As modern practice owners, we are in need of balance. We need to pay attention and adjust our strategy to current accounting trends and changes in the industry. But it’s important that we also forge your own unique path.
Before we explore the reason why basing your strategies only on trends is a bad idea, let's explore an innovation strategy, something your practice must have. It can be broken into two parts.
The first part is how you plan to be different and set yourself apart from other firms. And there are many differentiating options, from a virtual team culture to an exclusive narrow niche. You might require each client to pay your firm a minimum of $10k a year, or you may go after a less costly offering seeking to take over the world at $200/month.
The second part requires you to adjust your business model. Your firm's business model is the philosophy of how you create, deliver, and capture value for your customers. Many firms operate with the same business model they had 30 years ago. But if you are want to be different in a valuable way, then you need to portray that difference in the way you serve your customers. Your modern practice model is how the world will see and feel your commitment to being different.
To tackle the first part of your innovation strategy, let's explore two key ways you can set your firm apart:
Your business model describes the rationale of how you create, deliver, and capture value. You sell value, and your business model is the container by which you hand it out to paying customers. There are ways to tweak your business model so that your customers perceive more value as they work with your firm. As an example, you could have customers pay for your services over a 12-month contract, smoothing out their expenses and your cash flow. Or you could begin serving business clients only, and do away with the chaos of serving large groups of individuals during tax season.
Your positioning strategy is another way to be different. In Positioning for Professionals, Tim Williams helps us define how to be different by our what and who. Your what is the thing you are very good at, and most commonly comes in the form of a particular service you deliver. What thing do you do well as a firm that you should do more of? Flip that around and ask, what should you stop doing that you don't do very well? Your who is obviously a particular group of clients you serve the best. This is most often understood as a niche, but it could come from just defining what types of clients you enjoy serving the best. Women-owned businesses, non-profits, or franchise owners? Once you've positioned yourself (which really just means you've created more focus for your firm), then it's time to update to your website and let the world know.
Changing your business model can unlock huge secrets that will allow you to run a differentiated firm that is profitable. Although Alex Osterwalder has a popular Business Model Canvas, I prefer Ash Maurya's Lean Canvas. There are a total of nine components to Maurya's Canvas, but we'll focus on two that you can define as you adapt your business model.
List your client's three biggest problems. What problems do your customers have and how are they currently solving these problems? Most firms may list 'file a tax return' as a problem. But that is not really a problem since there are many alternatives to having a tax return filed (many firms will do it for that customer). As Maurya says, “problems create space for innovation,” so fall in love with the problem, not your solution. Firms do too little work in uncovering their client's problems. It takes work and a few meetings before even the client can fully understand their problem. But it is required if you are to truly identify real problems that most firms cannot solve. Focusing on defining a client's problem is the first step to adjusting your business model. This should become a first step in your process of helping a new lead.
Another key component on your road to becoming an innovative firm is to identify the key customer segments in your firm. Who do you currently do most of your work for? Are there groups of clients you haven't noticed. Your team can probably help you with this. Once you know the group of customers you are serving, take it a step further and list the characteristics of your ideal customer. A great benefit to taking time to identify your customer segments is that you can become more focused on going after them. “Serving anyone” is no strategy, and this causes paralysis in marketing. In fact, customer strategy can best be defined by who your firm will not serve. If serving anyone is not a good strategy, then a stronger definition of key customer segments will give you focus and nail down a huge part of a successful business model.
Maybe it's because I have a daughter who is about to go to college, but I've been guilty of creating innovation strategies that are based on trends, which are definitely short-sighted. Neither millennials like my daughter, or any other one generation or trend can bring clarity to running a modern practice.
We've created accidental business models in our firm over time, and we are now just questioning those models. I'm really discussing what we've most recently learned. Defining the key components mentioned above can take a lot of time, but taking the time can give you the basis for a real strategy to become and remain innovative for many years to come.
The Practice growth playbook provides you with a set of tools to transform your practice and double your profits in one year. Drawing on strategies employed by some of the world's most progressive firms, you'll learn how you can grow rapidly and build a sustainable modern practice. Download for free.
Jason Blumer, CPA
Founder/CEO of Thriveal CPA Network.
Jason Blumer is the Founder of the Thriveal CPA Network and Chief Innovation Officer of his own firm, Blumer CPAs. He says ‘dude’ a lot, wears jeans and flip flops to work and wishes he could get a tattoo. As a speaker, writer and podcaster, Jason desires to be out front shaking up the public profession of accounting with new ways to do things, and a renewed focus on the customer.