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Accountants in Practice

The 80/20 Rule Does it Apply to Your Practice

By Abbott and Crowe

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The Pareto Principle or as it is more commonly known the 80/20 rule says that basically 20% of your clients generate 80% of your income.

Now if this is actually correct in your practice it’s a very important piece of information and makes lots of decisions far easier to make.

So, why not find out if the rule applies in your practice. It is fairly simple to work out just take your list of clients and then place all businesses where the ownership is in the same family forming a unit to which you ascribe the total income for that unit as opposed to the list of businesses that are individual in character.

If the top 20% generate 80% or thereabouts of your income it becomes apparent which clients are more important than others.

Looking at your newly listed important clients are you actually paying them the attention that they deserve? Are their affairs running so smoothly that your interaction with them has become stilted and repetitious over the years? If when you review the annual Accounts finalisation notes do you find yourself or the staff repeating the same notes as in the past and are you guilty of saying things like “nothing much to report about this year” OR “just keep doing what you’ve always been doing”

If this is what you find you have to take action to almost re-establish the rapport you had in the past with your client for fear that your torpor could let in another Accountant.

Turning to the 80% of your clients that generate 20% of your income are you recognising the late payers? the incomplete or possibly virtually non-existent record cases?, the clients that complain about the fee level every year? And the clients that spend ages questioning everything.

Now feeling like you want to be free of these clients just become much easier to actually make happen hasn’t it.

Published June 2014