On this podcast interview, you'll hear Luke Smith of Purpose - this is part two of a two-part discussion I had with Luke recently.
Myself and a bunch of accountants actually grill Luke on this podcast and you'll hear Luke describe what it is his team are doing to ensure that there's a real connection in every year-end meeting between his team and his business owner clients.
So why not join me and a bunch of other accountants on this humanisethenumbers.online podcast and hear what Luke has got to say about how he and his team do great work to build that connection between his team and his clients?
The Solution:
"And suddenly you're having a conversation with them where they are able to understand the person they're talking to.
Whereas before they just sat in the room during the year end meeting and nobody's really explained why the figures are what they are...
So the starting point is just give them a little bit of information about how you can solve their current problems. Nobody changes if they haven't got a problem."
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SHOW NOTES
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TRANSCRIPT
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CHAPTER MARKERS
SHOW NOTES
TRANSCRIPT - unedited
00:00:00] Paul Shrimpling: [00:00:00] Welcome to the humanized, the numbers podcast, series leaders, managers, and owners of ambitious accounting firms, sharing insights, successes, and issues that will challenge you and connect you and your firm to the ways and means of transforming your firms results.
[00:00:20] Luke Smith: [00:00:20] And suddenly you're having a conversation with them where they are able to understand the person they're talking to.
[00:00:25] Whereas before they just sat in the room during the year end meeting. And, um, nobody's really explained why the figures are what they are. So the starting point is just give them a little bit of information about how you can solve their current problems. Nobody changes if they haven't got a problem.
[00:00:42] Paul Shrimpling: [00:00:42] This podcast is part two of a two-part discussion with Luke Smith of his firm purpose on the Island of Jersey. In this part of the discussion, you'll hear Luke Smith of his firm purpose based on the Island of Jersey. Talk in quite a bit of detail [00:01:00] about how important it is for him to take full responsibility for making his clients more money, generating a return on investment from the time and effort that he has with the clients.
[00:01:14] And as a. Predominantly advisory firm. This is a really, really valuable conversation that you're going to get some real powerful insights from as do the other accountants that are actually involved in this discussion with Luke. So watch out for those other people interviewing him, not just me. Let's dive into that discussion with Luke ma'am.
[00:01:32] Yeah. And Luke,
[00:01:32] Luke Smith: [00:01:32] just on that, on the client site, Chris drink water had a. Um, a nice question. I think on the acquisition side, Chris, do you want to unmute
[00:01:40] Audience question: [00:01:40] yes. That obviously it doesn't matter what size of clients you might have a there's a waste of time sapping ones. Um, I was just, you know, interested really because on those sides of fees and obviously promising perhaps the world, um, [00:02:00] some probably go in a direction that's unsustainable and, uh, And just really do, um, want too much that you can't provide, perhaps, um, have you come across that and anyone that you've had to end up parting ways because you thought actually it's, um, draining my attention away from the ones that
[00:02:22] Luke Smith: [00:02:22] deserve it.
[00:02:24] Audience question: [00:02:24] Um, not, not some are the only two that are, um, didn't
[00:02:29] Luke Smith: [00:02:29] listen and we're too small. So, um, you know, the, the lesson learned there was, if they're under half a million turnover, they still aren't ready to have a conversation where, um, they let someone else help advise them. Um, in terms of, you know, time draining, I had one client who we ended up charging 140 grand a year to, um, because like grades are 21 million turnover.
[00:02:55] And, um, it was from, we started with them when they were 5 million. [00:03:00] And then I ended up being 20, over 21 million. And we had three people, including most of my time, full-time on them. And that was quite a pain. Um, but it was a significant fee at the time and helped generate enough profit to, to grow the rest of the staff across the other side of the business.
[00:03:16] So, um, and you know, they gave me some shares in the business and we sold out a couple of years ago, and that was lovely so that you know, that you have to make sure, um, that you're getting value for what you're doing because. Um, you know, we, we lost one this year to COVID, um, you know, having 10% shareholding in that.
[00:03:36] And we thought it was worth, you know, quite a lot. And, um, one day they were making 50 grand a day turned over in the next day, zero. So, um, you know that you have to make the money as you go along as well, but you just have to say, listen, this is, this is what we're doing. Things have changed and fees need to go up again.
[00:03:56] Another client. Uh, 2011, we were charging them, I think two [00:04:00] grand a month and 2017. It was 70, 80 grand a year. Um, and the sales pitch that I often give is, you know, we'll, we'll, we'll get you to a point where you need a full-time as Dean. And unfortunately, a couple of times that's happened, uh, um, you know, the, uh, that, that they still cats.
[00:04:20] Uh, the me on the board or the FDA has come in and we're still doing the nuts and bolts for them because their relationship is so strong. So if you really do can, and you were there at the start when they weren't that big and you've helped them get there. So they don't want to go. And we do have a few that are just lay off God's sake, grow up, but, um, you just go to the bullies, only respond to Australia.
[00:04:44] So you have to be a bit strong with those ones.
[00:04:48] Audience question: [00:04:48] Okay. And, and so like, if you have, um, you know, you start the relationship, often you say it's going to be 30 grand. How do you get them from there to 70? You know, what conversations are you [00:05:00] having along the way? Um, yeah. So take
[00:05:04] Luke Smith: [00:05:04] those Mexicans, you know, if, if staff numbers go from, um, you know, with 140 grand while we had.
[00:05:11] 40 staff. When we started, when we finished, there were 210 and the one that went from 30 to a 75 80, they went into four or five different jurisdictions. When you cut you can't introduce extra piece just for the sake of it. You have to be able to say, well, listen, you've got another entity or you've got another product line, or you've got five to 10 more staff, you know, all those things.
[00:05:36] Have an impact. And, um, we generally don't do annual fee increases. We just have a look at it and say, the business has changed by this month. If we were repricing, this, what would we price it at now? And then we tell them, you know, in three months time, we think this is fair, but nobody ever says no. So what triggers those
[00:05:56] Audience question: [00:05:56] conversations
[00:05:57] Luke Smith: [00:05:57] then joining our George, getting [00:06:00] grumpy with how busy they are.
[00:06:01] So,
[00:06:02] Audience question: [00:06:02] you know, there's, there's no real
[00:06:03] Luke Smith: [00:06:03] methodology to it and this doesn't feel reasonable. Um, you know, and we don't do time sheets, so we don't ever have a clue about how it wants anything takes, you know, the time. Um, so it is just, uh, this isn't fair, that business has changed. Um, but normally it's quite a significant thing.
[00:06:22] Like, you know, most of the clients of a million plants are looking to grow to four or 5 million. And throughout that process, they are. Doing lots of things and you're helping budget those things. And when you're having that budget conversation saying, well, if you're going to set up this business or you're going to do that, or the other, we're going to have to charge more because there's more work to do.
