This probably isn’t an earth-shattering revelation if you’re an accountant. Over the last decade, your ability to make a decent living doing compliance work has decreased dramatically. Commercial tax operations are offering tax returns for incredibly low prices–in some cases, companies are even doing tax returns for free. If you’re the owner of a small or medium-sized firm, it doesn’t matter if your work is higher quality. You can’t compete on the price, and retail shops are spending millions of dollars in advertising every year to woo your clients away.
You notice your profits declining, so you start going into the office a little earlier, staying later, working weekends. You mistakenly believe that you simply need to work harder, to find more clients, to complete more tax returns in order to get ahead. Instead, each year you find yourself falling further behind. You spend more time at the office and less time with your family, with diminishing returns. You’re worried about where your business is headed and whether it’s going to survive long-term. The accounting industry has been disrupted, and that’s not your fault. The bad news is that working harder (something accountants excel at) won’t get you where you want to be.
The good news is that there is a way forward that will help you now only survive, but thrive. It requires you to evolve and adapt, and to let go of your attachment to the status quo. But the results and the rewards are absolutely worthwhile.
There are three key ideas you need to embrace in order to take your accounting practice to the next step in its evolution.
- Transform from accountant to advisor.
- Learn to price/sell/deliver.
- Confront and conquer fear.
Let’s take a closer look at #1: Transform from accountant to advisor.
The idea of stepping into an advisory role is a hot topic for accounting consultants and coaches. You may have heard of or even tried to adopt this advisory role for yourself. Without a clear sense of what exactly an advisor does, however, you may have found only limited (or no) success.
What does success look like? It looks like taking a client who is a business owner from a $500/year engagement (for annual tax returns) to a consistent $3,000-$15,000 monthly retainer. This is possible with the knowledge and expertise you possess right now
What holds accountants back from stepping into this advisory role is really just the space between their ears (more about that in this post on fear). However, practically speaking, accountants tend to fall into one of two camps when it comes to advising clients
- “I’m too busy working.” Many accountants are working 60+ hour work weeks, and are far too consumed with grinding out tax returns or putting out fires to actually give clients thoughtful, valuable advice about how to move their businesses forward.
- “I already do this and just bill for an hour of my time.” Another common practice is for accountants to casually offer business advice to their clients by answering questions in an email or picking up the phone for a chat. This relationship tends to be reactive (directed by the client) instead of proactive (directed by the accountant).
The problem with giving advice away for free, or at an hourly rate that is too low, or for a fixed fee that ends up not being very profitable, is that clients do not understand the value of the information they’re receiving. The same clients who happily pay a business coach thousands of dollars may haggle with you over the cost of monthly bookkeeping.
Accountants likewise tend to undervalue themselves, taking for granted what they have to offer. Yet you can help clients improve the health of their businesses in a number of ways. By understanding how to analyze the industry, forecast cash flow, and even properly budget, you can help a client decide whether to open a second office and where that second office should be located; when to expand a team and hire additional employees; whether investing in new systems or equipment is a profitable venture at this point in time. You can read the tea leaves about business in ways that many owners simply cannot.
Stepping into the role of advisor, however, is more than just understanding the value you provide. It begins by declaring to yourself that you’re ready to take the next step in your business. Then, practice every day to uphold that declaration. When you start living in your new role, you’ll find that your practice starts to reflect your new reality. You’ll soon find that your new perspective affects every aspect of your firm, including which clients you take on and which ones you decide not to work with.
- The old model of the accounting industry has been disrupted. High-volume, low-profit compliance work is seeing diminishing returns.
- The way to move forward is to step into the role of advisor, with monthly engagements of $3,000-$15,000 per client.
- The key to adopting the mindset of an advisor is understanding the unique value you can provide your clients businesses.
Now that you understand the value you can offer businesses, it’s time to learn how to communicate that value directly to your clients.
About the Author
Matt Solomon is the CEO of The Center for Enlightened Business. He takes an unconventional and bold approach to teach accounting firms of all sizes to learn how to get highly profitable clients and find more personal freedom. Empowering these firms to increase their engagements to $3,000-$15,000 per month while decreasing their hours by 20% or more.