However, “advisory services” and “consulting” are very abstracts concepts, and there are no true rules or guidelines for accounting professionals to follow in order to make sure the services rendered follow a certain standard. And, that makes many accounting professionals very uneasy. It made me VERY uneasy when I started, but it got progressively easier as I starting seeing the impact I was having in my clients’ success.
Before I list the three ways, let’s discuss strategy. It’s important for you to position yourself as your client’s “partner;” partner in the sense that you will feel the pain of a successful investment and share the celebration of success. The best way to do that is through billing your services. Essentially, you want to bill high when success is high, and bill low (or none) when there is little or no success. More on this at the conclusion of the article. Here are 3 ways to impact your client’s success:
- Advisory services on revenue growth
- Advisory services on cost control
- Advisory services on employee engagement
Advisory Services on Revenue Growth
This is the single biggest and most impactful area of advisory that an accounting professional can provide their clients. Almost every small business that I have worked with is looking to grow their sales; however, the single most common way that entrepreneurs tackle this issue is through investing more money in marketing, or working longer hours (and consequently, burning out themselves or their staff). So, as a consultant, if you can deliver revenue growth without the exorbitant marketing budget and long shifts, you will be a hero. So, these are the key areas to look into:
- Competitive Pricing: How are your client’s products and services priced, compared to the competition? Are they a premium/high value provider, or a low cost provider?
- Positioning: Is your clients’ messaging and branding position aligned with their pricing?
- Value: What is the value that your client’s products and services provide to their customer?
- Elasticity: How sensitive are your client’s customers to an increase in price?
- Choices: Is your client offering choices to their customers, or are they only selling a single option for product/service?
- Uniqueness: How unique or similar are your clients’ products and services, compared to their competitors?
- Advantages: What is your clients’ competitive advantage when it comes to infrastructure, know-how, branding and unique offerings
- Branding/Marketing: Are the investments in branding and marketing directed towards increasing the perceived VALUE of the product/service,
After analyzing these eight areas, you can consider helping your clients test the following changes:
- Improve the image, branding and messaging to position the product/service to become a HIGH VALUE/PREMIUM choice in the marketplace.
- Raise the prices across the board on all products and services.
- Help your clients create CHOICES for their customers. Make sure that they always have three choices for their customer: good, better and best. And, make sure that “best” has plenty of built-in margin, even if it’s priced out of the market. As long as there is 10-20% of sales on the top choice, you will see a significant increase in revenues.
- Evaluate the potential loss of sales when shifting from high volume to high value. You can even create a per unit break-even analysis that would compare how many low-cost deals your client can afford to lose in order to gain high value deals.
How would you price this service? Charge a percentage of the gross profit (GP) increase. In some cases, we work with the client for six months to two years, charging a monthly fee of 20% on the GP increase, and if there is none or negative, the client pays us nothing. I know that sounds strange, but I have clients that have increased their gross profits just through advisory services by increasing their pricing and creating choices for customers from 0k to 0k in one year only, and the client paid us an average of ,000 per month. We spent about 40-50 billable hours the first month vs. four to eight hours the 12th month, with the total being just over 100 hours for the entire year. If I had have tried to give the client a bill for over 0 per hour and a total of ,000 at the start of the engagement, he would have fired me on the spot.
By the way, this is not all rainbows and unicorns; some deals do not show as much success or negative results even. This is the risk you and your client BOTH take; but, the upside is definitely a win-win for both parties and, in average, it yields two to three times the average hourly rate.
It is important to note that as a QuickBooks ProAdvisor®, I leverage the current sales data inside QuickBooks®, using advanced tools such as Advanced Reporting for QuickBooks Enterprise or exporting sales transactions from QuickBooks Online into Excel to create pivot tables. Using historical analysis can provide some insight into the predictability of the results, from the revenue/pricing strategy being implemented.
Advisory Services on Cost Control
This is the second most impactful advisory service you can provide, but in my opinion, the easiest. In my experience, advisory on cost control has four prongs:
- Discovering and eliminating unnecessary costs. Very often, when I sit down and do an in-depth analysis of the costs being incurred by the business, I end up discovering several expenses, such as subscriptions to unused services, expenses for things nobody knows about and redundant expenses such as paying the for the same thing to multiple providers. Sometimes, there are expenditures that management deems as necessary, and after deep analysis, you realize that they can adapt easily without it.
- Maximizing the effectiveness of the current resources. Marketing budget is one of them – very often, we can maintain the same budget, but simply shifting the marketing dollars to the most effective campaigns works really well. For example, having your client ask all their customers, “Where did you hear about us?” or “Who referred you to us?,” helps to start gathering the data to see what marketing expenditures are delivering the most ROI. Ink expenditures is another one – I had one client where we changed the setting in every computer’s default print settings to print in “economy” mode. Since 80% of things being printed are for short-term (non client presentation) use, this saved my client about 0 a month in ink/toner. And, the toughest one to gauge is staff. There are so many engagements in which we realize that one person can do the job of two, and sometimes even three. By downsizing and giving the staying person a 20% raise, the savings are incredible. I know this sounds mean, but business is business and if your client had a staff member that was so incredibly ineffective that someone else could do their job, then it was bound to happen anyway. Increasing the effectiveness of your employee’s work can help save time and money. As an advisor, you can teach the bookkeeping staff to scan documents (and attach them to QuickBooks), in order to reduce all the wasted time from archiving and retrieving paperwork. Also, getting rid of large file cabinets traditionally used to store paperwork can give more capacity to new employees, rather than having to move to a larger and more expensive office.
