I’m aware that many accountants provide bookkeeping services for their clients. In some smaller firms this is all part of the service. In others it’s done more as a necessity when a client’s recordkeeping is based on the practice of ‘we throw all the papers into a bag or box and let the accountants sort it all out for us.”
I think it’s fair to say that many people are confused as they are unaware that anyone can call themselves an accountant (or indeed a bookkeeper). So small business owners do not know whether they need a bookkeeper as well as an accountant. And of course some accountants provide bookkeeping services as part and parcel of their accountancy service. It can be helpful therefore to clarify with clients which approach to bookkeeping will best suit them (and you).
Some accountants are more than capable of writing up a client’s annual accounts and preparing their tax return from a bag or box of what we used to call ‘incomplete records’ when I was training (many years ago!) Other accountants get stuck doing bookkeeping for their clients simply because it’s one of the services offered when the practice began. Is it the most effective solution for the clients? Is it satisfying for the qualified accountant whose expertise stretches way beyond that of a ‘simple’ bookkeeper? I mean no offence to bookkeepers here – I simply mean that their training, knowledge and expertise is, by definition less extensive than that of a qualified accountant.
So what are the options for small business owners when it comes to bookkeeping these days? I think there are six alternatives.
- DIY – best only attempted after recieving guidance from an experienced accountant or bookkeeper;
- DIY using an online bookkeeping package such as kashflow;
- DIY using a bookkeeping package on their computer – eg: sage;
- Use a postal service – sending off their monthly invoices and receipts etc to a service provider who writes up their books and then returns all the paperwork by post (eg: this service);
- Engage an independent vetted bookkeeper who knows what they are doing – such as someone provided by this service; or
- Let their accountant write up their books when they produce the annual accounts and tax returns.
Some accountants employ bookkeepers to do the work for clients. Again this probably makes more commercial sense than the accountant undertaking all the bookkeeping themselves – unless they have the time and inclination to do so. Bookkeeping service provided by employed or sub contracted staff made available by the accountant may be the ideal solution – especially once the practice has grown such that the qualified accountant can focus on more rewarding activities themselves.
Historically it was quite common to ignore bookkeeping during the year and to simply produce annual accounts from the papers and records collated by the business owner. This is no longer a sensible course of action – as I explained in a posting on the TaxBuzz blog last year: The end of the old paper bag jobs?
Continuing such an approach may deny the business owner the facility to claim they took ‘reasonable care’ in the event that HMRC identify any careless errors. The new penalties regime became law in 2007 but only really comes into effect as regards tax returns for periods ending on or after 31 March 2009. It’s now the case that where the taxpayer can show they took reasonable care to avoid errors HMRC are no longer allowed to charge penalties as regards consequential underpayments of tax. So effective bookkeeping throughout the year now has another benefit to commend it. And so it makes sense to think through which approach you wish to advocate to your clients. Indeed this may be the perfect opportunity to encourage clients to adopt a more efficient solution than that which they or you may have adopted through default.
Many accountants and other service providers talk about providing “added value” to their clients.
A friend of mine, Marcus Cauchi (who is a seller who trains selling not a trainer who teaches sales) makes the point that:
“Added value” is only added value if the prospect acknowledges a real (or perceived) need for the particular aspect of the product/service.
This is a key point. Each client (and prospective client) will have differing needs and priorities.
Whilst some firms have a menu driven approach to services and fees, most adopt a standard approach. Thus their fee structure and approach involves all clients receiving the same “added value” service.
You may want to consider whether all clients and prospects perceive a need for and a benefit from these ‘value adds’ that you provide or promise. Some may cost you nothing. Some may really be intrinsic to your style and approach. And some may be expensive in terms of cash or time. Are they really valued in the mind of those for whom they are intended?
A smaller practitioner shared this view with me recently. He is 60 and his current turnover is around £120k. He said to assume his net profits are around £80k pa.
