Creating more capacity in your firm for advisory services

The amount of time in a day is finite, and at any given point in your firm’s growth, so is your capacity. Determine the actual value of individual clients so you can responsibly transition out non-target clients to make room for high-value clients in your target segment.

Calculating the value of a client

At its simplest, the value of a client can be calculated by total fees divided by total time. Of course, that requires you to have been tracking time effectively before the calculation. And it’s not genuinely accurate unless you track all client-related time, including phone calls, meetings, and small requests. That can be difficult to do. Most tax professionals want to move away from time tracking as they shift into advisory, but some degree of tracking is always helpful.

Still, there is more to the value of a client than just their value-to-time ratio. There are other facets to consider. What additional value does the client add to the firm?

• Do they recommend you often?
• Do they show promise to grow in their scope of work?
• Do they add caché to your practice? Famous clients can be challenging, but some inherently add validation and notoriety. 

Additional ways to determine client time demands and value

• Use weekly staff meetings to gather feedback on which clients are taking up more time than they should on unplanned asks.
• Track the number of emails from clients.
• Track the number of follow-ups required to get information from clients.
• Track which clients call outside of standard work hours. It is usually apparent which clients aren’t in your sweet spot.

Pro tip: Intuit® Practice Management has a feature that helps to track the time you budgeted for a task against the actual time spent completing it. 

Four ways to segment clients

Segmenting clients can help prioritize resources in your firm. Following are four segmentation methods that Tax Council members have found useful.

• Transactional vs. Transformational
• A grading system based on profitability to the firm
• Client personas (the appreciative client, the referring client, the squeaky wheel, the CEO, etc.)
• By services groupings

Making room for advisory in an already busy firm

When you have reached your limit with capacity, it is generally time to hire more staff or weed out less profitable, challenging, or non-target clients. But those aren’t your only options. The following tips can help solve capacity challenges.

You can run the transactional and advisory side by side, but you have to have the transactional team dedicated to handling just the transaction side of the business and a dedicated team for the advisory services. The reason for this is that transactional and advisory services require two different mindsets and processes with your team: beck-and-call vs. process-defined – Minal Babaria, CPA, CTC, CTP, CCA

Increase your prices

For most advisory professionals, this is a win-win solution. Raising fees tends to wean out the high-maintenance and low-value clients. Clients who accept the fee increase demonstrate a commitment to growth and appreciation for the quality of your services.

Create work teams or pods

Pods work as a combined talent unit on a specified group of clients. It entails a divide-and-conquer strategy with an alignment to individual strengths. Each member of the pod focuses on what they do well across all clients in their group. This method makes it easy to identify which roles are needed to hire when capacity in a segment reaches its peak. It is also easy to move clients to a new pod that better matches their needs when the client is growing or changing.

Use automation

Appropriately applied automation saves you time and can increase client satisfaction as well. There are myriad things you can automate. Evaluate your workflow to find your time-consuming tasks and then find the right tool to take them off your plate. Zapier is a powerful and popular tool to create custom automation between apps.

Start smart

The best clients are pre-qualified and well-trained. Set clear expectations with clients upfront, and only take new clients that fit your target client descriptions. That can be easier said than done when a friend or current client refers a new client to your practice. However, it is better to be transparent and honest about fit from the start, or all parties can be dissatisfied. Hold clear boundaries.

Refer clients out

Breaking up is hard to do. However, you can build respect and earn trust when it is handled with the client in mind. Al-Nesha Jones recommends that you communicate it as soon as you can, and keep a network of other professionals that are accepting new clients so you can refer them. She regularly checks in with her colleagues, and they prepare a list in advance of accountants in their network that are accepting clients. They include network partner specialties in this list to share with clients. She does not operate on a referral basis, so the recommendations are purely provided to help the client and ease their transition.

Editor’s note: This article is a small part of a whitepaper, “The Path to Advisory,” that can be downloaded and used extensively in your firm. The PDF includes checklists, charts, and many other activities that could not be included in this article. Download it today. There is also an Executive Summary available for download. For a companion article to this one, check out “Creating capacity in your firm for advisory accounting.”