- Eliminate Low-Value Services. ...
- Reduce Operating Inefficiencies. ...
- Move to a Value-Based Pricing Model. ...
- Upsell Existing Clients. ...
- Make Sure New Clients Are Right For You. ...
- Offer Staff Education Benefits. ...
- Reduce Billing and Accounting Costs. ...
- Invest in Tech.
- Update your website. Take an objective look at your firm's website to determine what updates needed. ...
- Get to the top of local search results. ...
- Start (and maintain) a regular blog. ...
- Use social media effectively. ...
- Maximize email marketing efforts.
Profitability. Average CPA firm profitability, measured by income per partner (IPP), was $521,000 in 2020, up 4.8% over 2019. (IPP grew about 6% the two previous years.)
The character of the work is shifting as a result of the ongoing introduction of new efficiencies brought about by technological advancements in the accounting industry.
Clients are less likely to pay premium rates for legal compliance work but are more willing to pay for value-added advice. This is despite the fact that the volume of compliance work is not going anywhere and is actually increasing.
This indicates that the most profitable model for a firm is one that successfully completes tax and compliance work in a timely manner while reserving a significant amount of time and mental bandwidth for the provision of high-profit advising services.
This essay will discuss how to improve advisory revenue, why companies sometimes get stuck when trying to change to a more great mix of advising work, and how to overcome the common roadblocks to making this shift in the industry.
Why Offer Advisory Services?
If you are reading this post, there is a good possibility that you are already interested in conducting more advising work, and you do not require any additional convincing to make this decision.
Despite this, it is worthwhile to take a look at the positive effects that providing advising and consulting services to your clients, your employees, and your company can bring about:
1. It’s about helping your clients
The truth is that a lot of people who run their own businesses are having a hard time. They are no longer satisfied with simply wanting to know their numerical value. They are curious as to what the significance of their numbers is.
A little more than half of all small businesses in Australia have a positive cash flow, according to Xero Small Business Insights. This startling number is provided to emphasise the point. A little less than 50% have a negative cash flow! (We anticipate that these results are representative of the norm in the North American market.)
The significance of services such as planning, cash flow forecasting, and business growth cannot be overstated when considering just this one number.
2. Clients will happily pay for value
Even though compliance work isn't going gone anytime soon, clients often won't pay more for services that involve only completing their tax forms and submitting them on time.
Nonetheless, tangible value is what customers are willing to pay for. Take, for instance:
- Advice on how to structure your finances so that you can reduce your annual tax liability by tens of thousands of dollars.
- Advice on the purchase of a business that lowers associated risks and minimises potential future tax obligations.
- Installation of software that improves workflow while reducing labour expenses.
Providing your customers with services similar to these is analogous to "discounting the sale of money." Who among your customers wouldn't spend 80 cents for an extra dollar's worth of value?
3. Advisory work commands high fees and high hourly rates
Unlike the prices that accounting firms charge for routine compliance work, which can be easily compared with one another, advising services are focused on value rather than price.
Even if it only takes you five hours to put the plan into action, you might be able to charge fees of $20,000 because the plan is so ingenious and saves the client so much money in taxes each year. (Not even the most meticulous preparation of tax returns could come close to matching this hourly rate!)
4. Advisory work is exciting and challenging
Everyone involved in accounting, from principals to staff members, wants to do work that is exciting, difficult, and relevant.
You will have a better chance of enjoying a great work-life balance and keeping the engagement of your personnel high if you do more of this kind of job. Because of the additional value that your team will be able to provide, you will also have the financial flexibility to pay them more.
Common Barriers To Doing More Advisory Work (And How To Solve Them)
There are a few widespread obstacles that must be overcome in order to transition to a more great mix of advising work. You might find that some of these apply to you, or even all of them:
Reason #1: You’re too busy delivering essential compliance work to offer more advisory services.
The optimal business model for the vast majority of companies is to provide a combination of critical compliance services in addition to additional high-fee advice and consulting activities.
