Recently updated on March 7th, 2024 at 10:50 am
There are many reasons an accounting firm struggles to grow and keep up with the competition:
- It is comfortable with what it does and lacks momentum.
- It spends its time on the wrong activities.
- It doesn’t have a clear vision of how and where to grow.
- It doesn’t want the added cost of investing in growth.
- It sticks to traditional services that follow a seasonal growth pattern.
Many retail stores depend on Black Friday and its internet sibling, Cyber Monday, to put them in the black. They prepare the entire year for it and often have to hire seasonal staff to cover the workload. Over the Thanksgiving weekend in 2021, there were over 180 million shoppers.
And for most traditional accounting firms, tax season is their Black Friday. That is when they make the most revenue and grow — if they can handle their increased workload and have time to even speak to prospective clients, that is.
For many accounting firms, tax season is a battle, and when the battle is over, it is time for their staff to put their feet up. But it is also a perfect time to focus on their business instead of their clients and to chart a course for the future — one that doesn’t depend so much on tax season.
Growth should be a year-round objective of an accounting firm, but seasonal accounting patterns, with their deadlines and client expectations, can make it easy to put off growth. Your firm doesn’t have to do that. You can help your accounting firm grow year-round instead of waiting for success to revisit every tax season.
Building More Predictable Growth
According to the Rosenberg Survey, more accounting firms are merging, often to join forces with a larger accounting firm with capital to help them transition from compliance to advisory. The survey also found that these larger firms were profitable because of these reasons:
- Providing more advisory services.
- Engaging in strategic planning, marketing, and practice development.
- Adhering to a sturdy set of core values and maintaining partner accountability.
- Establishing a powerful technology infrastructure.
All these mergers and acquisitions might have small and medium-sized accounting firms wondering where they stand. They will have to beat the big firms at their own game. So here’s how to lay the groundwork for year-round growth.
Keep Track of Your Prospective Clients
While much of your growth can come from providing more new services for your existing clients, you still need to maintain your pipeline of prospective clients. Track these clients via a spreadsheet or, better yet, with CRM software — and regularly update the data throughout the year. Knowing exactly where your clients are in the sales process will help you identify opportunities that your firm can take advantage of.
Reviewing your client pipeline is only valuable to your firm if you keep the information on each potential client up to date. The most important part is identifying which stage in the sales pipeline each client is currently at. If they are still figuring out whether your firm is a good fit, the client is in the qualifying stage. If they have already decided that your firm fits well, they are at the meeting stage.
Classifying each prospect by what stage they are in will help your firm identify which ones to focus on. It can be tempting to focus on just those potential clients ready to meet you face-to-face, but this approach will eventually lead you back to square one, where you are qualifying bulk leads. The best approach is balanced. To keep the pipeline flowing, you need to find a balance that will guarantee you have leads ready at every stage.
The perfect time to do this is when you have downtime after tax season. After you are done focusing on clients’ needs for a while, you’ll have time to work on growing your firm with new clients. And if you plan on changing your pricing model, which we will get to next, you have the chance to test how well it works with clients that only know that model. And if your firm can’t keep your prospective client pipeline flowing, you’ll find out how to solve that problem later. You can’t leave prospects waiting because there’s a chance you will lose the sale.
Modify Your Pricing Model
Changing your pricing model may not be easy. Traditional accounting has used the time-based model for quite a while now. But it is becoming more common to use other pricing models, like fixed pricing or value pricing, which can help distribute your revenue more evenly throughout the year. If you currently base your revenue on time or make most of it around tax season, a change could really help your firm.
One thing your firm can do is switch to a monthly pricing model. If you have a client that pays $3,600 during tax season, you could instead bill them $300 each month. This will help your firm because it spreads your revenue throughout the year. The selling point for your clients is that they no longer have to come up with a bulk payment at tax time.
To make a monthly pricing model even more appealing to your clients, you can establish monthly deliverables. These could be as simple as regular bookkeeping reports, but you can also get more creative. If you want to provide more advisory services for the client in the future, one deliverable could be a monthly executive summary. That can give them a sample of what you could provide in an advisory role.
If your firm has been billing clients seasonally, you likely need to make that revenue stretch until tax time rolls around again. Switching from billable hours to a monthly pricing model can even out your revenue over the course of the year and enable your firm to grow continuously and budget more effectively.
By providing bookkeeping as a deliverable in your monthly pricing plan, you can also ensure that your clients’ books will be in good shape at tax time. That will mean less time prepping clients and their books to confirm they are ready for filing and will open up your capacity.
