CAN A WEBSITE IMPACT ON YOUR FIRM’S VALUE?
I recently published an article on the factors that impact the value of an accounting firm. They included key issues like profitability, location, the age of your client base and mix of clients between individuals, businesses and SMSF’s. Other valuation variables include your staff and use of technology. However, I missed an important valuation tool … your website.
So, does your website impact on the valuation of your firm?
Increasingly, websites are being seen as digital assets that can lift the value of an accounting practice. If your firm’s website is simply an electronic brochure that lists the who, what and where of the firm then it’s of no real value. These websites are just billboards in the desert and they don’t attract new business. On the other hand, websites that consistently generate leads and new business on auto-pilot are extremely valuable. Would you pay more for a firm who has a website that has generated in excess of $100k of new business year on year for the past 3 years? I certainly would.
All the recent research and studies suggest ‘growth’ is the number one issue in the accounting profession. Outsourcing seems to have partially solved the staffing issue while technology remains a major challenge for firms. If you need proof that growth is a major issue, in Victoria we have several hundred registered buyers looking to acquire fees of between $150k and $3M. The majority of these firms have an ageing client base and are flat lining or in decline. They are just hoping their existing clients will refer new business but hope isn’t a proven marketing strategy. Referrals have moved online and 5 star Google Reviews are important social proof.
If you look at the websites of the buyers (if they have one) most of them are electronic brochures. Clearly, a lot of sole practitioners and partners treat their website as a cost rather than an investment. As you know, if you view your website as an expense then it’s not going to appear in your balance sheet as an asset.
Some of these accounting firms spent thousands of dollars years ago creating a sophisticated website that has delivered zilch. Since then, the technology and website platforms have changed but when an accountant gets a zero return on their investment they understandably abandon ship. Your website should be considered a permanent work in progress and it’s never ‘finished’. I’ve even seen firms try and resuscitate their website because they spent a small fortune to build it. Here’s an important lesson, you can’t polish a moccasin. The rate of change is accelerating in the website space with advanced web technology and digital marketing tools. What used to cost $20,000 might now cost only $1,000. Beautiful website skins that firms paid $10,000 for can now be purchased for $72 from sites like www.templatemonster.com
To illustrate the real value of a website for an accounting firm let’s look at a member of the Accountants Accelerator Group who has generated a 6 figure return from his website for the past 3 years. Paul Dobson is the Principal of a Melbourne CBD based firm and says, “It’s been incredible. The website is our silent salesman that targets our ideal type of client across several niche industries and it’s highly valuable. It brings in new business clients every week without fail. It’s been like a snowball effect growing year on year”.
But what is the value of the website?
According to Paul, “It’s an interesting question but based on the results from the last few years and the new features being introduced, I would expect the website will continue to deliver even better results going forward. If I was selling the practice tomorrow, I would definitely want a premium price given the growth is almost guaranteed. If I knew that half a million dollars of new business was coming my way over the next 4 or 5 years thanks to the website I would be prepared to pay a premium.”
Paul made an interesting comment regarding the value of staff, “If you had a staff member who brings in $100k of new business every year you would do everything to retain and reward their services. Typically, these rainmakers end up leaving the firm, take a parcel of clients with them and set up in competition using all your IP. Our website is effectively a rainmaker that works 24/7 365 days a year and doesn’t take annual leave. The cost is irrelevant as we get a huge return on our investment”.
There are plenty of sceptical accountants who have ‘invested’ in non-performing brochure style websites and it’s no surprise to find they can’t get their head around a high performing site. Linda McGowan is another member of the Accountants Accelerator Group who is generating up to 10 leads a week off her website. Some of the leads are for individual tax returns that aren’t her target market but Linda says, “New clients are the lifeblood of the firm and they energise the work place and the team. We are fortunate because we don’t take on every prospect and refer some of the smaller clients to another member of the group who is at a different stage of their business life cycle.”
Clearly, you can't afford to get complacent and online marketing trends will keep changing. If you’re targeting prospects aged 20 to 45 you need to keep on trend and Paul says, “We recognise the importance of video and social media to our target market. Being a member of the Accountants Accelerator Group gives us a serious competitive edge because it’s their job to work on our marketing. My job is to spend my time helping clients not finding clients.”
In closing, websites for professional service firms like accounting firms can be a significant driver of growth. They can add value to your bottom line profitability and on sale they can also help deliver a premium price.
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