This week on the Future of Business we are excited to have Guy Pearson, co-founder of Practice Ignition and Chairman of Interactive Accounting, on the show to share his experience and insights on how to best deliver business advisory in your firm.
If you are an accountant or a bookkeeper, you have the experience and ability to be the trusted source for technical, technological and strategic direction. You challenge customers in all facets of their business to be accountable, process driven and productive. Right?!
But what does you need start offering business advisory? How do you upsell to business advisory? How do you find the right clients for business advisory services? What are the best tools and apps to deliver business advisory?
Tune in below to the exclusive interview with Guy and his 8 top tips to deliver business advisory services in your practice.
Don't feel like watching the video interview? Refer below for the script.
Alistair: - Thanks for tuning into The Future of Business. This show is proudly brought to you by Skippr Cash Flow. I am your host, Alistair Lamond. On the show today I went and met Guy Pearson from Practise Ignition to talk about the art of business advisory for today's accountant. It is an excellent opportunity for a firm to broaden their service offering and turn on new revenue channels. Before going down this path it is important for an advisor or an accountant to understand what kind of advisor they really want to be. How are they going to best price that service? How are you going to up-sell to provide advisory? How do you find new clients for this offering? Which apps are really going to help you effectively manage this relationship you're forging with your clients, all the important questions that need to be answered before jumping in.
Guy provided some fantastic insights and direction on these questions, so without further ado, let's go meet Guy Pearson from Practise Ignition.
Top Tip Number 1 - How do you define yourself as an advisor? (1:00)
Guy Pearson: Usually, it's based on skill set, so advisory if you do break into trusted and technical, trusted is probably more in line with when a client actually reaches out to yourself and asks a question, whereas technical would be probably perhaps something more reactive. A technical advisor is typically someone who talks about tax compliance, all those sorts of things. It's hard to know when those issues come up, once again, unless someone asks you a question, but very much on keeping someone out of trouble I would think, is technical advice.
A trusted advisor is usually, given a commercial scenario, what should I do in this scenario, and so a client liking you enough and believing in you being able to give them decent advice, coming to you with that problem and hopefully you can provide a solution. That would be the way that I'd dice it up between the two. I don't know how you choose which one. I would suggest that your skill sets as an accountant lead you one way or the other.
Top Tip Number 2 - How do you price advisory services? (2:05)
Guy Pearson: That's a good one. Pricing is one of the most complex issues when it comes to accountants. I think the main thing is that when you're stuck on time costs and there are certain scenarios where it perhaps is valid, you're never incentivized to actually get more efficient at anything you do or provide anything scalably. It's you're sort of stuck on the drip, if you will, and then you argue with your clients at the end of the process about how much you should get paid. I think pricing when it comes to value-based engagements. When it comes to advisory engagements, if it's something that's recurring like any other recurring service, so if you're fulfilling a monthly CFO role then it should just be a fixed price to perform that role for those certain customers.
When it comes to a project-based, which usually is what feeds in off being on a more of a recurring and retainer style model and you identify that there's a problem, that project should be value-priced, but once again I always view that value-based pricing is effectively ... should be a fixed price based on a cohort. If you've done something before, and we can talk about niches later, because I'm huge on building your niche so you can actually give advisory services, then you should be able to predict or understand what the value of the next time it is that you're going to do that piece of advice, in which case the value is more or less, okay, which cohort do they fit into. Are they less than a million, one to five, five to ten in turnover, in which case the price should be more or less in a matrix with some variables.
"People get caught up on everyone having to be unique and individual. I'm typically leaning more towards getting the work in and getting the revenue in and it being profitable and that being scalable."
I think it just depends on how you look at it, but I always think fixed price, considering the value it provides to your client, is a better approach.
Alistair Lamond: Great, and it keeps it simple. Guy Pearson: Very simple. It means your whole team can sell it, which is nice too.
Top Tip Number 3 - How do you upsell advisory services? (4:04)
Guy Pearson: Advisory is relatively simple in terms of how you would pitch it and present it. Talk about what we used to do, so I used to hijack, and get permission to access a customers file and I'd connect a reporting app. I'd connect something like Fathom particularly, because it had goal seek analysis, and this is going back to 2010. In Fathom, you choose a metric, so it might be gross profit margin, so if you don't know where you're starting with the business, usually the top line profit is not a bad place to start, and then we do a sensitivity analysis based on volume and value of transactions and outgoings, so whether it's fixed or variable based on revenue to allow you to choose a new target and then just move the levers and get you there over a period of time.
Then you'd have a conversation with your client about whether or not they thought that was achievable and what changes they'd have to make. That's like value conversation number one. Now, if you do something like that prepped with industry insights and understanding of best practises and you've prepared those things ahead of time, so do some R&D, the sales conversation becomes a very, very simple one.
