Best practices are, by definition, meant to be celebrated. They are designed to be mastered, shared at conferences and continually perfected. But what of their ugly brethren, those mistakes often relegated to a footnote on overly reported success stories?
Though not always spread through keynote speeches or employee recognition toasts, they can be just as contagious, quietly infiltrating accounting firms' processes until their exponential damage is finally detected.
"The successful man will profit from his mistakes and try again in a different way," author Dale Carnegie once said and, in that spirit, we asked readers to share the wealth.
According to their responses, many accounting firm blunders stem from a natural inclination to please people, whether it be clients or staff.
"[We] allowed someone who was smart but volatile and not a team player to remain with us for too long," shared Lisa Snow Hastings. "It negatively affected morale and staff retention. Once we realized how bad it was, though, we've become very attuned to not letting it happen again. No one gets a pass on respecting others."
This is a common mistake among accountants, according to Sandra Wiley, chief operating officer, shareholder and management planning consultant at Boomer Consulting. "We are a profession full of very nice people," she shared. "We believe that at the heart of people we work with, they are good and have all the best intentions. It is difficult for us to process the fact that even if a person has amazing technical expertise, they may not fit our culture. So, we delay the act of letting them go. The other issue is that we are people who hate confrontation, and letting someone find new opportunities outside of our firm means that we must confront a team member that does not fit and tell them face-to-face that we are letting them go. Not fun, very emotional and very uncomfortable. Our reality is that we are quick to hire and very slow to fire."
While the firm did the right thing in eventually letting the person go, the lag in taking action can set a dangerous standard.
"The problem we experience is that if we don't remove non-performers, or negative people, in our firm, we send the message to the good people that we allow and even reward bad behavior," Wiley continued. "Additionally, the bad person is like a cancer, and their behavior could, and often does, spread to other people in the firm. I don't believe that is the message anyone wants to send."
CLIENTS AREN'T SO GREAT, EITHER
Problematic staff would also fit the barnacle metaphor that QuickBooks consultant and advisor Joe Woodard uses to describe bad clients that cling on too long, another mistake referenced by several readers. Just as employees infect a firm, "barnacle" clients slow it down.
Reader John Hunter confessed to "not being selective enough when accepting new clients. The solution was to fire the clients that caused the problems. I believe that 10 percent of the clients cause 90 percent of the headaches. Dump 'em."
That proposition can be a "scary thing," according to Woodard, but "I have never had anything but a net gain from firing a client."
"It's a tough one," agreed Art Kuesel, president of Kuesel Consulting. "It's a mindset change - people are really concerned about letting bad clients go if they don't have a revenue stream lined up. But if you have clients that can't afford your fees, ultimately you're the one who suffers, not the client. You have a tough decision, to make sure your client base is aligned with your practice effectively."
This fee-related suffering was another oft-reported error from readers, including Daphna Simpson, who shared that she was "backing down on my fees to please a client."
"Most firms do not measure year-over-year growth in services within the current client base and thus do not hold people accountable for client retention and increased wallet share," explained Tom Siders, partner of management consulting firm L. Harris Partners LLC. "The result is under-served clients and failure to capitalize on the organic growth sitting in the current client base."
"If you cut some 'D' clients out, you free up more time for marketing," Kuesel added. "With the extra time away from clients who are fee-sensitive, you can now pursue the right kind of clients."
Firms can also re-assess budgets that this costly mistake knocks out of alignment.
"Advertising budgets and lowering fees for clients," wrote Lynette Rue on the Accounting Today Facebook wall. "That was a costly mistake in the long run."
"This is a costly mistake in running your practice overall," Kuesel responded, adding that not only should firms balance budgets, but overall time dedicated to business development. "Not allocating adequate marketing time consistently - clients I work with have such a cyclical schedule, with marketing time segmented into peaks and valleys. There is very little in [busy season], though March is usually one of the best times to pick up new business, as clients, and everyone, are thinking about taxes. You have to have a consistent, ongoing approach with your marketing, if you want to be successful in the long term."
What mistakes have obstructed your firm's long-term success plans? What lessons did you learn? Share your stories with Danielle Lee by e-mailing her at firstname.lastname@example.org for an online follow-up of more accounting firm mistakes from which we hope all readers can profit.
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