[00:06:43] And they're like,
[00:06:43] yeah,
[00:06:44] Luke Smith: [00:06:44] fair enough. So yesterday, someone rang me yesterday and he goes, well, I'm going to set
[00:06:48] Audience question: [00:06:48] up in the UK. Um,
[00:06:50] Luke Smith: [00:06:50] presumably you need to charge me the same as what you are at the moment. I can't justify that because it's just a tiny startup, but, um, you know, he was actually asking if we were going to double the [00:07:00] fees and I was like, no, but you know, um, there is, you know, we've got people thinking about it now.
[00:07:05] Cause we talk about it with them when there's a major change.
[00:07:08] Paul Shrimpling: [00:07:08] Yeah. Can I do, are you managing your client's stroke prospects expectations in any way, Luke, about the growth of the firm and the growth of the fees that can go with
[00:07:19] Audience question: [00:07:19] it.
[00:07:20] Luke Smith: [00:07:20] Probably should be, but we're not. No, cause it doesn't happen until it happens.
[00:07:25] And then when it happens, they're so intent on making the change happen. They don't really care about the cost of it.
[00:07:32] Paul Shrimpling: [00:07:32] Yeah. Pretty good. Very good. So tell me when, when you're going into, let's just deal with the prospect. Sorry, Chris, are you happy that you got your question answered there, Chris?
[00:07:44] Audience question: [00:07:44] Yeah. Yeah.
[00:07:46] Paul Shrimpling: [00:07:46] Thank you. Very good. Very good. Um, so we're interstate you're, you're first meeting a new prospect. However, they've come to you. Um, we deal with the lead gen, if we get the chance, um, how's that [00:08:00] conversation structured? What questions are you asking loop?
[00:08:04] Luke Smith: [00:08:04] How do you open to begin with? Well, normally it's just like, you know, how, how can I help, you know, um, there's a really, um, What's it called the naked and the
[00:08:15] naked
[00:08:16] Luke Smith: [00:08:16] advisor or something by Patrick Lencioni.
[00:08:18] Um, and, um, that works excellent in terms of how do you open that conversation with a consultancy prospect? Um, and it's basically just saying, try and solve a problem. Um, quite often the problem is. They don't think it's a lack of visibility. All of them think they know what's going on. I mean, they don't, but they all think they do normally it's, um, all everything's in place, but the cash in the bank account doesn't match the profit.
[00:08:51] We talk a little bit about the working capital. Like how do they build, so do they bill up front? Do they bill after what's the collapse, you know, Start to get underneath the skin of that. Start to give [00:09:00] them a few ideas around how they might change that and then say, you know, but we won't know until we've properly looked at everything and, um, actually got underneath the skin of, of how the business is working and what profits it's making.
[00:09:15] Um, uh, normally what I do in the, in the second chapter is, um, at the end of the first one, I've asked them to send me a link to Xero or QuickBooks or, um, And whatever system they might or might not be using. And then pretty quickly you can see mistakes in what the previous accounts done. And also. Um, areas that don't make any sense.
[00:09:40] And once you sit there with the balance sheet and explained to them, listen, this doesn't make sense. Um, they go, no, you're right. I've never understood that. And suddenly you're having a conversation with them where they are able to understand that the person they're talking to, whereas before they just sat in the room during the year end meeting, And, um, nobody's really explained why the figures are what they [00:10:00] are.
[00:10:00] And that's probably a good thing because they're probably wrong, you know, that's that, that's the sort of starting point is just give them a little bit of information about how you can solve their current problems. Nobody changes if they haven't got a problem, you know, they're always wanting to do, but they always do have a, you know, even us, you know, we've got, we've got problems that we need to fix.
[00:10:22] Um, and, um, You know, having they're too busy to solve those problems themselves. And they haven't got anyone else in the business to help them. And we've got credibility in helping people. So it's just, you know, we can help if you let us. Right.
[00:10:37] Paul Shrimpling: [00:10:37] So if I've heard you, right, it's as simple as asking questions, like how can I help?
[00:10:42] How do you bill for your work, how a profits generated. Yeah. Is that the essence of the conversation
[00:10:48] Luke Smith: [00:10:48] means? Yeah. Yeah. Yeah. I mean that that's, um, I mean, some people are now coming in because they know we do out source and they don't want to take out a bookkeeper or have anything to do with finance. Um, but the consultancy ones are [00:11:00] generally coming, coming in because, um, they they're turning over a lot of money.
[00:11:05] They're working harder than ever, and they're not making any money and they don't know why. Because everything, they know everything, but they don't know why they're not making any money. Yeah. Okay. All right.
[00:11:16] Paul Shrimpling: [00:11:16] Um, so do they, do they fall into, how do you, how do you categorize prospects from the, at the end of that first meeting
[00:11:23] Audience question: [00:11:23] or even
[00:11:23] Luke Smith: [00:11:23] before?
[00:11:24] Yeah. Yeah. Well, you know, so I think there's probably three groups. There's the people who are genuinely interested in growing their business and understanding the next stage of development of their company who are great because they just listen and it all works well. You've got the second group that I just talked about, who are just don't know why they think they know it all.
[00:11:46] You can't tell them anything about how to run their business, but they're just not making any money. And so they're exasperated. And then you've got the people who, um, come in, think they want the support from an accounts. And, [00:12:00] but just. Won't pay any money for anything, you know, so they'd rather do the invoicing themselves.
[00:12:06] They'd rather do it all themselves and just not bother making a change and they're just time wasters. So, um, group one is easy and great. There, aren't a lots of people on the planet like that. My experience, um, group two is the core and that's where it's like, You know, you're telling me, you know, everything, but you're making losses.
[00:12:25] So that can't be the case. You have to be a bit of a Dick with those people. Um,
[00:12:30] Paul Shrimpling: [00:12:30] explain that phrase. What do you mean? You've got to be aware of the
[00:12:33] Audience question: [00:12:33] deck?
[00:12:34] Luke Smith: [00:12:34] Well, I had a bodybuilder who'd run his business this for 10 years leave and tell my best mate that he cried after the meeting. So, um, you know, very direct around this, isn't working and as hard as you're working, you're failing.
[00:12:49] What do you want to do? Right. And often, so the Gerber message is if your, um,
[00:12:58] you
[00:12:58] Luke Smith: [00:12:58] know, it's a hobby, not a business. [00:13:00] Quite often. What we do is people come in and say, well, I'm making a profit. And I go, okay, what would I have to pay you to run this business? And they say 80 grand. And I said, and your profits there.
[00:13:10] See, and you're not taking a salary, so you're losing money and they go. And they don't want to admit it, but it's true. And they can't get away from that. So, um, let's say you spent four or 500 grand buying this thing and you're paying interest and you're also losing money on that because you could have put that money somewhere else and made a better return.
