OK, so we’ve all got them. You know, those things that we look back on and think “what the hell – why did I do that?” or, (even worse) “why didn’t I do that?”
I’ve had plenty – more of the former type than latter, but it all forms part of the rich tapestry of life that we humans form part of. And, much as we may regret things, it helps us develop into the people we are and forms the foundations of who we will be. Great.
BUT, what would happen if you knew that something was going to happen and, despite every nerve in your body screaming at you to do something, you didn’t “do it” (whatever “it” might be) – is that really a regret? If you adopted a stance of denial, does that turn into a form of regret?
How is it that, even when confronted with massive amounts of evidence supporting a reality that is going to occur (and I’m not talking “consensus” here) – I am talking incontrovertible facts – you still don’t make the moves that are required?
I’m not going to launch into semantics here (I will leave that to my far more learned colleagues in Verasage), I am just trying to posit the argument that often times, people do not do what they should and don’t take action when they should or find a million reasons not to do something they know they need to because, well, they have lost something.
What is the loss they have made?
Consider if you will the current state of the accounting profession. We are seeing massive changes set upon us – mainly from technology/cloud solutions, but also from offshoring operations. Did you know, for example, that most of the Big Four have established offices throughout Asia to which they “in-source” their compliance work at (about) AUD10 per hour? I know of an Australian example where a large corporate has moved a significant volume of their processing/admin work to a Pacific nation as the effective wage rate there is AUD1.20 per hour – a bit better than the award rate over here!
This is all happening now. Today. To our beloved accounting profession. And what are the vast majority of our colleagues around the world doing about? Nothing.
I posted some time ago about the changes that were occurring to our profession. The changes that were coming then are rolling out even more quickly than I anticipated.
So, what is the profession doing to adapt to this change? Not much. Some of us a screaming to all who can be bothered to listen that there needs to be a change in business model. Hardly anyone seems to be listening. Or caring. And we are not, by the way, being “chooky looky” – the sky is falling in!
What are most accounting firms doing to try and combat the inevitable? They are trying to be more efficient. Making better time recording platforms and putting greater emphasis on staff productivity. Anyone recall Danny DeVito in “Other People’s Money”? Buggy whips.
To make the process more precise isn’t what’s required in the accounting profession today (or tomorrow). As Ron Baker is fond of saying – “I’d rather be approximately right than precisely wrong”. Bravo Ron! But tell that to the Luddites who persist with a 1950’s business model 65 years after it was made common place and 64 years after it became redundant.
The time-sheet is an anachronistic tool that does not fit with today’s requirements. Staff hate them, admin hates them, managers hate them and Partners/Directors hate them. The people who hate them most however, are the second most important people in your business – your customers.
In some respects, I am advocating a “back to the future” scenario – get rid of time-sheets – but with some important changes. Changes like agreeing the scope of work and price up front with your customer. The change which includes and involves your people in determining scope – and price! The one where you truly empower your people to shine rather than record their misery in 6 minute increments.
Ed Chan of Chan & Naylor last week posted on Linked In. Chan’s argument is that accountants sell time. No. We don’t. We sell solutions to our customers’ problems. His argument is that the “solutions” (I am expanding his argument a little here, but I believe it is in the same vein as what he has written) are all compliance-based whereby all we are doing is the “same thing” for each client. As I have illustrated above, the basis of a lot of the compliance work is going to be automated or off-shored. So scalability only applies if you’re doing basic, processing and bookkeeping work. Not exactly what we’re trained for is it?
Similarly, setting an arbitrary hourly rate to charge them for your time isn’t reflective of their need or the value that they place on the work to be done. Using the same rate for everything you do makes you pretty “average”. And remember – average is where the best of the worst meets the worst of the best.
My belief is that every customer is unique and have their own set of fears, needs and the like. To try and put them all in one basket is to demean both them and the people who work on their files.
Chan’s argument is also based on the premise that all you have to do is to hire more people and more customers will come to you. Oh, to live in such a wonderful world!
From my experience (such as it is), the only way you can achieve this is to discount your offering to a level that drives people to you. And then, what happens to “the margin” that Ed believes is the Holy Grail? That and the fact that you’ll generally get the bottom-feeding clients who don’t value what you do anyway and will bring a whole heap of their “friends” along with them – High School Chemistry – like attracts like. You will also not exactly engage your people as they merely become cogs in a never-ending grind out of tax returns. Inspiring isn’t it!
So, in Ed’s world, where “you build a business to prepare a tax return”, I believe there will be regrets. Lots of them.
Customers don’t want tax returns. They want advice. Support, Counsel. Encouragement. SOLUTIONS. The tax return work is only there because the government stipulates it. Nobody really “values” it in the true sense of the word. And the ultimate disruption? I know of at least one of the Big Four that will be offering their clients compliance work for $0 in the coming years. How’s “the margin” on that?
Getting the business model right for accounting firms is critical given the disruptive times we are in. Making a bigger or cheaper version of what exists won’t answer the challenge – it merely cements in a race to the bottom for those firms that don’t adapt.
Regrets? Yep, I have them. A number of them. One I do not have however is getting rid of time-sheets and moving to a business model that will sustain our business, our people and our customers for a long time.
Oh – the loss they have made that I referred to above? It’s a loss of self esteem and belief in why they do what they do. And that, my friends, can be scaled!