However, the reality is that many companies are so bogged down in compliance work that they are unable to provide the content that has additional value. Their workload looks like this:
The addition of an offshore crew to take care of work of a lower complexity can be one immediate solution to the problem. This will free up space for your onshore employees to focus on more important tasks, as seen here:
Reason #2: You’re not spending enough face-time with clients
You are not spending enough face-time with customers, which is another issue preventing you from taking on more advising work. This problem is connected to the one discussed earlier.
It is far too simple to spend too much time in front of a computer rather than engaging in face-to-face or telephone communication with customers or clients.
Real-time communication is the only viable option for having meaningful exchanges of ideas. Email doesn't cut it. Therefore, spending face time with customers is a crucial leading indicator of revenue.
Reason #3: Clients don’t perceive you as an “advisor.”
When you don't spend enough face time with clients, they are likely to underestimate your worth as a trusted business counsel. This problem is still tied to the first two difficulties. It's possible that they have no idea what it is that you have to give them.
Customers who are unaware of the value you provide cannot make a purchase from you. When they are faced with a crucial business choice, it is quite improbable that they will pick up the phone to call you for help because they are reluctant to do so.
As a consequence, there will be less options to generate revenue.
Reason #4: You already offer advisory work, but you haven’t been packaging or selling it optimally.
It's possible that you're able to provide consulting services, but that you're not seeing the kind of sales traction that you want. A huge number of the world's most influential thought leaders have also contributed significantly to the field of "pitch" advisory services.
The book "The Consulting Bible" by Alan Weiss and the book "Implementing Value Pricing: A Radical Business Model For Professional Firms" by Ron Baker are two books that come highly recommended.
Despite the fact that these are excellent resources, there are situations when the issue is not a lack of information or abilities. To go back to our first argument, the problem lies in the fact that you are cooped up behind your computer rather than engaging in face-to-face conversation with customers about the obstacles, dilemmas, and possibilities they face.
New revenue ideas for accounting firms in 2019
The rising costs of doing business, advances in artificial intelligence and complicated data systems, and the competitive pricing offered by rival companies... What strategies do you have in place to maintain or, even better, expand the revenue of your accounting firm in 2019? Let's discuss what we've come up with...
Accountants are seeing their revenues dwindle as the cost of conducting business continues to climb and as AI and increasingly complex data systems eliminate a significant portion of the human labour that is connected with filing taxes.
A lot of businesses are thinking about lowering their pricing as a way to stay competitive, even if this would cut into their margins and put stress on their internal processes.
But there is hope, and it depends on how you look at the future. Things could turn out better.
As more and more accounting duties become automated, professionals in the field now have more time to focus on other aspects of their work.
Now is the time to investigate potential new revenue streams for your practice in 2021, as well as to consider how you may continue to maintain your competitive edge and provide patients with an exceptional level of care.
The following are the fundamentals to boosting the sales of your company:
According to Floatapp, if you were the owner of a company that was looking for ways to boost its revenue, you would normally examine the following options:
- Grow the number of customers you currently have on your books.
- Raise the amount of money that each customer spends on average.
- Attempt to conduct more transactions with each typical customer on a regular basis.
However, in order to bring in new customers or increase the amount of money you make from each existing customer, you will need to examine your products and services in great detail.
Mine your existing clients for opportunities
Your current client base has the greatest potential to bring in new business, regardless of the sector in which you operate. Since your customers already know and trust you, there is no reason not to check with them to see if they have additional needs that may be met by your company.
Invest an afternoon in reviewing your client list in its entirety. Determine the best ways to upgrade them to more extensive packages or provide them with extra services. You might also think about conducting a poll with your existing customers to learn more about their requirements and developing a referral programme to encourage them to bring in additional business.
Your customers can benefit from items that save both time and money, such as an audit shield package or an ACC review, which you provide for them. You can boost the revenue you make from each customer by upselling them more packages.
The majority of small firms do not plan their expansion, accurately predict their cash flow requirements, or even attempt to comprehend the reports that are provided to them by their accountants. You are able to boost your earnings without diverting attention away from your primary enterprise if you offer advisory services to your existing customers that make it easier for them to comprehend their own financial information. These services make use of the business insights obtained by managing a client's accounts and make it possible for you to boost your revenue per customer while simultaneously constructing a strong relationship that will result in a reduction in customer turnover.
