Tax Firm Seeking Growth
Strategic Planning for a Tax Accounting Firm
One of the reasons our clients have approached us is because they are in need of a business strategy that would help them determine the next direction for the companies. When we began working with them, the company sought incremental growth but ended up seeking a much more aggressive strategy with a more complex yet effective business model.
This accounting firm had about 10 years under its belt with about $300k in revenue. The client had about $100k in friends and family debt and was looking to be able to pay that back with interest in the following year. He had 6 employees, and he was a vital part of daily activities. He asked us to come in an help him double his revenue.
As many entrepreneurs, he was central to the company operations, and a result, the company was undervalued in terms of its potential. Showing the owner this, the owner, who would like to retire at some point, was interested in hearing other ideas.
Presenting him with typical scenarios – walk away, pass it to children, liquidate it or increase the Company’s value and sell it, he chose to increase valuation and sell the company at some point down the road. The question at that point became -how do you do this? This is essentially a commodity business -there are lots of providers with very few specializations, in a very competitive and fragmented market.
His goal for us was to help him develop a plan that would simply double the company revenue.
We began looking at the landscape of the client’s industry in order to get a good feel for where opportunities might exist. What we learned was that most of the larger firms we were presented with serving the needs of medium and large businesses, while the smaller firms tend to serve the needs of the very small businesses, but were limited in their ability to provide services, resulting in limited revenue opportunities and limitations in capacity.
Furthermore, there are specific segments of the small business community that are successful – able to provide the company with sustainable revenue – but are underserved. These companies generally don’t fit the profile of the businesses that are mass marketed to and tend to do business strictly on relationships. They tended not to be extremely technologically engaged but are sharp business people none-the-less. Furthermore, this is a growing population.
Secondly, we evaluated other providers that could potentially serve this market in order to learn about what their challenges are. We learned that they share similar challenges were our client has expertise.
As a result, we developed a strategy for the client that would allow them to exploit their expertise and increase the company’s capacity to serve the discovered market segment. When implemented, the plan would provide the client with an opportunity to expand his business exponentially. This business model enabled the client to step out of daily operations and no longer be central to operations, enabling the business to be able to operate without his ongoing oversight.
Processes and systems for monitoring them were established that would ensure that the same high level of personalized service was provided without losing clients while going through the change.
With a solid plan and direction, the client was able to draw from his network and raise capital in order to put the plan into action.