Tag: accounting

Accountants, It is Time to Think Like a Marketer with Kate Colbert

From the desk of Peter Margaritis
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Thinking like a marketer can be difficult when most of us — well, think like accountants. Marketing isn’t a space in our brains; we use that often. Sometimes it’s because we don’t want to, or don’t feel like we need to. Other times, it’s because we don’t even know where to start. 

Luckily, I had a guest on the podcast who’s expertise is in just that. Kate Colbert is the author of “Think Like a Marketer: How a Shift in Mindset Can Change Everything for Your Business,” as well as the owner of Silver Tree Communications, a full-service marketing company. 

Kate has (thankfully) broken down how to think like a marketer into five simple steps — which we can all apply to our businesses. Without further ado, because, as Kate says, “the perfect time to start thinking like a marketer is now”: 

1. Communicate for connection and meaning, not just to transact sales.

Communication should be the top priority for anybody doing business, whether you’re in the accounting world, retail, restaurants, or publishing. Communication is about adding meaning and value to potential customers – not just trying to snag a check from them. 

For example, most people only hear from their accountant around — you guessed it — tax season. They get a simple email reminding them to make their appointment, and maybe a follow-up or two. However, outside of that season, customers typically aren’t getting much year-round value from their accounting firm. Also, it doesn’t have to be that way. Blogs, podcasts, and newsletters are all great ways to engage your clients (present or future ones) and add meaning to your relationship, without asking them for a sale of some kind.

When a change in the tax code occurs, accountants need to reach out to their clients who will be impacted by this change.  For example, “There is a change in the tax code, and I would like to have a conversation on its potential impact on your business.  Can we meet for cup of coffee to discuss?” 

“The accounting professionals who are finding ways to create meaningful conversations are the ones that are creating sustainable businesses for the long haul,” she said. “And (they’re) capturing a lot more value to the bottom line because they can raise their prices because they’re [bringing more value to their clients].”

2. Live and die by your client’s insights.

Are you paying attention to what your clients are saying? What they like and dislike, what they want to see more or less? If not, you’re leaving tremendous marketing opportunities on the table. 

“What’s interesting to me about financial professionals is that, here’s a group of subject matter experts who are all about the data, right?” Kate said. 

However, how many accounting firms are invested in the data of what their customers think? What’s your net promoter score? How is it trending? 

Give a survey, or set up a focus group — you glean your information is up to you. Make this a priority in your marketing strategy. Otherwise, you’re not going to know where to go.

“Once you have those clients insights, you know what pivots to make in your firm to be able to grow,” Kate said.

3. Market in a way that’s strategy-religious and tactic-agnostic. 

So many companies — accounting and otherwise — take the opposite approach than this. They’re all over the place with their strategy, but married to one tactic, just because they think that’s what the rest of the industry is doing. 

The trick is in the opposite approach: Be married to your strategy (once you do the front-end work to come up with a robust one). Try a little bit of everything when it comes to the tactics — aka the vehicles by which you deliver your strategy. 

Maybe the tactic is a video series, a workshop, a television commercial, or a newsletter series. Perhaps it’s a combination of all of the above. However, the trick is to experiment with a variety of approaches and see how best to deliver your strategy. Where are you seeing the most engagement, or the most leads coming from where? Pay attention to the numbers, and start devoting resources to the tactics that are producing results (and pulling resources from tactics that don’t).

“It’s about being willing to try new things,” Kate said. “And then walk away from new things.”

4. Create cultures and processes that align with your brand.

If your firm has a brand associated with never surprise-invoicing people, then you should, as a firm, build billing processes and packages around that core value. According to Kate, structure your pricing in a way that there’s some cushion. Just in case people call and ask for further advice, you don’t feel like you’re giving it away for free. 

Also, if you have a brand focused on being accessible and comfortable, and not nickel-and-diming the client, then build a culture surrounding that. An example Kate used is Southwest Airlines. This is an airline that’s built its brand around never being late, and not putting more costs on the customers’ shoulders. When a Southwest plane lands, all the crew going around and cleaning so that the aircraft can be used again for its next flight on time. Southwest built a culture in its employees around its “never late” branding, and that shines through in their marketing.

“What are we willing to do differently to deliver on the story that we’re telling the marketplace about what makes you a better accounting firm than the accounting firm down the street?” Kate asked.

5. Do everything in service of maintaining a virtuous cycle of creating value for the client while capturing value for you. 

