the:EliteFirm mastery in modern accounting Pillar 1 CLARITY workbook 1. Purpose 2. Vision 3. Values M O D U L E 1 - C L A R I T Y O F V I S I O N 10. Financial Plan 4. Potential 5. 3 Ways to Grow 6. Potential 2 7. Revenue per Employee 8. Cash Acceleration Strategies 9. Benchmarking Contents M O D U L E 2 - U N L O C K I N G P O T E N T I A L Pillar 1 - Clarity Introduction Welcome /iˈliːt/ belonging to the most powerful, best-educated, wealthiest or best-trained group in a society ie the best of the best The six workshop dates: The Thistle Holborn, London 29 Nov 23 Clarity 30 Nov 23 Focus & Capacity 28 Feb 24 Structure 24 Apr 24 Skills 26 Jun 24 Resources 25 Sep 24 Planning It is with great pleasure that we welcome you to 'the:EliteFirm: Mastery in Modern Accounting', a transformative journey tailored for the ambitious, the forward-thinking, and the dedicated professionals in the world of accounting. Embarking on a Journey of Mastery You are about to embark on a 12-month odyssey that has been meticulously crafted by industry experts. This program, rooted in the six pillars of success and brought to life through our 14-step implementation plan, is your gateway to mastering the modern dynamics of the accounting profession. The Power of Implementation As you delve into this workbook, remember: the value of an idea lies not in its conception but in its execution. Ideas are the seeds of innovation, but it is your action that will nurture these seeds to fruition. This workbook is designed not just to impart knowledge but to inspire action - action that translates learning into tangible, impactful results. 1 Action Generates Results Throughout this program, you will encounter concepts, strategies, and insights that have the potential to revolutionize your approach to accounting. However, true transformation begins with implementation. We urge you to engage with these ideas actively, apply them within the context of your work, and observe the metamorphosis in your professional practice and your firm. Accountability: The Key to Success Accountability is the cornerstone of achievement. It is the invisible force that propels you from intention to accomplishment. In this program, you will find that accountability is not just a concept but a practice. From group sessions to SOS 1-2-1 calls, every aspect of 'the:EliteFirm' is structured to keep you on track, ensuring that the steps you take are consistent, measurable, and aligned with your goals. Your Role in This Journey As you navigate through this program, we encourage you to embrace every challenge as an opportunity for growth, every interaction as a learning experience, and every setback as a stepping stone to success. This workbook is your companion on this journey - a place for your thoughts, your plans, and your reflections. Use it to capture insights, set goals, and chart your progress. A Community of Elite Professionals Remember, you are now part of an elite community of accounting professionals committed to excellence. Leverage this network to share ideas, seek advice, and build lasting professional relationships. Welcome to a journey of transformation, growth, and unparalleled success. We are thrilled to have you with us and are excited to see the heights you will achieve as part of 'the:EliteFirm: Mastery in Modern Accounting'. Pillar 1 - Clarity Introduction 2 Pillar 1 - Clarity Introduction The 6 Pillars 3 Pillar 1 - Clarity Introduction The 14 Step Plan Clarity of Vision Unlocking Potential Capacity Creation Toolkit Client Mix Time Management Systems Pricing for Profit Engaging Incentives Team Mix Continuous Improvement Winning Environment The Firm Playbook Repeatable Services Competitive Strategy Virtuous Circle 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 4 5 In building and sustaining a successful firm, three foundational elements are crucial: 'Why or Purpose', 'Vision', and 'Core Values'. These are not mere buzzwords; they are the essence of a firm's identity and the compass that guides its trajectory. Together, they form a robust framework that directs decision-making, shapes culture and drives growth. By clearly defining these elements, a firm sets a clear path for its future and aligns its team, strategies, and operations around a shared understanding of what it stands for, where it is going, and the principles that guide its journey. Purpose, vision and values The Foundations of a Firm’s Identity and Direction Pillar 1 - Clarity Purpose, Vision & Values 6 The 'Why' or Purpose of a firm goes beyond profit and encompasses the deeper reasons for