I’ve talked to multiple firms since busy season ended and the overwhelming mood of the group is properly conveyed in one firm owner’s response: “I don’t want to encounter another busy season like the one that walloped me in 2022… that paradigm just ain’t going to cut it!”Honestly, there are few to no accountants who like tax season–it’s grueling, it’s thankless, it keeps us from evolving our business and it negatively impacts work-life balance. COVID-19 compounded these issues over the past two years, making the recent tax season an absolute nightmare.
So, what we know is that tax season this year was the worst. What do we do about it? Well, we work to make sure that this is the last tax season that sucks.
Tax professionals need not be at the mercy of any given tax season. Now is the time to put plans into place to deal with January 2023 in a whole new and intentional way.
Take back control!
Over the past two years, firms have incrementally added new tax clients because the busy season was extended. These were easy growth numbers—you didn’t have to work overly hard to pull in a surplus of clients.
This most recent season went back to a normal due date, which created significant pain and…well, you know the story.
The residual problem here is that the duct tape methodology you cultivated to deal with 2022 customer surpluses and tax pitfalls is not sustainable.
Arguably, the most significant risk right now is losing the overworked and stressed-out staff members you rely on to help serve clients. And without skilled staff, you’ll be unable to serve clients—the beginning of a downward spiral.
To get to the greener grass of a hellish tax season, the first step is to change your business model. And, like, pronto.
In today’s world, the wrong business model can be disastrous for your firm, leading you down the road of overworked staff, the loss of your best employees and the inability to serve clients well, and potentially even losing clients.
Staffing challenges, as you know, have become a significant risk in all businesses, including our own. No, we’re not working busy season hours. Rather, at Rootworks we foster a healthy, positive work environment.
We have great benefits, which include unlimited PTO with a work-from-wherever-you-want office policy. But even so, our employees are not immune to tempting job offers where, with the right expertise, they can make more money. And neither is yours.
This is where a new, modern business model will help immensely.
Correction—you had a business model that may have worked prior to the pandemic. But, oh, how times have changed. Today, the reality is that you took on tax clients beyond your firm’s capacity. And this is incredibly disruptive to your business model.
The good news is that there’s hope—a way to ensure your team sees a path forward and the team remains on staff while balancing your overflowing roster.
With this in mind, I have two goals I would love for you to consider for the rest of the year:
Concentration on these two goals will help make next year’s tax season run a whole lot smoother than it did this year.
I’m sure you’re now asking yourself: “How do I calculate my firm’s tax client capacity?”
I’m glad you asked.
But, before we delve into the Rootworks formula, I highly recommend that you first evaluate your tax processes. Are they efficient, streamlined, automated? Maximizing revenue while minimizing time spent is what I’m suggesting here.
To do that, make sure you first:
To calculate your current tax client capacity, you’ll need some information from your practice management system. For this exercise, print off your tax season billing information and have it handy.
Ask yourself, what is the average time spent per tax return (for illustration, let’s assume 1.5 hours).
Which of your tax clients has the highest realization rate?
Also, try to assess your staff utilization percentage outside of tax season. Is your staff 75% utilized—or is it more or less than that?
Now, let’s work on the capacity number:
If you’re doing 700 tax returns, you can see why you might have a major problem.
Here is where the hard part comes in. After your evaluation, if you find you’re indeed over client capacity, you must begin identifying which clients must go. Of course, this isn’t as simple as just firing a bunch of clients. There’s much more to consider as you think about your strategy.
Start by considering how you can generate as much revenue and realization by preparing 420 returns as you did with 700. Is it possible? Remember, you can raise your fees. You can also increase revenue with implementation of the IRS audit and communication protection services as part of a tax bundle.
You could also outsource a portion of your tax work. This could affect your capacity because your average time per return would probably be less. Calculating your capacity is more of an art than an exact science.
The key is to think modern and start making the transition to a better business model.
Another busy season like the insanity that was 2022 isn’t sustainable for your firm. Don’t allow your clients, team or work-life balance to suffer. Do not go back!
But bear in mind that the goal isn’t only sustainability; it’s to create a business you love. Seriously, don’t waste time. Put a plan together as soon as possible, and let’s start executing a year that most definitely won’t suck!
Have you noticed a trend in our message these last few months?
Managing your client base is a common topic. Most firm owners will tell you they wish they had more time to dedicate to it—and it’s always a conversation we have with new Rootworks members. Lately, we’ve been using the term Smart Client Management (or smarter client management) even with our long-term Rootworks member firms, because managing your client base is one thing that you CAN control in this crazy world.
If you simply, “Can’t do another tax season like this last one!” it’s time to be smarter about the clients you work with and the services you offer. Smarter client management isn’t just for firm owners; it’s a concept for the entire firm.
This really shouldn’t fall just to the firm’s owner. And while I hope you, the owner, dedicate at least one hour a week (but hopefully more) to reviewing your client list and looking for opportunities, I want to present you—the staff—with a challenge.
As a staff member, you’re just as responsible for managing your clients as your firm’s owner. You work with clients every day and see the changes in their data—which means you have a unique opportunity to raise your hand if you see something vastly different in this month’s numbers than last month. You also have a unique perspective on how a client can benefit from additional firm services. This isn’t a sales opportunity (well, not exactly), but rather an opportunity to make sure the client has exactly what they need to run their business to the best of their ability.
