Name: Rob Nixon
Title: Founder, PANALITIX
- Educated in excess of 170,000 accountants over 23 years.
- Coached 800 accountants to success. Average profit increase in year one is 93%.
- Authored three best-selling books on the accounting profession.
- Built four successful businesses that serve the accounting profession.
Your new book is called, The Perfect Firm, Your Playbook for Building A Perfect Accounting Business. Is “perfection” even achievable?
There is no perfect firm. I’ve met 170,000 accountants and not one of them is perfect. There is no one-size-fits-all for the perfect firm. It has to be your version of your perfect firm. I wrote the book as a blueprint or playbook on what a perfect firm would look like if the reader did everything in the book. The book is full of strategies that have worked for thousands of firms around the world.
What’s the one area MPs should focus on to get started on the path to the perfect firm?
There are five sequential steps to creating your version of your perfect firm. It starts with a belief system that it is the owner’s business and no one else’s and should be designed your way. This is business by design, not by default. Step 1: What business life do the partners want to live? Step 2: What numbers do you want to achieve? Step 3: What services do you want to deliver? Step 4: What culture do you want to have? Step 5: Who are the ideal clients to fit steps 1-4? Business by design follows steps 1 to 5 in order. Business by default follows steps 5 to 1 in order.
How can accountants best get ahead of digital disruption to the profession?
Accountants need to brace digital disruption – not fear it. It is inevitable that machine learning, artificial intelligence, robotics and blockchain will fundamentally change the business model of accountants. It is an amazing opportunity to embrace the technology. The first step is to migrate all clients to cloud accounting. Then with real-time data they can offer predictive analytical services and proper numbers-based advice. Helping clients improve their systems dramatically reduces the time at the accountant’s office to do the client work.
You are an advocate for value pricing. Why?
The traditional model of time-based billing in arrears does not value the intellectual property (experience) of an accountant. Not only that, but it is highly unethical to bill in arrears. If you are adding value to the client’s condition then you should be rewarded based on your contribution, not on how much time it took to do the work. Accountants do not sell time – they sell what they know. What you know should be priced accordingly.
Accountants like numbers, but you say some numbers are more important than others. Which numbers are firm leaders paying too much attention to?
There is a crazy culture of more billable time in the profession. I’ll give you more billable time says Johnny – I’ll just go slower and make mistakes – you’ve got your billable time. What a stupid focus. The focus on utilization hours promotes the wrong behavior. The other number accountants seem obsessed with is realization margin – we realized 88%, for example. Actually, no, you wrote off 12% and wasted $50,000 last month. When you price up front and drive time down by being more efficient you get positive realization and your average hourly rate increases dramatically. The magic number of an accounting firm is average hourly rate.
Accountants can change the world for the better if they are proactive and add value. Nearly every business in the world is connected to an accountant. Accountants can make a massive difference if they leverage off their trusted advisor status and help their clients with numbers-based advice.
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