These changes affecting the accounting industry are not only unstoppable, but provide an opportunity for accountants to be more strategic in growing their firm and its profitability.
At next-generation CPA firm Blumer and Associates, we’re becoming a lot more profitable by changing the way we work with our clients. Here are some things we’ve done to become more strategic:
Deepening our niche
The Internet helps you deepen your niche by making geography redundant. Creatives are our niche. We’re experts at helping businesses like ad agencies, graphic designers and copywriters.
Thanks to Skype, Google Docs, Xero and other online applications, we’re able to work with creatives from all over the world. Our potential client base has become orders of magnitude larger, we’ve developed more expertise, and we’re shielded from regional economic downturns.
We know we’re the best accountants for creative businesses. We also know that we’re not the best accountants for grocery store owners or mechanics. By deepening our niche, we’ve been able to become more selective with who we work with. We refer unsuitable clients to other accounting firms, and they do the same for us.
Going beyond tax season
I guarantee there’s someone out there who will charge less than you do to prepare taxes. We rise above by complementing tax preparation with business consulting services. It’s more profitable and far more fun than getting involved in a race to the bottom.
One example is the coaching we offer clients in creative industries. We meet with them once a month and help with things like pricing, client selection and effective marketing. As their accountants, we know their businesses inside and out, making us the best people to give relevant advice that they can apply today.
Services like this set us apart from other accountants. Our clients now see us as a key part of their business and a key driver in its growth. What’s more, they’re happy to pay more for these services than they would for tax preparation. After all, they’re getting way more value out of it!
So there’s no need to eliminate tax preparation. But for strategic accountants, it’s the foundation for more exciting and profitable extra services.
Getting rid of hourly rates
Here’s a newsflash: your clients don’t care how much time you spend working on their accounts. All they care about is how much they owe you and whether they’re getting their money’s worth.
That’s why you need to use fixed-price agreements. Fixed prices are relevant to their world—clients pay for the amount of value you deliver, not the amount of time you spend delivering it. Compare this to hourly billing, which treats every client as a drain on your time, energy and resources.
Fixed fees focus your firm on the client. What we do is sit down with our clients before we do any work and agree on what we’ll do for them and how much it will cost. They get something that is directly relevant to their business, and the price they pay is directly relevant to the value we add.
Finally, fixed fees make us more attractive to our clients because there are never any surprises. They pay the fee they agreed on. No more, no less.
Creating software solutions
Lots of online applications can talk to one another, so we choose the exact set of software our clients need. An online retailer can get cloud e-commerce and accounting software, while a brick and mortar retailer can get accounting, point of sale and payroll software.
This approach also applies to the cloud software we use to run our practice. It’s a huge improvement on the software suites the Big Four offer, which put us in the unenviable position of choosing between spending too much and getting a bunch of stuff we don’t need or not spending enough and missing out on what we do need.
Being the practice owner
As the owner of an accounting firm, you’re more than an accountant – you’re an entrepreneur. You might do some of the technical stuff, but your real value is in your ability to create long-term strategies,
Staff is key. You’ve got to find ways to empower them. We've removed all barriers from out team in serving our clients by removing dress codes, office hours, required work locations, employment agreements and boring annual reviews.
Your relationship with your clients is just as important. This doesn’t always mean face-to-face time (although a coffee with a client never hurt). Give them a call with some proactive advice; email them articles that are relevant to their business.
Becoming a coach
Want to become more strategic? Become a coach. Coaching is all about asking the right questions of your team and your clients. Help them see why they are growing, what they are passionate about, and how they set their prices. Ask your clients to explain their full process on serving their customers and then listen. Listen for situations where your client is giving value to their customer and then try to discover new ways to add additional value while also adding to your bottom line. When you become strategic and add more value, then you get to raise your prices, too. Your client is happy, and you are happy!