How can remuneration benchmarking impact your bottom line?

Australian Money

The changing Australian economy has resulted in a greater focus on operating costs for many businesses.  Employees are often an organisation’s greatest resource, and typically they also represent the largest cost to the bottom line, so paying appropriately is critical.

Why conduct remuneration benchmarking?

Remuneration benchmarking is a powerful tool that can provide you with the information necessary to answer the following three questions critical to sound financial and employee management:

1. Am I paying legally?  
Employee entitlements including minimum base wages are set by the applicable award, or if the employee is not covered by an award, the National Minimum Wage.

Minimum base rates increase annually on the first pay period on or following 1 July.  This coincides with many organisational pay review cycles, making this the perfect time to benchmark and ensure your pay levels are legally compliant.

2. Am I paying consistently?
In matters of remuneration an individual’s skills, experience and performance, should result in reasonable differentiation.  However, often other factors such as negotiation abilities and length of service can influence remuneration levels, leading to disparity within groups of staff performing the same role.  Not only can this have a negative impact on financial management and sustainability, employee engagement and productivity may also be affected.

3. Am I paying competitively?
Paying at market rate is not just for attracting quality applicants; it also ensures key employees don’t ‘jump ship’ for an increase, and that your remuneration levels and practices are sustainable.

When using market data, consider the industry, role and region carefully; comparing an Office Manager working in a small professional practice to one working for a large corporation is like comparing apples to oranges.

What about outliers?

What do you do if your employees are well below or above the benchmark?

1.  Assess the reason for the anomaly
You should always consider an individual outlier, case by case. If they are well below the benchmark, is it because they are missing a required qualification? Or underperforming?

If they are above the benchmark, is it because they are a top performer? Because they are due for promotion? Or perhaps they were hired during a peak in the market?

If there is a valid reason for the employee being below or above the benchmark, there is no requirement for immediate action. However you should still work toward bringing the individual in line with the rest of your employees.

2. Is there a training or performance issue? 
The ‘How’ of dealing with outliers is not set in stone.  An immediate pay rise is only necessary if the employee is below the applicable minimum wage or well below the market.  However, action will need to be taken if the employee in question: needs to be performance managed; should be on a training plan; needs a promotion; or if a conversation to reduce the pay level needs to be conducted.

3. Is this sustainable?
Your top performer may be worth every penny, but is it sustainable to give them a pay rise if they are already significantly above the average?

It may be time for a realistic conversation. Explain the reason for a smaller or no pay increase, consider alternatives such as: flexible hours; training opportunities; or alternative benefits. It is critical that unsustainable increases are minimised, while avoiding demotivating the employee in question.

Outliers are an issue that will not be solved overnight. It is essential that you plan to bring individuals in line with other employees over a period of time, together with building in consideration for regular workforce increases.

At a minimum, remuneration benchmarking will ensure you aren’t at risk of prosecution.  At best it can have a positive impact on your financial performance and employee engagement. With the minimum wage increase just around the corner, now is the perfect time to start.

Interested in effective recruitment strategies: CLICK HERE

Author: WCA (Warner Consulting Australia Pty. Ltd)
WCA are an Alliance Advisor with ATL Network

Getting Back In Touch With Old Contacts


It happens to all of us. There’s a former client, former customer, ex-colleague, ex networking associate you’ve lost touch with and you’d like to re-kindle the relationship, but you’re having trouble trying to figure out what to say after all this time. Don’t email. Call them up and say something like this:

“Hi (whatever their name is). It’s (your name) here. I was just thinking about you and I thought I’d pick up the phone and call. I don’t actually need anything. Just touching base to say hello and see how you’re going. Got a minute to talk?”

Well, that’s how I handle this kind of situation eight times out of ten. And the experience is typically an enjoyable one―both for me and for them. They’re happy to hear from me. We chat for a while. We laugh. We update each other on what’s going on in our worlds. We’re back in touch. And often we’ll arrange to meet up for coffee or a bite to eat. Sometimes it’s a drink after work. I’m always glad I made the call.

My attitude is if the relationship was once strong and you’ve just dropped the ball, then reach out to re-connect.

Like I say, mostly I just pick up the phone and call the person, but not always as you’ll see. Read on.

BIG QUESTION: How much business are you missing out on by dropping out of touch with people?

Ex clients, ex colleagues, people you went to school or university with, played sport with or just hung out with socially can be your very best source of new business. They already know you, like you and trust you at least to some degree.

But…I will admit it can feel a bit uncomfortable getting back in touch after months/years have passed. Will you look needy? Will it look like you’re after something or trying to sell something?

So we end up not re-establishing those relationships. We miss out and so do they.

If picking up the phone and calling them doesn’t sit comfortable for you, one of the best ways to re-connect with old contacts―and at the same time overcome any psychological roadblock you might have in re-connecting― is to get back in touch via email and in a way that provides value to the other person.

