We hear about accounting firm growth strategies all the time, but when it comes to putting a plan into action, many firms are lost on how to get started.
When we talk about growth, it’s important to understand there are two broad types of “growth.”
An increase in the number of clients
An increase in the amount of revenue per client
It’s unlikely you’ll only go with one strategy. Too many clients (at your current rates) means higher overhead, more payroll, and an overall increased burden with marginal profit gains. On the other hand, raising your rates for current clients is tricky—especially without adding extra value for the added price tag.
From here, your growth plan becomes even more nuanced.
The single question is no longer, “How do we grow rapidly?” Instead, it becomes a list of key considerations:
How can we increase value in order to increase revenue?
Who are our ideal candidates who both need this value and have the budget for our rates?
How do we find leads that fit into that ideal client profile?
What must we do to prepare for this type of growth?
Step One: Increase Value to Increase Rates
Before we dive into growth by increasing client revenue, let’s explore a simple scenario for comparison.
Your firm has a goal of $30k in monthly recurring revenue (MRR), and you currently service 20 clients, each of which pays $500/month on average. To reach your goal, you’ll need to take on another 40 clients at at least that same monthly average. That means an increase in staff and resources, and while your bottom line would increase, it wouldn’t be substantial.
Consider the additional resources required to serve an increased book of business: you’ll have to incorporate time and effort for training. Plus, what if your new resources don’t work out? It happens more than you think, and it could possibly interrupt operations, leading to disgruntled clients and a missed growth opportunity.
By contrast, a more reliable way to increase average revenue — and ensure it’s long-lasting — is to add high-value services to your current offerings.
Some highly requested offerings include:
Tax planning: This is the lowest hanging fruit. The bulk of your current revenue may come from tax filing, so asking current clients to consider tax planning is a quick win-win for both parties. You increase the intake while they become better prepared for the next tax season, saving time, money, and headache.
Forecasts/Budgeting: Some businesses are already growing rapidly and need help managing their growth. They have some big decisions on the horizon and want to know the best time to make them, the best way(s) to fund them, and how to do it with minimal stress. A solid budget and forecast adds value to those staring down big decisions, making it worth the increase in price.
Advisory services: Some organizations need additional help sorting out what the numbers are telling them. They could even need to run several future scenarios and ask key questions about their financials. The firm’s role is to support by interpreting data and recommending next steps.
Outsourced/Fractional CFO: Many businesses are on a healthy growth track, but they still aren’t ready to build their own finance team or hire a full-time CFO. In the short-to-mid term, your firm could step into that role and provide all of these mentioned services as a fractional CFO.
Additional strategy: Blend your growth options together. Set a revenue goal that includes both a number of clients and higher average rates charged for each of them.
Step Two: Find Clients Who Fit
After you figure out which services will rapidly grow your average client revenue, it’s time to find the clients that most need those services. Some businesses in your portfolio are ready to level-up to some of these extra services right now, while others might need some more time to mull it all over. Until you can master the upsell for your existing clients, you’ll have to do some searching for ideal clients.
We’re talking about those business customers who aim to get the maximum value from your services — while also fitting into the overall goal and culture of your accounting practice. Interestingly, narrowing your field of view actually helps you reach your ideal client goal; if you’re taking any business type and stage, it’s impossible to create a consistent growth that’s both sustainable and rapid. You want to get to that point where you’re turning clients away who aren’t a good fit!
To help your firm get there, consider setting up an ideal client profile:
Industry: Know which types of businesses need the services you’d like to grow. For instance, software startups likely have or are seeking funding and need help figuring out things like pricing, hiring, and taxes.
Size and/or revenue: If a company is large enough, they’ll likely have an internal finance team. Smaller companies might only want their taxes done and possibly basic bookkeeping. Find the right stage to offer your services.
Current accounting practices: Know where your ideal clients are currently. Are they trying to track it themselves? Using a bookkeeper who doesn’t offer more?
Key contacts: Once you know details about the business, it’s time to find the right people inside. This includes decision makers as well as those around them. For instance, the COO may hold the coin purse, but the HR person would love to know more about how finances impact hiring. Talking to both improves your chances to close the deal.
Step Three: Market Directly to Your Ideal Buyers
Scattered marketing is a common pitfall in accounting firms. Most of the problem comes down to one word: differentiation.
The good news is that part of differentiating your business comes from clearly communicating:
Services you offer
Specific people/businesses you help
Exactly how you use those services to help them
From there, it’s a matter of finding the right avenue to market the message and attract your target clients. Steps one and two cover the services and ideal clients. Creating the message means understanding where your buyers are and how to best communicate where you can take them.
Do this by understanding:
Key pain points: Big decisions, product pricing, poor cash flow, paying too much in taxes, exit strategy, taking on investors
The perfect result of your solution: Paying only the taxes due, smooth decisions without financial hiccups, improved cash flow, structuring for sale and/or funding
How you get them there: How you help that particular industry at that particular stage in their business handle the particular pain point
Further reading: Buffer created a great resource showing 27 of the best formulas for communicating what you sell to your ideal buyers. The above strategy is called “before-after-bridge.” You show the pain (before), life after the solution is given (after), and the solution that gets them there (the bridge).
Step Four: Prepare for Rapid Growth
Most growth is good for business, but a sudden increase in your client base could drown you and your team. This creates workplace stress, mistakes in deliverables, and if left untreated, an eventual decrease in business.
Bottom line: Rapid growth sounds great but can crush you if you're not ready.
Imagine a flowing river with numerous streams feeding into it, and you’re able to control the flow of individual streams through a system of valves. The different elements of your growth strategy are the streams (finding clients via marketing, hiring CPAs to handle deliverables, and handling the intake and onboarding). And how you manipulate the flow of each of these streams is how you determine your growth.
If you’ve considered adding services and finding ideal prospects for those services, it’s likely you’re going to have to change up how you hire staff and deliver services. Otherwise the whole system falls apart!
The top four processes you need include:
Hiring: Growth likely means you need to bring on staff, which is a challenge in itself. You have to know where to source qualified talent, and you must know how long it takes an individual to go from first interview to fully functional teammate.
Client onboarding: That is, a system for bringing your new clients onto your roster, including gaining financial account access, cleaning up their books for ongoing bookkeeping, establishing processes for document sharing and signing, etc. Some of these steps are able to be handled via automation, which saves your staff time and effort when it comes to essential but tedious, low-value work.
Marketing/Sales: Your marketing and sales process is also something that needs clarity. When you have the right staffing levels and a smooth onboarding process, it’s time to increase the flow of leads into your business.
Fulfillment: Of course, new services need definition. Filing taxes is fairly finite in nature, but advisory services that aren’t defined means your customers don’t understand what they’re getting. Or on the flip side: you could become overwhelmed with requests that make it not worth the fee (aka scope creep).
One Step at a Time
When done correctly, these steps prime your firm for rapid growth. But each of the topics covered here pack multiple layers that need attention. Take some time to think about your goal as a firm, and consider the services you need to offer to get there. Then it’s easier to move onto identifying potential client audiences and the tools necessary to provide them the best quality of service.
One shortcut that smart, growth-focused firms have adopted is leveraging technology to create a quick, logical path to growth.
Automated bookkeeping transforms your firm’s operations by removing the stress and risk that comes with manual data entry, categorizations, reporting, and more. Effectively, it lets your accountants do what they do best: provide high-quality services to your growing book of business.
To learn more about how Botkeeper’s full-suite bookkeeping solution will help transform your firm and inspire growth, click below to get in touch with a Botkeeper specialist. They’ll take you through a custom assessment!