How to grow your accounting firm with data analytics

minute read

Last Updated September 29, 2023

Category Data analytics


If your accounting firm isn’t data-driven, then nothing is driving it at all. And if you don’t have access to reliable and useful data, you’ll probably never be able to figure out how to grow your accounting firm. Data is essential.

Accounting has always faced challenges. Some are familiar: navigating the busy tax season, recruiting and retaining good employees, and finding and keeping clients.

But there are new challenges for firms that want to survive as modern businesses: managing clients, spreading work and revenue out beyond tax season, and moving to an accounting and advisory model.

Want to know how to grow your accounting firm? Here’s what data can do

The only way for your firm to address those challenges is to cultivate accurate data and use it wisely. Without data, you’re just guessing at strategy or doing what you’ve always done. That has the potential for disaster in a profession that is undergoing a significant transformation. You need data analysis if you want to figure out how to grow your accounting firm.

Help your employees achieve work-life balance

Accountants are leaving the profession in large numbers. Recent college graduates, even those who studied accounting, don’t want to be accountants. And the demand for accounting services is set to grow at a far faster pace than the overall US economy. So, if your firm has staffing problems now, they’re only going to get worse.

The fact is that firms can’t expect employees to sacrifice three months of their lives anymore. Yes, tax season will always be busy, but it can’t be all-consuming. Modern would-be accountants are looking for sanity in their work culture. If they can’t find it, they’ll go do something else.

You need to know how to balance how much your employees work during tax season with how much they work year-round. The idea is to get them as close to working consistent weekly hours as possible. That will likely involve a total rethinking of how you run your firm, but a rethink is a necessity at this point.

Use data to look at where you can offer new client services that aren’t entirely tax dependent. Those services shouldn’t require employees to work too many hours from February through April.

Staffing will continue to be an issue for accounting firms. However, your firm will be ahead of others if you can use data to help employees spend more time with their families and less time in front of their computers. And you’ll be able to find and keep great employees while other firms that aren’t data-driven will not.

Improve client service and differentiate yourself from competitors

A firm full of overworked employees is a firm that isn’t maximizing its potential for client service. Burnout leads to mistakes. It also makes employees less likely to provide the type of service you want your firm to be known for.

But there are other advantages to using data to improve client service as you determine how to grow your accounting firm.

For one, when you diversify your service offerings, you give clients a reason to stick with you that goes beyond relatively commoditized tax preparation. You become a trusted advisor to clients on multiple fronts, from consulting on benefits to succession planning to developing financial strategies.

Percentage of firm revenue by service line and recurring revenue by client are two data points that can help you determine which services to expand and which clients to target. They’re part of 10 key performance indicators every accounting firm should track.

Your competitors that aren’t using data to improve their firms likely aren’t offering new services. If they are, they might be missing their targets because they don’t know which clients will respond to a new service offering. You can stay ahead of the competition by always being ready to offer a new service to the right client—a service they actually want and need. In the process, you’ll recruit and keep more clients as well as build your monthly recurring revenue.

Practice Smart Client Management

Creating a humane work culture and expanding service offerings play directly into the concept of Smart Client Management (SCM). Fundamentally, SCM leads modern firms to achieve four goals:

  • Optimize services to ensure year-round revenue and a sustainable workload.
  • Leverage client data to gain valuable insight into client service and technology needs.
  • Use insights to support a holistic approach to product service and technology adoption.
  • Maximize revenue realization through recurring revenue-based pricing.

Using reliable data properly is critical to achieving the aims of SCM. As noted, your firm should be using data to improve your work culture, expand services and diversify revenue away from pure tax work. Those are all components of SCM.

But you might need to do even more. As you determine how to grow your accounting firm, you might actually start with subtraction. That could involve firing clients that are more trouble than they’re worth or refusing clients that will stand in the way of your quest for SCM.

The only way to make such difficult decisions is to analyze and act on a reliable set of data. Without data, you’re running your firm on guesswork and gut feelings, neither of which is an effective decision-making method. And you’re steering your firm back into the dark ages of accounting when you should be moving it forward.

How to grow your accounting firm by taking control of your data

With so much riding on data analysis, the process of getting the right numbers together and using them wisely can seem daunting, even terrifying. Fortunately, Rootworks Insights can help. An application that connects seamlessly and securely to QuickBooks® or Xero, Rootworks Insights instantly provides your firm with more than just financial data. It uncovers client stories that already exist in your sales data.

Rootworks Insights can help you determine your best and worst clients. It offers automated customer segmentation so you can easily see who buys often, spends a lot of money with your firm and pays on time. You can also see who takes too long to pay and doesn’t use other services. Rootworks Insights is critical for practicing SCM.

And, of course, the best place to run any accounting application, including QuickBooks Desktop and your favorite tax and business apps, is in the cloud. The right cloud provider protects your data with cybersecurity experts and stores it in top-tier data centers for reliable backup and rapid recovery. Running apps in the cloud enables your employees to work in the same files anywhere and at any time. It also virtually eliminates the risk of data error.

Data is absolutely essential as you strategize about how to grow your accounting firm. Working in the cloud is the safest, most reliable and most efficient way to access and analyze data. And Rootworks Insights can put together the data you need to make the decisions that will help you move your firm forward.

Ready to run your firm with the data that will help you make good decisions? Get started today.

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