Here’s the deal.

When you are providing something of value to them; when you’re being of service to them; when you’re being helpful you feel a lot more comfortable reaching out to re-connect. They appreciate you making contact and you have a greater desire to do it.

Here are a couple of surefire approaches (techniques I like to use myself) that allow you to comfortably re-establish contact and be a valuable resource at the same time. You’ll reconnect and feel good about it. And so will they.

These approaches for getting back in touch work like a charm because they are about giving value and being valuable and not asking for anything.

That’s the secret to successfully reconnecting with old contacts; reconnect by giving value, by being valuable, by being resourceful, by being helpful―and, I repeat, don’t ask for anything.

So the first way of being valuable when you get back in touch with someone is to invite them to an event or something you’re going to that you think they will find valuable too.

The best way of doing this is whenever you get invited to something yourself, say a networking event, a seminar or any kind of thing that you might find useful, think about WHO in your network or who in your data base you could invite to that as well.

Inviting an ex client, ex colleague or someone who has referred business to you in the past to come along with you is an excellent way to re-establish a relationship. It works really well for three of reasons.

First, they don’t even have to come along to the event to appreciate you thinking to invite them and you’re still back in touch. The invitation itself puts you back in touch. They might turn you down, but they will appreciate getting your invitation. And then you can go back and ask them what they’re doing now, how things are going for them, how’s business, etc. and perhaps even suggest catching up for a coffee or bite to eat to keep the conversation going.

The second good thing that happens is if they do come along to the event with you then both of you are out of the office, away from the pressures and distractions of the workplace. It’s a relaxed social environment. You can sit down together and chat over coffee or something to eat. Or you can stand around chatting at a networking event while you enjoy having a drink together. You get a nice chunk of social time together to rekindle the relationship. You get the idea.

The third good thing that happens is when they come along to an event with you they also get to meet other people―people who might be desirable contacts or prospects for THEIR business. You’re being valuable to them because you’re helping them increase who they know. They’ll be appreciative of you for that.

The second way of getting back in touch with old contacts and being valuable to them at the same time is to organise your own event. This gives you the opportunity to re-establish multiple relationships, all in one hit.

I’m not suggesting you put on some kind of mega conference or host a lavish cocktail party or anything grandiose like that. What I mean is inviting six or more of your old contacts―ex clients, ex colleagues, people who used to know each other―for drinks after work or a pay-for-your-own breakfast, lunch or dinner. It could even be as much as you inviting them over to your place for a barbecue. Either way, you’re getting everyone together. You’re back in touch. And, in the process, you’re creating value for everyone, including yourself. Not only are you re-connecting with each of them, but they’re also connecting and re-connecting with each other. It’s value for EVERYONE.

In addition to this, as the host/organiser you have the opportunity to interact with everyone before the event when you’re doing the inviting and at the event as you welcome people, make introductions and move from one conversation to the next. And there’s a bonus. You’re always a topic of conversation because you’re the host.

Then after the event, as you follow up with everyone to see if they enjoyed themselves you get another piece of time with them. Based on how the conversation goes, maybe then you suggest grabbing a coffee or something like that and enhance the relationship by having a more in-depth face to face conversation.

Here’s what I’ve being doing for years.….
I organise what I call a ‘drinks soiree’ every three or four months as way of re-connecting (and staying in touch) with people who are important to me, with no thought of what I might get back in return. Through a mix of text, email and phone I extend a personal invitation and I let everyone know that they’re buying their own drinks.

There’s always a good crowd. I greet people as they walk in the door. I make lots of introductions. I make sure I get to talk (albeit briefly) to all my guests before they leave.

I’m a topic of conversation because I’m the host. That’s a bonus!

After the event, I follow up (usually by phone) with a number of my guests. They’re always happy to talk. It gives us a more time to chat. I look to nurture the relationship by offering to introduce them to people they didn’t get to meet at the event. And, with a subset of them, I will arrange coffee to continue the conversation. It’s an effective way for me to keep some of my relationships ‘alive’. It’s all good fun and very good for business.

QUESTION: Who are six or more people that you would like to re-connect with? Think of people who can help you achieve your business goals.

ACTION: Don’t hesitate. Set the date for your event and get on with inviting your guests. You won’t regret it.
By the way, are you on LinkedIn?

If you’re anything like most people who are, you’ve probably collected a whole swag of contacts that you haven’t communicated with in ages―people you’ve worked with, done business with, had meetings with, discussed opportunities with―all kinds of people that you’ve fallen out of touch with. You haven’t been thinking about them and they haven’t been thinking about you.

BIG QUESTION: How much direct business and referral business are you missing out on―business that your rivals are getting instead―from all those LinkedIn contacts that have forgotten about you?

Try this valuable exercise….

