It’s official, we have reached the exciting future 1950s sci-fi magazines promised us. We have all the world’s knowledge in a tiny device that fits in our pockets, can get just about anything delivered in two hours or less, and nowadays you don’t even need your hand to open a glove box anymore, just your voice. We don’t have flying cars but we do have conveniences unimaginable to our ancestors. The second great industrial revolution is underway and happening all around us.
With all this excitement, comes a bit of uncertainty of course. Will the economy get better? Will the job market normalize? Will I ever be able to figure out the unnecessarily complicated visual menu on my car’s information center so I can open the stupid glove box? Asking the important questions.
If you own an accounting firm or small practice, you’ve no doubt asked yourself in the last year how you can make the most of these exciting, if uncertain, times. What will profits look like a year from now? Will you be able to hire talent? Should you be on TikTok? Again with the questions, some less important than others.
We can’t advise you if you should get on TikTik or not but what we can tell you is this: There is no better time than the present to think about how modernizing processes with profitability in mind can help you navigate the months and years ahead. “Profitability” doesn’t have to be a dirty word. We thought about putting a list of words that are dirty here to prove how not dirty it is but the sponsors of this article weren’t cool with that (understandably).
The following are five suggestions for maximizing profitability in uncertain times. We were going to give you ten but we decided to maximize the efficiency of this post. Ain’t nobody got time for ten items.
Let new technologies work for you
There’s a technological revolution happening in the accounting profession as we speak and there has never been a more exciting time to be an accountant. Your accounting professors probably told you that back in college but it’s actually true now.
Future-ready firms at the forefront of this movement are hauling giant cartoon bags of money to the bank every other day, that’s how profitable they are. OK, that’s a slight exaggeration. Getting all your clients in the cloud and automating a few manual tasks won’t fulfill your fantasies of swimming through a pool of cash a la Scrooge McDuck. But it will increase profitability because your time is money and the time you’re spending on repetitive, manual tasks is money you’re leaving on the table.
Are there tasks you are currently doing manually that you don’t need to be? And if so, what’s stopping you from getting it off your plate?
Here’s a real-world example: Every day, you’re spending hours on sending payments or reconciling incoming payments, precious time that could be better spent elsewhere. Let’s be real, no one enjoys doing this. Good news! There are online tools to manage accounts payable and receivable (AP and AR) for you. Melio, for example, allows you to manage and schedule business payments for your own business or your clients. It comes with no monthly fees and offers free ACH transactions and incoming payments. We encourage you to take it out for a spin and start saving time and money as early as now.
Take off some hats
If you’re running a firm, you’re no doubt wearing many hats. Juggling all these tasks at once on top of the actual service you provide is not only exhausting, it’s unsustainable. You. Are. Tired. We know. We see you, #TaxTwitter.
Are you doing all of your own social media, advertising, appointment-setting, and client-hounding? Do you hate it? Bet you do. The only person who enjoys this is that one weirdo up there ^^ whose favorite part of the day is reconciling payments.
Here’s what you do: Take some of that off your plate and pay someone else to do it. Now, you’re probably wondering how paying for something will make your practice more profitable in the long run and that is a reasonable thing to wonder. But outsourcing some of these things to experts whose job it is to do them not only frees you up to do the important stuff, it can improve your brand, which means more clients. Your clients don’t DIY their taxes, why are you DIYing marketing?
For those of you already doing this, great! You’re a clever one, aren’t you? Think of some other things you could outsource or improve. Maybe your website could use a facelift. Perhaps you could hire a freelance writer to produce regular newsletters informing your clients of important tax deadlines and changes.
You get the idea. Improve your image, improve your appeal, improve your profitability. It’s like the underpants gnome meme but without the ambiguous “???” step. And it’s a win-win for you because it frees you up to focus on more important things than scheduling tweets.
While we’re on the topic of marketing, referrals are an excellent way to get the word out without a whole lot of effort on your part. You’re already doing the hard part, that is, providing excellent service to your clients. Now let clients return the favor. They are probably already talking about you when a friend asks them “hey, I need an accountant do you know anyone?”
Plant the seed in clients’ minds that you appreciate referrals, and maybe give them a few extra business cards to hand out if needed. You can offer an incentive if you want, such as a discount on services, but often just nicely asking for referrals is incentive enough. If they’re happy with you–and they must be if you have an ongoing relationship–then they’ll surely spread your name around. Not in that “omg did you see what she wore?” way we spread things around in high school, I mean telling their friends they know someone who does an awesome job.
Alright, so just two items ago this article said “hire someone to do your social media” and reducing expenses sounds like the exact opposite of that because you’ll have to pay this person, but hear us out.
Let’s use streaming services as an example of smart thriftiness. Many people don’t subscribe to all the streaming services at once because who can watch all that TV in a month. No, they rotate. Netflix one month, HBO the next. Are you doing that at your business too? Did you pay for a yearly Adobe subscription two years ago for those three flyers you create a year and forgot about it? That’s a lot of money to throw away for something you aren’t using.
Think about things that you’re paying for that you don’t need to be. Imagine all the office water deliveries that were paid for from 2020-2021 that were never used, for example.
Periodically go through your subscriptions and purchases to figure out where a few pennies can be pinched, focusing, of course, on the things that you aren’t actually using and don’t need. Like that monthly subscription of coffee that’s been stacking up in the break room for two years.
On this subject, think about ways technology can work for you to help reduce expenses. If you’re spending $70 a month on bank transfer fees, for example, consider using Melio to send payments for free.
As you’ve probably noticed by now, we started the list with some fun stuff and now we’re working our way down to more sensitive topics. Chances are you’ve considered raising fees, but you just don’t know how to have those difficult conversations with your customers. You certainly don’t want to do it, especially with long-time clients who might leave to find someone cheaper.
Thing is, your peers are already raising their fees. If they haven’t already, they’re thinking about it or are in the process of initiating the discussion with clients.
It’s an uncomfortable conversation to have for sure but it’s not like you’re doing it for the fun of it. Everyone understands that costs are going up. Have those difficult conversations. The results may surprise you.
Well, we’ve reached the bottom of the list, and fittingly so since saying goodbye to paying clients is probably the last thing on your list, too. If you successfully deployed item #4 then, congratulations, some of your clients probably took care of this one themselves.
Much like eliminating unnecessary expenses, sometimes you need to think about eliminating unnecessary clients. Don’t tell them they are unnecessary, obviously, clients hate that. You can always go with the old “it’s not you, it’s me” that daters have used since the dawn of time. We all know it really is them, but they don’t have to know that.
We bet when you read the line “fire clients” at least a few immediately came to mind. You’ve known for some time that you should sever these relationships, you just didn’t know how or thought maybe with a sufficient amount of coaching these jerks might one day turn into lovely, promptly-paying people with whom you are honored to work. Yeah no.
When you eliminate the most difficult of clients it frees you up to give more of your limited time and energy to the delightful ones. Not to mention it gives you more of those precious, finite resources for yourself and your practice. Aren’t you worth it?
We’ve reached the end of the list and hopefully given you some things to think about and take action on. We know some of these topics can be difficult to mull over, which is all the more reason to take an inventory of your processes (audit pun not intended) and ask yourself if what you’re doing now is really working for you. The sooner you put these profitability ideas to action, the sooner you can get back to the fun stuff.
Melio is a business-to-business (B2B) online payment tool specifically built with small businesses in mind. It requires no subscription and allows you to send and receive business payments for free, only charging for fast and premium options. Sign up to start paying all of your clients’ business bills with Melio.