The free market allows virtually any company to enter the game and offer their products and services to the public. It doesn’t mean, however, that everyone gets the same head start. And, if you’re in an uber-competitive area such as accounting, dominated by big-time players like KPMG and PwC, you know all too well how unfair can it seem.
In a recent blog, we talked about how small accounting companies can leverage smart I.T. technology to compete with their gargantuan competitors. We mainly focused on one aspect—scalability, in the sense that well-placed I.T. solutions can enhance your customer support and virtually multiply your workforce, both of which allow smaller accounting companies to compete in the market.
In this article, we’d like to tackle the issue from a slightly different angle. Profitability is a relatively vague term, and for companies of different sizes, it can take on completely different meanings. For a large, established firm, profitability is a game of quarterly reports, shareholder satisfaction, and management bonuses. For smaller, up-and-coming accounting companies, lean models that increase profitability by drastically reducing costs can mean the difference between financial peace and bankruptcy.
Big companies can get away with lower profit margins due to economies of scale. Thanks to accumulated capital and established trust, major players can even operate without being profitable for a certain time period. Small companies don’t have that luxury, as they’re mostly dependent on their cash flow for survival. Also, since it’s impossible to duplicate the economies of scale, small accounting firms have to squeeze the most possible profit out of each business investment they make, each client they take on.
Inversely, small companies might not feel the difference of a small percentage change in profitability caused by a smart I.T. investment. If the solution is only marginally effective, it can take years before it pays off. For big businesses, however, even the slightest increase in profitability can mean millions of dollars of extra profit.
Without exception, profitability is at the core of decision making for accounting firms, and an investment in better I.T. is one of the best options available to decision makers.
When It Comes to I.T., Don’t Trust Just Anyone’s Advice
Many I.T. solutions seem deceptively easy to understand and implement. For Millennials, it’s a matter of honor—there are few 30-something business leaders who will willingly acknowledge they lack the experience and know-how to manage I.T. solutions within their firm.
It’s difficult to blame them. Having grown up with technology, it’s difficult to resist the temptation to think that you understand how it works. The fact that I.T. 20 years ago was as simple as plugging your PC’s network cables in and connecting the phone lines doesn’t help to kill the ego, either.
That’s why it’s worth a reminder: I.T. solutions today are exponentially more complex, both in depth and scope. In terms of depth, the solutions themselves have become much more sophisticated, which adds layers of complexities to consider, like what software options to choose, and how to combine them together for maximum efficiency. In terms of scope, there are few business departments that aren’t powered by an I.T. component—from internal communications, to operations, to HR and sales, technology runs through the veins of most modern businesses.
Since I.T. solutions often require a sizeable outlay, it is important to understand what areas of investment are going to pay off, and what technology may become a liability. Specialists spend lifetimes analyzing the impact of I.T. on business profitability. Ignoring this expertise in favor of a couple of offhand opinions by your colleagues or a sales representative is foolish (perhaps negligent).
Of course, there’s always the ethical dilemma of “asking your barber if you need a haircut.” Most I.T. consultants are also I.T. providers, which means it’s in our best interests to have you order more of our services. We understand that you might feel our advice could be biased.
There are several important factors to take into account here. First of all, we build long-term relationships based on mutual benefit. One-time services are not a viable business practice for our firm to sustain growth. That being said, we’re not interested in “here today, gone tomorrow” services; we want our services to help you grow because we know that long-term, this will lead to the greatest gains for both our business and yours.
Secondly, we always play with our cards open. We understand that I.T. might be a tedious subject at times, but we always encourage to ask us for the “why” behind every recommendation we make. Education is at the core of good consultation, and until you have complete faith in us, we’re more than happy to answer each and every one of your questions in as much detail as required.
Lastly, we simply know what bad I.T. investments do to accounting companies. It’s not just the fact that ineffective I.T. solutions are expensive and don’t pay off—it’s that they dig into the company’s inner processes and operations, effectively sabotaging your firm from the inside. Emails that don’t work; spreadsheets that don’t get saved; deadlines missed; errors made; clients lost. It’s ludicrous for us to give bad advice—much like it’s ludicrous for a doctor to recommend medicine that would kill the patient.
Where Does This Extra Profitability Come From?
This is the easy part. Accounting firms are primary candidates for the I.T. treatment. Here are the business areas that can be completely transformed for accountants of all sizes through lean, cost-effective solutions:
- Document management. If there’s one thing accounting firms know all too well, it’s paperwork. Digitizing your documents is not a new consideration; however, the fact remains that most small accounting practices still resort to working with spreadsheets and folders, where errors occur, and things get lost. One of the areas I.T. can help you is through a convenient, reliable, and interconnected document management system.
- Customer service and client communication. Again and again, we emphasize how important customer support is in today’s uber-competitive accounting market. It is estimated that up to $1.6 trillion in services go unsold due to customers choosing the competition because of poor customer service.
- Business development. In the era of mobile and teleconferences, physical meetings still reign supreme. A large part of this is due to low quality of videoconferencing: connection errors, confusing software, and difficult setup can result in a poor customer experience that leads to a lost prospect.
JMARK has been providing I.T. services to the accounting industry for 30 years. Our mission is to provide superior solutions that not only make you more efficient but help you increase market share and profitability. To learn about how our dedicated teams and financial services experts can help your firm grow, give us a call at 844-44-JMARK, send an email to jmarkit@JMARK.com, or just get in touch through the Contact Us page of this website.