And so, here are a few data points that you as a staff member can look for…and raise your hand to let your partner or manager know how the firm can serve your clients in the best possible way:
The above points are just a few examples. The key is to decide as a firm what kind of clients you want to work with, which services you WANT to provide and which data points matter most. Then build from there. If there’s clarity in what the firm wants and needs from its clients, all staff can be proactive in helping to manage the client list.
There are a ton of resources available via your firm’s rootworks.com member account that can help you set the firm up for success. Take a look today—and if you’re a Rootworks member, schedule a call with your coach to decide where to start.
“Someone’s sitting in the shade today because someone planted a tree a long time ago.”
— Warren Buffett
Boil it down, stir it around and you’ll see that data analytics is ultimately just a big pile of 1s and 0s—numbers.
And as much as our industry loves these things, they can also be a source of infinite distraction. I hope this article supplies a mindset and approaches that can help your firm plan, avoid distractions and effectively use the data at your fingertips.
As mentioned in earlier articles, data eagerly seeks proper context and practical application. Making decisions and taking actions based on dirty data piles will only lead you down a painful path of frustration. Instead, think of data analytics as a regular sojourn through a friendly botanical garden. (My apologies to any mutual allergy sufferers for the last analogy.)
Defining our firm’s goals is a great place to start, because it helps us avoid measuring everything. Measuring everything only keeps us on the painful path of frustration. I know Arnold said no pain, no gain, but I’ll let you in on a secret here: The only gain from measuring everything is an overwhelming pile of data without context.
Once you’ve defined your goals, it’s time to identify your measurement tool and frequency, which helps us understand where and when our new analytic habit will play out. If you’re not a full-time marketer/online presence manager, this habit should not be daily. Remember, sojourn = short stay, not constant obsession.
After reviewing your data, it’s time to assess and adjust. Did what we thought would happen come true? If not, why and what should we try changing for the next time?
Here are some examples to help you shape your data with the proper context and apply it to your firm’s goals.
Try forming a statement or brief explanation with a supporting question related to your business goals.
Statement: We want our firm to grow. We think we can do this by adding small business clients from the surrounding area.
Supporting question: How many new small business clients are we gaining from the surrounding area?
Statement: We want to refine our new client additions by focusing on growth within a specific industry (e.g., ophthalmologists, construction, etc.). We think we’ll achieve this by attending industry trade shows, hosting a couple of free webinars, and having a dedicated landing page on our website.
Supporting question: What dates will we be attending trade shows and hosting webinars? How much traffic did our industry landing page receive before, during, and after these events?
This will ensure you know where you’re looking for the data.
Google Analytics comes in a few flavors now. Universal, G4 or Tag Manager can all show you traffic to specific pages on your site and where those visitors are logging in—which for our example questions, is plenty of data to help us start measuring the effectiveness of our efforts.
This should give you a sense of frequency for checking your data. Remember, you should not need to be in here daily unless your responsibilities at the firm involve full-time marketing/online management.
How many visitors came to our website from the geographic area of interest over the last three months? In the previous three months, how many new clients did we onboard?
A review once a quarter should be sufficient.
When do we see visitor spikes on our targeted industry landing page?
Review once after each corresponding event (e.g., trade show, webinar).
Test your original statement against the data. Was your idea proven true?
If not, have a post-mortem meeting with firm members involved to gather non-recorded data, gain further understanding and adjust planning/tracking. Remember, measurements online are just one piece of the puzzle and only provide us with information related to human-to-computer interactions.
I hope the above information will help those looking for direction. Till next time, I wish you all the best.
P.S. If you’re an active Rootworks web subscriber, your firm will already have a Google Analytics account set up. Contact firstname.lastname@example.org if you’d like to gain additional access to your account.
Also, if you’re interested in having dedicated assistance with your online presence, check out our Marketing Solutions offerings.
It’s time to recognize this month’s Rootworks member anniversaries! Help us wish the following firms a Happy Rootworks Anniversary:
Leah Ilanah – Consulting and Coaching
Brendon Kane, CPA
Anfinson Thompson & Co CPA’s
Gulf Coast Accounting And Tax
Rogers & Co
Vienna Tax & Accounting CPAs
Davis & Associates CPAs, PS
Gibson CPA & Law LLC
Financial Advisory Systems, PLLC
CS United Associates Inc.
Fiore CPA, PA
Seaside Resources, Inc.
Motty CPA & Wealth Management
Jacob L. Perry CPA
Wassman CPA Services LLC
r + r CPAs PSC
James E Wilson CPA LLC
Perry, Roane & Henley
Ensign CPA Group
Jay D. Parks & Associates
Bountiful Peak Advisors
Thomas Lee Felker, CPA
J. Clark Lee, CPA, PC
Rivers and Rivers CPAs
Smith and Associates, P.C.
Congratulations on your success, and we look forward to celebrating many more anniversaries with you and your teams!
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Rootworks members can now use an early access version of Insights, which delivers customer segmentation and pricing data as well as reports for your firm and clients. Connection to QuickBooks Online is required for firms and/or clients.