[00:13:31] And they're like, yeah. And then it's that slow realization that actually I'm, I'm bad at this. I need some help. And, and
[00:13:40] Paul Shrimpling: [00:13:40] that, and so I'm now fishing for what goals are you setting out to achieving meeting one? And it sounds as though you're aiming for brutal truth. So I've, I misunderstood
[00:13:48] Audience question: [00:13:48] that. No, like, uh, to be honest, it's not that structured.
[00:13:51] It's
[00:13:51] Luke Smith: [00:13:51] just like, where does this conversation go? And does this person need some tough love or are they having a breakdown already? [00:14:00] You know, that's, that's the, that's the process. So when it's not. I probably should spend more time thinking about that and would probably be more successful if it's, but, um, no, I mean, it's basically what's going on.
[00:14:14] Um, and how do you feel about things and do you want it to be better? And then the really hard bit is we can definitely help with all that, but it's going to cost you five or six times the amount you're currently paying. And
[00:14:29] Paul Shrimpling: [00:14:29] so we've got a business that's potentially has got decent turnover. Not making any money or making losses.
[00:14:35] You're asking them to go from a three grand accounts fee to a 20 grand accounts fee. Yeah. That's a big, that's a big
[00:14:41] Luke Smith: [00:14:41] pitch. It is. It is challenging. It is challenging
[00:14:47] Audience question: [00:14:47] 50%.
[00:14:49] Paul Shrimpling: [00:14:49] Wow. Okay.
[00:14:51] Audience question: [00:14:51] But because they've only
[00:14:51] come
[00:14:52] Luke Smith: [00:14:52] because someone else has said just trust them. You know, um, and like I said, you know, like I said before, we wonderfully one of the new ones.
[00:15:00] [00:15:00] Um, he ranked six of our clients for an hour each to try and justify to himself spending an extra 15 grand a year on fees. And after two months he was, this is the greatest thing ever. Why didn't I do this 10 years ago? And I said, well, what could I have said before you came on. And he said, you couldn't have, I was like, Oh, brilliant.
[00:15:20] So even when they've experienced it, they still can't quite articulate the value of really knowing their business to a deeper level than they've ever known. Um, and none of them, you know, ever been through any business training. So they're just doing it off the back of having done it for someone else and then starting up themselves.
[00:15:37] And it's like, well, you know, you're and they're quite apologetic. It's like, I'm sorry, I don't know this. If you did know all this, I wouldn't have a job, so don't worry about it. You know, that's the, that's, that's, that's the relationship. Um, and, um, the easiest sale is tax planning and, um, and, and technology implementation.
[00:15:56] Um, the, the V the pure consultancy stuff is a difficult, [00:16:00] it's a difficult, so,
[00:16:02] Paul Shrimpling: [00:16:02] yeah. So let let's get, let's go down that tech and the tax, uh, Avenue then, you know, in meeting one, is the questioning any different or is that showing or could meeting to how how's that?
[00:16:14] Audience question: [00:16:14] Well,
[00:16:15] Luke Smith: [00:16:15] I will ask you though, what system are you using?
[00:16:17] What, what line of business systems you have? Um, most people don't understand the question, which is, you know, therefore good because you can say, well, were you using. I think we're up to 26 different applications now, something ridiculous, you know, um, all of those have a purpose that, that increased the value of the business.
[00:16:37] Most of them don't track time in their business and, and, um, possibly don't track time. Um, they're not quite a level of sophistication yet where they, they can, they can not do that. They need to still know the profitability of. Um, the difference between putting in Victorian sliders and develops. So I can tell you quite a lot about, about that, [00:17:00] unfortunately.
[00:17:01] Um, and that's because we got job profitability and see the most of the construction and trade businesses. They always think that that scope creep is a massive thing, which you can only track through time sheets. Um, so there's a number of technology solutions that can make a big difference. One of the clients is a, uh, kitchen design and, um, company, and they've, they argued with me for five months about putting in harvest and they found six grand of extra revenue last month.
[00:17:30] So that was humbled by, um, and, uh, you know, lots of these, lots of these people who you have to convince them and you have to say, you know, trust me. Um, and you have to really fail that you think it's the right thing to do. You have to be confident in delivering that message. Otherwise they, they won't implement, but when they do good things always come.
[00:17:51] Right. Um, there were, uh, I had a quick follow-up question,
[00:17:55] Audience question: [00:17:55] which you kind of started to go towards just then.
[00:17:57] Luke Smith: [00:17:57] Um, my, my first question was, did [00:18:00] you used to use time sheets and phase them out or have you never used them? Yeah. So we, we use them up until 2013. Um, and I used to do, uh, revenue across the penny, across every client took a long time.
[00:18:15] Um, we are, we are going back to time sheets, but I'm refusing to put charge out rates in them. Um, so I will put staff costs and overhead costs in there. But it is too difficult when I'm not at the coalface to know what's going on without having them. So, um, it's more, we have a monthly planning session and we're estimating the amount of time it takes to do jobs.
[00:18:45] And the staff are saying that it should, it takes an extra 50% on average to what we think it should. And that's either a training issue or we're wrong. And so, um, I would guess it's a training issue. [00:19:00] Um, so, um, we're, we'll be just to, we need a bit more evidence when we're talking to the team. About how long they're taking and what it is that they're doing.
[00:19:09] Um, and so to do that, we're, we're going to go back to time sheets in January, but we won't be having anything to do with charge out rates in that, um, just pure cost accounting. And actually, um, I've argued with Ron Baker, quite a lot on LinkedIn about this. Um, and, uh, he, he still maintains that it's not worth it and I still maintain it is so we'll see who's right over the next couple of years.
[00:19:33] Yeah. Yeah.
[00:19:35] How,
[00:19:35] Paul Shrimpling: [00:19:35] how have your team responded to the, the, the concept of
[00:19:39] Audience question: [00:19:39] installing time
[00:19:40] Luke Smith: [00:19:40] sheets? They they're happy because, um, I'm always saying, well, hang on. Why is this taking so long? They've got no answer to that. Um, so they actually just want the, I get it.
[00:19:52] Audience question: [00:19:52] It's weird. Cause you just thought the freedom would
[00:19:54] Luke Smith: [00:19:54] be the other way, but it's a freedom in, in knowing why things have taken the time they [00:20:00] have.
[00:20:00] Yeah. There's that there's, that, you know, people
[00:20:03] Paul Shrimpling: [00:20:03] want to feel a sense of achievement. And if the treatments that are attached to the profit of the job, which is what you're aiming for by understanding the costs and they can see how profitable each job is to a degree of accuracy, um, they're going to feel a greater sense of achievement and there maybe, um,
[00:20:19] Luke Smith: [00:20:19] you know, feel better about, well, and also we don't have a strong mechanism for finding the trigger at which the scope creeps on a project.
[00:20:27] Whereas with the time sheets we will do, we'll have a mechanism for understanding. I've asked for two extra things that aren't part of the box of services. Um, and, um, what we've identified already is that the consultancy time that Julie and I are doing is vastly undervalued. And, um, we think there's another 50 grand in there.
