Tax Time (almost) Done - Now What

Congrats, you’ve made it through another tax busy season (or at least file extensions to spread out some of the work you couldn’t get done), or for our Canadian friends, you have had to give your corporate clients an amount to pay months ago and now are filling out the paperwork (such a bizarre system), but I digress. 

From my experience running a professional services firm, I’ve always believed the best firms are built over the next few months. The effective use of this ‘downtime’ can be the catalyst for optimizing your practice, both within the firm operations and with your clients…and yes the effective use of this downtime can include taking clients and referral partners out for golf. 

The big firms have this cycle nailed down, and it looks something like this: 

• Dissect the results (qualitative and quantitative) of the last year (or at least YTD) 
• Develop the plans to address the identified weaknesses or leverage strengths 
• Educate and develop the internal team based on those plans 
• Engage with clients based on those plans 

Let’s break this down a bit further. 

Dissecting Results 

This is when you take a step back to look at the profitability of your firm in several areas including: 

• Service performed - personal tax, corp tax, assurance, advisory, fractional/outsourced finance services, etc. Understanding this will show once services you want to double down on, drop entirely, or create a plan to improve. 
   
• Client tier - are you bleeding money on your lowest-fee clients or do you have the processes in place to make them efficient? Are your large clients too demanding and draining your team (both hours capacity and mental/emotional capacity). Stratify your clients based on fees (find natural breaks in the distribution of client fees or look for an equal distribution splitting clients into 3 tiers) 
  
  
• Share of wallet/services - how many of your clients are you delivering multiple services to? Do they do better for profitability for you (probably yes due to centralized costs?). Are there commonalities between the businesses you are able to effectively service on multiple engagements (industry, size, source of customer acquisition). 

All this data is available through some form of billing reports from a practice management software and/or CRM data. There may be some manual work here, but with the right tools it will be minimal. 

Developing the Plan 

Use the data gathered to now plot out your current client roster into a 3x3 grid (or 2x2 if you want to keep it tight). On one axis put current fees, and on the other put growth potential. There are a number of factors here to consider (age of business, growth potential, strength of relationship, industry they are in, number of services they could use of yours, and more). 

The purpose of this is to identify which clients are key to retention (naturally) but also which ones are key to the growth of your firm. 

Based on all those in the ‘high potential’ or ‘high current fees’ come up with an account plan that maps out what conversations need to be had with those clients and who and by when they will be had. 

Educating (and incentivizing) the Team 

This could be a whole separate blog, but it is critical here to use the downtime and into the fall to bring the entire team (whether that’s 5 or 5,000 people) up-to-speed on the plan noted above. They are the ones working every day in the files that will be able to spot these opportunities and need to deliver to the client the expectation you have set. 

Implementing a compensation model that helps incentivize the team to act upon the plan is also critical (accountants like money)! 

Engage with Clients

Time to execute the plan! Meet with your clients over the summer/fall to understand how their business is performing. Keeping the conversation forward-looking is critical to move into a strategic advisor position with them. This is a great chance to be the ‘professional quarterback’ and engage with their other advisors as well to make sure there is a holistic and cohesive plan for the business to succeed. 

Using a CRM or practice management software to track these actions against these plans is critical as well for accountability purposes. 

And finally, using data and technology that helps give insights into performance and have a forward-looking view like interVal is hugely beneficial. 

Author: Dave Bunce CPA, CA