Five ways to grow your tax and accounting practice
Winning new clients and developing a practise isn’t easy – it requires significant strategic thought. It’s essential to tackle business growth from several different angles, focusing on internal and external opportunities. Follow these five critical steps to creating a multi-pronged growth strategy that will take your practice to the next level.
1. Recognise your ideal client
Many practices spend a great deal of time serving clients who simply aren’t profitable. These hours could be better spent looking after more valuable clients and searching for more like them.
- Analyse your existing client base and identify your ‘ideal client persona’. What do your most profitable clients look like? Consider their age, gender, occupation and family status.
- Identify existing clients who don’t fit this profile and spend less time with them (without neglecting them completely!)
- Look for more ‘ideal clients’. You can appoint a research agency or buy data for this.
- Decide how you want to approach these prospects (see point three).
- Develop a long-term business strategy that attracts similar clients.
2. Develop existing relationships
Once you’ve identified your most profitable clients – and begin attracting more of the same – you can build these relationships to make them even more profitable.
- Check in with those clients through regular calls (without hounding them!).
- Organise invite-only lunches and events – they’ll appreciate the VIP status.
- Develop a communications strategy with regular touchpoints, including monthly newsletters, end-of-year bulletins and milestone recognition.
- Offer incentives such as discounted services for bringing in new clients.
- Identify cross-sell or up-sell opportunities based on other products or services that may be of interest.
3. Market wisely
There are numerous ways to market your practice, so it’s essential to identify your core objectives upfront.
- Appoint an agency to analyse client demographics and discover which channels they are most influenced by.
- Consider a search engine optimisation (SEO) and marketing strategy to lift your page ranking and display advertising on sites your prospects are interested in.
- Develop a social media strategy, starting with Facebook and LinkedIn. Be sure to offer the information your prospects are interested in – don’t just advertise your wares.
- Don’t forget that more traditional marketing techniques such as direct mail, local area advertising and hosting events may still work well for your practice.
4. Make friends and influence people
Networking is a powerful tool. Even in the digital age, it is still one of the most influential place business growth strategies.
If you’re considering a merger or wish to attract new investors, attend events run by the Chamber of Commerce or your local Business Enterprise Centre. You’ll meet lots of like-minded people and discover new opportunities.
Choose which trade shows, lunches and enterprise events you attend by looking at a copy of the attendee list in advance. Only follow those that offer genuine opportunities.
5. Create a well-oiled machine
Don’t waste time on unnecessary admin – free up your employees so they can focus on prospecting, serving and selling. Identify deficiencies around the office, delegate tasks to more junior roles and automate as many functions as you can.
If your company doesn’t have a customer relationship management (CRM) system in place, consider one as a priority. You’ll be able to seamlessly manage, automate, consolidate and report on your sales, lead activity, serving and marketing efforts practice-wide. Consider outsourcing appropriate tasks as well. You’ll be amazed how quickly a cost-effective supplier will earn the outlay back by refocusing efforts internally.
You’ll need to implement various complementary strategies to achieve real business growth. Still, by following the five steps above, your practice will soon be going from strength to strength and grow your tax and accounting practice.
Make the time to grow your accounting practice
Stop being too busy
Many accounting businesses are cyclical, with a busy season and a hectic season. You probably spend long hours overseeing projects, managing staff, finding a new company, and fighting fires. There’s not much time to stop and think about how to grow your accounting practice. And even less time to implement changes.
But if you want to fix roadblocks and boost profitability, you’ll need to make a plan. Being strategic isn’t something you can do in spare moments, so schedule some time for it, like you would for anything else to do with your business. Then stand back and look at the big picture.
Do you have the right clients, the right staff, the right processes? Or put another way – if you didn’t already own your practice, would you buy it?
1. Do your processes slow you down and turn off clients?
Do you collaborate as efficiently as you could within the firm and with your clients? Online tools allow you to:
- have face-to-face meetings without leaving your office
- chat with clients and colleagues on instant messaging platforms
- simultaneously edit documents and databases from different locations
- create and share reports in real-time
- reduce or even eliminate manual data entry
Some of these technologies are free (Google Hangouts, for example). Others need to be purchased, but generally via an inexpensive monthly subscription.
Be aware that, in the long run, the way you work will affect the types of clients you attract. Newer businesses have very different expectations about how they like to collaborate. They aim to be paperless and often forego personal interaction in favour of digital communication.
Updating technology can be daunting.
You have to research your options, pick a system (or several), get training for you and your staff, then endure teething troubles. But don’t take that initial disruption out of context. Do a complete cost-benefit analysis and consider the longer-term benefits of streamlining your most painful workflows.