[00:20:47] So we're going to reprice everybody in Mar uh, over the next three months and, and change the change the way we're pricing the VA that, that sort of consultancy service. Right. Okay.
[00:20:57] Paul Shrimpling: [00:20:57] So two questions then one both on [00:21:00] technology. One is what, what tech are you using for the time
[00:21:03] Luke Smith: [00:21:03] sheets? Uh, so we worked, we tried harvest didn't like, it, it wasn't good enough.
[00:21:09] We're gonna quit using clicker, which is, um, Nike and Uber. And all these sorts of people are using. Johnny's used it for this one for the last month, just on his own. He really likes it. It's got gang charting, project management. All that sort of stuff, integrated data box and other dashboard reporting tools.
[00:21:29] So, um, yeah, we're gonna to use.
[00:21:32] Audience question: [00:21:32] Right. Okay.
[00:21:32] Paul Shrimpling: [00:21:32] And, um, in terms of pricing, are you using, uh, uh, any tech for
[00:21:37] Audience question: [00:21:37] pricing?
[00:21:38] Luke Smith: [00:21:38] Uh, no. We use, um, we had to go go proposal, but, uh, we only do seven or eight quotes a year, so, and everything's bespoke. So we use something called proposal, which is mine. Um, Probably I quoting price or software, you can integrate videos and design and all sorts of really cool stuff in it.
[00:21:58] And you can tell how often [00:22:00] they've looked at the quotes and when they're looking at it and make sneaky phone calls when they've opened it and all that sort of stuff.
[00:22:09] Paul Shrimpling: [00:22:09] Okay. Cool beans. And any more questions in the chat box list? Eh, no, not at the moment, please. All right. Um, so you touched on this monthly checking with the team. I I'm curious as to what weekly and what monthly routines are running in the, from, you know, my obsession with habits, slope. I'm just, um, what, what, what let's go weekly.
[00:22:32] First. What weekly routines take place in the firm every week without fail that contribute to you doing a good job for your clients on this monthly or quarterly basis.
[00:22:40] Audience question: [00:22:40] Yeah, so it's actually daily. So we have,
[00:22:43] Luke Smith: [00:22:43] uh, and,
[00:22:43] Audience question: [00:22:43] and so when everybody's in the
[00:22:45] Luke Smith: [00:22:45] office, we have a daily huddle, nine 15, um, one minute each during lockdown, we have two huddles, one at nine 15, one at two o'clock, uh, online.
[00:22:55] Um, and that's just what's happening today. What do we think we're getting done? What [00:23:00] am I waiting for? Um, how are you? Um, weekly, we have a weekly SMT, um, which is 40 minutes, which is. Um, me asking the boys, um, what are the deadlines for this week and what are we going to hit and which clients do we need to talk to?
[00:23:16] Because we either haven't got the info or. Um, we need to push the meeting for other reasons. Um, we look at data's and revenue in that meeting quickly as well. Um, monthly, we have a half day monthly planning session. So like I said, there's about 40 clients with about 150 entities. Most of them are consolidations.
[00:23:40] Um, and some of them are quarterly in some of them are monthly and some of them are 10 monthly. So we're working out, who's doing what, how much time they're taking, which juniors are reporting to which managers for which review. Whether or not, I go to the board meeting or Julie goes to the board meeting, or both of us go to the board meeting depending on how much love we've given a client in a [00:24:00] certain period of time.
[00:24:01] And they're also the ones that are successful. Don't need an argument and therefore not me. Um, and the ones that. Um, successful do need an argument and therefore me, so we just work it out. Um, and we share the workload between me and Joe. Yep. Um, um, it was my business partner. She started with the business in 2013 and, uh, I gave her some shares in 2015 and she, her background was a large.
[00:24:33] Uh, bank, um, 40 or 50 in their finance function. She was the head of the management accounting and reporting business performance team. Um, and so she helps architect some of the spotlight and fathom reports that we do. And she's, um, a lot less argumentative and therefore good, uh, going through the sort of detail with people that don't.
[00:25:00] [00:25:00] One, an argument. They just want the detail. So, um, we split up the work between, she does all the budgeting work other than the strategic piece. Um, and she does all of the sort of in-depth analysis stuff that I can't be bothered to do anymore. Yeah.
[00:25:16] Audience question: [00:25:16] Yeah.
[00:25:16] Paul Shrimpling: [00:25:16] Cool beans. So, um, while we're working remotely daily huddle at nine 15 and two o'clock
[00:25:23] Audience question: [00:25:23] they're very
[00:25:24] Luke Smith: [00:25:24] brief five minutes.
[00:25:27] Paul Shrimpling: [00:25:27] Right. Um, weekly SMT. How long does that take? Sorry, I didn't catch that or team rally. Okay. So the day, a little to everybody, presumably.
[00:25:36] Audience question: [00:25:36] Uh, no. So it's just me,
[00:25:38] Luke Smith: [00:25:38] Johnny, George, Julie, and we're just taking on it and you manage your Ricardo. So it's just the managers at, above in the daily huddles. Everybody I've said to me, me, me and Julie, and I don't go because Johnny's in charge of that group.
[00:25:51] Um, and, um, weekly it's I run it and it's Jules and the managers and, uh, [00:26:00] monthly it's just chills. And I going through the risk register and the financial performance. Right
[00:26:06] Paul Shrimpling: [00:26:06] misread. You said w w what do you mean by that? Yeah,
[00:26:09] Audience question: [00:26:09] so grownup businesses have decent corporate
[00:26:11] Luke Smith: [00:26:11] governance around risk mitigation, and, um, we run risk registers for both purpose and our clients as part of the VFD service.
[00:26:21] So we look at. Um, death, divorce and defection. So, um, death isn't death, although at the moment probably could be, um, but death, uh, in terms of, um, the client will go out of business. What are we doing to mitigate that risk divorce? Um, we want them to leave. What are we doing about it and defection, they might go somewhere else.
[00:26:42] What are we doing about it? And we look at that for both clients and staff. And then we look at, um, regulatory, AML risk and also strategic risk around not hitting our goals for the year. So, um, that's about two hours, um, something like that a [00:27:00] month. Um, and then the rest of it is, um, just looking at overall financial performance of the business and trying to look at the clients and understand are they met?
[00:27:12] Generally, if they're making more money than they were last year, we don't have anything to worry about. It's the ones that are going in the wrong direction. How do we give them some more time?
[00:27:22] Paul Shrimpling: [00:27:22] So within that, then Luke, how are you tracking and measuring the success of purpose?
[00:27:31] Luke Smith: [00:27:31] Uh,
[00:27:32] Audience question: [00:27:32] well, so we were just, um, w we, we track the success
[00:27:35] Luke Smith: [00:27:35] based on the increase in profitability.
[00:27:37] It's then it's not a great metric because it's not the only thing that we need to worry about. There are two or three leading performance indicators. So, um, one is that they get their management accounts at Lea within a month of month end. Um, the second one is they get their board pack at least 48 hours before the board meeting.
