While many accounting firms are attempting to offer advisory services, many still aren’t hitting the nail on the head, according to a business coach.
Speaking to Accountants Daily, Businest managing director Rhondalynn Korolak said that accountants are still failing to understand what it is that their clients want. “There’s a common misconception or mistake in the industry where everyone thinks that we have to give dashboards and KPIs to our small business clients.
However, it has statistically been proven that at least 87 per cent of our small business clients are financially illiterate,” she said.
“That’s a huge stumbling block that I think a lot of accountants have to come to grips with. If their clients are financially illiterate, they can’t read their financial statements, so it doesn’t matter how good the graphs look or how beautiful the dashboards and KPIs are. If someone can’t read their financial statements, they can’t read those either.”
Because of this misconception, Ms Korolak said one of the biggest issues plaguing the accounting industry at the moment is that firms aren’t delivering on their clients’ needs.
“The biggest mistake that I see accounting firms making, and even just sole practitioners, is they’re trying to sell fruit to their customers, when what the clients really crave is chocolate,” Ms Korolak said.
“Accountants are perfectly poised, they’re perfectly positioned to actually help small businesses, but we can’t do it if we keep trying to teach people accounting. The small businesses owners don’t want to learn it. They want us to take all the accounting jargon out and give them a clear roadmap with step-by-step instructions of how they’re going to fix their problems.”
Ms Korolak believes this comes down to a skill gap created by universities still teaching outdated skills and a lack of training opportunities.
“Advisory services aren’t about dashboards and it isn’t about giving people reports and all that kind of stuff. It’s about two things: getting leverage on the client and getting them to take action,” she said.
“The skills that most advisors would need to be able to pull that off and do it well are in many ways the exact opposite of skills that we were trained in school.”
This article originally appeared in the Accountants Daily on May 1, 2017
Our industry is full of people who have worked hard to build their practices or reach upper management. They’re intelligent, highly skilled, and hardworking. But only a handful have reached the pinnacle in our industry and attained the mantle of ‘the trusted advisor’ in the eyes of their clients.
Why is that? Interestingly, it is only subtle nuances that separate those stand-out performers from the rest.
It has often been said that ‘what got you to here won’t get you to there’, and if you think about it, this premise makes a lot of sense because if the skills that you currently have are capable of establishing you as the trusted advisor, then most of your income will be coming from strategic and advisory services.
Right now, there are a handful of success breakers (workplace habits or skills shortages) that are holding you back from making the next big leap forward. The key is to identify what those are and discover some practical solutions you can use to make the next big leap.
Let’s examine one of the most common success breakers in our industry and the implications it has for you as you move your practice away from compliance and toward strategic and advisory services: withholding information.
This is the refusal to share information in order to maintain an advantage over others.
For a very long time, accountants and bookkeepers have been the gatekeepers of the most vital knowledge in business – financial literacy. Cloaked in jargon, rules that take years to master, and systems that obfuscate financial performance, we have inadvertently created an industry shrouded in fear and mystery.
Most of what accountants do on a daily basis is incomprehensible to a lay person, and for many decades we have gotten paid well because we are in possession of this mysterious yet valuable commodity.
When I speak to accountants and bookkeepers about educating their clients in plain language, one of the most common objections that I hear is, “But if I teach my client how to understand their financial reports, they won’t need me anymore”. Unfortunately, too many have bought into the mindset that keeping clients in the dark is an essential ingredient to maintaining relevance and value.
This argument holds no water when held up to careful scrutiny. It makes no more sense to perpetuate this mindset than it does for a parent not to teach their child how to walk, use utensils, read or graduate from diapers to the toilette. Our job is to support, teach and nurture our clients to become the best and most successful versions of themselves, not to hold them back for fear they won’t need us.
Education enables understanding and growth, and growth is vital to the health of each small business, your practice and the whole economy. As your clients’ understanding and competency grows, so do the complexity of the problems they are confronted with. This growth allows them to turn to you for more challenging, strategic and interesting advice.
Cloud accounting and machine learning are also breaking down those purpose-built walls of specialised accounting knowledge and putting more information, insights and power directly into the hands of our lay person clients. As a result, there is a very real possibility that your job today, as you know, it is going to go away and be replaced by something else.
That is the sole reason why thought leaders, industry bodies and training organisations are urging you to focus on becoming ‘the trusted advisor’. But that mandate is both misleading and elusive.
