Broadly speaking, the accounting industry is thriving: profit is growing faster than revenue for larger firms as businesses navigate an increasingly complex regulatory landscape alongside a talent shortage. But the picture isn’t always as rosy for smaller firms struggling to navigate high demand and a lack of skilled workers.

Unfortunately, high demand doesn’t always translate to higher willingness to pay – but there are a few important things you can do to increase willingness to pay on your own. If you’re struggling to keep up, here are ways to grow your firm’s profit margin to keep it growing.

Find your niche (and charge for your expertise)

After you’ve been in business for a while, you probably already know who your ideal client is. Are they a nonprofit? A large creative agency? A manufacturer? Once you’re familiar with a particular niche, you can deepen the expertise of your firm to offer services tailored to that niche – and charge more for that expertise in the process.

Once you find your niche, you’ll also be able to upskill staff and add technology more strategically, as well as standardize processes to add extra value for a target subset of your potential client base. That will help you offer a much higher standard of service than a less specialized firm.

Try project-based fees to capture value

If you’re charging by the hour, you could be limiting your ability to increase your profit margin. Your real value lies in the end result you produce for your client, whether it’s an audit, payroll, or a tax return.

When you have a team with data analytics and automation skills, they might be highly capable of producing the same value in significantly less time. Project-based fees let you capture all of that value so that there’s time left over to evolve your firm rather than endlessly scrambling to meet the next deadline.

Reduce overhead costs with remote teams

It’s official: there’s no going back from remote work. A recent survey found that almost half of accounting firms had mostly remote teams – and the recent back-to-office push is being met with limited success.

Although remote teams come with their own struggles, it’s undeniable that you’ll save on rent and utilities if everyone works from home. Once you understand the tricks to managing remote teams, they can be just as collaborative and efficient as an in-house team. You’ll boost your profit margin and provide employees with more flexible work arrangements at the same time.

Choose productivity over burnout

It might seem counterintuitive, but hiring more staff can actually be more profitable in the long run – especially if your team is already maxed out with work. Productivity drops significantly after 50 hours a week, meaning that if you’re expecting your team to work above that threshold, you’re spending money on a less productive team.

Instead, find efficiencies to reduce workload, and the right staff. For example, you might think you need another CPA when everyone is overworked – when what you really need is an admin person to handle client inquiries and filing. Or maybe you need a data analyst on your team to help automate reporting.

When you actively prevent burnout, you’ll set yourself apart in the industry as an employer and have a much more dedicated (and productive) team.

Choose a tech stack that works for you

A new study by the CPA Firm Management Association found that only 28% of accounting firms manage their data internally, down from 83% in 2016. Cloud-based accounting software has replaced in-house servers, and also centralizes workflows as you build out the rest of your tech stack.

So what should the rest of your tech stack look like? 

In spite of the buzz about AI and automation, it can actually be detrimental to try to automate too much at once – especially if you don’t have efficient processes to begin with. AI tools still need significant oversight, so they still need someone who’s able to keep a close eye on their outputs. 

Instead, find the tools that complement your team’s skill sets, your workflows, and your niche.

More value, fewer resources

It comes down to this: how can you create the most value with the fewest resources? To keep your firm profitable, you’ll need to find the answer to this question over and over again as the business landscape, the tools at your disposal, and the accounting industry itself evolves.

Ready to take the first step towards a more efficient accounting firm? Try ProCharted free for 30 days today.