Build a Million Dollar Plus Accounting Firm with Only 5 Clients

Imagine this: A successful accounting firm that generates over a million dollars in revenue, all from the steady support of just five clients. Sounds far-fetched right? 
Well, think again. In a world where success is often measured by sheer numbers, we fixate on the idea that achieving greatness requires an extensive number of clients. But what if we dared to challenge this conventional wisdom? What if we told you that building a thriving accounting firm with just a few clients is possible and could catapult you into the million-dollar realm?

Can we make millions by running an accounting Firm??

Well, we hear this question very often!!

In this article, we’ll discuss how Entigrity did exactly that. We helped an accounting firm to leverage Finance, Accounting, and Back Office Outsourced Services to help them generate over a million dollars in revenue. Furthermore, this was achieved while only working with five to six clients! 
Now you must be wondering how exactly we help to build a million-dollar-plus accounting firm. Well, don’t worry, we’re going to tell you.

By following these steps, firms can maximize their potential and accelerate growth, drawing upon real-time examples to illustrate key points.

1. Understanding the Value of a Comprehensive Service Offering:

To build a $1M+ firm, it is crucial to recognize the value and benefits of a comprehensive service offering. While accounting and bookkeeping services form the foundation, expanding beyond these core functions allows firms to provide holistic financial support to their clients. 
By offering additional services such as financial analysis, budgeting, payroll management, vendor management, CFO Services, Advisory Support, and more, firms can address the full spectrum of financial and operational needs.
A comprehensive service offering offers several advantages, including:

a) Strengthening Client Relationships:

By catering to diverse F&A outsourcing needs, your firm builds stronger relationships with clients. This enhances client retention and encourages referrals, leading to organic growth. 

b) Increasing Revenue Streams:

Offering a wide range of F&A outsourcing services opens up opportunities for additional revenue streams, maximizing the firm's earning potential.

c) Differentiating from Competitors:

A comprehensive F&A Outsourcing service portfolio sets your firm apart from competitors who offer only basic accounting services. It positions your firm as a one-stop solution, attracting clients seeking a trusted partner for their financial needs. A comprehensive service offering strengthens client relationships, increases revenue streams, and positions the firm as a trusted partner for all financial requirements. By recognizing these advantages, firms can make informed decisions and drive sustainable growth, scaling their business by leveraging existing and new client relationships.
You can refer to our recent blog, “7 Reasons Why Accounting firms need to Offer Finance, Accounting & Back Office Outsourced Services?” which can give you the necessary financial support to make informed decisions and drive growth.

2. Work Smarter, Not Harder:  

It is often said that working smart is more important than working hard. This statement emphasizes the significance of efficiency and strategic planning in achieving success.
The approach is to serve a relatively small number of clients while providing exceptional services.We always tell accounting firm owners to believe in “Less Clients More Revenue Model” 

Accounting firms catering to businesses with annual revenues ranging from $2 million to $10 million can easily charge monthly fees that range from $5,000 to $30,000. As mentioned earlier, “You can build a Million dollar firm serving 5 to 6 clients working less than 1,000 hours a year”. This targeted strategy proves that a substantial revenue stream can be generated without needing a huge client base.

The idea is that success is not solely dependent on the number of hours worked or the size of the client portfolio. Instead, it emphasizes the importance of efficiency, specialization, and delivering exceptional value to a select clientele. By leveraging their expertise and focusing on providing top-notch services to a small group, accounting firms can achieve significant financial milestones while maintaining a healthy work-life balance.

3. Start working with MRR - Monthly Recurring Revenue Model:

MRR Is Key For Your Accounting Firm

The sustainability and success of any business, including accounting firms, are based on how much revenue it consistently brings in every month. But looking at the sporadic nature and seasonality of the profession, how much of that revenue can you predict generating repeatedly each month? The ultimate solution is to bring in clients for a monthly fixed fee, and this is where one must consider bringing MRR into the picture.

Monthly Recurring Revenue (MRR) is a key metric that reflects the consistent revenue a business can anticipate receiving on a monthly basis. It provides a reliable and predictable income stream, irrespective of workload variations or seasonal fluctuations. MRR is particularly relevant when implementing a subscription-based model, which technology companies and other service-oriented industries commonly adopt. By offering subscription-based services, firms can establish a recurring billing cycle, ensuring a steady flow of revenue and creating a foundation for financial stability.

The advantage of MRR lies in its ability to provide a clear picture of the company's financial health and growth trajectory. It allows businesses to forecast and plan their operations effectively, as they can depend on a baseline revenue amount each month. This stability facilitates better resource allocation, budgeting, and decision-making processes. Furthermore, MRR can empower your firm to assess the long-term value of client relationships and optimize strategies to increase retention.

To calculate MRR accurately, you must consider factors such as the number of active subscribers, the pricing of subscription plans, and any changes or upgrades made by customers. By monitoring MRR closely, firms can identify trends and make data-driven adjustments to improve overall performance.

Ultimately, MRR is a valuable metric for sustainable growth and financial stability. By focusing on building a subscription model and leveraging MRR, firms can create a reliable revenue stream that supports their ongoing operations and enables them to scale and thrive in the competitive marketplace.

