As Block and Liberty Add Accounting Services, Independents Face 3 Options

Libert-Block-logos-170x145When CPA Trendlines published its analysis, “Threat or Opportunity as H&R Block, Liberty Jump into Bookkeeping Services,” by Hitendra Patil of Pransform, it ignited a small firestorm of responses from readers and a reality check for the profession.

RELATED: New Strategic Ally, or Competitive Threat?

Two distinct groups of voices seem to be emerging with three basic options for independent accounting firms, according to Patil who has been studying the profession’s reactions.

Among the voices:

One – Those who believe that both H&R Block and Liberty will fail to deliver quality in bookkeeping services and hence attract only cost-focused business clients.

Two – Those who believe it is an awesome collaboration opportunity to get more business from H&R Block and Liberty’s marketing budget.

Hitendra Patil

But both H&R Block and Liberty are apparently investing in top class resources to lead their new bookkeeping divisions.

“There are two Goliaths. And thousands of Davids,” says Patil. “A lone David in the bookkeeping, accounting and tax profession isn’t likely to do much damage to either  Goliath. Even a few hundred Davids aren’t likely to cause much damage.”

The choice, Patil figures, is between defensively protecting your existing client base, or proactively expanding your reach.

“The Goliaths have decided,” he says. “The Davids need to decide, and quickly.”

Patil sees three strategies emerging:

  1. Turn Block and Liberty into Your eBay and Amazon: Some professionals have decided that they will not touch low-fee work. The real opportunity for independent professionals is to pick up higher value work from Block and Liberty. “Treat Block and Liberty as an eBay or Amazon for your high value services,” he says.
  1. Be the Hummingbird to Get the Honey: Just as hummingbirds drink nectar from flowers to help pollination represents a classic example of mutualism symbiosis, Block or Liberty could copy Intuit’s “Find a QB Pro Advisor” program. They could enroll “approved members” for their “consultants panels.” And at the same time, the cost-focused tax-clients independent accountants turn away could be referred to Block and Liberty.
  1. You and Block or Liberty Create a New LinkedIn: If you use LinkedIn, you know your connections don’t necessarily work for you, but you can possibly work with many of them. You and they can leverage each other’s capabilities. Independent accountants and Block or Liberty could bring each other the opportunities for what each does best.

Patil leaves with one final thought: The first-movers will reap the biggest advantages.


8 Responses to “As Block and Liberty Add Accounting Services, Independents Face 3 Options”

  1. Debra

    I personally am not afraid of the competition. As a previous Manager for H&R Block, I got to see the typical garbage in, garbage out on a tax return first hand. When a small business owner would bring a P&L to a Block tax preparer, a high percentage just keyed the data and didn’t question how they arrived at the numbers. They didn’t question because they didn’t know what they didn’t know.

    These business owners could get a surprise when they get audited because fixed assets, taxes paid and insurance, among other things were not handled correctly.

  2. Jerry Nordland

    If you really think Block is serious about this gesture, consider this: The District GM I interviewed with was new to Block coming from a retail management position with GameStop, and had no knowledge of tax preparation or bookkeeping.
    Sound like an ideal boss to you?

  3. Jerry Nordland

    Well, all is not as it seems, at least with Block. I was interviewed by the District GM and they expected that I would essentially move my tax practice inside their office, use their software, follow their non-compete rules etc. When I asked about remote clients or using even their software to serve invalid clients, they had no answers.
    They are so concerned with control of the data that they have no provisions for secure transfer of data outside their own private network. Even inter-office communications are extremely limited.

    If you enter discussions with Block you will see they are years behind the rest of us who have the freedom to use the best solutions from a variety of sources. I recommend you proceed carefully.

    I doubt their lawyers will allow you to cherry pick high end clients and maintain a separate practice independent of Block. When I worked for them, they were fond of describing their procedures as ‘The Block Way.’ In other words, My way or the Highway.’

  4. Ron Benjamin

    We always say there is plenty of room for competition. Small private practices have survived because, small businesses still like personal contact, and no big 4, big 8, etc… will touch bookkeeping with a 10 foot pole.

    Most CPA’s don’t do bookkeeping as a major part of their practice, and some want to get rid of their bookkeeping side. The money maker is in tax preparation, and small CPA firms have survived Big 4, Big 8, and Tax Franchises.

    Internet, cloud, and software have been our biggest competition. But good honest customer service, integrity, professionalism, and professional development still wins out in the end.

  5. Stephanie Wells, CPB

    I don’t see how it could be “good” for independent bookkeepers. These “cost conscious” tax clients won’t pay for the quality services independent bookkeepers offer, and nor will H&R Block or Liberty. We struggle enough with the “low cost” bookkeeping services out there without throwing Block and Liberty into the mix. Folks who use their services are looking for a bargain, not quality work because thats expensive. “You think hiring an expert is expensive, wait till you hire an amateur” and “you get what you pay for” come to mind.

  6. Dean Allan

    As someone who has been contributing to Hitendra’s LinkedIn discussion, it has fascinated me watching people’s tendencies to try and protect their “little piece of turf”.

    I struggle to understand how bookkeepers (in particular) see this decision by H&R Block and Liberty as a negative because to my mind it opens up a wonderful opportunity for bookkeepers to work with their local Block and Liberty branches by providing them with the quality bookkeeping they need to provide this new service to their clients.

    Perhaps I am looking at this situation totally “backwards” but it appears to me that bookkeepers who are scared of this decision are looking at it through a very “narrow” lens.

    • Johnny

      Just another big business pushing smaller ones to the side, and out of existence. It won’t be overnight, but it will not take long.

      You may not agree, but I have been doing books for small businesses and farms for a long time and they have taken a hit from the corporate giants.