In a dynamic market, small business owners continuously find ways to strengthen their operations and resilience to ensure their business is prepared to thrive in any economic climate. Fortunately, by many standards, tax preparation is a “recession-proof business.” Businesses in the financial services market may even see increased demand as clients become more concerned about their money and prioritize budgeting and tax preparation assistance.
However, tax offices aren’t entirely immune to the effects of a recession. By proactively adapting your tax practice to changing customer preferences, you can enhance your competitive edge in the industry and create a recession-proof business. This includes strategies like offering year-round services, leveraging technology, and more. In this guide, we’ll dive into these strategies to help you fortify your tax office against the uncertainties of the economy.
Diversify & offer year-round services
Instead of operating only during tax season, consider offering year-round services such as tax planning, payroll, and bookkeeping. With some additional education and certifications, you can add financial planning, retirement planning, estate planning, and small business consulting to your service offerings. This diversification can help you maintain a steady stream of clients and revenue throughout the year, mitigating the impact of a slower tax season.
Focus on client retention
Retaining existing customers is undeniably more cost-effective than acquiring new ones. Customers who are already familiar with your brand require less marketing effort and are significantly more likely to make repeat purchases. Start with the fundamentals of guaranteeing a satisfied customer:
- Excellent customer service
- Personalized attention
- Timely communication
You can encourage client retention with loyalty programs, referral incentives, and discounts for returning customers. A strong relationship with repeat customers naturally fosters loyalty and also generates increased word-of-mouth referrals.
Pro tip: Ask returning customers to provide feedback about their experiences with your business. Gathering and acting on this feedback builds trust and enhances their overall experience. By listening to your customers and making adjustments based on their input, you show that their opinions matter.
Check out our tips to increase client retention for more detailed strategies.
Adapt to remote work lifestyles
More and more clients prefer the ease of virtual tax preparation. Consider offering virtual consultations and using secure online portals like our TaxesToGo® app for clients to share documents and communicate securely. This flexibility allows you to serve clients regardless of location or work preference.
Attract younger clients
Building relationships with a growing segment of your customer base is an effective way to protect your business during a recession. Younger clients or first-time tax customers present a valuable opportunity for growth, as they are likely to need more financial services as they age. By positioning yourself as a trusted partner and resource early on, you increase the chances of retaining them through various life stages and evolving financial needs.
Tailor your services and marketing efforts to appeal to younger generations. Leverage social media platforms and online advertising to engage with younger audiences. Highlight your expertise in areas like self-employment taxes, gig economy income, and student tax credits.
Strengthen your online presence with marketing
Building a strong online presence not only helps you connect with clients, but also helps to protect your tax practice against economic downturns. Aim to provide valuable, educational tax-related content to build trust and position yourself as an industry expert.
In addition to social media, you’ll want to build a business website that showcases your services and makes it easy for clients to contact you. Incorporate local SEO strategies, such as creating a Google Business Profile, a free way to increase your visibility in local searches. Consider utilizing paid advertisements to further improve your reach and help clients in your area find your business faster.
Stay up to date on tax laws and regulations
Staying current with tax laws and regulations is essential not only for accurate tax preparation but also for building trust with clients. It’s important to continually educate yourself and your team on tax law changes and industry trends.
Being well-informed ensures accurate tax preparation services and minimizes risk for both your client and tax practice. Our Guide to Continuing Education Credits can help you find trusted resources that keep you informed and help you maintain your credentials as an EA, CPA, or Annual Filing Season Program participant.
Manage your budget and expenses
If revenue is ever low, it’s critical to keep a close eye on your business expenses. Identify areas where you can reduce costs without compromising the quality of your services. Review your budget and seek cost-saving opportunities such as opting for a virtual office or co-working space instead of a brick-and-mortar location.
Remember the objective is to maintain a lean operation rather than restrict your capabilities. For instance, instead of cutting back on marketing during lean times, consider reallocating your budget towards digital marketing strategies that potentially yield higher returns. This could involve investing in targeted online ads or enhancing your social media presence to attract a broader audience without the substantial costs associated with traditional advertising.
Additionally, look for ways to streamline your operations. This might involve automating routine tasks with software solutions, which can reduce labor costs and free up time for your team to focus on other tasks.
No business is entirely immune to recessions, but by implementing these strategies, you can strengthen your tax preparation business and increase its resilience in the face of economic fluctuations.
