So now that we have defined the category, and we have defined the impact on small businesses, why start the journey? What is the compelling case for embracing transformation work?
Reason 1: You need to remain relevant.
Technology is displacing the bookkeeping profession. It’s automating bookkeeping and tax. It will eventually displace audit through blockchain or automate audit significantly through artificial intelligence and machine learning. So, if eventually, by 2025 or 2030, bookkeeping, tax and other types of cyclical, repeatable and predictable work are automated, we need to prepare ourselves, our practices and our succession for another type of work.
There are two responses to this technological disruption:
One: Leverage the machines. You increase automation within your own bookkeeping practice to increase scalability within your own bookkeeping practice, to increase profitability and to create adaptive capacity.
With adaptive capacity, you can focus on becoming an agent of small business transformation. The lack of adaptive capacity is the biggest barrier accountants and bookkeepers tell us they face as they embrace this kind of transformation work. But if you can automate, you’re going to increase scale and revenue so significantly and disproportionately to effort that you will have the capacity to focus on transformation work.
Two: Transcend the machines. This is the transformation work story. With all its grandeur for small business owners, technology cannot take the spare pieces of information; figure out the patterns; connect them to the unique needs of specific business owners, with their financial and business dynamics and cultural needs; assess all the different market trends and disruptions along with other variables; and generate an answer for that client. The day may come, but it will not arrive soon.
By supplying mentorship, business coaching, and even financial analytics, we stay part of the equation and we stay relevant. And more importantly, we stay far ahead of where the machines will ever be.
Reason 2: You need to prepare for retirement.
This is another big one. If you are preparing for succession (and even if you’re a millennial, you should be preparing for succession), it's like the standard speech “Start preparing for retirement now.” You should do it strategically with your practice. You should always be building a practice someone else would want to buy. If you are looking to retire in the short term, lean into transformation work and embrace the challenge; don’t lean away from it.
You have a tremendous amount of wisdom and ten or fifteen diplomas from the School of Hard Knocks, many more than the young folks. They haven’t suffered, endured and survived those hardships. You have. Put that knowledge and that wisdom to work.
The less effort it takes you to generate the same amount of billings or wealth, the more freedom you will have from the cyclical and repeatable work no longer being on your desk! If you’re preparing for retirement, transformation work is your way to work less and make more money. And it is a pathway for you to hand the service work your firm does to someone within the company, so you can build up a successor on an earn-in model. Or maybe you’ll sell off that division of your company and get your paycheck, but still make money doing transformation work for a fraction of the time while generating the same or more revenue. This isn’t theoretical; it’s happening everywhere as people are value-pricing their transformation work.
Reason 3: You can increase your price.
I make a bold statement here: You cannot value price without transformation work. A price increase without an increase in value is price inflation. And the market, including your own customers, will not bear that kind of inflation. Increases in price without unique and differentiating value results in price rejection.
When I talked about this topic on a podcast episode, we had one comment: “How do you do this value pricing when everybody around you is in a race to the bottom on price?” My answer was: Stop value pricing anything that’s commoditized: bookkeeping, tax or audit. Instead, value price transformation work which comes with an increase in wealth. Then bundle in the commoditized services around that value pricing. Then you can maximize the pricing return on the commoditized services by masking what you’re charging under the umbrella of greater value creation.
With value pricing, we price under the wealth we generate, rather than over the cost we incur, so the client is still receiving more financial benefits than what it is paying you. Then you’ve moved from the overhead column into the wealth generator column. They couldn’t be happier, even if tax return preparation and bookkeeping fees increase. To your client, it’s all one relationship.
Reason 4: We get to change lives.
This is the reason that Woodard embraced our vision: to transform small business through small business advisors. I’m deeply passionate about it. I know that if we can make small businesses better, we will make small business owners and their families better; their employees and their families better, and maybe even their suppliers and customers and their families’ lives better.
There’s an amazing one-to-many principle here that we can affect with leadership, by instilling purpose, by providing peace of mind, by generating work-life harmonization, by increasing profits and other things small businesses are asking for. But I think that it’s not just materialism; what clients really want is security. They want their dream protected. And I saved the best one, for last: we can give them real hope for the future, in a world where 65 percent of businesses go out of business or file for bankruptcy within five years. They need some hope. We can deliver it. But to get there, we’ve got to overcome the barriers.
Click to return to Part 4
Click to continue to Part 6