Growing an Accounting Practice in Today's Economic Climate| |
When Peter Freuler took over his father's Orlando, Florida CPA practice in 2005, it was highly dominated by 1040s, which included filing 700 individual returns and 125 business returns. At that time, his firm's revenue was approximately $245,000. Today, his firm has more than doubled its revenue and profit margins are much more attractive.
How did Peter change the direction of his business and grow revenue? The first step
was to hire Build Your Firm (BYF) for outsourced marketing and lead generation in 2009. The second part was to restructure how work was processed in the practice and third, he culled out a portion of the practice and sold it to another firm, thus freeing up capacity and enabling the firm to focus on higher value clients. Today, Peter outsources all of his marketing to BYF and views them as an extension of his practice.
"We've steadily and strategically grown more business- focused," he said. "We don't turn down individuals, but we are not trying to be H&R Block, either." Our mix of revenue is primarily business oriented, which is the opposite of what the practice was in 2005 and my work-life balance has steadily improved.
Focus on Niches
Peter recognized a need to market his firm to attract more clients. He knew that targeting just anyone with the need for CPA services would not work, so he decided to create industry niches to differentiate his practice, attract a certain type of client, and gradually strengthen our firm's knowledge of that particular industry sector.
"Our original niche in dental and medical accounting started with just one client. This part of our business has stabilized as the healthcare industry has gone through regulation changes and some hospitals are now buying medical practices," he said.
As a result, the need for another business evolution occurred. Peter decided to augment his medical practice accounting niche with a real estate accounting niche. About 2-3 years ago, the local real estate market started to turn around so we decided to create a niche within the real estate sector amongst commercial property owners, residential property investors, and even non-resident property owners, which there are many in the Orlando area.
"Around 2008, the drop in the property value of vacation real estate dropped in the Orlando area," said Peter. "Individuals and investors started buying vacation condos as investments and called our practice, asking questions. Pretty soon we were able to answer those questions easily; and our second niche was born!"
Peter's clients include international investors who have purchased property in Orlando, as well as brokerage firms, property management firms and individuals who purchase the property as an investment.
"Some of our clients receive an easy 15% to 20% yield on rental property investments, but they need help with some of the more complex tax issues they face," he said. That's where we now excel.
The Niche Advantage
As Peter can attest, establishing a niche helps accounting firms and other businesses market themselves. The niche differentiates you from the competition, establishes you as a subject matter expert and enables you to reach your target market more easily. Over time, these type of business clients become easier for our entire staff to manage because of repetition.
Yet, creating a niche alone does not necessarily increase your business unless you complement it with marketing that effectively reaches this target audience. In Peter's case, he uses a combination of print newsletters designed specifically for real estate businesses in conjunction with direct mail letters to generate new leads amongst local businesses. He also has a website designed specifically for real estate businesses that targets local businesses and non-resident property owners who may reside in Europe, South America or throughout the United States. The Orlando area is very unique in that it has many residential property owners who come there periodically for vacations and manage it remotely as a rental property.
About 60% of our new business comes from Internet leads, which more than offsets the cost of maintaining three websites. The nice thing about internet leads is that the prospect has been hunting for a particular accounting firm, is ready to buy, and then takes the time to call us with their specific questions. And often, they are more than willing to work with us remotely, so they are more efficient to service over the old fashioned hand holding client.
"A lot of clients call us because their former CPA could not answer their real estate tax questions, so they start searching and find our website," said Peter. This puts us into a consultative type situation, which we enjoy, and is very easy to close.
Peter added that CPAs need to understand that achieving measurable results takes time and a continued commitment. "I've often been asked about the ROI of my marketing. I tell people it is a long-term investment and I rely on BYF to generate quality leads. Interestingly, I recently got a call from a prospective client who received a direct mail piece from me three years ago!"