Just as niche industry growth is making its mark on the profession, so is the migration to specialized services. With the lion’s share of clients utilizing accounting professionals for tax return and tax-preparation services (90 and 59%, respectively, according to The Sleeter Group), the profession is looking to expand its footprint, and make the shift from commoditized services into trusted advisory roles.
The Current Service Ecosystem
Before finding ways to expand your footprint, it helps to get a feel for the services currently being utilized by small businesses. According to a survey of 400 small businesses by Wasp Barcode Technologies, here’s the most common services rendered for SMB clients:
Sure, tax-related services make up the bulk of services utilized by companies, but what are SMBs looking for beyond these non-strategic services? The Sleeter Group has compiled precisely that, identifying the wants of SMBs both using, or planning to incorporate, an accountant into their business operations.
These are all important services, not to mention that they’ve got the added advantage of being virtually industry-agnostic. They apply to almost any business, and can be a great initial offering to your existing client base.
And while those planning to engage an accountant are, not surprisingly, most interested in tax services, those using a CPA have shifted their needs to a more strategic offering. But based on the services currently rendered, there seems to be a disconnect between what clients want and what they’re receiving from their accountant.
Maybe it’s lack of communication. Maybe it’s due to staff size. Or maybe it just comes down to being a proactive accountant, ensuring that your clients are aware of the depth and breadth of your expertise.
Begin Your Service Expansion with Existing Clients
You may think that in order to make headway with new revenue streams, it requires acquiring new clients – but that’s not necessarily the case. Rather than start from the ground up, it makes sense to expand your service footprint with your existing clients initially.
Not only will this deepen the client relationship and increase revenue (always a good thing,) but it will also give you a chance to evaluate the internal/operational demands of these services before presenting it to your market at large.
Once you get some traction within your existing base, you’ll be better equipped to answer the following :
- Can you effectively scale the offering to a larger client base?
- Do you have enough internal expertise to support the offering on a larger scale?
- Can you price the service reasonably while protecting (or increasing) margins?
- Do you have a plan to market the services?
- Do you have have a plan to “bundle” related services into a productized offering?
- Have you defined what success metrics might look like?
If the answer to all or most of these is “yes,” you’re probably ready to take it to market. If not, you may want to spend some more time fine tuning, avoiding hiccups that may damage your firm’s reputation or cause operational headaches.
Specialized Industry Meets Specialized Service
This is where market-differentiation really hits its apex, since it provides clients with a hyper-focused and relatable context into their business and pain points.
All industries have their own operational nuances, and the good news for you is that most of these also come with some type of corresponding accounting component.
The Question of Pricing
Many accountants feel compelled to compete for business based on price, which can not only adversely affect the perception of the quality of service, but also cut deeply into margins. And as we’ve seen earlier, price sensitivity may not be as heavily-weighted as one might think.
Of course, reasonable pricing is important, but as The Sleeter Group indicates, the fact that price doesn’t even rank in the top 5 criteria for businesses addressing their choice of accountant should give you latitude to consider a new approach to your model.
For commoditized services like tax returns, it may be difficult to demand premium pricing (virtually requiring that you compete on price), but the introduction of strategic or advisory services provides an opportunity to deviate from competing on cost alone, and instead begin migrating a portion of the business to higher-margin services.
It’s also a great opportunity to begin the shift away from hourly rates, and focus on value pricing your services. If you’re still among the 66% of accountants primarily utilizing hourly rates (Source: Intuit® Rate Survey 2015,) combining the rollout of specialized services with value pricing may be a feasible way to test both initiatives in a manageable way while you iron out any internal costing issues that may need work.
Focusing on specialized services is just one piece of the puzzle that we explore more in-depth in our Value-Added Practice e-book. Submit your email below to read the complete ebook.