its existence. It answers the fundamental question, "Why do we do what we do?" This purpose serves as a source of motivation and inspiration, not just for the leadership but for every member of the organization. When a firm's activities are aligned with its purpose, it instills a sense of belonging and dedication among employees, fosters loyalty among clients, and differentiates the firm in the market. A well-articulated purpose acts as a driving force, propelling the firm towards meaningful goals and impacting the broader community in a positive way. Chapter 1 Purpose Purpose The Driving Force 7 People do not buy what you do; they buy why you do what you do. People do not buy what you do; they buy what you believe in. The goal is not to do business with everyone who might need your product or service, it is to deal with those who believe what you believe Pillar 1 - Clarity Workbook Why? We started working about 8 weeks ago and the question we asked was: “our customers want to know who is Apple and what is it that we stand for, where do we fit in this world?” And what we’re about isn’t making boxes for people to get their jobs done, although we do that well — we do that better than almost anybody in some cases. But Apple’s about something more than that. Apple at the core — its core value, is that we believe that people with passion can change the world for the better. That’s what we believe. And we’ve had the opportunity to work with people like that. We’ve had the opportunity to work with people like you, with software developers with customers who have done it in some big and in some small ways. And we believe that in this world people can change it for the better. And that those people who are crazy enough to think they can change the world are the ones that actually do. Chapter 1 Purpose 8 Pillar 1 - Clarity Workbook What Are Your Whys? “Differentiation comes from clarity of WHY and not an excess of WHAT and HOW.” Why are you in this job? Why did you start / buy into this business? Why do you go to work in the morning? Why does the company exist? Why do youy care? Write your answer here... Chapter 1 Purpose 9 Pillar 1 - Clarity Workbook Ikigai Ikigai is a Japanese concept that translates to 'a reason for being' and represents the intersection of what you love, what you are good at, what the world needs, and what you can be paid for. This profound idea goes beyond mere career or vocational choices; it's about finding fulfillment and balance in all aspects of life. Ikigai lies at the heart of longevity, happiness, and purpose, encouraging individuals to discover a deep sense of satisfaction in their daily activities. In the realm of professional life, Ikigai can be a guiding principle for individuals and organizations alike, helping them to align their passions, talents, societal contributions, and economic needs into a cohesive and fulfilling purpose. By embracing Ikigai, firms and individuals can foster a more motivated, productive, and meaningful existence, both personally and professionally. with kind permission of PaperSeaHorse.com Chapter 1 Purpose 10 Pillar 1 - Clarity Workbook What is Your Firm’s Ikigai? The services that you love doing and delivering The services that your ideal clients need The services that you can get paid (what you are truly worth) for The services that you are great at Chapter 1 Purpose 11 Pillar 1 - Clarity Workbook The 3 Why's- If you were to build the firm of your dreams ... Chapter 1 Purpose What’s in it for the firm (and the partners/owners)? Write your answer here... 12 Pillar 1 - Clarity Workbook The 3 Why's- If you were to build the firm of your dreams ... Chapter 1 Purpose What’s in it for the team? Write your answer here... What’s in it for the clients? Write your answer here... 13 Pillar 1 - Clarity Workbook Example [The purpose of an elite firm is not to make money. It is imperative to make money, but it is not the purpose.] The purpose of an elite firm is to enrich lives, the lives of both team and clients. You don’t find your ‘purpose’, you create it! What is your purpose? Write your answer here... Chapter 1 Purpose 14 Vision is the aspirational picture of what a firm seeks to achieve in the future. It serves as a roadmap, guiding the firm towards its long-term goals and aspirations. A clear vision provides direction and helps in setting priorities, making strategic decisions, and aligning resources effectively. It empowers the firm to move forward with confidence, even in the face of uncertainty or adversity. A compelling vision not only motivates the internal team