Just as niche industry growth is making its mark on the accounting profession, so is the migration to specialized services.
With the lion’s share of clients utilizing accounting professionals for tax return and tax-preparation services (90 percent and 59 percent, respectively, according to The Sleeter Group), the profession is looking to expand its footprint and make the shift from commoditized services into trusted advisory roles.
The Current Service Ecosystem
Before finding ways to expand your footprint, it helps to get a feel for the services currently being utilized by small businesses. According to a survey of 400 small businesses by Wasp Barcode Technologies, here’s the most common services rendered for SMB clients:
- Tax preparation (71 percent)
- Payroll (50 percent)
- Audit (48 percent)
- Tax planning (30 percent)
- Personal finance (16 percent)
- Bookkeeping (14 percent)
Sure, tax-related services make up the bulk of services utilized by companies, but what are SMBs looking for beyond these nonstrategic services? The Sleeter Group has compiled precisely that, identifying the wants of SMBs using an accountant, or planning to incorporate one into their business operations.
The findings showed the most-wanted accounting services were:
- Business planning (25 percent)
- Business strategy (25 percent)
- Business dashborads (21 percent)
- Analytics (20 percent)
- Government audit representation (17 percent)
- Tax planning (17 percent)
These are all important services, not to mention that they’ve got the added advantage of being virtually industry-agnostic. They apply to almost any business and can be a great initial offering to your existing client base.
And while those planning to engage an accountant are, not surprisingly, most interested in tax services, those using a CPA have shifted their needs to a more strategic offering. But based on the services currently rendered, there seems to be a disconnect between what clients want and what they’re receiving from their accountant.
Maybe it’s lack of communication. Maybe it’s due to staff size. Or maybe it just comes down to being a proactive accountant. Ensuring that your clients are aware of the depth and breadth of your expertise can go a long way in helping you stand out from your competition.
Begin Your Expansion with Existing Clients
You may think that in order to make headway with new revenue streams, it requires acquiring new clients, but that’s not necessarily the case. Rather than start from the ground up, it makes sense to expand your service footprint with your existing clients initially.
Not only will this deepen the client relationship and increase revenue (always a good thing), but it will also give you a chance to evaluate the internal/operational demands of these services before presenting it to your market at large.
The Question of Pricing
Many accountants feel compelled to compete for business based on price, which can not only adversely affect the perception of the quality of service, but also cut deeply into margins. As we’ve seen earlier, price sensitivity may not be as heavily-weighted as one might think.
Of course reasonable pricing is important, but as The Sleeter Group indicates, the fact that price doesn’t even rank in the top five criteria for businesses addressing their choice of accountant should give you latitude to consider a new approach to your model.
For commoditized services like tax returns, it may be difficult to demand premium pricing (virtually requiring that you compete on price), but the introduction of strategic or advisory services provides an opportunity to deviate from competing on cost alone, and instead begin migrating a portion of the business to higher-margin services.
It’s also a great opportunity to begin the shift away from hourly rates and focus on value pricing your services. If you’re still among the 66 percent of accountants primarily utilizing hourly rates, combining the rollout of specialized services with value pricing may be a feasible way to test both initiatives in a manageable way while you iron out any internal costing issues that may need work.
This is an excerpt from a larger guide on how to truly build The Value-Added Practice, which you can download here for free.
Wes Wilkins is vice president of marketing at Circulus and when not geeking out on all things marketing he geeks out on video games, sports, craft beer, music, food, and his two husky compadres, Stevie Nicks and David Bowie.