Many years ago I went to meet a prospective seller of a CPA practice.  His entire office was a disorganized mess.  From dust and cobwebs to piles and piles of files and other paperwork.  I recommended that he really ought to clean and organize the office before we have a buyer come to meet with him .  After several weeks of preparation he told me he was ready.  So I set up a meeting with a prospective buyer.  After the meeting the buyer said, "John, I would need to spend $50,000 just to get that place organized."

Whether we are working with a firm who is looking to grow or a client who is looking to sell his or her firm one of our main concerns is the office condition.  Remember, there is only one chance to make a first impression to any prospective client or buyer of the firm. 

Here are a few quick tips you might be able to use.

• Use some type of a contact management system.
• Establish a routine for incoming mail.
• Keep your desktop and workspaces available for actual work. One former client had a one file out at a time policy that each person in the office followed.
• Consider a file system utilizing less paper (or better yet paperless).  You can start by scanning your current year files.
• Schedule a few minutes each day for planning, clean up and organizing.

For more ideas take a look a Rita’s blog.

Both new clients found him while they were searching the Internet for someone to solve their complex problems.  Based on their search results, they contacted him to discuss their problems. We looked at his website and it did a good job of expressing his competency and personality.  Obviously, it was successful in engaging these prospects and differentiating him from his competition.

So, how well do you differentiate yourself and your practice from your competition?  Addressing the following questions about your site will get you started on generating leads that will be a good fit for your practice:

1. Who are your ideal clients?  What niches do you serve?  Be sure your site identifies and welcomes these individuals and industries through text and use of imagery.
2. What are your specialties and areas of expertise?  Can you present them in terms of clients needs (benefits) rather than just services (features)?
3. Can you present yourself and your staff through the site?  Think of this as the “online dating” portion of lead generation.  Pictures, stories, backgrounds, articles, a blog—all provide the prospect an opportunity to get to know you early in their decision making process.  Work hard to get your personality engrained in the site.
4. What value adds can you build into your site?  Obviously, you can post one of the syndicated newsletters on the latest tax code changes or something similar, but so can your competitor.  So again, think blog or a specific area of knowledge you can share.  There is a level of transparency where you can provide enough to inform prospects without giving away your advantage to your competitors.

Your web site provides you with a great opportunity to make a strong first impression and you cannot beat the price when it comes to direct marketing.  So, take some time to think about what a prospective client will experience when they go to your site.  Most importantly identify your key differentiators and be sure to present them in terms that will resonate with your prospects and your clients.

The flip side of the coin is nothing builds client loyalty better than letting them know you care. Therefore, it is important you continually demonstrate to your clients that you care about them and their needs. This time of year provides a great opportunity to use your tax appointments to communicate how much you care. Here are some simple guidelines to get you started:

1) Make sure you have ample time between your appointments. Although this may seem to be poor utilization of your time, stacking your meetings can be a critical mistake on two levels: it does not account for a meeting running over; and it does not allow you time to prepare for your next meeting.

2) Give yourself ample time to prepare for a meeting. Reframe your thoughts from an earlier meeting, clear your desk, review and prepare for the meeting with the next client.  Nothing says “I don’t care” or at least “I don’t know you” more than flipping through a file to find a piece of personal information about a client during a meeting.

3) Respect your clients’ time by being punctual. We wait in lines and traffic throughout the day, make sure you are an exception to this experience.

4) Have a simple agenda for the meeting. Something that outlines the key phases of the meeting is all that is needed. Perhaps as simple as (1) agenda review (2) catch up (3) review financials and tax return (4) discuss business development - referrals and (5) next steps.

5) Be sure you focus on building rapport in all of your client interactions. This may not be a natural process for you, but it is critical in the “catch up” phase that you ask open ended questions to provide your clients an opportunity to tell you about their lives. Asking appropriate follow up questions will affirm that you are listening and care about what they are sharing.

These steps are simple, straightforward and will pay huge dividends over the years. If you are not already using them, I recommend you test one or two by implementing them this season with half of your appointments. After the season, survey your clients about their satisfaction and see how the results vary based on the two types of appointments.

I wrote back to say that I was happy the season was going well for her. I asked her to what did she contribute her success and was pleasantly surprised with her response.  She mentioned streamlining work processes and great support from home, by ensuring the following:

1. Having a routine and sticking to it
2. Limiting herself to a 12 hour work day, no matter how much energy she may have.
3. Taking a late lunch and exercising daily
4. No matter what, taking Sundays off.

Some who read this may shake their heads and disagree. What they will not realize is that this CPA has figured out that the time to recharge her batteries is not when they are totally run down. She realized that it is better to work harder and smarter. Stress is a big part of most people’s lives these days, and a busy tax season will just pile on the stress.  Taking time to recharge and “de-stress” will make your time at work more productive.

I can not wait to speak with her later this spring.  I imagine that, when I do, the same smile will be there.  At the same time, many others will have that tired, worn-out look and will need a while to de-compress before they truly enjoy the fruits of their labors.

I say find some time to recharge your batteries this season and enjoy the journey. What are your thoughts?

Several years ago we spoke with someone wanting to sell a tax practice in Arizona.  This owner had not increased fees in five years for fear that clients would leave and go to the H&R Block office nearby.  He wanted to receive a premium price for a premium practice, but what he had was a discount tax service.  Potential buyers were willing to purchase the practice at the same type of discount.

The value you receive as price when you sell your practice is going to be determined by the market.  To create a higher price for your practice, you need to create more value within the practice, typically by creating more value around each individual client.  This is done by providing more value to each client.

