Today’s accounting and bookkeeping services world has become increasingly competitive. Senior managers are looking to gain an edge and are turning to unique ways of adding profit centers.
There are two main reasons for firms to begin looking toward adding services like payroll and human resources: profit and the ability to offer full-service care to your customers.
The average millionaire has seven different income streams. The average American has one, maybe two. That’s a big difference between massive growth and living paycheck to paycheck. Now think in terms of your accounting firm. You can experience healthy growth by offering two services such as Quickbooks work and doing tax returns, but in order to really grow your firm way beyond average, you have to stand out and shine by offering more options. By just sticking to corporate income tax, you’re not going to gain many opportunities to do so. That means branching out of your comfort zone and offering your clients greater variety in your services.
Why Should a CPA Add Profit Centers?
If you’ve done your homework and developed a good, solid foundation for your firm, adding a new profit center is a great way to increase revenue, market leadership, referrals, and cross-selling opportunities. It can also dramatically accelerate your growth.
It’s not about how much money you can charge each client, it’s a matter of profitability. Not every client who walks through your accounting firm’s door will need or desire payroll or HR services. The point is, you need to offer it. Even if only a small percentage of your clients opt in on these opportunities, your firm will be a significantly more profitable business than the average accounting-only firm.
As firms are adopting the idea that a more complete client experience draws increased revenue, clients will be eventually expecting their accountant to offer extras like payroll services, so firms that don’t will be left in the dust by their competitors.
Don’t go into the marketplace offering the same old thing that everyone else does. When there’s no distinguishable difference between you and your competition, you’ll just blend into the background. Joe Cassandra and David Cristello, authors of Double Your Accounting Firm, suggest that opening up new profit centers highlights your current services and adds some flavor on the side. It all goes back to adding value for the client, and it starts with listening to them and understanding their problems.
Clients like to do business with people they trust and interact with on a regular basis. That means the more of their financial work you manage, the closer your relationship with them will be. “When the value you give to your clients increases, so does the frequency of interactions with them,” says Jay Holmes, founder of Blueback Accounting. That can come in the form of offering services like payroll, which can help to instill confidence and a deeper relationship with your clients. “Payroll is an important part of the confidential employee relationship bucket,” stresses Los Angeles-based Team Jenn Corp founder, Jennifer McCabe. “It’s worth it. No doubt.”
Human Resources isn’t that far from what a CPA generally does, as described by Karen Abernathy, CPA/CFE. CPAs are required to remain neutral and maintain independence when performing the audit function. Similarly, as it represents both the employee and employer, Human Resources must delicately balance the needs and rights of individuals with those of the organization when following policies and regulations. A successful auditor uses tact and discernment when working with clients; these same skills must be equally sharp and fully developed in human resources professionals.
Staffing problems is every company’s number one challenge. CPAs are in the perfect position to offer services like HR consulting to clients in need of financial professionals, particularly because there is a market segment of clients out there that feel they don’t need a full-blown HR department. That is precisely where you can step in and save the day.
What Makes Branching into Payroll and HR Possible for a CPA?
Driving this shift towards offering a more complete client experience is technology. That doesn’t sound like it adds up to much, but the reality is that the difference in how your firm functions is dramatic.
New software is drastically simplifying the payroll process and accounting firms are turning this to their advantage. Software now available has connectivity and data sharing built in from the ground up. Software is now cloud-based; stored on remote servers and accessed through an app.
How to Make It Work
It is vital to note, according to Cassandra and Cristello, that “new profit centers are a privilege, not a foundational element.” They go on to advise, “ If you do not have your existing service fulfillment, team management, client acquisition, and workflow system in place, adding a new profit center will only compound any existing confusion and add stress to the firm’s culture.” Adding a new profit center should be the last step you take after you have your workflow and processes securely in place and running smoothly.
These new profit centers should bring in high profit margins for you. Use your core services like tax returns and bookkeeping as a gateway to the more profitable ones. Make sure that you have a clear understanding of what your expected ROI should be, and work towards that goal.
Abernathy suggests that, “as a CPA you open your eyes to the added value you can bring to your professional and personal life. Knowing this, I do challenge all CPAs to develop their “people skills” just like I am still using CPA principles in the world.”
Your bottom line will thank you.