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How small and midsize accounting firms can take baby steps to deliver advisory services without disrupting their businesses

David Wilkins  Content Manager for Tax & Accounting at Thomson Reuters 

David Wilkins  Content Manager for Tax & Accounting at Thomson Reuters 

This is the second installment in a three-part series about how small and midsize accounting firms can overcome the challenges faced by creating a business advisory service and offering it to their clients

Nearly all small and midsize tax & accounting firms know their business clients want advisory services, but unfortunately, only about one-half of firms provide them, according to the recently published 2022 Tax Professionals Report from the Thomson Reuters Institute.

So, why aren’t more CPAs seizing this opportunity to deliver greater value and forge stronger relationships with their clients, while growing their practices in the process?

It may be because too often, accounting firms perceive the shift to offering business advisory services as a massive undertaking that would disrupt their business operations and require them to create a magic formula — a full set of new service offerings to meet this market need for all their clients.

But this doesn’t have to be an all-or-nothing, everything-at-once initiative, says Will Hill, a Senior Product Manager at Thomson Reuters. In fact, it’s best to start with baby steps, he says, because then firms can learn as they go, and adapt, evolve, and minimize risks as they make steady progress.

In addition, tackling a big change through small steps enables an accounting firm to involve its whole team, communicate expectations, acknowledge progress, and never have to struggle with taking on too much, too fast.

Hill shared six steps that small and midsize accounting firms can take to implement a business advisory services without disrupting the firm:

1. Let your clients lead the way

Is there a question that five clients have asked you, or a problem they’ve all shared in the past year? These five clients could be just the tip of the iceberg, and there are likely many others with the same question. Firms that can use their knowledge and ability to help these clients navigate the issue could leverage that problem-solving into the beginnings of a simple, highly relevant advisory service.

The best part is that this doesn’t have to disrupt a firm’s day-to-day tax & accounting work or turn a firm upside-down. Simply by documenting the problem and the process the firm will deploy to solve it can create a framework for how this advice can be managed with other clients. Set a price, and let your clients know you can solve this problem for them as well. Once it’s working like clockwork, reach out to non-clients that may share this problem and start building scale.

2. Make it a team effort

Once a process is established, firms should involve staffers in the execution to ensure each task is managed by a person with the right skills, experience, and capacity. This will spread out the work, ensure efficiency, and begin to shift the firm’s focus and culture toward an advisory role.

“This doesn’t have to rest on the partners’ shoulders,” Hill notes. “You can have partner-level strategic guidance, and delegate the tactical, hands-on work. Then you have a service offering that you can replicate and productize.”

3. Filling a market niche isn’t necessary

Advisory services are often delivered within an accounting firm’s set area of specialization — cybersecurity or cryptocurrency, perhaps, or a particular industry segment. However, that’s not necessary to get started, Hill explains.

Small and midsize accounting firms have a solid understanding of their clients’ financial strengths, weaknesses, and objectives, which makes them an ideal advisor on day-to-day business decisions, such as those involving financial planning, pricing decisions, and staffing questions.

“This isn’t about the size of the accounting firm,” Hill says. “This is about the firm’s engagement with the client. Firms should start asking questions to understand what keeps their clients up at night and determine how the firm can help. They just need to find out what their clients need. It starts there.”

4. Go with what you know

Businesses commonly need guidance in areas that accounting firms are well-suited for, including:

      • Succession planning — “This is a great door opener,” Hill explains. “Even if a client started the business yesterday, a firm can ask ‘Hey, what’s your exit strategy?’”
      • Entity structure — “This is a big one. When’s the right time to move around entities?” he asks. “When is it worthwhile, based on the client’s plan and goals, to have multiple entities versus a single entity? Accountants are in the perfect position to answer these questions.”
      • Cash-flow planning — “This one has been critical the past couple years, through the pandemic, but even prior to that. Poor cash-flow management is the number one killer of small businesses.”

5. Focus on execution

Remember those recommendations that firms make repeatedly to help their clients improve their financial performance or tax position? The ones that clients agree with but never get around to implementing?

Firms should consider building an advisory service around executing those good ideas for clients. Firms may have to assume that clients don’t follow-through because they don’t understand the steps, don’t have the time or patience, or think that implementing these ideas will require skills they lack or work they despise.

“When it comes to an advisory practice, the idea is less valuable than the implementation,” Hill notes. “There can be huge value in simply getting the job done.” To that end, firms should articulate the tactical steps required, identify those that the business must complete, take on the rest, and manage the project.

6. Be at ease as the journey unfolds

Transforming your tax & accounting firm into an advisory-focused firm, even with taking baby steps, requires that firms become comfortable with experiencing fluidity, forging a path in a series of small steps, and being uncertain about where that path is leading, Hill concludes.

“It’s taking what’s in front of you, listening to clients, and figuring out where the opportunity is today — and then seeing where that leads tomorrow,” he says. “It requires an entrepreneurial spirit, the ability to just sort of go and see where it all takes you.”


Next: We will explain how accounting firms can make advisory services permanent and sustainable.

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