Adviser: Mixing up the ingredients for success

Link: Small practice guide

If only the secret of having a successful firm was as simple as mixing the right ingredients according to a known recipe?

That said, my research for the ICAEW has shown there are a surprisingly high number of firms that don’t appear to appreciate the importance of these issues.

The first two ingredients, having a business plan and having a financial strategy, are the points we make most often to our clients. After all, that’s the business we’re in.

The third – being flexible enough to change banks to get a better deal – may be more difficult if you depend on your banker to give you leads for new clients.

But it is a sobering thought that fast-growing businesses are nearly twice as likely to have changed banks, or seriously thought about doing so, in the past three years. What price loyalty?

Two of the top 10 ingredients relate to training. In summary, these are train hard and train everyone. In the profession, we have a tendency to focus on technical training to comply with CPE requirements – but should we spend more on our business, management and soft skills training?

In the survey, almost no small firm that had invested significantly in their people over the past 12 months was in decline.

It is interesting that many of these magic ingredients reflect comments made in the recent ICAEW report The Profitable and Sustainable Practice.

More than 80% of the fastest growing businesses in the survey stick close to their core business area. They don’t diversify dramatically, and launch few new products or services. They ‘stick to the knitting’.

Fast-growing business owners are more likely to work less than 35 hours a week – the figures lend support to the notion that working long hours is not the key to achieving fast growth, but working smarter probably is.

Motivation matters. Cranfield’s studies showed that employees were generally more concerned about job satisfaction and taking on responsibility, than most owner managers gave them credit for. Coaching and motivating teams were areas in which fast growers and the rest differed sharply.

Cranfield also identified two other factors; successful businesses shop around for goods and services (often found online) and they have a website and are high users of email.

With a major cost for professional firms being staff costs, perhaps these factors are less important. But maybe we should be outsourcing more of our work to low-wage economies?

Nothing earth shattering, perhaps. But how many of us could put our hand on our hearts and say we are content with the focus of our efforts in these areas?

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