Have you ever wondered why certain accounting firms grow exponentially and have higher profitability than others? What is the secret behind it that the rest of the firms don’t know?
There are over 46,000 public accounting firms in the United States that are functioning on small and large scale. If we look at the ratio, The total revenue of the accounting sector was 127.8 billion U.S. dollars in 2020, 133.4 billion U.S. dollars in 2021, and is expected to reach around 142 billion U.S. dollars in 2022.
Presently, the estimated revenue of these firms reached as close as 145 billion dollars in 2023 which is quite a significant number.
Indeed, competition in the accounting industry is also growing along with the increase in revenue!
So, to compete efficiently, you’ll need to take a lot of action(s) to increase the growth of your firm, and you might be eager to get started right away. But first, you must figure out where you want to go.
There are a lot of strategies you may plan to achieve growth like taking on more clients, offering more services, etc.
An accounting firm’s strategic plan must include efficiency and a clear endpoint. Your goals will keep you focused, and remind your team about their primary focus and the firm’s long-term target.
Invest More in Marketing:
Fast-growing firms not only invest in accounting professionals, but they also allocate higher budgets for marketing than slow-growing firms. Marketing is about compellingly communicating your firm’s narrative and attracting more clients. There has been a rising association between marketing budget and excellent performance in business in recent years.
Here is the suggested marketing percentage for new and established companies.
You can also decide your monthly marketing budget using the graph below.
Foster Loyalty With Existing Clients:
Making new clients is not the only way to generate new revenue. In fact, a large amount of business generated by top accounting firms comes directly from existing clients. To take an advantage of this, your firm should prioritize establishing client relationships and promoting loyalty.
You can capitalize on cross-sell and upsell opportunities, professional service firms must develop a deeper and broader relationship with their clients. When they go beyond finance and actually grasp the client’s business, that is when the magic happens.
The 80-20 Rule (Pareto Principle):
The 80/20 rule, often known as the Pareto Principle, is a business observation that 80% of outcomes derive from 20% of inputs. Business owners should identify the crucial 20% of work done by themselves or their teams that has the greatest impact on the final product. These activities should be prioritized.
Salespeople’s performance results across a wide range of organizations have shown success by adopting the 80-20 rule. Furthermore, external consultants that employ Six Sigma and other management methodologies have successfully implemented the 80-20 approach in their practices.
Demonstrate Your Firm’s Ability:
Use every chance to demonstrate your firm’s knowledge and professional acumen, from your firm’s business owners to accounting professionals should deliver a lecture, participate in or regularly arrange a podcast, conduct a webinar, or publish a blog post on LinkedIn. This is how people in the modern economy identify, trust, and eventually hire experts—firms like yours.
You can check out the following graph for Social Media trends and make a strategy related to the platforms accordingly.
Product/ Service Innovation:
Conduct strategic planning to enhance current products and services like Audit and Assurance services. Explore ways to complement them and consider optimizing service offerings, such as Outsource Bookkeeping, Outsource Payroll, Outsource Tax Preparation etc. to increase profitability.
This strategy may involve refining existing services, introducing new lucrative ones, or adjusting pricing structures.
Make Use of Technology
One of the key ways to boost your accounting firm’s profits is by investing in technology. According to one of the reports, 58% of the accountants opined that their work turned out to be easier with the technological advancement.
Likewise, in 2023, about 86% of the accountants expect to devote an average of $15,800 on technology diversifications and improvements as well as upgrades
As such, with the aid of apt software and tools, you can finish tiresome tasks quickly, and hence, save your time and improve overall efficiency.
With the adoption of cloud-based software and other automation tools, manual errors can be reduced, and hence accuracy can be improved while allowing everyone to work on the same project in real-time.
Work on Your Pricing Strategy
Your firm’s profit margin is greatly influenced by the pricing strategy in place. As such, to increase profits, it is crucial to form pricing strategies per value of the services offered rather than the time involved.
With the aid of this method, firms can efficiently deliver value-added services, increasing revenue over time, while maintaining utmost transparency at all times.
Focus On Social Media
In today’s time, one of the best ways to reach the target audience and convert potential clients into actual ones to generate profit can be done by leveraging social media platforms. At present, more than 60% of the global population uses social media with their average usage being 2 hours and 24 minutes per day.
Also, with 4.80 billion people using these platforms with an additional 150 million new users making use of the online medium within the last 12 months, focusing on social media platforms for growing your business is the need of the hour.
With such popularity and reach, social media has now become a potent tool that should be leveraged by you to get optimal results. These will not only aid you in establishing brand awareness and trust but even motivate the target audience to reach out to your firm for the fulfillment of their needs.
Develop and Share Relevant Content
When you know your audience, you can start developing relevant content and sharing the same on platforms where your audiences are most active.
This not only gives them a better insight into your offerings but even opens possibilities for new business opportunities, thus increasing your firm’s profit in the long-run.
Hire the Right Talent
Another way to increase profitability is by hiring the right CPAs, EAs, Controllers, and other efficient people in your team. With more talent comes more work and hence, more revenue.
Also, with an increase in headcount, the company even enhances the experience level of all individuals at work, which can be used to offer more services to the clients. This way you can charge a premium amount from your clientele and gain profit.
Make Your Firm Stand Out:
Many of the high-growth firms’ top priority is to differentiate their firm and make it stand out. With the increasing competition in the accounting industry, this goal is a must-have to generate referrals and attract new clients.
A successful firm differentiates itself from the competition by doing something or multiple things differently than the others.
These secrets will help your firm grow exponentially and convert any average or below-average-performing firm into a high-growth firm. As you now know, it is not complicated as it appears. You just need the will to succeed and the proper knowledge to make it happen.
According to a study, high-growth firms achieved a compound annual sales growth rate of 20% or higher for at least three years. This benchmark was met by 29.7% of the firms in their sample. The rest saw average or no growth.
What will be your firm’s growth over the next three years? You might not know the answer, but you know that now your firm will fall in that category whose numbers are getting counted.