It wasn’t hard to find a reason to bring back author, accounting firm consultant, international speaker, and futuristic firm guru Rob Nixon back on the podcast to show you how to build the perfect accounting firm.

You can find our prior interview with Rob here in order to hear more about his background.

This time we stay in the nitty-gritty and discuss Rob’s new book, The Perfect Firm, which dissects the steps to create the perfect accounting firm.

In this episode of the Growing Your Firm Podcast, David Cristello and Rob Nixon discuss:

• The origins of The Perfect Firm and why it’s so relevant right now in the accounting industry
• 5 Steps to create the perfect accounting firm according to Rob Nixon
• Why running your firm ‘by default’ is deadly to your accounting firm’s future

ADDITIONAL LINKS:

• My prior interview with Rob about firm profitability
• LINKEDIN – Rob Nixon
• The Perfect Firm

BONUS: 
Get free tickets to Rob’s next 1-day firm reboot in person! A $200 value absolutely free just for being a Growing Your Firm listener.

How to get your free seats:

1. Head over to ThePerfectFirm.Global 
2. Click on “Get Tickets”
3. Put in code “PERFECT”
4. Enjoy!

BONUS #2: 

The goods keep coming! The first 9 listeners who leave a comment below that they listened to this episode…

I will send you a free copy of Rob’s new book The Perfect Firm free of charge! 

You have to leave a comment telling me what you enjoyed most about the episode. Hurry! Only 9 copies to ship.

How To Build A Perfect Accounting Firm:

Rob Nixon just released a new book that’s climbing the chart. The Perfect Firm just released in April 2017 and it could change the future of the accounting profession in the next five years.

Because the book tackles major ways you, the firm owner or partner, can be ahead of the pack when innovation and technology sweep away the ‘old school’ ways of running a firm.

His book accomplishes five things:

1. Helps you become a disrupt-or (not be disrupted)
2. Helps you run not a ‘practice’ but an accounting business
3. Shows you how to deliver profitable business advisory services
4. Steps to continue to build a great lifestyle
5. How to grow your perfect accounting firm

The book started taking shape after sitting down with a friend who just left his firm. Apparently, his friend was fed up with the partners. Sitting down with Rob, he asked: “What makes a perfect firm?” 

No one had ever asked Rob that in his 23 years of working in the accounting industry. Rob promised to write up a post about his thoughts.

Here’s the post Rob wrote. As you can see, the post took off more than any of his other posts. Right away, he knew he had something.

Rob dug through 23 years of work to make a ‘timeless’ book to last for the next decade. A book to define a perfect accounting firm. 

Obviously, there aren’t hard metrics that will tell you if you have a perfect accounting firm. That’s why Rob put together five steps to ensure you are on your way.

5 Steps To A Perfect Accounting Firm

These five steps are both ‘mindset’ strategies and also tactical strategies. Listen up!

1. You must treat yourself as an accounting ‘business’ NOT an accounting practice
   1. Your business should fuel your life, not the other way around
   2. Ask yourself these basic questions:
      1. How do I want my business life to look like?
      2. What type of work do I want to do?
      3. What type of clients do I want to work with?
2. You must know to the number what type of metrics you want:
   1. What income, revenue, internal metrics do you want to be hitting? (be specific!)
   2. Do you have a dream salary for each of the partners? Write down your vision.
3. What services do you want to deliver? 
   1. There’s no governmental law telling you that you must only offer tax and bookkeeping
   2. One firm Rob met with wanted to add a law firm to their practice. They did.
   3. Another hired scientists and engineers for data analysis for cyber-security.
   4. One firm had a ‘minimum package’ each client must get. At the time they had 256 clients. After implementing their ‘minimum package,’ they lost 130 clients fast. But, they realized something incredible. Their remaining 126 clients saw the profits-per-client jump to $26,000. Now, they have 2x as much time and no loss of revenues
4. You must build the culture you want to grow in:
   1. Who are the people you want around you when the going gets tough?
   2. Remember, you’re the firm owner. It’s a dictatorship. You make the rules and you make the culture you want.
   3. Rob went through a period where he lost employees. He didn’t blame others. He blamed himself and took a proactive approach to molding the culture he thought would work best with him and his clients.
5. Remember: Clients always come….LAST!
   1. The needs of your client do not come first. You find the client that meets YOUR NEEDS FIRST.
   2. Find clients who ‘believe what you believe.’ Who ‘treat your team as they deserve.’ Who ‘play by your rules.’

