Aaron Sullivan
The World Series just ended, and it got us thinking about how accounting is a bit like baseball: it’s heavy on numbers and statistics, it can be mentally exhausting, there are a lot of late nights where your idea of eating healthy goes out the window, and the [busy] season is always longer than you remember. Oh, and of course sometimes we hit things with bats...
Just kidding on that last one! (We hope...)
But really, comparing accounting to baseball isn’t all that crazy. In fact, tax season is like the playoffs with a lot of high intensity that hopefully results in a big payoff for a year’s worth of preparation. But while pro ball players get an offseason to recover from their biggest games, accountants aren’t afforded the same luxury.
Not that you shouldn’t take some time to kick your feet up! You absolutely should. But when you’re feeling rested enough and are ready to focus on your business instead of the arduous work on your clients’ businesses, then you might be ready to focus on accounting firm growth.
Growth or accounting firm scale is truly a year-round objective, but because accounting is seasonal with various deadlines and client expectations, it’s easy to put growth goals on the back burner. Don’t do that! You can set up your firm to be a year-round powerhouse rather than having the bulk of your success based on tax season craziness.
And here’s how.
Document Your Pipeline of Prospective Clients
Once you’ve made it through tax season, it’s time to recuperate. But it’s also the perfect time to review your pipeline of prospects.
Maintaining a document throughout the year that tracks prospective clients and the stage of the sales process is essential. Whether it’s reviewing the document you already have or making one for the first time, it can help you identify opportunities to add to your firm’s portfolio.
What to do
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Ensure every lead is in the correct stage of the sales pipeline. For example, if you’re still deciding if they’re a good fit for your firm, you’re still “qualifying” the client. Or if you’ve decided they’re a good fit and you’re trying to make the sale, they would be in the “meeting” stage. Any work that you do reviewing your pipeline is only as valuable as your document is accurate.
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Identify the clients who you will focus on to try and finalize the sale. While it might be tempting to go for the easy wins right away, it’s best to have a balanced approach. Say you focus on just the leads far in the pipeline. Once you’ve converted or lost those leads, you’re back at square one with a bulk of leads in the early stages. Finding a balance between the leads you’re focusing on will ensure you have sales waiting at every stage of the pipeline for smooth growth.
How it helps
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When you have downtime, it’s an invaluable opportunity to focus on growing your firm. Without the distractions of countless urgent tax season meetings, appointments, and tasks, you can finally put in work to grow your firm with new clients. Let’s say you’re looking to make a big change with the new year and change your pricing model (more on that later). You can bring on clients that will only know that pricing model, which is a great way of testing how it’s being received.
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When prospective clients get put on the back burner, there’s a chance of losing a potential sale. Putting in the effort to review and maintain this document can greatly improve metrics like your average win rate.
Change Your Pricing Model
Easier said than done, of course. Accounting has been rooted in the time-based pricing model for a long time. Alternatives are becoming more common, and some can help spread your revenue throughout the year. If you’re still billing based on time or making too much of your money from year-end services, a change can benefit you.
What to do
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Consider switching to a monthly service model. For example, if each client is paying around $6,000 at tax time, switch the pricing to $500 per month. This can ultimately work better for both you and your clients while generating the same revenue. Businesses can more easily plan for a monthly recurring cost as opposed to a one-time bulk cost.
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To make a monthly cost more appeasing, set deliverables for every month. It could be something like regular bookkeeping reports or a monthly executive summary. An executive summary will present all the pertinent information for a business in a concise and simple presentation. The better you can define your monthly service, the more acceptable the monthly pricing will be.
How it helps
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When being seasonal, those large influxes of cash need to last a long time to get to the next payday. But by switching over to a monthly pricing model from billable hours, your revenue gets smoothed out over the course of the year, allowing for more continuous, sustainable growth. This can greatly help with budgeting and allow you to explore full-time employees as opposed to part-time help around tax season.
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By including bookkeeping as part of a monthly pricing, you’re guaranteeing high-quality books when it’s time for tax season. Rather than losing time and effort cleaning up shoddy DIY work or outsourced books of unsure quality, you can hit the ground running. This will cut down on time needed to prep clients for tax filing, greatly opening up your capacity (a main struggle accounting firms face).
Offer Monthly Services
For some firms, changing pricing models isn’t an option. In these cases, you can explore other potential services that can be added to your product service menu. New monthly services will not only create additional revenue streams, but recurring revenue will improve cash flow and simplify budgeting.
What to do
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Many businesses lack the financial understanding to make heads or tails of their reports. Not only does this mean bookkeeping can be ignored for months on end, but if it is being done, they aren’t using it to inform business decisions. Client advisory services (CAS) can be offered year-round, opening up a brand new revenue stream. How you define your advisory services can define your firm’s growth.
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When a business ultimately decides to bring on an employee, it takes on a load of new responsibilities. Not only that, but missing one specific rule or law can result in hefty penalties. By adding payroll services to your firm’s repertoire, you can guarantee peace of mind for business owners who just want to bring on help to grow their business while also generating monthly revenue.
How it helps
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Advisory services can mean the difference between a business going under or thriving. 82% of businesses fail because of cash flow problems, something which can be improved with better budgeting and forecasting. Not only do advisory services add a new revenue stream to your firm, but it will help your businesses succeed and increase client retention.
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Businesses don’t want an accountant who simply checks the books and files taxes. They want guidance in the areas they know they’re lacking. Look at how virtual CFO services are growing as a prime example. Once your advisory services prove to be valuable to a client, you’re no longer just accounting services in their eyes. Instead, you’re a trusted advisor who is invaluable and irreplaceable. This will improve client retention and relationships.
Cut Operating Costs and Free Up Time with Automation
It’s intimidating to look at a long list of growth opportunities. Sure, it’s promising, but it raises the question: “Where will I find the time?”
Fortunately, accounting software has seen a recent spike in innovation. By using machine learning and artificial intelligence, time-consuming tasks like bank reconciliation, report generation, and payroll administration are being automated. But implementing new technology can take time, making it seem more costly than just the dollars and cents (here’s a spoiler—it’s not as expensive as you think!).
Embracing automation can shorten your bookkeeping cycle to a simple review and okay before sending it off to your clients. Not only will this free up your capacity for growth initiatives, but it will let you focus on new services that will create additional revenue streams for your firm.