Is FOMO hurting your advisory business?
Remember, when you were a kid, and you would gather with other kids for sport or play, and a couple of nominated children in the group would get to choose their teams? Do you recall the feeling of dread you had that you would get picked last or even not at all?
That same insecurity may be hampering your business success.
The dread or anxiety of being left out of the loop is today known by the nomenclature FOMO – fear of missing out – and affects everybody, regardless of temperament.
Tax advisers, accountants, bookkeepers and many other small to medium businesses in New Zealand tend to be a generalist in positioning, if not necessarily in nature.
Essentially, most expert-based businesses will take anybody who walks through the door, regardless of business type, sector or industry. In so doing, they are potentially losing out on a compelling business advantage – the power of differentiation that comes from having a niche.
Many experts and firms may find they attract more of one industry than another – often thanks to word-of-mouth – and so develop more significant expertise in that area. Still, they don't dare say it aloud because it may put other clients and customers off making sales inquiries – yes, that's FOMO.
However, in trying to be somebody to everybody, you end up getting lost in the crowd.
The best way to stand out in a crowded market is to differentiate. People notice different or novel before pretty much anything else. Having a niche is a point of difference.
Positioning around a niche is also a solid strategy for establishing your credentials as a specialist expert rather than just an expert. Also, it will increase your visibility within a chosen market because of word of mouth – it is easier to be famous in a small market than in a big one.
The human fear of loss is powerful. Some time ago a power company found that it had a better response from the word 'lose' than 'save' – people were more motivated to act out of fear of losing what they already had than they were by the prospect of gain.
Writing on the science of FOMO for Psychology Today, Nick Hobson PhD, says one solution to FOMO may be a shift in attention control.
“Focus less on potential losses of missing out and focus more on immediate gains of what's being done now,” Hobson says.
So instead of worrying out about the business you may be missing out on, concentrate on opening up opportunities in your niche. For example, earning a speaking spot at the annual event organisers' conference.
If you have considered positioning yourself within a niche for a specific type of client, sector, product or service, but you're worried that you might miss out, know that it's FOMO.
Know also that you are likely to achieve far greater gains by being the bigger fish in a smaller pond.
Solve your cashflow headache and get paid on your terms
When you leave your local Mitre10 store with your new BBQ in tow, do you tell the cashier to invoice you on the 20th of the month? Have you tried that with New World, or PB Tech lately? It begs the question: Why should your businesses be any different?
The 'practice' of paying invoices on the 20th of the month is not something enshrined in law, anywhere. If anything, it is a convention. When you get paid comes down to the terms and conditions you negotiate.
Ahead of the 2020 election, the Labour-New Zealand First coalition government was vowing to tackle big businesses that make SMEs wait 60, 90 and even 120 days for payment, describing it is an unfair imbalance in power.
Government Minister Stuart Nash, a one-time small business owner, told media that when he was in business, he needed the money but he worried that if he hassled his clients too much, they wouldn't give him more work.
Xero's Small Business Insights 2020 reports that the average payment times are currently 25.1 days compared to 30.8 days at the peak of the COVID-19 crisis.
Payment terms of the 20th of the following month – in reality, the 25th or the 30th of the next month if you're lucky – are a significant contributor to the challenge of a healthy cashflow. It has a knock-on effect because it means that the company that gets paid late pays late.
At the start of a relationship, the sale is all-important. Terms and conditions are highly fluid because nobody wants to sacrifice the deal. Still, it comes down to whether or not you want to set yourself up to be a successful and stable business with the right clients or one that is desperate and clinging to every scrap that comes along.
1. How you begin sets the tone
At the start, establish good terms and conditions that will work for your business and make it a condition of sale that those terms are agreed. It may be that your terms are cash on delivery, seven days or 30 days.
The point is that traditions and conventions obligate your business only in so far as you allow. Decide what kind of business you want to run, set the terms and conditions that are a win/win for both you and your customers and stick to them.
2. Avoid surprises
Make sure new customers understand and agree to your payment terms. Payment on the 20th of the next month is a modern convention, which means customers may assume that the 20th is acceptable to you – and it may be. However, if your payment terms are payment on delivery, seven days or even three days, make sure your customer knows at the start.
3. Reinforce your payment terms
Make sure your payment terms are on your invoice, along with your preferred payment methods like direct credit or credit card.
4. Follow up
It's tempting, for both small and larger businesses – owners and accounts people – to let a few days slide, especially if the relationship is new and bedding in but, remember, how you begin sets the tone of the relationship.
If payment is one day late, send a friendly reminder email. If the email reminder is not acknowledged, then follow-up to make sure the other party received the email and there has been no missed communication.
While you set your terms and conditions and it is not necessary for you to be confined by convention, the critical success factor to getting paid on time and staying on 'good terms' – no pun intended – with your client, is communication.
Communicate, communicate and communicate.
How to grow your tax advisory through thought leadership
There's a so-called old piece of wisdom that says: “Absence makes the heart grow fonder.”
In reality, it is an old wives’ tale because it isn't true – not for relationships and not for tax advisory businesses. If you want more business, if you want more referrals and more growth, you need to up your 'visibility' in a way that is relevant to your audience.
Thought leadership is one way to achieve this goal.
The founder of the networking organisation Business Network International (BNI), Dr Ivan Misner, has what he believes is the most critical concept in networking.
