Problems with Business Advisory
Getting into it is easier said than done…
On one hand, diversifying into business consultancy (i.e. constructively telling business owners how to solve problems) and getting paid for it, is attractive because it doubles the revenue from accountancy work and keeps your clients much closer to you. It also heads off the threats posed to your compliance revenue through the growth of online apps.
Whilst a move into consultancy is superficially simple, the reality involves some pain. For a start, you need to rethink how you work, the different risks that you run and how to deal with them.
As an accountant you are the expert, interpreting the rules and developing strategies to navigate clients through the statutory minefield. Your knowledge vastly outweighs theirs and they are prepared to listen, sign off on your work and pay, since the cost risk of not doing so outweighs the fee cost.
And you are well covered in all that through your training, institute support’ knowledge base and PI cover.
But when it comes to business consultancy, what looks similar really isn’t. It is an attractive opportunity however, because you have a readymade client base and their trust. Two very powerful things that consultants don’t have.
Consultants are called into businesses for only two reasons:
There is a crisis that needs hands-on support to save the situation. Price matters little because survival is the imperative.
The client business can be any size. An owner managed business, if it survives, quickly dispenses with the consultant and their cost.
There is a development need to overcome either a frustration or to take advantage of an opportunity. The consultant will work for an extended period within the business.
This client type will be medium / large with employed managers spending allocated budgets rather than their own money.
In both cases, the consultant’s process is to examine the business, advise the client of their current situation, forecast its potential and define the actions needed to solve a problem or achieve an ambition. The consultant may stop at that point or commence a second project to implement the plan.
In case 1 (above) the whole process may occur in hours, with work starting on day 1 and probably finishing within the week. This is mostly the work that consultants carry out for owner managed businesses, which explains why their income is erratic and repeat business and referrals, rare.
In case 2 (above) the whole process may take months or years. This is mostly the work that consultants carry out for employee-managed (medium / large) businesses. The fact that this type of work is rarely carried out for small businesses has much to do with their very high failure rate (200K-300K annually in UK). They just don’t have access to the continuous practical guidance that makes a serious difference to surviving and thriving.
This group of businesses makes up 94% of the population and its low use of long-term consultancy presents a huge unserved market which accountants are uniquely positioned to take on.
But how?
Let’s look first at buyer motivation…
If the owner needs an urgent solution s/he pays whatever, because in an emergency the cost risk of doing nothing outweighs the cost risk of paying for consultancy that may not work.
If the client wants a longer-term solution, they will first critically appraise any consultant to see if they have expertise that exceeds their own and which would therefore justify paying. Mostly, they consider that the cost risk of paying is higher than the cost risk of no solution. But they benefit from much free brainpicking, gathering ideas which they then try to implement themselves.
And that’s why accountants suffer the free advice problem because the business owner has paid for the statutory work so feels entitled to blag some extra value with a free brainpick eg “while I’m here what have you seen other clients do about (this) problem?”
And what accountant can resist helping an existing client?
Summary
So, owner managers looking for advice on how to make their businesses work better need it, but are unwilling to pay.
Yet, they are forced into high emergency payments when things go wrong that would have been avoided had they been able to spend (less money) strategically on advice to secure a trouble-free business in the first place.
The obstacle is a cost / risk equation tipped against spending on advice that may not deliver results, nor within a visible time horizon.
So how to break out from this?
By making the cost of advice less than the risk of the advice not delivering the desired result, causing a business of any size to see the obvious value of proceeding with a performance / value improvement project.
This can be achieved by making available:
A trustworthy source
Reliability
Credibility
Accessibility
Free advice (up the point of solution implementation)
Much lower cost (than the current day rate norms)
Indefinitely sustained programmes
Structured development meetings (separated from compliance)
An accountant can deliver all that because…
Already in place, they have:
Trust
Reliability
Credibility
And by adding:
Access to online solutions to every problem and ambition
Automated advice (free up the point of solution implementation)
Automated delivery 1000% faster at 95% lower cost
Technology driven programmes, affordable forever
A distinct (chargeable) consultancy process
From Runagood®…
From £250 +VAT
A collaboration of consultancy skills development, smart technology and market power.
By Duncan Collins
Founder of Runagood.com Ltd