Make the time to grow your accounting practice
Every accounting firm needs to make time to grow its business. Increasing your client base is an important way to create a sustainable, long-term business that will be able to withstand bumps in the road and still prosper. Here are five tips for busy accountants looking to grow their practice.
1. Invest in long-term marketing
Marketing isn’t a one-off investment. To keep new clients coming through your doors, you need to continue focusing and investing in long-term marketing campaigns. Step one is to create a detailed marketing plan that outlines your marketing goals and sets out the strategies you’ll use to achieve them.
In the digital age, your website will likely play a lead role, so ensure a search engine optimisation (SEO) strategy is included in this. It will help ensure your website ranks high when your potential customers search for accounting services online.
2. Create a business referral network
Teaming up with complementary businesses in your local area can connect you with a rich pool of new clients for a very low investment. Make contact with other professional services businesses such as lawyers, financial advisors, and IT providers nearby to create a professional referral network. But be sure to do your due diligence first – recommending under-performing providers to your clients may affect their trust in you.
3. Build your profile
You’ve probably heard the term ‘thought leader’. These are people who have built a strong personal profile in their industry through blogging, media appearances, and speaking events. Start by creating a killer LinkedIn profile, attending networking events, sharing your expertise in a series of blog articles, and sending out media releases that promote you as an expert interviewee.
4. Upsell your existing clients
Growing your practice isn’t just about attracting new customers. You could already be sitting on a mountain of unrealised revenue potential that will drive your firm’s growth. Audit your existing clients to find opportunities to upsell additional services. For example, a client that initially came to you as a modest startup might now have grown into a thriving small business and may require additional accounting services.
5. Optimise your work processes
With new clients rolling in, you might need to increase your capacity to keep your customer service standards high. Rather than automatically hiring new staff, assess your current work processes and identify where any workflow bottlenecks limit productivity. Best-practice accounting software such as QuickBooks Online can be useful for automating repetitive tasks – which will help you expand your client base without dropping your profit margin on unnecessary new hires.
The accounting practice action plan
The focus of successful, driven accounting firms is on their clients. These firms are evolving their business models and processes, investing in technology and developing their staff to facilitate proactive, forward-looking client relationships. The firms outstripping their competitors also have niche markets. They’re clear about their target market and about who falls inside and outside their service model.
To maximise the opportunities of an evolving Australian accounting industry and changing client needs, it might be time to re-evaluate your business strategy.
1. Who are your ideal clients?
What makes them tick? What frustrates them? What are they looking for? Can your business provide this?
Consider your firm’s brand positioning in the market. How does your offering stand apart from that of your competition?
What will ensure that your ideal client chooses you over another provider?
You should be able to articulate this in an elevator statement – one sentence you could use to describe your business to someone in the time it takes to ride an elevator. This statement can become the lens you apply to all future business decisions.
As a part of your positioning, consider the values you wish to exhibit to your clients and ensure your staff are aware of these and reflect them in their client interactions.
2. What are your long and short-term strategic objectives?
What are your strategic objectives across the next one, three and five years?
Do your objectives need to evolve?
Strategic objectives should always be quantifiable, so you can measure your success as you progress, and they don’t always need to be financially focused.
Consider including objectives relating to client satisfaction and staff retention and how much revenue and profit the business aims to make in a set period.
3. Separate strategies
What different strategies will help you achieve these objectives?
You might consider developing a strategic roadmap for each business area (for example, human resources or marketing) to provide as much clarity as possible about the goals for each department.
This will also help you communicate your strategy throughout the business and engage each team more effectively.
What resources do you need to deliver your strategies?
Consider the following:
- Services offered – are your clients looking for more benefits than you currently offer? How might you extend your services to provide what they’re looking for and gain a more significant share of their wallet? Can you develop a referral arrangement with other businesses that have a similar client base or values? Can you acquire a company that suits your strategic objectives?
- Staffing – What skills do your staff members need as you execute your new strategy? If your current staff members don’t have these skills, what types of people might have them, and how can you bring them into your team? Can you up-skill your staff and undertake to license or does the role require a specialist? From a staff retention perspective, successful businesses often think about other initiatives or policies that can be introduced to attract and keep the highest quality staff members.
- Technology – what technology solutions do you need to meet your ideal client’s needs? Should you consider the cloud and the positive impact it might have on your current infrastructure? Or could a technological solution help you achieve other objectives like being more responsive and proactive in servicing your client base through regular communications? Consider how you can leverage technology to streamline measurement and reporting processes and provide a more real-time view of your successes and opportunities.
- Brand profile and marketing – consider your brand positioning and ideal client. How and where can you reach your ideal client? What communication channels are appropriate, and how often do they want to hear from you? Consider a regular program that enables you to plan your communications and the information you send to clients. Also, consider how you can raise your profile and use your existing clients to find new ones. Events are often a successful platform for this, so think about events you can facilitate that might suit your base.
