It was interesting reading the latest Accountant’s Report 2016 prepared by Bstar that listed the four top business concerns facing accountants in 2016. These concerns are listed in order of priority as:-
- Attracting new high value business clients
- Transitioning from a compliance to an advice service business model
- Declining fee growth rates and profit margins
- Capacity and time constraints
In my previous blogs I covered the first two concerns for accountants. This week I will cover concern number 3 – Declining fee growth rates and constraints.
Declining Fee Growth Rates and Profit Margins
- Very few accounting practices have successfully addressed how to grow fees or new/ alternative revenue streams.
- There is now general acceptance within the industry that compliance fee growth rates and profit margins will continue to decline.
- In a market where ‘ideal’ business clients are in high demand, and as competition increases, practices are discounting compliance fees, even below cost.
- Accountants don’t have the time or resources to attract high quality business clients.
- Even if accountants offer advisory services, they don’t know how to market these services to their clients and prospective clients.
Business owners are shopping for lower accounting fees. After all, in their minds, accounting compliance services are just a commodity – a process that simply crunches the numbers and spits out a report. They believe any accountant can pretty much do the same thing. So why should they pay more for the same thing they can get for less? The most successful accounting firms help their clients to grow their business.
According to the Bstar Report 2016 accountants want to grow their practices and they believe the key to growth is retention of quality clients and attracting new high value business clients.
So, should accountants lower their fees in order to retain existing clients and attract new ones? My answer to that is ABSOLUTELY NOT. Reducing fees is not going to help an accountant to grow their practice. Differentiation is the key for accountants in cementing client retention, and achieving their financial goals.
And the best way for accountants to retain and attract quality clients is to differentiate themselves from their competition that offer the exact same vanilla accounting services. And in differentiating themselves from other accounting firms they will build client loyalty. You see…the key to building client loyalty while simultaneously growing an accounting practice is to help your clients to grow their revenue and profits. In order to differentiate, accountants need the tools and resources to offer advisory services to their clients. A program that will help the small business owner with marketing that will in turn help them improve the revenue and profits in their business. A system that will ensure consistency of the delivery of advisory services instead of just offering ad hoc advice that is rarely appreciated and hardly ever remunerated.
That’s right…marketing advisory services to help clients to take their businesses to the next level… Differentiation!
Small business owners are not price sensitive, they are value sensitive… and when you help to improve their revenue and cash flow they perceive value and will not argue about the price… Food for thought.
To catch up on the previous two blogs covering concerns 1 and 2 click on: www.bizconnectionsjointventures.com.