It's when you tell someone that you're going to help them shave 5% off their GP without illustrating it to them, without illustrating that you actually understand what they do, or even understand what systems that they use, or perhaps you don't even have the data. You're just throwing it out there as a sales pitch because someone told you to, I think that's when it falls over.
Most important factors are; have the data, have a set of connected systems, be able to illustrate that you understand how the GP or whatever the chosen metric is for that business and that industry needs to change, and then work out a plan towards it, and then that's usually where the project kicks in and that value advisory piece.
"I know that people say you should always charge, but you never charge when you're figuring stuff out."
That's you, that's R&D, because if you get it right for one, and we talked about niches a little bit before, you can do it for the next guy, and for the next guy, and the next guy, and typically industry on industry usually looking at the same one, they have the same key, core metrics. The better you get at those, the better you get at giving advisory, the more of them you can have, and the higher up you'll get in the value chain.
Top Tip Number 4 - How to find new business advisory clients? (6:23)
It's in your existing client base. Without plugging Practise Ignition too much, I'd strongly suggest that you tag them, what industry they are in, and then you can go back and build a report to see who's in those industries and what services they're currently consuming, and then think about whether or not they're ready for advisory. Outside of that if you, once again, much easier when you focus on a particular vertical or at least a few verticals if not one specific one, and then ironically you need to run marketing and campaigns that focus on where they are.
Much like we're doing this video today to talk to accountants and VCFOs about value advisory advice, like giving value advice, and you're posting it online, and you're going to share it on LinkedIn, and all the mediums which they live in. You need to do the same thing when you're thinking about where your clients are. There's no point in trying to do value advisory for construction workers and having it at the Hilton at 7:00 p.m. as a black tie dinner event, because they're going to have knocked off at 3:00 likely, maybe had a cheeky one on the way home at the pub, which is great, and the last thing they're going to want to do is suit up and go back out to the city when they've got to be up at 4:00 in the morning. Much better idea would be to pick the closest venue that they would likely to assemble at, so it might be your local RSL, it could be a pub. It could be a master builder's association. Have it there, bringing in an external speaker they actually want to hear, and you be the person, if you like, saying ... I call it the enabler which is probably the wrong word, but your firm is the enabler, and they're talking about how they've grown their business, and you say it's with thanks to this guy over here that that happened, and then you have a banner, and you get leads off the back of that. I think that's always huge.
"Make sure you think about your target audience, think about the value you're trying to give them. Case studies are always nice, so even better if that case study is speaking just about the business problems they solved, and not necessarily how you solved them, and then be the sponsor, the enabler, and suggest systems that people can put in place and give things away for free."
We found that worked really well for us when we did startups, and so be where your clients are and focus on bringing them some content that they actually want to listen to, and be the enabler.
Top Tip Number 5 - How do I best manage my advisory internally? (9:05)
Guy Pearson: The first thing is you need to have a smooth onboarding process, so you need to be able to scope up the work, send the agreement out to a client and have it connected to workflows and invoicing. Make that all easy, which is where we come in. After that internal processes are mostly around being able to segment your client data, so which clients could be eligible for which services, what are they participating in and what value are they getting out of it. Usually that would live in something like Practise Ignition, again, in a CRM.
I think the biggest thing is to make sure that the team knows how to identify those clients. That's usually all about the fact that you have partners who may understand how to do provide advisory services, and that sometimes stays at the top of the tree, and you got to try and force that down so it's a flatter structure, so everyone can do it, because data entry is slowly going away.
"Teaching your team and coaching them on signals that clients may give for advisory services."
Once again, going down that niche path again. If you have clients in a similar industry across the board then a lot of those questions and signals are going to be very similar, which makes it easier to educate your team on what they should be looking for and perhaps what conversations they can have. I think it's more about making sure that people identify and know how to identify and what those scenarios are. It could be needing to buy an asset, purchasing, a massive dip in cash flow coming up for a client when you're doing the books and just going, "Holy moly." You need something like Skippr in place so they can see that going on, and then we can talk to them about how they can manage their cash flow issues.
"It's all a mixture of basically software, identification, and then how to actually have that first conversation and then making sure that everyone in the firm engages. "
Top Tip Number 6 - How to find a niche for my advisory? (10:56)
That is a really good question. Ironically they probably have one already in some way shape or form, they're just completely unaware of it. Having run a firm and stumbled onto it ourselves rather than it being almost like a set out path at the beginning. The firm that we started we kind of went scatterbrained. We went anywhere that wanted to move to the cloud, and then ironically this digital, the digital firms, startups, everyone that wanted to move online was using online banking for everything anyway, were further ahead probably down the tech journey than us that wanted to join, and so when we look back at our client base we noticed that trend, which is why we went, "Well, we love dealing with these guys. They love dealing with us. Let's do more of them."
