Five ways to grow your tax and accounting practice
It is not simple to acquire new customers and expand a business; to do it successfully requires considerable strategic consideration. It is vital to approach the expansion of a firm from a number of different sides, concentrating on prospects both internal and external to the company. If you want to create a multi-pronged growth strategy that will take your practice to the next level, the first thing you need to do is follow these five essential steps.
1. Identify your ideal customer
There are a lot of practices that devote a significant amount of time to supporting customers that just aren’t lucrative. These hours could be put to better use by taking care of more valuable customers and looking for other customers who are similar to them.
- Conduct an investigation of your current clientele and create a profile of your “ideal client persona.” Who are your most lucrative customers, and what do they look like? Think about their age, gender, what they do for a living, and whether or not they have a family.
- Determine which of your current customers do not fall into this category and spend less time with them (without completely ignoring them, of course!)
- Try to find more “perfect clients” to work with. In order to accomplish this, you can either hire a research organisation or purchase data.
- Determine the manner in which you wish to approach these potential customers (see point three).
- Create a company plan with a long-term focus that targets customers who are like your existing ones.
2. Expand existing connections
After you’ve determined which of your customers brings in the most revenue for your business and begin working to bring in more of the same, you’ll be able to strengthen these connections and make them even more lucrative.
- Call those customers on a frequent basis to check in with them (but don’t bother them too much!).
- Lunches and gatherings that are by invitation only should be planned, as they will value their VIP status.
- Create a communications strategy that includes regular touchpoints, such as monthly newsletters, end-of-year announcements, and acknowledgement of milestones.
- Provide new customers with discounts on services as an incentive to bring in other customers.
- Determine whether there are any prospects for up-selling or cross-selling based on other items or services that would be of interest to the customer.
3. Market responsibly
Because there are many different approaches to marketing your clinic, it is vital to determine your primary goals before getting started.
- Employ a consulting firm to investigate the demographics of your clientele and identify the media outlets that have the greatest impact on them.
- You should think about implementing a search engine optimisation (SEO) and marketing strategy to increase your page ranking and display advertising on websites that are interesting to the customers you are trying to attract.
- Create a social media strategy, with Facebook and LinkedIn serving as your beginning points. Don’t merely advertise your products; instead, make sure to provide the information that your potential customers are looking for.
- It is important to keep in mind that more traditional methods of marketing, such as sending out direct mail, advertising in the local area, and sponsoring events, may still be effective for your clinic.
4. Make friends and exert influence
The power of this technology lies in its network. Even in this day of digitalisation, it remains one of the most influential methods for the success of place-based businesses.
Attending events hosted by your local Chamber of Commerce or Business Enterprise Centre is a good idea if you are thinking of combining your businesses or trying to entice new investors. You’ll find a tonne of people who share your interests and learn about brand new opportunities.
Examining a copy of the participant list in advance will allow you to select the business conferences, luncheons, and other events at which you will participate. Only follow those accounts that will actually open doors for you.
5. Make a well-functioning system
Do not let your employees’ time be wasted on pointless administrative tasks; instead, liberate their time so they can concentrate on prospecting, servicing, and selling. Identify problems that exist throughout the workplace, assign responsibilities to employees with less seniority, and automate as many jobs as you are able to.
Consider making the purchase of a customer relationship management (CRM) system a top priority for your business if it does not already have one. You will be able to manage, automate, consolidate, and report on your sales, lead activity, and marketing efforts across the entirety of your practice without any hassle. Think about contracting out the necessary activities as well. You’ll be surprised at how soon a cost-effective supplier may earn back the initial investment by refocusing efforts within the company.
If you want to see actual growth in your company, you’ll need to put into action a number of different strategies that complement one another. Nevertheless, if you follow the five procedures that have been outlined above, you will quickly see that your practice is flourishing and will be able to expand your tax and accounting business.
Make the time to grow your accounting practice
Stop being too busy
Many accounting businesses follow cyclical patterns, with busy seasons and slower off-peak times of the year. It’s likely that you put in a lot of hours monitoring projects, managing people, searching for a new company, and putting out fires. There is not much time to pause and contemplate the various ways in which you might expand your accounting practice. And an even shorter window to put changes into effect.
You will, however, need to devise a strategy in order to overcome obstacles and increase your level of profitability. Because being strategic is not something that can be done in your spare time, you will need to schedule some time for it, just as you would arrange time for anything else that has to do with your company. The next step is to take a step back and examine the bigger picture.