This is building a perfect accounting firm by design not by chance.

Governing ‘By Default’ Could Kill Your Growth:

A business running ‘by default’ runs by the seat of their pants. They know they have clients they shouldn’t, yet they don’t have the guts to cut ties. A ‘default’ firm runs on auto-pilot.

A dangerous game.

The problem lies in that accounting firms don’t need to always hunt for new clients. Accounting is a profession where leads turn up due to compliance. Compare that to consultants and lawyers who are more project-orientated.

Firms will keep clients awhile and automatically think it means they do a great job. Not always the case. 

A client not moving from firm to firm more has to do with financial intimacy than satisfaction. A client simply doesn’t want to explain their story again to another CPA, so they stay put. This is great leverage for a firm like yours…but breeds complacency.

You should start making the changes now because, in the next 5 years, the accounting industry will not look like it does now. The average age of a partner is about 52.5 years old. This profession is an ‘old man’s game.’

At some point, the older partners will get swept away and a new firm owner will take the reins. The time is now to really think about the future strategy of your ‘perfect’ firm.

How to start?

DAVID’S TIP: Do you actually know your client’s goals? If you know their goals, you can only up more value to them. Be proactive and don’t wait until you’re in dire straits.

In the end, building a perfect accounting firm comes down to how much value you’re willing to provide your clients. The more you provide, the better chance you have to survive the coming changes.

WHAT DID YOU THINK? THE FIRST 9 PEOPLE TO COMMENT BELOW WILL GET ROB’S BRAND-NEW BOOK, The PERFECT FIRM, DELIVERED TO THEM. COMMENT BELOW!

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Speaker 1: You now have this kind of benchmarking system or you’re doing cash flow analysis. You’re digging into those numbers. We had one firm that would set aside 30 minute, dig into the numbers to find new opportunities, challenges that go on in the business. Now that you have this information, how can you then go to the client and best present the value of this advisory service or of this higher level? We’ve already touched on this a bit which is the numbers will lead a lot of the discussion here and having the confidence. You know that you can bring a lot of value. Part of it’s just part of the confidence as well, but a very tactical question. Are these usually in person or are they Skype or Zoom? Is there a type of outline or arc that you want to go through? I know that Steve mentioned case studies in books. Let’s say you have an existing client. You want them to add an additional service or service offering that you’ve put together. How does that sales conversation work?

We’ll kick this one-off with Angie and we’ll pass it back to Steve as well.

Angie: It’s a broad question. I guess the best thing to do is understand what you’re working on with the client, so understand the solution you’re providing to them, what it does, what the impact will have. We use a standard GAAP analysis a lot, which is basically on the left hand side. Where are you currently? What is your current reality? On the right hand side, what is your desired or new reality? Then how do we get there? Those are the internal pieces in terms of how do you get from where you are to where you want to go.

A lot of times consulting recommendations come as a result of where the company currently is and wants to go. If you establish that from the beginning, when you’re reporting results and you’re reporting recommendations, you can always go back to this is where you are, this is where you want to go, and this is what it’s going to do for you.

Again, we like to do as many meetings in person in terms of setting the stage that we can, but that’s not always realistic. You want to make sure you can have an in person meeting if possible, but then you follow-up through regular video, Webpass, Skype meetings to talk about where you currently are. People are typically very visual, so if you can put things in graph format that are easy to understand to get buy in, that’s also very effective. Reports and graphs and regular communication, making it easy to understand, those are great ways to demonstrate what you’ve been doing.