Offer Monthly Services
For some firms, changing pricing models is not feasible for one reason or another. If that is the case with your firm, you can investigate other possible services to provide to your clients on a monthly basis. Adding new monthly services to your product service menu will create additional revenue streams, improve cash flow, and simplify budgeting.
One service you can provide for your clients is payroll. Hiring a new employee is a complex process, and forgetting about one law or rule can result in hefty penalties. When you take care of payroll for your clients, you can give them peace of mind that it is being handled properly, allowing them to focus on their business.
Advisory is another service you can offer your clients year-round, creating an additional revenue stream for your firm. Many businesses don’t have the financial knowledge to make sense of their reports, which means bookkeeping may be put on the back burner for months at a time.
Even if your clients are keeping their books up to date, they could still make decisions without the benefits advisory can bring them. A whopping 82% of businesses fail because of cash flow issues. The advisory services you provide to your clients can help them improve their budgeting and forecasting and can be why they thrive and grow instead of struggling or even going under.
Once you provide advisory services to your clients, they will no longer see your firm as just an accounting firm. They will see you as a trusted advisor. So not only will providing advisory services give your firm another revenue stream, it will improve the relationships with your clients and make your firm hard to replace.
Finding the Time
While providing monthly services like advisory can add new revenue streams, you still have to find the time to advise your clients. In the past, this may have required hiring part-time or even full-time employees, but this is not a scalable solution. You may work toward providing monthly services, but until you get there, hiring new employees might not be feasible. Fortunately, there are other ways you can free up time.
Accounting Automation
Accounting software has leaped forward in innovation in the last decade, even in just the last few years. Accounting automation software can connect to cloud accounting platforms on a schedule to ensure that your clients’ financial data is always up to date. Automation eliminates manual data entry and the human error associated with it, so you and your clients’ can feel more confident that the data is accurate.
Automated accounting can streamline the bookkeeping process to a quick review before sending the results to your clients. Besides freeing up your capacity for growth initiatives, you will be able to focus on new services that will generate additional revenue for your firm.
And because the data is always up to date, you can provide your clients with accurate real-time financial insights on business performance with automated reports and live custom financial dashboards. Automating accounting processes can do more than free up time: it is key to providing advisory services.
Offshore Accounting
Hiring staff involves several expenses for your accounting firm. Even a part-time employee is an investment. It is not just their salary that will cost you. You will also potentially have to buy new office furniture and computer equipment. Solving capacity problems by adding to your firm’s headcount can be risky, especially if most of your work is seasonal.
Another option is outsourcing some of your accounting tasks to an offshore accounting team that only works for you when needed. While you and your staff focus on new growth initiatives like providing client advisory services, they can handle the day-to-day accounting tasks that any accountant can do.
Getting Started
Your accounting firm can grow throughout the year, and there are many ways it can accomplish this goal. You can keep your prospective client pipeline flowing, change to a monthly billing cycle, or add new monthly services. But the first thing you need is the time to do it, and PathQuest can help you with that.
PathQuest SCALE, our automated accounting solution, will help you find that time. SCALE will connect to your clients’ accounting platforms, including Xero, Quickbooks, Intact, and more, in real-time, so their data is always up to date and manual data entry becomes a thing of the past.
But that is only the first step. The next step is to connect that data to accounting business intelligence software so you can generate the reports and forecasts that are key to adding advisory to your product service menu. Fortunately, SCALE comes with PathQuest BI. With PathQuest BI, you can create custom financial dashboards for each of your clients’ needs, and they will be available to them in the cloud and updated in real-time, so the reports and forecasts you provide for them are always accurate.
When you opt to use SCALE, you will also have access to a dedicated accounting advisory services team. The team includes a staff accountant, senior accountant, team lead, service delivery manager (CPA), implementation manager, and quality assurance and customer success manager who can help whenever you need it. They can help you solve your time-sensitive bookkeeping needs, minimize the day-to-day manual drudgery, and increase your bandwidth. That way, you can focus on growing your business.
Ready to see everything PathQuest can do to help your firm grow more predictably? Book a demo today!
Published on: 9 August 2022
John Bugh is Chief Revenue Officer for PathQuest, responsible for the strategic direction, planning, vision, growth, and performance of the company’s marketing, branding, and revenue streams.
As a seasoned professional with over 35 years of experience in executive sales, marketing, and operational leadership, John has worked to build high-performing leadership-teams that have a demonstrated track record of accelerating growth, increasing revenue, establishing sustainability, and improving profitability.
He is an avid life-long fan of the NY Yankees and loves to snow ski with his family whenever he has the opportunity!
Listen Exclusive Podcast On
Contact Us
Call Now:
+1 (743) 223-2073
