Advantages & Disadvantages of an Accounting Firm Increasing Its Scope of Services
Most accounting firms offer accounting and bookkeeping services, management consulting, assurance services or tax management. If your firm offers fewer than these four services, knowing the advantages and disadvantages of expanding your scope of services can help you make the best decision about whether or not to move forward. Another option is to acquire an established firm that sells the services you want to expand into so you start working with a ready-made client list.
If your clients keep asking for additional tax services, such as payroll or audit help, you’ll make them happy by expanding your available services to handle their projects. Before offering the new services, make sure your staff is qualified and experienced in handling the new accounting tasks. Adding more services may put a strain on your staff’s ability to provide proper customer service or meet tax deadlines on time, a negative that may result in clients getting frustrated and leaving for another firm.
You may experience a backlash when you start sending invoices for work that your clients have come to expect for free, such as handling payroll or providing year-end documentation. Send a letter that gives at least a month’s notice to allow your current clients time to get used to the idea of paying for these accounting services. You may still lose a few clients who don’t want to pay and feel they can find a more accommodating firm elsewhere.
Getting new customers based on offering new accounting services usually translates into more dollars for your firm as long as your current staff can handle the extra workload. You may need to train your staff about new audit procedures, working with payroll software or how to convince prospects to use your tax management consulting services. The value of your company will likely increase once you start selling the new services, giving you more power to seek additional financing or a larger credit line to grow even more.
Adding more services to your lineup may mean that you need to hire more employees to handle the tasks, especially hiring workers who are qualified in specific areas such as assurance services or business management consulting. You’ll need enough clients to keep the additional staff member busy or the new scope of services will become a drain on your profits instead of adding to the bottom line. Complete a financial projection to determine how many new clients will use the service so you can pay your new staff member a competitive wage and you can still make a profit.