Speaker 1: Absolutely, and I love the point about, and it goes back to this foundation of understanding where the client wants to get to and being comfortable asking questions. I think that’s just such a foundational shift to move into the advisory mindset. Steve, when you are approached with this kind of question where maybe you’ve uncovered areas where you can assist a client but you’re not quite sure how to present it to him … I know we’re getting a bit into sales conversation mode, so slightly different, but how can they start to reintroduce or introduce these conversations to a client in a way that the client sees the potential of maybe this advisory service that they’re talking about?

Steve: For me, it all comes back, and Angie’s insights were fantastically valuable there. Thank you, Angie. I agree with all of that. I learned a lot from that, too. For me it, again, comes back to my message from before, which is it’s all about the numbers. It’s the very best way of getting someone to sit up and take notice is to quantify that difference between those two situations that Angie talked about, quantify the difference between where you are now and where you might want to be.

For example, one of the things that I see worked very, very well is an accountant will sit down with their client and very often will be willing to do this, have this conversation, and do this bit of analysis for free because it is essentially the shop window, the sales pitch, albeit that is valuable in itself, for the other services that the client will go on to buy afterwards, the advisory services.

Sit down with the client, very often at the end of this financial year, when they’re finalizing their historic set of accounts prior to filing them. Sit down with the client and say something like, “Okay, well Dave, last year your profit was $30,000,” or whatever the figure is. You’ve got the agreed accounts in front of you. “Why don’t we spend a few minutes looking forward to next year and seeing what might be possible in your business.”

Either they’ll be using the benchmarking analysis to suggest that maybe it’s possible to get higher margins or higher sales growth rates or higher return on capital figures or whatever or, more probably, they’ll be drilling down into a simple version of the business model and playing with the profit leaders in their P&L account and showing the client what would happen if they could, for example, generate 10% more sales leads, improve their sales lead conversion rate by 10%, increase the average value of an invoice by 10%, and so on and so forth. The cumulative, the combined, effect of those changes can often be very, very dramatic. It’s the same sort of marginal gains principle that’s talked about a lot in the literature these days.

If you sit down with a client and say, “Where you are now is this set of numbers,” say it’s $100,000 a year in profitability, “if we could work with you to create these kinds of changes, then maybe your profitability,” you do the math in front of them using a spreadsheet or some other tool, “in principle, next year your profits might be $220,000.

That’s 120,000 increase, Dave, but it’s not just a one year increase, is it?” This is the other key. What accountants often do is they might quantify the difference between a tax bill with or without tax saving or profit figure with or without some advice, but actually very often that’s a recurring improvement. You put in some changes and the profits are, in my example, 120,000 pounds higher a year, not just once in total. “$120,000 a year, Dave, is an extra $600,000 over the next five years or maybe, given you want to retire in 20 years time, it’s $2.4 million between now and when you want to retire.”

In other words, extrapolate it over a sensible time frame because once you’ve got a 600,000 or 2.4 million dollar figure attached to the alternative future compared to where they’re going to be without it, then you can ask the question like say, “How would it feel if you actually were able to get that extra $2.4 million? What would you have to do with it? What would it mean for you and your family if your business … How would that make you feel?” Then they’ve attached all these words to this alternative future which they don’t know how to get there without your help. You’re the first person that’s articulated it, quantified it, extrapolated it, and really shown them what’s at stake.

Then you follow that conversation with some examples, again, yet more proof of how you can actually help them create that action plan of bridging the gap between where they are and where they want to be. Maybe that’s using some software to illustrate potential strategies or whether you share ideas with them or whether you share your case studies or whether you go into the content of your book and suggest you work together through the ideas in the book to make those changes happen.

How do you do it? If you then follow on from the quantification with some evidence that you can actually help in that sense and then, thirdly, if you are willing to price that work, because there still may be sketches and this is still about creating an alternative future and there’s no certainty that you’ll succeed, is there, but if you’re willing to price it in a way that takes a lot of the risk away from the client.

