Simeoni – 2014 Most Efficient Accounting Firm

The 2014 Good Bad Ugly Most Efficient Accounting Firm award is based on the Business Fitness ‘Efficiency Factor’, a one-number performance summary, which brings together profitability, productivity and financial management efficiency, to paint an overall picture of the performance of the firm across multiple management fronts.

This year the most efficient accounting firm is awarded to Simeoni, a Sydney-based sole practitioner firm with nothing but optimism for the future. With quality staff and systems monitored regularly, fixed price agreements, clear delegation of remedial work and a focus on educating clients and building relationships, this firm’s got everything covered.

Running a business vs. a practice

Deciding to run the practice as a business, Simeoni rebelled against the traditional partner structure (being the sole practitioner) and the firm continues to grow and move into new areas. With 20-30 accounting firms in the same street, the firm is always asking how they can be different to each one of these competitors. They’ve been part of a number of accounting networks and taken insight from each of them, and have reviewed their systems and templates and updated them to best practice standards.

Top staff have the opportunity to become directors and shareholders, and as each staff member is driven by different motives, having a fixed structure to the firm and then asking staff where they want to go means the directors can tell them exactly what they need to do to achieve it. Asking staff to think for themselves and create their own goals within a well-defined system is one way of creating freedom without chaos.

Another reason to run your practice as a high-performing business is that quality staff won’t stay with a firm clearly lacks a promising future.

Making a conscious effort to converse with their clients and find out exactly what they wanted from their accounting firm, the firm discovered two things: they don’t like tax surprises, and they don’t like accounting bill surprises. The firm realised that if they could take these surprises away from the clients, they would automatically have an advantage over their competitors. Moving away from paying for time has meant the firm no longer charges by the hour. Clients pay for the result, not the time invested, which means they’re no longer afraid to call the firm for fear of being charged more, and there’s no fear of the bill. Though the firm still do exactly the same work, this payment model has led to a much more rewarding partnership with their clients.

Quality staff training is a huge priority for Simeoni – the firm works on a lot of internal programs, and attends a lot of webinars, conferences, seminars and updates. Their focus on technology means all staff need to be constantly updated in this area.

The firm regularly monitors their budgets, gross margins (per month and annum), cost of labour to fees, overheads, efficiency, and people and productivity (month by month – how and why they are performing like they are). Constantly analysing where they can improve and what they can do has made the firm the high-performing business it is.

They are also diligent in focusing on their client base: on new clients, on client retention, and on why they may have lost clients.

Their expenses are quite low (around 22.5% of revenue compared to the 30% most firms experience, excluding partner salaries), which has much to do with the technology, processes and systems they have in place. Many of the staff have shared jobs or multiple duties, and the firm multi-skills staff in different areas to become more efficient. For example, a secretary is not just a secretary but might also do BAS work and more.

While future planning for the average accounting firm might involve focusing on compliance deadlines and the like, Simeoni’s insistence on running the firm as a business has led them to look at opportunities for generating multiple income streams. He became a qualified financial planner in order to converse with his clients on this topic if they come to with questions. Looking ahead, Simeoni see lots of income opportunities from advisory services to SMSF help to even, down the track, IT-type services, marketing, and a range of other areas previously unconsidered by accountants. Their advice to other firms is to prepare to make mistakes, but not be afraid to try something new.

Niche

Focusing on niche clients and industries has been a very successful strategy for the firm. Being seen as the leading authority in a particular area is justification for most of the fees you choose to charge. For example, one of the firm’s focuses is on real estate, and they’ve become the largest trust account auditors in NSW through this. They have programs, systems and procedures in place all tailored to real estate.

To market these niche services, the firm has a marketing manager who constantly sends out relevant (and interesting!) updates, whether weekly, fortnightly or monthly. This marketing manager does everything social media and networking related, and structures their published content around seasons, such as an audit themed season. The firm have also built their own database of 3000-4000 real estate agents that the marketing manager is responsible for updating.

Attracting and retaining clients

From a marketing perspective, Simeoni encourages firms to just keep sending out quality content. No prospect will inquire the first time they hear about you – it could take 10-50 times, but the more you’re in their sphere, the more likely they are to turn to you when in need.

The firm trains staff in the art of confidence, an essential skill for closing the sale and remaining engaged with clients. The firm constantly publish useful information for the clients and social media followers, such as new ATO regulations or deadlines, and explain that the content needs to grab a viewer’s attention within the first 5 seconds.

When it comes to building relationships with existing clients, the first thing, according to Simeoni, is having the time to do it. He explains the need to get the right systems in place to minimise stress and maximise time, which you can then offer to your clients. For this firm, the majority of their compliance work is finished by the end of March, which gives Simeoni and staff plenty of time to connect with their clients. One tactic they’ve found helpful is to contact clients around the March/April period and ask where they are now (business-related), what they are doing in the next year, five years and ten years, which allows the firm to be involved in the current and future running of the business.