[00:28:00] [00:28:00] Um, and the third one is they're increasing their profits. So those are, if, if we get the numbers out quickly, they've had enough time to review them before the meeting and they're making more money. People don't leave.
[00:28:12] Yeah.
[00:28:14] Paul Shrimpling: [00:28:14] So does that mean you're taking responsibility for your
[00:28:16] clients
[00:28:16] Audience question: [00:28:16] making more money
[00:28:17] Luke Smith: [00:28:17] then?
[00:28:19] Well, otherwise we were pointless, so yes. Yeah. The, the only justification in that 15, 17 grand more fees is that they're more successful. Year on year. Yeah.
[00:28:31] Paul Shrimpling: [00:28:31] So there's, there's no option for steady state in that setting.
[00:28:34] Audience question: [00:28:34] Uh,
[00:28:35] Luke Smith: [00:28:35] one, one of them said last year, my wife doesn't want me to grow the business this year, so I'm not coming to meetings anymore.
[00:28:41] I just want the account. So I was like, all right, fair enough. Cause I don't want to push him into a situation where he's always growing. Um, but I also did say, you're going to, you might regret that a couple of years down the line. So, um, you know, he says choice, um, but we did reduce fees or bit, we made [00:29:00] more profit because of the way we changed the pricing.
[00:29:02] But anyway, um, he's just recommended his best mate for, for exactly the same fees as him. So that obviously didn't go badly. Yeah. Yeah. Very
[00:29:12] Paul Shrimpling: [00:29:12] good. Very good
[00:29:13] Luke Smith: [00:29:13] lyric on the tech fund. Um, cliff question again, Chris, do you want to unmute and come in?
[00:29:19] Paul Shrimpling: [00:29:19] Um, yeah, you mentioned, uh, that, um,
[00:29:23] Audience question: [00:29:23] you did a spotlight and fathom, but I thought that they do a very similar job really.
[00:29:29] So there must be something that you're using in one and not the other for some reason. Yeah. So the rest of my team and
[00:29:35] Luke Smith: [00:29:35] total pains and they've, won't remove. Uh, and I still think fathoms better that that's where we are. And we're we're fathom is really good for, um, if I was an in-house FC, there is absolutely no doubt.
[00:29:50] Fathom is the way forward, but a lot of the clients prefer the simplicity of the spotlight reports. So, um, we're currently making a decision about next [00:30:00] year. I tried to get the whole business to move across, but they didn't like, they all got a bit grumpy and they didn't like it. But fathoms just brought out a new version of consolidated forecasting.
[00:30:10] That is really good. And so we're currently going through, I'm trying to convince them all that they. They should move. Um, but what we will do is we'll use fathom for in-house where we don't need to produce reports regularly. And we'll use spotlight for, for clients who just want a simple format. Um, so we will end up with two systems, which isn't great, but I'm not backing down.
[00:30:32] And, uh, they won't move wholesale. So there has to be a middle ground
[00:30:39] Paul Shrimpling: [00:30:39] that leaks mix with the middle ground. That's interesting.
[00:30:44] Audience question: [00:30:44] It's always a balanced boat. It's just
[00:30:45] Luke Smith: [00:30:45] a, yeah. Yeah. Very
[00:30:49] Paul Shrimpling: [00:30:49] good.
[00:30:50] Luke Smith: [00:30:50] Very good. Um,
[00:30:53] Paul Shrimpling: [00:30:53] what, what, what challenges do you see or have seen and see going forward around this [00:31:00] Luke centric?
[00:31:01] Business that you seem to have.
[00:31:04] Audience question: [00:31:04] Yeah. Well, you know, the biggest problem that we've got is
[00:31:06] Luke Smith: [00:31:06] not obviously scaling is hard, but the plan has always been the over, over the next few years. I think we've probably got at least half of the client base who are baby boomers who are looking to slow down or stop.
[00:31:21] Um, the plan we've lost a couple of clients. As a result of them being
[00:31:28] Audience question: [00:31:28] bought by bigger competitors. And there's not much you can do about that when there's a finance team of 10 sitting at head office.
[00:31:35] Luke Smith: [00:31:35] So, um, the way to protect that revenue is to buy the client. So, um, I'm currently, we're currently going through a process.
[00:31:45] We've raised some money, we're creating a local business fund. Um, and we should touch words. Um, have our first acquisition on the 1st of January, there's another to plan for next year. Um, and then I [00:32:00] just become chairman of a bigger group and don't have to worry about the I'm just consulting for myself most of the time at that point.
[00:32:07] Audience question: [00:32:07] Um, so in
[00:32:09] Luke Smith: [00:32:09] terms of guiding purpose,
[00:32:11] Audience question: [00:32:11] Very
[00:32:12] Luke Smith: [00:32:12] difficult to do. Um, Johnny and Georgia getting there slowly, but their heads are too in the weeds at the moment. So, um, they can, they will be able to do it over a period of time, but they need to do the reading. Um, and the reading does take time. You know, it, it, it does take time in terms of the guys on the call.
[00:32:33] Scaling. There is a difference between advisory and consultancy and I've not defined it well, but the difference as far as I can tell is that advisory is, this is your debtors days. These are the three ways to change your debtors days. Consultancy is you've got a problem. Let's get a whiteboard. And scaling consultancies, incredibly difficult scaling [00:33:00] advisory is not because the templates that you build in spotlight promote those conversations anyway.
[00:33:06] Um, and Johnny and George were very good at doing that. What the clients won't get, that they, some of them get the moment is that strategic view of the world. And the way that we're changing the business model for next year is they're going to start paying for Julie and I as non-executive directors.
[00:33:23] Rather than as accountants and they'll pay the boys for the advisory piece.
[00:33:28] Paul Shrimpling: [00:33:28] So you make an, a real distinction in your clients' minds between
[00:33:31] Audience question: [00:33:31] the two. Yeah.
[00:33:32] Luke Smith: [00:33:32] We're effectively becoming nets for them. And you know, it's taken a long time to realize that that that's the way forward because I was doing both roles.
[00:33:43] But you know, when you talk to people like Ainslie or Steve PI or. Paul or any of the people around the industry a lot, there is you don't believe that what we're doing is advisory. They think it's management consultancy. [00:34:00] And I think they're probably, I think they're right. So the advisory piece is actually not that challenging.
[00:34:05] Get some really good graphs together. And then help your, and the other thing you can do, which is perfectly acceptable is do some videos. So this is your debts. As they graph, if it's going up, this is the issues. If it's going down, that's the issues. And these are the three ways people do it. I mean, that's easy to, to scale.
[00:34:22] Um, the difficult bit is, um, where do I go? What am I doing? How do I deal with this member of staff? How most of the conversations we have at the board meetings are either management or staff problems. They're not. Accountancy problems. Brilliant
[00:34:40] Paul Shrimpling: [00:34:40] point, I think quite major in a lot of people's eyes is you work out just sticking with advisory.
