3 steps to a more profitable accounting firm

It’s a simple process to profitable practice growth, involving three basic steps. These steps are the key to increasing bottom-line revenue and realization rates. And they also allow you to work less while providing better service to clients.

Step 1: Identify high-profit clients

This is where most firm owners make a huge mistake. They follow a flawed business model and end up with low-fee clients.

But it’s really not their fault. After all, the industry pushes us to go after tax preparation and compliance work. We’re told to build a volume-based practice where we serve hundreds of clients who need these low-fee services.

The results are disastrous for most firm owners. These services are looked at as commodities. So you end up becoming just another “bean counter”.

Plus, you have to work extremely hard and long. The numbers bear that out. For example, if you want to earn $100,000 a year, you’ll need 400 clients paying you $250 per tax prep to get there. Obviously, that’s a lot of work.

Even if you double your prices, you still need 200 clients to reach that income goal. No wonder most firm owners are working too hard, too long, for too little.

The key here is to realize there are high-profit clients available.

These clients will cheerfully pay you four and five-figures per month. I’m talking about business owners who desperately need your knowledge, experience and expertise to help them grow their business.

And it’s easy to find them. Right now, in your client roster, you probably have a handful of business owners who could generate thousands of dollars per month in extra revenue for your firm. Just cull through that list and pick out the ones who you know would love to grow their business and need help doing so.

Which leads us to step 2.

Step 2: Offer services that command premium prices

The best way to grow your accounting practice in today’s economy is to provide high-end advisory services that you deliver on a monthly retainer basis.

You won’t suffer through income roller coasters. And you won’t have to work like crazy during the tax and audit busy season to make up the bulk of your income. By offering high-end advisory services you get paid consistently.

Every single month.

This makes it much easier to reach your income goals.

For example, you only need three clients paying you $3,000 per month to make an extra $108,000 per year. Even the accounting industry itself has started advocating this new model.

As CPA Practice Advisor reports, “moving to advisory services will benefit your firm and your clients. 93% of small businesses value accountants as their source of business advice, so the opportunity is out there.”

Start thinking about what services will help your business clients grow. This is where you can leverage your knowledge, experience and expertise.

Step 3: Reach out to them with your offer

The final step is the easy part.

Invite the business clients who you’ve determined will be a good fit for advisory services to have a conversation with you (we showed one firm owner how to do this and she landed 18 appointments in less than a half-hour.

Because, as CPA Practice Advisor points out, “small businesses value accountants are their source of business advice.”

Your clients are looking forward to having this conversation with you. This one-on-one is meant to explore the possibilities. You’ll discover what they want to move forward in their business. And you’ll be able to see where there is a good fit between what these clients want and what you can deliver.

Follow these three steps and you too can grow your practice profitably with higher revenue, bigger realization rates, and less work.