The Coronavirus pandemic and economic crisis have truly brought to the surface a realization that’s been building over the course of my career as an accounting professional.
When I chose Accounting as my college major, took an internship in public accounting, studied hard and earned the CPA designation, I had no idea that the most valuable thing I would end up doing for clients wouldn’t have anything to do with earning per share, fraud detection, or tax optimization. Instead, the highest value I provide to clients is serving as their “small business financial consultant.”
For the past decade, I fought that reality. I wanted the value I offered to be consistent with my training: providing good books, thoughtful analysis, and nuanced explanation of the tax code. I wanted to be an advisor, providing financial insight not emotional support. In part, I felt best equipped to provide good books; it seemed less practical to spend time talking to each client individually.
Clinging to that belief, I built a company, scaled teams of specialists, standardized, proceduralized, raised capital, and automated what could be automated. Ceterus now delivers books that are more accurate and timely to a range of businesses. We provide endless metrics, analytics, and reports. And while our clients love these things and get a lot of value from them, what I’ve come to understand (and what COVID-19 reinforced), is that no amount of analytics can match the value provided when a skilled accountant takes the time to listen and share advice based on their insights and experience.
Why am I writing this? Well, after learning the hard way that there is no good replacement for the role of small business therapist, I want to encourage — no, implore you to embrace this role. Make it your top priority. Do not view time spent providing consultation to your clients as a distraction from doing the accounting. View it as the most important thing you do in your craft. Understand that it is a long-term investment in your business. Focus on doing it well. Learn to do it better. Clear space in your calendar to make it a habit. Your clients will benefit, as will your business.
Yes! You read that correctly. The time you take to focus on your small business financial consulting practice will benefit your business, and there are three very practical reasons why: Rates, Retention, and Referrals.
Rates
Price sensitivity is high for things robots can do.
Price sensitivity is low for personalized, difficult-to-replicate services delivered by humans.
The bad news is that much of the work we do as accountants is rapidly becoming automatable. Preparing tax returns, reconciling accounts, sharing financial statements, and many other functions that have traditionally been central to your practice can now be done by smart software. The automation trend is only going to accelerate, and it’s going to accelerate rapidly. Cloud technology, machine learning (ML), robotic process automation (RPA), and simple automation scripts are driving down the cost (and hence the perceived value) of this work. Automation also changes the competitive landscape for practitioners.
The good news is that robots make lousy business financial consultants. By making consulting-oriented work the foundation of your relationship with your clients, you will be better positioned to charge a rate on which you can build a profitable business. Clients cannot easily price shop the time and value they derive from you being their “partner.”
Retention
Work a robot can do is not sticky.
Quality human interaction is very sticky.
Retention is one of the most important attributes of a successful firm. We know this: the most profitable customer is the one you already have. The cost to acquire and onboard a new customer is huge. The same rationale that applies to pricing applies equally to retention.
So, bad news first. Competition is rampant within the commoditized areas of accounting. In addition to rate pressure on these services, a client’s willingness to switch providers will be high if you don’t inject a non-commodity element into your service. Large firms are merging, technology companies are entering the space, and automation and competition will only increase as time marches on.
Now, the good news. Your clients care FAR more about the financial consultation services you provide than the commoditized work. If these services come as a package, your clients will gladly pay you to do both the “robot work” and the “consultation work.” Remember what I said before? No amount of analytics can match the value provided when a skilled accountant takes the time to listen and share advice based on their insights and experience. We will discuss how to optimize this commoditized “robot work” later on.
Referrals
Referrals are the best source of growth. They are cost-effective and create high-value client relationships. Your current clients know what you do and how you do it, and those they refer are more likely to be looking for something similar.
When clients call you “my CPA,” you are more expendable. But when your clients call you “my CFO,” “my finance guy/gal,” or, my favorite “my financial consultant,” you know you’re in a good place with them. When clients view you as more of a partner, they will also talk about you more, with sincerity and affection, and be much more likely to refer you to their peers.
Like any relationship, clients react to your cues. If you seem burnt out, inconsistent with responses, and on the brink of overload, they aren’t going to refer you. Even when they love the business consultation they get from you, they will sense a limit in your capacity to serve others. They will fear that by introducing you to potential clients, this limited resource will ultimately become less available to them. The best way to avoid burnout (and the appearance of burnout) is to specialize in the financial consultation work and make the “robot” work as efficient and as hands-off as possible.
Focus on what you can do far better than a robot ever could. When you shift from being “just” an accountant and become more of a small business financial consultant, you’ll be far more valuable to your clients and will improve your rates, retention, and referrals.
If you are a CPA ready to create room to focus on delivering more consultation to your clients click here.
