We are proud to announce SAIBA's September Practice of the Month, Ardent Accounting Tax Advisory. This practice of excellence in Tokai, Cape Town and is succeeding under the leadership of Directors David van Niekerk (CA(SA)) and Carel Nieuwoudt BCompt (BAP(SA)). We took the time to visit Carel and David to see what makes their practice stand out. Read this interview and learn the importance of keeping a positive cashflow
What were the biggest mistakes you made when you started your practice? What would you have done differently?
My partner and myself, who is a registered auditor, worked and managed an audit firm for approximately 15 years. During this time, we were fortunate to gain a lot of experience in how to run a practice and what not do. We’ve been very lucky in having dealt with many clients over this period, specifically in assisting new businesses grow and manage cash flows. Our experience in this regard, and something we were fortunate to have avoided ourselves, is how difficult the early years can be on maintaining a positive cash flow.
Having helped many clients deal with this very issue, we knew what we needed to do in order to shield our new firm from mistakes often made by new businesses. I think one of the biggest mistakes made by new practices, and new business in general, is where the owners equate turnover (often a big figure) as an indication of how much money a business has, and they remunerate themselves accordingly with little consideration to the bottom line (often a much smaller figure, sometimes even a loss). We maintained our income at the same remuneration we were paid previously, and have done so with the view that building up cash reserves and investing money in improving how the firm runs (better internet, developing new website, running email in the cloud, etc) yields better results than stripping the business of liquidity.
In an average week, how much time do you spend studying or reading on new developments or attend CPD events?
Due to the nature of our industry, and the constant changes in legislation, we try to attend to seminars once a month. That is apart from the daily research we conduct to ensure we provide a service to our clients that is informed and remains relevant at all times. It is also important that our staff gets training and updates on a weekly basis, and we send our staff to workshops during the year as well as provide in-house training and discussions to facilitate broadening their knowledge base.
When you started your firm where did you get your clients?
We were offered the opportunity to buy over our ex employer’s audit and accounting practice that has been in business for over 30 years. Since the takeover, we have secured more clients, who were referred to us from the existing clients, which we believe is a tribute to our service. We’ve found a good trend where now that clients know they’re dealing with the business owner directly, they are much more inclined to recommend our services to other business owners. It’s important to note that it is vital to maintain a relationship between the firm’s owner and the clients, and not to delegate this task to managers or employees.
How did your firm change since you started?
We’ve taken steps to ensure there is always a direct line of communication between our clients and us. In this, we have our personal business emails, our office number, and we give clients our cell numbers. Under the previous owner, it was encouraged to only communicate via the office line or email.
We’ve also taken steps to communicate to clients that we are actively interested in their business and tax affairs.
We don’t like taking on clients we don’t get to know, and it is problematic for larger firms where they have so many clients it’s difficult to keep up with them. We share knowledge and information about client business between our staff to ensure that the firm’s collective memory on clients is maintained and pervasive. If one of us is not available, we try to ensure that regardless of who a client speaks to, they will be speaking to someone who knows them and their business.
We’ve also actively updated internal IT systems and data storage, moving many of these onto integrated platforms that are accessible from anywhere via the internet. We’re currently in the process of replacing the client management platforms with one fully integrated system hosted in the cloud, which will become the electronic version of our firm wide “collective memory of clients”. It’s an exciting challenge!
What is the one thing in your firm that will ensure your firm achieves success in the future?
We can use the run of the mill fancy words and catchphrases like “striving for perfection” and “providing efficient service delivery” to describe our approach, but that doesn’t truly reflect our interaction and approach to clients.
Simply put, we have a “real world” approach to our clients – we recognise business is nothing more than a group of individuals working together to achieve something, and we treat our clients as individuals. We are aware of their individual needs, concerns and idiosyncrasies, which is why it is so vital that we maintain a wide collective memory of each client. Having a genuine interest in our clients helped us continue to expand our firm, and we believe will continue to help us achieve success in the future. I think clients recognise and appreciate our straightforward and real world approach in offering them our services.
What do you see as the next growth area for your firm?
There is a shortage in services offered to small and growing businesses that need professional assistance and guidance, without having to pay huge amounts for the expertise. With our years of experience in the audit, accounting and tax fields, we offer services to new and growing businesses at reasonable costs with the view of actually educating our clients in these areas. By educating our clients, it may mean that instead of them paying us to perform the accounting function for them, they are able to run this in-house at no additional cost other than time. Yes, this might appear to be counter-intuitive in that we end up earning less from those clients, but size of fees is not where we find value in our services. We want to help build better businesses.
What percentage of your revenue comes from the following work: tax, accounting, consulting?
Tax 40% Accounting 55% Consulting 5%
How do you select the right employees for your firm?
It is vitally important that the employee should have the necessary qualifications and work ethic our clients would expect from the firm. We interview based on culture fit, as well as ability, as opposed to knowledge. It’s easy to find someone who can quote the income tax act, but difficult to find that rare individual who has the ability to find answers to a question from a client he or she may not yet have encountered. The application of this ability to resolve problems, to find answers, to apply one’s mind to a new challenge is often what sets the bar between successful and unsuccessful applicants.
How does SAIBA add value to your firm?
SAIBA has enabled us to receive recognition as Accounting Officers and Independent Reviewers within the new Companies Act, which has added to the professional status of our firm. Regular technical updates ensure we are always in a position to advise our clients in the best possible way.
Are there any operational tips to other practices?
With the increasing changes in legislation it is extremely important to keep yourself updated with the latest information to be competitive in the industry, and to be steadfast in your ability to give your client the best advice.
Another important tip is to understand that it is impossible to be 100% correct 100% of the time. A sign that your accountant is genuine is hearing the words, “I don’t know” in answer to a question – so long as it’s followed by, “but I’ll do the research, find the answer and get back to you”. We find clients appreciate this honest answer more than trying to wing a response to sound clever (and being wrong).