From the squeeze of tax season to the mounting numbers of clients assigned to your existing employees, managing an accounting practice is challenging. This is why, when deciding to expand your firm, the prospect can be as daunting as it is exciting.
But don't worry. If you're looking to expand your accounting practice, we're here to help. In this article, we'll cover whether expansion is the right move for your practice, how you can plan for successful growth, and the expansion strategies that established accountants rely on.
Is it Time to Expand Your Accounting Practice?
Before you dive into preparing what could be a costly and time-consuming growth plan, it's best to assess whether your existing practice is ready and prepared for the expansion process. Here are some things to consider:
- Client Growth - If you frequently acquire new clients and have a pool of potential customers you could attract with increased marketing, it may be time to expand. Furthermore, if your team is working to capacity or you're considering turning down potential clients due to resource limitations, expansion is a practical choice
- Financial Health - Consistent profits are a good sign you're ready to expand. However, being in the green usually isn't enough to support expansion on its own. You might need access to investor capital or other funding, especially if you want to make significant moves like renting large physical premises.
- Market Demand - If potential clients in your niche have multiple accountants to choose from in your area, you might find yourself with the same amount of competition even after expansion. However, if you plan to offer new services that will put you above your competition or enable you to appeal to a new client base, you can overcome this challenge.
There are a few more things to consider, like client feedback, industry trends, and your overall strategic vision. But if the three boxes above are ticked, your practice is usually primed and ready for expansion.
Preparing to Expand and Planning Your Growth
When preparing to expand your accounting practice, the first step is to take stock of what you're currently working with. Make a list of and assess:
Employees - It might also be worth asking employees to list their strengths, opportunities for improvement, and KPI stats so you can determine what training you should offer or what skills new hires will need.
Technology and infrastructure - List the hardware and software you use, and make a note of any shortcomings you've experienced when using them. Additionally, it may be helpful to map the journey of a document or process through your practice to identify any inefficiencies.
Services offered - Record any client feedback or suggestions about your services. Then, take a look at your competitors' offerings to find out where you need to catch up.
With insights from these lists, you should know where to improve and scale your existing practice.
Creating Your Growth Plan
Now, it's time to set out your goals for expansion and create a roadmap to achieving those goals. Make sure your goals are:
S - Specific
Break your aims for expansion down into smaller sections. Take care, as this can be harder than it first appears. For example, you may want to increase the number of clients you can take on by 20%.
While this is specific, you'll need to expand some other areas of your practice before achieving this aim. You might need to hire a new CPA to handle the clients' workload or integrate automation software into your existing technology to save time. Try reaching the root of your issues and plans for expansion to create the most specific goals.
M - Measurable
It may not be clear how the moves you've made toward expansion affect your practice's day-to-day operations. So, to track the impact you’re having, make your goals measurable.
For example, you may update your technological capabilities to decrease client onboarding time by 25% or offer your employees customer service training to reach a 90% client retention rate. As well as tracking how much your practice has scaled, this approach allows you to make necessary adjustments along the way.
A - Attainable
The chance to expand means you can take steps toward your ideal practice. But it's important not to get too caught up in what could be, and focus instead on what should be. When setting your growth goals, consider the resources you have at your disposal and those you'll need to purchase.
While it's good to dream big, there's little point in setting goals outside your capabilities or budget. Instead, dialing it back and ensuring your expansion plans are achievable can help you maintain good morale as things get shaken up, ensuring a consistent drive toward growth.
R - Relevant
There's a good chance that, when you set up your accounting firm, you had similar goals in mind to those you're jotting down now. Take a look at your original business plan and make sure your expansion goals align with the goals you've set in the past.
For example, expanding marketing efforts to sole proprietors won't be worth it if you want your practice to be the number-one choice for big business audits in your local area by 2025. By keeping your targets relevant, you'll ensure your expansion drives your practice's overall success.
T - Time-Measured
Though expanding your accounting practice is undoubtedly exciting, often it's better to scale certain areas before others. This piecemeal approach can take a lot of time, but it will ensure your practice continues to run smoothly throughout the expansion process.