Even something as arduous as payroll can now be done in a fraction of the time it used to take.
More efficient systems will lower internal costs and create time, which can help you grow your accounting practice.
2. Are you just busy, or are you billable?
When you look at your internal processes, look at your clients’ too, because you can only work as fast as they let you.
Clients who embrace new technologies will do wonders for your bottom line.
- They’ll do business online, requiring fewer meetings.
- Their financial data will stream directly into the ledger without double handling.
- Their numbers will be clean (coming from bank feeds rather than spreadsheets).
- They’ll send queries on messaging platforms rather than via long emails.
You’ll probably always have some old-school clients in the mix, but try to attract modern businesses too. You’ll work more efficiently, get through more billable work, and build your reputation as a progressive practise for millennial-minded enterprises.
If you can’t easily find tech-savvy clients, make them. Identify a progressive client this year and set them up with a cloud accounting package. Once they’re up and running, use them as a case study for your other clients. The testimonials will motivate other businesses to make the switch too. Transitioning clients to the cloud could be a good revenue stream.
Being busy is good for revenue. But that doesn’t mean it’s good for profitability.
3. How are you competing for talent?
Your staff affect your profitability, culture and brand. Do they make your clients comfortable and happy? Are they good to each other? Are they proficient at their jobs? Are they the sorts of people who can develop new business and grow your accounting practice?
It’s not easy to find people with significant accounting and people skills. Consider what you can do to attract them. More enormous salaries aren’t always possible, and they’re not necessarily the answer. A 2015 study by WorkplaceTrends found 75% of employees ranked flexibility as the top benefit in their jobs.
You could bring more entrepreneurial staff into practice simply by cutting five hours off the work week or allowing the team to work from home. Again, your workflows and processes will have a significant bearing on your ability to do this. If your accounting and time-recording systems are online, your people can work where and whenever they like. Don’t underestimate what that could mean for your recruitment and human resources.
4. Is it time to go after a niche?
Keep looking at your practice to see if you’re doing specific types of work or serving certain types of clients. You could be developing a niche without even knowing it. Niche practices enjoy competitive advantages, such as:
- Economies of scale
They get proficient at repeating specific tasks and develop systems to deliver projects faster.
- Expert capabilities
They develop a deep understanding of specific industries, enabling them to deliver authoritative advice.
- Marketing resonance
They get word-of-mouth referrals within the industry they serve and can produce far more targeted marketing.
Some firms target a niche practice from day one, but you could develop a niche organically. Look for patterns in the sorts of clients you have or the work you do. And see what sorts of projects you’re really good at delivering – they’re the profitable ones. If certain parts of your business look strong, consider developing it into a niche.
You don’t have to change your entire marketing strategy overnight. You could start by developing a landing page or a microsite for that niche and using the URL in targeted marketing campaigns. It’s something you can try without breaking the bank, and it could be a good launchpad to help grow your accounting practice.
5. Have you got your branding right?
What does your brand say about your firm? Do the name and logo speak to the clients you want?
Accounting practices have traditionally adopted partner surnames. But other accountants have found success branding themselves after landmarks, geographies or concepts.
A new brand name could be your opportunity to be more descriptive – reflecting a niche that you’re developing and making it more transparent what you do or the sorts of clients you’re looking for.
Dropping surnames from your firm’s brand will also make you more significant than any individual, which could make the practise more marketable when it comes time to sell.
Make a plan and grow your accounting practice.
Being busy is good for revenue. But that doesn’t mean it’s good for profitability. So no matter how busy you are, make time to step back and look at the bigger picture. Are you working efficiently? Are your clients as billable as they could be? Are you attracting the right sort of talent? Could your marketing be more targeted?
To build a sustainable business, you need to strategise. Thinking time isn’t a luxury. It’s a necessity. Put it into your schedule and take control of your firm’s future.
Advice for selling an accounting practice
Accountant & Bookkeeper Guides
Selling an accounting practice is a complex business. Whether you’re focused on getting a big payday or you want to protect your legacy, it’ll take a lot of planning and preparation.
Nearly two-thirds of accounting firm owners are baby boomers, and they’re starting to retire. There could be a sudden glut of accounting firms hitting the market – but there are only so many buyers.
If you’re looking to sell your accounting practice, you might have some competition on the horizon. Here are seven things to think about before putting your business on the market.
