Stuck in a time warp?

Escaping the compliance trap

Over the years, accountants have sought several solutions to the compliance trap including MYOB, QuickBooks, Cashflow Manager, BankLink and other software programs. Cloud computing and outsourcing are now touted as the panacea but history suggests ‘one size does not fit all’. You need to assess the needs of the business (bookkeeping, invoicing, payroll, inventory, full-blown general ledger etc) and match those with the accounting skills of the business owner. It’s ‘horses for courses’ and if your reflex is to push one of the double-entry accounting programs at your business start-up clients then you deserve the computerised shoeboxes, write-offs and headaches. It’s time to stop blaming clients for their poor record-keeping and start matching their business needs with their accounting skills so you get better quality records.

The big issue

While GST has turned the vast majority of the 9000 Australian accounting firms into compliance sweatshops, it’s no surprise to find ‘growth’ is the number one concern for partners and principals. Three years ago finding quality Gen X and Gen Y staff was the big issue but what do you expect to attract when you don’t have a website and simply run a compliance sweatshop? Outsourcing the compliance work may have pushed the staffing issue down the list of priorities but how on earth can you expect to attract new clients and recruit quality staff when all you do is deliver basic compliance work?

Suburban firms have become a sea of sameness offering a single commodity, compliance. They compete on price for low end bookkeeping work, but undercutting is a flawed strategy and a recipe for write-offs. When a potential new client contacts your office what do you describe as your point of difference? And don’t tell me ‘personal service’ because everyone says that so it can’t be a point of difference! GST somewhat disguised the need for marketing but it needs to be back on your agenda right now!

Creating a complication

The GST compliance burden also led to an explosion of bookkeepers but results have generally been poor. Having said that, why do these firms throw double-entry accounting programs at clients and expect perfect records? Go figure.

Let’s face it, the majority of small business owners need a simple single-entry bookkeeping program. They don’t need – and certainly can’t drive – sophisticated double-entry accounting programs to simply record their receipts and payments and prepare invoices. Imagine if 95 per cent of your clients gave you a reconciled cash book and left you to just complete the finishing touches like journal entries for debtors, creditors, stock and depreciation.

Enter the profession’s competitor

We now find the profession is littered with ‘compliance sweatshops’ characterised by an ageing client base, no website (or just an electronic billboard) and fees that are either flat-lining or in decline. They lack a rainmaker and some believe the solution is to buy fees. However, what some of these buyers fail to realise is that compliance also limits your growth. It soaks up your capacity and ability to offer the services that clients really want – strategies and advice to help them grow their revenue, profit, business and wealth. In the ‘noughties’ this lack of capacity created a perfect opportunity for a competitor to the accounting profession, the ‘business coach’.

Business coaches offer high impact advice at premium rates while accountants fight over the low level compliance work. They have no interest in offering compliance services, probably bought a franchise, got some marketing training and are charging and recovering at hourly rates most principals dream about. They didn’t steal this type of work from us, we gave it to them on a platter.

The cynics will question if there is a real demand for business coaching services. Well, according to the US Department of Labor, Employment and Training, business coaching and associated services are expected to be the fastest-growing sector in that country over the next seven years.

Forecast growth of 83 per cent will even outstrip the demand for health care for the ageing baby-boomer population. It will grow four times faster than the demand for accounting and tax preparation services (21 per cent) in the same period. Australia will mirror this trend as the baby-boomer business owners sell their businesses and retire.

Away with complacency

We have been asleep at the compliance wheel. It’s our fault for becoming complacent. Doesn’t it make sense to be in a growth industry?

Your clients need to see you as their business coach, not just their compliance accountant. You need to offer more than just compliance to improve your job satisfaction and reduce the pressure that comes with low level work and rolling deadlines.

I’m not suggesting you throw away all your accounting and tax training but you need to elevate yourself above the rest of the pack by offering your clients what they really want.

This move will lift your profitability – but more importantly, it will attract more referrals and go a long way to solving the growth issue. When was the last time you talked to your clients about growing their business, their branding, marketing, website and how to harness the power of social media to win more business?

Time to change focus

If you’re one of the firms bogged in compliance you probably don’t have much time to devote to consulting. That’s fine, until your clients find out what other people are offering. When you qualified all those years ago there was probably no such thing as a ‘business coach’ so they weren’t a threat to your practice. But now business coaches are thick on the ground and they are providing consulting services to business owners, some of whom are probably your clients.

If you are spinning your wheels with fees that are flat-lining and have an ageing client base, you should treat this article as a wake-up call.