This post is the second in our series on how accountants and CPAs can capitalize on the client contact of tax season to build a business model that relies less on compliance work.
If you missed the first step, you can catch up here. This time, we focus on how accountants and bookkeepers can plan monthly revenue to optimise growth.
By focusing your practice on monthly recurring revenue, you can partner with your clients to help them refocus their energy on the growth of their business, while you take care of the financial management.
We’ve covered the topic of moving to a monthly revenue model before on this blog, but if you missed it let’s recap. It boils down to three key advantages:
- It aligns outgoing costs and incoming revenues.
- It brings cost clarity and certainty for clients.
- It gives you a reliable metric to track your growth.
Once you plan monthly revenue targets you can then focus on increasing client spend to meet it.
One client at a time
Once you’ve set your sights on a target for the additional annual revenue you’d like to see your firm earn. Now let’s quantify how that breaks down per client. In our first step, we used the example of choosing a destination for a road trip. We’ll stick with that analogy to make sense of our next step.
Just like mapping a road trip (in pre-GPS days), you picked your destination and then mapped out how you’d get there by working backwards, choosing the highways, state routes, or back roads that would get you to where you wanted to be.
In the same way, we work backwards from your target added revenue. For example, working with the goal of $100,000, it won’t be an equal split between clients, but rather a blend of clients at different monthly fees. When starting to plan monthly revenue, we recommend you review your clients for whom you’re already performing monthly or quarterly work. Let’s use them as a jumping off point.
Growth in Practice
Here’s an example:
Three clients at $1000 per month = $36,000 annually
Ten clients at $600 per month = $72,000 annually
In this example, you’ll end up with an additional revenue of $108,000.
Two clients at $800 per month = $19,200 annually
Six clients at $500 per month = $36,000 annually
Thirteen clients at $300 per month = $46,800 annually
Here you’ll end up with $102,000 in additional revenue. Not bad, huh? And you can see that we’re not suggesting you sell $20,000 one-off consulting tax packages.
Go back to your list of clients for whom you’re already performing monthly work. The key is reproducing these clients over and over again. When you look at it from that perspective, it doesn’t seem that difficult, does it?
At this point, you’re most likely wondering where these clients will be found. The answer is, you probably have a number of them already, but you just don’t know it.
You have year-end clients who could use this service, you probably have quarterly clients that could benefit from transitioning to a monthly service, and that’s in addition to all your monthly clients you already have.
Why are we recommending this during tax season, the crunch time to beat all crunch times?
Because when else do you get your clients’ undivided attention.
If they’re not listening to you at tax season, well, that’s another issue. If, after you go through their returns with them, you fail to ask how you can help them with their day-to-day accounting, you are missing out on a great opportunity.
You have a captive audience during the three and a half months of tax season. Make the most of it.