but also resonates with clients and stakeholders, creating a shared sense of excitement and anticipation for what the future holds. Vision If You Don’t Know Where You Are Going Any Road Will Get You There! Charting the Future Chapter2 Vision 15 Pillar 1 - Clarity Workbook Project yourself 5/10 years into the future and picture yourself talking to me and you are talking about your business What is the market share? What is the reputation? Where are you operating? How has the organization developed over time? What changes in strategy have you embraced? Who are the customers? What changes in products/services? How many employees? What changes in structure? What changes in site/location/resources? What are you known for? Write your answer here... Chapter2 Vision 16 Pillar 1 - Clarity Workbook Vision Statement A vision statement provides a brief description of a company’s long-term goals. It’s typically ambitious. A good vision statement helps you: Inspire teams and keep them focused Connect with customers in niche markets Make smarter decisions Attract top talent A vision statement is usually paired with your Purpose to guide planning. It doesn’t have a set length. You can craft a one-sentence statement or write a three-page document discussing the company’s future. The goal of a vision statement is to differentiate yourself from competitors and focus efforts on achieving your objectives. Some (Short) Examples TESLA: To create the most compelling car company of the 21st century by driving the world’s transition to electric vehicles. AMAZON: To be Earth’s most customer-centric company; to build a place where people can come to find and discover anything they might want to buy online. SOUTHWEST AIRLINES: To be the world’s most loved, most efficient, and most profitable airline. DISNEY: To be one of the world’s leading producers and providers of entertainment and information. Chapter2 Vision 17 Write your answer here... Your Vision Statement Pillar 1 - Clarity Workbook Chapter2 Vision 18 Chapter 3 Core Values Core Values Core values are the fundamental beliefs and guiding principles that dictate the behavior and action of an individual or an organisation. They are paramount because they create a moral compass, shaping a consistent framework for decision-making and actions. In a business context, core values are the bedrock upon which a company's culture, brand, and identity are built. They influence every aspect of the business, from hiring practices and team dynamics to client relationships and strategic planning. When core values are clearly defined and genuinely upheld, they foster an environment of trust and integrity, which not only enhances internal cohesion but also strengthens the organization's reputation in the market. By anchoring an organization in a set of unshakeable beliefs, core values become a source of strength and resilience, especially in times of change or challenge, ensuring that the business stays true to its vision and purpose. The Ethical Compass 19 Pillar 1 - Clarity Workbook Your Personal Core Values Chapter 3 Core Values A quick way to find out what your personal values are is to use the cheat sheet “Reverse Engineering Your Values By David Miller - see the:EliteFirm resources Your Firm’s Core Values Once you have determined what your personal values are, meet with your fellow partners/leadership team to talk about theirs and, based on those, agree on a first draft list for the firm. This is important so that you can guide the discussions that will necessarily ensue. Then, follow the LIAISE process that Aynsley used at his accounting firm on the following page. Finally, you could undertake the team exercise that we did at Clarity, to determine what are good and bad examples of the values in operation. 20 Pillar 1 - Clarity Workbook Chapter 3 Core Values 21 Pillar 1 - Clarity Workbook Our Core Values Chapter 3 Core Values 22 In our journey toward mastery in modern accounting, it's crucial to shift our focus from merely solving problems to unlocking potential. Nature, in its infinite wisdom, does not solve for problems; it evolves by solving for potential. This approach opens up a realm of possibilities, transcending the limitations of problem-centric thinking. By focusing on potential, we align ourselves with a mindset of growth and innovation, which is essential in the dynamic world of accounting. It's not just about fixing what's broken; it's about envisioning what could be and working towards that ideal. Relying solely on a problem-solution mentality can lead to sub-optimal outcomes. While