In uncertain economic times, many firms feel the need to take on any client they can get. Yet one of the biggest problems firms have is too many small clients. I’ve often compared it to being too busy picking up $10 bills when there are $100 bills on the table.
The unfortunate reality is that many small businesses won’t still be in business by the end of the year. Or, if they are in business, will have trouble paying for the services firms provide. How much time is your firm spending on those small clients? If instead, you spent that time on your very best clients, your firm could end up coming through this time the strongest you’ve ever been.
Rather than trying to hang on to every client you have, a better strategy might be to let some of those clients go. Here is our roadmap for prioritizing your best opportunities.
The cloud and disruptive technology have changed the playing field. Remember, value is determined by the customer – not the service provider.
Your clients want more from you than compliance services. They want advisory and consulting services. If you can package them with compliance services and deliver them better and faster, your best clients will recognize the value you provide rather than seeking out the cheapest alternative.
Menu of services
Many firms still have too many clients who only utilize one service, such as personal tax return preparation. Continuing to work with these types of clients forces workload compression during busy season, leads to potential over-staffing at other times of the year, and does little to improve your bottom line.
Develop a menu of services from all four areas: transactional, compliance, advisory, and consulting. Then develop a pricing structure, taking into account the level of service needed and access to expertise and other resources. Have upfront discussions with your clients about your scope of services and pricing. This will improve client satisfaction as well as cash flow.
The clients that helped you reach your current level of success may not be the clients that will help you sustain that success now and into the future. Remember Pareto’s Law: 20% of your clients produce 80% of your revenue.
Define your target clients and establish filtering criteria for existing clients who may no longer be appropriate. Focus on providing your target clients with expanded services and let the rest go. This can be difficult, but for most firms, it’s necessary to terminate a small portion of clients in order to create the capacity to provide higher-level, more valuable services to the best clients.
This year, the firms that heeded the call to move to the cloud were prepared to have 100% of their staff working from home. The ones who didn’t struggled to continue servicing clients while protecting the health of their employees. Wherever your firm fell on that spectrum, take note of what did and didn’t work, and work toward improvement.
Establish a technology committee to ensure your IT projects are aligned with the firm’s overall vision and strategic plan.
Your entire team can add value, not just accountants. In fact, many firms are now employing non-accounting graduates for advisory services. For example, data scientists, wealth management, technology, finance and marketing. That diversity of thought and experience makes a firm more valuable and innovative.
Conduct a resources gap analysis, select your curriculum, and start training. Implement 90-day game plans for every member of the firm.
Even in these uncertain times, the question remains: would you rather have five $100k clients or prepare 1,000 individual tax returns for $500 apiece? I am confident you see the benefit of larger clients who take advantage of multiple services. Start focusing on those ideal clients and you will do much better than those who are paralyzed by procrastination.
Becoming a future-ready practice
By 2030, the world of accounting is going to look radically different. Download our guide practical advice and tips on how to prepare for the next decade.