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Why entrepreneurs should sack their accountants

For growing businesses, there is only one direction for successful companies – and that’s forward.

It’s why start-ups often succeed at first; they are focused on their future, on their destination. It’s also why so many companies stall after a few years, losing their momentum, focusing on the past (“Business was really good a few years ago”) more than the future.

That’s why all companies, especially owner-manager businesses, need help to maintain a forward direction and focus.

So the question is this:

How many accountants really help their clients grow their businesses?

The answer, of course, is that some do and some don’t, but why is that?
 
I believe the answer is very clear: there are essentially two very different sorts of accountancy firm. (Again a sweeping generalisation but I think that the polarisation makes the point.)
 
Which one do you have?
 
Accountant historians (AHs)
As their name suggests, AHs are focused on the past, on analysing it, preserving it, but what do they then do with that information? Often, very little. When asked by clients what the figures might mean for the future, they don’t feel comfortable making predictions – and rightly so. In truth, they know very little about their clients’ businesses. 

To be fair, that works for many companies and many firms of accountants. It’s horses for courses, but the fact is that clients tend to hold AHs in comparatively low esteem. They want to minimise costs so AHs get paid less. What’s worse, the AH service is commoditised – “anybody can do that” think the clients, so will go to a cheaper competitor. Not only do AHs, therefore, earn less, their clients churn more rapidly and they have to spend more time and money winning replacement clients.

It’s all about the lifetime value of clients: the ideal is long-staying, high-spending clients, and the nightmare is low-paying, short-staying clients.

Accountant entrepreneurs (AEs)

A very different kettle of fish with very different attitudes towards the contribution they can make to their clients’ businesses. They do the basics as well as anybody else but they know information is power and use it to help their clients – and earn themselves higher revenues. They use their knowledge of many companies to provide a real world, really current perspective for clients. They know what has worked for other companies and what hasn’t. They earn the respect – and the fees – accordingly. 

They earn more and keep their clients longer so the average lifetime value of their clients is considerably more than the AHs. They also get new business opportunities and tend to be retained even when companies really take off.

So are some people born AHs and others AEs? Absolutely not. It is a matter of attitude, of a little training, some practice, and the enthusiasm born out of successful attempts to change the way you approach clients.

Published On: 21st April 2011

This entry was posted on Thursday, April 21st, 2011 at 12:03 pm and is filed under News. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.