In recent years, many accounting firms are struggling to achieve significant growth in revenue. Much of this has to do with increasing efficiency and decreased value of tax compliance work. When it becomes cheaper to produce standard outputs, it’s inevitable that market forces will see a reduction in the cost of these services to consumers. And it’s proving to be quite difficult for smaller firms in particular to replace traditional compliance services with value-added advisory services.
In this environment, it’s not surprising that firms are focusing on profit rather than revenue growth. The challenge with this approach is that, as the pricing of traditional services continues to decline, it becomes increasingly difficult to achieve the same profit levels, even with the use of technology and outsourcing to improve efficiency. At some stage, any accounting firm looking for future sustainability needs to seriously look at their service offering.
This comes back to the question ‘Is 5% growth enough?’ Firms seeking to develop their service offering to include business and financial advisory services need to attract staff who have the technical and communication skills to really engage with their clients … and this costs money. Superior quality staff are desirable and their salaries must remain competitive to achieve high levels of retention. A business development strategy that focuses on revenue growth is essential to retain healthy profit levels. What strategies should sustainable firms adopt to achieve growth levels of 10% or more?
1.Ensure that the culture of your firm focuses on client relationships and business development as much as it does on workflow and production. A focus on productivity (chargeable hours) may be a useful measure of internal production, but can often interfere with the firm’s desire to seek opportunities to add value to clients. Do your employees have ‘permission’ to take the time to explore client needs through ongoing communication and enquiry? Is there a strong focus on data analytics versus number crunching?
2.Adopt a proactive approach to growth in revenue. Develop a business plan that specifically identifies the type of new services and projects you are interested in providing, based on the skills and capabilities of your people. Identify the clients who would be interested in these services. Specifically outline the number and average value of the services you will be providing. And then put in place a marketing plan achieve these objectives.
3.Be assertive in letting your clients know that you are interested in more than a transactional relationship. Sure, some will let you know right away that they don’t want coaching or advisory services. But you’ll be surprised at how many clients are interested to know what you can do to help them to achieve their financial objectives. It’s as simple as saying ‘What we have done in the past was good. However, in moving forward, we’ll be asking you questions we haven’t asked in the past. We’ll challenge you to achieve great results. And we’ll be available to support and guide you in this process.’
4.Provide appropriate training to your team, focusing on skills of enquiry, communication and data analysis. The accountant of the future is already here today. Your young accountants need to be challenged to think outside the square, to ask questions about clients that demonstrate curiosity and interest in their financial challenges and needs. It’s clear from my conversations with young accountants that they want more client interaction. Rather than saying ‘they don’t have the experience,’ leaders of firms should be giving them the opportunity to engage with clients, to ask questions that demonstrate interest and empathy … and then to work with more experienced colleagues to add value to clients.
5.Develop a strong value proposition that defines the type of clients you want to attract and the services that you want to provide. Be assertive in ‘reframing’ the nature of the relationship that you have with your clients. Of course, tax compliance will always provide the foundation of accounting services. Clients know this, you don’t need to focus on it when communicating with your market place. Firms that have a clear value proposition focusing on advice and coaching to help clients achieve their financial goals are already achieving strong growth in revenue.
What growth in revenue did your firm achieve over the past 12 months? Are you prepared to put in the time and effort, with your team, to develop and implement a business plan for growth. A key benefit of this approach is that your proactive clients will see the change and will be keen to engage more with you, knowing that you ‘practice what you preach.’
Set your firm a growth target of at least 10% over the next year. Don’t include price increases for existing services. Tell your team about the target and ask for their input. Offer a team incentive for achievement of your growth target. And work with each team member to identify specific actions that they can take to contribute to the firm’s goal.