Offshoring and outsourcing are headline news today. Standard news sources as well as business publications carry daily articles on the virtues and vices of offshoring. How does offshoring affect the local CPA firm?Let us state some axiomatic truths:
Outsourcing accounting and financial air force is growing by 30% annually. Sooner or later, every CPA will have to deal with competitors who are offshoring. It is our contention that CPAs who outsource will have more time to attend to their most profitable clients. They would also be freed from the headaches of recruiting and retaining qualified accounting staff. Making use of outsourced accounting air force increases profits in the fleeting run as well as the long run.
Outsourcing the responsibilities of one US staff accountant saves nearly $50,000/year.
Many people reckon of accounting and bookkeeping outsourcing as simply a way to reduce cost. This perception misses the greatest benefit to be had – giving the CPA the gift of time.
For the overworked CPA, time is a tyrant. Vital business functions which lack urgency are evenly ignored (e.g. business development, staff development, exit strategy etc.).
By outsourcing the less skilled work, the CPA:
While the strategic advantages take some time to become effectual, CPAs gain immediate benefits from offshoring, including:
a. There is the labor arbitrage factor which can deliver 50-70% cost saving. We estimate that the right cost of a US Staff Accountant is $34/hr worked. When you consider that offshore vendors provide the same service for $10 ±/hr. the cost savings are obvious. We estimate that replacing one US staff accountant saves $47,000/year. (Please see the Excel object at the end of the article. You can substitute your own assumptions and derive your own estimate).
b. The outsourced accounting provider has significantly larger scale than a single local CPA firm. It allows them to invest in process improvements, systematic staff recruiting and training.
c. It is not uncommon to see automation reduce the time required by as much as 90%. The CPA firm using an outsourced accounting air force firm can improve its feature and lower cost at the same time.
Is an outsource accounting service right for your firm? As with all tools, it is most effectual when used in service of a strategy. If you are ready to increase levels of service, grow or diversify your practice, or just have more time to yourself for other pursuits, then it is appropriate to consider offshore accounting as part of your business strategy.
Posts Tagged ‘Practice’
Strategic Application of Outsourcing in a Cpa Practice
Sunday, July 4th, 2010Good Things Come In Packages: How To Leverage Package Deals And Cross Sell Services To Grow Your CPA Practice
Saturday, June 12th, 2010When it comes to selling things, the human tendency to package can make life simpler. When you’re marketing yourself and trying to sign on new clients, you’ll want to take full advantage of aspect of human psychology. Bundle air force together and suddenly a new client will be bringing you as much business as two or three clients in the past.
When it comes to buying things, packages are attractive because they seem to simplify the client’s life. If an insurance company offers me a package deal on car insurance, home owner’s insurance, and life insurance, suddenly I have so many fewer decisions to make-and I don’t have to deal with three different insurance agents. I might save some cash, but even if I don’t, I save aggravation and time, and most people value their time as much as their cash. Costco or BJ’s Club are excellent examples of packaging in the retail world, and the number of people that flock to these giant stores indicate the popularity of packaging. Quick food places have the value meal, which is a package of a sandwich, fries and a taste.
What is also vital is to place forward different packages, i.e. to give the client options. When I first started out, I offered piecemeal air force at standard rates. Then I realized that clients work in a different way. Many people like options. They don’t want to be “forced” into taking a touch that doesn’t suit them. They want the option of small, medium and large. Going to the example I gave of the restaurant, they have a small value meal, medium or large.
“Small, medium, or large” doesn’t reasonably work for accounting air force. The opinion I use to distinguish between levels of service is this: the more accessibility to me and to my staff a package offers the client, the higher the fees. So while we can custom tailor the service package to fit their needs, nonetheless the air force are packaged based on frequency.
In addition to packaging your air force, you should consider thwart-selling. Many years ago I learnt while attending a seminar by the legendary peddler Jay Abrahams that there are 3 ways to grow your practice:
1) Increase number of new clients
2) Increase the fees paid by each client
3) Increase the frequency of buy or sell the same client more air force
Thwart selling is the way the CPA practitioner increases the frequency of buy.