My friend had noted that were he to sell his practice he would be lucky to secure a capital sum of much more than £120k (being around once times his recurring fees).
After paying 18% CGT, at current rates, he would be left with, at most, around £100k (and this might only be received over a 12-24 month period). If invested the annual income from this figure would be a very small amount as compared with his current £80k annual income. Of course one hopes he would also receive pension income too. However my friend had an alternative plan:
He reckons that it would make more sense to simply allow the practice to run down. As long as he feels comfortable and competent to continue servicing clients why bother trying to sell his practice? If he ends up with a practice that’s only one quarter its present size his net income would be around £25k. To achieve the same figure from investments would require him to have £1m in the bank. There’s no way he could sell his practice for anything approaching such a figure.
I was wondering how common is such a view and approach or are there other options for my friend to consider.
A lot of people choose not to explore social media as they don’t have the time. In effect they want to know if they will be able to identify a ROI for the time spent learning about and engaging with other people through online social media?
In the same way as you might ask the question – Is it worthwhile trying to learn a foreign language?
The analogy isn’t perfect – they never are. But I think it’s fair to suggest that you wouldn’t expect a good ROI if you spent time learning Chinese but never went to China, engaged with other Chinese speakers or read any Chinese books/magazines.
If you were to ask – Is it worth me learning to speak Chinese for business purposes the answer would probably be ‘NO’ – unless you anticipated that your customers, suppliers, or business would have some involvement with China and Chinese speakers in the future.
If you were uncertain as to how much business there might be in or with China in the future you would be unable to predict the ROI for the time it might take you to study, practice and learn Chinese. BUT, after a little investigation you would be right to weigh up the time, effort and money involved and to consider whether there might be better ways to invest it. Maybe there’s another language you would be better off learning first or instead?
And in the future, when you look back at the time, effort and money expended on learning Chinese you would be able to determine if it had been worthwhile. You might also be able to identify the value of orders and the profits that you can attribute to having learned Chinese.
I doubt that there are many people who take a crash course in Chinese but spend little time learning how to pronounce Chinese words, make a hash of writing Chinese characters and don’t attempt to learn anything about Chinese culture or the differences in the way that the Chinese address each other and approach business. Such people would be unlikely to ever achieve any ROI or benefit from their half-hearted attempt to learn Chinese. And if we’d known how they were going to approach it we could have predicted that outcome. It’s the same with social media. Indeed I’ve heard it said that some people approach social media as clumsily as some people visiting a foreign country. It’s like a Brit who visits China and tries to converse in French.
Anticipating the usual drivers for accountants I wrote a piece last year on Blogging myths for accountants. And then another explaining why I thought that ‘Twitter is not for accountants‘. I’ve since shared a range of tips and advice for those who want to experiment with twitter. If you are inclined to experiment with blogging, to find out more about twitter or any other social media, online networking or business forums I would suggest that you bear in mind the analogy above.
The issue you then need to resolve is that if you want the investment of your time to be worthwhile, you will need to consider how you will ‘use’ the media. However, until you learn more about social media you won’t be able to assess how you will ‘use’ it. Catch-22?
Whenever I am asked to speak about ‘social’ networking to audiences of professional advisers I insist on the quote marks. In my experience most advisers aren’t excited by the the idea of social activities when they’re working. And if anyone wants to encourage accountants (and, I would expect, most other professional advisers) to get involved with social media it’s worth recognising that the ‘social’ prefix can be a big turn-off.
During my talks I explain that it can help to think of social, simply as the converse of ANTI-social. And that’s especially important when you are considering the business potential of online social networks. You need to avoid being seen as ANTI-social.
Imagine someone you know, another accountant maybe, has moved to a new village and has popped into the local village pub to meet some of the locals. Or imagine your friend joined an exercise class or a local dance class. Or any sort of club. Would it be SOCIAL if your friend started by shouting out to everyone about their accountancy practice? If they stood there shouting requests for tax queries that they could answer? Or just stood up and told everyone that they are now the new local accountant?