- Decreasing paper losses. Paper losses are defined as losses or expenses due to human error, or lack of proper paperwork. You can analyze how purchase decisions are being made, how these expenditures executed and controlled, and how to properly avoid paying things “twice.”
- “Immaterial theft.” This one is tricky. In many companies, employees steal. But, not in the traditional way … they steal in “immaterial” ways, such as taking longer breaks, not punching in/out properly, taking office supplies home and using other company resources for personal use. For most business owners, these activities are “immaterial,” and they end up dismissing them as important, or maybe even fail to label them as “THEFT.” As an independent advisor, you can simply just observe these patterns and keep tally of the potential cost savings of eliminating ALL of these. Normally, when you present the entire package with a dollar amount assigned to it, they will start paying attention.
With the same philosophy of “partner” with your clients in their success, you can set up a similar billing structure, where you charge a percentage, maybe 35% of the average monthly cost savings for a period of 6 months or so, as you work with your clients in eliminating costs. You could use your client’s average monthly fixed expenses as a baseline. Another way to justify the necessity to reduce costs is benchmarking. You can use free websites, such as bizstats.com, to pull national averages of expense percentages, per expense category per industry, to compare with your client’s expenditures.
Advisory Services on Employee Engagement
This is definitely the single hardest service to provide, but one that can provide a lot of long-term “intangible” value. So, with advisory services in revenue growth and cost reduction, the results are very easy to measure and very tangible, and by billing as a percentage of that, it unites both your clients and your own financial interest. However, advisory services on employee engagement are difficult to measure in financial terms. Usually, success can be measured through high retention, low turnover, employee happiness, promotions of current employees, growth of staff, involvement of management in day-to-day issues, high level of customer satisfaction and more. So, what can an accounting professional do to help their clients drive better employee engagement?
- Execution of communicated planned activities. I think one of the most common mistakes management can make is to say they are going to do something, and not do it. Since management and ownership are often the same in the small business world, there isn’t an executive manager or leader to make sure that actions and words are always reconciled. As an independent advisor, you can keep track of all the communicated activities from management and make sure those are being executed as promised. The single biggest way for employees to lose faith and respect for the manager is to not believe them or distrust them based on this.
- Many employees that work for my clients’ businesses have told me that what keeps them motivated is that their employees care about their personal growth, and when companies provide new training consistently, it is a win-win. Employees learn something new so that they feel more empowered, and employers get possibly more output from their newly acquired skills. As an advisor, you can provide some training, such as QuickBooks, basic accounting or financial literacy.
- Compensation plans. It is very important that compensation is both competitive and commensurate, with the work being performed by the staff. As an advisor, you can design commission structures that align the businesses outcomes with the employees inputs, rewarding the right behaviors.
- Periodic reviews and feedback. Employees want to know how they are doing and what impact they are creating for the company they work in. They also need to know that they are on a path for personal and financial growth; otherwise, they will shop for jobs somewhere else. As an advisor, you can help measure some of the financial impact your employees have had in the company, whether it’s through more sales or cost reduction.
Engaged employees that trust their management are well trained, feel they are compensated fairly, and have long-terms plans to grow within the company that will surely translate to revenue growth or cost reduction. Therefore, unless employees are engaged, all other strategic plans to grow sales or control costs may fail. So, it behooves the advisor to include some sort of employee engagement activities in their advisor services, in order to complement any tangible financial-driven advisory. Sometimes, the advisor’s role as a “partner” is more emotional than financial, as engaging in these activities have the most unpredictable results.
At the end of the day, you may engage with your clients in any traditional accounting services or advisor services that can have a high impact in your client’s business; but, being their “partner,” it’s about taking risks during the engagement and reaping the rewards together, as well as feeling your client’s pain points by guarantying positive results and becoming emotionally involved in their success.
Everything I have learned about providing advisory services came from these books:
- Ron Baker’s Implementing Value Pricing
- Mark Wikersham’s Effective Pricing for Accountants
- Peter Blocks’s Flawless Consulting
- Peter Drucker’s Innovation and Entrepreneurship
- Daniel Pink’s Drive
- Simon Sinek’s Start with the Why
- Jim Collins’s Good to Great
- Dale Carnagie’s How to Win Friends and Influence People
- Malcolm Gladwell’s Ourliers
- Steven Covey’s 7 Habits of Highly Effective People
- Patrick Lencioni’s Getting Naked
- Napoleon Hill’s Think and Grow Rich|
And, some great podcasts:
- Art of Value Podcast
- The Soul of Enterprise Podcast
- Grow my Accounting Practice Podcast
Scaling New Heights Podcast