[00:34:45] You work out the graphs, build some, um, you know, five minute videos or whatever around that, and the three ways to fix it.
[00:34:54] Audience question: [00:34:54] Um, aren't you just giving away what to do?
[00:34:57] Luke Smith: [00:34:57] No, no, I'd say I disagree [00:35:00] with pretty much everybody, Martin beset and all of them around. Um, they say give everything away for free.
[00:35:06] Absolutely not. If you're part of the gang, you can have stuff if you're not you don't. And, um, you know, we charge, we're basically a, you know, a constant MBA course for small business owners. And if you're giving away the whole course, then. The only value you've got is if you pay for it as a personal trainer, you go to the sessions.
[00:35:28] Whereas if you don't, you don't. So, um, you know, I, I would say that you don't give away anything. You do, you know, if you've got staff, you don't feel confident talking about that's a state and what to do, that's the problem, wrong people, but just if the conversation turns to. Human problems. And you don't want it to resource up to have those conversations partner with an HR or people consultancy and get them to help.
[00:35:56] And then, you know, we've, we've toyed with, with the [00:36:00] acquisitions that we're doing, um, of the client base, we're creating a virtual board. So we're going to have a marketing director, a company secretary, uh, obviously us as accountants, um, and start to create virtual boards for clients where they're getting the right advice from the right people.
[00:36:18] Once a month, they bugger off and do whatever they need to do and then come back and we see how they've done.
[00:36:25] Paul Shrimpling: [00:36:25] So it's no longer just about purpose, the accountancy management accounts, advisory consulting piece. We've actually got an HR person. That's part of the group
[00:36:34] Audience question: [00:36:34] marketing
[00:36:35] Paul Shrimpling: [00:36:35] person, part of the group.
[00:36:36] Um,
[00:36:38] Audience question: [00:36:38] will you own them or, well, so we've, we've tried. We will do next
[00:36:43] Luke Smith: [00:36:43] year. We tested it last year. Um, with both we set up a technology team, we set up a. HR team and they were the wrong people. I think the principal was right, but the people themselves were wrong. You actually need someone quite. Independent.
[00:36:58] And grown-ups quite an [00:37:00] expensive investment because they need to be able to manage themselves and be credible with the client straight away. I didn't have the time to manage the two that the people that we brought in, but absolutely, you know, I do stray into areas that probably shouldn't sometimes around marketing and stuff like that, but, um, When you go on this virtual board, if they're willing to pay, you know, a grand or two a meeting, which, which most of them are a million quid turnover, then they can get some really good advice from some really clever people with the right skill sets.
[00:37:31] Yeah, yeah. Yeah. Hmm.
[00:37:35] Paul Shrimpling: [00:37:35] So I just want to ask this question just cause it, um, and it's more of a statement than any than the question really around if you've got, if your clients are turning over between
[00:37:43] Audience question: [00:37:43] a million and. 15 million. Um,
[00:37:48] Paul Shrimpling: [00:37:48] if, if for, just for the sake of argument, the average turnover of your clients is five for the sake of argument, a new challenging on average 25 grand per client.
[00:37:58] Um, I'm not on the Campton, so I can't [00:38:00] quickly go. What's the what's 25 grand as a percentage of
[00:38:02] Audience question: [00:38:02] 5
[00:38:03] Luke Smith: [00:38:03] million without the kid. I'm too tired. Now
[00:38:06] Audience question: [00:38:06] I don't, I don't respond to the word to counseling
[00:38:08] Luke Smith: [00:38:08] anymore,
[00:38:10] Audience question: [00:38:10] but,
[00:38:12] Luke Smith: [00:38:12] um, yeah, it's not a lot. Is it? Yeah,
[00:38:16] Paul Shrimpling: [00:38:16] I just, uh, you know, it's just one of the questions that I've been, I've been working with some live large, large firms recently, and I'm going, you know, let's just, let's just do a quick assessment of a random set of 20 clients and just see what your fees are as a percentage of the turnover of the business.
[00:38:32] And if you want to look at the percentage of your fee as a percentage of that profit of the business, you can, if you want, but actually you can't control that. In the, in the short-term anyway. Um, and all of a sudden they're ranking themselves, um, or ranking their clients in terms of, you know, whether it's 1%, 2%, 5% or
[00:38:49] Luke Smith: [00:38:49] more.
[00:38:50] Yeah. I, I think, um, you know, generally speaking people tolerate 1% and when you get to, you know, w we're 20 grand on, [00:39:00] um, on a million. So that's not obviously 1%, that's 2%, but, um, you know, you, you it's, it's quite it in compliance work to, you know, 1% of 500 grand, five grand fee easy. Yeah. If, if they're up 5 million, they probably won't spend 50 that they probably spend 35 or 40, but again, it depends, you know, a bookkeeper in Jersey.
[00:39:23] It's currently
[00:39:23] Audience question: [00:39:23] 37,000 pounds a year.
[00:39:25] Luke Smith: [00:39:25] So, you know, if we can, um, I know it's mental, right. But, um, it, it, you know, if, um, if you can outsource that for 18, that's obviously a good thing to do. Yeah. So that's where this whole financial control thing has started. And that is very scalable. Because it doesn't involve me doing anything.
[00:39:47] Um, you know, it's the boys setting up proper controlled processes and it saves clients a fortune. Great. I'm Luke, John Jonathan has got a follow-up question in terms of the tech. [00:40:00] Yeah, just regarding all the different softwares you
[00:40:02] Audience question: [00:40:02] mentioned earlier, you sort of
[00:40:03] Luke Smith: [00:40:03] use, I think it's the 26 different apps. Do
[00:40:07] Audience question: [00:40:07] you, do you do deals with the different app companies
[00:40:10] Luke Smith: [00:40:10] to buy licenses for your clients?
[00:40:12] Or do you get your, and therefore recharge them for those
[00:40:15] Audience question: [00:40:15] licenses? Or do you just get the clients to sign up to the different softwares you want? But the reason I ask, sorry, is
[00:40:21] Luke Smith: [00:40:21] I just had a quick look at fathom cause I've not seen it before. And it just struck me as quite expensive and also the look to them when woo.
[00:40:27] Audience question: [00:40:27] There's always a deal, Jonathan,
[00:40:29] Luke Smith: [00:40:29] always a deal. So, um, you know, we could get you in touch with Anthony Shaw, we'll sort you out, but, um, I think, um, we, we don't charge for, um, spotlight or fathom. We obviously do charge for zero receipt. We make a profit on CRO receipt, bank harvest. Um, Things like the quoting software, we get them to pay for themselves because there's no inside partner program.
[00:40:55] So it really depends which software company it is and whether or not they'll give you a tickle. [00:41:00] Um, do you put all of, so from your perspective, I know, I know you have, uh, uh, in international gods to spotlight fathom, but if it was up to you, would you put all of your clients on fathom or is it select clients?
