How to (massively) increase Revenues and Profits...Steve Jobs Speech (Stanford University 2005) “Stay Hungry, Stay Foolish” • Love what you do –you’ll know in your heart

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How to (massively) increase Revenues and Profits

With less Clients and less Effort

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Marc R BruceFounder & CEO

True North Group

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“encourage you to jump out of the jar

… to share global trends and a proven

strategy to grow your Practice”

My purpose today …

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Our agenda Introduction and background (my story) Thought Leadership. Global Trends 10 Strategies to Grow a Practice Cloud Accounting and Offshoring Working with Clients – case studies Questions

Steve Jobs Speech(Stanford University 2005)

“Stay Hungry, Stay Foolish”• Love what you do – you’ll know in your heart• Join the dots – have faith the pieces will come together• Death … “Live each day … “

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The Makeover… aka “The Pivot”Year … 1990

The Focus PartnershipBusiness Development Advisors

Providing tailored strategies,systems and training designed

to unlock the true potentialof your business.

EasitaxTax Advisors to PAYE individuals

Providing PAYE individuals withaccess to competent taxation

and financial advice.

Ascent Financial StrategiesFinancial Planners & AdvisorsStrategies for creating and increasingwealth, to provide peace of mindand quality of life.

The Bruce PartnershipChartered AccountantsA proactive and unique firm,focused on developing closerelationships to meet businessand personal objectives.

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Outside of Asia, audit is limited to Listed companies and large private companies representing less than 2% of the market.To put that in context here in Singapore, there are currently 300,000 companies according to ACRA. That means we’re on track to have less than 6,000 audits shared between 700 Firms.We also know that the Big 4 have around 67% market share, meaning that 696 firms are competing for 6,000 x (1 – 67%) = 2,000 audits (estimated).In January 2016, the UK again expanded its audit exemption thresholds.It’s a fact for Singapore auditors … the ‘rice bowl’ is only likely to shrink further!It’s little wonder that the Big 4 in Singapore have reduced reliance on audit services to less than 25% of revenues. However, for SMP’s its 64-71% of total fees.

Singapore Audit Trends

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Singapore Accounting IndustryNo. of Companies 300,000 From ACRA

No. Accounting Firms 700 SAC Census 2015

No. SGX Listed Companies 650 Maket Capitalisation > SG$40m

No. SME's (Sole P & P'ships) 180,000 ACRA

Accounting Revenues (SG$) 1,800,000,000 SAC Census 2015: $1.8 billion, of which the Big 4 have 67%

Big 4 Revenues (SG$) 1,206,000,000 67%

Top 10 Revenues 198,000,000 11%

Market share (non Big 4/Top 10) 396,000,000 22%

Market share per Firm (non Big 4/top 10) 577,260 686 Firms (700-4-10)

Note: 483 firms <10 staff (69% of the market)

Audited Companies approx 2% 6,000 Marc's Estimate

SME (audit exempt) Companies approx 98% 294,000 Marc's Estimate

78% of revenues are controlled by just 14 Firms, or 2% of the Accounting Industry

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Audit ExemptionUnited

KingdomUnited

Kingdom Singapore

GBP (£) SGD ($) SGD ($)

Revenues £ 10.2m $ 20.0m $ 10.0m

Employees 50 50 50

Total Assets £ 5.1m $ 10.0m $ 10.0m

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Summary of Key Results from Surveys of Public Accountants & Clients

Challenges Accountants face: What Clients are saying:

I feel fee resistance from clients I need a partner to provide proactive strategic advice

Keeping up with regulations and technology (eg cloud accounting)

My accountant does not understand my business

Work-life balance issues I want a specialist/expertise

Attracting new clients My accountant is not responsive

Finding and keeping employees 20% of clients are dissatisfied

Note: Clients don’t rank fees as a top issue

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Globally, Dun & Bradstreet estimate that 82% of businesses go under by their 10th anniversary, and over 95% of products fail. Every time a new venture starts, nearly 4 failA study conducted by Ohio University of 356 companies over 19 years found that 50% of all business decisions failed. Nearly 2/3 of executives never explore alternatives prior to making a decision, instead using manipulation, persuasion and heavy handedness. Only 7% considered long-term priorities or conferred with colleaguesAstonishingly, 91% of business people have confidence in their ability to make decisionsA NY University study found that over 65% of M & A’s have been failures resulting in negative shareholder value

Research

The 2005 – Added Value reportby the ICAEW said:

‘Small firms will succeed in many cases by specialising, and by developing skills to

provide added-value products, services and consultancy in areas such as strategic

business advice and personal financial services’

Conclusion

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AICPA2011 and Beyond Vision Project

