A modern business model is a vague and overused term. What does it actually mean?
The IT revolution that we are currently in has two major influences on the traditional public practice accounting business. Firstly, it is changing the way our clients run their business. From attracting their customers through to managing their business, processes are changing dramatically. This means that the requirements of their accountant are also changing. Secondly, how an accountant delivers their services to a client is also changing. The traditional public practice accountant needs to embrace change within their own practice to ensure their clients are being serviced.
We spoke to Mulraneys Accountants to hear the finer details of how they’re doing just this.
1. Identify your customer
This is no small feat, as most accounting firms have a client base similar to a “bag of mixed lollies”, with clients from all different industries seeking different levels of service. However, an accounting practice of the future needs a clear direction on who they want to service. Defining this creates enormous efficiencies within the practice. Planning is precise, and delivery of traditional compliance work is efficient and accurate. More time for advisory work with the client!
One method of reforming your client base is via industry verticals, whereby a niche industry is identified, researched and sourced as clients. Convert that “bag of mixed lollies” to a “bag of Minties”.
Mulraneys analysed their current client base, and identified areas on which to specialise. This required not only an analysis of their clients, but also a review of the experience and ability of their partners and staff. In addition, a keen interest in the changing workplace has provided numerous opportunities to access new clients.
By contacting industry leaders, Mulraneys have tailored packages to suit clients. Each package defines exactly what the client requires and embraces the fixed fee/regular payment model. There are no geographic boundaries anymore; Mulraneys have clients all over Australia.
Over the past 12 months, Mulraneys have increased their fee revenue by 50%, and have projects in place to grow by 100% in the next 12 months.
2. Streamline operations
Mulraneys identified three principal areas to review. These areas, according to the firm, are probably the only aspects of the business that haven’t changed in the last thirty years or more.
Every business needs:
Sales and Marketing
Accountants are (no surprises here) traditionally substandard in this area. Accountants must embrace the Internet and discover just how well it can help you identify and contact your target customer. Your website, LinkedIn, Twitter, Facebook and the like.
Mulraneys believe that social media creates awareness. Clients will increasingly use social media; however, if you think that this will bring new clientsAA directly to your practice, you may be waiting a long time.
Social media can also provide contacts. Once you have identified your target market, sites such as LinkedIn can provide contact points. It is then up to you to make contact.
Their website is also a valuable marketing tool. Mulraneys have purposely left their traditional website in place as they convert their existing clients to a new model. However, they have created industry-driven websites for their new clients. A key part of these sites is the delivery of all ongoing client information via a log in portal. This forms a major part of their Marketing Engine.
There is no money spent on traditional paid advertising. The team at Mulraneys believe that money is better spent on direct contact with key personnel in your target industry.
To embrace internal changes, the planning part of a business needs an overhaul. Procedures, managing jobs and tasks within a job will become a crucial part of the new business model.
The Mulraneys Planning Engine is different! Embracing the term “microtasking” is a key plank to the new system. Jobs are split into procedures and procedures split into tasks. Each task is assigned to a staff member.
Pricing is completed by reference to each job. Managers complete the pricing review and partners approve.
There are no timesheets. Fixed priced agreements shift the focus from time and work in progress to fees billed.
The complete system is documented, allowing easy transition for new staff and to also control outsourcing. Too often, we hear stories of disaster when work is outsourced. Without microtasking, the efficiencies so often marked with “cloud accounting” are lost.
This is where the work is done. Mulraneys have split this function into three sections:
- Compliance Engine: This is basically the traditional practice software that maintains client details, tax returns, corporate compliance and documents. However, the difference is that procedures are systemised and standardised to allow easy, controlled outsourcing to practices that specialise in compliance work.
For Mulraneys, efficiencies are gained by not using traditional modules in this software. No timesheet recording, no WIP analysis and reporting, no debtors control. Mulraneys have linked cloud software to manage all debtors.
It’s time for traditional practice software providers to embrace the IT revolution. Not by reinventing the old software on the cloud; produce what the client (a public practice) requires. Greater efficiencies can be gained in this area.
- Outsourcing: Work is outsourced to an Australian company, with all work completed on a set fee basis (to match with the set fee revenue). The Planning Engine controls what work is to be done and how often, along with a QA and monitoring section. Using this systematic approach, the aim is to get “every transaction right, every day”. So, within the firm, a standard expectation is that all work is completed to a specific standard and plan.
- Advisory: Because all processing and compliance work is already completed, the managers and partners at Mulraneys are focused on completing a final review and further advisory work as requested by the client. So, existing staff capacity is redeployed to handle the top end work.
Mulraneys continue to service their traditional client base with both compliance and advisory work. Their new client base will also be serviced with compliance and ongoing advisory. The difference is that compliance work is done efficiently in real time, providing clients with the real time data needed to compete. Administration tasks, both within a client business, and within the practice, have also been refined to provide further efficiencies.
The evolution of the new Mulraneys model is ongoing. In its twelve months of operation, fee revenue has grown by 50% and overall margins have grown by 20%. There is no reason why the model can’t continue to scale in the future.