One of the big, I think, confusions that goes on in the industry right now and most small business owners do not know the difference between tax preparation and tax planning. Tax preparation is where we’re just doing the return based on what the client did, right? We’re putting the information in, we’re setting up the return based on what actually happened. That’s preparing the return to be filed with the IRS. And that’s obviously a seasonal activity, it happens at certain times of the year, there’s also extension season, okay? Versus tax planning where we’re gonna be looking at the client’s entire life and business and trying to figure out, okay, look, how could we restructure things in their business, in their life, to pay the least amount of taxes as legally possible? And we’ll maximize deductions, we’ll be restructuring legal entities, restructuring potentially the domicile country, the home country, that they’re located in, setting up retirement accounts. There’s a variety of things we’ll do and we actually have an amazing tax planning training later on in the program for anybody that wants to get started in this type of work. But these are two separate engagements. If you’re saving people money and you’re gonna be restructuring their business and their life to do so, and it’s not a de minimis amount, you know, it’s not $500 or $1000, it’s 5,000, 10,000, 15,000, 20,000, 30,000, 50,0000. You should not just lump that into the preparation, you want that to be a separate engagement.
Does Mindset Influence How You Grow Your Accounting Practice?
As we continue to help people start from scratch with starting or growing their accounting and tax firms, we notice a common thread amongst people struggling with taking their firms to the next level: mindset. Many firm owners and new accountants can even be oblivious to the affects that mindset can have when trying to grow your accounting practice. Even seasoned accountants had trouble with this; watch the following video from our CFO/Financial Coaching Bootcamp.
Do You Just Need More Leads To Grow Your Accounting Practice?
As James Rainwater mentions in the video, he thought he just needed more leads. To an extent, he’s right; more leads is definitely part of the process to grow your accounting firm. To really grow your firm, changing your mindset can have a more impactful, over-arching effect that can resonate beyond just getting more leads. There’s a process for getting leads (we teach it in Next Level Firms™ and in our Sales & Marketing Workshop!), but beyond that, a shift in mindset is needed to grow your practice.
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When considering the pricing of your accounting services, there are a lot of factors to consider. Profitability, the structure of your services, the value you’re providing your clients/prospective clients, etc. should be considered. Pricing for accounting services can quickly become complex, especially as you start to adjust pricing on a per-client basis. Sometimes you adjust your service structure to meet perceived client needs as well. The following video from our CFO/Financial Coaching bootcamp in early 2019 addresses the creeping complexity that often plagues accountants when pricing for accounting services.
In the above video from our recent CFO/Financial Coaching bootcamp, we focused on an audience question about pricing strategy. The featured question was regarding adding clauses for different cases/clients. We recommend keeping your pricing structure (and your service structure as well) as simple as possible, especially since layered pricing strategies don’t always result in a profitable engagement. Simplifying your pricing runs in parallel with our beliefs on not using contracts with your clients (see “Do You Need A Contract For Your Clients”).
Streamline Your Pricing
A profitable engagement is always the goal. Why introduce complexity to your pricing, packaging and sales if the bottom line does not reflect the effort to get there. If you spend a limited amount of time and effort testing a more complex pricing and service structure and you stop closing clients, go back to a simplified pricing strategy.
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Personally I don’t care about contracts, because for me I just wanna win the engagement on value. You know I wanna build a system where the person doesn’t wanna leave because we’re a lynch pin, we don’t need an agreement or a contract to make them feel like there’s something in. I just think it’s sticky, and if somebody want’s to leave, I mean I don’t wanna work with people that don’t wanna be around me. And so I just don’t, I’ve never seen anybody exactly to this point where, you know they engage contracts like, “You need to stick to this contract, there’s 24,000 for the year, yes we’re in month four”, and you sold the business, you wanna work with somebody else, you’re not happy, we got to you late, whatever the combination of reasons is. And it just, it’s weird, so, I don’t think they’re really enforceable, even if you have it, because in small business it’s like, what are you gonna do, you know you gonna hire a lawyer?
The key thing is the reason why that works is because even if they walk away from that meeting and they don’t take that, she still provided a value. The original value she promised on the first call, which is I can save you x amount, she’s already proved that out in the first tax plan, she’s walked through all that. Hey, the original value I promised provided, but there is a more complex opportunity that you could go through and so there’s nothing that she’s doing that wasn’t promised. I talk about this a lot that if you want something, it’s important to bring it up on the first strategy session. You can even say on the first strategy session that you require anybody, once you’ve gone through the process, to give you two references, and then at the end, if he asks for two references, you already said it at the beginning so it’s no big deal.