- Measurement and review – to understand the impact of your changes, ensure all your activities have established quantifiable key performance indicators (KPIs) at the outset and progressively check in to see how you’re tracking against them. Relevant staff should review this reporting regularly and identify opportunities for optimisation.
How To Grow Accounting Practice By Changing Your Mindset
There are three types of accountants that are all in very different circumstances, yet each of them shares a common trait:
- The accountant who is just starting their firm.
- The accountant has a firm but has struggled to grow it.
- The accountant who has scaled their firm but has hit the ceiling.
Three accountants, very different places, one unifying problem—accounting firm growth.
How do you grow your accounting firm no matter where you are in the life cycle of your business? We’ve noticed one common thread with accountants struggling to take their firms to the next level: mindset.
Grow Accounting Practice with the Right Accounting Mindset
Both seasoned firm owners and new accountants alike are often oblivious to how drastically your mindset impacts the growing your accounting practice. It’s not just about getting more leads. To an extent, yes, more leads are definitely part of the process to grow your accounting firm, but it’s not the driver.
You’ve heard the popular saying, “Don’t put the cart before the horse.” Leads, in this case, are the cart. You need to carry a certain amount of leads each month to close new clients. It’s just basic math—X leads to make Y clients.
The driver of this sales machine, the horse, is your mindset. To grow your firm, changing your mindset can have a more impactful, over-arching effect that can resonate beyond just getting more leads. There’s a process for getting leads, but beyond that, a shift in mindset is needed to grow an accounting practice.
Accountant Mindset Shift to Grow Accounting Practice
There are three main ways you can change your mindset to maximise accounting firm growth.
#1 Thinking Big for an Accountant
Increase your targets. Many accountants are “realistic” when it comes to numbers, but the problem is often the outrageous can be realistic if only a change in mindset happens. For example, think about the famous story of the four-minute mile. For years, people thought it was impossible to break four minutes. It was the limit of the human body. Then, Roger Bannister died it. Since that time, many others also have, and it’s almost routine among the top male runners.
The point is this, if your accounting firm is doing $300,000 annually, it may seem outrageous to do 7-figures. But is it that crazy? Others have done it, and you are a talented accountant too. So, the first step is simply to have your goals enlarged. How big do you want your accounting practice to be? Think big!
#2 Start New Every Month with Your Accounting Firm Sales
We see this often happen with accountants who go after recurring monthly clients where the mindset is geared toward “settling”.
We mean by this that when you do monthly recurring accounting, your mindset naturally becomes different. You’re building up to $15,000 a month or $50,000 a month, whatever it is that you want to do, and as you’re building up all those numbers, here’s what happens…
Month One: Get 3 clients at $2,500, that’s $7,500.
Month Two: Get 7 more clients at $2,500, that’s $17,500
(Add in the previous month, and you have ten clients now for $25,000)
Month Three: Add 4 more clients at $2,500 for an additional $10,000
Suddenly, as you start month four, you already are counting on $35,000 as your starting point. When accountants do monthly recurring…it can make them lazy because they begin to count on the recurring. And soon, they stop adding new monthly clients.
If the goal is for you to grow accounting practice, have a system where your sales are zero at the beginning of each month. We don’t mean you shouldn’t have recurring monthly clients, but rather as you track sales, only count the new sales you go out and get. Don’t figure your recurring sales into the equation.
This gets your mindset on trying to get new clients, not just servicing existing clients. Under this system, you can have $150,000 in recurring revenue in July, but on August 1st, you are back to $0 in sales—and you need to try and beat the previous month without considering the recurring.
It’s a pretty big mountain to climb each month.
Will you be able to do it again when your $80,000 month goes to zero as the calendar turns to the following month? With past services, you have the mindset to fight every month to keep your business big. If you want to grow with recurring monthly clients, keep your mindset on finding new revenue without counting on the monthly incoming!
#3 Find New Confidence as an Accountant
You can have huge targets and start from scratch new every month, but if you don’t have the confidence to make things happen, it’s just daydreaming. Confidence comes from knowing and doing. When you learn something extremely well, you have confidence in that thing. Likewise, when you do something over and over and over again, you gain confidence.
This is why it’s vital to combine your “big think” and “starting new every month” with confidence in yourself selling the right services, for the right price, to the right clients. This means you know exactly what services are best worth your accounting firm’s time and energy; how to grow an accounting practice selling your accounting services for a highly profitable price that still gives your clients incredible value; and where to find these potential clients who would be a fit for your service.
Do you have extreme confidence in…
What accounting services you’re offering? Do you have doubts about whether doing a bunch of 1040s is the best way to move forward? Are you confident in selling and scaling tax plans and CFO services?
What prices you’re charging? Does the thought of doing a $1,000 personal return seem normal to you or too much? What about a $2,000 business return? If you do not know for sure your firm’s value, you will not be able to price accordingly!
Who you’re taking on as clients? If the thought of adding more clients sounds bad, maybe it’s because you’re not dealing with the right type of clients! To grow an accounting practice, you must find your ideal clientele. Do you know who they are?