Find three of your LinkedIn contacts that you’d like to re-establish a relationship with. Send them a note. Ask how things are going for them, what they’re doing now and how’s business. That kind of thing. Let them know that you don’t actually need anything, but you’re just checking in to see how they are doing.

How good would that make you feel if someone you haven’t spoken to in a while just dropped you a note that said they were thinking of you and wanted to say hello? That would make me feel pretty good. Spread a little goodwill today and reach out to some of your old contacts. And while you’re at it, tack on a few lines about what’s new with you, but don’t ask for anything. And no selling!

Odds are, people will be pleased to hear from you and they’ll come back to you. Some of them in a flash. So you’ve swapped notes. You’ve re-connected. Maybe you then suggest a phone call or grabbing a coffee if they’re nearby or something like that and enhance the relationship by making it more personal. That can lead to anything. Maybe something big.

QUESTION: What’s the point of making all those connections on LinkedIn in the first place if you never interact with them?

ACTION: Send three notes today and keep sending three notes each week until you have reached out to all those LinkedIn contacts you want re-connect with.

What about all those old business cards sitting on your desk or in a draw of people you met at networking events and other situations, but didn’t follow up with? Some of these cards are leads you’ve generated, but aren’t likely to result in anything meaningful because you’ve let them go cold.

ACTION: Go through those cards and pull out the ones you think are potential opportunities. Of those that you’re not connected to on LinkedIn, send them an invitation to connect.

MAJOR IMPORTANCE: Don’t do the generic thing that says, “I’d like to add you to my professional network on LinkedIn”. Instead, say something personal like, “Hi (whatever their name is). Just trying to re-establish connection with friends and colleagues who I’ve lost touch with. Would you like to connect here on LinkedIn so we can stay on top of what’s going on with each other?” That’s all you need to say at this point. The invitation itself puts you back in touch.

Chances are, most people will recognise your name and ‘accept’. Now you’re trading messages. You’re back in touch. The door’s open to start a conversation. Maybe you could invite them to an event you’re going to…..or your own event. Maybe (based on what you’ve gleaned from their LinkedIn Profile or their website) send them a link to a podcast, video or article they might find useful. Maybe suggest grabbing a coffee together. But it’s not the time to ask for anything or sell anything. Your goal is to re-new the connection.

Already connected to some of these people on LinkedIn? You know what to do. See earlier in this article.

Stuck for words when you re-connect? The following might help……….
● I thought it was time I gave you a call.
● I’ve be meaning to call you.
● Just wondering what you’re up to.
● Long time, no talk,. What’s new?
● It’s been so long since I last saw you. How are you?
● Amazing how time has gone by.
● Where does time go?
● Just touching base to say hello and see if you’re ok.
● I saw something today that made me think of you.
● I had cause to think of you this morning when……
● I was thinking of you today because……
● Your name crossed my mind/came up in my head when I was……
● It’s been way too long. Let’s catch up. My shout!
● We connected on LinkedIn six months ago. I see from your profile that you……
● I noticed your LinkedIn profile and……..
● If you’re looking to reach out simply for the sake of not being forgotten, LinkedIn is a great option. If you’re not already in each other’s networks, send a brief personal message and ask to connect. Already connected? Endorse your contact for skills you know s/he has.
● Just a quick update.
● Good to see you lighting up the social pages in (name of publication) when you noticed their photo.
● When I saw this I immediately thought of you.
● I thought you would find this interesting.
● I just wanted to touch base to see if you’d like to meet for coffee and swap updates on what’s been going on in our worlds. Let me know if you’re keen.
● I have so missed seeing you.
● I see you’re working in Sydney now, which explains why you’re not at the Local Chambers meetings I used to see you at. I hope everything is going nicely for you.

Reaching out to old contacts can be hugely beneficial and it’s not something that needs to be painful. Use the tips above to reach out and odds are your old contacts will be pleased to hear from you.
I hope you find these ideas for re-connecting useful.

That’s it for now.

Until next time.

PS. NOTE WELL: When you re-connect with old connects, try not to let them go cold again. You need to keep in touch. The secret to that is to prioritise and systemise. And that’s a topic for another time.

Author: Ron Gibson, Alliance Advisor with ATL Network

Ron runs a Web-based Business Growth Masterclass for Professional Advisors. Next Program is scheduled 6th July. More information: CLICK HERE

Blame or responsibility: Knowing the difference can change your business

ActionWarren Buffet, perhaps the most successful investor in the world, got it wrong once, and some of his followers lost money by taking his advice. When he apologised to investors, a number commentators lauded his action, saying he was taking “responsibility” for his actions.

I disagree. While Buffet’s apology was a noble and honourable gesture it did not constitute taking responsibility. He was taking the blame.

What’s the difference between taking the blame and taking responsibility? My definition is quite clear. The parts of the word hold the answer: it is the ability to respond, whether it be to a problem, challenge, trend or future opportunity.

