The stable growth of any kind of business relies almost entirely on its ability to increase profitability, and it’s no different when it comes to tax and accounting firms. Fortunately, there are plenty of ways to do this, 8 of which can be found listed below:
1. Look to outsourcing
Whether you use a third party to help you with your bookkeeping and payroll, or choose to outsource tax preparation, this strategy can be extremely convenient and cost-effective for smaller accounting firms who don’t have the budget for hiring in-house staff. Keep up with demand – maybe even exceed it – without costly overheads associated with salaried hires.
It’s worth noting that many outsourcing agencies use the latest advances in AI, automation and software to help them work more efficiently, and if you hire them, you could benefit from this without having had to invest in it yourself.
2. Set up referral plans for clients
Having a current or previous client recommend your tax services to others, is a great way to grow your business, but not every client automatically makes those kind of referrals. Try creating a referral plan that offers some form of compensation to clients for sending some new business in your direction.
3. Cross-sell services to existing clients
While it’s always good to attract new clients, focusing on your existing ones by offering them a range of services they might not already be using, can encourage them to sign up for more.
4. Move away from low-value services
For most accounting firms, they offer some services that don’t bring in as much profit when compared to others, and dropping these – or focusing less on them – could help you increase revenue.
5. Elevate your brand
Although there will always be some clients who only ever want the cheapest services, many more look for a firm they can trust and whom they know have the relevant expertise to assist them well. By managing your brand thoughtfully and marketing it innovatively, you can encourage penny pinchers to invest in your higher value services.
6. Review your marketing strategy
In connection with the previous point, any firm seeking to grow and be more profitable must invest in marketing, and with such things as content creation, paid online advertising, social media marketing and search engine optimization, firms can entice new clients to their services.
7. Revisit your pricing plans
Reviewing the price of your firms services is something that should be done periodically. Markets change, and it could be that your services are cheaper now than they should be when compared to your competitors, or lowering your fees might help you welcome new clients looking for a good deal.
8. Expand the services you provide
From bookkeeping and payroll, to advisory services and financial planning, there are plenty of ways to offer clients more than just tax preparation, and bring in the bigger bucks. Even if you have to outsource and take advantage of offshore tax preparation services in order to this, it could still pay dividends.
It’s important as an accounting firm, to regularly review your profitability, particularly as markets evolve and new competition enters the field. Check in with your regular clients and ask for their feedback as to whether you could be offering them more in terms of services, too. Being more profitable doesn’t often happen overnight, and must remain a long-term goal, but by using some of the strategies listed above, you could do your best to make profitability a top priority.
