How do small tax or accounting practices grow? According to recent research by HD Vest and Accounting Today, one recurring theme is to aim high.

But how?

For starters, begin by imitating firms that have already experienced the growth you’re hoping to achieve. And one way to do that is to not shy away from targeting higher-income households.


Nearly half (48 percent) of growing midsized firms in our research identify their “target clients” as those with household incomes exceeding $150,000. Only 38 percent of smaller growth-oriented firms have that goal in mind. Similarly, the proportion of midsized firms targeting clients with household incomes of at least $300,000 (18 percent) is double the proportion of small firms (9 percent).

Both firm categories are primarily going after clients in the 45-64 age bracket, although proportionately more of the smaller firms are targeting younger clients (age 25-34 bracket) than the midsized ones.

In a pattern consistent with the “aim high” theme, small firms are more inclined than midsized ones to emphasize the cost of their services as part of their value proposition. “While undercutting the competition on price is a classic strategy, it can be self-defeating over the longer term,” warned Chad Smith, a wealth management strategist at HD Vest Financial Services.


Along similar lines, smaller firms put greater emphasis than midsized ones on being available and flexible in their scheduling practices to meet with clients. “There’s nothing wrong with making yourself available to clients, but the midsized growing firms seem to have been successful without giving up too much control over their work schedule,” Smith says.

It is also possible that becoming less flexible is only an option after you have established a strong and client base.

Meanwhile, the proportion of growing midsized firms that view innovation as a key value proposition vis-a-vis the competition, while not large (14 percent), is three times that of the smaller firms.

The overwhelming majority (70 percent) of firms of all sizes name “Adding new clients in current service categories” as their primary growth strategy. A small but significant percentage (6 percent for the small firms, and 8 percent of the midsized ones) identified “Adding new service offerings” as their primary growth strategy. Nearly half of all firms surveyed, however, identified “Diversifying services” as necessary for them to achieve their intermediate and long-term goals.


What kind of services to add? After such standard offerings as tax consulting and accounting, the top categories were financial planning/wealth management, retirement planning and estate planning. Overall, approximately one-third of all firms polled identified those services. Smaller firms were somewhat more likely to do so than the larger ones.

Also, about one firm in five listed “investment advisory/asset allocation” as a new service under consideration. “This is not surprising, because adding financial services to your menu is a natural way to capture more revenue per client, and to retain them,” said Smith. “As younger clients get older, their wealth grows, and so does their need for assistance in managing it,” he added.

Some additional survey highlights:

Large and midsized firms both overwhelmingly market their businesses by encouraging clients to refer new business to them, or hope for “word-of-mouth” client-building. Relatively few pin high hopes to the use of Web sites, mailings (e-mail and snail mail), and social media.Staff training was identified as “very important” to long-term success by 37 percent of the midsized firms, and only 20 percent of the small ones. This might be explained by the fact that the small firms, by definition, lack much of a staff to train.Midsized firms were far more likely to identify “investment in technology” as “very important” to their long-term goal achievement than the smaller firms (37 percent vs. 21 percent).

For more information about HD Vest Financial Services and how they can help you transfer a client’s wealth, visit or contact a Business Development Consultant at (800) 742-7950.

HD Vest Financial Services® and its affiliates (collectively, “H.D. Vest, Inc.”) do not provide tax or accounting services. You should consult your tax professional regarding the tax implications of any investments.

The views and opinions presented in this article are those of Chad Smith and not of HD Vest Financial Services or its subsidiaries.

HD Vest Financial Services® is the holding company for the group of companies providing financial services under the HD Vest name.

Securities offered through HD Vest Investment ServicesSM, Member SIPC, Advisory services offered through HD Vest Advisory ServicesSM, 6333 N. State Highway 161, Fourth Floor, Irving, TX 75038, 972-870-6000.