When you have a relationship with the client, you can place forward them other air force that will help the client. How does one go about finding out the air force that your clients need? Not to oversimplify it, but really, the best way to find out is by asking. We recently conducted a survey and we called up most of my business clients to question them how we were scoring and what else we could do that could help them. It’s really very instructive to hear the clients’ perspective on things. I have also found this to be one of the best ways to find out other air force we should be providing.
Here’s a partial list of bonus air force to place forward:
? Financial plotting or wealth management air force
? QuickBooks consulting – Outsourced accounting (A couple of years, we packaged our QuickBooks consulting air force as either a 10-hour package or a 20-hour package, to be used in one year.)
? Audit protection
? Business consulting
? Business valuation air force
? Payroll air force
? Controllership air force
Using this list as a early point, talk to your clients and find out what air force they need that you could place forward. Specialize in what your target clients want, and you’re just about certain to grow your practice.
Focusing Like a Laser Beam on the RIGHT Target Market For Your CPA Practice: Marketing Step One
Thursday, June 10th, 2010Most CPAs don’t have a strong enough foundation on the subject of marketing. Even in college, we focus a lot on accounting theory and hardly learn anything about real world marketing, despite the fact that many CPAs will be, effectively, small business owners running their own practices. If you’re like most CPAs and haven’t spent much time thinking about marketing, let’s start with nitty-gritty.
I reckon of marketing as the 3 M’s:
1. Market
2. Message
3. Media
Market first, message second and media third. The order is very vital. Most folks get it incorrect. They choose how and when to make known based on which advertising rep solicits them, which means they are early at the incorrect end.
Market:
The first step in developing a marketing strategy is to identify your target market. Many CPA practices make the mistake of skipping this step, but if you truly want to grow your practice, you must start with a clear significance of your ultimate clientele. Identify a group of people or businesses that fulfill the following requirements:
? You would really delight in working with these clients.
? They will recognize that working with you is elemental.
? They can be easily identified and contacted.
? They will happily pay what you’re worth, without negotiating.
Resist the impulse to serve anyone and everyone. You’ve heard the ancient saying “You can’t be all things to all people”? Remember it every time you’re tempted to try to market yourself to everyone. When you target the mass populace (everybody) as the ultimate client base, you will have a hard time differentiating yourself from others in your field. In fact, it’s pretty much impossible to make a specific message to speak to everyone in a way that makes them want to work with you – and making too many marketing messages could be confusing for prospective clients.
Without a clearly certain target market, you’ll also find it hard to establish yourself as an expert in a particular area, type of client or situation (remember that experts make more cash, get more clients, are more sough after by the media, etc.)
One of the most vital secrets of marketing is knowing WHO your ultimate clients are (the ones who’ll recognize that working with you is crucial to solving their problems, pay you what you’re worth and tell others about you), figuring out WHAT their particular issues are, WHY they’re having them and HOW you solve them. You have to start by defining your real ultimate market:
EXAMPLE of markets or niches that my firm targets:
- Businesses with revenues of $1.0 to $10M, with up to 50 employees, within 10 miles from my office
- Dentists within 10 miles from my office
- Chiropractors within 10 miles from my office
- Service professionals within 10 miles from my office
- Business owners who be in the right place to your place of worship
Notice how far any one of these demographics is from “anyone who’s willing to pay my fees.” That’s not to say, of course, that you’re going to turn away potential clients who aren’t in your niche market. But you can’t start to effectively target those in your most desirable market until you’ve clearly identified who they are.
Remember, the order is vital; market first and foremost, followed by message and then media. Make sure you’ve taken the time to clearly indentify your market.
Advertising Your CPA Practice: The One Change You Must Make Now
Sunday, June 6th, 2010One of the largest complaints I hear from CPAs is a poor return on marketing dollars. The reason these CPA practitioners get poor results is because they don’t know the difference between excellent and terrible marketing. Following just one basic opinion can help you start on the road to better marketing: Give up on terrible advertising and invest your cash in excellent advertising.