Seven things to think about when selling an accounting practice
- The smaller your practice, the easier the sale
If your accounting practise small, it will probably be easier for you to find a buyer. This is especially true if you’re the sole owner and have complete authority over the business. Small accounting practices can be appealing to larger firms because:
- acquiring a list of clients from a smaller practise is much quicker than adding clients one at a time
- smaller practises typically have fewer staff to accommodate in transitions
A smaller practice also typically costs less to acquire, which means you have a bigger market – from big companies down to small practices and even individuals. If you own a more prominent firm, or you’re a partner selling your equity, be prepared for a more complex sale.
- Is internal succession an option?
Selling an accounting practise to another business can mean the end of your firm, as you knew it. If you’d instead ensure your practice’s continued vision and culture, you should consider passing the reins to someone internally.
In larger firms, partners can sell their equity to the remaining owners or rising stars. Succession is built into the business plan. It’s much harder for small practices as there may not have been a budget to hire and groom potential partners. You’ll have to decide if you have someone with enough:
- experience and leadership to run the practice
- capital to buy you out
You’ll also need to figure out if you have the time and resources to get them ready to take over. If you have a good candidate to buy the firm, you might want to start talking about your plan now. They’ll need time to decide if it’s what they want, and they’ll need to build a financial plan for making the purchase.
- The importance of client retention
Client retention is one of the key metrics in deciding the value of an accounting practice. Buyers rarely agree to an upfront sale because of the risk that clients will leave after the handover when the principal has gone. Instead, they’re more likely to pay yearly instalments, which are adjusted based on client retention.
If the firm loses clients, the annual instalments will go down. If it gains clients, yearly instalments will go up. In other words, it won’t be enough to demonstrate that your firm has loyal clients. You’ll need to ensure that loyalty continues after you’ve left. Make sure your clients have confidence in your staff.
The quality of your clients can be just as important as the quantity.
Have you worked hard to attain new clients? A slow growth rate may lower your practice’s value, so try to keep adding accounts
Are your clients easy to work with, and do they pay on time? Unprofitable accounts will likely hurt your sale price.=
- The timing of the sale
Many firms have busy and slow cycles that affect revenue and cash flow. You might be compliance-focused with a busy tax season. Or perhaps you serve seasonal industries, like tourism. If so, beware of when you sell. Buyers won’t want to invest in your practice during a time of weak earning.
Your accounts receivable can also affect the sale. The money owed for work you’ve already done is, in effect, your revenue. However, claiming it after closing the deal can put pressure on the buyer.
Buyers want a quick return on their investment. They don’t want to have to turn around and pay you more money straight after the sale. Think of ways to sweeten the deal, like:
- handing over control of your practice just before your most profitable time of year to help the buyer hit the ground running
- loaning the buyer your accounts receivable for a short time to give them more cash flow
A degree of generosity on your part could mean less capital investment from the buyer – and potentially a better selling price for you.
- Prepare and plan
A successful sale rarely just happens. Give some thought to how you’ll position the firm to potential buyers.
To help decide what your sales pitch will be, evaluate your firm’s performance and find where you excel. Promote those metrics vigorously. Equally, you should acknowledge where you’re not doing well and try to address those issues before they get in the way of a good deal.
When selling an accounting practice, past profits are significant but try to paint a rosy picture of the future too. Tell a more comprehensive story about where the business is going.
- What technology does your practice use?
Choosing which technology to use in your firm can impact its future sale. Does your practice run on dated software or spreadsheets? If so, buyers will assume you do a lot of low-yielding, manual work. They’ll think they have to work harder for every dollar that comes in the door.
If, on the other hand, you’ve adopted cloud accounting or tax and practise complete management technology, promote it. Tell potential buyers how quickly you’re able to do business. Also, make the point that:
- your staff are proficient with technology and can transition to a modern firm (or help transform a paper-based parent firm)
- your clients use cloud accounting and are therefore efficient to work with
- Consultants can help you value your practice and find potential buyers
As an accountant, you’re a small business specialist. But you probably don’t have much experience in pricing, marketing or selling an accounting practice. Consider using a specialist.
Merger and Acquisition consultants are often qualified accountants and they can help you decide on timing and pricing. They probably also have advanced knowledge of firms looking to buy and can:
- help get your firm in optimal shape to impress buyers
- promote your firm
- act as the broker
Plan your practice’s future
Whether you’re selling an accounting, practise next year, or in 10 years, it’s never too soon to start planning. Decide if you’d prefer internal succession, merger or acquisition, and start preparing for the best outcome.
That might mean grooming your staff to take over or making your firm an attractive acquisition target. Whichever way you go, you’ll need to make sure the practice can succeed without you. Your firm’s ability to retain clients after you’ve left will determine whether or not it flourishes, and it could decide the size of your final paycheque.