Have you ensured that you have the right customers, the right employees, and the proper procedures? To put it another way, if you didn’t already own your practice, would you purchase it if you had the opportunity?
1. Do your processes slow you down and turn off clients?
Do you collaborate as effectively as you possibly can both within the company and with the clientele of the company? The use of online technologies enables you to:
- have face-to-face conversations without ever having to leave your office
- instant messaging services allow users to converse with customers and coworkers
- documents and databases can be edited simultaneously while being located in separate places
- make reports and share them with others in real-time
- decrease or even eliminate manual data entry
Free versions of several of these technologies are available (Google Hangouts, for example). Some must be purchased, but in most cases, this may be done through a low-cost subscription paid monthly.
Be conscious of the fact that the manner in which you perform your duties will, over the course of time, have an impact on the customers you attract. Newer enterprises typically have significantly different collaboration preferences and expectations than more established companies.
Their goal is to eliminate the use of paper, and they frequently rely on electronic communication rather than face-to-face engagement.
Keeping up with technological advancements can be challenging.
You are required to conduct research on your available options, select a system (or several systems), obtain training for both you and your personnel, and then deal with any teething problems that may arise.
However, you shouldn’t consider that initial disturbance in isolation from the rest of the situation. Carry out a comprehensive cost-benefit analysis and take into account the longer-term benefits of optimising the workflows that cause you the most discomfort. Even a task as laborious as processing payroll may now be accomplished in a far shorter amount of time than it used to require.
You will be able to save money on operational expenses and gain time with more efficient methods, both of which will help you expand your accounting firm.
2. Are you just busy, or are you billable?
When evaluating your company’s internal procedures, you should also evaluate those of your customers because the speed at which you can complete your task is dependent on how quickly they allow it.
Customers who are willing to try out innovative products and services will do wonders for your bottom line.
- They will do business on the internet, which will result in fewer in-person meetings.
- Their financial data won’t need to be doubly handled because it will be entered straight into the ledger.
- Their records will be free of errors (coming from bank feeds rather than spreadsheets).
- Instead of sending lengthy emails, they will communicate their questions through various chat systems.
It’s likely that you’ll always have some traditional customers, but you should also make an effort to bring in more contemporary companies. You’ll be able to operate more efficiently, complete more work that can be billed to clients, and enhance your reputation as a progressive practice for businesses that are geared towards millennials.
Create tech-savvy customers if you can’t readily locate them in the market. During the course of this year, you should seek out a forward-thinking client and provide them with a cloud accounting solution. When they are fully operational, you can use them as a case study for your other customers. The testimonies will encourage additional companies to implement the change as well. Moving your customers’ workloads to the cloud presents the possibility of new revenue streams.
Having a lot of things to do is beneficial to revenue. However, this does not necessarily guarantee that it will increase profitability.
3. How are you competing for talent?
Your workforce has an impact on your company’s revenue as well as culture and brand.
Do they ensure the contentment and comfort of your customers? Do they get along well with one another? Are they skilled in the tasks they perform? Are they the kinds of people who can help your accounting office bring in new clients and expand in the future?
Finding employees who are capable in both accounting and dealing with people is not an easy task. Think about the things you can do to pique their interest. Paying employees more substantial pay is not always feasible, and it is not always the solution to the problem.
According to research conducted by WorkplaceTrends in 2015, the majority of workers (75 percent) consider flexibility to be the most valuable perk of their professions.
Cutting the work week by five hours or letting the team work from home is a simple way to encourage more entrepreneurial behaviour among the personnel. Again, the workflows and procedures you use will play a key role in determining your level of success in this endeavour.
If the accounting and time-recording systems that your company uses are accessible online, then your employees are free to work whenever and wherever they choose. It would be a mistake to minimise the potential impact it could have on your recruitment and human resources.
4. Is it time to go after a niche?
Maintain a close eye on your business to determine whether or not you engage in certain kinds of work or provide services to particular clients. It’s possible that you’re carving out a specialised market for yourself without even realising it. The following are some competitive advantages enjoyed by niche practises:
- Economies of scale
They get skilled at performing particular tasks repeatedly and build processes to expedite the delivery of projects.
- Expert capabilities
They get an in-depth knowledge of particular fields, which enables them to provide advice that is considered authoritative.
- Marketing resonance
They are able to produce far more focused marketing and receive recommendations from people working in the industry that they serve through word of mouth.
