You’ve got plenty of solid advice to offer your small and medium-sized clients to boost their business. But if you’re thinking of throwing out your own shingle it can be a bit more difficult to take a bird’s-eye view. Do you have a business model for your firm in mind? If not, here are some examples and how outsourcing accounting can help you achieve them.
What are you looking for in a business model?
The long-term answer is you want to create a vast financial empire that will crush all of your competition. Fair enough. But let’s look at some goals that you can achieve in the first few years of your new firm.
So what do we want? A-list (low-hassle, high-profitability) clients. Ongoing growth and expansion would be nice. Making enough money to be able to eat, or dare we dream it, pay for an enjoyable lifestyle would certainly be up there.
Outsourcing Accounting as Part of Your Business Model
We’ve discussed before how accounting firms are going to have to shift their function in the affairs of their clients in the face of automated tax returns, bookkeeping, and so on. Pure compliance work will become less sustainable for firms – number juggling is no longer enough.
New, healthy firms are going to be more than “just accountants;” they’re going to be ongoing business consultants. They’ll be Johnny or Jane on the spot, able to spot black flags and opportunities for business owners who are too busy with other duties to take advantage of them.
So what are the potential models that are going to work best for you in light of this shift in the accounting world?
The One-Man/Woman Show (or Super-small Firm)
Had enough of people? Then the one-person model is for you. The obvious benefit? Super-low overhead, especially if you’re working out of your home.
The downside? You can become a victim of your own success and get behind in your work. If this is the case you have a couple of choices. Lose more time (and a fair chunk of change) in searching for a good hire, or investigate outsourcing accounting.
Outsourcing is the simpler and far less expensive solution to the happy woes that come from a successful one-person accounting shop. You’re able to expand your menu of services in pretty much any accounting direction required by your clients. You get certified experienced workers doing your quality compliance work for you, leaving you to eagle-eye your clients’ books looking for those black flags and big opportunities.
Whatever your choice, if your one-person firm gains any traction at all you’re going to be facing an expansion if you want to remain tenable.
The Niche Firm
You love helping small baby businesses get over their first-year woes. You help non-profits. You focus on a particular field like restaurants. Whatever your niche, you’ve found your favourite kind of client and you’re focused on building your business in that particular community.
This can range in size from the above one-person firm to multiple partners with two or three accountants under them. Generally speaking this is not likely to get much bigger than being a medium-sized firm since businesses from the niche can still take their business to “regular” firms, and “niche” by its very definition refers to a limited field of clients.
Done right, this firm can be highly profitable while being enjoyable. It really lets you focus in on your dream clients without having to do 80-hour weeks.
Whatever the size a niche firm is also going to benefit from outsourcing accounting because when you deliver good work your clients are naturally going to want you to handle more of their accounting needs (eg. personal finances).
Instead of worrying about adding a whole new division to handle the new types of work outsourcing will allow you to meet your clients’ needs without breaking the bank.
The Springboard Firm
This form of firm has multiple partners with multiple accountants working underneath them. The firms generate business by bringing in masses of clients via compliance work and then offering expanded services to those existing clients. It’s a volume business.
The benefits of outsourcing accounting here are fairly obvious – if you work to build this kind of firm you’re going to be swamped with compliance, bookkeeping, and tax work. Collate it and get it sent overseas so that your partners have the time to focus on client-facing work.
The Partner-centric Firm
These firms are entirely set to prop up partners so that they have the time to woo the big-deal clients. This means that partners rarely if ever see the compliance, tax, and bookkeeping work, which in turn means a fair amount of workers, managers, an HR department, a marketing department, and so on.
If you want to own a floor in some kind of fancy downtown office-building then this is likely the firm you’re looking to build. In this case outsourcing accounting is going to render massive amounts in savings, both in worker hours, HR costs, training, and employee churn.
Which Kind of Firm Do You Want to Be?
Most people will choose the small, Niche, or if they’re dreaming super-big, the Partner-centric firms. Even if you’re only at the dreaming stage of your future self-owned firm it’s not too early to decide which version you would like to own and work in.
In any of the versions outsourcing accounting will help you achieve your ideal firm for a fraction of the cost and time associated with building a firm via the legacy method.