- Provide a free analysis of the company's operations. You should take advantage of this occasion to ask your customers a series of questions, after which you should review their objectives and cash flow. On the basis of the data, you draw conclusions and make recommendations for new services (such as business advice or coaching). It is a powerful tool for generating leads and frequently results in new business opportunities.
- Make some changes to your price. Put an end to charging by the hour and employing ad hoc methods for the additional services you provide. Many companies have adopted the practise of bundling services and moving customers onto monthly payment plans since it helps to maintain a consistent cash flow and adds value-based pricing.
- Remove any dead or dying branches. Concentrate on marketing and providing your services to the customers that you desire, specifically those who are willing to pay a higher price for your expertise (The Fundbox blog has an excellent article on sourcing value clients). Get rid of the employees who aren't a good fit for your company and who create more headaches than they're worth.
- Make some room in your schedule. You will need to free up time so that your team can deliver value-added services like the ones we've discussed here if you want to boost income using these types of services.
One of the most cutting-edge approaches to achieving this is to contract Connect to handle all of your regulatory compliance duties.
We will help you lower your margins for compliance and free up your in-house team to work on more specialised and fascinating consulting work thanks to the fact that we have over 800 accountants who have completed their training and are ready to take on your work.
Cutting costs where possible to increase revenue
When you run your company in a more efficient manner, you will be able to get a larger portion of the income for each dollar that you make in profit. Investigate other avenues via which your company might be able to cut costs. You could consider:
- Compliance tasks are being outsourced. Outsourcing through Connect can be a fantastic method to keep more of the money you produce while allowing your accountants to focus on more interesting tasks, as was stated above. According to one of Connect's customers, "with Connect, we have replaced a $160,000 wage expense with a $100,000 compliance cost, and we've greatly increased our productivity." Connect is a cloud-based compliance and risk management platform.
- I was working from a faraway location. One of the most significant ongoing costs for your company may be the cost of renting office space and supplying your staff with necessary equipment. A growing number of accounting businesses are adopting a model known as remote working, in which employees work from their homes or another place of their choosing and only come together for meetings or conference calls when it is necessary to do so. Along with cutting overhead costs, this provides employees with flexibility and a better work-life balance.
- They are making changes to the sales procedures. A significant number of businesses throw away an excessive amount of time and money on the sales process. Take a look at your sales funnel and leads to identify areas in which you could benefit from making adjustments in order to shorten the amount of time it takes to close a deal, enhance the onboarding process, and reduce customer churn.
It may be nerve-wracking to make adjustments to your accounting practise, but doing so will be the only way for you to increase your income in 2019. Rather than trembling in fear of machine learning and AI in your company, you should welcome them with open arms and highlight the value that humans bring to the table in business. Create a vision for the next 5–10 years for the company, and then work to make that vision a reality. Regardless of the requirements of your practise,
Four methods to assist your accounting clients in expanding their businesses
Because accounting companies play such an important role in their customers' professional lives, they are able to transition from merely crunching numbers to providing advice to businesses. This allows accounting firms to differentiate themselves from other organisations that do the same function.
Each contemporary accounting professional and the businesses that they are employed by have to place a key emphasis on the growth of their clients' respective businesses. The following is a list of four distinct strategies that can be of assistance to you in achieving your goal.
When a business makes the decision to make a strategic shift, expand, contract, or sell, the first persons they consult for direction and assistance are their accountants. This exemplifies the aggregate value of the accounting profession as a reliable source of advice and assistance for businesses.
With this new advancement, there is a great deal that accountants may look forwards to. When companies play such a significant role not only in their own professional lives but also in the professional lives of their customers, they are in a position to develop beyond the function of simply crunching data and into the function of delivering business consulting services.
This transformation has been partially driven by the gradual increase of cloud-based accounting systems, which have allowed the broader sector to focus on a more collaborative relationship with customers. This transformation has been partially driven by the gradual increase of cloud-based accounting systems. Accounting software that is hosted in the cloud has also contributed to the acceleration of this transformation. However, there is no denying that a greater emphasis placed on supporting clients in the expansion of their businesses has directly led to a rise in the demand placed on accounting firms. This increase in demand may be directly attributed to the increasing emphasis.
