What will you focus on in 2017 to make your business better than it is now? What new skills and tools do you need to make changes?
As accountants, our daily work is full of to-the-penny details that keep us focused on transactions, charts, data, and numbers all day long. We have to be good at the details to be in our industry. But we also need to be able to move from the trees to the forest and see the big picture.
It’s such an exciting time to be an accountant. Not only are they making cool movies about us, we are seeing so many exciting and productive changes that we can benefit from. Here are some sweeping trends and how to measure how your firm stacks up.
From Compliance to Advisory
The most exciting change for me is how accountants are making a difference in the lives of owners of small businesses. A study by Intuit showed that when small business owners hire an accountant, their success rate goes up by…drumroll, please… a whopping 89%. Did you realize you had that much impact on your small biz clients? You are truly dream shapers for these entrepreneurs.
As compliance work becomes automated, advisory work will take on a larger role in your business. One measure of how your firm is doing is to calculate the percentage of revenue that comes from compliance work vs. advisory work. The modern accounting firm is generating a growing percentage of advisory work year after year.
From Hourly Billing to Value Pricing
As data entry becomes more and more automated each year, hourly billers are actually giving themselves a demotion year after year by staying with this pricing method. More than half of the profession has switched to fixed or flat fee pricing or a version of that: package pricing. Many are also value pricing which is a better way to price high return-on-investment engagements.
How is your firm doing in this area? What percentage of revenue is being priced by the hour versus flat fee or value pricing? As the mainstream catches on to fixed and value pricing, the hourly pricing method will be less and less common.
I still think hourly pricing is easier when you first get started, but as soon as you have some history, you should move to a better pricing method.
From Operations to Multiple Functions
In the traditional accounting firm partnership and compensation model, the emphasis has been to promote accountants who were good technically as well as able to bring in business. This makes for a great service for clients, but often shortchanges development of other corporate functions, such as sales and marketing and human relations. Newer business models are appearing that don’t have these deficits, which leads to a more well-rounded corporate business model for accounting firms.
From Desktop to Cloud
Today I just moved my last desktop app, Outlook email, to Google apps email in the cloud. My accounting system, my scheduling system, my to-do list, my payroll system, and a huge number of other vendor apps are all in the cloud now. All of our client delivery is done via the cloud. We are nearly 100% cloud-based.
Measure how your firm fares by calculating the ratio of desktop apps to cloud apps. More and more firms are moving everything to the cloud for better accessibility, security, and collaboration.
From Technician to CEO
As accountants, almost all of us start out being technicians. We’re good at accounting and taxes. As our business grows, our skill set needs to expand from accounting knowledge to CEO-level skills: deal-making, pricing, developing new markets, and managing and growing people, to name a few.
Do you see yourself more as a technician working on client work, or do you see yourself developing your staff, your clients, and your business by adding these skill sets? You can rank yourself based on the amount of time you spend being a technician versus being a CEO.
A Great Start to 2017
This month, we have a chance to reflect on the trends above, assess where our firms stand, and decide on a course of action that will take us where we want to go in 2017. How did your firm rate in each of the above trends? Which trend should you start improving first?
The good news is a growing number of practice consultant are focusing on providing marketing and practice management training and support for the small CPA firm. This means you have easy access to courses and tools that can help you modernize your practice.
About the Author
Sandi Smith Leyva, CPA, CMA, MBA, has helped thousands of accountants grow their practices through her innovative coaching and training services. She was named a 2014 CPA Practice Advisor Top 25 Thought Leader, a “Ones to Watch” in Accounting Today’s “Top 100 Most Influential People in Accounting” and “Maverick of the Year” by the 2013 Stevie Women in Business Awards.