What does that mean? It means usually you have a client review, so if you went through your whole client base and just ticked the general industry, which might be trades, or contractors if you're in the US and you're watching this, finance, or professional services or whatever it is. If you sort of get a list you'll find that of the operating businesses, so excluding any investment entities you'll find that you've got 50 of those, 100 of those, and maybe, big firm, 400 of this particular type, well, you should go after those three segments. Typically firms don't have all that information together, so if you can pick a niche, or if you can review your client base and figure out what your niche is even if it's broad like professional services is incredibly broad. Hopefully you can narrow that down, but even if it was just that, the applications and data entry tools that they need, so to actually run their business, so time tracking for efficiency work, job, tasks, reporting with write offs, like where have they got issues, all the way through to the ledger and then reporting.
If you put all that together you can actually offer some pretty good advisory services, whereas if you're not thinking about data flow, because you're so scattered brained and you can't do it, so very much review your client base, try and peg down some specific industries even if it's rather vague, and then start thinking about applications they can use and the data flows they would have.
Top Tip Number 7 - How do I keep advisory clients accountable? (13:09)
Big thing is if you're going to go into that advisory relationship and all clients should be held accountable, particularly that you will have predetermined the goals that they're trying to hit so they would have agreed upon them.
First thing would be to have monthly catch ups, even if that's a two minute phone call, even if it's just checking in on their reporting app to see how they're tracking against what you set.
The second thing is, and I know a few of my accounting friends do this really well is they tie in personal rewards for the client that you as the accountant almost act like a, quote from Steph Heinz, Mother Hen;
"They have to deliver X before you will let them go and take a holiday. If they deliver X plus Y then they get a bigger holiday."
If you tie some rewards in so you gamify the advisory, that's usually key. Otherwise the second thing is to have plotted a big goal. Gamification, one, second thing is to apply a big goal. We have a board at Practise Ignition, and effectively that's kind of like my advisory service provider, if you will, and we're trying to figure out where we want to end up at the moment, and let's take baby steps back to where we are now.
If you can hit the momentum and trajectory of those steps, hitting your end goal, which might be in software circumstances, trade sale, IPO, big audacious events, revenue milestones, all those sorts of things, if you have those in mind you can pair it back to where you are now and make those goals and targets that me as a client has to hit every month achievable.
"Momentum breeds confidence, breeds progress, breeds momentum, it breeds success. It's all just one big circle."
I think just regular checkups and holding them accountable and making sure that they know the impact that if they don't hit them without being an arsehole, of what they will have on the ultimate goal, is big as well. Gamification and tracking against an ultimate goal I think would be the two ways to make sure your client feels like they're held accountable, and that they deliver.
Top Tip Number 8 - What are the best apps to assist advisors? (15:26)
The useful tools for an advisor. I think there's four key areas. One is how you run your practice, and so shameless plug, something like Practice Ignition to help you get a really clear picture of who your client is and what they consume from you, perhaps even what industry they're in.
Then things you use to run your practise, so job management, so Xero's Practise Management Suite, you got Intuit releasing Kanban, so all those sorts of things, and with PI you get payments, but if not PI, something to provide payments. You want to make sure your back office runs really smoothly connected, preferably with online tax.
Then the last thing would be internal knowledge management, so Google Sites, Confluence from Atlassian or something like that, and internal task project which could be JIRA if you download Atlassian suite or something like Asana.
Then you've got the three biggies, so in accounting terms you've got how to get your data into the ledger, and so Hubdoc and Receipt Bank are the two that come to mind.
You've got the ledger itself, so the three biggies globally if we think about global players are going to be Sage, Intuits, QuickBooks, and Xero, and then you've got reporting and reporting typically is split up into two. Number one is budgeting and real-time versus budget. Your beautiful Skippr to manage cash flow forecasting and budgeting.
On the flip side, I think, for the generic business you've probably got Spotlight Reporting or Fathom are my two favourites on the advisory conversation, not around cash flow but around KPIs necessarily and where your heading. I think Fathom is amazing for having that first advisory conversation. They've got some really cool new tech coming out. Then Spotlight, I think, is amazing for board level reporting, so when you've got clients that are a bit more sophisticated that require that sort of thing, I think that's great. Personally I think you can have as many of those products as possible. There really is no necessarily one size fits all. They can all add value, but you got to focus on the USPs, so what is ... It's almost like inventory management solutions. If you do drop shipping there's an inventory management system that is kick arse for you, if you don't, then use the other one. I think you need to identify what the needs are and make sure these tools satisfy them and but more important solve the customers problems.
Thanks for tuning in!
Want more background on Guy and Practice Ignition? Check out some exciting news on their recently announced funding round.