How to Boost Profits at Your Accounting Firm
If you have plateaued with your profits at your accounting firm while others are soaring, it may be time to rethink some of the aspects of your business. These are a few tips that can get you started:
1. Encourage Ideas Within Your Team
If you would like to increase profits in your accounting firm, you will have to look within. Utilize your team to brainstorm ideas. Come together to insight strategies and find ways to implement plans for the future. This could include cutting unnecessary costs within the firm, or even hiring on new competent accountants, enrolled agents, or lawyers, who can bring in revenue.
2. Invest in Education
Look to your team and make note of those who stand out. You may have capable accountants in the low ranks that have proven their skills. One of the best ways to make profits in the long run is to make investments in the short term. If you have lower level or entry-level accountants who have expressed a desire to grow within your accounting firm, then you may want to motivate them with opportunities for advancement. Incentivize them with the free or subsidized CPA course to help them become a CPA. Once they become a CPA, they will be able to use their knowledge to boost the profits in your firm.
3. Improve Communication
If you plan to make long-term changes to optimize performance, be sure that you remain in communication with your team. If you are a small firm, then you should confer in meetings every week or so to be sure that everyone in your team is on the same page. If you are in charge of several branches of a firm, then be sure that the managers of the other branches understand the changes being made. For example, if you are integrating the team into a systemized process, schedule a meeting with all of the branch managers to go over all of the changes.
4. Change Your Services
It may seem like the best option is to put all of your services out on display like a menu, but that is not always the most practical idea. The truth is that there are services that do not fetch a very high price. If you want to figure out which services are not bringing in profits, then you simply need to measure your net firm billing rate or average hourly rate for every service. Over time, you will find the margins and you can compare them between all of the other services. The rest is simple—the low-earning services can be taken off the list. If, however, you wish to keep the service, consider why it is not bringing in enough profit. Perhaps one member of your firm is particularly good at that service, and you can designate it to him or her. On the other hand, it is ok not to offer every service. Spend time in what you excel at and maximize those profits instead of wasting time on something that will not bring in enough money.
5. Encourage Clients to Buy More
There is no need to encourage clients to buy things they do not need. Instead, offer your veteran clients services that you can continue to help them with over time. For example, they may need long-term financial advice such as with keeping up with investments. If your accountants have abilities that are not being utilized, encourage them to offer his or her services at an additional price.
6. Choose Clients Wisely
Every accounting firm wants to have more clients. However, are the clients making you enough money? Many firms hold on to clients that end up costing the firm more money than they are worth. The truth is that some clients will be irresponsible and disorganized. If you have clients that are a waste of your time, then take advantage of your valuable time by cutting them loose. You rely on your clients to make you money, but you also need them to provide on their end of the deal. Dedicate that valuable time to clients who will do their part.