10 Things That Accountants Didn’t Need to Worry about 10 Years Ago

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Hitendra Patil
Patil

Now, what do you do about it?

By Hitendra Patil
Pransform Inc.

There is a shift in how people make their buying decisions and actually how they buy. Accordingly, there is a total transformation how people sell their products and services. And it's impacting the CPA business... in at least 10 ways:

1. Social Media: Ten years ago, “media” was some music that all of you enjoyed at “social” events like weddings, parties or maybe pubs. Now if your firm is not on Facebook, Twitter, LinkedIn and even Instagram, your firm might be facing the music.

2. Customer Ratings: Ten years ago, you got referrals due to word-of-mouth customer ratings. You probably lost a few clients because of the same thing. But now you can get or lose customers without any referral as they can see your independently authenticated customer ratings on several websites.

3. Cloud: Ten years ago, you were annoyed by clouds that blocked the view of the stars and full moon at a late evening open-air dinner with your loved ones. Now you can get annoyed by cloud (software) in the daytime, at your office and at your home.

4. Software Costs: Ten years ago, you paid once for software and maybe a little more for annual updates. Now you pay every month. Being an accountant, you suddenly see break-even time and total cost of ownership being quite a challenge, most likely because you may not have built these changes into your pricing.

5. Handheld Devices: Ten years ago, clients and staff came to your location. Now your firm has to go to the client and many times, even to your staff’s location! This has its challenges of coordination management.

6. Non-Local Competition: Ten years ago, you were worried about the firm next door or down the street. Now you are worried about your competitor from 400 or 4,000 miles away.

7. No One Else Can Do What You Can Do: Ten years ago, people came to you because you were the specialist who knew how to create books and prepare taxes. Now accounting software has become powerful, intelligent and easier to operate, enabling many people to do their own accounting fairly well. Ten years ago, 14.6 million taxpayers e-filed their returns from home; 46.5 million self-filed in 2014.

8. Fee Information: Ten years ago, not too many of your clients knew how much you charged others. Not too many prospects knew much about the “going rates” in the area unless they did a lot of footwork and visited multiple firms. Now national averages, local averages and pricing links are available in an instant with a Google search.

9. Managing Generation Y and Generation Z: Ten years ago, you dealt with generational changes. Now take a look at these detailed articles:

5 Reasons Gen Y Will Make or Break Your Firm

8 Seconds into the Future: Meet Generation Z

10. Value of Your Practice: Ten years ago, you could have sold your firm for 1.5 to 2.0 times your gross revenue. Now most thought leaders think and recent sales data indicates that if you get 1.0 time, you are lucky.

Worrying about the shift in market realities will not lead to a solution to these challenges; adapting your practice to higher-value capabilities that are insightful and interpretational will.

Listen to one CPA who has weathered 35 years of changes in the marketplace and two generations of clients. Alex Alvarez of Business Management Services LLC, CPAs, in Cincinnati says, “I am an entrepreneur whose business is accounting and taxes. I tell my business clients that their financial statements are nothing but the story of their business.”

Notice the distinct difference in his perspective of looking at his practice and his belief as to what is behind his durable success.

Or, listen to this management partner of a large regional firm tell his prospects: “I am not a great accountant, my partners are; but if you want to grow your business successfully, I am the man who you want to talk to.”

How do you meet market shift challenges like these?

 

One Response to “10 Things That Accountants Didn’t Need to Worry about 10 Years Ago”

  1. Marc Rosenberg

    This article has one of the best “grabbers” for an article title I have seen for quite a while. By law, the favorite past time of anyone over 60 is to reminisce (some would say bitch and moan) about what things were like years ago, so it is sure to grab people’s attention.

    However, upon reading the article in depth, I thought some of the items were pretty weak and one was outright, dead wrong.

    · Customer ratings – Other than solos and 1040 moonlighters on services such as Turbotax and Yelp, who seem to exclusively rate preparers of small 1040-only returns, I’ve never heard of any online customer ratings for reputable, multi-partner firms that is independently and thus reliably tabulated. Have you ever seen any? If you have, could you give me the names? I would be curious to check them out.
    · Fee information – Same comment as above. Are you aware of a reliable online site that gives fee information that is even half as accurate as, say, one of the leading MAP surveys? If so, I would be curious to find out about these sites.
    · Handheld devices – is this guy saying that partners going to clients’ offices is new? Its been that way for years. In fact, I would think that technology, in general, has unfortunately reduced the client visits, not increased them.
    · Value of your practice – this is the one that’s downright wrong – “10 years ago, firms sold for 1.5 to 2.0 but now, you’re lucky if you get 1.0…” 10 years ago, no way firms sold for 1.5 to 2.0. And being lucky to get 1.0 today, wow, this is evidence that this guy is clueless about the merger market. Myself and all my merger colleagues will tell you that a practice under $1M in a major market that is reasonably profitable with no skeletons in the closet routinely sells for more than 1.0.

    Well, I guess the guy writing the article and you publishing it achieved the goal of getting me to rant, which sometimes is an acceptable practice to stimulate discussion. I know I will discuss it with my roundtables when we meet after tax season.

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