The evidence of responsibility is action. If someone claims they are taking responsibility, they are taking or planning action. The conversation is about action – they are focused on what action to take today that will make the future better. Responsibility is a forward looking, action-oriented concept.

Taking the blame – I’m sorry, it’s my fault – is not taking responsibility. In fact blaming oneself can be the ‘soft option’ and often substitutes for action and, in so doing, stifles taking responsibility.

 

Why the difference matters

Laying blame and taking responsibility are diametrically opposed; where one is, the other won’t stay long. Yet many managers act as if they are interchangeable. This creates problems for leaders; serious problems, when there are issues of bullying, for example. And the business can suffer too, due to the lack of an action orientation.

Blaming others has nothing to do with action and nor is it about the future. It is about the ego and making people feel guilty about a past event. Blame often leads to conversations of accusation, justification, excuses and back-side-protecting, not action!

 

What you say can change what they do

If this is happening in your organisation, and you want it to change, it starts with your conversations, as a leader (irrespective of your job title). Move the conversations away from blame toward action.

This means not only avoiding conversations where one blames another but also where people blame themselves – “it’s my fault”. Neither conversation is constructive. I cut people off when they move into the blame space by asking a very simple question: what are you going to do now to address the situation? This moves the conversation into a far more positive and productive space.

Focus your conversation on:

  • The actions needed to fix the current problem.
  • The actions needed to make sure the problem can never happen again.

Until both these are dealt with the problem has not been solved and responsibility is not complete.

If we have to delve into the past to be able to address the problem (and you will, in most cases) it can be easy to slip into a blame mentality. Avoid this by focusing on process – the process that created the problem. Don’t get drawn into the personalities.

It matters less what words you use, it’s the way it is said that counts. If you find yourself (metaphorically) wagging your finger at someone and saying, “you need to take responsibility for this” then it will be interpreted as blame. One of the most common blame statements I hear comes out of the USA – it happened on your watch.

 

Ability is important, too

So far, I have concentrated on the word ‘response’; but what about the word ‘ability’? Do your people have the ability to respond as the business needs. If not, what are you doing about developing their ability to respond?

If blame and responsibility are mutually exclusive approaches, which is it to be for you?

About the author: Warwick Cavell, an Alliance Advisor with ATL Network,  is a thought leader in communicating for results and strategy implementation. For over 25 years, he has helped leaders improve business performance by changing the way people communicate and work to solve problems – both internally and with their clients. He is a highly respected facilitator, coach, speaker and trainer, and author of regular blogs.

Complacency Breeds Complacency


Why Should I Worry?

Professional Complacency

When it comes to profit many firms are complacent. So long as the bills are being paid and I draw a reasonable sum each month why should I worry? That raises a most interesting question just how much is enough?

I frequently ask principals/partners in workshops to write down on a piece of paper just what they think their profit should be? Invariably there is a very diverse range of opinion and there should at least be some attempt by partners to come to agreement on a suitable amount. But the point I wish to make is that a large sum is inevitably left on the table. Complacency breeds complacency and as long as partners are reasonably satisfied a serious effort to change is unlikely. Yet most professional firms invest so little in areas like innovation, staff training, the latest technology, professional marketing, systems and procedures improvement, furniture and equipment, office presentation, and much more. If there is cash in the bank at the end of the month then a suitable drawing is on the cards!

So few firms complete a budgeting exercise that drives the firm. Ideally the overall firm budget for the year/s ahead should have a number of budgets branching off and supporting it where a serious drilling down is evident. I refer to the Personnel Budget, the Work-in-Progress and Debtors Budgets, the Capital Expenditure Budget that itemizes future investment in equipment especially information technology, the Training Budget that links into the skills audits and individualizes or tailors the training needs, the Marketing Budget, the Cash Flow Budget as distinct from the accruals Profit and Loss Budget, the Balance Sheet Budget, the Drawings Budget, and all of these should link in so that what if scenarios may be considered up front. The DuPont analysis is also an outstanding tool for assisting in these projections.

Detailed Drilling Down

Now I did say ideally and the reality is that this sort of detailed drilling down enables decisions to be made in advance and not on the run. For example, what percentage of our revenue should we outlay on training? What is realistic to enable us to grow our people and skills to reach the vision we have already determined in our Business Plan and strategies? In light of our growth projection what is a reasonable percentage to spend on marketing in order to achieve that growth. This should lead to what I refer to as laser beam focused marketing rather than the scattergun marketing that most professionals engage in (if any marketing at all!).