Our entire industry and the way we educate and train new recruits are focused on technical skills, legislative changes, and GAAP processes. From day one, you are taught to speak to your clients in terms of financial statements, key performance indicators, reconciliations, and forecasts. That is your language and your domain of expertise, not theirs. No matter how colourful or beautiful your reports are, they are still incomprehensible to most of your clients who have never studied accounting and don’t wish to do so.
When you sit down to advise your clients, it’s easy to fall into the trap of ‘explaining accounting’, as opposed to focusing on the specific steps and strategies that your client needs to implement to grow profitably. There is very little training in university, on the job, or in industry bodies to show you HOW to become ‘the trusted advisor’. But unfortunately, there is an overwhelming and distracting emphasis on social media, apps, sales, and marketing.
However, you marketing yourself as ‘the trusted advisor’, no matter how convincingly, doesn’t make it so. It isn’t a designation that we declare ourselves, but rather an honour and a privilege our clients bestow upon us for curing the pain points that keep them up at night.
Becoming ‘the trusted advisor’ is about connecting with your clients and communicating in a way that inspires and empowers them to take action to improve their results. The skills to achieve this are more in line with coaching and training, than sales or marketing.
Where to from here?
If you don’t accept the premise, that your job as you know it is about to change drastically, then you do not need to do anything. You may simply sit back and watch as more and more of what you do is replaced by cloud technology and apps.
However, doing nothing is rarely a viable option in any business or industry. Change is inevitable. It is already upon us.
What got you here – to the success and accomplishments you have already achieved – is not going to get you to where you need to be as our industry continues to evolve rapidly.
Right now you are facing an uncertain future. What that means is that traditional approaches, such as hiding behind the complexity and jargon of our industry, are unlikely to be helpful. In order to evolve and remain relevant despite the changes, you must find a new set of tools, skills, talents and behaviours that complement the ones you already have, not replace them.
Here is a list of strategies that you can use to identify and acquire the new tools, skills, talents and behaviours that will catapult you to the pinnacle of our industry and enable you to become even more successful this year:
1. Specify in writing your targets for growing the advisory services of your practice. These targets must be written down in order to be effective, compelling and measurable.
2. Identify one or two specific niches of clients that you will focus on this year to achieve those targets.
3. Create a list of the two to three most important pain points that these clients have right now (the things that worry them and keep them up at night).
4. Identify and document the key strategies and steps that your clients must take in order to cure the pain points and prevent them from recurring again next month.
5. Critically evaluate the reports, dashboards, metrics and graphs that you present to your clients. Remember, your clients are not accountants and they have no desire to learn accounting. They merely want you to help them fix the problems so they can make more money while doing what they love.
6. Identify and develop the materials that you need to gain leverage on your clients and empower them to take action. When in doubt, ask for advice from trusted colleagues who have proven experience delivering impactful advisory services. It pays dividends to work collaboratively with your colleagues and it also means that you avoid ‘reinventing the wheel’.
7. Be open to trying new things (this includes technology, processes, communication styles, delivery channels, etc). It is only by trial and error that you will uncover what works and what doesn’t.
8. Identify the new skills, talents and behaviours that are needed by every member of your team, and the courses or programs that will help you achieve those results.
9. Create a comprehensive budget for training over the next 12 months and a formal plan for evaluating the progress and competency of each team member. Money spent on your team’s skills to deliver effective solutions is far more impactful than advertising and social media.
10. Start tracking the progress of each client to ensure they are following through on the action plan discussed with them.
11. Open a dialogue with your clients, ask for specific feedback from them about what they have learned, how it has impacted their business, and what you could do better.
This article originally appeared as an interview with Lara Bullock on Accounting Daily website.
It’s impossible to pick up an industry publication without encountering headlines that scream “automation will eliminate most of what you do in your practice in the next decade”.
The concern is a very real and global one – it affects every industry, not just accounting. Proof in point, a 2013 research study estimates that nearly half of employment in America is at high risk of becoming automated in 10 to 20 years, with the accounting profession ranking in the top six of the most automatable occupations.
According to an Australian research paper released by the Centre for Economic Development of Australia (CEDA), “in the next decade there is a high probability that occupations such as accountants, estate agents and even economists will not exist or will be significantly depleted.”
The researchers even go so far as to hypothesise that 94 per cent of what you do right now as an accountant or bookkeeper will be replaced by machine learning and artificial intelligence by 2030.
That is only 13 years from now.
And it’s precisely why thought leaders, industry bodies, and training organisations are urging you to focus on making the shift to advisory.
