5 Keys to a Successful Tax Practice

Practice Management Success

As an accountant, it is sometimes hard to stay on top of all the moving pieces of client service. I have found that if I take some time – especially in late summer and early fall – to sit and think about my business, it does wonders for my life at the office. Here are the five key ideas that I think make up a successful tax practice:

#1: Set the “Right” Kind of Goals

When I say the right kind of goals, I mean the type of goals that move your business forward. One goal you must focus on each year is the financial goal. If you don’t have an idea of what you want to earn, pay employees and take home each year, you will just drift along.

  • Determine how much you want to earn topline (revenue), and across how many clients. This will give you your average revenue per client. Then, if a new client walks in that is going to be lower than what you need to average, you know that prospect is not a good fit.
  • How much will you spend on employees, marketing and office equipment? Put together a budget so that you will stay consistent for the year.
  • Be relentless about your take-home goal, aka, your profit. If you are not hitting your profit goals during the year, you need to take action.

At my firm, Ragain Financial, we plan every six months, and I share those plans with the staff, my spouse and my clients – all in different ways, but I want everyone to understand their role.

#2: Standardize Your Processes

When was the last time you really sat down for a few hours and thought about your processes? If you have not recently, your process may be holding you back. Here are some examples:

  • When you are contacted by a prospective, new client, what is the workflow of selling, and onboarding, first-year work and other details?
  • When a client comes in the office, is there a routine you and your staff follow?
  • When preparing a tax return, is that process consistent for each client? Could it be standardized?

You must analyze your methods and workflows every year. Don’t be afraid of change – we change our workflows at my firm all the time. Always make them better, and standardize as much as you can.

#3: Invest in Your Staff

When I started my firm 15 years ago, I started out on my own and quickly needed to hire. My first instinct when I hired was to keep it inexpensive, and I tried to hold that idea for about six years. It was a very bad plan.

 Later, when I started hiring people based on their skill set, enthusiasm and their ability to serve my clients well, my payroll costs went up, but so did my profits. In fact, I can attribute my decision to hire great people to just about every good thing that has happened at my firm. I leave the firm in Florida and live in Minnesota for six months every year. You can’t do that unless you hire great people to steer the ship while you are gone.

 Once you hire, you also need to invest. Train them, give them support and be firm, but never be mean. Just like a great client, the more you train and invest in your people, the better they become, and the more profitable and happy you will be.

#4: Focus on Planning

This one is near and dear to my heart, and I developed the software to help me with it.

Tax planning is key to how we stop selling our services as a commodity and start being a profit center for our clients. We can make a difference for each of them, and by doing so, they will pay higher fees and reward us with increased business and referrals.

Have formal tax planning services for every client, and create an atmosphere in your firm that planning is more important than compliance. Your staff will take up the mission with you, and together, you can teach clients how planning is so much more valuable than compliance and return prep.

#5: Exceed Client Expectations

I use a phrase in my firm and my speaking engagements that I believe is so important: “We must make clients smile.”

That is a hard thing to do in our business. Tax work is not the type of thing clients get excited about, but you must find a way! You must find a way to exceed their expectations and get that smile out of them!

Client satisfaction can be measured in something called the Net Promoter Score, an easy way to ask clients to measure how you’re helping them. We do this one to two times each year at our firm, and if that score is ever below an eight, you have problems.

Think about how you present tax returns, how the information gathering takes place, what happens when a client calls, and how available you are for the team and clients. All of these factor into client expectations – and later, how satisfied they are with your work and your service.

How many referrals are you getting? If it is less than one client each year, you need to be analyzing this. The best firms are far ahead of that number. When you take the time to analyze what will make clients smile, and how you can blow them away with your service, the rest is easy. Just replicate that a few hundred times and you are all set.

Like I said at the start, finding time to work on ourselves and the internal tasks of our firms is hard. Clients always want more, right? You have to try and find a moment, or at least a few hours a month. Combine that time with these five keys to success, and you may really make a difference.

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