The emergence of new technology, new ways of doing business, and young professionals making waves in the accounting industry has upended the way accounting firms are developed and managed. Firms that can provide a differentiated value – beyond traditional compliance services – will have the upper hand as the industry continues to revolutionize. Having said that, CPAs and entrepreneurs have a unique opportunity to reinvent their firms or build a firm from the ground up, which is significantly different from and more valuable than the competition.
Shift Towards Specialization
One of the most significant changes I’ve seen with accounting firms is identifying and targeting a niche market. What clients aren’t getting from large full-service firms, they are finding in small, specialty ones. This observation is what ultimately led me to start my e-commerce accounting firm, E-Commerce Accountants.
Most private practice CPAs take on any and all clients without regard to the type of individual and/or business. However, my business is hyper-focused on the skills and tax services that e-commerce businesses specifically need. Having a niche approach makes us a more valuable resource to our targeted clients (which are online retailers).
The new age of accounting firms needs to understand that every industry has accounting nuances and methods that need to be personalized and tailored.
Having a grasp on these distinctions and focusing on one specialty area will make your firm more beneficial to your clients. So, what works for my business?
Virtual Business Operation
Before COVID-19 made work from home the new normal, the foundation of my firm has always been a ‘work from home’ operation. Everyone in my company works remotely, which I knew from the start, was where the future of work was headed. The pandemic just so happened to accelerate the move, with major corporations like Twitter, announcing employees can work from home permanently.
Instead of finding someone locally for a position, I’d rather seek out talent that’s the perfect fit for the role, no matter where they are physically located. Many people may be hesitant to move for a job, but the way I see it, they shouldn’t have to pick up their lives when quality work can be done remotely. I’ve found that most of the e-commerce companies we work with also love this model because we work in the same type of environment that they do.
Most private practice CPAs run a “drop off” service business, which I predict is on the decline moving forward. Speaking to your clients once a year during tax seasons, or even worse, when an issue arises, is not the traditional approach anymore.
Accounting firms add more genuine value to clients when they are having an ongoing dialogue (e.g. monthly check-in meetings). It’s important to ensure that you’re consistently speaking, maintaining relationships, and developing accounting/tax planning strategies for clients.
Perhaps one of the most important aspects of running a successful service business is the ability to build and maintain personal relationships. The reality is that competition is fierce as it pertains to providing a quality service. Competitors can likely provide the same quality service, with similar prices, but building personal relationships with your clients makes all the difference when it comes to them choosing who to work with.
If your clients like you and are connected to you on a personal level, they want you to succeed and will feel good about contributing to your success. They’ll likely start referring you to their friends and family, continuing the help the growth of your business, because they are subconsciously emotionally invested in your success.
When it comes down to it, the incremental price difference between your firm and the competition is irrelevant. It’s shocking how few accountants understand this concept. If you can develop personal relationships, and combine that with high-quality service and experience, the sky is the limit in the marketplace for your services.
Taking care of the people that work for you should always be a priority. I truly believe that my business is worthless without the people that work for me and it’s important to show them just how critical they are to the operation. Unfortunately, in the accounting space, there seems to be a culture of “work first – everything else second,” and I try to embrace the “everything else.” A big part of taking care of your employees is showing an interest in and supporting their lives outside of work.
For example, I have a bookkeeper that’s been working for me for almost three years. He’s a career aspiring actor and writer in Los Angeles and is working as a bookkeeper to help fund his acting aspirations. When I first started working with him, he seemed very guarded about this and did not want to share this part of his life with me – likely because the people he had worked with previously discouraged this.
He’s now starred in several national commercials and even has taken up standup comedy! What’s even more interesting is that he consistently takes on more clients and more work because he loves our firm and our culture. To this day he’s never missed a deadline and all of his assigned clients love him.
Invest in your employees, encourage their growth, and support their goals both in the firm and in their lives outside of work.
One thing is for certain, clients will be seeking accounting firms that stick out from the competition. As more and more young professionals enter the accounting industry, there’s an opportunity to refresh, bolster, and reinvent a profession that has operated on a traditional foundation for many years.
My advice for aspiring accounting entrepreneurs is to work for a reputable accounting firm for five years (or more) to master your craft. I see far too many entrepreneurs rushing into starting a business, and therefore, are unable to compete with more seasoned professionals.
I spent almost seven years working with Ernst & Young. During all of the late nights and weekends that I spent working, I was able to thoroughly learn this business better than most. The things I learned carried over and are present in my practice today. Learning from the best truly helped shape my career path – but being able to put my spin on it is what’s led me to success.