If someone did behave like that would it be social or ANTI—social?
What would you say if your friend told you that it was a waste of time moving to the village as there are no new clients there, no new suppliers, no advocates, no one has referred any clients to them and everyone seems quite unfriendly. If your friend did complain after behaving like that, whose fault do you think it would be? The villagers or your friend who’d simply arrived out of the blue and shouted their mouth off, expecting to somehow win over the local inhabitants without spending any time building a relationship first?
Many online social networks are like local communities. If you want to gain any value from your involvement you first need to engage fellow ‘villagers’ in conversation. This is very different to any other form of marketing activity which generally consists of broadcasting your views, ideas and marketing messages.
So – a big tip if you intend to experiment with social media – is to avoid shouting and broadcasting. You may be online but the norms of social behaviour are equally important. Think about how you can be social, rather than anti-social.
In an earlier post on this blog – Social Networking for Accountants (part one) I noted that some ‘online communities’ have more of a social than business focus and thus appear to focus on ‘social networking’. Others appear to be focused more on business related networking. Don’t be fooled though. Professional advisers are generally chosen and referred by reference to a personal relationship and these take time to build. I am coming around to the view that you can build more relationships faster online than offline and that effective online networking is worth accountants exploring.
If you’ve heard other accountants or professional advisers complain that online social networking is a waste of time, you may want to consider whether that’s simply their experience. It could well be a function of their approach. Were they actually social or anti-social?
If you’re an experienced social networker, please share your views below about what works and what doesn’t when someone new joins a forum or online network. Many thanks
It seems there is a tricky balance to be made here. I’ve written previously about how networking, whether online or offline, can be an effective way to secure new clients of the type you want – just as long as those with whom you network know enough about you, like you, trust you and know the sort of referrals that can help you.
I’ve recently seen the results of some research from the respected Kellogg school of management in the USA. The Price of a Billable Hour – Social networks affect transaction costs. The summary is dated July 2009 but the research itself seems to date back to 2004 and thus pretty much predates the rise of online ‘social’ networking.
Nevertheless, this research highlights what may be a key disadvantage of networking – especially online where we are encouraged to include social and personal material rather than to have a solely business focus. (Although I would always advise caution and remind you that anything posted online will be there for all time. It could come back to haunt you if it is too personal, unprofessional or otherwise indiscreet).
To paraphrase one key finding, the research suggests that you will charge lower fees to your friends than to clients with whom you share no social interactions. And put like that it’s almost obvious isn’t it?
In the UK, Barristers are often perceived to be more expensive than solicitors and, in general, they are perceived as less approachable. Is there a correlation?
One conclusion that could be drawn is that you will end up charging lower fees to clients ‘won’ as a result of relationships developed through ‘social’ networking. I wonder whether, for example, regular attenders at weekly BNI breakfast meetings charge their fellow group members the same fee levels as would be charged to new clients who are total strangers? Maybe any reduction in normal fees is justified if the client in question is a regular and reliable introducer of new clients.
I’m curious as to whether real life supports the conclusion drawn from the above research. And how you feel about it.
I’d appreciate your views as comments below or by email to the usual address.
* Relevant previous posts include:
This is a follow up to my earlier post “Getting started on twitter” in which I explained some basic introductory points concerning twitter.
When it comes to using twitter there are no absolute rules or universally agreed twitterquette(!) but there is a heck of a lot that we can all learn from the experience of those who’ve gone before.
Based on my experience over the last year and inspired by a variety of guides to using twitter for business I’ve collated and tailored a top ten list of Do’s and Don’ts for accountants who use twitter. I hope you find them useful:
- Don’t attempt to use the main twitter website once you’ve registered, added a photo and your bio. The main twitter website is not user friendly and will turn you off very quickly. Download tweetdeck, hootsuite or seismic to your computer and you’ll find it all gets MUCH easier.