In other words, take to Dave, “In principle, there might be as much as $2.4 million at stake over the next 20 years, depending on whether you do something different or whether you just chug along as you currently are, Dave. We could help you look at how best to tap into that and our fee for doing that,” might be $5,000 or $10,000 in the first six months or 1,000 or 2,000. Here, even a better way actually on this, I think, might be $1,000 a month for the next 24 months, but you can stop at the end of any month and if you want, at the end of any month, you can ask for your money back for that month if you didn’t feel it was valuable.

You’ve taken away most of the risk from their shoulders, but what you might have done, in that case, is lined up $1,000 a month, a $24,000 fee but with a large amount of risk reversibility in there. At the end of any month they can decide if they want to trigger the guarantee or not. If they do trigger it, you then have the option of saying, “Well, actually, this isn’t working. Let’s just stop.” Or you might decide, “Okay, that particular month we weren’t particular valuable, so that’s fine.” You’re not money back guaranteeing all $24,000 at the end of the 24 month period. You’re making that money back guarantee much more manageable, much less risky to you. By breaking it down into bite sized chunks, you’re making the whole thing much more acceptable to them.

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David: What’s the best place to start? Should you go to a trusted current client and have these conversations, “Have somebody to practice with?” Is this tried for a new client, so completely fresh eyes and you don’t have to make that compliance shift. We’ll start with Steve on this one and go to Angie, and then we’ll wrap up because I know there’s a lot of questions around additional, how to present or grow the advisers services. Angie and Steve, I know, put out a lot of content. I want to make sure the audience has the ability to connect with you, go to your site, learn more, digest your content. For those that want to take that first step, again we’ll start with Steve on this one, should they go with existing clients, new clients, what’s the best avenue to first try out this conversation?

Steve: Yeah, great question. The answer is almost there in the question as you phrased it originally David. The worst place to start, are with, there are sectors and we all know what they are, you probably know. They may be different at your side of the pond, but over in this country for example, the very worst place to start would be with farmers. With anybody in agriculture because in Europe the whole of the EU has been trying to solve the farming, the problem of unsuccessful farms, and certainly an accountant is not going to be able to do that either. The second worst place to start are with people with MBA because they know it all already, or at least they think they do.

Where you really want to start are with people who have pain, where they’re relatively simple businesses that you can understand readily and make a real difference to. One of the best strategies, I think, for making a start is to pick a business sector, one type of business a week, it might be hairdressers this week, next week it might be stationary retailers, the week after that it might be fast food restaurants or motor engineers, or, whatever. Pick one business each week, someone, a business sector that you are actually going to be meeting the following week, whether it’s a client or a prospect. You’re going to be talking to someone who is a hairdresser next week. So, get your entire team together for just 15 to 30 minutes, make it over lunch maybe on a Friday. Buy in some pizzas and get the team to just brainstorm ideas, some of which will be crazy and one or two of which will actually be quite interesting and useful, but could potentially be useful and valuable to that hairdresser or auto engineer, or whatever, you’re meeting next week.

If you do that process every week by the end of the year you’ll have 52 sets of ideas for 52 separate businesses. The subsequent week you go to that particular client, that particular hairdresser and say, “I got my entire team together last week to brainstorm your business, we came up with dozens of ideas, a few of them were quite frankly [inaudible 00:02:39], but actually I think one or two of them were quite interesting. Shall we take a look at them? What about, let’s talk about them.” It’s yet more proof and evidence that, one, you care, two, that you can be valuable. Of course, then, every other hairdresser that you ever meet or you ever talk to, you can say, “I got my entire team together a few weeks ago to brainstorm a hairdressing business just like yours, why don’t I share with you some of the insights?” You can leverage off that stuff over, and over, and over again. That’s a really practical approach to take in terms of building, and then you capture all those ideas. You write them up on a [inaudible 00:03:14] on the hard drive in a word file and then anybody can take those and factor them into any conversation with anybody. One of those 52 steps, after five years, you’ll have 250 types of businesses that you’ve brainstormed.