You can say anything at the beginning and it can be fine at the end, but if you start to ask for stuff at the end or you start to do stuff at the end and not include stuff you promised or ask for extra stuff that you didn’t say you needed, that’s where people get touchy but if you say you were going to do something at the beginning and you do it, you can pretty much do anything.
Margot says, “Hi, Andrew. As you know, I have been working with real estate niche. I’m not getting volume. I’m thinking to add peer contractors, designers, women-owned businesses, to bring in heavier volume. Thoughts.”
So, what I would say is, if you’re in the real estate niche, instead of going to designers or … What the other one, here, designers and contractors? I would try to think about, “Okay, if I’m in the niche of real estate, what does that really mean, first?” If I’m in the niche of real estate, and in that niche of real estate, are we talking about agents? Are we talking about brokers? Are we talking about property managers? Are we talking about developers? Are we talking about investors? Right? These are some of the major categories of people in the real estates base.
So, whenever you think about niche, and as you go further down and you think about changing your targeting on LinkedIn, or on Facebook Advertising, you wanna be very clear. I’m helping a friend of mine. He’s doing three, four million a year in sales and he’s got a great company. Three or four million a month, sorry, in sales. So he’s doing 30, 40 million a year. He’s got a great company and he’s done a lot of great stuff. He’s, actually, starting a separate business. So I was giving him some advice and what not, and I was talking about picking a niche and how that’s been super valuable and important for me and everybody here.
I was saying, “When you pick a niche, every single word, when you describe that niche, matters. Okay? So, when you say, “real estate,” you’ve gotta be real specific … like, who is in your niche? Then, within each of these, there’s also sub-components. Right? So if you think about agents, there’s people that are interested in getting in, but have no license … because you have to have a license to be a real estate agent, from my knowledge. Interested in getting in … people that started but are doing zero in sales. Right? So they, actually, don’t … They’ve started. They’re doing it full time, or almost full time, but they don’t actually have even one client that they’ve won or any money that they’ve made from this. Then, you have people that are doing, sort of, zero to a hundred K. You have people that are doing 100 to 500, and you have people that are doing 500 to a million. Right? And all these people are just agents. So, just agents. Right? Not to mention you go into brokers, proper managers, developers, investors.
There’s all sorts of things … Like investors, it’s like, are they commercial? Are they residential? So you wanna be … If you’re thinking about widening your niche, you first wanna get really clear about what the niche is. Then, when you widen it, I would first rather widen it up the tree, rather than jumping to something else completely or jumping through a completely different niche, like designers. Right? Designers. So, I would try to widen it to something that’s as close to this as possible, rather than going to medical practices or something. That would be more like evolving the niche. You know, I always talk about evolving the niche as opposed to changing it. You wanna be somebody that evolves the niche … doesn’t completely change it.
First … Margot’s case, in particular, I wanna get really clear about who it is. Then I wanna think about evolving it and seeing if we can widen it that way, so I do get some sort of bump. I don’t have to completely change my message. People don’t get confused.
So when you think about putting a statement out there, it doesn’t have to be a statement that’s true for every single person. It has to be a statement that’s true for some people, for some people. Because think about it, guys. Think about it like this. If you say that you can save somebody $10,000 in taxes, $10,000 in taxes, or you can increase profit margins to result in an extra $10,000 to the owner or whatever the case may be. Or you say that you could save somebody $75,000 in taxes, this is going to attract a certain type of person, a smaller company, someone that cares about $10,000.
I can tell you, if you told me you could save me $10,000, I’d say I wouldn’t even care. Not even worth my time to take the call, because my time is more valuable spent somewhere else. Because first off, I’ve got to have a call with you. Then maybe it’s going to work, maybe it’s not going to work. Then I have to pay you. At that point, that much thinking, that much time, I’ve already lost money relative to my business and where it’s at.
But somebody who’s got a business that does $125,000 a year in sales, if you could save them $10,000, they’re like, “Hey, I got all the time in the world to figure this one out.” Now if you say $75,000, a bigger company’s going to be interested. So you have to use an aggressive claim. You have to have an aggressive claim, and that aggressive claim will come true because it’s simply going to bring these people out of the woods. If your claims are small, you’re going to get small clients.