[00:41:11] Audience question: [00:41:11] I
[00:41:12] Luke Smith: [00:41:12] did try to do that last year and there was a revolt, so, um, you know, mutiny on the, on the bounty. Um, and we spent a lot of time and effort trying to get them across. Um, but yes, I think so, because. If you're doing the higher level advisory stuff, um, the sensitivity analysis, the trend analysis, the goal seek the there's so many cool things that they do around KPIs around.
[00:41:43] Um, it's a really, they've really thought about it. And they've got a lot of big businesses on there. I think, hang on. He said they've got 50,000 clients something ridiculous. Um, whereas the spotlight guys. It does what it says, and it's very good. We've used it since we started and we still [00:42:00] continue to use it.
[00:42:01] Um, but, um, it is sort of cookie cutter. It's a lot more cookie cutter. So, um, Yeah, but we should probably start charging for fathom. So we'll do that. So that's been useful today.
[00:42:18] Paul Shrimpling: [00:42:18] Very good. Okay. Folks. Now I promise, look that so we, that we don't have to this conversation on the 11 o'clock hour. So we got the 13, 12 minutes. To go. So if you've got any other questions you want to ask, you need to rush them off into the, uh, into the chat group, but I'll keep going until they show or, um, the, um, talk to me about your attitudes and opinions about focusing on a niche,
[00:42:47] Audience question: [00:42:47] please.
[00:42:48] Luke, would you. Yeah, well, it's, it's, it's difficult to, um,
[00:42:53] Luke Smith: [00:42:53] obviously we, we aren't niche. So people say, well, you're not niche because you're one client in each industry and we've got 40 industries. [00:43:00] Um, but our niche is 1 million to 15 million, um, five to. 200 staff and the problems that come about as a result of scaling small businesses from management by pizza.
[00:43:15] So under 12 people to, um, sort of 50 people, and there's a lot of growing pains and there's a lot of good books. So, um, uh, Daniel Priestley did it, does it, does it a really good LinkedIn article that he did on the entrepreneur's journey. And so we stole a lot of that. Um, and, um, talk about the desert and businesses going from 12 to 50 people and what it costs to introduce management overhead and other owning staff into the business.
[00:43:47] Um, So I've never thought, well, I wish I did doctors or I wish I did dentists or I wish I did. Probably we, we, you know, while in Jersey we wouldn't have scale quicker. There's like 10 of them. But, um, you know, in [00:44:00] terms of, um, yeah, I don't know how you can do. Advisory to the level that we're doing it and work with competing clients, because anyone that talks to me about Chinese walls is a liar, uh, in my humble.
[00:44:16] And, um, you know, especially over here, it's just too, too small mastermind groups. Don't work over here. We've tried that and. One of the, one of the people in the room is related to one of the other's partners who then tells them something that they shouldn't have done, you know, half a degree of separation.
[00:44:32] So, um, we've had to chose the path that we've chosen. I think if I was in the UK, There's definitely value in, in marketing and niche. I probably have five or six businesses with
[00:44:44] Audience question: [00:44:44] just different
[00:44:45] Luke Smith: [00:44:45] websites with,
[00:44:47] Audience question: [00:44:47] within the, on them.
[00:44:48] Luke Smith: [00:44:48] Um, and a member of staff, uh, for each, but, um, all the problems are the same, you know, it's.
[00:44:56] There's, there's very rarely a new problem that comes up in the [00:45:00] meetings. Uh, and I have to check myself now because I know what's coming and I'm a bit quick to go, or this is how you, and I just got to let them finish, but it becomes quite tedious after seven years. So, um, you know, it's just trying to be patient and, um, You know, the best consultants.
[00:45:20] So Paul pulled on is incredible at helping people come to their own conclusions. Whereas I get bored really fast and go, this is the problem, and this is how we solve it. So, um, I need to work on that, but, um, yeah. Do you need to work on
[00:45:34] Paul Shrimpling: [00:45:34] that? You know, cause it's, is it, you know, what do your clients actually
[00:45:37] want?
[00:45:37] Audience question: [00:45:37] Well, so this is it. So they're all sort of 40 to 60 year old white males,
[00:45:42] Luke Smith: [00:45:42] except for a couple. And they all think they know better. And three months after we've told them the solution, they come in and they've had this great idea. It's like, well, no, you haven't. That was my idea three months ago. But, um, so actually I think, yeah, I do
[00:45:56] Audience question: [00:45:56] well, I don't, I do it in a sort of, Oh, I'm sure
[00:45:58] Luke Smith: [00:45:58] we've talked about that before, [00:46:00] you know, side of the way, but it's, um,
[00:46:02] Audience question: [00:46:02] I think I would get changed quicker,
[00:46:04] Luke Smith: [00:46:04] which ultimately is the goal.
[00:46:06] If I was less direct. Um, but it's also part of who I am. So I know. And
[00:46:14] Paul Shrimpling: [00:46:14] then we're back to, you've got to be authentic about who you are, but actually if you can be more coaching in extracting the quality of the questions you ask. Um, as opposed to the, um, you know, smash the nose against the wall called brutal truths, and then see what happens, which, um, maybe a bit too much of a,
[00:46:35] Luke Smith: [00:46:35] there's a time for both, you know?
[00:46:37] And, um, I haven't got the balance. Right. You know, that's why Joel's is so good because she'd never argue with anybody. Um, and, um, we have a really good balance there between us, where if somebody needs to come up with their own idea, she's better to help deliver that message.
[00:46:53] Paul Shrimpling: [00:46:53] So what's what stopped you actually doing purpose in, in the
[00:46:57] Audience question: [00:46:57] UK?
[00:46:59] Luke Smith: [00:46:59] Uh, [00:47:00] yeah, just, uh, laziness and, um, you know, we've got a couple of London clients who, uh, charities or other things are like getting on the plate while I used to like getting on the plane once a month and coming over and saying, hello, but, um, No. I mean over overhead, there's no one doing what we're doing.
[00:47:19] We've got a really good reputation. You know, bankers will tell clients that if they're with us, they're more likely to get a loan, you know? So there's the ego thing and, uh, being, uh, uh, you know, Overweight big fish in a tiny pond is better than, than being an overweight, small fish in a massive pond. So, um, you know, that's where, that's where I am with that.
[00:47:41] And
[00:47:41] Paul Shrimpling: [00:47:41] I guess it doesn't fit with you wanting to be a chief minister of Germany.
[00:47:45] Audience question: [00:47:45] If we, if we can get 15 clients bought over the next five years,
[00:47:49] Luke Smith: [00:47:49] then I'll pretty much know everything that's going on. So, um, you know, there's, there's some benefits to that. And maybe
[00:47:55] if
[00:47:55] Paul Shrimpling: [00:47:55] the number of employees add up to a certain number, then they're going to [00:48:00] vote for you
[00:48:00] Audience question: [00:48:00] anyway, 93 votes, you get into government over here.
