Saving time and money are no longer goals, but necessities for small business survival.
Accounting industry experts note that small independent CPA firms are a dying breed. This is a long term trend that accelerated over the past two years. Recent rapid increases in costs raised the threat to crisis level. These business pressures that translate to increasing costs are especially heart-felt for a person like me who left a Wall Street career with a goal of serving small businesses and ordinary working class clients. I make an analogy comparing my accounting practice to a small town general store. These small retailers made up a large portion of our small rural communities’ market purchases when I was young. Then they almost disappeared. Now, in my neighborhoods, three of these stores are making a comeback with enthusiastic support of the local community. The comeback strategy requires dramatic bold steps that we would not have considered just a few years ago.
Six changes I’ve made to radically transform my accounting practice this year:
1) Simplified the online user experience. I added a special purpose web site at SouthJersey.CPA to support efficient administration of accounting service contracts. It’s just 4 pages and three sub-pages, so 7 pages total. It is meant to be fast and simple and shortens new client onboarding time. The web site simplifies the quoting and engagement agreement process. Web site traffic data indicates that clients seem to be using it for a minute or two during client onboarding. I am betting that saving clients time and making the sign-up process easier will pay off for all of us.
2) Expanded use of fixed payments and retainers. Quoting, billing and collection costs take up to a quarter of the total time in serving smaller clients. I see that as wasted unproductive time adding up to 25% wasted costs. In addition, uncertainty of work requirements in the beginning of an engagement raises the risk of undercharging, so the quote-based systems tends to raise prices in any industry. Meanwhile, billing and payment software support costs have increased sharply in 2021 and 2022. Some billing and payment costs doubled over that period. Passing on these higher costs to clients is not a sustainable solution. It is easier and more efficient to move this cost management issue to the setup of the relationship and not worry about it again over the year. Switching to automatic monthly ACH or a simple $1,000 retainer saves clients money over the long term.
3) Offering alternative ways to lower accounting costs. At some point our client base simply can not continue to raise their prices to cover increasing operating costs. It made sense to shift strategies, break out of the box, and offer cost-reducing options for accounting and related services. We can help with this by shifting from traditional services to supporting lower cost alternatives. This might mean saying “no” to QuickBooks fees or credit card processing for the smallest businesses. This also means saying “no” to participation on boards, committees, and community organizations that are not connected with or supported by a revenue generating activity. An alternative low cost and flexible advisory service has been initially well received by two groups: 1) those who realize that they need to learn to use to make better use of technology to reduce their costs and boost efficiency, and 2) those who anticipate that they may have future tax compliance issues outside of annual tax preparation. I hope and expect that the appeal of this approach expands to other types of clients.
4) Expanded advisory services for “do-it-yourselfers”. Many CPAs cringe when people ask for help with a “quick question”. I embrace it. In fact, I let them know that my practice is designed to offer exactly that type of help, without risk or ongoing obligation to them.
5) Expanded use of internet banking services for those who want turn-key outsourced CFO service. I’m having success setting up a parallel online banking system than does not interfere with a client’s local banking relationship but, over time, proves to be more efficient and cost effective.
6) Added a second free initial consultation to allow more time for focus of discussion on the big picture and clients’ long term goals. Giving a bit more time allows us to change the focus of conversation from advisory to a coaching mode and explore things that really matter in the big picture of their financial and business lives.