Is a recession around the corner? Ninety-one percent of the leaders of 400 large U.S. companies think so. And if a recession does hit, no business is immune.
As a trusted advisor, you work day in and day out to safeguard your clients’ companies from the unknown. But what about your own practice?
How to prepare for a recession:
With an impending recession on the horizon, now may be the time to prepare. Read on for inspiration on how to recession-proof your accounting firm.
1. Diversify your offerings
Back in 2020, 67% of accounting firms began offering COVID-related services. After all, there was a market and need for it. Not to mention, offering COVID-related services increased revenue for accountants during a volatile time.
Likewise, you can diversify your offerings when preparing for a recession. Doing so can help you upsell or cross-sell services to your current clients and expand your client base. And, you can opt for services that allow for a recurring revenue profit stream, like payroll solutions.
If you don’t already offer payroll, what’s holding you back? According to business coach Loren Fogelman, the following challenges keep accountants from offering payroll:
- Yourself: You want to ensure you give a high level of service at all times. With payroll law and tax rate changes, accountants worry that payroll services can lead to mistakes if they don’t diligently check the news.
- Time: How can you make room for one more thing in your day, especially payroll? Manually handling payroll for clients requires you to make sure you’re compliant with payroll requirements.
- Marketing: Deciding to offer payroll is just part of the equation. Next, you need to know how to market it to clients to get clients to sign up.
Do any of these challenges sound familiar? If so, fear not. Savvy accounting professionals trust online payroll software to handle the calculations, stay up-to-date on all the tax rates, and file and deposit taxes. And because online payroll providers handle everything, you can manage your clients’ payroll without spending more than a few minutes each pay period.
To maximize the additional income you’ll bring in with payroll services, look for an inexpensive payroll provider that:
- Offers the same reputability and reliability as your clients expect from you
- Has a designated partner program for accountants with volume discounts
- Handles payroll taxes on your clients’ behalf
- Comes with a tax-filing guarantee
- Offers free, expert US-based support
Look for guides on offering and marketing payroll services so you can begin offering payroll as a profit stream.
2. Evaluate your pricing
A September 2022 PNC survey found that 63% of small and mid-sized business owners expect to raise prices in the next six months. And, 36% plan to raise prices by 5% or more over the next year.
What about you? Are you satisfied with your current pricing system? Let’s look at an example. Payroll can be a lucrative service … but the majority of accountants feel they’re pricing payroll solutions too low. According to an October 2022 survey, 56% of accounting professionals said they need to raise their payroll service rates.
On the other hand, you may find that your prices are too high, costing you potential clients. In that case, you may consider lowering your pricing.
Before raising or lowering your prices, consider the following factors:
- The average price accountants charge ($60 – $400+ per hour)
- Where your firm is located
- What experience and credentials you bring to the table
- The services you offer
- Your clients’ business sizes
3. Cut back vendor costs
A whopping 69% of small business owners indicated they’re making adjustments to address higher inflation and an upcoming recession. One of these adjustments includes cutting costs.
We all want to do it—in our businesses and personal lives. But, how?
To recession-proof your practice, you can:
- Eliminate unnecessary expenses
- Look for alternatives
Do you have unnecessary expenses you can cut? For example, you may not need your daily coffee deliveries or magazine subscriptions. Prioritize what you spend your money on (you can always bring things back later!).
Or, do you have some expenses you can find at a better price elsewhere? Let’s look at software as an example. How much do you spend each month on your accounting software? What about payroll? Are you paying too much for features you aren’t using?
The ultimate tip for a recession-proof firm: Client relationships
Having a loyal client base is always essential for a thriving accounting practice. And during a recession, relationships are more important than ever.
Your clients may struggle to stay afloat if a recession hits. One way you can help recession-proof your clients’ businesses and your own firm is by being flexible.
You may consider working with clients who are hit hard by:
- Offering discounts or setting up payment plans
- Helping clients evaluate their costs and where they can trim their budget
- Giving clients less expensive service options, like DIY payroll and accounting using co-branded software
After all, recession-proofing your firm is only as successful as recession-proofing your clients’ businesses. The recession will end at one point. But the client relationships you preserve will last well beyond.
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Tags: Accounting, Firm Management, Payroll, Taxes