Rule of Thumb

Most professional firms work on the rule of thumb of 1/3rd, 1/3rd, 1/3rd, i.e. 1/3rd of revenue is taken up in overhead, 1/3rd of revenue is absorbed in wage costs and 1/3rd remains for profit  suggesting that professional firms should earn 331/3 % net profit but this is where the illusion of profit comes in. Because no adjustment is made for realistic commercial salaries for principals, or interest on capital and current accounts this simple formula can lead to complacency. And note that the interest is calculated at commercial rates and after regular, realistic revaluation of Balance Sheet items  especially Goodwill, Intellectual Property and other intangibles. my book, “Earn Your True Worth”  I explain in greater detail the options for calculating commercial salary.

A Reasonable Return ?

Where these adjustments are made in a commercial manner invariably I have found that Net Profit (before tax) drops dramatically to around 5% pa or less. Losses are not uncommon. In my experience listed corporations on the stock exchange generally seek a return in the order of 15-20% pa or more and they are punished in their share prices if they don’t, so accountability is very strong. It seems to me that this is a reasonable minimal guide for professional firms. Return on investment should also be examined (allowing for revaluation of the intangibles). Is the firm receiving a reasonable return on their investment after the above adjustments?

A True Costing System

So where is the net profit we should be earning? Waste is a big factor and time sheet recording for many professionals has made us lazy. There is a strong move to value pricing, i.e., a more serious examination of the value to the client and negotiation and management of expectations with the client. I am not advocating cessation of the time sheet system; I am simply advocating a return to the use of time sheets as a costing system that is a reference point only (as originally intended), not the means of calculating the bill. As already explained when professional firms have such low productivity there is something seriously amiss.

The Practice Cannot Run Itself!

You simply must take the management of your professional practice at least as seriously as you do when attending to the needs of your largest client. My book will provide you with an approach to truly earning what you are worth but you must be willing to take action, apply resources and make decisions. The practice cannot run itself! And avoid being misled by the illusion of strong profit.

David Connell, Co-Founder, ATL Network.

2016 – ACCOUNTING PRACTITIONERS FACING THE BRINK – MAJOR DECISION TIME!

Time to decide

I recently received a very strongly worded email from a practitioner who complained that my views as to the demise of compliance work in accounting firms was completely wrong! I replied explaining that I have never held or expressed that view.

So long as we have politicians there will always be compliance work and we have reason to get excited every time they use the word ‘reform’ of the tax system because inevitably it means more work for us and of course more tax being paid!

HOWEVER, what I have been writing about is the need for change in fully adapting to a fast changing world where there is no ‘business as usual’. The evidence is in and in this last year especially many signs have emerged of practitioners facing some very big decisions …now…not sometime in the future. This is definitely not a time to be complacent, procrastinate or be a laggard – refer Diffusion of Innovation Theory and graph below:

 Early Adopters V Laggards

As you can see from this graph 50% of businesses and practitioners tend to be ‘late’ or ‘laggards’ when it comes to innovation and change. All too often we are just too busy being busy to notice change!

One practitioner phoned me just before the Christmas break and expressed surprise that this year he expected he would have his tax lodgement program finalised by Christmas for the very first time. He was stressed though as to what to do with his staff for the next six months. A recent national survey has revealed for the first time a downturn in a number of KPI’s including revenue and has concluded that greater efficiency is now apparent in the processing of compliance work and this has created capacity. I agree completely and this is a trend that can only continue and compound.

HUGE OPPORTUNITIES

For decades I have been ‘preaching’ about the huge opportunities and potential for accounting firms and I have been referring to these as a ‘field of diamonds’, i.e., at least 20 support services that practitioners can and should be providing to clients. A recent survey carried out by ourselves discovered that many, if not most, firms have a list of services highlighted on their website but ALL of the surveyed firms agreed that they were not actually providing these services in any significant way. By far and away the bulk of revenue is earned through compliance activity (including tax, audit, super funds, etc.) with about 10% described as ‘consulting’ or ‘special’ but arising from existing compliance activity. One firm did point out that it was just part of their service to provide inter-generational asset transfer support and advice but simply viewed this as part of their ongoing year-to-year support…without any specific processes or check lists.

Over a period now of around 30 years I have specialised in providing ‘future directions and solutions’ to accounting firms’, facilitation ‘practice makeover’ workshops, acting in a role of part-time chairman of many firms and generally supporting firms in practical ways. Prior to that I was for many years a practitioner, a senior equity partner, in Australia’s largest accounting firm. With this experience I have had the opportunity to make a number of important observations and one is that simply adding on or tagging on a new service to your practice rarely works. I have personally made this mistake in my own practice. I believed strongly (and still do!) that we need to constantly reinvent ourselves and look to new possibilities. I loved succession planning so in my practice I began to develop this as a service for the firm, rolling out processes, templates, etc. and before long referrals were coming in from banks especially for large assignments – let’s face it even today very few practitioners offer this service and I suspect I was the only practitioner in my region, at the time, actually doing something about it! Subsequently I left the practice to start what was known for many years as ‘ANZAN Professionals’. As I understand matters this succession planning service was dropped by my old firm because they either didn’t want to provide it or didn’t understand it! I have heard versions of this story in many firms many times over. It is now apparent to me that unless a new service is fully embraced by the entire firm with complete processes ready to go you may well be wasting your time.

