Accountants are more comfortable talking to clients about
financial matters than strategy. If a business has profit and associated
cash-flow issues it is a reflection that their strategy is not working. Blaming
the economy, the government, competitors, and even poor quality staff, is like
blaming the weather, you may be right, but you are still left with low profit
and poor cash-flow. A good strategy will take into account all scenarios, and
will enable profitability in any situation. So if the accountant is
uncomfortable talking strategy, and it is the strategy that makes a company
successful, what should we do?
The answer, we need a sleight of hand, we need to convince
the accountant that it is their job to provide advice to their client to ensure
profitability and a healthy cash-flow. The accountant will normally accept that
responsibility. Accountants also like check-lists so if we gave them a process
for improving the profit and cash-flow of a business that would also help.
Compliance work is fast becoming a commodity, mainly because the clients endure
it rather than value it. The client is more interested in things that directly
benefit them, and having more money in the bank is an easy benefit to sell.
That means profit improvement should be an easier sell than compliance work.
So what if the accountant promoted a service to
significantly improve profit in the client’s business, and what if we
guaranteed we can show the client how to add pre-agreed amount of money to the
bank balance? Notice I said guarantee to show how, rather than guarantee to
actually put it there. The accountant cannot guarantee the client’s commitment
to the profit improvement process, they can only guarantee their own part of
it. At this point most accountants are pondering, what amount of money would I
be prepared to guarantee? The answer should be that it depends.
It depends on a lot of factors, such as the size of the
business, the level of waste there is, the resources we have available to
remove the waste, and how much time it will take? I think you would be safe
guaranteeing to find around 10% of the cost of running the business (overheads
and variable expenses combined). I may not have to guarantee that much to
provide an attractive return-on-investment. For example, if the operating costs
were $10 million, 10% is obviously $1 million, I might guarantee $200k,
particularly if I thought my cost in doing so was $20k. I have always worked on
a ROI rule of thumb of 10:1, even then most clients don’t need a ROI so high if
they are confident in the outcome.
The guarantee is one part of the confidence, but it is even
better if you can demonstrate how you would save the money. I can normally do
that in a two hour workshop. I run that workshop on the basis that if we don’t
go ahead the workshop is free. I then use the two hours to walk the client
through the seven wastes process and put the outcomes into a one page profit
improvement plan. If the client then takes the plan and tries to implement it
themselves don’t be concerned, it is highly unlikely that they will be
successful, but if they are I have still been of significant value to them.
Most clients appreciate that implementation is the key and that they need your
help to generate the results. At Mindshop we use eight week cycles with
multiple teams to work our one page profit improvement plan. The client learns
as we go, but we keep working on issues that become more complex and difficult
as we go along, so we are always required.
In time, the low-hanging fruit of profit are addressed, and
the client’s attention moves to growth, throwing up issues of marketing,
recruitment, pricing, competitor analysis, and leadership, all strategic
issues. So what started as profit improvement, has morphed into strategy, as we
have built both trust and confidence in the process. Once the accountant knows strategy
there is no stopping them. The challenge is to get the accountant to agree to
helping clients with cash-flow, then to guarantee their work, and then to keep
going no matter what. Mindshop’s backing should give them the confidence to
start the process, if it doesn’t there must be some other barriers to unblock.
The accountant of 2015 has no choice, all the good ones will be doing this, all
the average ones will be working for the good ones or have gone off and got a
job in industry! Either way they will be all working more on creating change
through strategy than compliance work.
So how do we move forward? Apply the waste reduction process
to your own firm, experience it first hand, learning as you go. The next step
is to offer the process to some “friendly” clients who need it. The third step
is to develop a one page marketing plan for the profit improvement product. The
plan should cover issues such as the web-site, events, waste process, training,
and pricing. These three steps are all that is required to get sufficient
momentum to sustain itself as a valuable service and on to ultimately a
specialty in strategy. What’s stopping you from starting?
