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Transforming Your Accounting Practice for Long-Term Success: Insights from Amanda Aguillard

Gone are the days when simply crunching numbers and filing tax returns were enough to sustain a thriving practice.

In this Federal Tax Updates podcast episode, Amanda Aguillard, COO at Padgett and member of the IRS Advisory Council, shares her expertise on transforming your accounting practice for sustained growth and profitability.

The key to success, according to Aguillard, lies in three critical areas:

  • right-sizing your client base,
  • specializing your services and
  • optimizing your processes.

By focusing on these three essential elements, you can transform your accounting practice into a thriving, sustainable business that effectively meets your clients’ needs while supporting your long-term goals.

Assessing and Grading Clients for a Right-Sized Practice

One of the most crucial steps is objectively evaluating your client base. Right-sizing your practice involves focusing on the clients who contribute to your success and align with your professional goals. She recommends a systematic approach to assessing and grading your clients to achieve this.

The first step in this process is to create a comprehensive spreadsheet that lists all your clients and their respective fees. This allows you to gain a clear, data-driven overview of your client base and identifies areas for improvement. Aguillard suggests grading clients from A+ to F based on critical factors such as:

  • attitude and responsiveness,
  • timeliness of record submission, and
  • willingness to pay appropriate fees.

By categorizing clients in this manner, you can quickly identify your A+ clients – those who have a great attitude, are responsive, and pay well – and your F clients, who may be difficult, unresponsive, or constantly complaining about fees.

Amanda emphasizes the importance of involving your staff in this assessment process, as they often have valuable insights into client interactions that you may not be privy to. “If your staff tells you, ‘This person doesn’t treat us well,’ that’s an immediate F, and they get cut,” Aguillard advises.

To help you implement this strategy, consider the following step-by-step guide to assessing and grading your clients:

  1. Create a spreadsheet listing all your clients and their respective fees.
  2. Establish grading criteria based on attitude, responsiveness, timeliness, and willingness to pay appropriate fees.
  3. Involve your staff in the assessment process, seeking their input on client interactions and experiences.
  4. Assign each client grades (A+ to F) based on the established criteria.
  5. Identify your A+ clients and prioritize their needs and relationships.
  6. Evaluate lower-tier clients and determine whether they can be improved or should be culled from your practice.
  7. Develop a plan to communicate any changes or adjustments to your clients, emphasizing the benefits for your firm and your clients.

Right-sizing your client base through this assessment process allows you to concentrate your efforts on those clients who truly value your services and contribute to your practice’s success. You can create a more manageable, profitable, and enjoyable practice by focusing on your A+ clients and improving or culling those in the lower tiers.

Specializing for Improved Efficiency and Profitability

Specializing your services is another critical strategy for adapting your accounting practice for long-term success. As Aguillard explains, focusing on specific industries or client profiles can significantly enhance your practice’s efficiency and profitability.

Two of the most significant benefits of specialization are the ability to streamline your processes and become an expert in your chosen niche. By concentrating on a particular industry or client type, you can develop a deep understanding of their unique needs, challenges, and opportunities. This expertise lets you provide your clients with more targeted, valuable services while improving efficiency and productivity.

Specialization also makes it easier to define your ideal client persona and set clear boundaries for your practice. “As soon as you can get to that place of specialization and a persona that is your ideal client, it gets much easier to say no to the wrong kinds of clients,” Amanda points out. “It doesn’t have to be personal, but it’s just like, ‘We don’t do that. That’s not what our practice does.'”

By honing in on your ideal client profile, you can more easily identify and attract those clients who are the best fit for your specialized services. This leads to more rewarding and profitable engagements and allows you to build a more focused and sustainable practice over time.

Amanda acknowledges that specialization may not always be possible, especially when you’re just starting. However, she encourages accounting professionals to work towards specialization as soon as possible, as it is a powerful tool for adapting your practice and achieving long-term success.

Remember, specializing your services means turning away only some clients who don’t fit your niche. Amanda emphasizes that referring out clients who don’t align with your specialization is a professional and acceptable practice. By doing so, you can maintain your focus on your area of expertise while still providing value to those clients by connecting them with other qualified professionals.

Optimizing Processes and Diversifying Revenue Streams

Optimizing your processes and diversifying your revenue streams are other crucial components of adapting your accounting practice for long-term success. As Amanda emphasizes, expanding your offerings beyond traditional tax preparation can significantly increase profitability and a more balanced workload throughout the year.

One fundamental way to optimize your processes is by leveraging technology to streamline workflows and enhance efficiency. Aguillard advises evaluating your current processes and identifying areas where technology can help improve performance. “The first step is really to think about what are the things that went badly and how did they go badly. And then, can a piece of software help us do it better?” she explains.

Focusing on your specific needs and requirements is essential when considering technology solutions. Amanda suggests defining your non-negotiable criteria, such as the need for a client portal, mobile capabilities, or specific security features. By objectively determining your must-haves, you can more effectively evaluate software options and select the best fit for your practice.

Another vital aspect of optimizing your processes and diversifying your revenue streams is offering accounting, payroll, and advisory services on an ongoing basis. By shifting your focus from one-time tax preparation to recurring monthly engagements, you can create a more predictable and stable revenue stream for your practice. Aguillard illustrates the potential impact of this shift with a powerful example: “If you get a $600 a month accounting client, that’s a $7,200 client, compared to a $600 return. Just by converting your mindset from the dollars to the annual revenue of a client, you can see that accounting services, payroll services, advisory services are a much bigger spread.”

This highlights the tremendous opportunity for growth and profitability that comes with diversifying your service offerings. By providing value to your clients throughout the year, you can significantly increase your per-client revenue and build stronger, more enduring relationships with your clients.

Moreover, offering recurring services can help smooth out the workload compression that many accounting practices experience during peak tax season. By distributing your work more evenly across the year, you can reduce stress on your team, improve work-life balance, and create a more sustainable and manageable practice overall.

Amanda also points out that many clients, even those who may initially seem like simple tax preparation clients, are businesses or have side hustles that could benefit from ongoing accounting support. By taking the time to understand your client’s full financial picture and proactively offering services that meet their needs, you can unlock new opportunities for growth and profitability.

Optimizing your processes and diversifying your revenue streams may require a shift in mindset and a willingness to adapt your practice to new ways of doing business. However, as Aguillard’s insights demonstrate, the benefits of this approach are well worth the effort.

Embracing Change for Long-Term Success

While change can be intimidating, it’s essential to recognize that the benefits of adapting your practice far outweigh the risks. By right-sizing your client base, specializing your services, and optimizing your processes, you can create a more profitable, efficient, and enjoyable practice that supports your professional goals and enhances your quality of life.

Moreover, embracing change and implementing these strategies can help you better serve your clients in the long run. You’ll build stronger, more enduring relationships with your clients and establish yourself as a trusted advisor and partner in their success.

Of course, adapting your practice is an ongoing process that requires continuous learning, experimentation, and refinement. As Amanda emphasizes, it’s essential to start small and make incremental changes over time rather than trying to overhaul your entire practice overnight.

As you navigate this change process, remember that you’re not alone. The accounting community is filled with experienced professionals like Amanda Aguillard eager to share their knowledge and support one another in pursuing long-term success. By staying connected with your peers, seeking mentorship and guidance, and continuously learning and growing, you can position yourself and your practice for a bright and prosperous future.

If you’re ready to take the next step towards transforming your accounting practice for long-term success, listen to the entire Federal Tax Updates podcast episode featuring Amanda Aguillard.

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