shift your practice: stop depending on compliance work

are you ready to step off the hamster wheel?

by matt solomon
the center for enlightened business

this article is the first in our five shifts series, which lays out five key shifts you need to take your business away from a high-volume model with long hours and unfulfilling work and toward monthly engagement of $3,000-$15,000 per client with $500+ hourly realization rates and a better quality of life.

shift 1: stop depending on compliance work

more: let go of beliefs that hold you back | reframe sales as communicating value | 3 keys to evolving your accounting practice
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the idea of reducing your dependence on compliance work may be radical for some accountants and familiar to others.

compliance work is the main source of income for many accountants, but unfortunately, it’s a high volume, low-profit ballgame. in order to be successful, you need to have flawless execution and massive leverage – if anything is out of place or goes awry, you won’t get the results you’re hoping for.

here are a few critical problems with compliance work:

the compliance model keeps you chained to the tax-season cycle. you work at max capacity a few months out of the year, and the rest of the year … you still work too much. generating more revenue means getting more business, which means working more hours, which is time you already don’t have.

compliance work breeds massive competition. between technological developments with artificial intelligence (ai) and outsourcing compliance work to other countries, this market has long since been disrupted.

the compliance model is risky. it leaves you with inconsistent cash flow, low realization rates and a low perception of your value from the market. enough said.

compliance is outdated. you’re probably working this way in your business because it’s the way your bosses and mentors showed you how to do things. accountants are slow to change, but “the way things have always been” is no longer a safe bet. see “the compliance model is risky” above.

you can’t compete with the big players out there. companies such as turbotax and h&r block spend millions of dollars advertising in your market and undercutting your prices for compliance services. it’s an uphill battle to compete with these giants.

your clients don’t value what you do. clients don’t value compliance work highly. why should they, when turbotax or h&r block is offering dirt-cheap tax prep services around the block?

you’re not responding to what the market needs. the market (including your current clients) wants less audit and accounting services and more value-added consulting services. it’s time for you to respond accordingly!

this list is quite extensive, but it shouldn’t make you disheartened! it’s simply meant to illustrate that a compliance-based practice isn’t the way to evolve your practice to the next level of profitability and purposeful, satisfying work.

a successful firm can still retain some compliance work (hey, some accountants find tax returns relaxing!), but it should not be your main offering or source of revenue. it should be a choice, part of a hybrid offering or a supplemental service. under the model we propose, you don’t have to do any compliance work if you don’t want to!

to recap: under the compliance model, you’re stuck on the hamster wheel of work; your revenue is handcuffed to the number of hours you put in; and you’ll be subject to brutal tax seasons forever.

fortunately, there’s a better model! if you get this right, you can shift your practice:

• be free of crazy tax seasons
• add months of leisure time back into your life
• generate consistent cash flow every month
• increase your realization rates (maybe 10x or more)
• get paid what you’re really worth
• find security in a safer business model
• do work that’s more purposeful and even more fun!

how do you make it happen? that’s what we’ll cover in our next piece on shift 2: step into the role of a business advisor.

posted on october 21, 2020