If you want a very brief rundown of the ideas I’ve laid out in this article, scroll to the section with the big iceberg infographic. If you want to understand the research and statistics that lead me to develop the business advisory clientele iceberg, then you’re a rare breed of reader, and with all my heart, I hope I don’t disappoint you. Read on.
This story starts with a wide-eyed, newly employed Spotlight Reporting SDR: me. My role was to contact people trialling our software, discuss their needs and what they’re trying to achieve, and connect them with the right people or resources to succeed.
Very early on I noticed two distinct patterns. I would come across the ideal boutique advisory firm: an accountant who had just opened their own practice, had 20-30 clients all of whom were on a fixed rate monthly package complete with a report, forecast, and advisory meeting. These accountants typically had a very high average revenue per client, far fewer headaches, and definitely a deep understanding of their clients and their clients businesses'.
The other pattern? A senior accountant or director from a well established firm starts a trial, and tells me they’ve been approached by one of their clients with a request for some reports, maybe a forecast. After some questioning it usually becomes clear that they have a desire to provide more advisory, but just don’t see any potential in their current client base to justify anything short of ad-hoc services. How many clients do these firms typically have? Around 200.
Why is there such a stark contrast between the two, and is the latter correct in their analysis of their client base? Let’s take a look.
Now before I dive into it I should caveat the following with: yes, soft-skills and your client base are factors here. An accountant who has 100 sole trader clients may not be able to get even a majority of them onto reporting, forecasting, or business advisory services—BUT in my experience, the vast majority of firms won’t have this problem. There’s no shortage of research and data to support my anecdotal experiences.
In 2018, NAB released an industry report detailing the perspectives of SMEs and their accountants in the context of accounting services. In many areas, there was an alarming disconnect between what SMEs wanted, and what their accountants thought they wanted.
So what became of the aforementioned director, their firm, and their substantial client base? Well… typically they journeyed no further into their advisory adventure because they, like the accountants in the NAB report, underestimated the wants and needs of their clients.
To the accountant who reactively offers these services, I say, you’ve struck gold and you haven’t even realised. The gap between supply and demand has shrunk in recent years, but it’s still well felt by SMEs, and under capatilised on by accounting firms.
A succinct way of thinking about it is with the ever popular iceberg analogy. Your one or two clients who have proactively approached you and asked for these services are just the tip of the iceberg. 21% want Business Strategy, 17% wants Business Analytics, 10% want budgeting and forecasting, and 12% want Business Planning. If you’re an accountant and one of your clients approaches you with a request for advisory services you’re just seeing the tip of the iceberg. There’s a whole lot more under the surface.
There is a lot that you, as an accountant, can do, to tap into the demands in the market. For starters, the same NAB study found that:
1. SMEs do not believe they have adequate financial literacy and
2. 54% of them found their accountant through a recommendation or referral.
The work you put in won’t pay off linearly. Like a lot of things, you’ll eventually hit a critical mass and have more business than you know what to do with, but to get a few simple things right:
1. If one or two of your clients approach you requesting business advisory services, don’t approach it as a ‘value-add,’ but as a priority. Business Advisory services are highly valued, and if your advisory clients are getting the services they need, they will always recommend you to other businesses who are in need of an accountant when the chance arises. People love being the one to give a good referral but they won’t stake their reputation on someone they aren’t completely satisfied with.
2. Be proactive. Those one or two clients are just the tip of the iceberg, and there’s a whole lot of mass underwater. Ask your clients for feedback frequently, and give them the chance to tell you what they want. You’ll be surprised at the low-hanging fruit you’ll find.
3. Market your advisory services to your current clientele. The best way to do this is to give them value upfront for free. You can use a Spotlight trial to create free management reports for each one of your clients, with very little effort and time. We’ve seen firms have amazing uptake from such an exercise.
The full NAB Report can be found here. I encourage you to read it.