How to identify business growth opportunities in an economic downturn

UK businesses are facing unprecedented pressures that accountants and bookkeepers will have to confront, both for themselves and for their clients, as 2022 draws to a close. Despite this, Carl Reader, Head of Accounting EMEA (UK) for Ignition, says that focusing on your core clients’ needs, selling them more additional services and becoming a stronger adviser by marketing your best specialist competencies can create growth opportunities in the coming year.

“While trends such as talent acquisition, sustainability, technology and automation of processes, including digital tax, will be in people’s minds, the main thing UK businesses will need to immediately confront head on are the effects of the war in Ukraine, such as the cost of living crisis, the pressures of rising energy prices and an economic downturn that will form a difficult background to the early months of 2023,” says Carl Reader.

“If you look outside the window or turn on the news in the UK, it’s misery. Businesses are closing their doors, we’ve all got higher gas bills coming in, we seem to be attacked on all sides, which is precisely why accountants and bookkeepers need to focus on growth.”

He has five recommendations for accounting professionals coping with the pressures on their own businesses, as well as those of their clients, that can boost their growth opportunities.

Carl Reader says: “You need to be mindful of what’s confronting the businesses you work with. Accounting firms are usually shielded from downturns, the effects are slow to reach them. But this is the first recession in my adult lifetime where the news of theoretical recession being reported in the media is coinciding with tough times on the ground in terms of real-time effects on businesses and their costs.”

Because of this, he says, the first thing accountants have to do is build a thorough understanding of what their clients are going through and the challenges facing them both as individuals and as businesses. For example, are they facing personal or business finance challenges that could be easily solved by more or restructured debt, tighter management reporting or simply by having someone with whom they can talk through their problems, who understands them and their business. “Some people just need a sounding board and to suggest they stop doing something and try something else instead.”

Developing your people’s soft skills, as well as ensuring their professional competencies are up to scratch, will be important for dealing with clients during this period, Carl Reader adds.

One of the lessons accountants learnt from the Covid-19 pandemic is that while many companies want advice, accountants were often unwilling to be seen as profiting as a result of the crisis, so they didn’t ask for appropriate payment for their services.

“Accountants tried to help people out and thought they would build future clients or client loyalty as a result,” Carl Reader says. “For many though it didn’t happen. Some businesses – the local pub or restaurant say, that has stopped trading at lunchtimes and has cut down to Wednesday to Sunday trading and is looking for staff – may not be able to afford your services right now, so it’s important to concentrate on businesses that are able to pay.”

Being able to read the room on which businesses are able to pay is essential, Carl Reader says, if you are to help clients better negotiate and survive in the downturn. “A trusted piece of advice for account professionals is to map out your clients’ needs and the services you can offer on a spreadsheet. In tough times you really need to do this because this is when your services really can keep them afloat rather than just be the icing on the cake.

“So prepare a matrix mapping all your clients’ current and possible needs. Standard services would be filing accounts, tax and VAT returns. But they’re also needing advice around personal debt, the structuring of business debt, preparing cash-flow forecasts and management reports. Annotate each of those clients’ needs and what you do for them. Put an X in those boxes for those services you perform for each client, then identify those who won’t want any additional services and those who might. It’s those black spaces in the ‘might’ column that will allow you to have a conversation with clients about how you might further help them.”

This is an important exercise that needs to be repeated regularly, Carl Reader says, as it identifies which clients will be responsible for your growth opportunities. Once you’ve identified them, you then need to develop your sales pitch and approach.

While the internet offers many ways of staying connected with multiple clients about industry news that affects them, such as upcoming regulatory changes, too many accountants and bookkeepers rely on platforms such as LinkedIn or email alerts to try and attract new business or upsell more services to existing clients, Carl Reader believes. “They came to rely on these during the pandemic and it’s easier to hide behind a laptop for many people. That needs to change.

“From a promotion perspective, in downturns I believe that by far the best approach to a sales pitch is not a cold email asking if they want management accounting, but an actual conversation with those clients where there is perceived harmony between them wanting the services you can offer and their being able to pay for them,” he says.

“The phone call should be from the partner who handles the client or the sales relationship manager,” Carl Reader adds. “It should first be a call about how the business is going and what the environment is like for them, and a sanity check to make sure the assumptions you’ve made about their business are correct.

“You need to structure a conversation so the manager you speak to can discuss the challenges they are facing and you should be asking, ‘How are you coping with the downturn’ and ‘is there anything keeping you up at night’ – very open-ended, which will indicate areas where you can demonstrate you can provide a benefit.”

Offering to dig deep into clients’ financial data and show how prices could be increased, new systems introduced or new market areas or business opportunities explored are useful discussion points. But he warns that an outright ‘go for the kill’ sales pitch might be off-putting as so many business owners are facing additional costs and competing needs for their cash.

“Instead, what accounting firms need to become skilled at is marrying the benefits and costs of the services they provide and showing how using them will actually increase their clients’ portion of the pie,” Carl Reader says.

The matrix approach outlined above and the conversations with clients that will follow have the added benefit of helping accountants and bookkeepers better understand what they do best themselves. This, Carl Reader says, provides a chance to open out their specific areas of competence and expertise to the wider market.

“This evidence allows accountants to say, ‘You know what, we’ve got a track record of doing this stuff. It’s no longer some hypothetical advisory work some guru’s told us to do; it’s no longer an option on our website that’s there because we think it sounds good. We’ve got proof that people want to buy it, that they bought it, and we delivered’. It’s at that point you can start to market it.”

Accountants might decide there’s a particular element of service they are better at or enjoy, or get more satisfaction from, such as cash-flow projection or restructuring. Alternatively, they might realise from the matrix exercise there’s an unmet demand for certain activities that will offer growth potential. “Whatever it is, they’ve used their clients as a test bed and what they’ve been successful at is what they should roll out,” Carl Reader says.

Again, he says that accountants shouldn’t hide behind technology now the world has opened up post-Covid. “You can get out and about, have face-to-face meetings, go to trade events, which is brilliant for those who will seize the opportunity to reach out to new secondary markets by being in places where other accountants aren’t.”

“Accountants have to learn the lessons of the pandemic,” Carl Reader says. “Many felt they would build client loyalty and that it felt wrong to commercialise transactions at such times, but the reality is you have to in order to survive and grow, and the start of 2023 is likely to be similar to the pandemic in many ways. You need to ensure you’re paid for the work you do and that clients understand this is a commercial relationship.”

Taking the pain out of some of the complex areas of client engagement where what should be trusted relationships can break down is where Ignition has a crucial role to play, says Carl Reader.

Ensuring you have agreed the right terms, conditions and service level agreements (SLAs) with clients before any work starts, and that the payment schedule is agreed – as are the fees for any additional work – will prevent any misunderstandings and awkward conversations at a later stage in your relationship. Ignition’s automated engagement letters ease that process, while its automated invoicing takes the pain and ‘staff effort’ out of reminders and chasing bills – and ensures you receive monthly payments so you can monitor your own cash flow’s peaks and troughs.

You can also act in an advisory way for yourself, Carl Reader says, because the Ignition business dashboard can help you look at cashflow and churn, and adjust your activities as you need.

Ignition makes it simple for you to sell, bill and get paid for your services – all in one place. Find out more by watching the online interactive demo.