While some would have you believe that talk of jobs and revenue lost is just simple fear mongering, many firms are right now seeking to move away from backward-looking compliance work (work that describes what has happened in the past and present) which is increasingly being automated by cloud accounting packages and apps. These firms are exploring new value-added advisory services that are not so easily automated and are forward-looking (helping the client to anticipate and deal with change, challenges and opportunities).
These advisory services, can help accounting and bookkeeping firms to future-proof their practices and create faster-growing, recurring, or high-margin revenue streams that make it easier to let go of compliance work.
So, it begs the question, if the future of our industry is cloudy, how many firms are already providing advisory services and what is real the outlook/potential for our industry?
A recent survey by Sageworks found that while many practitioners would like for a large share of their revenue to come from advisory services, the reality is that for many, very little revenue is actually derived from strategic, consultative or advisory work.
Participants of this survey were asked two questions:
- what percentage of firm revenue comes from advisory/consulting work? and
- what percentage would they like to come from advisory work?.
The graph showing the responses to each question are virtual mirror images of each other. While many would like to offer advisory services, most are in fact not doing so today.
Surprisingly, nearly half of respondents said less than 10 per cent of revenue comes from advisory/consulting work, and more than two-thirds put the estimate at less than 20 per cent of revenue. Only 13 per cent said 40 per cent or more of revenue is advisory/consulting.
As for the first question – how much they’d like to come from consulting/advisory work – nearly half of respondents said 40 per cent of revenue. The majority of the respondents said they’d like at least 30 per cent to come from strategic, consulting, and/or advisory.
Unfortunately, our industry and the way we educate and train new recruits is focused on technical skills, legislative changes, and GAAP processes. These establish you as an expert but they are not enough to elevate you into the realm of coaching, consulting or advisory. When you sit down to advise your clients, it’s just too easy to fall into the trap of “explaining accounting” and focusing on ‘what’, as opposed to focusing on the specific steps and strategies your client must implement to grow safely and profitably.
Compounding this, there is very little training in university, on the job, or in our industry bodies to show you how to make the shift into advisory. Contrary to popular belief, advisory is not about selling dashboards, forecasts or apps. It’s about connecting with your clients and communicating in a way that gains leverage and influences them to take action to improve their results.
Right now you are facing a cloudy and uncertain future. Doing nothing is no longer an option.
In order to evolve and remain relevant, you must acquire a new set of tools, talents, and thought processes that complement the financial acumen you already have. The skills, focus, and mindset required to excel in the fields of audit, tax, and compliance are vastly different from those required to excel in the disciplines of strategy, advisory services, and coaching/consulting. The core distinction lies in the difference between whether you are seen to be an expert, or to have expertise and insight.
The client will always pay more money for expertise and insight because their perceived value to the business is much higher.
As an accountant or bookkeeper, you are already a deep subject matter expert in all things financial. However, most of what you do for your clients is focused on the numbers that describe the past and present of the business. These compliance tasks are highly price-sensitive, the scope of work is limited, and it is almost impossible to leverage them to create influence with your client.
In order to create influence, you must move into the domains of ‘why’ and ‘how’ — these hold the key to helping your clients move forward. Coaching and advisory services are the gateways to ‘why’ and ‘how’, respectively. Figure 1 sets out the three gateways and illustrates the path from accountant/bookkeeper to coach and trusted advisor.
Both ‘why’ and ‘how’ require a future-based, big-picture focus as well as a broad, inter-disciplinary approach. While all three dimensions require deep subject matter expertise, only the trusted advisor possesses the key set of skills, focus, and mindset that leverages their specialized knowledge in a way that is impactful and influential.
*This article originally appeared in the Aug 18, 2017 edition of Public Accountant magazine.
Rhondalynn is also the co-founder of the world’s first advisory mastermind for accountants and bookkeepers Make The SHIFT
03 Sep 2015
Imagine yourself at a business networking event or at a dinner with a prospective boss or client. The waiter offers you a tantalizing assortment of drinks but instead of sparkling water or soft drink, you select a glass of red wine.
In your mind, it seems innocent enough and you presume that holding that glass of wine will make you appear more intelligent, successful, interesting or debonair to your potential boss or customer, right?
Unfortunately, you’re only 2 minutes into the night, and you may have already made your first rookie mistake – which could cost you your chance of landing your dream job, picking up a great new client or doing business with someone in the room.
So what went wrong?