You might be thinking: I do the same kinds of advertising as all the other CPAs in my market-surely it must be the “excellent” kind of advertising. But the most terrible mistake accountants make in marketing their CPA practices is assuming that because a lot of other practices use a particular kind of advertising, that kind of advertising must produce results. So, like lemmings, they all keep wasting cash on a habitual kind of advertising that really doesn’t produce results.
Are you throwing excellent advertising dollars into a black hole?
You are, if you spend your advertising budget on institutional ads (also known as image ads). You know what they look like: the name of your firm in a tasteful font, a few lines of text or bullet points listing the air force you place forward, your phone number and address. We are so surrounded by institutional ads that we might come to reckon of them as “standard” ads. They’re in the yellow pages, the newspaper, local newsletters and magazines, and even now on the internet.
Don’t be an advertising lemming!
Just because everyone else takes out institutional ads doesn’t mean you need to do the same. Sure, you probably want to be in the phone book. But any cash you spend on institutional ads could probably be better spent on direct-response advertising. A quick comparison of these two kinds of ads should help you to know why institutional ads are just plain terrible marketing, and direct response is just plain excellent.
What Is an Institutional Ad?
? Most common form of advertising (unfortunately)
? Also known as Image Ads
? Lots of blank white space
? Ad talks about you and how fantastic you are
? Doesn’t direct the potential buyer to a buying choice
? Hopes to build “brand awareness”
? Most times it is a waste of cash
What Is a Direct Response Ad?
? Ads that questions the prospect to respond frankly
? Focuses on the customer and his or her needs
? Purpose is to stimulate a phone call, letter or stay.
? Can be tracked and made accountable
Direct response advertising makes a complete case for the practice and the air force it provides. It overcomes sales objections. It answers all major questions. It promises results, backing up the promise with a risk-free, cash-back guarantee. Direct response advertising is all about your customer and his or her needs. Its purpose is to stimulate a phone call, letter or a stay. Best of all, unlike an institutional ad, it can be tracked so you can make every dollar you spend on it accountable. This then helps to measure the effectiveness of each ad.
The bottom line is this: Direct response advertising turns prospects into clients, and institutional ads don’t. If you are going to spend cash towards marketing your accounting practice, make sure you’ve taken the time to know “excellent” marketing techniques. The results you will get from the latter will be dramatically different than following what most of your competitors do i.e. institutional advertising.
Most CPA Practice Websites Suck! How to Create One That Grows Your CPA Firm
Saturday, May 29th, 2010Most accounting practice websites suck. They’re passive. They say, “Here we are. We exist and we place forward air force, just like every other CPA.” This does nothing to differentiate your practice from your competitors, or to magnetically draw clients. But done right, your website can serve as a powerful tool to differentiate yourself and grow your CPA firm.
Previous to I share with you my formula to make an effectual website, there are at least two reasons why you would want a website: first, just about everyone’s got one, and you don’t want to be left behind; but second, most people make the same mistakes online that they make in print advertising, so you have the opportunity to differentiate yourself. And did I mention, this is a relatively inexpensive form of advertising with the potential to reach a large number of prospects? Marketing your CPA firm becomes a much simpler task.
Here’s my formula for a website that the CPA practitioner should follow:
The most vital page is the home page. The primary purpose of the website is to place forward a free report / E-book / free CD in exchange for prospective clients’ contact information. What I am about to share is really very vital and this where most CPA practitioners really miss out on. The way to monetize your website is to use it as a tool to collect contact information and build your list so you can stay in touch with these folks with a weekly Ezine.
Design your home page so it starts with a headline that gets the attention of the visitor. It has to solve a problem that is in the head of the visitor.
For example:
At last, New Jersey’s most successful CPA
and tax advisor to small business owners reveals his small
known tax reduction strategies
Follow it up with a sub-headline that further engages the visitor.