Customers generally demand more value-added services from their accountants and expect them to be proactive about their own needs, as well as swiftly respond to any inquiries they may have. As a result of this, accountants are expected to wear a variety of hats.
According to recent findings, the larger accounting sector in Australia has seen a little increase in income on the back of enhanced technology and value-adding services. This development can be attributed to both of these factors.
According to research carried out by IBISWorld between 2013 and 2018, the industry recorded yearly sales of $20 billion Australian dollars and experienced annual growth of 1.5%. According to the findings of the survey, this development can largely be attributed to positive company confidence as well as an increased need for sector-specific consulting services such as auditing.
In a corporate climate that is growing increasingly competitive, clients have also turned to accounting companies for guidance on how to reduce their expenses and improve their overall efficiency.
During this time, the sector has increased its worth even further by adopting cutting-edge technologies such as cloud-based accounting and data analytics, amongst others. A number of different accounting firms in Australia have been using digital technologies and processes in order to assist their clients in predicting what the future may bring. This can assist the clients in increasing their profitability.
One example of this would be predictive accounting, which enables accountants to better engage with their clients through the use of their databases, software, and analytical tools to uncover new business prospects for their clients.
A couple of years ago, Wolters Kluwer began providing clients with the option of predictive accounting. The incorporation of the technology into the company meant that it would be able to assist accountants in speeding up the creation of leads and significantly improving their efficiency.
Here are some other ways in which accounting firms are assisting their clients in accelerating the growth of their businesses.
1. Work as a consultant
These days, clients anticipate more from their accountants than the mere processing of numbers in a spreadsheet. They are searching for somebody who they can have complete confidence in to take on the job of advisor to their firm and help them with increasing their business operations.
According to the regional director for Wolters Kluwer, Daniel Wyner, "Historically, accountants have worked with their clients by looking in the rear-view mirror at what occurred within their business over the previous reporting period," but all of that has changed now.
According to him, giving advise to clients creates new opportunities for accountants to bring in new clients through the front door. Moreover, he believes that accountants should give counsel to clients.
"Unfortunately, going to see your accountant may sometimes be just as uncomfortable as going to the dentist, but it shouldn't be that terrible. It is not always required to urge a client to do things that are outside of their comfort zone in order to expand their business, but it is highly recommended that you do it whenever possible.
It is not required that every instance of information transmission take place within the framework of a commercial relationship with the client. There may be other contexts in which information transfer may take place. Wyner recommends that in addition to this, you should look for ways to educate, inspire, and motivate people within the context of their own businesses.
Nevertheless, he offers the following observation: "Over the past twenty years, accountants have been served to a balanced diet of large tax overhauls." [Citation needed] For instance, as a result of the implementation of the Goods and Services Tax, accountants have been given a substantial amount of new work to complete.
According to him, the unveiling of the federal budget is an incredible opportunity for accountants to organise events that educate clients on the ways in which alterations in rules can impact the manner in which they can grow their companies.
Sharing your knowledge with others by elucidating topics such as changes to self-managed super funds (SMSFs) and co-contributions is an excellent method to do so.
Wyner claims that in order for accounting firms to put these offers into effect, they do not require an exceptionally complex emailing system. Instead, all that is required of you is the ability to understand and comprehend your existing client base, the ability to make contact with these customers, and the ability to invite them in so that you may support those customers. When it comes to taking precautionary steps in this regard, the utilisation of additional resources available inside the organisation is not required at all times.
Wyner possesses the digital resources that are required to compile a report that profiles consumers according to particular features, such as the amount of income they earn in comparison to a particular tax band. He is able to create an offer that is especially tailored to the specific requirements of each individual consumer and print out communications that include the email address of each specific customer.
"Accountants may utilise digital technology to assist them proactively touch base with a core set of clients and search for specific opportunities to help build their business," he says. "This might help them look for specific opportunities to help develop their business." This might assist them in looking for specific opportunities that can assist them in growing their firm.
