Julio Gonzalez, National Tax Reform Expert and CEO of Engineered Tax Services (ETS), The Growth Partnership and ABLE CRM.
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It is startling to look at how many small businesses have been trampled by bigger, often better funded, more advanced competitors. Businesses are increasingly losing out to conglomerates breaking into their industries and conducting massive takeovers backed by innovative, alternative solutions and the funding to use them. A glaring example is what Uber has done and is doing to the now outdated, tired taxi industry, ensuring the only way for taxis to continue to thrive is by legislating the app out of existence in certain territories.
It is not making many headlines yet, perhaps for good reason, but the traditional accounting firm could be the next to fall to this trend of becoming obsolete due to a bigger, more advanced conglomerate changing the game. Amazon founder Jeff Bezos has entered the accounting industry, privately investing $100 million into an SMB accounting startup called Pilot.
Pilot provides small- and medium-sized bookkeeping and tax management services advertised at a lower price than private CPAs. The startup is relatively new and only has a minimal fraction of the client base in the industry. However, with the validation and funds from Bezos, the small company could soon dominate the market. The emerging company is now valued at $1.2 billion, joining the unicorn club.
While this could gouge a large portion of the client base, CPAs and accounting firms are not left hopeless in the face of Bezos and his empire. The key is to evolve, and to evolve fast. Taxis fell because Uber found a new way to streamline the service and make it a better, often more affordable, more user-friendly experience. Uber simply did what cabs had been doing for decades, better. Naturally, it was not long until imitators, such as Lyft, emerged to compete. The taxi companies of the era would have been wise to join forces early or streamline their own services as quickly as possible by perhaps building a similarly advanced, well-marketed app.
Bezos is not going to bet $100 million on a non-winning horse, indicating Pilot is doing something the multi-billionaire likely believes will change the industry. It advertises itself as the affordable and accurate bookkeeping option for startups and SMBs, alluring buzzwords meant to attract startups and SMBs. Accounting firms need to take a deep look at their offerings and be ready to compete.
What does Bezos’ investment mean for CPAs?
There is a bigger picture when you consider the implications of Bezos backing Pilot. Pilot, since its founding, has had a close relationship with Amazon; in fact, the co-founder of Pilot was an intern for the giant corporation. What’s more, Pilot’s discourse clearly indicates it wants to collaborate with AWS in the future. Anyone familiar with the unmatched exponential growth and success of AWS can understand why this would be cause for concern in the accounting industry.
Despite Pilot claiming to want to support the growth of SMBs, which we all want, Amazon is the same company that has decimated many of those SMBs with its competitive, cutting-edge, convenient offerings. While Pilot may claim to have SMBs’ best interests at heart, what it doesn’t have yet is the trust that is earned by a loyal, reliable accountant who constantly strives to put the customer first. However, its accessible customer service and innovative technology will likely appeal to many in the midst of massive, well-funded marketing campaigns.
So, what can CPAs do to compete?
Explore every avenue for growth.
If accounting firms want to compete, it’s time to explore every avenue for growth and expansion and, most importantly, provide the most exceptional experience possible for the customers and clients who will be the real decision makers in the end. What can you offer customers that the bigger, more advanced, better-funded guy can’t? Many accounting firms fail to utilize incredible new tools that are right at their fingertips.
Specialty tax credits and collaborations with firms that serve them may be the key to offering your customer more. It’s time to look at more powerful CRMs, focusing in on your most valuable clients and constantly asking the question, “How do we earn customer loyalty?”
Offer exceptional customer service.
Accounting firms still have some critical competitive advantages: knowledge of their customers and their needs, and in many cases, their trust. If you or your firm can streamline some of your process to match the efficiency of new players while still offering personalized service, and you can assure your clients that their money is in the best possible hands, that is invaluable.
Pilot has grown due to the expert customer service it provides. Its model includes attaching an accountant to a client and sending them monthly finance reports. Ask yourself, how often are you communicating with your clients? Do you send them frequent financial reports? Do you find every possible opportunity to decrease their tax burden, exploring less conventional avenues such as specialty tax credits specific to their unique businesses and projects? Do you espouse a sense of community and loyalty by going above and beyond for the clients that matter to you?
The time is now to innovate and upgrade. If you integrate pathways that demonstrate to your clients you offer the best, most personalized service in a more accessible way, when they’re bombarded by massive marketing campaigns, they should know they have something more important: prioritization, and trust.
We must adapt. Earn the trust and loyalty of your clients now. Implement the latest and greatest in user experience tech, security and any other pathways to innovation that put you on the cutting edge. Be everything you can to your clients so when the shiny new Uber of the accounting industry catches their eyes, they remember that their accountant is the loyal, sharp one who would leave no stone unturned when it comes to ensuring each client’s financial life is optimized, secure and in the best possible hands.
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