- Don’t feel compelled to answer the basic twitter question “What are you doing?” – especially if the answer is something mundane. Better to imagine the invitation is to answer the question: “What is holding your attention right now?”
- Don’t automatically follow everyone who follows you or chase hundreds of followers. If you do this you will attract spammers, marketing ‘gurus’, social media specialists, loners and losers. None of them will be prospective clients or advocates. They probably won’t even read any of your tweets. They will simply follow you in the hope that you’ll follow back and increase their numbers. And that is a mug’s game that many twitter virgins play although it serves no useful purpose.
- Don’t think you need to read everything on your Twitter feed. Think of it as a river. Jump in-stream, participate, and then get out. NEVER worry about what you’ve missed – it doesn’t work that way.
- Don’t assume that all of your followers will see all of your tweets. They only dip in and out – just like you do.
- Don’t set up a standard message to auto-welcome new followers – they won’t click on your links and established twitter users don’t like to get automated ‘thank you for following me’ type messages.
- Despite the fact that you may be using Twitter as a marketing tool, don’t try to solicit business or make sales. It looks spammy, and will NOT secure you new clients. Bottom line: you will generate enquiries only if your followers get to know you and to like you and if they know you’re an accountant and that you like your work.
- Don’t tweet anything you wouldn’t want to be quoted in the press. Once published all your tweets are there for posterity and you don’t want any of them to come back to haunt you.
- It should go without saying, but don’t tweet anything about a client without explicit permission. Along the same lines, even if it’s good or exciting news about the client, don’t assume that the client has already made it public. Even if it IS public, you may still want to get permission first.
- Don’t expect to ‘get’ twitter straight away. Apparently 60% of people who try to use twitter give up within 3 months. I suspect many accountants will be the same.
- Do be social and interact with your followers and those you follow. Be thought-provoking with some of your tweets and pass on tips and ideas that others may find of interest.
- Do ReTweet (RT) tweets written by other people that you think are worth sharing with your followers. If you want some of your tweets to be ReTweeted, keep them to nearer 110 characters rather than 140 as the RT element of the message will often be 15-25 characters long.
- Do recommend books and articles that you’ve read that may be of interest to your followers.
- Do copy behaviour you find that you like on twitter and avoid replicating behaviour that you dislike. Everyone is different of course but a ‘twitterquette’ is developing and worth following.
- Do tweet links to your own and your favourite blog posts elsewhere so that your followers know what you write about or like. And do ensure that you add a few words at least rather than just posting a link without any description.
- Do use an application like Tweetdeck on your computer to filter topics, create groups, and maximize your time on Twitter.
- Do use an application on your iphone or blackberry to enable you to use twitter in odd moments when you’re away from your desk/office.
- Do remember that your followers may have friends, followers or family who could be looking for a new accountant even if your followers seem unlikely to be in the market themselves. They may ReTweet your messages or simply talk about you if the subject comes up.
- Do respond when people engage you in conversation. If you want to reply publicly use the @ sign at the start of your tweet (eg: @bookmarklee). If you want to reply privately and directly use D before the other person’s user name: (eg: D bookmarklee)
- Do engage the people you follow or who follow you in conversation shortly after you connect. Ask them a question, or enquire about something they’ve tweeted. They’ll be more likely to follow you back.
What do you think? Is this list helpful? Do you agree or disagree or have further tips to share? Please leave a comment with your own ideas and suggestions.
If there is sufficient interest I will post a further item on twitter later in the month. In it I’ll offer some tips and ideas to help you develop your twitter strategy by explaining WHAT accountants can do with twitter and HOW some accountants are benefitting from using twitter. In the mean time if you have any questions by all means post them as comments on this blog.
Regular readers may be surprised to see this post here – remembering my first post about twitter: Twitter is not for accountants. In effect that suggested that accountants can get by quite happily without using twitter. It’s also true to say that accountants do not need to try telemarketing or direct mail. But many do and some do so successfully.
