Using the Numbers to Reshape Your Strategies

1. 1 Using the Numbers to Reshape Your Strategies As plans are drawn and re-drawn by accounting firms around the globe, a quick analysis of your existing clients and fee income can provide some real clarity to what your next steps should be. Coaching accounting firms gives me the privilege of detailed insight into their numbers, and this allows me to research trends and patterns. One thing that is becoming more and more clear as firms systemise their approaches is the way that time and fees are spread across the client base. Understanding your spread and building your strategies based upon your existing performance enables a firm to move forward in possibly a more practical and confident manner than a complete ‘blank piece of paper’ relaunch. https://www.progressbb.co.uk/

2. 2 Take an accounting firm with a fee income of £1M and 490 clients. Most firms' software will allow them to quickly categorise clients by annual fee income to the firm. In a broad brush approach designed to spark strategic thinking, I’ve been researching the fees of firms when splitting the clients into 3 groups –the ‘A’ list top clients, the ‘B’ list average clients and the low spenders. By using annual fees as my parameters, I look at the fees generated by each group compared to the population. Typically, I’ll set the bands at >£5K, £1K - £5K and <£1K. The findings have come out intriguingly similar to date. For the fictitious example above, what I might expect to see is something along these lines: The >£5K group has relatively few clients (40 – 8%) but a high average fee (£12K) and high contribution to the firm’s fees (£480K – 48%) The £1k-£5K group has the bulk of the clients (250 – 51%), a moderate average fee (£1.8K) and a reasonable contribution to the firm’s fees (£450K – 45%) The <£1K group has a relatively high number of clients (200 – 41%) but a low average fee (£350) and low contribution to the firm’s overall fees (£70K – 7%) The actual figures will obviously vary for your own firm, but I see the same headlines repeated often: A very small number of clients, typically 6-10%, producing 45%-50% of the firm’s overall fees The bulk producing around an average fee mark of £150 pm A large number, typically 25%-30%, of low-end clients returning less than 10% of the firm’s overall fees The immediate question to ask, of course, is this: Where does the firm, and in particular it’s more senior people, spend it’s time and, hence, it’s key resource? Invariably, it’s disproportionate to the fee income being generated by that group. From a strategic point of view, what you do next will depend on the vison for your firm but, I would suggest, that for a ‘regular’ accounting firm looking to provide the full range of compliance and advisory services but equally looking to build the client experience and the advisory element, a plan of action stands out: Directors and key personnel focus 1:1 in retaining and developing the top tier. The team and systems focus on servicing and developing the mid-tier. https://www.progressbb.co.uk/

3. 3 A minimum fee equivalent to the mid-tier is introduced. The lower tier is largely removed, in bulk or selectively. The marketing and pricing is aligned to the new client groups. Take the example of the £1m firm above. They could release 41% of their client base by numbers if they removed the entire lower tier, freeing up significant time to focus on the higher performing groups with, at worse, only a 7% hit to the GRF which, in reality, they would recover several times over by better engagement with the top tier. A new minimum fee of around £200 pm that new business comes in on and existing business transitions to would boost the performance of the mid-tier. Better engagement with top-tier and rising mid-tier clients would positively impact firm performance across the board. We end up with aligned systems, team and marketing, much better focusing of resources and clarity throughout the firm. However your own figures pan out, I would highly recommend carrying out the exercise. Because it’s broad brush, it’s very quick to do but it prompts a fascinating conversation on strategy and how to better serve and market your client groups. https://www.progressbb.co.uk/

4. 4 Richard Brewin FCA has been an accountant at the sharp end for almost 40 years, the last 10 of which as a mentor and coach for accountants running their own firms. Today, as joint Managing Director of ProgressBB, he is at the forefront of development in this area with the launch of their self-help online mentoring program for accountants, Progress Foundations. Source:https://www.articleted.com/article/366319/88322/Using-The-Numbers-To-Reshape-Your-Strategies Contact Details:- Name: Progress Barnwell Brewin LTD Address: 8 Plantagenet Way, Ashby de la Zouch, Leicestershire, LE65 1LE Phone No.: 07940 587031 Email: hello@progressbb.co.uk Website: https://www.progressbb.co.uk/ https://www.progressbb.co.uk/