So, what to do? “When circumstances change, leaders must themselves be able to see things in new ways”They must move beyond having their two feet stuck on the ground and lift themselves above the ground to see what is unknown. This is an easy statement to make but it is psychologically very difficult to do…Steven Segal. Many accounting firms have been established in an era of stability and growth and now they find it impossible to adjust to an era of disruption and destruction.

We need only consider the current changes to providing investment advice and the time limit placed upon practitioners of 30thJune next to comply with RG146 or face a very challenging time in servicing their superannuation funds for example. Accountants also have a professional and legal duty to provide their client with all necessary information on managing business risks. This will inevitably lead to the accountant informing the client of the need for various forms of insurance, such as Director’s and Officer’s insurance. Accountants are still obligated to advise what insurance is required to mitigate those risks and why but not what specific insurance products. I suspect that there is much confusion among practitioners in this area.

WHAT NOT TO DO!

Financial Planning is an area where pressure has been applied for change and urgent change by accounting practitioners and I fear that many have missed the opportunity already.

Strategic Planning, Succession Planning, DuPont Analysis and forecasting, Advisory Boards, Outsourced (insourced!) CFO services, Waste Audits, Balanced Scorecard, Coaching and Mentoring, Human Resources (HR), Business Turnaround, Due Diligence, Purchase and Sale of Business, Mergers and Acquisitions, Valuations and much more, are all services with much potential but the biggest. Most difficult decision would be what NOT to do!

Over many years I have completed countless independent valuations for practices and overall I would suggest that returns are not as good as many practitioners believe. When ‘commercial’ adjustments are made for salaries (currently considered to be around $200,000), interest on current accounts, ROI (allowing for realistic valuations of Goodwill, etc.) ‘profit’ is reduced significantly and often does not exceed 5%. Investors in listed ASX companies have an expectation of a return of between 15-20% or the share value is marked down.

So this raises an important question in my mind – should practitioners, and I refer to ‘general’ practitioners or ‘compliance’ practitioners take on these new services at all? I refer again to my observation above re rolling out an all-of-firm supported service with fully established check lists and processes in place. One of the very positive developments in the last 2-3 decades has been the growth of specialist support services for accounting firms. As a further observation, in current times an 80/20 share of revenue seems to be a reasonably accepted share of revenue with these specialists (there are many variations of course). They get 80% for rolling out the service for your client and your keep 20% (including capital gain) effectively for the referral and you don’t have to stress about keeping up to date in yet another area of expertise, developing processes, training of staff and so on.  Medical GP’s have been doing this for decades perhaps it is time for the accounting profession to fully embrace the concept.

Many practitioners are currently anchored in everyday experience and cannot see new possibilities emerging and are taken off guard by change. Few are willing to leave their comfort zones and thus to stay in tune with the way circumstances are constantly changing. Leaving one’s comfort zone is an act of choice – a choice many practitioners are reluctant to make.

We have established Practitioner Networks across Australia and New Zealand as a means of enabling practitioners to keep up to date with change, for peer review, and for assistance in implementing change. Go to 2016 Advisory Thought Leadership Program.

The more we resist the changes that are constantly occurring, the more we marginalise ourselves, paradoxically leaving us outside of the main-stream in which change is occurring.  It is no longer possible to defer change in your practice – decisions must be made now – 2016 – and we have the systems and processes at the ready to assist you in determining your firm’s future.

I would love to receive your feedback – either leave your comments here below or email or phone me direct. Let me have your thoughts? Do you agree or disagree?

CONTACT US TODAY

David Connell, Co-Founder, ATL Network

Mobile: +61 428 00 2010  |  Office: 02 69 22 6565

Email: david.connell@atlnetwork.com.au

Accounting Practitioners – What’s your plan?

Whats your plan

The average age of Accountants in Public Practice is 58 and getting older. Less than 20% of all practitioners have a documented exit or succession plan. So while many practitioners are thinking about retirement and life after their current business few are planning for it.

Like most things in business and life planning and preparation are critical. The value of your business is probable a key to your future so it is time to take a little time focusing on NOW.

Some questions you might be asking yourself are:

  • How can I exit my business on my terms and on my timetable?
  • How can I maximise the value of my business?
  • How can I ensure financial security for my family when I exit the business?
  • How can I ensure my business goes to the party of my choice?

Consider:

  • Is succession a viable option?
  • If I just ‘put it on the market’ will there be a buyer and what would they pay?
  • How long can I keep working in my business if I cannot sell it?