And so people say, “Well, I’m only getting small business owners on the phone. I’m only getting micro companies on the phone. People doing 50, 70,000 a year in sales or just getting started.” And then I look, and it’s because they’ve got small claims. If you want big clients, you’ve got to make big claims.
It doesn’t mean that if somebody comes along and is doing $60,000 a year in gross sales, that you’re going to be able to save them $75,000 in taxes. I mean, obviously it’s ridiculous. But once they get on the phone, you can walk through their specific situation and give them an estimate themselves.
When trying to attract bigger, more profitable clients, you need to change your messaging to attract that level of client when trying to grow your accounting firm.
Make more aggressive claims to bring in bigger clients for your accounting firm. That claim has a higher likelihood of becoming true because of the size of the client you’ll begin attracting. If your claims are small, you’ll attract small clients. If you’re trying to grow your accounting firm, make bigger claims to attract bigger clients.
Some people are concerned that bigger claims will not fit for a lot of their existing base, but your messaging does not have to fit everyone you’re attracting when trying to grow your accounting firm. Once you get the client on the phone, you’ll be able to adjust your claim relative to the size of their business.
When you get to a certain age, you’re expected to be more of a business man, especially doing accounting, doing accounting as a service, working in some of these firms. You’re expected to be able to get clients. You’re expected to be able to get new business, and just because you feel, you have this little inclination, “Oh, I don’t care about money. Money’s not the primary thing.” Give me a break. Look, you need a lot of money if you’re actually going to help people. Right now you’re helping no one. You’re broke. You don’t have any money to help yourself. You can’t even help yourself, and you’re be like, “They’re caring more about money than helping people.”
They’re helping hundreds of thousands of people. Hundreds of thousands of people every day. They’re out there delivering services for them, solving problems, answering the phone at midnight, being there on a Saturday and Sunday. They’re helping, helping, helping, helping, helping. You’re over here literally unemployed, can’t cut it, can’t get a job, and your little mind is telling you that you care more about the clients than you care about the business, and the problem is is like, what these people don’t understand is that really, what they’re telling themselves on the inside.
They’ve got these little stories, “Oh, I care more about the clients than just making money. For me, it’s not about the money. I just want to do good work for people.” They’re saying these things that are totally counterproductive to themselves, totally counterproductive to their clients, totally counterproductive to their careers, and just all around bad, bad, bad, bad, bad things to think about.
When you talk about being a CFO, it’s about trying to figure out what is actually gonna make the difference for this business. What do they need to do right now to grow sales, increase margins, reduce expenses, have a higher valuation on the company. It’s different by niche, and even within the same niche, it’s different if the company’s just getting started, whether they’re funded or not, they’re doing a million a year, 5 million a year, 10 million a year. It’s gonna be different. So, being a CFO is more about a way of thinking than it is about one specific template that’s gonna work for every company ever. Every company’s in a different situation.
When you talk about taxes, it’s like the tax code that’s gonna apply, you run people in to see how does this situation apply to them. How do these companies fit in with the tax code? With the CFO services, totally different, because there’s just so many complexities to consider. It’s important that you focus on the actual substance of your relationship. I don’t care if you deliver the information … I always tell people, “I don’t care if you deliver the information on a napkin. We need to get a napkin in here so we can say, ‘Hey, here’s the CFO services, we’re gonna give it to you on a napkin.'” As long as it makes the company more money. As long as it makes the company more valuable. As long as it actually helps the owners and the entrepreneurs that run the company run the business better, make more, net more, that’s what matters. How it looks and everything, not as important, not as important. Does it actually work?
That’s the biggest thing I found, is that the clients don’t care whether you give them a spreadsheet or how complicated the Excel is. Actually, they prefer one column, they prefer just five numbers, five steps, here’s what to do to make the company more profitable, or to grow the valuation. What they want is your knowledge.
100%, and being a CFO isn’t so much about giving them one specific thing. It’s about being able to have a conversation, not about accounting. How many times have you heard, when you talk to a potential client, and they’re like, “Well, my account is just so reactive,” and they’re just so an accountant. They’re just an accountant, right? And they just do the books and send over the numbers, but they’re not actually thinking. They’re putting the numbers together, and you know, I know when I find these people. Some of you guys might be on here, ’cause I ask them, I say, “Well, so what are you charging your clients on a monthly basis?” “Like, oh, you know, 300, 500, 700,” whatever they’re charging, right? And I say, “Well, how big are these companies in terms of their annual sales?” And you know what they say?