I still enjoy using twitter myself but I’m not sure my view about twitter and accountants has really changed. However I am seeing an increasing (although still very small) number of ambitious accountants experimenting with twitter. I have therefore accepted that the time has come to help accountants explore twitter. If you’re inclined to experiment I’d like to assist you in getting maximum value and pleasure from the time and effort you devote to this.
I’ve set out below some basic steps to help you get started. A subsequent post will contain twenty tips (my top ten Do’s and Don’ts) to help you use twitter and then, if there is sufficient interest, I’ll offer some thoughts on how accountants can develop a twitter strategy.
What’s stopping you?
Last month I sought to clarify the biggest misconception about twitter. It arises due to those in the media who still think that twitter is a ‘micro blogging website where users post inane messages telling each other the answer to a standard question: “What are you doing right now?” Indeed plenty of people think that twitter is full of people talking about what they had for breakfast or tea. BUT I use twitter without ever seeing that rubbish. And you can too.
It’s easy. You only see the tweets of people YOU choose to follow. People you find of interest. If someone you are following posts stuff you think is ‘rubbish’, uninteresting or “pointless babble” you simply stop following them. And that’s it. You won’t see any more rubbish. The secret is simply to choose who you follow with care and to ‘unfollow’ them (it’s really easy to do) if you’re bored by their tweets.
Conversation not advertising
To avoid disappointment let me just stress that accountants can derive business value from of twitter. However that value is often indirect in nature and depends greatly on your personal approach and twitter strategy. I set out my own twitter strategy here.
Just as with all other forms of online social media, the overt : Tax worries? Call now! messages will fall on deaf ears. Do not bother experimenting with twitter if you are thinking of using it for overt advertising. It doesn’t work like that. You will simply waste your time.
Set up your account
You start by going to www.twitter.com and setting up an account with a username (eg: AndyPandy) and a brief biography. Identify your locality (eg: Shropshire, or North London) and your website address.
Choose your username carefully
Be clear whether you are going to post tweets in your name or in the name of your firm. I suggest that, in most cases it’s generally best to start using your real name as your username, the one that people know you by. Of course, if you have a common name (as I do) you may need to adopt a variation. I’m @bookmarklee). You can use underscores if that helps. Another exception is if you’ve built a brand around a name other than your own (e.g., @thetaxbuzz), then staying consistent takes priority. In time you may choose to start a separate twitter account using your firm’s name but that’s often best saved until you’ve got the hang of twitter and decided how you want to use it for business.
Add a photo
It’s clear that more people will want to follow you if you also add a photo showing your face, rather than a logo or any other sort of photo. A face photo can also help your followers feel that they are getting to know you as it will appear alongside each of your tweets. And this is the first step towards them starting to like you and trust you – which are usually prerequisites to them becoming clients.
Tweets cannot be more than 140 characters in length. It’s common to provide links to interesting items on the web, websites and blogs. Most people who do this use url shorteners (eg: bit/ly) to reduce the length of their links
You may want to follow a few other accountants to see the sort of things that they tweet. There’s a list of over 130 accountants using twitter on the UK tax and accountancy listing here.
Who will read your tweets
There is no point in starting to send loads of tweets until you have people following you. They become your ‘followers’. There’s a bit of a catch-22 here as few people will follow you until you start posting tweets. So do post maybe 2 or 3 a day and think about what sort of style and approach you want to adopt. If you only post promotional messages no one of value is likely to choose to start following you so that would be a self defeating policy.
Your tweets can only be seen by people who are following you or by those who search twitter for words contained in your tweets. In time your tweets may be seen by other people if any of your followers ReTweet (RT) your tweets so that their followers can see them too.
As distinct from your followers are the people you choose to follow. There will often be some overlap but despite what some twitter ‘experts’ suggest there is no logic in following back all those people who follow you. That would be like saying you should subscribe for the email newsletters of everyone who reads yours. We all have different interests and different reasons for choosing who we follow.