Core ServicesAssurance – services that provide quality information for decision making

Technology – improve decision making and knowledge management

Management Consulting – advice and insight on the financial and non-financial performance of an organisation– operationally and strategically

Financial Planning – wealth management

International Services – globalisation

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Research A survey conducted by Price & Associates in the

USA found that less than 10% of High Net Worth Individuals and Small Business owners currently obtain financial products and other services from their accountants, however, the majority would turn to their accountant for these services, if they could

The survey also found that clients who sourced such services from their accountants, were highly satisfied

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Employee Career ConcernsAustralian Survey 2014

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Global Benchmarking … how is your firm performing?ACCOUNTANTS IN PUBLIC PRACTICE (SMP’s) USA AUST. UK SING. TargetNo. of Public Firms 130,000 10,000 12,000 650 Avg Fees per Equity Partner $ 772,500 $ 886,106 $ 652,500 < $500,000 $ 1,000,000 Fees per Employee 154,500 136,920 $ 130,500 $ 82,500 166,667 Labour costs (%) 35.6% 38.9% 38.0% 52.8% 25.0%Overhead costs (%) 28.3% 31.8% 33.0% 27.8% 25.0%Profit per Equity Partner (%) 36.1% 33.3% 27.0% 19.4% 50.0%Profit per Equity Partner (BPS) $ 278,873 $ 295,073 $ 176,175 $ 500,000

Rent 5.0% 5.7% 4.0%Employee to Partner Ratio 5.0 5.0 4.0 7.0

Productivity - Employees (hours) 1,000 1,200 Productivity - Partners (hours) 900 500 Retention rate (%) 23.3%Debtor Collections (days) 54 43 42 20WIP (days) 50 47 75 30No. Clients (group) 100Avg Fee per Client (group) $ 10,000

BPS = before partners salary

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Your current Profit PotentialWhat are your total labour costs (excluding Partners)?

• Take that number and multiple by 2 (that’s the Singapore average) to determine average revenues.

• Now take that Labour cost figure and multiply by 3 …• That is the adjusted revenue potential assuming you match

the benchmarks of your western counterparts (who don’t rely on audit)

• By the way … the increase in revenues goes directly to Partner’s profits! That’s your real potential based on current resources. Of course you can achieve more than than this.

• How? That’s purpose of this presentation, but the let me just say that it’s a mostly Practice Management issue

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Operational PlanSystems/Workflows Technology

Marketing PlanClient Selection Services

Practice Strategic PlanVision Culture

Building Blocks for Improvement “Big Rocks”

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10 Strategies to (massively) Grow an Accounting Practice

Use: TNG Practice Optimiser CanvasStrategy #1: It’s a Business

• Do you want a job or a business?• The purpose of business is to create life for the

owner! The mindset of an entrepreneur• The 4 D’s – new habits like reading; new skills• A Planning process. KPI’s, monitoring & review progress• Set vision and culture – where will you be in 5 years?• Leadership and management skills

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Strategy #2: Client Selection• What type of clients do you want?• Why is this important?• By size; by industry; by location; growth; those

that appreciate value and pay on time!• Problem for accountants … Pond- _ _ _ _• Strategy #101 (visit TNG Global website & blog)• Remember D’s breed D’s

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Strategy #3: Client Services (aka Value Proposition)• Paradigm shift … what do your clients want?• It’s called “product-market fit”• List the services, and then have a specific strategy

for upselling and cross-selling. A sales process.• CFO. You are no longer the ‘once a year’ accountant• Create specialisations - skill; and/or industry niches• The MDP … let’s talk about consulting

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Why Consulting? The Accountant as Trusted Business Advisor Accountants are ideally positioned to advise their

clients (beyond traditional services) How’s your MDP? To meet the needs of clients, and make a difference! Variety, fun … a new lease on life Huge market potential – the SME “pond” SME’s need help, big time – the 4 categories Creates loyalty – UK survey of accountants’ clients

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What is Consulting? Strategic Planning ... Analysis, research, strategy Marketing Operations, Systems & Processes Human Resources Corporate Advisory, Risk Management Financial Management including Performance

Measurement – virtual “CFO” Leadership

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Organisation Chart

Training

Shareholders

Board of DirectorsCEO/MD

M...... O...... F.....

