The Context of AdvisoryNov 30, 2023
Yesterday I attended the Xero Roadshow here in Auckland. My god, it was fun!
The fun part largely came from getting to see and talk with people that I already know but rarely see, especially in person. This list included members of my From Bookkeeper to Business Owner coaching group, Xero team members from over the years, and a bunch of fellow ICNZB bookkeepers.
It helped that there was food and drink on offer throughout the day (thank you Xero), and plenty of opportunity for connection amongst ourselves and a chance to talk to the app exhibitors around the room.
I also appreciated the event time - 12:00 - 7:00 pm. I was able to visit a client for a training session, complete the last GST return on time, run a termination pay for a client, and hold a coaching session - all before hopping in an Uber to get to the event.
The context of advisory
Xero, MYOB and Reckon have long advocated for advisory services being the future of accounting practices. What was different in the message this year, which I appreciated as I have long been saying the same thing, was some context around which services can be placed inside an advisory services bucket.
The Advisory list, or Consulting services as I tend to call them but whatever, the name doesn't matter, can include services such as app advisory, training and implementation, cashflow and budgeting, and just generally helping business owners to understand their numbers by way of customised reports and meetings to discuss.
These are all services that bookkeeping businesses can, and do, offer as well.
But let's be clear, these are not bookkeeping services and you shouldn't be charging bookkeeping rates. These are cream-on-top services and as a general rule of thumb can be priced at twice your bookkeeping rate.
Which bookkeepers should be offering these services?
I'm not saying that advisory/consulting services are something to be offered by all bookkeepers. The spectrum of experience within the bookkeeping profession is wide.
The same can be said about accountants by the way. The spectrum of experience is equally as wide and you wouldn't expect a recent graduate to be offering advisory services.
You need to have a certain level of knowledge and experience to do this work, but even if you aren't at that level yet, it's something that you can aim for.
Do you know your numbers?
In my first business, consulting services - which for us back then was mostly software sales, installation, and training - made up 25% of the total revenue. It was awesome cream-on-the-top income.
Offering these services allowed us to not only get paid more but also to continue to learn and grow professionally, and to have challenging, ad-hoc projects to work on outside of our bread-and-butter bookkeeping services.
Nowadays, my current business has a focus on coaching and consulting, so that metric is completely flipped in the opposite direction.
As an aside, my team were all contractors and being able to offer them this type of higher-priced work meant that I could pay them more for this type of work as well. I couldn't raise their bookkeeping rate because you know... margins. But I could offer them this higher paid work when it came up which meant they could make more money overall.
Offering this work to my team (the ones qualified to do this work) also meant that as a business I could grow this side of the business instead of it being just me which would have been a constraint to growth.
Are you pricing correctly for advisory services?
So, my question for you is, are you offering advisory or consulting services, and if so, are you pricing these services correctly?
Is this an area of your business where you would like to see some improvement?
For some of these services, the line is grey when it comes to what's bookkeeping and what's advisory and this can be a tricky line to navigate.
But there are things you can put in place to help with that depending on whether you have a team, whether your pricing is hourly rate, fixed fee, or a hybrid pricing model, and whether you are clear yourself about what's bookkeeping and what's consulting.
Reach out if you need some guidance around this or if you have some thoughts to share on the matter.
The more that we can get bookkeepers to a standard whereby advisory services, at advisory rates, are able to be offered and delivered well, the better off for all small businesses including our own bookkeeping businesses.
Have a great day!
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