Be wary of straight line projections for your firm or business as there is seldom a straight line to success. Consider for example start-up founders who, when facing a potential funder, make projections (often) based on an unrealistic percentage growth each year. The usual response from a banker or investor with business experience is say to the promoter: ‘Go back to the drawing board.’ Consider now two issues facing accounting and bookkeeping professionals; one being the transition away from hourly rate billing to fixed-price billing. The other being the vexed question: to be a generalist or specialist?
Not all clients make great candidates for fixed pricing. Not all existing and future clients are ready or willing to leave hourly billing behind.
Those clients who see the value of improved efficiencies that come with standardizing on one price structure and who are hungry for strategic advice that helps them solve their most pressing issues are the ones who will make the best candidates for the transition to fixed fees.
Some clients want the basics and may not be interested in the higher-value advice that makes fixed fee pricing a good solution. Some are more comfortable paying an hourly rate. A transition plan must allow for an iterative road rather than a straight line.
Fixed pricing encourages you to move up the value chain, albeit over time; but specialisation is a sure-fire way to attract higher fees. Accountants know this, lawyers know this and doctors know this (think GP versus Ophthalmic surgeon or Dermatologist. Even the plumbing contractor who invests in specialised, high pressure water systems integrated with cameras, to address blocked waste water lines. Rather than the $95 leaky tap, the specialist plumber can charge $950 for a two-hour job.
Bookkeepers can select industry sectors that can yield higher fees, for example medical practices. Or, they can specialise in selecting clients who want a particular service that is not compliance-only work, for example custom reporting.
Whatever strategy they adopt, a firm seeking to niche itself is not restricted to one niche only, multiple niches can produce manifold increase in revenues. As with fixed pricing, the path to specialisation is never a straight line; more often than not, it means carrying a diverse group of clients.