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Getting Started with Consulting?Recommended Reading “Built to Last” Collins & Porras “Good to Great” James Collins “Traction” Gino Wickman MBA texts, Strategy Michael Porter, Peter Drucker “E Myth Revisited” Michael Gerber “7 Habits of Highly Effective People” Stephen Covey Marketing Books – Al Ries, Jay Abraham Harvard Business Review

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Strategy #4: Pricing of Services• Hourly rates … you’re waaay too cheap• A huge irritation … clients hate surprises.• There is a way to make more money and have

happier clients, AND improve cashflow.• Increase prices tomorrow!• Fixed fees based on value, not time• Use timesheets and hour rates as a benchmark• Create a fee “menu”

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Increasing Your Average FeeMin. Ideal

Compliance $ 2,000 $ 5,000CFO, Special Work 6,000 12,000Tax Planning 1,500 5,000Strategic Consulting 18,000 30,000Other Consulting 2,500 3,000

Total $ 30,000 $ 55,000

There is GOLD in your client base!

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Value Billing: WarningDon’t make this rookie mistake

“unless you price your services using fixed fees, your revenues will go down as you

improve efficiencies”

Case Study: ‘W’ Engineering

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Strategy #5: Billing & Collection• Agree everything in advance with the client

including payment terms• Remove aging from Statements 30/60/90• Set up automatic bank transfers for recurring fixed

fees• Clients are happier, and you will reduce lock-up

from 100+ days down to less than 50 days• What is the likely effect on cashflow?

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Strategy #6: Marketing• Build a strategy – keep it simple• Differentiation – branding and image eg TNG and

case study to follow• Create marketing materials and a website to

explain your services and what makes you unique (your website is a tool to grow your business, not an online brochure)

• Use automation. Your client database is gold.• Visit ‘A’ clients often• Seminars; networking; referral system; alliances

Our Services

Our Services

• Taxation & Accounting Compliance• GST, FBT, CGT and other tax requirements• Financial Statements• Tax effective business structuring• Guidance on day to day running of a business• Tax Planning• Management Rights - Verification

• Financial Plans• Tax Effective Investments• Insurance• Tax Planning• Investments• Superannuation (personal and corporate)• Retirement Planning

• IT Accounting and Training• Setup and support for Quickbooks, MYOB etc• Setup and support for POS systems• Setup and support of CRM systems• General assistance with day to day IT issues• Telephone and on-site support packages

• Strategic Planning• Management Support• Human Resource Management• Budgets and Forecasts• Business Plans• Business Mentoring

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Strategy #7: The Wow Factor• Create a compelling environment, culture and

client experience “Melany”• Office layout• Client communications• Parking• Develop Client Service Standards “We care”

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Strategy #8: Overhead Costs• Accountants are very good at managing this

aspect!• Think “ROI”. Be more willing to spend (invest) in

areas which give you a return on the spend.• Rent should be less than 5%• Think about parking and accessibility for both

clients and employees. Check the ego.• Employee retention is a BIG cost. Singapore at

23.3%!

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Strategy #9: Technology & Systems• Technology is not a cost. It’s an investment• Beyond efficiencies, both your clients and

employees will judge you• The Paperless office.• Many new software products now available. Move

to cloud based products with a huge range of apps and fully integrated

• Streamline workflows and processes. Bottlenecks. The never ending pursuit for improvement in every process

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Strategy #10: Labour Strategy• Starts with culture and vision• It’s your biggest expense, by far!• Remove viruses and under-performers (even partners)

• Productivity. Clear JD’s, targets, hours, incentives• HRM. Lift your ‘game’ more like a Big 4 firm• Leverage is a key metric that drives profit• Map out a clear career path and CPE• Consider flexible working hours and remote working• Offshoring …

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Cloud Accounting & OffshoringWhat is Cloud Accounting?

• Saas Vs On Premise solution• The main players• Benefits: no server; no more back ups; no more updates;

simultaneous multi-user access from any location; the Apps (integrated) and eco-system

• USA still less than 10% take up rate but Xero is expanding rapidly. Took 4 years to get the first 50,000 users and now 50,000 in just 10 weeks (Feb 2016).

• Automated bank feeds is the key here in Singapore• An opportunity for accountants to take control of client’s

financial affairs. QBO and Xero pay commission• Perfect solution coupled with Offshoring …

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Cloud Accounting & OffshoringWhat the difference between Outsourcing and Offshoring?

• Dedicated employees• Best practice is to create a team that is a natural

extension of your existing office• Same systems, same working hours• Philippines Vs India. Time zone, language, pool of talent• Start with 2 CPA’s. Why?• The Process:

1. Strategic (design a suitable model, roles, JD’s)2. Recruitment (advertising and interviews)3. Secondment (on boarding)4. Training

• The costs and savings

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THANK YOU… let’s start making a difference …

Email: [email protected]

Skype: marc.bruce

Ph: (65) 8621 4570

Documents

How to (massively) increase Revenues and Profits...Steve Jobs Speech (Stanford University 2005) “Stay Hungry, Stay Foolish” • Love what you do –you’ll know in your heart