Modernize and virtualize your tax practice.

• Author: Walker, April
• Position: Part 2

In the midst of the second tax season dealing with COVID-19, the global pandemic has continued to cause disruption in the management of a firm's tax practice. Rethinking all aspects of tax practice is critical to continue to thrive during these unprecedented times. As a vaccine is distributed, the hope is that someday soon the country will be operating on the other side of the pandemic. Even with that optimistic stance, evolving the current tax practice into being more "virtual" still makes a lot of business sense. Firms that can think outside the box in terms of growing the client base will emerge healthier.

Part 1 of this column discussed challenges in dealing with clients and others in a virtual practice and provided suggestions and recommendations to overcome those challenges (see Lagarde and Cutrer, "Modernize and Virtualize Your Tax Practice: Part 1," 51 The Tax Adviser 816 (December 2020), available at tinyurl.com/yc8ko58b). Part 2 focuses on maintaining and sustaining firm growth in a more virtual way. Traditional marketing services (such as in-person proposal meetings, taking clients and prospective clients to lunch, and chamber of commerce mixers) may still not be commonplace or advisable in 2021, but there are different strategies to consider to help grow an accounting firm.

Focus on key clients and prospects

While one strategy might be to try to hold on to all clients during this uncertain time, since 2020 tax work is currently underway, this could be an ideal time to evaluate clients. And while considering current clients, give some further thought to what an ideal client looks like for the firm.

It might be helpful to remember this paraphrase of the classic line from George Orwell's novel Animal Farm: "All clients are equal, but some clients are more equal than others." Reviewing the firms' client list and categorizing them into A, B, C, and D groups can clarify which clients should be the focus of time and resources.

Here are some characteristics of these classifications to consider:

A clients

* Top clients--make up 50% to 65% of firm revenue.

* Multiple services are provided.

* High realization.

* Easy to work with.

B clients

* Good clients, but are probably being underserved--they usually make up about 50% to 60% of your clients.

* Differ from A clients in one or more ways--maybe only one service is provided, or the type of work is less profitable.

* Time and energy necessary to turn these into A clients.

C clients

* Likely are good clients, but, generally, they generate a small amount of revenue and...