Growing a CPA firm takes quite bit more than landing a few high-value clients. Many small CPA firms run themselves into the ground because they don’t take into account many of the common issues that significantly reduce profitability. If you’re starting or trying to grow your CPA firm this year, take a look at this quick playbook. This guide should help you begin planning a winning growth strategy.
1. Create a virtual practice
The hardest thing about starting a firm from scratch is that it takes a while to get clients. Running a traditional, brick-and-mortar CPA firm not only increases your cost of doing business, it also limits the number of clients you can potentially work with.
Expand your network outside of your local region. This is smart for two reasons.
First, there’s a good chance that your CPA license allows you to work with clients in different states. There may be some exceptions to this, and you should certainly do your due diligence to make sure you’re not breaking any laws. However, in most U.S. states, a CPA license can be used to service clients in many other states.
That means there’s no real benefit to limiting your services to only those within a reasonable driving distance. When you expand outward, as far as reasonably possible, you create a larger addressable market for yourself.
The second thing to consider is the cost of doing business. Running a physical, brick-and-mortar operation is going to carry more overhead, including travel costs. Conversely, when you operate a virtual practice, you can eliminate most of the common fixed overhead costs that are unavoidable with a brick-and-mortar operation.
2. Create a profit-focused pricing structure
A business that’s constantly running in the red is a failing business. There’s no getting around that fact. CPA firms that fail are often ones where the pricing structure is poor and where the founder or CEO is working so many hours on each contract that there’s no return on investment.
As we noted in a previous post on making the right pricing decisions, lowering prices to generate more volume can lead to low margins on low volume. Instead of making yourself the fast food chain of the CPA world, consider the following:
- Know your strengths and what sets your product/services apart
- Think about what your clients need
- Do recon to understand your competition
Run some pricing scenarios. Determine where you can price competitively, and where you may need to optimize processes to increase returns.
3. Create repeatable and scalable processes
A common trapping for CPA firms is that they become personality-driven. If the firm’s growth or strength relies on the personality of one or two individuals, and not necessarily the processes that they provide, that firm is on shaky ground. What happens if those top personalities leave? Could the business survive?
The answer to that should always be “yes, we could survive.” If you’re even a little bit unsure, that’s a troubling sign. It means you’ve placed too much weight on personalities to drive revenue and business, instead of superior processes that can be performed by any high-functioning CPAs.
The best way to avoid this is to backtrack and make sure you have the right processes in place. Document how you perform your business. Make sure everyone who works for you is trained in performing the same processes.
We’re not saying you should avoid hiring people with excellent personalities, of course. When you can find those super-star personalities who excel at the business, you definitely want to bring them on board. But don’t let the success of the company rely solely on its ability to charm. Make sure the success is built on their ability to perform the processes you’ve created that lead to winning engagements with customers.
4. Develop a hiring process that reaches the right people
You can’t grow a CPA firm without eventually hiring other accountants. Once you do reach the point where you can scale and hire, your future success will depend on getting the right people in place the first time.
Hiring wrong is exceptionally expensive. If you don’t hire the right people, you’ll find yourself having to pick up the slack for work they didn’t perform well (or at all), reducing the time you have to spend with additional clients. And those poor-fit hires will likely quit or have to be fired, again reducing your ability to work contracts.
For more advice on creating a better hiring process, we recommend you check out Episode 76 of the Virtual CPA Success Show, Improve Your Hiring Strategy with Jamie Van Cuyk.
Hiring someone with the right skills is always going to be important. However, you also need to consider whether that person has the right personality and temperament to work well with you and with your customers.
Need to know more? The Virtual CFO Playbook, How to Land $60,000 a Year Clients and Provide A Killer Client Experience is an online series of modules that will equip you with essential tools for creating and delivering scalable VCFO services. These approaches have helped Summit CPA grow from $500,000 to upwards of 5 million in revenue over the past decade.
You can enroll now to get access to the full, in-depth course.