One way to reduce the pain is to become more efficient. But what if you are already as efficient as you can reasonably be?
For many of our firms, growth is critical to fuel our succession plans. If not that, it is necessary to retain top talent. If not that, it is important to boost critical mass in areas of niche specialty. But when profitable growth doesn’t come from compliance services, where does growth come from?
Service line diversification might be on your mind – and it should be. Think of this: why do grocery stores now sell sandwiches? Why do they have their own coffee stands? Many here in Chicago even have full bars stocked with craft beer and wine bars pouring flights from all over the world. One reason is because the margins are better on these products and services. Why should they focus on selling you a bag of flour for $2 at 1 percent margin, when they could make a 300 percent margin on a $12 glass of wine?
To relate this to our firms, shouldn’t we be focused on selling more wine and less flour?
If you look at some of the fastest growing firms in the country, you will note they are also selling more wine and less flour. But how do they do it? It’s simple—they decided to build a wine bar and sell wine to their current clients. Interestingly enough, the clients love it, and they are opening doors at companies with accounting firms that currently only sell flour—and are selling them wine too.
So, if you are considering the impact of growth and profitable growth on your future, I would strongly encourage you to look into how you can sell more wine, sandwiches and coffee. What kinds of services do your clients need from you (or could buy from you) that you aren’t providing? The list is virtually endless!
Finally, many firms would argue that they already sell wine, but I would argue that in many cases they are “dabbling,” and their wine bar looks like a lemonade stand an 8-year-old could have put together. Avoid this – because dabbling will never fuel the volume of growth or that you really need.