The importance and need to have well structured exit plan is essential for all practitioners. For many practitioners, their business is a large part of their ‘net wealth’ so improving business value improves their future. As a business owner you want to know how to:

  • What do you need to do so it sells for more rather than less?
  • Who can help you sell your business effectively?
  • How do you exit on your terms and your timetable?

We can help. Call us 1300 79 66 27.

How many accountants will make the cut?

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A number of years ago I headed up a national network of consultants, most of whom were accountants in public practice. We ran annual conferences, and in one particular year I decided to engage a firm to carry out personality profiles for all those attending the conference. While it was hugely successful and created many great conversations, it was also notable for another reason.

Before the conference I met with the managing director of the personality profiling firm to give him some background on what we did and where our members came from. Our goal was, essentially, to develop business ‘facilitators’ and make them better business advisors as opposed to compliance accountants. As I explained this I received a look of astonishment from the MD. When I asked about his response, he explained: “I have done a lot of profiling of accountants over a number of years and this has shown me that, only 15-20% of accountants have the profile to be successful as facilitators. So either my stats are wrong or you have been successful in attracting a large portion of accountants with the ‘right’ profile into your network”.

When we did the profiles it was clear that the latter was true. Just over 90% of those who attended the conference came within the profile he nominated as being required to be an effective facilitator. While I don’t put too much faith in profiles – people can’t be put in boxes – this was a result that made me sit up and take notice.

How many accountants, I wondered, are going to be able to make it in the new world?

Technology is driving changes that are disrupting the structure of accounting practices, now and in the future. This has particularly impacted compliance services – the core work of most accounting practices. As prices drop through technology-driven price competition and as technology is able to reduce the requirement for a visit to the accountant, revenues and profits continue to drop.

In response, accountants have cut costs trying to protect profits. They’ve taken work offshore.

Others have adopted a more progressive strategy: to grow fees beyond compliance work by developing ‘value-added’ services and moving into business advisory services.

Many services of professional service firms, and the accounting profession is no different, are based on the professional adviser, being the ‘expert’, solving ‘technical problems’ for their clients. The basic communication style appropriate for this type of problem-solving is called ‘advocacy’ – the professional adviser advocates the best or the ‘right’ decision. The dentist tells you what is wrong with your teeth and what you need to do to resolve it. While you may seek a second opinion your role is to make the decision as to whether you want to go ahead or not. Apart from keeping your mouth open, you have a small role in the final solution. The dentist solves the problem for you.

Accountants who move into business advisory services encounter clients with a different type of problem – adaptive problems. Adaptive problems do not have such clearly defined solutions – what works in one organisation may not work in another; what works today may not work tomorrow. Staff loyalty is an example.

Adaptive problems are ‘evolved’ rather than ‘solved’. Once a tooth is filled the problem is solved; staff loyalty is worked on each and every day.

Adaptive problems are evolved by a facilitator who uses an inquiry conversational style.

The inquiry conversational style involves more than asking questions; it requires a different skill-set than what most accountants are used to. There is a key shift: while experts solve technical problems for their clients, clients solve adaptive problems (under the guidance of the facilitator). Adaptive problems not only require a different conversational style but also a different way of thinking about value, problem-solving and how the service is delivered.

By Warwick Cavell, Associate Advisor, ATL Network

Why networking doesn’t work for a lot of people — and the solution for it.

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For many business people and professionals, networking is their primary source of business, while many others frequently claim to put a lot of effort into networking without seeing much return. What’s going on here? Why does networking work for some people, but not for others? What about you?

Networking, according to those who are successful at doing it — meaning they actually can attribute significant new business from the activity of networking — is NOT about finding people who may be good prospects for your products and services. It’s NOT about looking for potential new clients and customers for your firm. It’s NOT!

 Successful networking is about finding and developing ongoing relationships with “advocates” — people who will refer you, recommend you and introduce you to potential buyers of your products and services. It’s “who you know who knows who you want to meet”.
Good networkers do not view the attendees they meet at an event as their prospects. That is unless an attendee says, “I should probably hire you!”
 
Remember, those attendees are at the event to grow their own business.
If anything, attendees  at networking events, conferences, cocktail parties, etc. are potential referral sources. They know hundreds perhaps even thousands
 of other people and may potentially connect you to your next prospect
and maybe even many more prospects after that.
Don’t get me wrong. I’m not saying you won’t ever find a new client or customer while you’re out there doing a bit of networking. In some cases, you will. I’m just saying it won’t happen as often as you would like. Nor am I saying that your networking associates won’t ever buy from you. Some will, but not not nearly enough of them.
The reality is the lion’s share of your future new business will NOTcome directly from the people you meet in a networking environment. It will come indirectly as a result of those people talking about how great you are to the people THEY know. This word-of-mouth advertising advertising leads to a referral — your best, most profitable source of new business.
 
