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We’ve all heard the phrase, “Two things are certain in life: death and taxes.”
And since your business focuses on one of those things, it might be tempting to hang your hat on bookkeeping, tax strategy and return filing services. But there are a few reasons why this is dangerous.
If you want a well-rounded business in 2020, it’s time to diversify.
The importance of diversifying your accounting business
Unless society as we know it collapses, there will always be a need for accounting services. We all have to pay the piper (read: the ATO), but we just want to ensure we’re not overpaying.
Tax accounting software
In recent years, you’re probably starting to see fewer clients opting for the traditional accounting services. This is because tax accounting software has come a long way in the past decade. And it’s often free or at minimal monthly fees.
Software will never replace skilled accounting services, especially when it comes to structuring and strategy, but as time goes on, we can expect more people to rely on the ease and affordability of these programs. This isn’t necessarily a bad thing because it leaves the more creative and complex work to you.
And that’s probably why you got into the accounting field in the first place.
But with this, it’s also important to keep in mind that clients are coming to you for your expertise, and so they’re going to expect a lot more from you than any software program can offer. This is where diversification comes in handy.
Seasonality
Seasonality is another big reason to diversify your accounting business. If you focus on tax accounting, it can be difficult to balance quiet times of year with the huge influx of tax returns come tax season.
In most cases, the bulk of the tax returns you’ll be filing are for existing clients who have also hired you for bookkeeping. But bookkeeping typically doesn’t take as much time as filing tax returns, so it’s a delicate balance. In the off-season, you’re trying to keep busy. And in tax season, you feel like you’re working 24/7.
Because you practically are.
But with a diversified accounting practice, you can relax a bit when tax time rolls around. No longer do you have to bank your business’s success on this short window of time. You’ll be bringing in revenue from various sources throughout the year, so tax time revenue is the icing on the cake.
How to diversify your accounting business
Now, we’re not talking about being all things to all people. You’re not exactly going to set up a foot massage station at your firm. (Although, that may help soften the blow for business owners with a massive ATO bill).
If you want to diversify, think about services you can offer that complement your own. Regardless of business type, this is the best way to think about diversification.
Here are some ideas.
Make business loan referrals
When you’re working with a client who owes an amount to the ATO, or wants to grow their business, you may want to recommend a cashflow loan. It could be the perfect solution for businesses that have solid profits on paper, but are experiencing cashflow issues. Other clients may wish to purchase new plant or machinery and a referral for equipment finance could be of value to your client.
If you have the right partner, you can work out a referral system where you receive a fee for each successful loan referral. One example is Lend’s Partner Referral Platform. Essentially, you add your clients details and the platform takes care of the rest. Ultimately assisting your client to get the funding they require.
Add valuation services
Whether your client is looking for business services, going through a divorce or filing bankruptcy, they may find themselves in need of valuation services. And you’re in the perfect position to offer them, if you have valuation expertise within your team.
Become a virtual CFO
If you work with small businesses, you may have the opportunity to save them some money by becoming their virtual CFO. You will most certainly be compensated for your time, attention and expertise, but your services will still be cheaper than hiring a CFO on staff.
And to be honest, you’re already intimately familiar with their finances as their accountant, so it will be an easy transition. In your position as virtual CFO, you’ll get more involved in the business’s day-to-day operations and help them make sound financial decisions.
In this way, you’re in a great position to help clients grow and prosper, and that’s good for everyone.
Here’s a great article from Xero on “How to become a Virtual CFO”.
New business services
If you want to diversify even further, you can start marketing services directed towards new businesses. Your level of involvement will depend on your desires and capacity, but you can offer things like:
- Business plan advice
- Corporate entity advice and formation
- Financial planning
- Succession planning
- Cash flow budgeting
The best part about offering services to help get new businesses off the ground is that you’ll likely become their go-to accountant as they grow. It’s a natural fit for diversifying and expanding your accounting business.
Marketing your new services
If you already have a large client base, you may be able to expand your services by word-of-mouth. But in most cases, you’ll need to market your services to both existing and new clients.
In your efforts, you’ll want to focus on your area of expertise (new or established businesses) and include a list of services you offer. The one-stop-shop is very appealing to the busy client, so you’ll want to drive home the point that your firm is full service.
Conclusion
Not only can diversification expand your business, but it can make you invaluable to your existing clients. Even if you don’t invest in any form of marketing, you can increase your accounting firm’s revenue by offering new services to existing clients.
It’s just a bonus that these services also help make your accounting job easier and more seamless.
Whether you’re looking for new work or not, now is a great time to diversify. If you’re nearing capacity, look for easy add-on services like offering cash-flow loans. And if you’re focused on major expansion, consider something more involved, like becoming a virtual CFO.
Whatever you do, diversify.
