5 min read

Bringing the competition into focus

What do you think about your “competition?”

In a way, cloud accounting and AI Fintech open up the world to nearly every firm, but does this mean you compete with every other accounting firm on the planet? Or does it mean there’s a lot more room for collaboration? (Hint: it’s the second one.)

 

 

In times past, if there were two (or more) firms in a region. These two businesses competed for all of the businesses in the geographic area. Those firms typically offered just about every service, from bookkeeping to advisory—and everything in between.

It was a competitive environment. But things are so different now, and many accounting professionals now see things in a collaborative way.

 

The necessary shift from competition to collaboration

Necessity is the mother of invention. Or for the more philosophical types, Plato wrote, “our need will be the real creator.”

The most recent data shows that while still increasing, firm growth is slowing. Other data, from The Growth Partnership, shows that big firms are growing at a faster rate (Mergers and Acquisitions seem to play a role). These trends are driven, in part, due to businesses desiring a more holistic approach to their accounting.

Let’s make two observations about all of this data:

  • It seems that accounting clients want plenty of expertise, ability, and services in the professionals they employ.
  • Firms with staffing and offerings get a larger share of the market (as a rule).

But what’s a firm to do if they don’t have a huge team or a sizable M&A budget lying around the bank account?

In a phrase—Strategic partnerships.

 

How small-to-medium firms stay competitive (through collaboration)

two-colleagues-working-together-office-white-botkeeper

There are two primary ways tight-knit firms compete; choosing a vertical and/or specializing in a particular service(s).

A firm only working with dentists is an example of sticking to a vertical. Some firms only choose to do taxes, while others specifically don’t do taxes. These are examples of specializing in particular services. There are even firms that do both. (For example, a firm that only offers CFO and advisory services for dentists.)

Narrowing down both what you offer and who you serve improves:

  • Your marketing: With fewer industries, it’s easier to speak the language of your ideal buyers while directly hitting their particular pains when it comes to their finances.
  • Your processes: Instead of having a Jack-of-all-trades team, you have experienced specialists in the areas you offer.

Your reputation: Referrals come easier when your leads know other people in the same field (almost always). And your clients likely have a great, tailored experience.

But what about all the talk of, “big firms are more profitable” and “people want more services?”

It’s here collaboration and strategic partnerships come into play. Yes, there are firms only offering tax and others only offering CFO. But what if those two firms work together, referring clients to one another?

Partnerships like these happen throughout the accounting profession, to varying degrees, every day.

Here are three descriptions of varying levels of partnership to get your creative juices flowing.

 

1. Referrals, if clients ask

A basic and entry-level partnership is having referral partnerships with other firms, CPAs, and other professionals. Chances are you have clients who ask if you offer service X, Y, and Z at your firm.

What do you say? “Unfortunately, we don’t offer that, at this time.”

And this isn’t just some firm you happen to know who does a particular thing. Any referral that’s not an enthusiastic endorsement shouldn’t come from your firm. And any other financial professionals who want to refer clients to you should do so enthusiastically.

When you think of a referral, imagine saying something like,

“We focus on our strong suit, which is [insert service here]. And we partner with [insert professional or partner firm name here] who specializes in that service. We’ve worked with them for years. They help a number of our clients with their [service] needs.

If you’d like, I’d be happy to send an introductory email with both of you, or even try to schedule a quick call with all of us to introduce you.”

Do you know and trust any other professionals that deserve this level of referral? If not, it’s likely time to work on your networking. Why?

social-network-concept-connected-miniature-people-green-chalkboard-botkeeper

Because if you’re not able to give such a glowing recommendation, why would you hand over clients at all? And remember, this is a two-way street. The other firms should enthusiastically endorse your firm for your specialties, too.

 

2. Offering partner services to clients

Offering the services your partners handle is very similar to our definition of referral but a half-step closer to a full-on partnership. A referral tells your clients about someone who offers a product or service you don’t personally offer.

You're offering the potential (to both the client and the partner), but it’s a hand-off. You make the introduction and then metaphorically wash your hands of any future dealings between the two parties.

On the other hand, offering a partner’s services is a bump up to teaming with other firms and professionals to work on your respective parts of a client’s account together. For example, if you offer advisory and the partner firm does traditional tax and audit—there’s a natural level of partnership there.

Instead of using the client to share the financial details, you work out an agreement for the tax firm to ship you all data related to the account, then your team takes it to work out forecasts, models, and develop your strategic advice for the client.

The nuts and bolts of the agreement are flexible and often nuanced. Typically, your products are offered by the partner organization and vice versa. Again, many degrees of difference here, from creating a joint engagement agreement, presetting pricing, etc.. If you begin with a solid referral relationship, offering partners’ services is a potential next step in the partnership.

 

3. Coordination as a service

 

 

Have issues letting go of control? Understandable.

Counting on other business owners is excellent, in an ideal situation, but it’s not always possible to openly share clients. However, there is another way to handle multiple partners while fulfilling all of the needs your clients express.

Coordination as a service is a relatively new concept in the accounting profession. The difference is, you develop the partnerships, offer the work, and manage the client without them interacting with your various partners.

Example: AB&C Accounting offers a full range of accounting services to SaaS companies. The firm only personally does services associated with advisory and CFO. However, the firm works with three other entities:

  • Bookkeeping via an automated AI bookkeeping software, like Botkeeper.
  • A local CPA who handles taxes and is well versed in credits, like the R&D tax credit (used by many SaaS companies).
  • A small firm specializing in payroll, accounts payable, and budgeting.

Essentially, AB&C subcontracts all other professionals, selling their services as that of their own. Then, they coordinate the fulfillment and delivery of all of these services.

  • The client gets fewer points of contact and (potentially) a better price.
  • Contractors (aka, the other firms and professionals) have a pipeline of steady work while providing excellent service.
  • AB&C benefits from that big firm growth while focusing on its strengths.

With their powers combined, that’s a powerhouse firm, right?

 

Are there real competitors?

Yep, your firm has competition. But this doesn’t negate the need for collaboration but rather highlights the need to grow strategic partnerships with other firms, professionals, and accounting solutions.

One sure way to get a leg up on the competition is to build better efficiencies in your firm. That starts by reimagining the low-value work that eats up your firm's time. Automating bookkeeping with Botkeeper has saved our partners thousands of hours and countless dollars. Take the first step to a more competitive firm today!

 
Let's talk Botkeeping℠
 
 

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