it's important to address immediate issues, this approach often misses the larger picture, overlooking opportunities that lie beyond the immediate horizon. In the accounting world, where the landscape is continuously evolving, adhering strictly to this mentality might solve one issue but cause unintended consequences elsewhere. For instance, focusing only on cutting costs might solve short-term financial pressures but could undermine long-term firm growth and employee satisfaction. It's about finding a balance, where solutions not only address current problems but also pave the way for future opportunities. Chapter 4 Potential 1 Potential Unlocking Potential: why it matters? Beyond Problem- Solution Paradigm 23 Embracing potential means challenging the status quo. It's about questioning the 'why' behind our traditional practices and daring to imagine a different, more efficient, and more rewarding way of doing things. In accounting, this could mean rethinking client relationships, adopting new technologies, or redefining service offerings. By challenging the existing norms and refusing to settle for 'good enough,' we open doors to innovation and excellence. Remember, every great advancement in any field started as a challenge to the conventional way of thinking. It's not just about doing things right; it's about doing the right things for a brighter, more potent future. Challenging the Status Quo Nature doesn’t solve for problems. It solves for potential. Chapter 4 Potential 1 24 Pillar 1 - Clarity Workbook Before we Get Started What business are you in? what business should you really be in? Write your answer here... Why am I in business? (or if a team member: Why am I working in accounting? ) originally? today? Is there a gap, and how are you going to close it? Write your answer here... Who am I in this business? Artist/Manager/Entrepreneur - take the genius (an/or Talent Dynamics) test Write your answer here... Chapter 4 Potential 1 25 Pillar 1 - Clarity Workbook Where are you (in the lifecycle of business)? As an individual/business/industry - are you in spring/summer/autumn/winter Write your answer here... What’s next? for you, your firm, the accounting industry? Write your answer here... Chapter 4 Potential 1 26 Chapter 5 The 3 Ways to Grow 1. Increase the number of customers/clients (of the type you want) The 3 Ways to Grow 2. Increase the average transaction value 3. Increase the frequency of the number of times they buy (or refer to you) 27 Number of customers x AV transaction value x No of purchases = Total your numbers (eg 1000) your number (eg £100) your number (eg 2) your number (eg £200,000) x x = 10% increase 10% increase 10% increase x x = 33% increase 25% increase 50% increase x x = your % increase your % increase your % increase x x = What is your % increase in total? =Pillar 1 - Clarity Workbook Chapter 5 The 3 Ways to Grow 28 What is Your Potential? Chapter 6 Potential 2 Pillar 1 - Clarity Workbook Where are you now? Where do you want to get to? What's the timeframe? Revenue Gross Profit % (includes fee earner salaries) Net Profit Team number Revenue per Employee Number of clients Cash Days Hours worked (per week) Take home pay 29 Pillar 1 - Clarity Workbook If you were to get there (looking back), how does that make you feel now? Write your answer here... If you were to stay where you are, how would that make you feel? Write your answer here... What do you need to do to get there? Write your answer here... Chapter 6 Potential 2 30 Pillar 1 - Clarity Workbook What’s likely to stop you? Write your answer here... What plans do you need to put in place to make it happen? Write your answer here... Chapter 6 Potential 2 31 What is Your Potential?/ 2 Pillar 1 - Clarity Workbook Original % Increase Revised % Revenue Salaries Gross profit Overheads Profit Chapter 6 Potential 2 32 What If? Pillar 1 - Clarity Workbook Number of business clients x Average added value fees = GRF less Salaries Other costs = Net profit Chapter 6 Potential 2 33 Chapter7 Revenue per Employee Revenue per Employee Keen attention to revenue per employee is pivotal for assessing the efficiency and profitability of a firm. Setting a benchmark of £125,000 /$165,000/ €137,500 / AU$200,000 revenue per employee serves as a critical yardstick for performance. This metric is not just a number; it's a reflection of how effectively a firm leverages its human capital, optimizes its processes and delivers value to its clients. Focusing on this benchmark is crucial because it directly correlates with the firm's financial health and operational efficiency. It helps in identifying areas that need improvement, whether in technology adoption, process refinement, or client management strategies. By striving to meet or exceed this benchmark, accounting firms can ensure they are not only maximizing their revenue generation capabilities but also operating at an optimal level of productivity and client service excellence. 