What do you think an SME should pay their accountant? $10,000 a year, $20,000 or $60,000? How about $100,000 a year?
Lisa Kernes is co-founder of Ignite Alliance, a boutique advisory that is challenging the definition of what an accounting firm looks like. Yes, they do tax and bookkeeping, but Ignite’s goal is to fast track their clients’ growth. That involves services that you wouldn’t associate with accounting, backed by effective strategy.
In this preview of her session at the Accounting Business Expo 2018 (click here to register for free), Kernes reveals the high-value services behind her advisory model that make it worth paying six-figure fees.
D1: How do you describe your company Ignite Alliance?
Lisa Kernes: It’s more of a boutique advisory firm helping aspirational businesses grow. Our ideal client is someone who wants to go from good to great.
D1: What staff do you employ and services do you provide?
Kernes: We have a mixture of staff from different backgrounds. In our innovation team, our manager is ex-AusIndustry. So for government grants for clients we have someone from the other side of the fence.
From the finance side of things it’s fairly similar to what an accounting firm would be. We have compliance accountants, an outsourced bookkeeper team and probably the biggest thing we do differently is we have a martech (marketing technology) team – they are the growth side. Small businesses have different apps and tools they use. We have young-gun uni students who are up to date with the latest apps and can jump in and do the research to find apps for our clients.
D1: What qualifications do they have?
Kernes: A mixture. The most senior person is double degree in business and IT – she’s 22. Then another has an IT degree and a diploma of IT doing a double degree in business.
D1: Do they do HubSpot and Salesforce consulting?
Kernes: Yes, we do strategy and we have a network of business partners that do the implementation. If someone needs some help for LinkedIn or FaceBook advertising I’d rather have a specialist in those areas to do the implementation.
So we try to be across all the tools and techniques that you need to be across in a business and partner with people who are doing really great things in that space.
I think that’s the biggest difference about us – an abundance mentality. I know accountants like to keep everything to themselves but to get results you have to be a lot more fluid.
D1: What was the profile of your last client you charged a six-figure fee?
Kernes: We met them through networking. They were on BRW Fast 100 two years in a row cos they were growing really quickly. We first got involved to do just their tax return. Then we started talking about grants. We did the entrepreneurs program for them and R&D – they were doing quite a lot of it.
Then the client just started calling and asking about their monthly reporting. So we started doing monthly CFO meetings – we realised that their reporting was really bad and AR was out of control.
They are an importer and have a warehouse and an office, the business is split into the two departments. Digging deeper, the warehouse staff were scared of taking the invoice details to the accounts department. It was a bad culture.
That’s how we started with the HR onboarding process for new staff, setting expectations, implementing a daily, weekly, and monthly checklist. So the warehouse staff had a daily checklist that all invoicing had been sent to the accounting staff.
D1: What were the range of services you ended up selling them?
Kernes: We did an employment manual, onboarding new employees, managing the performance of existing employees (training and an annual review procedure). Then in the finance department we did a CFO monthly meeting reporting package and a seconded management accountant placed there internally.
The management accountant reviewed which products were profitable and streamlined collection processes. We also did the R&D, outsourced payroll, a restructure for their personal entities of the owners and set them up with SMSF funds and did their personal accounting. Then we did the risk management side of things – they had a server so we took them to the cloud, worked out segregation of duties for approval of payments in the accounts team, and so on.
D1: What percentage of that work would be ongoing?
Kernes: About 60%. The seconded management accountant is the biggest part of it.
D1: Is it better to provide a seconded accountant or for the company to hire directly?
Kernes: They have hired another internal accounts person directly, but having the higher value resources has been beneficial for them.
D1: Could you provide seconded management accountants to more clients?
Kernes: Definitely. I’m not sure that everyone would need them full time but definitely part time would be very beneficial. I think that’s the gap that’s missing from a lot of businesses. They will have their bookkeeper and an accountant who does their tax but a lot of them are missing the management accountant piece.
D1: How do you source that?
Kernes: It’s a teachable skill. All chartered accountants would understand the different reporting techniques and how to do that role.
D1: Are there any common traits to SMEs that could need management accountants?
Kernes: It’s about identifying them. In my talk I go through three personas and understanding what they need. Step one is understanding who they are, and in the kick-off meeting we identify the services they need. The larger sized price tag is the clients that fit into that Do it For Me model. The startups want to DIY but the mindset of Do It For ME clients is where you can identify more opportunities.
An SME needs to feel comfortable that when they spend more money with you they will make more money. Rather than seeing your accounting fees as an expense – it’s almost like a growth plan, they need to be comfortable that they are going to get an ROI. It’s a completely different mindset for an accountant, changing to a commercial model.
D1: Can you do that if you’re just selling compliance?
Kernes: Well, you can’t. But with the profit funnel we have developed it’s identifying where the focus areas should be. From marketing to sales to delivery to the financial model, it’s identifying the best place for their business. That client’s accounts receivable department had a massive problem. After they filled that hole they actually increased their revenue. So we paid for ourselves.
D1: Will compliance firms need to become boutique advisory to be attractive?
Kernes: It depends on the firm, really. Compliance isn’t the game for us, so we’re happy to partner with firms to do this work. It’s about focusing on what their core service will be. If they move to advisory they need to create a model to help their clients grow so they are not just increasing expenses for the client. It’s more a marketing approach than an accounting approach.
Lisa Kernes is talking in “How an accountant became a growth strategist – with six-figure clients” at 4.00 pm – 4.30 pm on Wed 21 March 2018 at the Accounting Business Expo, Darling Harbour.
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Sholto Macpherson