Developing & Implementing Growth Strategies For Your Accounting Firm

Joydeep Das

Joydeep Das

Senior editor

Parul Saxena

Chief editor

Last updated: August 31, 2021

Any accounting company that wants to sustain itself long-term and survive market fluctuations requires a well-planned growth strategy. 

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A robust and thoughtfully created growth strategy encompasses a firm’s target market, clients, and industries while also determining what services it would offer. Additionally, it defines how the accounting firm would position and develop itself over time and thwart the increasing competition with technology and service commoditization.

Top accounting firms typically have a growth strategy planned for the next five to ten years, which they periodically alter based on market conditions. However, if you haven’t got a growth strategy chalked out, fret not. Through this post, we’ll explain some of the most popular strategies that accounting companies can adopt for sustained growth t.

So let’s discover some tried and tested business strategies and best practices to improve the longevity of your accounting firm

Growth Strategies For Accounting Firms 

Although accounting companies can adapt a gamut of growth strategies, each involves varying degrees of risks and implementation challenges. However, the following three methods are known to increase your returns over time and improve the stability of your accounting firm with minimal risks.

  • Improving market penetration

Let us start with the basics first. We live in a world of consumer products, where the shortcut to improved revenues is selling more such products to the same group of consumers (think up-selling and cross-selling). However, accounting is a service, and services need to be commoditized first to improve revenues.

If you cannot reach out to newer markets/clients, an easy way to grow your accounting firm would be to offer more services to the same clientele. You can also add new services like consulting and auditing into your service kitty to generate more revenues.

Of course, this means that you need to divide your services and put them into various pricing slabs that you can sell separately. However, doing so can be pretty challenging in reality and may involve a few risks.

Before you diversify and initiate cross-selling of services, it is essential that your clients understand the benefits of adopting accounting tools in your organization and the entire range of services that your accounting company offers. This is because clients will rarely see value in an unfamiliar service without a proven track record for effectiveness, even if you are among the top accounting firms.

The trick is to get them hooked to the new service by offering them a ‘free trial’ or a ‘special offer’ and start monetizing it after it becomes popular. This will help your accounting firm garner more revenues from its existing customers without acquiring new clients.

  • Targeting new markets

To enjoy sustained growth, an accounting company also needs to offer its existing services to newer markets. This means catering to more industries and customizing your services for clients/companies of all sizes.

However, implementing this strategy can be challenging for an accounting firm as it needs to invest in educating, acquiring, and nurturing its newfound audiences before they become loyal customers.

Entering into new markets also requires developing more services based on market research : Global Business Accounting Software Analysis 2017-’24, which also incurs additional costs. Even if everything goes right and you manage to acquire a significant number of clients, there is still a genuine risk of brand dilution.

Several top accounting firms have contemplated brand extensions and then backed out of them, fearing that it would make them lose their reputation as ‘specialists’ in the field. Moreover, having a finger in every pie involves focusing on many things together, which can make you lose your edge and exclusivity.

  • Introducing new services

Another way to boost the revenues of your accounting firm is to develop a brand new service offering alongside your regular services. For instance, an accounting company may decide to include financial planning, GST return filing, or digital security systems on top of its traditional counting services.

Many accounting companies shy away from introducing new services since it may involve certain risks. Moreover, developing a new service wing, recruiting the right workforce, and promoting the new service offering requires additional time and effort. Introducing new accounting firm services can distract you from your core business and invite a slew of regulatory obstacles.

However, the most significant risk of using this technique is that it can water down your brand and make you appear as a ‘jack-of-all-trades.’ Furthermore, by aiming for broader recognition in the market, your firm could lose its glory as a specialist.

Therefore, you must consider if your market accepts that your firm can offer the new services you are planning to launch. Generally, it is a good idea to go for ancillary services that your existing clients used to go elsewhere for. This will help you attract your current customers and keep all your firm’s services within your specialty. 

Strategy Implementation: Organic Growth vs. Mergers & Acquisitions

Once you have finalized the growth strategy for your accounting firm, it is time to decide how you want to implement it. Essentially, you need to choose whether you want to create the foundation of your new business using your existing resources and expertise (the organic way), or you want to take the help of external resources ( through mergers and acquisitions) to develop your firm. We have discussed the pros & cons of both the implementation strategies below:

Organic Growth 

Organic growth involves winning business from both your existing clients and new ones. It is typically regarded as the healthiest way towards the development of accounting companies since it is more valuable and reliable than acquisitions and mergers.

Sure it needs you to research your target clientele to understand their needs, but since your resources are well-known to you, you can rest assured that the feedback is credible. Moreover, you are in complete control of your new service offerings.

You can create a targeted marketing campaign to reach your potential clients and share your expertise with the market based on the insights received. Organic growth can be slow initially since it takes time to develop new services; however, once established; it can yield significant returns, resulting in massive growth and expansion.

Mergers & Acquisitions

Mergers and acquisitions allow you to quickly add the necessary expertise and skills required for your accounting firm to expand its horizons. By merging your firm with other firms having the expertise needed (or acquiring them), you gain more market credibility and quickly gain the required capabilities to ensure growth.

In addition, mergers and acquisitions instantly fill up skill gaps and bring in more clients, helping you create new revenue streams.

Despite their apparent advantages, mergers can be tricky. Therefore, it is crucial to research the companies you want to acquire, including their culture, way of operations, clients, and associated brands.  

Conclusion

Each accounting firm is unique in its own way and needs to figure out the best growth strategy for itself. Top accounting firms constantly reinvent them-self by upgrading their expansion plans.

The strategies listed above can all spearhead your accounting firm towards growth. However, the success or extent of growth would depend on how well the expansion plan fits your company culture, risk-taking ability, resources, and future objectives.

Joydeep Das
The newest addition to SoftwareSuggest's writing armada, Joydeep Das has extensive experience with both technical and non-technical content. However, marketing and promotional topics have remained his true love since over a decade.

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