An interview with John Birse, National Divisional Franchisor
John Birse is CEO and National Divisional Franchisor of the Jim's Bookkeeping Division, and a Director of the Institute of Certified Bookkeepers. John has been an accounting teacher in secondary schools, project manager of school accounting software, computer services marketer, and owner of a commercial training facility.
A popular image of a bookkeeper is that of a middle-aged back room, or work-from-home numbers cruncher. Fact or fiction?
Fiction - with the introduction of the GST in 2000 all small business owners came to the realisation that they had to get their financial records in some order to lodge their BAS regularly. This elevated many to the roll of bookkeeper even though they may have wished to work more on their business than in it. Over the last few years we have seen the growth of professional bookkeepers who recognise they can add considerable value to a small business by efficiently organising and processing their financial information not just for tax compliance but more importantly for performance information that can be used by the business owners to better manage their business. This has been further reinforced in March 2010 with the establishment of a Tax Practitioner Board which will oversee bookkeepers acting as BAS Agents.
This new breed of professional bookkeepers are exactly who I am targeting as franchisees wanting to present themselves as dynamic, self confident contributors able to market themselves to small business clients. Although a past ATO survey showed a majority of bookkeepers to be over 40 and female our bookkeepers are fairly well divided between male and female with the average age around 45. About half the work is done at the client's site and half done at our home office. It is a fact that bookkeepers have to be good with numbers - you can get away with the odd spelling mistake but you cannot transpose numbers without causing great damage. Bookkeepers are stepping up to take the new role as BAS Agents but many appreciate the support of a franchise such as Jim's behind them.
What changes have you seen in the bookkeeping marketplace over the past few years that concern and excite you?
The old Income Tax Assessment Act (ITAA) contained a Section 251L that prohibited bookkeepers from charging for the preparation of a BAS for a client. This issue has been hotly debated by representatives of the bookkeeping industry via the Bookkeeping Advisory Group set-up by the ATO and by Professional Associations such as the Institute of Certified Bookkeepers (ICB). This has resulted in the formation of the Tax Practitioners Board which now recognizes the role of bookkeepers as BAS Agents. Unfortunately this has meant a focus on the GST which is like the tail wagging the dog. A more fundamental issue is assisting bookkeepers in helping small business owners better manage the performance of their business. A great majority of business owners, their partners and employees can still self lodge their BAS and are not taking advantage of the efficiencies provided by a certified professional bookkeeper.
The Institute of Certified Bookkeepers (ICB) has taken this broader view being part of an international bookkeeping support structure with over 130,000 members worldwide. The ICB caters for three levels of bookkeeping practice - Level I covers record keeping and processing; Level II takes in debtors/creditors and banking; and Level III covers a wide range of more advanced bookkeeping requirements such as GST Advice. It may take a few years to settle down but in the end the ATO, TPB, accountants and small business owners will recognise the important role played by properly trained bookkeepers not just getting the GST right. Web based Accounting programs and electronic transactions will also change the way financial information is collected and business owners should be able to get access to their financial situation faster and be able to read dashboard type reports easier. While still verifying and substantiating financial information the modern bookkeeper will be increasingly involved with analysis and interpretation than data entry.
In late 2005 the ATO highlighted the need for a greater degree of professionalism in the bookkeeping industry. Did that surprise you?
I think that bookkeepers have been a convenient scapegoat for the many complex issues surrounding the way small business owners have tried to deal with the GST. The fact that 93.5% of businesses in Australia have less than 20 employees (and therefore probably no internal accountant) has meant that accountants have been swamped by compliance issues as well as dealing with many shoe boxes of disorganised financial records. The bookkeeping industry has been largely unorganised and not adequately represented on various Government Committees compared to our well organised accountant colleagues. As mentioned earlier a number of bookkeeping associations such as the ICB have now appeared in Australia and I think bookkeepers will find that proper industry representation will occur and create a recognised standard that was only available previously through software providers. The Tax Practitioner Board will also play an important role in overseeing a code of conduct for Associations and Agents and this will bring and improved level of professionalism from Accountants and Bookkeepers.
It is also a fact that every business needs a bookkeeper and often this job has been thrust on wives/husbands, girlfriends/boyfriends or mothers/fathers. Professional bookkeepers are now showing that the proper management of a business's accounting system requires an expertise and discipline and that it is not as easy as loading software onto a computer. Once small business owners see the strategic advantage associated with using a professional bookkeeper then the status and importance of bookkeeping will be understood and businesses will prefer to outsource bookkeeping rather than try to do it themselves.
