Clients are very demanding and are like baby chicks in some ways (with their constant squeaking for attention and assistance). Accountants can fall into the trap of constantly trying to satisfy their client demands (which are insatiable) and let their business needs slide. Accountants are often so busy preparing and lodging clients’ tax returns with the ATO on-time, that their own tax returns are lodged late. Too often the time that should be spent on practice management is instead spent on clients’ work.
So much of our day to day work (activity) is really just a waste of time and produces no results (productivity). It is easy to fall into the trap of thinking working harder and longer hours is the secret of success in business, but that is simply not the case. All that is important is the output, the results that are produced, not the time taken to achieve it.
The Pareto Principle (also known as the 80–20 rule) states that, for many events, roughly 80% of the effects come from 20% of the causes. Changes that practices can implement to improve their profitability immediately and benefit from the Pareto Principle include focusing the activities of staff, management and resources on the top 20% of clients and getting rid of the clients with the lowest 20% annual fees. (These clients are unprofitable and cost the practice money to service).