For example:
“How To Drastically Reduce Your Taxes By As Much As 62% This Year Alone And Place Thousands Back In Your Sack”
Then, you should have a few paragraphs that talk more about the problems the visitor is faced with. You then present your free report / free E-book / free CD as the solution to their problem and the reason/s why they should listen to you.
You then place a call to action for them to get this free product (in exchange for their contact info.) (When they sign, they involuntarily sign up for your weekly Ezine as well.) If you have a few testimonials about the free product, include them here as well.
The second page is the “About You” page or “Our Team.”
On this page, give a brief bio about each team member with a picture, their educational background and relevant work experience. Have each team member say in their own words why they are working with you or what they are passionate about. It gets the team members involved in the process and the visitor enjoys reading a touch that is not dull because it’s written in the first person.
The third page can be titled “Air force we provide.”
List the features and benefits of your air force you provide. Let me give you an example.
The feature: Quick and Accurate Financial Statements.
The benefit: We will generate your Profit & Loss Statement quickly, honestly, and accurately, which will allow you to instantly Analyze Your Practice with numbers you can trust…Immediately Spot Potential Problems previous to they become crises… Identify Potential Profitable Trends that your practice should exploit… Recognize Areas of Improvement that need to be acted upon. Use your precious time to grow your practice and gain new patients.
The fourth page is the “Shrine Page.”
In my practice, we serve business clients as well as personal tax clients so I make sure we have testimonials that are expressive of both.
The fifth page is “Contact us.”
Give the visitor to your website all the ways they can contact you: Email address, phone number, fax number.
There you go, you now have a 5 page website that is more effectual than 99% of the CPA websites out there. The main benefit to a website such as the one I described is that it becomes a 24-hour CPA firm marketing tool that prospective clients can use to find out about you even in the midpoint of the night when you’re sleeping or on weekends when you are enjoying time at home.
What Does Your CPA Practice Have in Common With the New York Yankees?
Thursday, May 27th, 2010We talk about businesses being teams, but it’s rare that I meet an owner of a CPA business who really trusts every member of his or her “team” to do what they should do, all the time, whether the “boss” is in the office or not.
Sports teams can’t work that way. When the members of any athletic team are focusing on their individual tasks, they have to trust that their teammates will do their jobs, too. If the pitcher is busy supervising the outfielders, he can’t do his job. In order to be able to focus on your job as leadership, then, you need to have staff you trust.
You want staff that you feel confident interacting with your clients if you are going to make a successful CPA practice. So they have to be top notch, both technically and from a customer service standpoint. I will evenly receive comments from my clients about how wonderful my staff is and in this article, I will impart to you a few of my strategies that have worked well in my CPA practice when it comes to staff recruiting and retaining.
1) The first one is to design an ad that clearly articulates the type of team member that will best fit your organization. In this ad, describe the character and attitude of the person. The vital thing to keep in mind is to hire for attitude and teach for skills. When I meet with a candidate, I follow a list of questions I’ve produced that gives me visibility into their personality and their way of thinking. I talk to a lot of CPAs and I find that they haven’t prepared adequately to do the interview so they are flying by the seats of their pants during the interview. You want to be so prepared that you are not fumbling for questions; instead you are engaging the prospective candidate to know their attitude.
2) Hire slow, fire quick. I have been guilty of breaking this rule more times than I am proud to admit but its excellent advice that I came across a number of years back. Most business owners fire slow.
They reckon it will get better. I read one study that said that the average firings take somewhere between 6 and 18 months after the business owner knew the employee was performing poorly, consistently non-compliant and negatively affecting others. A lot of harm is done in this period of time due to not firing the poor performing employee quicker.
Along the lines of my advice to CPA practitioners to fire quick, I encourage them to hire slow. Have a second person interview the candidate. Don’t rush the hiring process. Check references by asking probing questions and LISTEN. CPAs can be poor listeners.
