All businesses have short-term and long-term goals. However, not all types of businesses have the same types of goals. For example, while a goal for all businesses may be to increase profits, many goals that a restaurant may set will be different from those of a law firm or accounting firm. In this article, we’ll explore some long-term and short-term goals an accounting firm or business should set if they want lasting success.
Importance of Goal Setting for Accounting Businesses
The role of accountants extends far beyond traditional bookkeeping and tax preparation. They are more like strategic partners for businesses when it comes to financial decisions. That’s why, like any other business, accountants need to set clear goals so that they can position themselves to maximize their potential.
Goal-setting acts as a beacon, offering direction and clarity. Accountants’ jobs often encompass myriad details. By having overarching goals, they can make sure that they don’t get lost in the minutiae. Also, having goals provides a roadmap that guides them towards broader objectives and ensures that daily activities align with long-term aspirations.
Furthermore, setting business goals equips accountants with a metric for success. It offers tangible milestones against which they can measure their progress and achievements. In a profession that thrives on precision, having clear benchmarks helps accountants understand where they stand, what they’ve achieved, and what gaps need bridging. This continuous assessment propels personal and professional growth, urging accountants to upskill, adapt, and evolve by the changing demands of the industry.
Short-Term Business Goals for an Accounting Business
One of the first types of goals accountants should consider is their short-term goals. Short-term business goals can mean any goal that is intended to be reached in the near future. The length of time varies from person to person and business to business. For some businesses, a short-term goal is one that they would like to accomplish in less than 18 months. For others, their timeframe for reaching their short-term goals is 3 months.
However, for the sake of this article, we’ll define short-term as goals that need to be met within a year. These are those goals that need to be met within the year.
1. Increase Non-seasonal Clients
By nature, an accounting firm is a seasonal business. While partners refer to the period between the end of the year and the April tax deadline as “great season,” because they make the vast majority of their money during this time, non-partner employees refer to it simply as “busy season.”
However, it’s vital to look for ways to ensure income doesn’t stop for the rest of the year. Increasing the number of clients that have non-standard fiscal year ends, or that are looking for services year-round, such as bookkeeping, quarterly reporting, and payroll, is important.
While this will always be a seasonal business, this helps level out the workload, and thus income, throughout the year.
2. Decrease the Time Needed to Onboard Seasonal Clients
The seasonal nature of the business often requires the hiring of seasonal employees. These employees need to be able to hit the ground running, meaning onboarding needs to be as quick and seamless as possible.
The more time spent on getting these employees trained and settled, the less time they spend carrying their share of the busy season weight. The result is extra stress on permanent employees trying to meet deadlines.
Alternatively, seasonal employees will have to start sooner to have the time needed to be onboarded properly, which costs more money. The goal is to find the balance between speedy onboarding and ensuring they are comfortable with their job. Poorly trained employees make costly mistakes.
3. Look for Ways to Automate Processes
This goal has multiple benefits. First, automation done properly reduces the risk of certain mistakes. It also moves things along faster, reducing the time spent on non-billable hours, and leaving more time for billable hours.
In addition, automated processes make onboarding seasonal employees easier, saving both time and money all around. This may include hiring a consultant to help pinpoint areas where automation could be used more effectively. Another way is to use automation software.
Automated software is designed to handle repetitive tasks. This will minimize manual interventions and the risk of human error.
Account reconciliations, data entry, and transaction categorizations, traditionally tedious processes, can be automated to save significant time and ensure consistency. Beyond just the time saved, automation ensures that data is processed uniformly. This will reduce discrepancies and ensure that financial records are maintained with the highest degree of accuracy.
In an era where real-time financial insights are coveted, automation offers faster data processing and reporting. Businesses no longer need to wait for monthly or quarterly reports. This will not only keep your clients happy, but it will make your accounting business more valuable to your clients.
For accountants to leverage automation, they must begin by selecting the right software tools tailored to their business needs. Comprehensive accounting software like QuickBooks, Xero, or Sage often comes with built-in automation features. For more intricate needs, specialized tools like Expensify for expense management or Bill.com for payables and receivables can be integrated.
4. Improve Soft Skills
Unfortunately, accountants are often pigeonholed as meticulous number-crunchers. Yet, as the business environment evolves, so too does the role of the accountant. That is why improving soft skills like communication and empathy can go a long way for accountants.
Soft skills, often seen as secondary to technical abilities in professions like accounting, are now taking center stage. Communication, for instance, is becoming even more important. An accountant may have unparalleled analytic skills, but without the ability to articulate complex financial data in understandable terms, their expertise can go underutilized.
Empathy and active listening are equally important. Without truly listening and empathizing with clients, accountants will not be able to accurately help them with their problems. By actively listening and showing genuine empathy, they can foster trust.
Collaboration and teamwork also play a significant role. Modern accounting often involves interdisciplinary collaborations, requiring accountants to work seamlessly with professionals from diverse fields. Enhancing collaborative skills ensures that accountants contribute effectively in team settings, fostering mutual respect and shared success.
Long-term Business Goals for an Accounting Business
These are those goals that the business should work toward over the years. While technically they are ongoing, making them measurable over a specific period of time helps everyone see the progress and stay motivated.
1. Increase Client Retention
An accounting firm obviously cannot exist without its clients. While new clients are great, high client turnover is not. Retaining clients long-term is a sign of stability. It also helps to ensure steady business and income when new clients are not as plentiful.
As software is becoming better at helping individuals file taxes, many people feel as though they do not need an accountant for their bookkeeping and tax preparation needs. That is why accountants need to do their best to keep the clients they have while adding new clients to their book of business.
To make it measurable, consider setting a goal of increasing client retention rate by a set percent over a set number of years. For example, “increase client retention from 20% to 30% over the next 5 years.”
2. Increase Employee Retention
This goes hand in hand with client retention. Your employees know your clients. They develop relationships with long-term clients and vice versa. When an employee leaves, they take everything they know about that client and their business with them.
This means another employee has to start over learning the intricacies of the previous employee’s clients’ books from scratch. Sometimes it has to happen, but the less often the better.
Learning curves take time, time costs money, and it’s not uncommon for a client to follow their accountant from one firm to the next.
3. Reputation Management
Marketing is important, but most businesses choose their accountant based on word of mouth. Even if they do not, everyone reads reviews online these days. Ensuring the firm’s reputation stays intact is vital.
This means staying on top of complaints from unhappy clients, monitoring online discussions regarding the firm, and making right any wrongs that occur. It also means making sure employees are properly trained to handle any potentially controversial situations that may arise.
They need to know what to do if they come across a mistake. They need to know how to report it and who to report it to. What are the processes if a client expresses dissatisfaction? Is someone responding to complaints and reviews online? The process is ongoing.
4. Increase Margins to Between 20%-50%
Improving profit margin is an important long-term financial goal for any business. While net profit margins can vary depending on various factors in the accounting business, a good number to maintain is anywhere between 20%-50%. It has been reported that the average net profits for accounting firms were just above 21% with a gross usually over 50%. If you’re operating a firm that is consistently under 20% it is time to look at ways to increase profitability.
There are a few ways to do this. You can free up your time by utilizing software and AI to allow yourself and your team more time to take on more clients. You may also want to minimize the amount of audit and review work done by your business. One survey found that accounting firms that produce more revenue from audits and reviews are less profitable.
The goal of any business is to make money. An accounting firm does that by helping others manage their money. As a result, the goals of an accounting business will need to consider others’ finances if they are to support the main goal, which is growth.