We see images of alcohol being consumed in a business context all the time – sexy, successful men like Don Draper and Jordan Belfort, living the high life and partaking in alcohol to spark creativity, boost confidence, bond with colleagues or build rapport with clients.The association with fun, virility, worldliness and success has been deeply ingrained in our culture through print media, TV and Hollywood film.
Unfortunately, the association of alcohol with drunkenness (or at least impairment) is even more deeply embedded in the subconscious of your mind.In fact, even if you just see someone holding a glass of wine at a business networking event or on a social media site, it will likely reduce your assessment of their intelligence. Research proves that even a stone-cold sober person holding a glass of wine suffers an apparent 10-20 point IQ drop, not in real terms, but in the eyes of the observer.
Why Do We Unconsciously Judge People Who Consume Alcohol?
The “imbibing idiot bias” is documented in a 2012 study by Scott Rick (University of Michigan) and Maurice Schweitzer (Wharton – The University of Pennsylvania). Their work demonstrates, among other things, that subjects viewed holding a glass of wine at a business networking event were judged to be less intelligent and less appropriate for hiring. Conversely, participants who were pictured with a soft drink were viewed as more intelligent and more hireable.
These conclusions were further explored in a March 2013 Australian survey of 100 business owners who attended an after-business networking event. 71% reported having at least one alcoholic beverage, while 36% reported having at least two. Not surprisingly, the 36 respondents reported the least number of business cards exchanged and qualified leads gained. The 29% who did not consume an alcoholic beverage exchanged twice as many business cards and gained 41% more leads.
The “imbibing idiot bias” is an example of a phenomenon called “the priming effect.” Priming occurs whenever decisions and actions are predisposed, hastened or influenced in a particular direction by the context, visuals, emotions, or symbols presented.
Why is Priming So Damn Effective?
Priming works to influence and persuade because most of the drivers behind the choices and decisions you make every day happen primarily below the level of thought and consciousness. This means that all of us – executives, job candidates and business owners – are strongly influenced by intangible factors that largely go undetected by the rational parts of our minds.
Evidence of the priming effect is all around us – at work, at home and in the media.
It is the reason why presidents pose for photos while sitting behind a large wooden desk, surrounded by a flag, a photo of their family, and bookshelves full of leather bound books. Without saying a word, the context has already predisposed or influenced your opinion of their values, work ethic, and intelligence. And it also explains why voters tend to cast more politically conservative ballots if asked to attend polls in or near a church location, as opposed to those who vote near government or secular buildings.
Despite what you might think, alcohol and business don’t mix!We are conditioned to associate alcohol with cognitive impairment, and even when no such impairment is present, the association still sticks and we will automatically judge the person partaking as less intelligent and less suitable for doing business with.
In challenging economic times, where perception and first impressions can make the difference between thriving and barely surviving, it makes good sense to avoid alcoholic beverages when you are networking, interviewing, selling or posting in social media environments. In light of many people’s liberal views toward what they say/post online (all of which are very easy to access by an employer, recruiter, customer or supplier), this research could help you make the best impression possible in business.
Understanding how strongly the human brain is influenced and primed by subtle cues (such as a glass of wine or beer) can prevent you (or one of your team members) from unwittingly committing an act of reputation suicide at a business networking event.
Does The Imbibing Idiot Bias Also Apply To Social Drinks With Colleagues?
In sharp contrast to this, however, there have been several recent studies (*see research excerpt below) that seem to indicate moderate alcohol consumption may increase social bonding between team members and stimulate longer conversations.While alcohol and business networking, prospecting and interviewing don’t mix, there is some evidence that in the confined setting of drinks among existing team members in an after work social context, moderate consumption allows for increased social bonding, engaging conversation, camaraderie and positive displays of emotions.
There are also specific industries and certain cultures where alcohol consumption is more acceptable and in some instances encouraged. In fact many executives who specialize in doing business in Asia will insist imbibing is a must if you want to build relationships and do business in Asian countries.
Summary – Do Alcohol and Business Mix?
Under limited circumstances (i.e. team bonding, certain industries, specific cultures), alcohol and business may in fact mix.However, for those of you who are looking for jobs, clients, joint venture partners, suppliers etc,. it may still be very prudent to err on the side of caution and not indulge in front of someone that you are trying to make a good impression with. While a glass of wine or beer might taste refreshing for a moment, it may to curb your ability to attract leads, clients, positions, investors or partners. It should be noted that most of the research on this topic to date appears to be localized – it would be valuable to see more studies done in other countries and cultures where different associations may have been built up over time. These cultural nuances would of course impact the judgments that business people (in those industries or countries) would make when alcohol is served and it would be exciting to see if these initial studies have global applicability or not.