So here’s the rub. If networking is not working for you it means you don’t have enough advocates out there dropping your name and bragging about youand your business totheir friends and associates.
YOU NEED MORE ADVOCATES!
Foranyone that claims to put a lot of effort into networking without seeing much return, there’s a paradigm shift that needs to take place if they’re going to get the results they’d like to get. That shift is to move from looking for “prospects” to looking for “advocates”. Meaning, if you’re focusing solely on finding your next client or customer, you’ll miss out on making a lot of valuable connections who can refer business your way.
If you have no interest in establishing relationships, and you just want to sell to the people you meet, you are missing the opportunity to discover whether or not they might be useful advocates for you and your business. It’s your loss!
To make networking work for you, think beyond this person as a client/customer for me or can this person hire me when you meet people. The person you’re talking to may not need your services but someone or several some-ones in their network may. The idea is to develop a trusting relationship with the people you meet by following up and staying in touch with them. Over time you want to ensure that they know what your products/services/solutions are, what problems they solve for what type of people and the typical results you tend to achieve for your clients. If you get the relationship right — it takes time; one cup of coffee is never enough — and you have a good enough message about your offerings (i.e. it’s easily understood), they will happily refer you and recommend you to the people they know. And if they see your product or service as a solution to their problem or the means to achieving their goal, they’ll happily buy from you too.
Remember it’s “who you know who knows who you want to meet”.
 
Think of every person you meet as someone who could refer
business your way or help you gain valuable information.
 
Build relationships with people so that they will refer
others in their networks who need your services.
 
 
DON’T MAKE THIS BIG NETWORKING MISTAKE………….
 
It’s easy to dismiss people after talking to them for 60 seconds if they don’t fit the profile of our perfect client or customer. It’s easy to think, “I should cut this conversation short and move on. This person doesn’t need what I sell.” It’s easy to forget that this person knows a lot of other people. For example, their best friend maybe the owner of a business that is an ideal prospect for your services. Instead of eliminating this person, you can build a friendly rapport with them and have a warm referral (or even hot personal introduction) to a great prospect.
AND REMEMBER THIS………….
 
One of the biggest turnoffs at networking events is people that are solely there to build their own businesses. Don’t get me wrong ― that’s a reason we’re all there! I’m talking about the person who is keen to talk about what they do and explore how you can help them but they never ask about what you do and how they may reciprocate. The most successful networking conversations are win-win, give-and-take encounters. By focusing on how you can help others, people will be drawn to you and want to help you back. It’s human nature.
Those who are successful at networking don’t
build relationships to “get”, they build them to ‘give”.
 
So think referrals, think introductions, think word-of-mouth recommendations. Think about who can make those happen for you. In other words, focus on finding and meeting potential advocates — and if you find a good prospect for your firm, that’s a bonus!
 
An advocate may be the CEO of your local chamber of commerce. S/he may be in the marketing, finance or human resources department. They might be another business owner or professional. They might be responsible for sales or business development in a non-competing company. They might be a supplier to your business. They may sit on a committee at your surf club or head up a not-for-profit. Typically, they are well-connected and well-regarded.
Advocates may not buy your product or service today, or ever, but in time they may put you in touch with numerous others who could.
One advocate can bring you 5, 10 or more clients while if you pursue one potential prospect you will often end up frustrated and with zero new sales. Successful networking requires a shift in focus from trying to meet prospects to trying to find and meet advocates.
Approaching networking in this way takes the pressure off you to “sell” and means the other person feels no pressure to “buy”. You won’t be “elevator pitching” your products and services to everyone you come into contact with, trying to make a sale. You won’t be spraying your business cards around like confetti. And you won’t be turning people off. Instead, you’ll be better received, you’ll make better connections and, ultimately, you’ll have much more success in winning new business.
If you just go looking for clients and customers, there is always that
tension that you are sizing people up and down, trying to
figure out if it is worth investing time in someone.
 
I have said it repeatedly; networking is all about building relationships. I’m not trying to directly sell my services to “potential clients”; I look at networking as attempting to build relationships with people who could refer me business. I don’t have to sell directly to people I meet because if they need my services, they’ll find find me; they’ll let me know.
Take the stress out of your conversations altogether. Rather than
looking to turn your contacts into clients, look to
turn THEIR relationships into clients.
 
The real power of networking is in
who THEY know: there are many more opportunities there.
Remember, it’s “who you know who knows who you want to meet”.
So who are your potential advocates? Think about the businesses, the people who are in regular touch with your ideal clients or customers. How will you find them and when you do find them how will you approach them and what will you say to connect with them? Then how will you go about building a relationship right with them and ensuring they understand the value you bring to the table so they will want to refer you and recommend you? It takes some work and patience, but it pays off BIG TIME!
Ron Gibson, Associate Advisor with ATL Network.
Ron can be contacted on 0413 420 538 or gonetworking@iinet.net.au