Accounting Firms Operations and Technology Survey 2016 (AFOT Survey) revealed top challenges faced by accounting and tax firms. 20 key findings from this survey indicate that some issues are commonly faced by a majority of your competitors.
- One in 3 accounting firms faces workflow efficiency challenges, despite technology!
- One in 2 other firms likely competes for referrals from YOUR connections.
- Getting new clients is difficult
Are you facing similar challenges?
Common challenges are actually the hints for you. You might perceive these challenges to be a competitive disadvantage for you. But you can actually leverage these challenges help you grow your practice.
Take an Opposite Approach to Workflow Efficiency Challenges:
The more inefficiently the work flows in your office, the more is the drain on your profitability. The time and efforts you take to “handle” the work actually reduce the magnitude of billable work you do! No wonder, the rate of adoption of workflow technologies and softwares at accounting and tax firms is at its peak.
Yet, one in 3 accounting firms faces workflow efficiency challenges, despite technology!
You can turn the great workflow challenge tide in your favor to grow your practice.
How to Turn Workflow Challenge into a Competitive Advantage?
Most firms think implementing a workflow software system will solve their efficiency problems. It is not the software itself that solves the problem. It is how you adapt the software to your process flows (or vice versa).
Don’t try too hard to make the workflow software work for your practice. Take a deeper and closer look at your “processes” first. Workflows in the software and those your people follow may actually be different. Identify which work steps get handled many times by the same resource / person, and why. When knowledge and experience are not enough to make decisions in the process flows, work flows back and forth.
Empower your people with the necessary knowledge to make those decisions. Coupled with well-documented review processes, work can and will flow faster. You will grow your practice and earn more revenue because you will produce and deliver more work. It will increase your firm’s efficiencies increases your revenue and profit.
Outcompete Others from Obtaining Referrals from YOUR Connections:
You may not recognize but you are more often that not actually competing for the same referral. 80% of respondents of AFOT Survey reported they get new clients by referrals from other professionals. (Attorneys, Financial Consultants, Insurance Agents, Doctors and so on).
Ironically, if you think to grow your practice, you too should focus on such referrals, you will be dismayed about the “competition” for such referrals.
Check your LinkedIn connections. Each of your “other professional” connections is likely also connected with your competitors. In a locational / geographic competition, it is all the more common. Small world, as they say!
How to Be The Preferred Referral Receiver?
It all boils down to “out of sight, out of mind” truth. When your attorney “friend” also has another CPA friend, who gets the referral?
New technology tools can help you keep in more regular touch with your “referral networks”.
“Recency effect” principle in psychology states that people are likely to most remember the most recently presented information or experiences. So, being “fresh” on the memories of your professional connections is a “daily work” that you want to do.
At the same time, according to the “primacy effect” principle, humans are likely to remember the words in the beginning of a long list more than in the middle.
What it means is that to grow your practice, you would want to be the first CPA to connect to other professionals and stay on top of their memories.
Looking out for such professionals who are starting out with their practices and connecting with them (and being in constant touch with them) will yield you long term growth.
Maybe Only You Are Not Raising Fees to Increase Revenue:
AFOT survey results also revealed that getting new clients is so difficult, 1 in two firms focuses on selling more to existing clients and raising fees. In other words, it means if you have not raised your fees in recent times, you may be the only one to lose out.
How to Include Raising Fees in Your Growth Strategies?
As counterintuitive it may sound, clients may not be as sensitive to fee raises as you might assume. Make sure that your engagement letters include a fee increase clause at renewal. (Maybe a range of percentages). It will create an “anchoring effect” in the minds of your clients.
Anchoring is a cognitive bias that describes the common human tendency to rely too heavily on the first piece of information offered (the “anchor”) when making decisions. Anchoring is commonly used in sales. You hear a higher price first, only for the sales person to offer you a discount later. It makes you compare the new lower price with the “anchored” higher price. And then you feel a sense of “loss-avoidance” or “gain satisfaction”.
So, if fee raises is not a definite strategy for your revenue growth, you want to reconsider it, now.
How will you overcome the common practice growth challenges?
Pransform helps you overcome practice growth challenges. Contact Pransform now to learn how we can help you grow your practice.