2. Hold trainings
If you have developed the infrastructure required to offer workshops and seminars within your practise, you will be able to act as your own "keynote speaker" at events like these. In addition to that, this is a fantastic value-added benefit for the customers.
Melbourne-based The managing director of the business, tax, and wealth advice service SEIVA, Brent Szalay FCPA, is responsible for positioning the firm as a strategic partner to the company's clients.
"We offer clients to attend workshops, which gets them out of their environment to analyse why they're running their business and get back to their basic goals," adds Szalay. We also provide them with the opportunity to network with other business owners."
Business owners are guided through a series of questions in the seminars to help them envision the future and decide where they want their organisations to be in five or ten years.
Szalay is the first to admit that the seminars don't cover advanced physics or mathematics, but he thinks that for clients who are on the never-ending treadmill of running their company, this is frequently a novel approach.
We want to get clients thinking about the future, he says, using a SWOT analysis and working with important business stakeholders to consider the strengths and opportunities that lay within the organisation and that we can help them with. We wish to encourage clients to consider the future by using a SWOT analysis (strengths, weaknesses, opportunities, and threats) and engaging with important stakeholders to consider the business's strengths and opportunities.
Analyses of whether the client can support growth are part of workshops spanning one or two days.
Szalay explains, "To evaluate if they could handle that amount of potential, we advise our clients to consider what they would do if they had 30 new enquiries tomorrow. We ask our clients to consider what they would do if they received 30 additional inquiries the next day.
"While some businesses might think they are ready to grow, the truth is that they might not have the policies in place to accommodate such development,"
These kinds of workshops frequently show how overburdened business leaders are with duties within their organisations. So that our clients can focus on growing their businesses rather than controlling them, we are always exploring for innovative ways to free up capacity and assign duties.
Szalay arranges follow-up meetings with clients on a monthly or quarterly basis in order to keep them on track because execution is frequently the most difficult part.
He contends that accountants must be curious and attentive to their clients if they want to help them increase their wealth.
3. Guide clients to identify market trends
Another great way to contribute to the expansion of our customers' businesses is by assisting their customers in identifying new trends that are appearing on the market. This can entail looking at broader economic and consumer trends within their specific industrial area, for example.
Accountants have access to a broad variety of research papers and tools for market analysis, both of which can assist them in spotting relevant trends for their clients. Accountants also have access to a large variety of research papers and instruments for market analysis.
Whether your objective is to locate information on geographically related services, study new pricing structures, or aid them in locating a potential new market niche, you will need to select which one to use in order to accomplish your goals.
Joss Fenton CPA, who is also the co-owner and director of the organisation 4 Business & Community, located in Hobart, has provided assistance to a range of businesses in the process of determining how to transition to a more ethical and sustainable business model.
In his own words, Fenton is a "registered tax agent and business nerd" who provides accounting and business solutions that are environmentally responsible. To guarantee that his clients are operating a business that is both sustainable and influential, he recommends that they keep track of the origin of the products they sell and examine their personnel and labour practises.
Professional Development: The key to maintaining a viable business. If you are a lone practitioner or a partner in a more renowned business, the principles and lessons that you learn in this course should help you establish achievable strategies to build your firm so that it is both sustainable and growing.
4. Become more technical
As previously mentioned, using more technology and digital tools can increase your ability to assist a client's business in adapting and growing.
Offering to provide data-driven business reports that provide exact insights into the most lucrative areas of any corporation can go a long way towards earning that client's trust and business, according to Dinesh Aggarwal FCPA, founder and managing director of Fortuna Advisory Group.
He claims, and this is highly regarded, "We are able to generate truly analytical studies that give our clients insights into deeper issues that could drive growth."
"The industry is teeming with business intelligence data, as well as forecasting and analytical tools, which can enable an accounting firm to become more technology-oriented and, in turn, aid the growth of their clients' firms," he claimed.
Aggarwal advises that you should take the time to consider the particular type of business counsel that you want to specialise in before choosing whether tools or applications would be the right addition to your services.
The abundance of digital tools that are already available might help you transition into a more technical company and a position as an adviser. He claims that accounting firms are experiencing an exciting time right now.