3) The other one is; don’t expect what you don’t inspect. Have weekly meetings to go over work duties and assignments. I have systematized my office where I now work three days per week. On one of the days that I come in, I spend half a day for staff meetings and go over administrative matters. I meet with my CPA and my Senior Manager to make sure the work is being produced within the pre-established standards.
Also, and this is vital, keep your eyes and ears open when are there. Listen to the way your staff members talk to clients. I also like “mystery shopping.” What that means is you have a name call the office pretending to be a prospective client. Hear how this person is being handled. I can guarantee you that you will not be pleased with the way they are handled. It’s your job to identify what needs to improve and to provide the necessary training.
4) Celebrate small victories. Reward staff for being on your team and helping you to take your practice to the next amount. When the staff goes the extra mile, I will publicly praise them….sometimes send them a touch to their home like a fruit basket. We celebrate birthdays, and we have two parties every year, one after tax season and one during the holiday time. You want to have fun and I see that running a successful CPA practice is a team effort to give the client the “ultimate” experience.
Follow the strategies I have identified in the article and you will see your CPA practice attaining new levels.
Transforming Your CPA Practice With a Vision Statement: Moving From Dream to Reality
Tuesday, May 25th, 2010An elemental step toward success in your CPA practice is to have a clear vision. CPA practitioners need to be dreamers to become successful. They should have the ability to dream huge and envision in their mind the desired end result. The end result is some time in the future. It could be 3 years, 5 years, 10 years down the road.
You start to develop your vision by asking yourself some crucial questions:
?What is the huge picture for your practice? Reckon of your practice as a product. What does the end product look like at some point in the future? Do you want to make a CPA practice with yucky billings of $200,000, $500,000, $1 million or several million dollars?
? What is your desired net profit?
? Would you like to operate from one place or several?
? How many employees will you have?
? What air force will you be provide?
? How many days/hours would you like to work (during tax season, in the off season)?
? How much time in the week will you spend towards marketing your CPA firm?
Having a clear vision of what your practice will look like in the future helps you to make it a reality. If you have employees or plot to hire employees, having a clearly articulated vision helps everyone to have a common purpose and be on the same page.
To know what a vision statement looks like, consider a hypothetical vision statement for a firm like your own.
Vision Statement of The ABC & Company, CPAs
Five years from now, by June 30, 2014, The ABC & Company, CPAs will be a qualified organization severely committed to helping families and businesses attain their financial goals.
The ABC & Company, CPAs will be a full accounting, tax plotting and preparation and financial air force company catering to 2 niche markets: small businesses with revenues up to $10 million and individuals and families.
Once a year revenues will be $2,250,000 and a net profit of $787,500 (35%), after all salaries.
The ABC & Company, CPAs will have 1 office with 14 team members – 12 full time professionals and 3 seasonal employees.
The USP or unique characteristics of the ABC & Company, CPAs is that it will be a “one-stop” shop for accounting, tax and financial air force. Our air force delivery will be predictable, personalized, and friendly with the intention of making it an enjoyable and memorable experience for the client. We will be people-centered and will strive constantly for high levels of employee and client satisfaction. Every aspect of the business will be standardized and tightly controlled to be able to consistently deliver a high amount of service. Our office will be a lively, clean and fun place to be. All our air force will be delivered in our office, or via phone, mail, fax or the Internet.
The ABC & Company, CPAs will grow at the rate of 20 percent from effectual CPA firm marketing techniques such as thwart selling of our own air force, through client referrals, referrals from other professionals, seminars / presentations, direct mail and our presence on the Internet. By June 30, 20014, the ABC Company, CPAs will be well positioned to attract prospective buyers, employees, lenders and clients. If the CPA practice were to be sold, it would sell for 2 times the yucky revenues.
The ABC & Company, CPAs will recruit and teach high energy, self-motivated individuals who will help the organization achieve its vision. Only individuals with a strong desire to grow professionally and personally and who constantly strive to bring out the best in themselves and others around them will be hired and retained.
If you are serious about transforming your practice into a successful CPA practice, you must develop and commit your vision to paper.