In terms of specifically whether you should go for existing clients or prospects, I have, I normally advise a three-step process. Step one, which, is initially talk to and practice your skills with one of your best clients. A client where there are a lot of deposits in the emotional bank account, where they like you a lot, and however well or not you do in that initial session, they’re not going to hold it against you, they’re going to be very forgiving.

I would go to that kind of client, a client that loves you, and say, “Dave we’re piloting,” and use that exact language, “We are piloting some new services, and [inaudible 00:04:04] rooted in the numbers to be more valuable to our clients, but it’s still early days. Would it be okay if I piloted those with you? At my expense, so it won’t cost you anything and, hopefully, will be really valuable to you. All I ask in return is that you give me some candid feedback so that I can improve that process going forward when I use it with others. Secondly, if you find it valuable that you give me a testimonial, because those testimonials would be hugely valuable to persuade others to take notice of you as well. And thirdly, that you’re gentle with me so that if it is a little bit rough around the edges, that’s okay.” Step one I would do it with my best clients or have one of our best clients to fine tune the skills, build up the case studies, get the testimonials. Secondly then, I would probably start rolling the same kind of service conversations out with prospects because the very worst that can happen when you meet a prospect is, they’re not a client at the beginning of the meeting and if you don’t do a good job they’re still not a client at the end, but you’ve not actually lost anything, have you?

Whereas, if you roll it out with the rest of your clients before you’re ready they might be a client at the beginning, you screw up, and they’re not a client by the end. There’s a downside in that case. First you do it on your great clients to pilot it, secondly, then start field testing it with prospects, because for many of you that’s what you want to do, bring more clients in to your firm. Thirdly, crucially, don’t just restrict that advisory stuff to prospects, because, your existing clients absolutely deserve high quality input from you.

When you’re ready to do the very best job you can, then start having that conversation with your existing clients. Why at that point? Because when you do the very best job, when you’re the most polished at delivering that kind of advice, having those kind of conversations, your clients will snap your hands off. In fact, they are, of course, the best and the easiest people to sell to because they trust you, know you, and like you already. That relationship exists.

I think you have to be ready first before you have those conversations with them.

David: I like the process of laying it out in a linear fashion because you don’t want to just segment just one and isolate it there. Angie, when somebody comes to you and is looking for the best place to start, but they’re nervous about going into this new ward of advisory conversations, and value conversations, what do you recommend as maybe one or two steps that they can take to get started here? After, we wrap up this question we’ll make sure the audience knows how to connect with you guys. I’m sure there’s tons of follow-up questions they have as well.

Angie: I’ll be brief. I would say existing clients are a great place to start. I would also just recommend that everybody listening meet with partners and service plan leaders in your organization and determine what those services are that could be beneficial across the board for clients. Then have a few people come with you on a client exploratory meeting, a client service meeting where you’re not charging the client. For me that would be the best advice just to get started.

David: Okay. Perfect. If, somebody has follow-up questions, I know you both were in a lot of content. You work with a number of firms here in North America and abroad, but if somebody has a question, or [inaudible 00:07:16] the content case studies, things like that, Angie we’ll start with you. What’s the best way for them to reach out, connect, learn more about all of the things that you are doing over there at The Rainmaker Companies?

Angie: Sure. My email is Angie@therainmakercompanies.com. My direct line is 6156271802. My website is www.therainmakercompanies.com.

David: Just to give some perspective on rainmakerscompanies.com. I guess at a high level what are some different facets that you help firms with, obviously advisory and building that arm up, is a portion of it. How else do you potentially work with firms. What types of things do you help firms with?

Angie: Sure. We work with accounting firms all over the world, primarily in the US, on growth consulting. We do business development programs, we are the original Rainmaker Academy, so we teach business development skill sets. We have a leadership academy and we have alliances of firms all over the world that are involved in different niches, like manufacturing, health care, not for profit, real estate, construction, auto dealers, for example. Also, an international alliance called Enterprise Worldwide where our group gets together for best practices.

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