Both industries are people-based businesses. They are both [or should be both] very customer service focused businesses. But the traditional accounting firm and the more typical real estate business model have stark differences. I can’t help but to think that real estate businesses are a more modern business model than many accounting firms.
[Yes, I know I am referring to both industries in a stereotypical fashion. I am simply trying to encourage some positive discussion to improve our industry.]
The top 5 things accountants can learn from real estate agents to modernise their business model and challenge industry disruption:
1. You don’t have to earn the same gross profit margin across all service lines
Real estate agents usually will have 2 very different businesses under the same roof – sales and property management. Sales typically will make a lower gross profit margin than property management [treating direct wages as a cost of sale].
The traditional accounting practice does not differentiate between its different income streams or will expect the same profit margin from business consulting and bookkeeping [for example] as they will from compliance and audit services. The old rule of thumb of 3 times wages comes to mind here.
All services offered should add something to the overall strategy and vision – but expecting the same gross profit margin from all service lines is in my mind an old school way of thinking.
2. More variable remuneration and less fixed wages
Commission only structures are common within the sales division of a real estate business – salespeople are often only paid for what they contribute. This would be unheard of in many accounting practices. Even the more traditionally conservative property management divisions of good real estate businesses are introducing more variable remuneration options.
3. Reward performance and allow individuals to stand out from the pack
Accountants traditionally shy away from putting individuals up on a pedestal. Is this because of a fear they will upset all those non-performers back in the pack? Maybe it’s because accountants know a team effort is crucial and no one KPI will do.
Is it normal to hear of an accounting firm having an awards night to celebrate the individuals who billed the most, grew the most or provided the best customer service? I know it does happen – but I don’t believe it is the norm like it is in real estate.
4. Know what you don’t know
I find real estate business owners openly acknowledge they don’t know everything about ‘business’ and are comfortable to call in help. Often they will engage coaches, collaborate with financial brokers or conjunct with other agents when necessary. Maybe accountants are meant to know everything already and therefore too embarrassed to ask for help?
5. Investing in soft skills is just as important as technical skills
I often hear of real estate agents sending themselves off to personal improvement courses (whether deductible or not) to enable them to do their jobs better. Look at the schedules at real estate conferences – self-help and personal improvement take up a much greater proportion of the day than at your typical accountant’s conference.
Of course, there are external factors affecting the industries differently – regulation and economic conditions come to mind – but as traditional businesses like accounting are disrupted with new business models, ideas and processes, we have to look at other industries to raise the bar and take our accounting businesses forward.
Don’t worry there are a heap of things that real estate agents can learn from accountants too – I will share my thoughts on these too.
PS: If you are an accountant and you take offence to some of my suggestions, please don’t. If we cannot critically look at ourselves and identify what we are good at and what we are not, then we have an even longer journey ahead of us. Don’t forget, I am an accountant too!