Decide on an order of priority and ensure timelines reflect that hierarchy. For example, you'll want to hire and train new employees before tax season. However, you might not want to add new services to their workload until after April.
Putting Your Plan in Action
There are a few other considerations you’ll need to make during the planning phase, such as:
Readying Your Contacts - It's a sound idea to reach out to anyone in your network who's expanded their practice before you to learn about common challenges. Additionally, if you need specialist advice or have to get on the waiting list with a headhunter or letting agency, do it sooner rather than later.
Budgeting - Before you begin making purchases, make sure all your budgets are in order, along with any contingency plans. Check back and adjust your budget along the way to avoid major pitfalls.
Double-Checking Regulations - Check the federal and state regulations that apply to your practice and any new services you plan to offer. For example, you may need to apply for permits or train staff in order to remain compliant throughout your expansion journey. Though it’s time-consuming, staying on the right side of the law is essential.
Strategies to Expand Your Accounting Practice
Now that you've got an expansion plan, let's examine some time-tested strategies successful accountants use to scale their practices.
- Investing in technology - Almost 60% of those running accounting practices say investing in digital improvements has a direct, positive impact on their profits. With advancements like cloud accounting, automation, data analytics, and increased cybersecurity at your fingertips, your firm can quickly improve efficiency and provide better service simply by investing in software.
- Upskilling employees - Worryingly, 92% of accounting practices struggled with hiring new employees in 2023. This has led leaders to encourage their existing employees to hone their skills and offer niche services. In addition to training them in your new software and supporting their continuing professional education, encourage your employees to create their own growth plans. Welcome attempts to upskill by offering book tokens or tickets to training days.
- Expanding your reach - In the digital age, clients don't need to come into your office for meetings or send documents through the post. In fact, your employees can do much of their work from their home offices. That's to say, you don't need to limit your clients to those in your local area. If you’re focusing on improving your technological capabilities, you can easily expand your reach with digital marketing to find and cater to clients entirely online.
- Explore partnerships - A partnership is an excellent idea if you're pushing your employees and infrastructure to the limits but still need more resources for expansion. Merging with an existing firm will give you access to a new client base, additional expertise, increased market presence, and a fresh perspective on processes. Attend seminars and conferences to network, and don't hesitate to contact those looking for partners.
- Diversify your offerings - One of the most favored ways for accountants to expand their firm is through new and unique services. Eighty-two percent of accounting firms say their clients expect more from them than they did five years ago, proving that there's a clear expectation for expansion in this area. However, it will take some time to determine precisely what services you should offer. Consider surveying your existing clients or performing market research on potential clients to get some ideas. Remember, you may need to train your employees to provide these services or invest even more in new technology.
In Conclusion…
Expanding your accounting practice allows you to position your firm for continued success. However, changing how you're used to operating can cause problems for both your employees and clients. This is why expansion requires careful planning and a continued commitment from all those involved.
Make sure to determine whether your practice needs expansion, and if you have the resources to see your growth plan through to completion. Speaking of your growth plan, set SMART targets to ensure you stay on track and work toward tailored goals. Finally, take advantage of your industry knowledge and stick to time-tested strategies used by successful accountants.
Good luck!
Sources and Resources
- https://www.forbes.com/sites/forbesbusinesscouncil/2023/09/05/15-telling-signs-its-time-to-scale-up-your-company/
- https://www.infinity-globus.com/blog/grow-your-accounting-practice-everything-you-need-to-know/
- https://www.upwork.com/en-gb/resources/business-expansion-plan
- https://www.business.com/articles/writing-a-business-growth-plan/
- https://jetpackworkflow.com/blog/how-to-scale-an-accounting-firm/
- https://surfaccounts.com/6-tips-to-grow-accounting-practice/
- https://www.fctraining.org/ways-to-grow-your-accountancy-firm-successfully.php
- https://www.youtube.com/watch?v=dOR2UmiepxA
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