Ok so with this month’s article I wanted to change things up a little, in a change to the last few months - no more about me right now – let’s talk business.
It’s hard to grow when you are wrapped in a straitjacket.
Running lean is obviously a popular business strategy, it may even be one that you promote to your clients to get to profitability, but does it work in Knowledge & Expertise based businesses like accounting firms?
Running lean (in terms of staff numbers) can seem like an attractive game plan for businesses looking to maximize profits, but for most accountants who deal with a variety of business sizes with varying complexities, it simply is not a good strategy.
I spoke with a prospect this week who before Christmas was at full capacity and had a resignation pending and this was putting a spanner in the works for the year ahead where they have ambitious growth plans.
This week they came back to me and said:
“Mark, I know this is going to put me in the exact same position I was in before, but I’ve just had a former member of staff ask to come back so we are back at full capacity”
“Excellent news, so when are we getting started?”
“What?”
This prospect fully thought that being back at full capacity meant it was a good idea to stop recruiting… which seems a bit mad!
I’m not sure if capacity planning is lost art these days? 🤷🏽♂️
So I’ve decided to have a look at why I don’t think running lean works for knowledge-based businesses, like Accountants - funnily enough!
I don’t need to remind you that as a profession there is an expectation that accountants are accurate, thorough, and knowledgeable. Knowledgeable on not only compliance but also on the intricacies of each client.
Running at capacity and losing someone can destroy momentum and disrupt client relationships which is why accountants should always be looking to run with resilience and extra capacity to give room to grow.
Unless you are in the extremely enviable position of only running with a full team of superstars in every position (if you are, tell me your secrets!), running lean can compromise the quality of work. We know you and your team are often overworked.
Without adequate support, mistakes do happen. Alternatively, the team’s work-life balance can suffer and lead to burnout. Worst case scenarios here are you lose a client(s) due to quality of work and then lose the staff member due to ensuing burnout too!
With a smaller team, accountants can struggle to provide the level of service that clients expect.
With the shift to Cloud accounting and proactive, fully outsourced finance divisions, clients may feel neglected or frustrated if they are unable to get timely responses or if their work is delayed due to the lack of resources.
There are so many options for these days a quick google search can lead to a loss of a client that could have been easily avoided. It’s important to have a team that can manage the workload effectively to maintain strong client relationships and provide the level of service that they expect.
Maybe one that’s not so obvious is running lean can also lead to a lack of innovation. When accountants are overworked and stretched too thin, they may not have the time or energy to explore new technologies and develop new skills. Lots of firms I know are deliberately leaving business on the table because they know they can’t service it effectively. Lack of innovation can cause stagnation.
With a larger team, there is more capacity for innovation which should in turn lead to more business to fill said capacity as staff members can focus on developing new solutions or exploring new technologies to improve the business's services (genius eh?). This can help the business stay competitive.
Moreover, having a larger team also allows for more specialized skills development. Each staff has their strengths and having a diverse team can help ensure that your firm can handle a range of various engagements.
Imagine taking away all the stuff that’s standing in you’re A-player’s way. How much more could they achieve? Can they develop the client winning skills required to make them a partner?
Get the right people doing the right jobs and allow A-players to shine
Lastly, I’m sure you all know this one but running lean will result in higher staff turnover.
In a knowledge-based business this can be as bad as a pub closing their kitchen or a manufacturing plant losing a production line. Your team's knowledge and expertise are your product – don’t lose it, build it!
When staff members are overworked, seeking opportunities elsewhere is expected and very easy right now. With recruiters that will put forward candidates woefully underqualified in the knowledge that good firms tend to stick with them for 6 months to give them their fair shot and by the time you realise they’re not going to cut it – the recruiter is moving them on to another role for a tidy 20% fee. Recruitment, onboarding, and training of new staff members is time-consuming and expensive.
Remember, high staff turnover will also harm client relationships, so consistency is key!
FYI, we recently analysed our numbers, and we expect around a 3-5 year stint from our staff – but we in our weekly “Anniversaries” email receive every week here at Frontline - we have a ton of staff celebrating 7, 8 and even 9 year anniversaries. There really is no limit when teams are run well and we’re here to fully support you doing that.
So, don’t let the capacity get away from you. You can build capacity, keep an eye on profitability, and look after your current team all at the same time.
As always, I’m happy to hear your thoughts and views on the above – let me know what you think.
UK Country Director
Frontline Accounting
With over 10 years’ experience working with Accountancy Firms, BPO’s and Fintech’s like Intuit & Dext; Mark helps firms maximize efficiency and solve capacity issues with People + Technology.
Learn more about how Offshoring works: www.frontlineaccounting.com
Book a call with me: www.calendly.com/markmcnee
