Accountancy & Management: Time to take care of business: A new report asks whether firms are paying enough attention to commercial skills

THE FIRMS involved steadfastly refuse to acknowledge the problem. But observers are more or less agreed that a recession that has brought bad news for all in the accountancy profession has been especially tough on practices just below the big six.

Being caught between the large international firms - which have the power to attract work through 'low-balling', or charging less-than-economic rates - and the smaller, genuinely cheaper niche operators makes the so-called second tier especially vulnerable at a time of intense competition, goes the thinking.

But it seems the truth is less straightforward. Recent research by Huthwaite, the UK-based international consultancy and training organisation, suggests that there are as many differences as similarities within the middle-ranking sector.

At the same time, one popular myth appears to have been put to rest. For some time now - as if in answer to the Monty Python jibe about accountants having to be boring - firms of all sorts and sizes have been stressing to would-be recruits the importance of personality as well as technical ability. But, although this approach may have resulted in some partnerships having more energetic, outgoing people, it is no guarantee that they will have the business skills required to succeed in a tougher marketplace.

Peter Belsey and Linda Marsh write in their report, What Future for Mid-sized Accountancy Firms? Tactics for Survival, that they were surprised that so little mention was made of business skills when firms were talking about the keys to success. 'A major concern we are left with is whether the reputation of accountants for being boring and unexciting had overemphasised in people's minds the need for more lively and exciting people at the expense of commercial skills required by effective business people and consultants.'

They feel this is particularly important as clients increasingly look for better deals from their professional advisers. 'It appears from the information we received that most partnerships would benefit from an improved understanding of the skills required for developing business and the ability to deal with clients driving increasingly hard bargains.'

But it is not just a problem in the present economic conditions, nor confined to medium-sized practices. It is surely vital that people who seek to advise others on how to run their affairs - as every accountancy firm now insists it is in the business of doing - should at all times be able to demonstrate commercial sense themselves. As Mr Belsey and Ms Marsh add: 'There are few markets now where people are willing to put their business with someone because they share the same background and interests. They are increasingly looking for people who show business understanding and an ability to add value in ways such as helping maximise assets and competitiveness.'

One of the biggest barriers to such an approach is the very nature of the partnership concept, with its air of old-world clubbiness. But the participants can also hold back development. Many partners in many firms remain suspicious of commercial attitudes in general and marketing in particular.

According to the report, the main handicap to developing entrepreneurial skills is the overall culture of the partnership, in particular the way partners often keep to themselves responsibility for sales and negotiation. The most successful involve staff responsible for marketing in the development of strategic and individual plans rather than just the implementation. They also allow non-partners to participate in business development activities, with some even using such skills as a criterion for selecting partners.

Above all, the most successful firms do not rely on informal groups to develop business. They organise a variety of activities, both internally and externally, aimed at identifying and exploiting business opportunities. Internally-focused initiatives include marketing plans based on such areas as products, services, markets or even selling more to certain clients; assignment debriefings and training.

Among the more effective external activities are seminars and conferences - so long as care is taken with the subject, selection of the audience and ensuring that appropriate personnel are on hand for 'chatting up'; direct mail, especially where targeted and part of a careful strategy; carefully planned expansion into new geographical areas and presentations. On the other hand, corporate hospitality, such as lunches, cocktail parties and invitations to non- business events, are pleasant diversions but do not appear to be a lucrative source of business. At least one partnership among the 12 surveyed is scaling down such events.

But perhaps the most pressing need is information. Although increasing use is being made of client satisfaction surveys, there is still some scepticism perhaps because of fear of what they may show. Nevertheless, firms must find out as much as they can about what their clients think of them, the report's authors add. Far from being bliss, ignorance is 'increasingly dangerous as the market becomes more competitive'.

Pointing out that many firms have made great strides in developing certain skills, particularly those relating to presentations and proposals, Mr Belsey and Ms Marsh urge partnerships to escape from the idea that entrepreneurs are born not made. They acknowledge that the stress on chargeable hours reduces many accountants' opportunities to try new skills and initiatives and therefore limits their chances of developing in line with the longer-term needs of their firms. But, if people are willing, they can expand their business skills significantly.

What Future for Mid-sized Accountancy Firms? is available from Huthwaite for pounds 95. Tel 0709 710081.

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