There’s a huge push in the accounting industry to expand the list of services firms offer to provide more value to their clients and boost top line revenue. Many firms are choosing to do so by adding consulting services through the acquisition of smaller consulting companies or building them internally.
After studying this trend and acknowledging the challenges accounting firms already have, I have a question.
Does adding consulting services actually improve anything important at your firm?
Most firms are obsessed with top line revenue – it’s widely accepted in the industry as the universal benchmark for measuring growth. My question is why? If revenue grows at a similar pace to expense, did your firm actually improve anything? For me, that answer is no. In fact, I’d argue that making your firm bigger, but not more profitable actually makes it weaker.
Where should your focus be instead?
I know revenue is popular to talk about, but it doesn’t tell the whole story. For example, I might think I ‘own’ a home I just bought, but I don’t. I don’t have the deed to the property. The bank does. It doesn’t tell the whole story.
Revenue is a vanity metric. Instead, you should focus on profitability and efficiency.
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But my clients need more help, what should we do instead?
I’m not against adding services, but just adding ‘consulting’ is even more generic than accounting. What problems do your clients need solved? Focus there and build productized services around solving THAT problem. It will help you market the solution and differentiate your firm so it doesn’t look like your firm is doing the exact same thing as every other firm.
You can help your firm stand out AND solve real problems for your client by taking a different approach.
Talk soon,
Sean