P1246990948MsJgG - PowerPoint PPT Presentation

Title: P1246990948MsJgG


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This article, discussing key commercial issues
facing small practices, first appeared in the
January 2005 issue of Accountancy magazine.

Mungo Dunnett Associates 11 Polstead Road, Oxford
OX2 6TW Tel 01865 311966 Email
info_at_md-as.com Web www.md-as.com We operate
across a range of professional service firms.
Our focus is on ensuring that your activities
are geared towards the areas that are most
commercially valuable.
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New Years resolutions
for smaller practices
by MUNGO DUNNETT
First basics Lets sort out the business
basics. Dont let another year slip by without
tightening up the Work In Progress. Who has
responsibility for making sure bills get sent out
on time and making sure that billing
arrangements are agreed with clients before the
work starts? Who has responsibility for debtor
control and making sure that bills are never
sent out without having been agreed with the
client first? Who has responsibility for fee
recovery and making sure that your targets are
hit, and the reasons for shortfalls are
understood and dealt with? More widely, have
you got a series of simple, clear measurements
that tell you how the business is performing, are
these checked regularly, and does the buck stop
with named Partners on each of these? These are
all basic management issues, and if youve been
sloppy on your WIP, debt control, fee recovery
and KPIs, nows the time to put a stop to it.
Secondly time efficiency Its easy to be
busy, but when you are a Partner you also need to
be effective with your time. Reflect on your
Partner roles and responsibilities in general.
These people are the main ammunition the practice
has the key technicians, the most experienced
business practitioners, and the reason for the
firms reputation. And yet the chances are that
your firm
doesnt utilise the Partners properly. So,
its time to end all of the following
structureless meetings that suck up time and
money without producing decisions and action
everything filtering up to the senior partners,
who get inundated with minutiae or partners
getting involved in everybody elses work,
delving down into far more detail than they
should fire-fighting, with too much time spent
dealing with todays issues, and no time left to
think about tomorrows the key rainmakers
spending too much time stuck behind a desk
dealing with paperwork, and not enough time
finding future fee work and senior people being
allowed to do their own thing, in their own way,
without proper accountability to the rest of the
practice. In short get your key people
working on things that make the firm money, and
make sure that everybody is targeted to deliver
to clearly outlined goals. Thirdly address the
people issues Deal with the lingering people
issues. By far the most common area for muddled
thinking, contradictory messages and sheer lack
of resolution is HR. If there are people in the
practice whose behaviour is unacceptable, deal
with them. If you dont have robust performance
measures in place, install them. There is
rarely resistance to a clearly articulated,
properly thought-through series of personnel
practices only those with
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game. If you have a timesheet mechanism, make
sure people use it, and check the way it is used.
If you need a better management information
system in order to draw fees and costs together
for each client across all service lines, then
find one or build one but dont spend
unnecessary time or money on this, when something
as simple as Microsoft Access will generally do.
The purpose of the exercise is to identify
those clients, service lines and maybe even
locations where your key profit is coming from
and also to identify those areas that are tying
up resource and delivering next to nothing on the
bottom line. And if youve done all of these
things, take what for many accounting firms is
the hardest step of all act on the findings, and
change the way you handle and prioritise your
clients. If an area is underperforming, hold its
feet to the fire or wind it down if an area is a
star, focus on it its usually easiest to build
on an existing success. Sixth cross-sell
Take the rise in the audit threshold as a
wake-up call. If audit was your bread and
butter, you need to become much more proactive in
your handling of clients, moving towards ongoing
(not annual) reviews, probing for client needs,
and widening the client dialogue into an advisory
relationship. Are you comfortable that you
have really done everything possible to
cross-sell, to establish wider client
relationships, and to seek further means to add
chargeable value? Unwillingness to engage
something to fear will resist it. Where there
are complex cases, find employment law advice.
But dont let personnel issues linger they will
practically never resolve themselves to the
firms benefit. Get tough take the decisions
you know you should have taken a long time
ago.   Fourth pragmatic IT decisions and on
the topic of tough decisions make a clear and
thorough choice about your IT. Dont buy a
system you dont need. Dont buy in haste.
Above all, dont buy a shiny new system without
making sure your problems are not to do with how
the existing one is being used. Far too often a
seductive IT sales pitch makes firms forget that
the real problem is peoples inability (or
unwillingness) to make the best of what you
already have. One thing I constantly see firms
regret is their installing IT that never seems to
do what was promised. Fifth identify
profitability Take the time, before the firm
goes any further, to work out with some certainty
exactly where the profit is coming from. Many
accounting firms pay scant attention to the areas
where the bulk of the profit is created and
those areas are sometimes a remarkably small
proportion of the firms total activity. If
profits are flat while billings are increasing,
theres a good chance that this means you are not
allocating your resources properly. The fastest
way to address this is to begin insisting that
all staff costs are allocated, including those
partners who generally dont play the
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established with real clarity what it is thats
different about your firms message, and how that
can be communicated so that it gets noticed.
Finally strategic clarity Finally, consider
the biggest question of all what does your firm
really stand for, and how is it going to survive
as competition and margins get tighter? Make
this the year when you make firm decisions about
what it is you are going to focus on, what you
want clients to value about you, and how you are
therefore going to position yourselves against
your competition. This is the strategic
clarity that pulls together all the issues
mentioned above, and is the factor that
distinguishes successful firms from opportunistic
and muddled ones. What is your unquestioned
expertise in your local market? What gaps must
you fill, rather than simply talking about, in
terms of your people and your service offerings?
And, most importantly of all, who is going to
take charge of the tough decisions, and move the
firm forward?
proactively with clients is the death knell of
the sleepy firm. Make sure that this is the year
when you can demonstrate to your client base,
with absolute clarity, that your service is
superior to your local alternatives. Otherwise,
you will simply be unable to charge the fees you
need to survive and grow. Seventh focus on
marketing   And talking of growing give some
proper attention to your marketing efforts, which
too often are treated as a corner-of-the-desk
activity, and too often are indistinguishable
from every other firms promotional material.
Take time to think carefully about how you are
going to find new clients what you can offer
that is different, or put across differently and
how you are going to get your message noticed by
the market. On a bigger scale, this could be
the year when you finally open that new office.
Dont do this in haste make sure you properly
understand the local market, the competitors
already operating there, and again make sure
that you have