March 2021 represents the end of the first year of this awful pandemic. It has been a tough year for accountancy business owners. Some have seen revenues and profitability falling while others have seen these numbers increase. Why is that? What are these successful firms doing?
There is not one answer – we all understand that life is not that simple. Inter firm surveys continue to show a wide range of 2020 performance outcomes – some are highlighted in my accompanying blog article – What is your revenue per partner?
Pre pandemic planning
Firms that have improved performance have done so overwhemingly because of the decisions and investments they made pre pandemic. The two key areas that have benefitted these firms have been:
- Technology. These firms were developing tech and cloud services so that they were ahead of the client needs and demand curves. They had invested, not just in the Cloud, but also in their people and marketing. So, in the 72 hours that most firms took to transition from the office to home – they had fit for purpose plans that were ready for action and good to go.
Key challenge: This is an old and well understood challenge but it is one that most likely will impede future success if not adequately addressed. Some firm owners resist the call for appropriate investment in technology, knowing it is never going to be a minimal item in the budget. Over the years this line item for has been ever increasing – a trend that is not going into reverse in the forseeable future. The challenge everyone understands is that investment in technology takes away from today’s bottom line.
Key point: There has to be a balance between innovation and profit sharing.
- Marketing. These firms were highly visible in the marketplace and were perceived as leading edge. These firms highlight how specialist services have enabled them to maximise 2020/21 opportunities. They have also become accustomed to using data analytics and blockchain to make decisions about what market needs must be addressed.
These were the two major reported factors in those firm’s 2020 success.
Other reported profitability factors included:
- Taking advantage of government schemes to furlough staff
- Making staff redundant
- Relocating to lower cost premises – it appears that these firms already had plans to relocate. Other firms report having made arrangements for office subletting while others have opted for office hotel spacing
- Some firms report merging in order to lower or share overhead cost
Client contact programme
Other reported success factors focus on an active client contact programme. Understanding that clients were all in reactive mode firms report developing online client contact programmes. These involve partners making contact with their Top 20 clients at least once a month. These calls are more frequent where service on demand was necessary. Firm owners are finding that hours are now flexed with many making calls between 6am and 8pm. In other words – hours to suit the client. Joan from Sydney describes these as ‘bear-hug’ meetings as she asks clients “How is everything going?” These are calls that fall outside the remit and demands of compliance.
Key Action: Have each firm owner develop a plan and create targets for the number of bear-hug calls. If you don’t do this be aware that your competitors are. Your top 20 clients will, most likely, be on a competitors list of good prospects. Stay relevant. Stay in touch.
Finally, Covid has unquestionably changed the way we all think. For most countries 2021 is a year when more and more adults will receive vaccinations albeit the roll out is slow in most countries. Firms are pivoting toward technology. Certainly many of my clients report that their forward looking budgets are heavily biased toward technology investment.