Accountants and bookkeepers have been busier than ever since the pandemic. Burnout aside, they've been fortunate to have the hugely important role of guiding their business clients through tough times.
If there’s one positive to take from the Covid disruption, it’s the opportunity to consider what is important in life. Let’s call that our revised definition of success. For those of us in business, it’s never been more important to redefine the plan, goals, and actions that will ensure the business delivers us 'success'. In other words, defining the level of Time, Mind and Financial Freedom we want the business to provide. Let’s call that our revised definition of business success. Then, if you have employees, the natural extension is to consider what the business needs to deliver to your team - the revised definition of team success.
Read on for some practical ideas on how to link these three components of success (Personal, Business, and Team) together, to help you articulate the value of such conversations and planning with your clients.
Personal success
For many of your business clients, how they define personal success now is probably different from what it was in early 2020. For example, they may have wanted to travel the world, upgrade the house and car, or enjoy regular meals out followed by live entertainment. To secure this lifestyle, they needed to grow their business profit and were working huge hours - never finding the time to be with family or enjoying those meals out and entertainment.
Then lockdown happened and many of those goals were no longer possible; the excitement of overseas travel was replaced with excitement to just get out of the house. The goal to upgrade the car was replaced with upgrading the bike and entertainment goals reflected a board game or Netflix!
As the lockdown restrictions came and went, (and in many cases came again), your clients have probably emerged with new clarity about what is really important.
They might have found themselves thinking... the regular overseas travel is a no-go, the house or car upgrading less relevant, and the entertainment spending can definitely be scaled back. This will certainly put less financial pressure on them and their families.
As an example, let's crunch the numbers for a client to demonstrate how they can redefine success. Let’s say a particular client can now get by on 20k less per annum than before; if they were aiming for 100k profit, maybe 80k is now sufficient (and more realistic). Their revised personal definition of success might then be 80k income, working no more than 35 hours per week, enjoying spending time with family, and boosting their health and fitness.
Business success
The business is there to serve business owners; not the other way round. It should give your clients the cashflow they need personally AND the discretionary time to enjoy the lifestyle they choose. If we take our example above, your client's previous personal definition of success (100k earnings) meant they were working 60+ hours per week. They had very little time for family or exercise, and perhaps a regular sore head on the weekend due to enthusiastic ‘de-stressing’ of the alcoholic kind!
With a revised personal definition of success of 80k, they can reduce the pressure needed on the business to deliver that old level of profit. If all business costs remain constant, it could be that sales can drop by 10% and they’ll still achieve what they need from the business. Lowering the sales target could free up their time to make a better Business Plan - a plan for a smarter business, perhaps with higher margins and excess overhead costs removed.
Even in the current economic climate, there are many areas to improve results in their business including:
- The five ways to grow sales.
- Growing margin.
- Growing profit / reducing overhead costs.
- Improving cashflow.
- Improving return on investment from the team.
That plan is their revised definition of business success – a plan that gives certainty that they’ll achieve their new definition of personal success.
Success for the team
If that same client has employees, achieving business success is highly dependent on how well their team performs... and it’s likely their team has also reflected on what success looks like for them. Studies show that a happy and engaged team with a strong workplace culture will out-perform a team driven using the carrot and stick method. In the words of Peter Drucker, "Culture eats strategy for breakfast".
Redefining success for a team should include things like:
- Creating and living into an agreed set of Core Values
- Regular performance reviews and goal setting (i.e. the team defining their version of success in their role)
- Flexible working arrangements
- Reviewing their roles, responsibilities, and progression opportunities
- Reviewing remuneration, holiday, and perks (maybe it’s time for you or your clients to trial that 4.5 day working week to see if productivity remains the same - with an increase in loyalty, resilience, and overall happiness of the team)
Revisiting the above for all team members gives a clear understanding of what success means to them.
What will you do?
The best way to pull these three components of success together is to follow these five steps:
- Create a revised personal budget and define personal success - income needed, role, hours of work, and holidays.
- Update the Business Plan - a one-pager setting out the minimum viable sales needed to achieve the desired income, and the goals and actions to ensure it happens.
- Update the Annual Financial Forecast - the Business Plan put into numbers.
- Set up a system for ongoing reporting with accountability meetings (ideally with an independent coach).
- Have the team complete a reflection questionnaire followed by a performance review and goal setting meeting with the business owners.
There is no magic here - these five steps have always been important - it’s just that right now, they are all likely in need of a review. And, as the trusted advisor, you are best positioned to help your clients follow these five steps.
The Gap provides all of the required resources for you to redefine success for yourself, your business, your team, and your clients. Talk to our Sales Team today to learn more.
"There is no try. Only do or do not."
- Yoda