In a stark example of the problems — and opportunity costs — associated with working in your business rather than on your business, an accountant has outlined how one business owner unlocked $1.2 million in new sales thanks to a $60,000 investment.
George Morice, accounting director at Prime Partners, recently appeared in an episode of the My Business Podcast to explain some of the strategies he discusses with clients to improve their profitability — including seemingly drastic measures like shedding clients.
But Mr Morice explained that in one instance, he was unable to help a client improve the profitability of their business, because they were continually distracted by the everyday.
“And I failed with one client, and it still grinds me a little bit,” he recalled.
“It was a law firm, and an absolutely amazing owner, really lovely guy, incredible lawyer. If you need legal advice, I’d see him, [but] if you need business advice, I wouldn’t.”
Mr Morice said that the client was “excited” at the prospect of transforming his business for the better, and an audit of the business identified the key factors to address to boost performance.
“He goes, ‘Great. This is what I need. I’ve needed this.’ Okay, on we go. And I come back later and I’m like, ‘Okay, so these were the first two steps we need to do. Where are we at?’”
The response from the client, Mr Morice explained, was one undoubtedly familiar with many business owners.
“‘Well, I was going to do it, but invoicing came up’ and these sort of things. And this is a very fair sort of statement. For a lot of people, time is their biggest struggle,” he said.
“So, I went, ‘Okay, that’s understandable. So, let’s set a deadline for this.’ And this happened again and again and again.
“He genuinely wanted help, but he wasn’t willing to do the work to get that help. And at that point, there is nothing we can do.”
Mr Morice said that he initially halved his personal fee, recognising that without the client making changes, his time was of little value.
“I said, ‘Look, I’m halving my fee. I’m not getting the value I said I was going to get for you.’ And that’s really important to me, so I said, ‘I’ll halve your fee, but we really need to focus on this.’”
But still, the lawyer was unable to implement the strategies that had been mutually agreed upon.
At this point, Mr Morice said, he felt no alternative but to let the client go altogether.
“I said, ‘Look, we’re still not getting anywhere. I’m going to leave. I’m firing you as a client, basically. Still friends: if you need anything, I’m here. But I can’t continue this relationship because... nothing’s going to change.’”
Change is possible
While this situation may sound familiar to many people in business, Mr Morice said that change is possible and realistically achievable, pointing to the experience of another client.
“The poor person was working themselves into a grave,” he recalled, noting that the business owner was typically working at least 60 to 70 hours a week.
But in auditing the business and its operations, Mr Morice discovered that roughly half of that time was being taken up with basic admin.
“Fifty per cent of the time was in these administrative tasks that did not need them to be doing it, but they’d always done it that way,” he said.
“They’d always gone in the morning, they’d always opened the mail. They’d always build out the invoices, they’d done all these things.”
Mr Morice proposed the business invest in hiring a full-time employee to take over all of these administrative tasks and “give you back 30 to 40 hours a week”.
“That client went out and brought in about $1.2 million of extra work the next year, because they had that time,” he said.
“He had paid $60,000 for an administrative staff[er] and he’d brought in an extra $1.2 million worth of work.
“When someone says it, you go, ‘Yeah, well, that’s logical; of course, you’re going to do that’. But it’s having someone with a full system process to actually show you that’s happening in your business [that sparks the drive to change].”
Mr Morice concluded: “Owners don’t have the time to actually think about these things. And that’s where we’ve got to get them off the that production trap into thinking about these things.”
More insights from Mr Morice on “business betterment” and boosting profitability can found on the My Business Podcast.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.
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