Building a digital assets practice at your accounting firm is extremely rewarding, but it can also be challenging. Company bureaucracy, billable hours requirements, and the inertia needed to “make something new” happen at a large organization can be daunting. However, firm by firm, digital assets practices are sprouting, led by enterprising individuals with the entrepreneurial spirit to explore uncharted territory.
The team at LedgerLens pioneered the crypto and digital assets space starting in 2016, built one of the first digital assets practices in the world, and grew revenue at a Top-20 U.S. CPA firm to $25M in just a few short years.
Our model has been successfully replicated by two other global firms in the last 12 months. And now, with LedgerLens removing the technical barriers to entry, and enabling firms to offer audit, attest and other services, we expect this model to facilitate the upstart of dozens of practice groups in the coming months.
Here’s how we did it.
Step 1: Drum Up Excitement
The goal at this stage is to make your colleagues aware that digital assets exist, that the market is growing, and the myriad use cases are already creating opportunities for CPAs, Chartered Accountants and consultants.
As you build an outlet for those interested in crypto and digital assets, begin to understand their current experience, interests, and how these individuals can assist you in spreading the positive, growth-oriented message within the firm. As the “prime mover,” you can host lunch-and-learn sessions, ad-hoc trainings, or social events related to digital assets.
The key message at this juncture: blockchains are accounting ledgers; the use cases are real and growing, and triple-entry accounting puts accounting experts in a prime position to participate in the next evolution of finance and accounting.
With a pool of interested colleagues energized to support, you will proceed to step 2.
Step 2: Assemble & Organize a Group of Digital Asset Enthusiasts
You should aim to find between 5-10 passionate individuals who also have an existing service line expertise. Importantly, colleagues with social capital or past experience growing new service lines at the firm are key assets as you prepare to explore new territory. Begin to identify your executive sponsor: who at the leadership level can assist you in navigating future conversations with firm leadership?
Invite staff and senior-level colleagues to support you in building the necessary “pitch” materials and outlining possible client engagements related to the new practice.
Step 3: Identify Revenue-Driving Opportunities for the Firm
our team of passionate individuals should then identify opportunities that the firm can capitalize on to drive net new revenue. Your goal at this stage is to align the opportunities with what the firm can easily execute today and what it can reasonably expect to capture in the future if it invests in this space.
Consider the “easy wins” first. For instance, if the firm services multiple other industries with an audit readiness service, extending audit readiness services to companies with crypto and digital assets on the balance sheet could be a natural and low-lift extension of the firm’s current expertise. But also consider the more ambitious paths where the firm may not currently have a strong or established service offering, but the market opportunity is enticing.
Step 4: Obtain Buy-In from Leadership
It’s time for the pitch. Assemble your team of champions and work diligently to present the opportunity to the leadership team at your firm. Consider presenting to a “safe” group before heading into meetings with top leadership; you will find that you will get critical feedback on the way your firm’s leadership assesses new opportunities, considers risks, and may get a hint about questions that will be asked of you.
It might take days, weeks, or months to get the opportunity to make your case, but with consistent excitement among peers, management will eventually take note. As bitcoin and digital assets proliferate in pop culture, management’s interest is likely already piqued. They will want to listen to educated employees on the subject.
At this key moment, you have two goals: First, show leadership that you have considered every angle and know the firm’s general approach to assessing new opportunities in order to earn their trust. Second, obtain buy-in to invest in the space, starting with a few dedicated, innovative, and entrepreneurial individuals. But remember, like any sales pitch, trust comes first and buy-in may take more than one meeting or presentation. If you have leadership in a room listening to your pitch, you are already succeeding.
When crafting your pitch, consider the following: Your case needs to be supported by three main prongs: (1) The quantitative case (i.e. the market is growing by A%, the going rate for services of this kind is $X, if we obtain Y number of new clients, we could increase revenue by $Z, with an investment of $ZZ); (2) The qualitative case (i.e. this is where we need to be as a firm, employees want us to do this or will be excited by it, our clients are interested in it, etc.); and, (3) what are the risks (i.e. you need to present the risk landscape and show the leadership that you know the risks, have considered them, and can present a cogent analysis of how offering X new services can be risk managed).
This formula lays the foundation for trust in your ideas and your plan. And, it may also get you immediate buy-in!
Step 5: Formalize a Practice of Industry Experts
Once you have convinced management to invest in the space, the work is just beginning. At this stage, formalize your practice with a budget, resources, and a dedicated timeframe to make this industry niche a reality. You will likely want to be conservative in your expectations, as it will take time to develop the “plumbing” of the practice and you will want to ensure expectations are aligned with management. What current resources are dedicated, which are shared?
Set reasonable assumptions as your performance to budget in your first year is a make or break moment.
Step 6: Get Some Quick Wins While Building Up Skillsets
Win and get hands on! Achieve some early wins to prove your practice’s viability. This means winning client engagements. Our recommendation? Find the path of least resistance. If all the crypto enthusiasts in your group are tax experts, then do crypto tax. If they are audit experts, then do crypto audits.
Get a few wins under your belt. Wins beget wins. And early momentum is critical, even if they are smaller engagements.
Simultaneously, identify unique niche opportunities your service line can uniquely offer, such as Proof of Reserve services, custody consulting services, or smart contract auditing. Take the time to hear from prospective clients about what they need. Even if you don’t have a service to meet the need immediately, this is a key market signal that can inform your plan and allow you to be nimble in moving to meet market demand.
Where you don’t have engagements yet, use crypto personally and engage your young staffers to use crypto accounting, crypto tax, and crypto audit software tools on your personal portfolio or a firm’s test portfolio. Knowing the software is critical to cost-efficient delivery of services and client satisfaction. Use of “petty cash” and small amounts of crypto for testing (or team challenges) is a great way to get hands on.
Step 7: Offer Digital Asset Expertise to Other Service Lines
Spread the word and drum up excitement across the whole firm. Approach each service line leader and offer your digital asset services. This is the game of inside sales, and can pay big dividends as you will naturally uncover new relationships as a result.
The clients you win for crypto work will naturally ask about other services. Refer these to your peers in different service lines and help them execute the engagements. Feed them relationships and opportunities. This is where your “pitch” becomes real for service line leaders as they will see that your theory is producing real results for the firm and their individual practice.
These colleagues will need your help understanding consensus mechanisms, wallets, and blockchains. Act as their “translator” when talking to digital asset clients and prospects. You will be the “crypto person” and they can be the “traditional expert.” Together, you form the perfect team to serve your client. After a few engagements, you will build up their confidence to service the space.
Step 8: Identify “Champions” within Each Service Line to Scale Digital Assets
After referring a few clients to other service lines and helping execute a couple of engagements, identify individuals within each service line who have shown passion and expertise for your digital asset referrals. Hand them the reins to the digital asset practice in this service area, help them make their own case to leadership about going full-time in the industry. You will often work closely together in the future, collaborating on crypto engagements, sharing knowledge, resources, and more.
Step 9: Build Out “Pods” within Each Service Line
Structure the team for growth by build a team or “pod” around the service line champion. Assist your champion in getting internal support from your “core” blockchain team. If it’s audit, advocate for hiring crypto audit-specific personnel. If it’s tax, do the same.
Around this time in your practice’s evolution, start considering how to best report on your total impact. If your firm is organized by departments and service lines, this may be a challenge as you will need to cobble together pipeline, revenue, and cost data from different departments (and perhaps even different reporting systems). Its going to be a little messy, and a lot manual work to begin with, but strive to present the “industry view” of your financial performance. If your firm is not already organizing itself by industry, you may also be seen as a thought leader on specialization (and all the benefits to the firm and the clients that come from deep industry specialization).
Step 10: Scale Responsibly to Build a Strong Industry Reputation
The most important thing is to execute with excellence and keep client satisfaction high. The digital asset industry is relatively small, and reputation goes a long way. The best source for new client wins is referrals from existing clients! Ensure excellence within your practice and across each crypto pod in each service line to build a strong reputation and a robust practice.
With scale will come challenges; however, your number one focus must be communication across the firm, creating expectations for how individuals across the firm share work and resources, and keeping an industry team identity.
Organize industry team all-hands calls, just like a department would, encourage colleagues to share details of their engagements and lessons learned for cross-functional education, and continue to hold training sessions.
Help colleagues set goals and expectations for themselves and their direct reports, then help them achieve them.
Create an identity for your industry team, foster it, and share it with the market and your entire firm.
Communication, clear goals and expectations, and a shared vision and identity are critical to your long-term success.
Congratulations! You have now built your digital asset practice!
In our time at a Top-20 U.S. firm, we were able to build a $25M practice across the firm, with close to 75 industry team members, in just a few years. The proverbial pie is only growing larger as demand for expert services in digital assets and crypto continues to outpace supply.
We are excited to see what you can accomplish. Schedule a call or demo with our team to learn more.