In short, the mindset to grow your accounting practice begins with thinking bigger, starting your monthly sales from scratch each month so you’ll push harder, and gaining the confidence, you need with knowing what to offer, how to price it, and whom to sell. It to! When you combine these ingredients, accounting firm growth should soon follow!
Top tips for selling an accounting practice
Several key issues need to considered not only to ensure a good sale but also a smooth transition for the new owner.
Time of year
It would be easy to think that the best time to sell an accountancy practice would be tax time. An accountancy practice has busy and slow periods, and it’s always better to sell when cash flow is positive.
However, there’s no one-size-fits-all accountancy practice model. A practice that is compliance-focused will be the busiest during tax season. A practice that deals more with seasonal businesses will be busiest at different times of the year.
Selling an accountancy practice when your revenue and cash flow are healthy will attract the right buyer quickly.
Size of the accountancy practice
There’s a misconception that the smaller the practice, the more accessible the sale. The truth is there are buyers for all types of procedures; it just requires a different marketing approach.
A typical accountancy practice does from $200,000 to $1 million in fees per year. In some ways, a $300,000 practice is more in demand than, say, an $800,000 practice.
But there are also plenty of buyers for the more prominent firms, too, in the $800,000 to $3 million brackets. The difference is how it’s marketed. Firms in the lower bracket will attract potential buyers through advertising, while the $800,000 to $3 million firms are generally sold by knowing who is looking and approaching them directly.
The smaller firms appeal to first-time buyers generally in the $300,000 to $400,000 range. They are bringing in enough fees to employ staff and grow the business. The firms in the higher range are often bought by existing practices that have access to capital and have done it before, so they see no risk involved.
Maintaining a strong database of clients will help sell your accounting practice. It’s cheaper to keep an existing client happy than it is to get a new client. However, there’s always a fear that when news gets out that the firm is for sale, clients will leave.
Don’t panic! There is a solution to manage this issue – the secret is to keep it ‘business as usual.
When selling, the willingness of the existing owner to stay on for 6-12 months is important. Even if it’s just on a casual basis for a few hours a week, it will help make the sale and the transition smooth and seamless.
It’s best to handle the sale and the transition in stages. This gives the current owner time to introduce the new owner to clients and gradually get them used to the idea of change.
This is easier than you may think because often, the existing owner is selling to retire. He or she would be only too happy to ease out gradually.
Technology and data
Another misconception is that you must have the latest technology in place to sell your accountancy practice. This isn’t a deal-breaker. Newer firms are more likely to be paperless, but there are plenty of accountancy practices operating for many years and still use traditional data storage solutions.
Every firm has its system and on the whole, buyers expect to integrate their systems when they buy another practice.
Fees can be an issue when selling. But again, it is manageable. An older firm may not have increased its fees in years and could now be considered too cheap.
The buyer will certainly want to increase the firm’s fees but must understand that it can’t be done overnight. It takes a little time to successfully introduce a new fee structure, so it’s more about managing the buyer’s expectations and doing the transition in stages.
When marketing your accountancy practice for sale, it’s essential to look ahead. Potential buyers will naturally look at the firm’s past financial performance. However, it’s crucial to highlight its bright financial future.
Perhaps you have recently sourced new clients or introduced new technology, or taken on more staff. Anything that could potentially increase your turnover in the coming months and years should be highlighted.
Mitigating the risk
No problem is insurmountable when it comes to selling an accountancy practice. It’s essential to remove the emotion and remember that most things are negotiable. You can nearly always mitigate the risk.
It’s all to do with how you structure the deal. For example, perhaps 25% of your business comes from just one client. It would be easy for a potential buyer to worry about what would happen if that one client left.
The way to overcome this is by getting the existing owner to stay on for a few months on a casual basis until you are happy that the client is comfortable with the change. Alternatively, the buyer may come on board initially as a partner, thus easing the firm into the sale.
Is there someone in your firm who is keen to take over the practice? At first glance, this would seem an attractive proposition, but it’s essential to consider the proposal on all its merits.
Again, it’s time to remove the emotion and consider this from a purely business point of view. Does the individual concerned have the means to buy the firm at your asking price? Do they have the knowledge, experience and leadership skills to become a business owner? Do you have the time to coach them?
Sometimes it’s better to market your business and sell to someone you have no previous connection with.
Preparing for sale
As with selling any business, preparation is the key. The better you prepare, the better the outcome. Start planning the sale 6-12 months so that you can evaluate your practice’s performance and make any necessary changes or improvements to make it more attractive to a buyer.
The critical issues to consider are your client base and retention, your fee structure, staffing and employment contracts, any leases or licences. Consider what makes your accountancy practice superior to others. Put yourself in the shoes of a potential buyer and consider what would make the method attractive to you.
Your firm’s growth
Your solicitor and your financial adviser need to be involved from an early stage to help you successfully navigate through the sale. It’s also important to consider how you will sell your business. Remember, a business broker who specialises in accountancy practices may already have potential buyers waiting.