How is Jim's Bookkeeping rising to the challenge?
I believe Franchising provides an excellent vehicle to provide the necessary support and training through proven operation and marketing methods to help bookkeepers reach a level of business success so they can invest in their future. Our steady growth provides us with a plan to have 212 active franchisees by 2012. Our bookkeepers continue to make a big difference to their client's business operations and besides offering software competence I hope to assist small business owners identify their business performance through a better understanding of their financial reports. Being a national network, Jim Bookkeeping can also offer a standardised service to other Franchise groups and nationwide businesses which provide a benchmark of performance data to assist management. Independent bookkeepers often find it hard to get the support and advice necessary to build a profitable practice. This often occurs as bookkeepers have not learnt to value themselves and have been prepared to work well below acceptable rates. Owning a franchise set a bookkeeper apart from the pack and helps them justify the rates they charge for adding value to their client's business.
Everyone these days, talks about the superiority of their "brand". What makes a great brand and how do you go about building it?
I'm just reading the book by Stephen Covey - "The speed of trust" and the importance that trust can have to any relationship cannot be ignored. I see a brand or logo as the graphical representation of the business and the trust that consumers attach to that brand will be reflected in their buying habits and how they rate that brand to other competitors. It takes considerable time to build a brand (some say up to 10 years) so having a brand such as Jim's that can be identified with one of Australia's small business success stories is a powerful asset. With over 30 other Jim's Divisions we are also well aware of the challenges that face small business in Australia and Jim's Bookkeepers are in a perfect position to assist other Jim's in getting their business off on the right bookkeeping track.
Jim's has come to represent customer service through Jim Penman's ethos and is reinforced by over 3,100 franchisees displaying the brand on their trailers, vehicles, stationery and uniforms. You build a brand through the collective experiences of countless consumers of the product or service that eventually brings an awareness and association of that brand with a particular product or service. You also need to protect the brand's integrity by maintaining standards through style guides and training and acting on complaints. Media can promote a brand but customer experience will confirm a brand's promise.
Why is franchising a better alternative than operating as an independent?
Research done by Edith Cowan University in Western Australia shows that franchisees are 2.5 times less likely to fail than independent small businesses. This is because of the training and selection process that accompanies the purchase of a franchise as well as the on-going support and review of the franchisees business. Michael Gerber in his E Myth also highlights the problem with people following their area of technical competence by starting their own business but finding themselves lacking the entrepreneurial and administration skills essential to running a business.
A franchise brings with it the systems and support based on the experience of a successful operator in that industry. There are however examples where franchisees have found the systems and support lacking and that is why in Australia we have regulations such as the Franchise Code of Conduct and the ACCC acting as a watchdog over franchise developments. As a Jim's Bookkeeper a franchise owner gains the benefit of the Jim's Brand and the buying power that comes with being a part of one of Australia's largest Franchises. As the Divisional Franchisor I have also established strategic relationships with software companies, insurance underwriters, uniform suppliers, marketers and other industry representatives that have translated into deals that would not have been available to an independent bookkeeper.
It can also be very lonely running an independent bookkeeping business, and at the end of the day you cannot sell your business as it revolves around you running it. As a franchisee you are part of a regional group that meets regularly as well as having State and National Conferences and Jim's Bookkeeping franchises have experienced capital growth of 400% since the first one was sold in 2000. All our Franchisors and Franchisees have a business plan template that reflects the current bookkeeping industry in Australia (from research data built up over the last 10 years) with models to assist them reach their full potential as a bookkeeping practice.
We know how tough it is to find people with the right blend of technical skills and business nous, and who'll fit well with our firm's culture. What makes a great franchisee great?
The big challenge is to realise you have bought a business and not a job. The franchise model provides you with all the necessary resources and advice you will need but you still have to find and keep your clients. Presenting the brand in the best possible way is achieved by being passionate and competent in the service provided but making sure you listen to the client's needs and exceed their expectations. Franchisees need to work closely with their Franchisor but have the desire to learn the lessons and put these into practice to achieve your goals. A franchisee must recognise the need for on-going professional development and the opportunity to build their business to achieve capital gains from splits and resales of territories. Jim's Bookkeeping have also build up many years of experience in how to market bookkeeping to local small business owners and this helps us avoid the marketing traps that many independent bookkeepers fall for. For example we promote the benefits of a Jim's Bookkeeping service to a client rather than speak of the features of a bookkeeping service.