“The VCP Process® – visibility, credibility, profitability – is a continuum,” he says. “Once you achieve credibility (and not before), you then need to start asking for referrals in order to achieve profitability. Profitability does not result automatically from visibility and credibility.”
What Misner is describing is true of marketing as well. While marketing – regardless of your methodology – will help you achieve visibility with your clients and potential clients, which in turn leads to credibility, you still need to do the hard work. In networking, it's asking for referrals. In your online marketing, it's about proving you are an expert, you are trustworthy, and you are good at what you do.
In this COVID-19 environment, opportunities to meet people face-to-face and interact personally to clinch new business and maintain existing business, are reduced. There is more emphasis on digital ways of working, shopping and socialising. While many accounting firms were dealing with the disruptions brought to reporting and compliance (and the rise of greater emphasis on advisory), COVID-19 is accelerating the change.
In this new climate, tax advisory businesses are advised to grow their online presence and visibility – to expand their digital footprint – in a way that establishes their credentials as expert and trustworthy.
Thought leadership can help you do that.
1. Be valuable
We are living in an age of content shock. There is quite literally a deluge of content (list stories, how-to stories, updates and reports). For example, content about the increase in the provisional tax threshold is relatively common. It is important content, it is of value, but it is not valuable because it is common. By all means, it is the kind of content that any practice should be creating and sharing, but it won't earn you thought leadership.
Thought leadership comes from creating content – blogs, podcasts, opinion editorials, videos et cetera – that are unique, and you achieve that by applying your unique expertise and interpretation to the events (like tax developments) going on around you. Always look to understand and communicate what it means for your audience at a granular level
2. Stand for something
Your clients and potential clients want you to have an opinion. It’s why they pay you. Thought leaders have an opinion, and they are not afraid to express it. If you try to be everything to everybody, you end up being nothing to nobody.
3. Aim for relevance
A content piece about how to improve cashflow is of value and also a common theme. Most companies, consultancies, banks and accounting firms have content about this. One way to differentiate your content and improve engagement is to add relevance by referring to the events and circumstances of the day.
For example, 'Maintaining cashflow this COVID-19 Christmas’ is current and timely. It is relevant because it refers to the issues of the day. Commentary about everyday problems and developments on the tax front should always be made in the context of the times in which we live.
In summary
It's not easy to 'stick your neck' out and establish your expertise, authority and trustworthiness through thought leadership, but nothing worthwhile is ever easy.
Whether you get more business from referrals or other marketing and sales methods, thought leadership will benefit your practice because it says that you know what you’re about.
How to overcome the pain of tax procrastination
With Inland Revenue (IRD) currently charging a penalty of seven percent interest, you would think that every single business owner in New Zealand would be highly motivated to get their tax issues sorted.
Why then, is tax procrastination a problem?
Tax is an obligation. We have no choice but to get on top of it. Whether that's paying on time if we can or, if we can't, making alternative arrangements. Solutions may include tax pooling through Tax Management NZ or reaching an agreement with IRD. However, there is a segment of Kiwi taxpayers who continue to bury their heads in the sand despite the potential pain it may cause.
However, tax procrastination, it turns out, is a 'thing' and it's not laziness either.
Dr Piers Steel, author of the book The Procrastination Equation: How to Stop Putting Things Off and Start Getting Stuff Done calls procrastination 'self-harm'. It's hard to argue with him when you consider the breath-taking tax penalty regime we face in New Zealand.
Dr Fuschia Sirois, a professor of psychology at the University of Sheffield, recently told the New York Times: “Procrastination isn’t a unique character flaw or a mysterious curse on your ability to manage time, but a way of coping with challenging emotions and negative moods induced by certain tasks — boredom, anxiety, insecurity, frustration, resentment, self-doubt and beyond”.
In short, we use procrastination to manage an immediate negative mood rather than with getting on with the task.
Beating tax procrastination
Carleton University’s Tim Pychyl suggests that the next time you feel inclined to put off something – like getting your tax sorted – you should simplify your focus down to taking the first step. The very next action helps shift your primary emotion.
“Once we get started, we’re typically able to keep going. Getting started is everything,” he says.
First tasks
Having a handful of obvious first steps you can take will help start you on that critical first step.
1. First step, get expert advice
If you are concerned about cashflow, particularly in this year marred by COVID-19, find a tax adviser (your accountant or tax consultant). Should you already have one, pick up the phone and speak to him or her about your options – even if it's to book an appointment.
Take that first step.
2. List your next steps
In partnership with your tax adviser, get an understanding of what all your options are. These may include tax pooling or coming to an arrangement with IRD for an extension, or a repayment schedule. Do you qualify for Working for Families or the temporary tax loss carry-back regime?
Knowing your options helps you put in place tangible next steps.
3. Reduce the workload
Sometimes the thought of having to gather all the bits and pieces of information we need can seem like a chore well worth postponing. To combat this, put in place a system that keeps your source of financial information at your fingertips.
One Auckland accounting firm reports that they have to chase at least 30 percent off their clients for 'bits of information' and it can take months. Most businesses are GST registered, which means that at least 90 percent of your needed business data is already available by the time you file your GST return. Almost every accounting software package on the market will likely have an app that lets you track receipts and other financial information in real-time.
According to research, procrastination (in all its guises) can be associated with high stress and related acute health problems. That's because the things we procrastinate never go away.
Avoid the costs of tax procrastination. Know what steps you're going to take and start taking them today.