By integrating Advisory and Offshore Staffing, your firm can reap the benefits below:

• Offshore Staffing will help you build capacity to give deliverables and, at the same time, help you manage your cost.
• Advisory Services help your clients in a real way and add real value to their business and life, may it be business health check, Cash Flow Management, Budgeting & KPI monitoring, Tax Planning, System and Operations Review, Cost Control Measures & Recommendations, etc. 

4. Focus on fulfilling the ongoing client demand:

You can’t run away, and you can’t hide!!
Suppose your firm is working with a client who needs some extra support with their day-to-day operations besides bookkeeping and accounting. Maybe they require assistance with financial analysis, budgeting, payroll management, vendor management, CFO services, and advisory support. While you recognized the opportunity, you found yourself limited to providing only accounting and bookkeeping services, which prevented you from meeting the client's full range of needs. This is where you fail to meet client expectations.
But don't worry, we're here to help you out! By integrating finance and accounting (F&A) outsourcing into your operations and partnering with Entigrity, you can enjoy a flexible and scalable solution that perfectly aligns with your growing client demands. This way, you won't have to focus on a number of clients or compromise on service quality or overwhelm your internal resources. Let's work together to ensure your clients receive exceptional support in all required areas.

5. Prioritise increasing profit margins:

Accounting firms should at least dip their toes into the F&A outsourcing world!
Firm owners need to understand they are in a business where the landscape is changing day by day. You need to have tunnel vision in your approach to how you see your firm's growth in the future and what critical steps you are following to grow your profit margins quarterly or year by year.
The introduction of F&A outsourcing can increase the potential for healthy profit margins within an accounting firm. And when you start helping your client with financial analysis, budgeting or advisory support, you end up working with fewer clients, but taking on more responsibilities, which eventually results in higher profit margins.

6. Higher Client Dependence: 

Building personalized and long-term relationships is crucial for accounting firms. By providing services that allow close collaboration with clients, such as accounting and bookkeeping, firms can develop trust, loyalty, and dependency. Working closely with clients, understanding their unique needs, and delivering exceptional service helps establish the firm as a trusted advisor. This increases the firm's pricing power and enhances client retention, leading to stable and recurring revenue streams over an extended period.

7. Technology Integration: Streamlining Operations and Enhancing Efficiency:

As you expand your business from core accounting and bookkeeping to encompass payroll, financials, and back-office tasks, it becomes crucial to advance your game in terms of technology. By embracing advancements such as AI-powered payroll software, cloud-based financial management systems, and integrated back-office platforms, you can increase efficiency while providing greater value to your clients. 
These tools empower you to streamline payroll processes, improve financial analysis, and enhance advisory services. Embracing technology advancements enables you to deliver more comprehensive and efficient solutions, positioning your firm at the forefront of the industry.

Developing a robust service offering and implementing a strategic approach are crucial steps toward building a $1M+ firm in the finance and accounting domain. By expanding beyond traditional accounting and bookkeeping services and offering a comprehensive suite of finance, accounting, and back-office outsourced services, you position your firm as a trusted partner capable of attracting high-value clients. Customization, specialization, technology integration, and strategic partnerships are key to unlocking growth potential and establishing your firm as an industry leader and putting it on track to do one million in revenue. By adapting these strategies to your unique circumstances and drawing inspiration from real-time examples, you can pave the way for sustainable growth and success in the competitive landscape of finance and accounting. To know more about how Entigrity can help your firm become a one-million-dollar business, schedule a call with our team today. 

FAQ: 

1. How many clients does the average accounting firm have?
In the United States, each firm can have up to 125 accounting clients. An average-sized accountancy practice in the United Kingdom has roughly 75 clients, although, in Australia, Germany, Canada, and France, that number can be greater or lower.

But when the business started relying on the number of clients they had on their bucket list, they almost forgot the Value of a comprehensive service they could offer, so they could focus on the minimum client that brings a chunk of revenue.
 

2. WHY IS BUILDING MRR A KEY FOR YOUR FIRM?
Reasons: 

• Clients are paying a fixed monthly fee that is easier to absorb than a large one-off fee. 
• Invoicing becomes easier and more automatic, and so do the collections.
• You end up with negative WIP and minimal receivables so your cash flow improves out of sight.

3. Are small accounting firms profitable?
Accounting firms are the world's most profitable industry for small enterprises year after year. But they can generate more revenue, all from the steady support of fewer clients, when they spreadhead their wings from accounting and bookkeeping services to offer additional services such as financial analysis, budgeting, payroll management, vendor management, CFO Services, Advisory Support, and more.

Entigrity™ is a trusted offshore staffing partner to 725+ accountants, CPAs, and tax firms across the US and Canada. Our flexible and transparent hiring model gives helps firms of all sizes to hire staff for accounting, bookkeeping, tax preparation, or any other task for 75% less cost. As a firm 'run by accountants, for the accountants,' Entigrity captures the hiring needs of accounting firms most precisely, providing staff that works directly under your control and management; still, you are left with the least to worry about compliance, payroll taxes, overheads or any other benefits.