This last marketing value is related in a way to the first: It’s all about creating value. Kate states, “that might mean giving things away for free. If giving something away for free is going to land you even more business eventually, then it’s a good cycle to get into.”

“It’s about can you create value for people, not just upfront when you’re trying to win them, but continuously, how do you keep creating value?” Kate said. “But how do you capture it back? We’re all in business to stay in business. So it’s not about giving it all away for selling it for too cheap. It’s really about figuring out how do you make sure that you’re pricing yourself right.” 

Much of this value comes back to the concept of “delighting.” How do you not just serve your clients, but delight them? Whether that’s the atmosphere, you create within the office, the gift that you give a new client, or that phone call informing the client of a tax law change.  How do you delight your client enough to where they not only want to keep coming back, but they also want to bring you quality referrals? 

Strategically doing this — in a way that eventually brings money back to your bottom line — is how to create a winning marketing strategy (and business). 

“You can’t create more value for your clients, or future clients, or associates, or whomever you serve if you’re not capturing money back to the bottom line,” Kate said. “If you’re constantly working your marketing, your business is going to be around as long as you want it to be. Then you can retire and go buy a yacht.”

Click here to listen to the entire interview

How The New Five-Step Revenue Recognition Model Impacts Your Organization

From the desk of Peter Margaritis

steps-to-making-progress-onlineFor several years the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) have worked to develop a single standard revenue recognition model. This new standard will apply to all industries and companies using either the U.S. GAAP and IFRS accounting standards. The intention of the new revenue recognition model is to improve financial statements and eliminate differences between GAAP and IFRS.

In November the FASB and IASB voted to move forward with preparation of the final standard which is expected to be issued in the first quarter of 2014. What does this mean to you and your organization?

This new standard on revenue recognition is a principles-based approach (with some guidance) rather than a “bright line” rules-based approach. It will be a single revenue recognition model applied across all industries and transactions. When the new standard becomes effective, industry-specific revenue recognition accounting will no longer exist. This is a significant change.

At the time of this writing, the proposed effective date for publicly held entities with annual reporting periods beginning on or after December 15, 2016 (with no early adoption) and for privately held entities with annual reporting periods beginning on or after December 15, 2017, with early adoption allowed but no sooner than December 15, 2016.

The core principle is that “an entity must recognize revenue when it transfers promised goods and services to the customer and the amount recognized should be the consideration to which the entity expects to be entitled.”[1] Businesses will determine the correct revenue recognition using this Five Step Model:

1. Identify the contract(s)
2. Identify the separate performance obligations
3. Determine the transaction price
4. Allocate the transaction price to the separate performance obligations
5. Recognize revenue when the entity satisfies a performance obligation

The Five Step Model appears manageable, but let’s look more closely at each step.

Step 1: Identify the contract

A fairly straightforward step whereby specific criteria must be met in order to have a contract. Specifically, the contract must have commercial substance, the promised goods and services must be identified and approved, and the payment terms identified.

Step 2: Identify separate performance obligations

This is applicable when an entity transfers more than one good or service to the customer and the additional good or service is distinct. In order for a good and service to be distinct it could be sold separately or the customer can benefit from the good or service either on its own or together with readily available resources. However a good or service is not distinct if it’s bundled with other goods and services; if the business services are highly interrelated; and if the goods and services are significantly modified or customized.[2] As an example, if you sold a car with a 5-year warranty included in the purchase price and sold a separate three-year extended warranty.  The three-year extended warranty would be a separate performance obligation.

 Step 3:  Determine the transaction price

According to the new revenue recognition model, the transaction price “is the amount of consideration to which the entity expects to receive for the transfer of the promised goods and services.”[3] In determining the transaction price, management will need to take into consideration the variable consideration, time, value of money, non-cash consideration, and consideration payable to the customer.

The determination of variable consideration will require significant amount of judgment. Variable consideration includes items such as discounts, rebates, refunds, and royalties. In estimating the transaction price the entity would use either the expected value method or the most likely amount method.  I will state the obvious here, but both of these methods require management’s best guess. In addition, for an entity to estimate the variable consideration the entity must have relevant experience with the item and the probability of significant reversals would not occur.

Step 4: Allocate the transaction price to the separate performance obligations

A business determines this based upon the relative standalone-selling price of each performance obligations. In determining the standalone-selling price, management needs to identify observable evidence. If none exist management will need to use a method of estimation to determine the standalone-selling price. Once this has been determined they allocate the amount of consideration expected to each of the separate performance obligations.

