Tips for Bookkeeping Firms to Manage Seasonal Revenue Spikes

Though needs may fluctuate over time, bookkeeping and accounting firms will always be in demand among those who need help handling their books. Unlike other types of businesses, bookkeeping services have built-in demand across almost every industry.

But just as bookkeeping offers these built-in benefits, there are also some inherent drawbacks. One of the main challenges for most firms is the industry's seasonal nature. There tends to be a huge demand for work around the time when federal and state taxes are due or when the government’s fiscal year ends—typically September 30.

Outside of these yearly stretches, things can be pretty quiet. We’ve talked to firms who see drops of 50% or more when the busy season finishes. Many of them have annual traditions that involve cutting down on expenses to prevent overspending when revenue is low.

What if there was a way you could smooth out the peaks and valleys of bookkeeping revenue throughout the year? Instead of having to buckle down and lower your costs, consider one of these revenue management solutions to help you get a better handle on seasonal revenue fluctuations in your firm:

Expand into advisory services or other new areas

Bookkeeping firms work with the most critical figures a business has: expenses, revenue, payroll, and so on. In many cases, understanding these numbers provides an excellent foundation for helping clients with broader business challenges—especially when a bookkeeping firm has some experience with revenue cycle management and knows the kinds of challenges their clients usually have to deal with. This model is particularly beneficial for firms that work with many companies in a particular industry.

Larger accounting firms already practice under this model, and while you don’t need to be everything to everyone, you might be surprised at how easily you’ll be able to incorporate offerings like business strategy, positioning, and sales consulting into your service mix. Try picking one or two to start out with and then expanding from there as you see fit. Do some research to determine which kinds would be best based on the work your team is currently doing.

Incorporate capacity planning

At its core, capacity planning is a term that describes the process of evaluating your firm’s available working capacity against client demands of that capacity. In other words, how much work do you have coming in compared to how much work you can handle?

It may seem like a simple concept, but you’d be surprised how many bookkeeping firms overshoot their capacity or take on more work than they can handle, believing they can get everything done by just working a bit more. If you don’t have quantitative numbers that express how much work your firm can handle and how much of that capacity is currently being used, you’ll eventually run into challenges with both managing your internal team and handling client deadlines. Capacity planning will also make it easier to quantify exactly how busy you are during the hectic seasons and how many adjustments you’ll need to make to increase revenue in the slow times.

Consider a new client base

No matter which kinds of clients you’re currently working with, there are likely a few other client groups that wouldn’t be too hard to pivot towards. For example, if you typically handle tax preparation services for local home services businesses, could you find another category of local business to service? Perhaps you could go from handling taxes for plumbers to also working with electricians.

And if you’re not sure how to get started working with a new base of clients, one of the best ways to expand your business is to partner with others in your local community. Think about business referral groups, events you can sponsor, or general business networking opportunities you’ll have with many individuals and organizations you might not have otherwise interacted with. Just remember, it takes time and repeated effort for this kind of client prospecting to pay off—don’t expect to attend one conference in your area and see results immediately.

Use software to tie everything together

Smoothing out the spikes in seasonal revenue takes time and dedicated energy across a few different parts of your business: operations, sales and marketing, and internal project management. Handling revenue cycle management in all of these different sectors of your firm with different software tools can make these tasks even more burdensome than they would be on their own. With the right platform, you’ll be able to handle all the different moving parts involved with expanding your revenue in the off-season.

From tracking your interactions with new prospective clients to getting a better handle on revenue management, accounting practice management software will serve as a foundation from which you can build your firm’s unique position in the market, helping you to enjoy the fruits of a thriving practice all year and not just when demand is at its highest.

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