You can establish a niche practice in the same way that other businesses do, which is by targeting a certain practice area from the beginning. Look for recurring themes in the types of customers you serve or the tasks that you perform. Check to see what kinds of tasks you excel at producing because they are the ones that will bring in the most money. If you notice that certain aspects of your company are very successful, you might want to think about specialising in those areas.
It is not necessary to make a complete shift in your marketing strategy all at once. You may begin by establishing a landing page or a microsite for that niche and then utilise the URL for those efforts in targeted marketing. You won’t have to empty your bank account to give it a shot, and it has the potential to serve as a solid springboard for expanding your accounting firm.
5. Have you got your branding right?
What kind of message does your company’s brand provide to consumers? Does the company name and logo appeal to the customers you wish to work with?
Historically, the surnames of the partners have been used in accounting methods. However, some other accountants have discovered that they can successfully brand themselves by emulating well-known monuments, regions, or concepts.
It is possible that a new brand name will provide you with the opportunity to be more descriptive. This could include reflecting a speciality that you are establishing and making it clearer what it is that you do or the kind of customers that you are searching for.
Eliminating surnames from the brand of your company will not only make you more significant than any individual, but it will also make the business potentially more marketable when the time comes to sell it.
Make a plan and grow your accounting practice.
Having a lot of things to do is beneficial to revenue. However, this does not necessarily guarantee that it will increase profitability. Therefore, regardless of how hectic your schedule is, you should always make time to take a step back and examine the wider picture.
Are you making good use of your time? Are your customers generating as much revenue as they possibly can? Are people who have the skills you need to succeed drawn to you? Could you get more specific with your marketing?
One must engage in strategic planning in order to establish a successful enterprise. The ability to reflect is a necessity, not a luxury. It’s not optional at all. Put it on your calendar, and take charge of the direction your company will go in the future.
Advice for selling an accounting practice
Accountant & Bookkeeper Guides
The transaction of selling an accounting practice is a complicated one. It will require a great deal of planning and preparation, regardless of whether your goal is to make a lot of money or to preserve your family’s name and heritage.
The owners of over two-thirds of accounting firms are baby boomers, and many of them have started the retirement process. There is a finite number of potential purchasers, despite the fact that there can be a sudden influx of accounting businesses onto the market.
If you are considering selling your accounting practice, you should be aware that there is likely to be some competition in the near future. Before you put your company up for sale, you should give some consideration to the following seven factors.
When selling an accounting practice, here are seven considerations to keep in mind.
- The less space your practice occupies, the simpler it is to sell.
If the size of your accounting practice is relatively modest, finding a buyer should not be too difficult for you. This is especially important to keep in mind if you are the only owner of the company and have entire control over its operations. Larger accounting firms may be interested in purchasing smaller practices for the following reasons:
- Buying a client list from a local business that has less customers is a far more time-efficient strategy than attracting customers one by one.
- In general, smaller practices have a lesser number of staff members to accommodate patients through transitions.
A smaller practice also often has lower acquisition expenses, which means that you have access to a larger market, which can include large corporations all the way down to small practices and even individuals. Be prepared for a more complicated sale if you own a more well-known company or if you are a partner selling your share of the company’s equity.
- Is internal succession an option?
It’s possible that selling your accounting practice to another company will mark the end of your company as you’ve known it. If you would rather secure the continuation of the vision and culture of your practice, you should think about handing the reins over to someone already employed there.
When a company is large enough, partners have the option of selling their equity to the company’s current owners or to rising stars. The succession strategy is incorporated into the overall business plan. It is significantly more difficult for small practices since there may not have been a budget to hire and train potential partners. This makes the process much more difficult. You will need to make a decision as to whether or not you have someone with sufficient:
- the necessary expertise and direction to manage the practice
- capital to buy you out of your contract
In addition to this, you will need to evaluate the amount of time and resources at your disposal in order to establish whether or not you can adequately get them ready to take over. You should probably start talking about your idea as soon as possible, especially if you know someone who would be a good fit to buy the company. If you do know someone who might be a good fit, They will need some time to consider whether or not it is something that they want, and in order to purchase it, they will also need to create a spending plan.
- The importance of client retention
When determining the worth of an accounting practice, client retention is one of the most important criteria to look at. The possibility that clients will depart after the handover, after the principal has moved on, is one of the primary reasons why buyers almost never agree to an up-front transaction. Instead, it’s more probable that they’ll pay in annual instalments, which can be changed dependent on how long they remain a customer.