 Step 5: Recognize revenue when the entity satisfies a performance obligation

This is accomplished when the customer obtains control of the good or service. If the performance obligation is satisfied over time (construction of an asset), and there exists continuous improvement of the asset, the entity would use a progress method (output or input method) to recognize revenue. The percent of completion method would not be used during the step.

The new model requires that management make more estimates and judgments in areas of identifying separate performance obligations, determining the transaction price, variable consideration, the allocation of the transaction price, and when control has been transferred. This increase in estimates and judgments mean that management should assess and update internal controls and processes to avoid fraud.

Additionally, management will need to forecast revenue changes to determine any significant changes in the financial metrics in order to avoid any covenant violations. These changes in forecasted revenue should also be analyzed for any potential tax planning opportunities when the standard becomes effective.

What does this mean for your organization? Entities will be required to show two-year comparative data, either on the face or in the notes to the final statements, when they file their 2017 financial statements. In other words, you will need to be ready by the end of 2015.

It’s time to start planning.


[1] FASB Exposure Draft Revenue Recognition (Topic 605), Issued November 14, 2011

[2] FASB Exposure Draft Revenue Recognition (Topic 605), Issued November 14, 2011

[3] FASB Exposure Draft Revenue Recognition (Topic 605), Issued November 14, 2011

Public Speaking Skills Part 4: Presentation Day

From the desk of Peter Margaritis

You’ll want to arrive early so if you are unsure of where you’re going, look it up. Getting lost is not a valid 2013 excuse. Give yourself about 45 minutes to check the room, be sure the projector or microphone are working and to meet any other presenters, organizers and early arrivals. Feeling good in the room helps calm nerves.

As you are introduced, take a few deep breaths to help slow down your inner clock. You want the audience on your side from the beginning, so show energy, enthusiasm and passion in your voice from your first words. And smile – it will be heard in your voice and pass through the audience.

I always look for friendly faces, people who show their interest in the topic through their body language. These folks want to be Edutained. They want you to succeed. Make eye contact and check back with them often – if they look a bit confused you may need to let the audience catch up with you, maybe revisit an especially difficult point.

Get your audience involved by taking polls or asking simple questions. If you make a mistake own up, take a deep breath, and move on.  Humor (not jokes) can help you keep the audience with you. Remember, there may be bumps in the road but you’re taking people on a journey.

Finding a Simpler Way to Communicate a Complex Topic

From the desk of Peter Margaritis

Everyone’s heard of the KISS principle, right? Keep It Simple Stupid! Now I don’t necessarily like to use the “s” word – if you’re a parent, you’ve likely gone to painstaking efforts to get your kids to not use this word – but I really like this principle, and it’s something to always keep in mind when preparing a presentation.

Last month I presented a 90-minute A&A update for the Arizona Society of CPAs and one of the subtopics dealt with consolidation (topic 810): principal versus agent analysis. Basically this section was addressing the proposed rules on the consolidation of variable interest entities (VIE). I’m not sure if you know this, but a variable interest entity comes from the French term meaning “damn you Enron.” There are hundreds of pages of guidance in the current codification on how to consolidate VIE. This guidance is very complex.

As I was preparing for this presentation, I knew that I needed to find a simpler way of explaining this new proposed update because I wanted my audience to understand and retain this information and – just as importantly – I wanted them to stay awake during the section of my presentation!  Just saying the words “variable interest entities” can put an accountant to sleep in a nano-second. Also, the demographics of this conference consisted of a few SEC filers with the majority being in public accounting with clients that are privately held entities.

So, after spending some time trying to figure out a simple way of explaining this very complex topic, I came up with a scenario that I thought my audience – at least a vast majority –could relate to.

Here is an example of the KISS principle in action …

Your mother-in-law is a VIE. She collects social security, some investments, and slot machine winnings (and losses) but she is primarily being supported by her six children. Some of the siblings are providing more than others, but your family is providing the most. Your spouse likes to be in control and likes to make decisions as demonstrated by her position as a school principal. Your spouse wants her mother – your mother-in-law – to move in with your family. That’s right, your mother-in-law will be living with you 24/7.

Does your mother-in-law consolidate and move in because your spouse is the decider and is using her power as a principal over your mother-in-law and related parties? Or, will an agreement be reached with the other siblings whereby your mother-in-law will spend equal time with everyone and your family will share power and thus have an agent relationship?

