Prepare for 2024: Increase Profitability Without Hiring Staff
As we approach 2024, the accounting industry is poised for significant changes and challenges, including profitability during these inflationary times. Maintaining increased levels of profitability each year dictates increasing revenues without the necessity of hiring more staff.
The continued success of a CPA firm hinges on three core elements:
Engaging new higher based fee clients without increasing staff levels;
Increasing fees from existing clients; and
Terminating low fee / profitability clients.
These core elements are deeply intertwined and influenced by your client selection and fee structures. A thoughtful, strategic approach can effectively link these elements together, enhancing your firm's profitability while not increasing staff capacity.
Set a Goal of New Higher Based Fee Clients
Marketing strategically for new higher based fee clients requires an assessment of your current clients and the current market value for those fees. Use marketing to attract quality clients that are willing to pay the current inflationary market price for the proposed services. If staff capacity is an issue in terms of servicing this new work, then it’s time to terminate ‘C and D’ clients and outsource work abroad at much lower labor costs. The first step toward this holistic approach to increasing profitability involves establishing new market fee guidelines. A fee increase should be considered for existing clients to raise their fees closer to current market amounts. This approach might result in some clients considering the new fees excessive, leading them to seek services from lower-cost firms. This will allow the Firm to replace these clients with higher priced fee engagements. There should be no situation where fees fall below the minimum profit threshold discussed below.
Assess and evaluate your marketing activities and approach based on the likelihood that the activity will:
Engage new clients who will generate high realization rates through higher fees,
Cultivate and nurture productive referral sources with quality clients who are willing to pay current market prices,
Enhance the firm's image and the partners' reputations, and
Promote cross-selling of services to existing high-quality clients.
Attracting quality clients demands a structured, strategic approach implemented consistently over time. Engaging a quality new client can take months, or even years, of regular contact to develop relationships and sustain momentum. Therefore, resist the temptation to scale back your marketing efforts due to being at "maximum capacity" or during busy season. Commit to a long-term, continuous marketing plan emphasizing quality clients and gracefully parting ways with less profitable ones. This strategy will ensure sufficient capacity to handle staffing and seasonal demands without compromising service quality.
Focusing on quality over quantity in your client selection and marketing efforts could be one of your firm’s most vital business decisions. This approach will add value to your practice and ensure the firm's long-term success. By emphasizing value, strategic planning, and consistency, your firm can increase its profitability and solidify its standing in the market.
Prepare for 2024: Strategic Planning is Essential for Success
In the dynamic landscape of the accounting industry in 2024, your firm's continued success hinges on implementing a strategic marketing plan that maximize profitability without increasing labor costs. If you're ready to increase profitability without hiring staff, attract higher fee-based clients, position your firm for growth, and navigate the challenges ahead, we're here to help.
Contact us today to discuss your specific needs and challenges. Our team specializes in providing personalized assistance with strategic planning and marketing tailored to CPA firms like yours. Let's work together to increase your firm's profitability in the coming year. Reach out now and take the first step toward a more prosperous future for your CPA firm in 2024!