34 Ways to improve your RpE and/or ERR 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 What’s your number? Pillar 1 - Clarity Workbook Chapter7 Revenue per Employee 35 What’s your Revenue Gap? Pillar 1 - Clarity Workbook Total Employee Costs x 3 (or 5) = less Actual Revenue = 84 Ways to Grow RpE Chapter7 Revenue per Employee 36 Chapter 8 Cash Acceleration Strategies Cash Acceleration Strategies Cash is the oxygen that fuels growth. And the cash conversion cycle is a key performance indicator that measures how long it takes for a £/$/€ spent on anything to make its way through your business and back into your bank account. We suggest that you regularly brainstorm with the team on ways to improve cash flow. Constantly improving the flow of cash in the firm- and better understanding how cash moves through the business - is a powerful driver for improving the firm as a whole. Cash is King 37 Cash Acceleration Strategies Pillar 1 - Clarity Workbook Ways to improve client relations/satisfaction, value we deliver, communication 1 2 3 4 5 Ways to improve records chasing, WIP management and team utilisation 1 2 3 4 5 Chapter 8 Cash Acceleration Strategies 38 Cash Acceleration Strategies Pillar 1 - Clarity Workbook Ways to improve the efficiency of the delivery (Accounts, VAT, tax etc ) cycle 1 2 3 4 5 Ways to improve pricing, billing and cash collection 1 2 3 4 5 Chapter 8 Cash Acceleration Strategies 39 Example Cash Acceleration Strategies Pillar 1 - Clarity Workbook We all need to be more hands-on (in the short term) and frequently walk around the building. We need to think delegate v abrogate whenever possible and we need to put in reporting mechanisms to manage. We also must enable and encourage the managers to pick up the reins on the Ops side. Our meeting rhythm is re-established immediately (daily huddles, weekly wip, monthly management, monthly ops and any others). Meetings are sacrosanct and must start on time and have an end time. There is no excuse for missing a meeting. Internal meetings are as important as external meetings. If a client rings and the call is taken, they must be told that [x yz] will be going in to a meeting at [meeting time – 10 mins], is that ok or should [x yz] ring back? They are chaired ruthlessly and everyone must come prepared so no time is wasted. Where appropriate (i.e. Wip meetings) exceptions are reported, not long commentary. WIP – I think to start, until we get into a rhythm, that all three of us must attend the wip meetings. I was quite surprised at the recent wip list. I think we need to ensure all jobs are on this and not just accounts and the report needs visibility improvements. All columns need to be completed and the length of time the job has been worked on needs to be clear. Jobs completed to draft and sent to client need to be moved from the main wip list – but possibly kept on the same page? Or, if too big on another sheet? We will share charing a few until we get the tone, speed and results and then hand over to the Senior Manager to chair. Then just one of us can attend to listen and provide authority and report back to the other two at our next huddle. Example Cash acceleration strategies - used at TT - “taken directly from an internal memo” and to be read in that context:- ” Chapter 8 Cash Acceleration Strategies 40 Example Cash Acceleration Strategies Pillar 1 - Clarity Workbook Team huddle managed by Xxxxx to ensure all are meeting their WIP targets – what are you working on, are you meeting your timings, what are the KPIs and where is anyone stuck. Work in chasing – this needs to be incorporated in the WIP meeting and delegated to someone as a priority to manage (Xxxxx?) and to delegated to someone to action (Xxx?) and both need to understand the importance of this. Before, during and after calls are put back in place. We may need to refresh the system?? Before – at planning stage (hopefully one week before job) to check deadlines, DD, fees, etc During to go through queries, if none - to talk through some proforma questions to show we are into the nitty gritty, tax savings (accruals, asset w/downs, provisions etc) and After to say the drafts are on their way, portal or post, any