The most common objection I get from established firms of accountants is that they are busy so don't need to do any marketing. Having spoken one-to-one with many hundreds of accountants in my time I think this equation is in their head:
Marketing = more clients = more work = more hassle = less enjoyment. No wonder they don’t want to talk to me if marketing is associated with being unhappy!
But, the truth is that marketing is not about being busy or unhappy, it is about making profit and having choices. If anything, the busier you are the more you will benefit from marketing because marketing is about leveraging resources rather than putting strain on them.
Net profit or gross fees?
The title of this post comes from the book Building Strong Brands by David A Aaker. In the book the author makes the point that chasing market share is fool’s gold because it often reduces profits. I think this is similar to accountants focussing on Gross Recurring Fees (GRF) rather than thinking about Net Recurring Profit (NRP).
A report by AVN accountants found that before the recession the average UK partner was earning £78,000. But, is this really profit because profit is what you get from not working? The AVN research showed that after adding back an arm’s length salary charge for the partner's time, over half of all practices are loss making.
But, getting to a notional break-even is not the objective, there is a much bigger opportunity cost to not investing in marketing. Think about your own practice. I bet there is at least one client where you generate higher than average recovery rates. Perhaps you get £100, £125 or £150 an hour or more?
Whatever it is, take the best recovery rate you have and multiply that by 1,500 for every qualified accounting resource you have. The difference between that and your firm's GRF is probably closer to the real opportunity cost.
Could you be leaving £1 million on the table?
Referring back the AVN research the top quartile of firms in the survey reported average recovery rates of £161.60. The difference between that and £52 an hour, which is the effective rate based on 1,500 hours and partner’s earning of £78,000, is £109 an hour!
If you are working 1,500 chargeable hours a year that is £163,500 extra on your bottom line every year. Over most partner's working life that is way over £1 million and with that in mind it is not all about the money but quality of life.
When you are highly profitable you have the option of working a three or four day week. So, marketing is really about your life.
The next step?
The first thing to do is to book some time in your diary each week for marketing. I would suggest at least four hours which you can easily find by implementing good time management. Don't tell me you don't have time for time management!
Remember, being too busy for marketing is like being too busy to look after your health or to nurture the special relationships in your life; you are just storing up trouble down the line. In fact, if you are a practice owner I would argue that marketing is probably the most important thing in your life. This is because marketing drives your business and your business drives your life.
Be honest a minute and have a think. Ask yourself a few questions.
• How much money are you leaving on the table each year?
• How many hours are you working every year that could be unnecessary?
• How many years will you work where you could sell up earlier?
• How much stress and hassle are you putting up with because you have some nightmare clients?
The more positive questions are:
• What could you do if your business allowed you to?
• Who could you help more than you are able to?
• How would people look at you if you really got your practice working better?
Now, if you feel the urge to have a look at marketing feel free to give me a call. And, before you ask, the cost of marketing is much less than the cost of not marketing.
Start with some no and low cost marketing initiatives. Things like adding value, adopting value pricing, having an effective Website, cross selling new products to existing clients, enhancing service levels, PR, asking for referrals and networking. All these work and cost very little to do.
Here is a 30-minute presentation about the key principles of building an effective Website at the heart of your marketing department.