If the company loses customers, the annual instalments will decrease as a result. In the event that it acquires new customers, the yearly payments will be increased. To put it another way, only demonstrating that your company has devoted customers won’t be sufficient. You will need to take steps to guarantee that loyalty is maintained after you have left the organisation. Ensure that your customers have faith in the members of your staff.
It’s possible that the quality of your customers is just as crucial as the quantity of them you have.
Have you put in a lot of effort to get new customers? Your practice’s worth could decrease if it has a modest growth rate, thus it’s important to continue adding new accounts.
Are your customers straightforward to work with and prompt with their payments? Your sale price will most certainly suffer as a result of unprofitable accounts.
- The timing of the sale
A significant number of companies go through busy and slow cycles, both of which have an effect on sales and cash flow. These cycles can last for months or even years. It’s possible that you’re more worried about complying with regulations due to the frantic nature of tax season. Or maybe you provide services to firms that are affected by cycles, such as the tourism industry. In this scenario, the timing of your sale needs to be carefully considered to ensure its success. When earnings are minimal, prospective purchasers of your practise won’t have any interest in making an investment in it.
Your outstanding invoices have the potential to influence the sale as well. Your income might be thought of as the sum of money that is owing to you for work that you have already completed. Claiming it after the purchase has been closed, on the other hand, can put pressure on the buyer.
The purchasers are looking for a rapid return on their investment. They would prefer to avoid the inconvenience of having to make an additional financial transaction with you so soon after the sale. Think of methods to make the offer more appealing, such as:
- handing over control of your practice shortly before the time of year when it is expected to generate the most revenue in order to assist the buyer in getting off to a quick start.
- lending the buyer some of your accounts receivable for a limited period of time in order to provide them with increased cash flow
If you demonstrate a certain degree of kindness towards the buyer, they may make a smaller initial financial investment, which could result in a higher selling price for you.
- Prepare and plan
A successful sale is something that almost never just happens by itself. Consider the manner in which you will offer the business to potential buyers of the enterprise, and make plans accordingly.
Evaluate the success of your company and determine the areas in which it excels to assist you in deciding what your sales pitch will be. Foster a strong interest in such measurements. Equally as important, you should be honest about the areas in which you are struggling and make an effort to fix these problems before they prevent you from making a profitable transaction.
When selling an accounting business, it is important to focus on past profitability, but you should also do your best to portray a positive picture of the practice’s future. Share with the audience a more in-depth narrative regarding the future of the company.
- What technology does your practice use?
The technology that you choose to instal at your firm could potentially have an effect on the company’s capacity to sell itself in the future. In order to administer your practise, do you still rely on antiquated software or spreadsheets? If this is the case, then customers would probably get the conclusion that you conduct manual labour while putting in a lot of effort for a relatively little wage. They will have the mentality that they need to put in greater effort for each dollar that comes through the register. This is the thinking that they will have.
Promote cloud accounting or tax and full management technology if you’ve implemented it. On the other hand, if you haven’t done so before, do so. Inform prospective customers of the speed with which you can conduct business. In addition, emphasise the fact that:
- Your team is technologically savvy and able to adapt to a more contemporary business environment (or help transform a paper-based parent firm)
- Your customers are time- and resource-efficient to work with because they use cloud accounting.
- Consultants can help you value your practice and find potential buyers
You are an expert in matters pertaining to small businesses because you are an accountant. However, it’s likely that you don’t have much experience when it comes to pricing, marketing, or selling accounting practices. Think about employing the services of an expert.
Many times, merger and acquisition advisors are experienced accountants who are able to assist you in making decisions regarding timing and cost. They possibly also have an in-depth understanding of companies that are interested in being acquired and can:
- assist in getting your business in top form to amaze customers
- advance your business
- represent the broker
Plan your practice’s future
It is never too early to start planning, regardless of whether you are going to sell an accounting practise next year or in 10 years. Make a decision as to whether you would like an internal succession, a merger, or an acquisition, and then begin making preparations for the best possible outcome.
This may involve preparing members of your employees to assume leadership roles or positioning your company to be a desirable acquisition target. Whichever path you choose, you will need to ensure that the practise can be successful even in your absence. The capacity of your company to maintain client relationships after you’ve departed will influence not only whether or not it thrives but also the size of the check you receive as your last compensation.