve. Yet, you can still customize the outcomes for each of your clients. It is the insights, reports and advice you can customize to each client while your processes are standardized. Find more opportunities to standardize and customize.
13. Optimize overhead, not reduce headcount.
It is almost a reflex action to reduce headcount when the recession hits. But this time, the situation is very different because of the pandemic. More than ever before, the sheer human considerations coupled with specialist knowledge required to wade through the complexities need you to retain your experienced and knowledgeable staff. With working from home the norm now, it is possible for firms to optimize overhead even more than ever before.
14. Find creative ways to keep all your staff on payroll.
In 2008, when the recession suddenly hit, one of my then-clients, an 11-person CPA firm in Chicago, found that 40 percent of the firm’s clients were not reachable. Many of those businesses went bankrupt very quickly. The firm lost significant revenue in no time. More and more clients were finding it tough to keep going. The firm owner decided to lay off 50 percent of the staff to help the firm survive. Within the same week, all staff came together and proposed that they all would work 50 percent of the time so that each of them got some income. At the same time, the firm cut down on administrative overhead as much as it could. The firm survived the tough times.
15. Dive wholeheartedly into offering CAS.
The economic downturn requires business owners to focus on their core business functions entirely. The time was never better for offering full-scale Client Accounting Services (CAS). Not only does it help your clients to focus on their craft, it helps them fully benefit from the breadth and depth of your professional expertise. And more powerful than ever before, cloud technologies make it easier, faster and more profitable to offer CAS without needing additional resources at your firm.
16. Share your insights more, not just with your clients.
It is an absolute must to share actionable insights with your clients. But don’t just stop there. Share such insights with your larger audience, but by generalizing those, i.e., bring out the core concepts from specific client situations. Post on social media. Write blogs. Share with your social media “groups.” Do webinars. Do podcasts. Create YouTube videos. Request your clients to share such insights with their vendors and customers.
17. If need be, consider marginal costing and operating profit only.
It is a hard pill to swallow, but these may not be the times to stick to your profitability definitions and parameters. You may want to think in terms of marginal costing, operating profitability and even operating break-even, at least for the foreseeable future. Hopefully, you won’t have to think in these terms but if need be, be open to considering such drastic measures.
18. Invest more time in marketing and sales.
Contrary to the instinct to reduce investment in processes that may not yield predictable results, it is time to invest more of your time (and money) in your marketing and sales functions. Recessionary times can reduce incoming referrals, and you need to be ready to overcome that shortfall. As mentioned above, sharing your professional insights and wisdom can be effective for your marketing. Find that extra time to do so.
19. Do consulting webinars/online meetings with multiple people.
Everyone has limited time per day. You can optimize your time by inviting multiple clients/prospects to a common webinar/online meeting. Picking, say, five common issues facing most businesses and how to overcome them, or something like that, could be a good use of your and your clients’/prospects’ time.
20. Budget 100+ hours to do pro bono consulting with clients.
At least two hours on an average per week to deliver free consulting insights to your clients can help you strengthen client relationships and give you new insights to hone your advisory skills and knowledge. You may not want to promote it as “free consulting” to ensure clients perceive some value in your efforts. Pitching the consulting session as “normally charged at $150 but offered at no cost to you for a limited time/till <<date>>” might help you avoid diluting the value of your expertise. The current world situation is the right time to share your expertise generously and graciously.
21. Do goodwill accounting of what you do for clients.
When a business acquires another, it also acquires intangible “goodwill.” Think of your pro bono time as if you are earning future goodwill from your clients/prospects. Don’t just keep it in your thoughts. Estimate whatever you feel is the appropriate tangible valuation of such goodwill and keep account of such goodwill, not with the expectation of returns but to ensure you are on track to keep the goodwill score moving upward. What gets measured gets done.
Please share your ideas/thoughts in comments below.
Why not begin sharing right now? Please share more ideas/thoughts in the comments below to help your peers in the profession.
I wish you, your near and dear ones, your clients, and every person in your network all the very best in 2021 and the times to come.