In the fiercely competitive tax industry, small and midsize tax firms must leverage business development to differentiate themselves, build strong client relationships, and drive sustainable growth
Ask the leaders of most tax & accounting firms what their top priorities are year over year and among the top five will be increasing revenue, or some other description of promoting firmwide growth. Adding pressure to this push for growth is that today — unlike many times in the past — tax firms are facing increased competition as the advancement in technology standardizes how tax work is done, making individual firms’ ability to differentiate themselves increasingly difficult.
In addition, clients are asking for more transparency into billing and fees to ensure that they are getting the best value for their money. And as their internal tax functions and their outside tax firms embrace technology, clients (and firms alike) are realizing that high billing rates for tax preparation is no longer feasible.
Clearly, tax & accounting firms must not only consider ways to promote growth, must incorporate business development strategies into those efforts in order to meet clients evolving demands.
How can your firm grow its business development?
Business development is a set of intentional activities aimed at improving an organization’s market position and achieving revenue growth. These activities involve strategic planning, market research, relationship building, and exploring new opportunities. For many tax & accounting firms, this might mean, for example, expanding client bases, enhancing service offerings, or entering new markets. Business development has long been viewed as something reserved for larger firms, and as something more novel for smaller firms; in the current environment, however, it has become crucial for smaller firms as well.
Competition is real, as larger tax firms continue to merge with other large firms, creating opportunities to expand their reach into more geographic regions and putting pressure on small and midsize tax firms. Larger firms tend to have more resources and stronger brand recognition, making it challenging for smaller firms to attract new clients and possibly retain their current clients.
By crafting a strong business development strategy, tax firms of any size can identify unique selling propositions and differentiate themselves from their competitors. Indeed, tax firms leaders who spend the time to understand how the business of tax and the needs of their current and prospective clients have changed will be able to tailor their firms’ services much more effectively. Again, this strategic positioning not only attracts new clients but also fosters loyalty among existing ones.
Strengthening client relationships & experience
It’s important to remember that at the heart of business development is relationship building. Many firms may tout their strong relationships with clients, but upon closer look, these relationships are often frayed, with clients that have been paying the same fees for more than five years or longer. With the firm eating the cost of adjustments for inflation and the like, it becomes an untenable situation.
And the problem isn’t just financial, many tax & accounting firm leaders have complained about clients that do not submit needed documents in a timely manner, or those that ask for free tax advice”, and the list goes on. Quite frankly, many firms’ relationships with their clients were born out of a Oh, I am so happy to have a client feeling, that not much examination of the benefits and pitfalls has taken place. Indeed, any relationship in which the boundaries aren’t set is difficult to sustain into a strong, healthy relationship.
Firms that have clarity on what type of relationship they want with their clients can better set those relationships up for success, even as early as during client recruitment and during more difficult times, such as moving the current clients to the firm’s new business model. All of it can be finessed, but it does require work.
Any plan to improve client relationships must include what now will be the client experience. To that end, all business development strategies also must focus on understanding and improving the client journey. This includes knowing what the clients’ pain points are — and evaluating how the firm interacts with the client may yield some answers to this question. For example, how long does it take for a firm member to call a client back with the information they requested? What is the process for clients to submit their tax documents — is it simple? Or is it a process that works best for your team but not the client? And, finally, have we asked the client what they would like in terms of how we work with them?
Following that kind of self-evaluation, leaders should consider streamlining as many work processes as possible, with the client being center of mind. Has what’s been implemented enhance clients’ experiences with the firm? The correct answer should be obvious.
Using business development to attract & retain talent
As the tax & accounting industry as a whole continues to experience a contraction in talent, especially as more individuals are leaving the industry, it’s worth mentioning that business development can play a crucial role in stemming this tide. Firms that can create a dynamic and growth-oriented work environment are more likely to retain their staff, as well as signaling to potential employees that those firms are forward-thinking and committed to growth.
Indeed, this can make those firms more attractive to high-caliber professionals who may be seeking career development opportunities. The bottom line is that a firm-wide focus on growth and innovation can enhance employee satisfaction and retention, reducing turnover and ensuring a stable, experienced workforce.
Promoting sustainable growth
Early in the post-pandemic environment, many tax & accounting firms saw significant financial growth with little intentional planning, due in part to the pandemic-era government loans. So robust was this growth that in the annual Rosenberg Report, Allan Koltin, one of the consultants involved, called it the Golden Age of Accounting. Now, as the dust settles and normalcy returns, firms need a growth strategy that is sustainable to ensure that they can survive as a business. For small and midsize tax firms, business development provides a roadmap for achieving this. It involves setting clear objectives, identifying growth opportunities, and implementing strategies to achieve them.
Whether it’s expanding into new geographical markets, targeting a different client segment, or introducing new services, a well-thought-out business development plan ensures that growth is strategic and sustainable. Further, it may prevent firms from overextending themselves, allowing for instead a measured, manageable expansion.
Conclusion
Business development is not a mere adjunct to the operations of small and midsize tax firms, it is a fundamental component of their success and longevity. For these firms, the question is not whether they can afford to invest in business development, but whether they can afford not to. Indeed, for many tax & accounting firms, embracing business development is embracing a future of opportunities, resilience, and sustained success.
You can find more about the value of creating business development strategies here.