Finally – in this post – let me stress that you will often find that a good proportion of people who choose to follow you are based overseas. Many of them will be in marketing, social media ‘experts’ or hoping that you will buy their products. My advice, unless it makes strategic sense for you to target or engage with such peoples, is to simply recognise that the NUMBER of followers is NOT a reflection of the number of people who are genuinely interested in reading your tweets or engaging with you – other than for their own benefit.
More to come
In the next post in this series I’ll set out twenty top tips collated and adapted from the hundreds I’ve read over the last year. I’ve created what I hope is a useful list of top Do’s and Don’ts for accountants using twitter. And then finally, if sufficient people are interested, I’ll offer some tips and ideas to help you develop your twitter strategy by explaining WHAT accountants can do with twitter and HOW some accountants are benefitting from using twitter. In the mean time if you have any questions by all means post them as comments on this blog.
A driver who drove his car to the edge of a 100ft drop after he “slavishly” followed its SatNav instructions has become one of the first motorists to be convicted for placing too much trust in his SatNav.
When I noted this news story today I was reminded of a comment I make during my talks about how to avoid professional negligence claims. It’s in the context of evidencing ‘good practice’. One way of doing this is to comply with your professional body’s Membership Handbook. In normal circumstances you might expect that if you can show that your actions were in accordance with the guidelines contained in the Handbook you would have a strong defence against allegations of professional negligence. But this is not the whole picture.
During my talks I focus more on the practical and commercial issues than on the legal ones as I have an accountancy and tax background rather than a legal one. In this context I make the point that, whilst the position is not free from doubt, slavishly following guidance that is patently wrong may not be a good enough excuse. There is some precedent for this in the world of medical negligence.
We need to recognise that some of the guidelines in membership handbooks may be out of date – and that the Courts will expect professional advisers to apply common sense. The test will be what would a reasonably competent accountant have done in the circumstances. If this would differ from the membership guidelines then you should have done so too. It seems the same is true for drivers – is it reasonable to follow your SatNav instructions if they are clearly wrong? The report today suggests the answer is ‘no’ – and you can’t get off by blaming your SatNav.
I don’t imagine that the recent ‘SatNav’ case will figure in future courses about professional negligence but it is a useful reminder that we are all expected to apply common sense rather than slavishly following generic guidance that may be out of date, irrelevant or dangerous.
This is a first. It’s the first time I’ve had something to blog where I can see how it could fit on any or even all 3 of my blogs!
- It sounds like a riddle or joke – so would fit well on: Accountant jokes and fun
- It includes reference to tax planning – so would seem well suited to the TaxBuzz blog
- On reflection though, the rationale for the post is related to my advice and tips for ambitious accountants.
Earlier this week I was chatting with a nice guy who has been on a sabbatical since taking early retirement from a public sector role. He is now thinking about what he’s going to do next and is quite happy to accept that he may need to start networking once he secures a position.
I suggested this was to confuse networking* with selling. He would be much better off to start networking asap. Networking to build relationships. Networking to identify ways in which he can help other people. And Networking to build a deep and wide network of people who know him, like him and trust him. This cannot be done overnight.
It’s the same with inheritance tax planning. Ideally one would do this at least seven years before dying. I’m not suggesting that you need to start networking seven years before you hope to reap the benefits. Of course not. It’s just that seven years pre-death is the optimum time to start inheritance tax planning. Of course it’s not possible as you rarely know when that seven year period begins. Still, if you leave it too late your inheritance tax planning may be ineffective.
So, returning to Networking: If you want to achieve promotion and advancement within your firm you will generally increase your chances if you are well known and liked before your name is first mentioned as a potential partner. If you are thinking of setting up your own practice, how much easier would it be if you were already well known in the local community – by people who could become clients, recommend clients or help you source trusted suppliers? You get the picture.
If you leave it too late to start networking you could come across as desperate, needy and ill-prepared. In effect if you leave it too late your networking efforts will be ineffective – for a while at least.
* Relevant previous posts include: