In 2019, Marcus Chen* was running a successful compliance-focused accounting practice in Melbourne’s eastern suburbs. However, he was trapped in a cycle that’s plaguing practices across Australia: declining margins on traditional compliance work, increasing competition from online providers, and clients who viewed accounting as a commodity service.
This case study shows how one practice broke free from the compliance trap and transformed into a high-value advisory firm, tripling revenue and creating a business worth $2.1 million.
The Compliance Trap Problem
Marcus’s practice generated $650,000 in annual fees, primarily from:
- Individual tax returns (45% of revenue)
- Basic bookkeeping services (25% of revenue)
- Company compliance and BAS preparation (20% of revenue)
- SMSF administration (10% of revenue)
Despite solid revenue, the practice faced increasing pressure:
Market Challenges
- Online tax preparation services undercutting individual return fees
- Bookkeeping becoming commoditised through cloud software
- Clients expecting faster turnaround times for lower fees
- Difficulty differentiating from competitors
Operational Issues
- Highly seasonal workload creating staff stress
- Low-margin work consuming most productive time
- Limited scope for fee increases on compliance services
- High staff turnover due to repetitive work
Financial Constraints
- Profit margins declining from 28% to 19% over three years
- Increasing costs not offset by fee growth
- Practice value stagnating despite revenue growth
- Limited scalability due to time-based billing model
The Advisory Transformation Strategy
Working with SMF’s practice development team, Marcus developed a three-year transformation plan to shift from compliance to advisory services.
Phase 1: Foundation Building (Year 1) Team Development
- Hired a senior business advisor with CA qualification
- Invested in staff training for advisory skills
- Restructured job roles to create career progression paths
- Implemented performance-based compensation
Service Development
- Launched monthly business review meetings for key clients
- Developed cash flow forecasting and budgeting services
- Created business planning and strategy packages
- Introduced management reporting services
Client Segmentation
- Identified high-potential clients for advisory services
- Developed tiered service offerings
- Implemented value-based pricing for advisory work
- Gradually transitioned focus from compliance to advisory
Phase 2: Service Expansion (Year 2) Specialisation Development
- Focused on professional services and technology businesses
- Developed expertise in business valuations and succession planning
- Created HR and employment law advisory services
- Launched CFO services for growing businesses
Technology Integration
- Implemented business intelligence dashboards
- Automated routine compliance work
- Developed client portals for real-time financial reporting
- Created standardised advisory service delivery processes
Marketing and Positioning
- Rebranded as a business advisory firm
- Developed thought leadership content
- Engaged in industry networking and speaking opportunities
- Created referral programs with complementary professionals
Phase 3: Full Advisory Model (Year 3) Revenue Model Transformation
- Shifted 70% of revenue to advisory services
- Implemented recurring monthly advisory fees
- Developed high-value project-based services
- Created scalable service delivery models
The Remarkable Results
The transformation exceeded all expectations:
Financial Performance
- Annual revenue increased from $650,000 to $1.9 million
- Profit margins improved from 19% to 42%
- Average fee per client increased 180%
- Practice valuation rose from $650,000 to $2.1 million
Operational Improvements
- Reduced seasonal workload variation by 60%
- Improved staff retention with more interesting work
- Increased client satisfaction through value-added services
- Created predictable recurring revenue streams
Strategic Value
- Developed sustainable competitive advantages
- Created strong client relationships difficult to replicate
- Built valuable intellectual property in service delivery
- Established platform for continued growth
Key Success Factors
Several elements were crucial to the transformation’s success:
Leadership Vision: Marcus committed fully to the change, investing time and resources in building advisory capabilities.
Staff Development: Significant investment in training and hiring advisory-skilled professionals was essential.
Client Communication: Existing clients were educated about the value of advisory services through regular communication and demonstration of results.
Systematic Approach: The transformation followed a structured timeline allowing for skill development and market adaptation.
Common Obstacles and Solutions
The transformation wasn’t without challenges:
Staff Resistance: Some staff were uncomfortable with advisory work. Solution: Provided extensive training and created clear role definitions.
Client Pushback: Some clients resisted paying advisory fees. Solution: Demonstrated clear value through pilot programs and case studies.
Cash Flow Management: Investing in transformation required careful cash flow planning. Solution: Phased approach with ongoing revenue from existing services.
Skill Development: Building advisory capabilities took time. Solution: Hired experienced professionals and invested in continuous training.
Advisory Services That Worked
The most successful services included:
- Monthly business reviews with KPI reporting
- Cash flow forecasting and management
- Business planning and strategy development
- HR and employment law guidance
- Succession planning for business owners
- Business valuations and acquisition support
How SMF Facilitated the Transformation
SMF’s support extended beyond traditional brokerage services:
- Strategic planning and implementation guidance
- Introduction to advisory service specialists
- Best practice sharing from successful transformations
- Financial planning and cash flow management
- Market positioning and pricing advice
Lessons for Australian Practices
This case demonstrates that practices can successfully escape the compliance trap through strategic transformation:
Start with Existing Clients: The easiest path to advisory services is expanding relationships with current clients who trust your expertise.
Invest in Skills: Advisory services require different capabilities than compliance work. Investment in training and hiring is essential.
Price for Value: Advisory services should be priced based on value delivered, not time spent.
Build Systematically: Successful transformation requires structured planning and implementation over time.
How SMF Can Help Your Practice
At Sell My Firm, we’ve guided dozens of Australian practices through successful advisory transformations. Our structured approach helps identify opportunities, develop capabilities, and implement changes that dramatically increase practice value.
Whether you’re trapped in low-margin compliance work or simply want to build a more valuable practice, we can help you develop and execute a transformation strategy.
*Names have been changed to protect client confidentiality.