Proven Strategies for Accountants to Build a Profitable Practice
The difference between accounting firms who rake in large profits and those that simply stay afloat is strategy. As the workload of a firm increases, it can become easy for partners to get lost in the day-to-day activities of their firm and lose sight of the larger picture. Generating profits is often equated with building a successful practice, but this isn’t always the case. Your accounting firm might be growing its revenue, but this does not always mean that it’s reaching its full potential. With the increased competition in the accounting space, new technologies being introduced and changing client profiles, accounting firms need a clear growth strategy if they want to continue on an upward growth trajectory.
Here are the most important steps for an accounting firm to chart a future-oriented growth strategy.
1. Choose quality over quantity
In the age-old tug of war between quality and quantity, a growing accounting firm should always choose quality. In the initial stage when firms are just beginning to establish themselves, focusing on growing their client portfolio is important as it helps firm gain a foothold in the market. However, as a firm becomes larger, the quality of their client profile becomes more important than the numbers alone. 10 low-quality clients who require only basic accounting work is less valuable to a firm than 1 high-quality client who requires strategic consulting and is willing to pay a higher fee. By trimming down your clients and focusing only on those that add the greatest value to your firm, your employees will be able to devote more time to each client. This gives them greater room to increase face time with clients, take on a more advisory role and bring in greater revenues for your firm.
2. Create a niche for your firm
What differentiates your firm from all the others in the industry? If you can’t find a clear competitive advantage that your firm enjoys, then it’s unlikely that potential clients will either. Your firm doesn’t have to offer a huge range of services just because it has the capability to do so. Instead, focusing on one specific niche where you can build a strong presence can help you become more profitable in the long run. There are a number of specific segments today that are proving to be more profitable than general accounting practices. Some of these include wealth management, business coaching, international tax and more. As your expertise in a particular segment grows, your firm will become the natural choice for clients seeking services in that niche.
Developing this reputation for your firm cannot happen overnight. You might need to re-look at your branding, marketing communications and even the content on your website to align with your niche. You can also speak at events related to that segment to grow your firm’s reputation as a leader in the space. Sometimes, your firm might already be occupying a niche without you realising it. Taking a closer look at the range of services you are performing can help you identify if your firm is strong in a particular area.
3. Adapt to the latest technology
A profitable firm today is one that is open to taking advantage of the latest technological advancements. Technology is the way forward for firms looking to streamline and optimise their workflow. Switching to a cloud-based accounting practice can help make your processes more visible, bring down costs drastically and improve the performance of your firm. The cloud also requires less maintenance work which can reduce an accounting firm ’s overhead costs. Migrating to the cloud is essential if you are looking to take advantage of the gig economy by outsourcing certain basic functions so your employees can move on to higher-value roles.
Apart from improving your internal processes, adopting the latest technology is crucial when you are trying to refine your client portfolio. Digitally-savvy clients are unlikely to partner with a firm who is still using outdated technology and relying heavily on paper. They also want their accounting partners to be available digitally, instead of only offering face-to-face interactions. Only by making your firm technology-ready can you reposition your brand and attract the right kind of clients that will help you grow your firm.
4. Consider offshoring certain functions
In the accounting industry, nothing is truer than the saying, ‘time is money’. Unless an accountant has sufficient time on their hands, they will be unable to take on the larger advisory role that can help bring in higher profits. Most firms today are caught up with low-value tasks that are also very time-intensive. An important step in an accounting firm’s growth journey is spending more time on higher-value work. However, this doesn’t mean they can do away completely with lower-level tasks as these are still important. Outsourcing provides a cost-effective alternative that can help accounting firm’s prioritise their time more efficiently. By offshoring routine tasks to companies with technical expertise, accountants will have more time freed up to focus on growing their firm.
Offshoring certain functions doesn’t mean losing visbility. Sundaram Business Services, for example, has developed Softdox, a single dashboard that offers our clients complete process visibility.
You can read our blog on Is Your Company Ready for Business Process Outsourcing to learn more about whether this is the right option for you.
5. Productize your services
Repackaging your services as a product can be the key to achieving higher profits while simultaneously providing higher value services. Marketing your services as a product can help you reach a wider audience and help them understand your offerings much easier. Giving your product a catchy name will encapsulate all your services in a single word, helping your clients recall it better. Like a product, you can list out the clear advantages of using it, what it includes and a clear uniform process that will be followed. Since you will have a greater scope to automate processes when a service is productized, it will reduce manual tracking and follow-ups, which can save your firm a lot of money. Giving your product a catchy name will encapsulate all your services in a single word, helping your clients recall it better. Since it is a ‘product’, you can also charge your clients a higher rate for it rather than the standard practice of billing them hourly.
Building a profitable accounting firm doesn’t relate to just numbers alone. It also means ensuring that your firm’s talent is being utilised to their full capacity. Through these strategies, you can help your firm scale up and reach new heights.
To learn more about Sundaram Business Services and how we can support your organisation, visit sundarambizserv.com