The world of business is getting more complex and sophisticated by the day. Data, analytics, specialization, best practices, and experience continue to become more and more domain-specific. While every accounting professional undoubtedly needs to understand general principles of economics, business, and accounting, being an excellent generalist is no longer what will best empower the small business entrepreneurs (SBEs) of 2021 and beyond.
As you know from our company story at Ceterus, one of the most significant (and successful) decisions we ever made was to shift from doing “everything else” for practically every type of customer, to focusing on a very small handful of vertical markets. Accounting professionals who want to empower SBEs (and increase their rates, retention, and referrals in the process) need to be industry experts. You already know this as a result of your decision to focus on dental practices.
Industry Specialization Provides More Consistent Processes
There’s no denying it: the process to generate financial reports is a critical function of accounting. But this same process that has been the backbone of accounting for so long is also what’s holding the industry back. When professional accountants get stuck in the process-oriented work, they’re hindered from spending time delivering high-value financial consultation (business therapy!) to their clients.
This doesn’t mean we need to ditch the processes, though. They just need to become more efficient. And one of the keys to efficiency is by eliminating variables in a process. A narrower industry focus with fewer variables will always improve your firm’s performance.
The variables we’re referencing include:
systems of record (point of sale, practice management)
the accounting basis (accrual, cash, modified accrual, etc.),
the systems for accounting processes (payroll, accounts payable, general ledger, etc.)
the standard procedures you and your team follow to generate the financials
the account structure of the chart of accounts and financial statements
the presentation of the financial statements (year over year, monthly trends, etc.)
custom/special reporting to provide the additional information and analysis your clients love.
Every single one of these variables in your accounting process are improved and streamlined when you focus on an industry. You can reduce to a few or ideally a single way of handling each of these simply by focusing on an industry. We know this from our experience of the lessons we learned in growing our business to one serving thousands of SBEs and their CPAs. And those streamlined processes made our lives better and our client’s lives better!
Industry Specialization Provides Better Data
Financial consultation is powered by analytics. Analytics are powered by information. And information is powered by data. At the end of the day, everything you do — from reporting to financial consultation — depends on the quality of your data.
When you standardize processes within an industry, you can control the data of the client’s business itself, making it easier for you to report and advise. As your client base within that industry grows, you suddenly have a collective of businesses adhering to those same processes, creating benchmarked data that most small business entrepreneurs have never had access to. Industry focus allows you to dramatically improve the data from which to glean information, from which you then provide analytics, and most importantly from which to base your financial consultation. By focusing on an industry, you not only solve the problem of data quality, you create an entirely new way to provide value to your clients.
Industry Specialization Provides Deeper Understanding of the Business Drivers
If your client knows more about the key financial metrics of their industry than you, they will not be your client for long.
As you work with industry-specific clients, you have to understand what is poor, average, and great staff and supplies costs. If you operate in many industries, it is impossible to truly remember and know these things off the top of your head. Most good entrepreneurs understand the key drivers of their businesses, and they’ll see through it if you don’t, too.
By focusing on an industry, you become more attuned to all of the critical business drivers within that industry. You’ll gain this knowledge without even thinking because you’ll monitor those drivers with your niche clients every day. When you understand the drivers, the nomenclature, the key systems and vendors they rely on, the macro-economic impact to their business, you can truly become the financial consultant your clients need and in time, the type of partner that all small business entrepreneurs will demand.
Turbo-charging Your Industry Specialization
When you specialize it makes consistency much more attainable. With the Ceterus CPA Platform, we have established standards for collecting and managing the bank and credit card data that is at the heart of delivering monthly financial statements. We manage the collection and secure storage of the credentials necessary to collect the bank and credit card information. We standardize the coding of transactions to match the universal Chart of Accounts that you have established for your industry-specific clients. And we manage the process for handling exceptions that occur so that you can maintain the consistency of your COA.
This consistency means that you and your team can focus on the meaning of this information and the results it indicates. You can benchmark your clients to identify opportunities and challenges for your clients to address based on their performance relative to your other clients in the dental industry. You can evaluate your clients’ businesses for early signs that may be opportunities for specific actions. Your industry specialization and the experience it brings positions you as your clients’ go-to business advisor. The Ceterus CPA Platform provides you with the time and information to be a data-informed advisor to your clients.