[00:48:04] So, uh, shouldn't be right quits
[00:48:07] Paul Shrimpling: [00:48:07] in that. So when, when do we come over and celebrate that in project 52 minutes,
[00:48:13] Audience question: [00:48:13] 20, 28 will be, uh, you know, going for, going for government once we've made enough money out of this and it all works well then, uh, The wages
[00:48:21] Luke Smith: [00:48:21] are terrible. So, uh, you know, we'll have to have a crack at it once the, uh, once I hit my number.
[00:48:26] Yeah.
[00:48:29] Paul Shrimpling: [00:48:29] Very good. Very good. I mentioned project 52. So once I once went out renounce, um, with Luca, mine, good lady, wife, and we, we drank too much champagne and ended up buying the 52nd part of the pub. That leaks and, uh, which we still own. I think it's still going
[00:48:50] to lots of guts. Um, right. I am doing book apart from my yet parting shots, you know, I always ask, uh, w w [00:49:00] what's been the most value in this discussion for you then?
[00:49:03] Luke Smith: [00:49:03] I'm
[00:49:03] going
[00:49:03] Audience question: [00:49:03] to start charging for fireman spotlight.
[00:49:05] Luke Smith: [00:49:05] So, um, you know, we're probably
[00:49:08] Audience question: [00:49:08] Jonathan checks. It I'll make the intro to Ansley and get your discount.
[00:49:12] Um,
[00:49:13] Luke Smith: [00:49:13] and, um, I need to, I'm gonna bother to change about the directness, you know, 43 now can't be bothered. Um, but I think in terms of the prospect, I should be thinking more about. What type of individual is coming. Um, and I should be thinking more about how we understand what they're thinking and therefore how I change my language when I'm having that conversation.
[00:49:41] So, um, Martins taught me a few good things around, um, sales and process, which we are at which we have implemented, and that has worked well. So always getting a second meeting and a few things like that. But I think wha where I'm failing in the conversion is, um, [00:50:00] Understanding their motive before they come and not just sometimes reacting to it and sometimes not reacting to it.
[00:50:06] I think it needs to be better understand that their motive for being in the room. Right. So
[00:50:12] Audience question: [00:50:12] sometimes not what they say, it's,
[00:50:14] Paul Shrimpling: [00:50:14] you know, it's the thing of time what we're saying, isn't it? Yeah. And I think maybe, you know, your, your comments earlier about, sometimes you want to jump into quick that, that that's in that same space,
[00:50:22] Audience question: [00:50:22] isn't it?
[00:50:23] Luke Smith: [00:50:23] Yeah. Yeah. Things not easy. But it's rather important. Well, yeah, we're doing okay.
[00:50:33] Audience question: [00:50:33] I
[00:50:33] Paul Shrimpling: [00:50:33] guess, I guess one of the, I just see a Luke is that, um, you know, we're having a conversation with you seven, eight years from, you know, kick-starting this. It's all working you average fee, you know, very high, you know, modest number of clients.
[00:50:49] You're now starting to buy clients out. You know, the, the it's, it's a different space from the vast majority of firms who are on this journey towards either advisory or consulting. I think that's been very [00:51:00] valuable, actually. It's just making that distinction between advisory versus consulting in that one, scalable.
[00:51:06] And one is. Yup. You need someone of a certain attitude, personality and skillset. Yes. You can learn skills, but there's that personality and attitude piece, which comes with it as well. And maybe experience. Um, so that that's been really valuable, but it's, it's trying to cut through and what we're going to do in the next session with these guys is just go, right.
[00:51:25] How do we unpick what we've learned today, uh, that applies to each individual firm or rather each individual person on the session today that, um, isn't loop now it's, you know, seven years ago,
[00:51:38] Audience question: [00:51:38] I'll give you that. I, I th I think, you
[00:51:40] Luke Smith: [00:51:40] know, genuinely the where, and it still happens right now. Where you can highlight something in the numbers that they didn't know that is gold dust, you know, still to this day, if you can change the way you're recording revenue or change the way you recording [00:52:00] costs.
[00:52:01] And you say this line that the percentage of revenue on this line has changed compared to that. Why is that? And is that a good thing? You don't have to know the answer, but you've, you've actually changed the conversation too. This is, this is what your business is doing. Did you know that the answer will be no nine times out of 10?
[00:52:20] And then is that a good thing? Well, it either is, or it isn't, and that's where I think they feel that, um, your you've got their back and you're thinking about it and that's a really simple change. You know, the, the, the we've struggled for years on the definition of cost of goods sold. And I know that sounds pathetic, but, but, but that the definition of cost of goods sold, um, will define the success of virtually every business.
[00:52:49] Um, in terms of really understanding pricing and performance. And, um, so anybody that's got a pub that just throws, um, the cost of the booze into, [00:53:00] into a cost of sales is very naughty and needs to stop doing that. Yeah. Yeah. And if there's
[00:53:07] Paul Shrimpling: [00:53:07] anything that comes into good out is actually appreciating and then digging down, use your word to the granular level, that cost of goods across the sale.
[00:53:16] Yeah. Um, and then bolt onto that some now some knowledge about good pricing. Yeah, yeah. Nine tenths of the way, or is that too?
[00:53:24] Audience question: [00:53:24] You know, I, you know, most of the clients that have
[00:53:27] Luke Smith: [00:53:27] been with us for seven or eight years, and one of them said, we're going to buy this business and then we'll do your usual Trek of increasing pricing.
[00:53:33] Um, and that's, uh, you know, the, uh, implementing value pricing by Ron Baker is well worth the 133 pounds each. For it. Um, and, um, you know, that that's like another life-changing book on, uh, on consultancy,
[00:53:53] Paul Shrimpling: [00:53:53] more valuable discussions with the leaders of ambitious accounting firms at humanized, the numbers.online, [00:54:00] you can also sign up to be notified each time a new podcast is made available this podcast series humanized, the numbers has been made possible. Thanks to the support. Of our sponsors, my work papers, advanced track and VFD pro visit humanized the numbers.online, click the logo of each sponsor.
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CHAPTER MARKERS
START TIME | CHAPTER TITLE |
|---|---|
00:01:32 | Introduction |
00:04:47 | How to increase fees |
00:07:50 | How can I help? |
00:11:19 | First meeting with clients |
00:17:52 | Timesheets |
00:21:34 | Technology for pricing |
00:22:32 | Daily/weekly routines |
00:26:06 | Risk register |
00:27:25 | Spotlight vs Fathom |
00:29:19 | Winning advisory fees |
00:30:44 | Challenges in building the business around 1 person |
00:34:36 | Part of the gang? |
00:40:00 | Using Fathom and Spotlight with your clients |
00:42:42 | Focussing on a niche |
00:44:56 | Brutal truths vs coaching |
00:46:53 | Staying in Jersey |
00:48:54 | Conclusion |
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