The second most important factor to building client relationships is listening. Simeoni explains that many accountants are reluctant to truly listen to their clients’ problems because doing so will probably mean more work for them. However, that view is changing with all the talk of advisory/value-added services.

Client relationships are extremely important to the firm, and they treat each client with the same amount of care and attention. The traditional view was that an accounting firm couldn’t make money from individuals – but as Simeoni explains, that has changed completely now with the potential of on-selling financial planning.

Finally, Simeoni urges not to be disheartened and give up when you lose a client. Find out why and think about how you can do better. Last year, the firm lost 4 out of 5 of their biggest clients due to circumstances unrelated to the firm’s performance, and yet had their highest revenue so far. Losing a client is not the end of the world – it’s just a chance to learn.

Breaking out of the compliance rut

The firm is optimistic about the future of compliance work. Though they’re not sure to what extent it will be valued or what exactly it will look like, their advice is to get it done efficiently and well, and figure out a way to ensure it still makes you money. Don’t let it drain all your resources – invest in the systems to make it work.

The firm uses Workflow Max so that every part of a job is documented. Simeoni notes that he could be anywhere in the world and still know who’s working on what and at what stage the job is at. Monitoring the job’s budget with timesheets means the firm knows how much the job is costing. Efficiency is important to the firm, as they don’t want staff working late or on weekends – instead they’d rather help them discover how they can work more efficiently.

The firm has developed a lot of their templates and procedures internally, with the help of documents from external providers. They constantly review the standards of their system, attend seminars and look at what the market is offering, try new things and seek new ideas.

When asked how to find the balance between over-delivering and under-delivering on quality, the firm explains that quality for them means the level of rectification work, the amount of complaints, and compliance (in certain regulations). These things can cause alarm bells, so the firm makes sure they can fix them.

Dropping costs

In an effort to reduce the high cost of labour from highly paid staff that most accounting firms are victim to, the firm outsources or assigns to juniors or interns (who are also valuable for recruiting new staff) work requiring a lower skillset. Their admin staff also perform much of the simpler work that the accountant would traditionally have completed. With costs reduced, the firm can afford to pay senior staff very well.

In fact, the firm has taken a very modern approach to managing employees. They’ve specifically selected quality, determined people with their own goals. These employees tell the owner what salary they desire, and based on a set formula of productivity required, they know what is expected to earn that salary. Salaries are therefore based on productivity targets (mainly dollars, not hours), as well as retention and securing of clients.

The firm’s outlook on outsourcing is that they don’t outsource the work – just the labour. This is a very important distinction to the firm, because it means the work / the job never really leaves the practice. With one of their staff members in Australia having migrated from India, the firm established a small team in India through his connections and use these remote employees whenever required. They use an isolated file server for these employees to log in to, allowing them to see details for a particularly client only, as a security/privacy measure.

Technology has also dramatically reduced their costs – the firm uses Xero, Workflow Max and a number of other software systems and templates to automate much of their compliance work.

Write-offs

The firm devised a plan to eliminate (not just reduce) the age old accountant’s dilemma of write-offs. Every service is provided at a fixed price, and clients sign an engagement letter clearly outlining the scope of the work and what the price will be. Before beginning the job, issues with pricing are discussed so that neither the firm nor the client wastes time in completing part of a job. The client is not surprised by the bill at the end of the job, and the firm can inform them as to how long the job will take.

Educating their clients well means that clients pulling out is a rare occurrence. Two senior staff monitor the jobs and hand the more remedial work down to junior staff. Usually, staff can predict in the first 15-20% of work on a job whether there will be problems with it. If this occurs, work is stopped and the problem is dealt with, instead of put aside until the end.

Their motto

For accountants, they’ve taken a particularly broad motto: helping clients to achieve their goals. This is the “why” part – the “how” is through their specific accounting services. The firm has taken the approach that they will do whatever it takes to help their clients achieve their goals; accounting and tax work are merely the tools that assist them in this process.

The firm believes that once the focus is placed on helping their clients with bigger picture goals in mind, accountants stop focusing on accounting and tax and the details of the work they’re doing, and become the kind of human accountant we’re all being pushed to be in the digital era. Traditional accounting firms are focused on the work, and not the client’s needs, yet the firm insists that the money will come from focusing on the client and what keeps them up at night.

Clearly, the firm are not experts in every area. The difference, however, is that they make the effort to point clients in the right direction or source people who can perform a certain task or offer particular advice to a client. The best way to convince clients to take action on your advice? Advise yourself first. If you’re not taking your own advice, then they won’t believe you. Seeing your firm thriving on your own advice is the best way to prove your point.