Marketing seems to be a real struggle for most professional services workers, including bookkeepers. How do you get technically minded people who aren't trained for it and who are by nature timid about selling themselves, to become effective self-promoters?
There are clear stages in the growth of a bookkeeping business, and while the initial marketing will be on getting new clients ultimately most new clients will come from referrals from happy clients. In Jim's Bookkeeping we have refined our initial marketing to attraction marketing rather than the traditional cold calling techniques that put many bookkeepers off. By using a buddy system (often with the Franchisor accompanying the Franchisee) a level of confidence in delivering an audio logo and learning to listen to the client's needs is built. We have also been fortunate in having access to the resources and experiences of the Jim's Group, extensive case studies that have worked and a marketing manual that takes a new franchisee through the fundamentals of "selling" themselves to small business owners and accountants in their territory. All Franchisees have free access to an Intranet of resources and often communicate with each other using voip and other communication utilities.
There are a hell of a lot of hungry bookkeepers and accountants out there vying for the same pie. Why do you think standing out from the crowd and getting regular work is such a hard slog for some?
Many bookkeepers have not had the opportunity to reflect on the collective experiences I have gained over the last 40 years working in different aspects of human activity and culminating in a solution that combines education, technology and systems. When this is combined with the action research from our successes and failures you have a knowledge base for success. For example we know the trap of quoting an hourly rate as opposed to a fee for service completed. We know that clients are prepared to pay an extra 15% for the comfort that comes from a professional bookkeeper with a known brand. We know that a profit and loss cannot reveal cash flow and that a bank statement cannot reveal profitability. We also know that competing on price is futile and that people will pay a higher rate if they can see that it contributes to a higher return in their business performance. We now have clients, accountants and strategic partners seeking out Jim's Bookkeepers because they have experienced the benefits of our service and have seen the reliability of its delivery. The reputation of Jim's Bookkeeping has now created many opportunities to provide a National bookkeeping service of the highest standard with full access to all levels of delivery at the local, regional and national front with complaints and training processes that work to maintain the highest level of service.
(Apart from joining a franchise family) what is the best piece of advice you could offer anyone trying to build a successful bookkeeping business?
Small Business owners will invite you into their business and pay for your services if you are able to add value by saving them time or money. To do this you must have gained proficiency in bookkeeping and accounting theory and practice as well as knowing your way around a computer and the accounting software programs. You will also need a solid methodology to protect yourself from making errors and prevent others from blaming you for things that were not of your making. Become a member of the ICB to affirm your professionalism and stay informed about issues in the bookkeeping industry. Do your homework and be honest about your strengths and weaknesses before deciding whether employment, self employment or franchising is the best fit for you. Show initiative, take control of your life and become proactive rather than reactive. Know what you know, know what you don't know (and work to improve these areas) and don't take on work you cannot do to the highest standard.
Looking into your crystal ball, how do you see the future of the profession?
I'm fairly upbeat about the potential of the bookkeeping industry. Technology has made it easier for us to process financial information and there is a great need to educate business owners about managing their business based on information about their businesses performance. Bookkeepers are in the perfect position to deliver these new services as traditional accountants have become focused on compliance and have priced themselves out of the area where than can provide on-going and personalised support at a price small business can afford. The challenge is for bookkeepers to become professionals who invest in on-going training belong to a bookkeeping association and present themselves in the right way. Gone are the days when bookkeepers could operate as a back-yard business without regard for the complexities associated with running a modern business. The time has come for bookkeepers to step up as the new professionals who can guide small business through the difficult journey of capturing, recording and analysing their financial transactions. The new standard of training for a professional bookkeeper will be Certificate IV and bookkeepers will need experience before they can become a BAS Agent or a full member of ICB. This will mean professional bookkeepers in practice will need to step up and take on contractors or employees taking them to new areas of responsibility and structure. Jim's Bookkeeping can offer that structure in which to grow your bookkeeping practice.
John Birse can be reached on 0418 364 658 or johnb@jimsbookkeeping.com.au
Links:
www.icb.org.au
www.tpb.gov.au