[*A team at the University of Pittsburgh recently conducted a study with 720 participants divided into small groups. Each participant received three drinks (either alcoholic, non-alcoholic or a placebo) over a 36-minute period. The subjects were videotaped by a hidden camera as they consumed their beverages and conversed. Then, experts in facial expressions and speech patterns evaluated their interactions with each other and found that moderate amounts of alcohol:
• Increased the frequency of “true smiles” and reciprocity of smiling;
• Increased social bonding;
• Kept all parties engaged in the discussion longer; and
• Enhanced positive emotions while decreasing negative emotions.]
**This blog is an excerpt taken from a series of posts and press releases on this subject by Rhondalynn Korolak. She is the best-selling author of 3 books, the most recent of which – Sales Seduction – is in the Top 20 Sales and Marketing Books on Amazon.com,
11 Feb 2015
If you’ve ever watched reality TV (and don’t say you haven’t because we all know it’s too easy to get sucked in by the drama and controversy), you may have noticed a specific formula…
First you find a cause – dating, small business, cooking or home improvement. Next, you add a few unassuming characters – some very relatable but also few who are downright crazy, nasty or delusional. And last but not least, you add just enough controversy, intrigue, shock and cutting remarks to keep the masses coming back for more each night.
In the end, are any of these contestants (or their small businesses in the case of Shark Tank) really any better off? Probably not, but what you have done is create some compelling TV and sold a bucket load of ads to big brands like iSelect, Swisee, Safeway, NAB and Mitre 10.
The other night, I watched Channel Ten’s latest reality TV import, Shark Tank. The premise is pretty straightforward.
A few naive and nervous and numerically challenged small business owners lined up to pitch to a panel of cool, critical and cashed-up potential investors.
Some ideas got funded for relatively small amounts. Most ideas (and their creators) got ripped to shreds by the panel.
So, the show is essentially Survivor, The Apprentice and The Bachelor all rolled into one with Australian small business contestants, and a catchy brand that has the ominous word “shark” in it.
How could that possibly fail?
As I watched, I wondered, ‘Are any of these small businesses likely to breakeven or become profitable and cash flow positive?’
And, perhaps not suprisingly, the answer is “not likely”.
Why is that? Because some of the ideas were pretty interesting. The cricket cooler, the motorized skate board and the hamdog may actually have global potential, but to be viable in the long term, the owners really need to do their homework first and know their numbers.
Case in point – not one of the small business owners who pitched had done market research with their product (or prototype) and could quantify the size of their market. Without that vital information, how can they possibly estimate topline revenue, market penetration or the value of their business with any precision or clarity?
And without those last three things, it’s impossible to give a meaningful pitch or ask for the “right amount” of capital. I’m sure you will agree, other than the guy who thought his hairbrained rental resume idea was worth $2.5million, most of the entrepreneurs vastly underestimated the amount of working capital that they needed.
Several contestants floundered when they got asked the big questions about breakeven, margins and cash flow. Yes, the dreaded cash flow question pretty much stumped everyone.
Most were asking for arbitrary sums of money to commercialise their inventions without regard for how much it might really take to get their brand out there and win their first major customers. One pair even thought it was clever to ask the investors to chip in $150,000 so they [the founders] could leave their secure day jobs and start working in the business full time. Crazy right? If you the owner don’t have skin in the game or work in the business full time, chances are you should still be writing your business plan, not pitching it on national TV in front of 5 sharks and a million viewers.
The cricket cooler duo were the most polished in terms of delivery and presentation. They recognized that patents and intellectual property were vital to their valuation and attractiveness to the sharks, but drastically underestimated the value of locking things down in India – the number one cricket market in the world. And the sophisticated sharks knew that Australia is just a mere drop in the bucket, compared to the potential in a market like India.
Unlike the really trashy stuff – Bachelor, Idol, or Real Housewives of Melbourne – the show didn’t make me feel icky or shocked while watching the sharks tear the flesh off the bones and gnaw away at the contestant’s dreams. I sort of expected that would be the main draw card and the whole premise of the show. Why call the show shark tank if you don’t intend to set up a blood bath and feeding frenzy?
But as an entrepreneur, I did feel genuinely remorseful for each of the contestants. The small businesses who got funded gave up decent chunks of equity for relatively small injections of capital – which may or may not be enough to get them to market and earn their first customers. And the ones who didn’t walked away without any constructive advice or tangible instructions on how to go away and get their idea investor-ready.