An increasing number of chartered accountants market themselves as gurus or experts. When encountering a person like this – in person or online – we need to ask, “Does this person truly possess the experience and education required to claim that label?” Once we’ve decided they’re credible, should we follow their business practices and abandon ours? This is the question we’d like to examine today.
On LinkedIn, for example, accounting advice is frequently posted about three specific, core business practices. They each have their merits but also come with a unique set of pitfalls.
1. Moving from chargeable hours to value pricing
Some experts believe the chargeable hours model is antiquated and needs to be eliminated. With this model, the more time a project takes, the more money a client will be billed, with no real motivation to do quick, efficient work. However, a switch to value pricing leaves no room for variables. Some clients will fit perfectly with value pricing while others will not, taking up far more of your time than expected in your agreed-upon value billing. Those extra chargeable hours must be captured or you risk not being properly compensated.
2. Moving Your Business to the Cloud
The Cloud has its benefits: The ability to work remotely, get automatic software updates, and no worries of data loss if, for example, you have a fire in your building. However, no one should dismiss the cloud’s potential for security breaches. Additionally, what if you wish to leave a company’s cloud-based application? Is there truly a clear path to actually retrieving your data? These issues must be taken into account.
The guru frequently suggests outsourcing lower-level work. For example, there are places in India where they’re trained in Canadian tax law. The labour costs are low and, with the time difference, work can be done overnight, ready the next day. However, security can again be an issue. Even after the work is done, your affiliate in India still has the client’s sensitive data. How will they treat it or use it? Is their network truly secure? Outsourcing can also affect the long term development of junior employees.
When it comes to new concepts from gurus or anyone else, it’s important to listen and keep an open mind. However, it’s equally important to measure their experience and be cautious about what’s being suggested. The tried and true model isn’t always broken just because it’s been around a long time.
For more on this subject be sure to listen to Episode 2 of The Vaive and Associates Tax Podcast, hosted by Rolland Vaive, as he discusses the LinkedIn Gurus.