queries for client? And set up meeting date A KPI on average turnaround is reported daily at the huddles? Billing is a priority and everyone knows what is to be billed this week, what has been billed, the shortfall and what needs to be made up the following week – reported on daily. Everyone knows the menu of services and knows what clients are on what levels Telephone calls are kept to 10 mins and end times are to be encouraged. Anything beyond 10 mins is a consultation and may be a ‘meeting’. So, if a team member is spending longer than 10 mins they need to be thinking is this billable or is this part of the service. If it is going to take time the client needs to be told-clearly they don’t expect us to know everything and most people will appreciate that hey want the right answer and not an educated guess. If anyone is to do ANY work for a client it must be check against the menu of services and client service level. If at all unsure, must speak with a manager. The client must be told what the approximate costs are and agree to the fee. Extra Work Orders? Chapter 8 Cash Acceleration Strategies 41 Example Cash Acceleration Strategies Pillar 1 - Clarity Workbook All fee notes are to be raised before the work is finished and the client given the report, piece of work, accounts etc and with a due date within 14 days All clients on DD Pre-year end meetings to be for ALL clients and fees to be discussed up front at start of meeting. Monthly fees to be introduced for ALL clients. People are prepared to pay for value – we need to explain value Clients are to be up-sold appropriate services at all times Tax savings, value created to be discussed with client or put on fee note incl valuation as below Valuations of all clients to be done for last two years and kept on a spreadsheet and revaluation (incl value added to now be done annually – STD basis to be agreed (4 x multiple on EBITDAR) On accounts jobs, at planning, the in-charge to check fee against menu of services and discuss with manager and manager to check if any specials done during the year Allocation of job immediately on arrival and planning to be done by the following day. Calling system for Platinum/Gold and Rose clients to be enforced and booked in the diaries - just to see how they are - monthly, quarterly and bi annually. Measurement of team high satisfaction days to be installed asap JetPack Workflow to manage all this CFO to report daily on our cash position at our huddle and for the reasons outlined In summary we need to get work in quicker, turned around quicker, all work billed with zero engagement creep, all the team need to be thinking fees, we want happy clients and then fees collected within 14 days. Ideally all clients on monthly fees and DD.” Chapter 8 Cash Acceleration Strategies 42 Chapter 9 Benchmarking Bench marking How do you compare? Notes: 43 Chapter 10 Financial Plan Financial Plan Wherever possible please use your account clarity. 44 Conclusion As we wrap up the first segment of our journey in 'the:EliteFirm: Mastery in Modern Accounting,' focusing on the Clarity pillar, it's essential to reflect on the profound insights and strategies we've explored. Clarity is not just about having a clear vision for your firm; it's the beacon that guides every decision, strategy, and action you undertake. It illuminates the path towards your goals, aligns your team's efforts, and helps you communicate your purpose and value to clients. Through this workbook, we've delved into the importance of defining a clear vision, setting precise goals, and understanding the fundamental drivers of your firm's success. We've seen how clarity can transform challenges into opportunities and complexity into streamlined processes. It's the cornerstone that supports focused decision-making, efficient resource allocation, and effective client engagement. As you move forward, carry with you the lessons and exercises from this workbook. Let them remind you of the power of having clarity in your practice. Remember, the journey to becoming an elite firm is continuous and dynamic. The clarity you've cultivated here is your steadfast companion, ensuring that every step you take is purposeful and aligned with your ultimate aspirations. Embark on the next phase of this program with the confidence that comes from knowing your direction and purpose. The road to mastery is a journey of constant learning and growth, and with clarity as your foundation, you are well-equipped to navigate it successfully. Embracing Clarity in Your Accounting Practice Pillar 1 - Clarity The End 45