Under the current proposal, there is a qualitative test that I call “the feelings test” which consists of three questions, just like the three questions the bridge keeper asked in Monty Python and the Holy Grail. This is very different than the current quantitative test, a.k.a “no feelings, just the facts test.”

These “feeling” questions are along the line of:

  • Who else has rights? The other five children have rights and individually and collectively could be considered agents.
  • Has your family received compensation (chicken soup, knitted sweater, or season tickets to the Cincinnati Reds) from your mother-in-law?
  • If so, what is the magnitude and variability of the compensation?
  • Is this compensation different than the compensation she is providing to the other families?
  • Finally, are you seeing positive returns from your investment in her gambling habit or have you just help absorb the losses or both?

The answers to these questions, based on the judgment of the decider, will determine if your family is the principal or an agent. In other words, the answers to these questions will help determine if your mother-in-law will move in permanently or just visit for a couple of months.

I got laughs, engaged eyes, positive head nodding, reduced smart phone praying, active listening ears and just general interest in this very complex topic. So the next time you try to deliver complex information, just remember the KISS principle – use less technical jargon and more every day scenarios to demonstrate your point.

Networking: Even Accountants Can Mingle

From the desk of Peter Margaritis

Now that our eyes are adjusting to the sunlight rather than the glow of florescent light we’ve been subjected to since early January, it’s time to get out there and start networking.

That’s right – networking!

If the thought of “networking” makes you sweat, it’s time to re-think what networking really is. It’s really pretty simple. Anytime you’re at an event or even a meeting where you don’t know someone, you have the opportunity to network. It’s about introducing yourself and getting to know someone else. At any business function, introduce yourself to somebody you don’t know. At a CPE event, introduce yourself to someone you don’t know. Attending a conference? Introduce yourself to someone you don’t know. (Noticing a theme here?)

Today I want to give you four networking tips that you can apply immediately.

  1. The Mindset. This involves having the right attitude, believing in yourself, having a plan, and the simplest thing of all – remembering to smile.  By taking just a little time to get in the right mindset, you’ll have a lot more confidence walking into that event. And, simply smiling can make anyone more approachable! As Victor Borge once said, “A smile is the shortest distance between two people.” And what did I mean by “having a plan?” Any gathering of individuals – no matter how large or small – I view as an opportunity to meet someone and I set a goal of trying to obtain at least 5 new  business cards. Make a plan or set a goal like that for yourself.
  2. The Preparation. As accountants, some of us tend to be more introverted, so in order to make meaningful connections, preparation is key. Preparation means doing your homework – listen, read, watch. What’s happening in the news? What’s going on in your community? What’s going on in the profession? After you have answered these questions, formulate five or six questions that you can use to start a conversation. Let’s say I’m in Cincinnati … I’d probably start off the conversation by asking someone if they’re a Reds fan and if so, what do they think of their prospects this year to win the division. An easy opener that’s sure to get the conversation going.
  3. The Implementation. Don’t be shy. Walk up, stick your hand out and introduce yourself. “Hi my name is…..” (I have yet to do this and have someone shriek and run away from me.) And this is important – engage them by being curious about them. Ask questions to get them talking about themselves. This is a great way to break the ice and create rapport with someone. Some conversations will be great and some may be non-starters for whatever reason, but the more people you talk to, the more likely you are to make some really meaningful connections. The key to effective implementation is to be a good listener with both your eyes and ears. I’ve actually walked away from people who were talking to me but weren’t listening to me or they were looking around the room to find others. To me, that just shows a complete lack of any genuine or sincere interest. So, if you’re not interested in continuing a conversation with someone, politely excuse yourself and move on.
  4. The follow-up. One of the most critical steps in just about anything we do – including networking – is following up.  I like to send a handwritten “nice meeting you” card within a couple of weeks of meeting someone. I also like to forward interesting article links or something I’ve learned more about regarding their interests or their business. Sometimes I’ll pick up the phone call the person to see if we can schedule time for coffee or lunch just so we can get to know each other better.

I said I had four tips, but here’s a bonus one for you. I like to call my approach to networking – “the Godfather approach.” I always end a conversation by saying, “please feel free to contact me at any time if I can do anything for you.” Because as in the movie the Godfather, if I do this for you, someday I will come to you and ask you for a favor.”

Now get out there and start networking!