There are three core values a practice can provide to a client:  high service, high quality and  low price.  The catch is that a practice can only survive and stay in business when it provides two of the three.  A practice cannot afford the cost and overhead of providing high service and high quality while also providing low price.  So to provide low price, either the standard of service or the standard of quality has to be lowered.  Guess which of these a buyer will find of least value?  Low price equals low revenue per client or at best a huge volume of work to generate revenue per client and buyers care about revenue margin and profitability to insure debt service and future income.

Buyers are looking for valuable practices. Spend the quality time and effort building that practice and it should pay off handsomely, both along the way and when it comes time to sell.

What are your thoughts?

According to the Bureau of Labor Statistics, in October of 2007, the unemployment rate in Portland, OR was at 4.5%.  By October of 2009 the unemployment rate had jumped to 10.7%.  (It is now hovering around 12%.)

Between the end of 2007 and 2009 while the unemployment rate more than doubled, this accounting practice had grown 40%.

What is the owner’s secret?  He told us he does not know, he just gets lots of referrals.  Although he does not know what he is doing to acquire new clients, he does know what he is doing to serve them.  He values his clients highly, provides exceptional service and stays in regular communication with them through a monthly newsletter.

“We stay in touch with our clients and manage the relationship.  Even if we have a problem client, we do our best to treat them right.  Even if we have to let them go, we try doing it in a way that leaves them with a positive experience.”

Following his intuition about the value of customer service, this practitioner has inadvertently developed a client referral program that works.

A Referral Ready Accounting Firm

No client will refer friends and neighbors to a service they do not believe in.  Some clients may refer people to a service they find helpful.  Most clients will refer a service that they experience as exceptional and unique. 

What can you do to create a referral ready accounting firm? 

1. Manage the relationships with the clients you he already have. Make sure they are well-served.  Anticipate their needs.  Respond to their concerns in a timely fashion.  Work to maintain a relationship of value with each and every one.
2. Stay in contact with your clients.  Distribute a monthly newsletter.  Survey your clients to check your quality.  Ask how you may better meet their needs. 
3. Educate your clients on how you firm can serve them. Use a monthly newsletter to make it easy for them to talk to their friends and neighbors about how you can help them solve their problems.  Tell how you have saved a particular client money, or resolved a tax issue, or provided sound advice.
4. Give your clients something to talk about. By being intentional about how your clients experience your service.  Find small ways to make it special, unique:  One practioner we know has M&M figures throughout his office...many given to him by clients over the years.  When you visit his office, you tell people about it.  People do not tell stories about a work product.  They tell stories about what they experience.

What are your thoughts on developing referrals?  We would love to hear them.

SWOT Analysis—short for strengths, weaknesses, opportunities, and threats—is a strategic planning technique that offers insight into your practice and those of your competitors.  This process will help breakdown your practice and identify ways to maximize your strengths while minimizing your weaknesses. By examining the opportunities and threats you can identify new service opportunities to pursue, identify highly competitive new services you may want to avoid and recognize steps you can take to avoid losing clients to your competition. Taking that information, formulating a plan and executing on that plan will help you grow your business by design by matching your services to your current clients and new prospects.

The benefits to your practice include:

• determining practice growth potential,
• evaluating the competitive marketplace,
• concentrating your marketing and business development activities in the most beneficial areas,
• identifying possible threats and ways to minimize them.

An old baseball maxim says that, to be successful, you have to “hit ‘em where they ain’t.” That can also apply to your practice. By analyzing and planning, you will know what areas to “hit” and what areas not to “hit” while you are executing the strategy developed during the process.

Taking time every quarter to measure your performance and adjust accordingly will help you build a much stronger and much more valuable practice. The SWOT Analysis can be an effective tool during that process.

In our fifteen years of evaluating practices, we have seen varying extremes in revenues per client. Our experience has shown that the more profitable practices are paying attention to client development during the busy season. If these competitors are in the market when you are not, they will get the new clients you are seeking, and perhaps will get your clients over time.

This tax season will be demanding, but it does not have to be chaotic. Spending time planning, educating the staff and developing a business development strategy will increase:

• Profitability
• Sales per client
• Potential referrals

This is the time of the year where your clients, the public, and the business world are all paying attention to accounting. There is a tremendous opportunity to grow your practice.

Firms need to look at the busy season as a stepping stone for 2010, while your clients are focused on taxes/accounting more than any other time. Benefits from maintaining a business development strategy are numerous and include:

• Accounting draws attention: The tax season is the time where you get the opportunity to meet your clients in person. Accounting is an important issue that, generally, captures an audience.
• Competitive advantage: Firms that make an effort at marketing during the busy season gain a competitive advantage over other firms who are not in the marketplace.
• Strengthened relationships: It is an opportunity to further strengthen relationships with existing clients.
• Increased referrals: Strengthened relationships will improve both quality and quantity of referrals.
• Accelerated growth: It offers opportunities to increase business and should not be wasted.

How does an accounting or tax firm develop business during tax season? It certainly is a challenge.  If it were easy, everyone would be doing it. There are a numerous ways, but none of them will be successful without the proper foundation; planning and preparation.

We will address other business development issues that your firm can employ to go from busy season to always busy and enhance your firm’s value in greater detail in our blog during the weeks to come.

Client relationship management is an indispensable part of business development especially with regard to existing clients. We have a saying in our office that clients don’t care how much we know until they know how much we care. Client relationship management is all about showing that you care about them both professionally and personally.   

Here are some key techniques that will help you to maintain strong client relationships:

Communication: Keep in touch with your clients.  Use tax season as a way to re-connect and build a better relationship. Plan to keep in touch throughout the year.

Appreciation: Listen to your clients. Find out what is happening in their lives and businesses. Show a genuine appreciation of who they are and what they are experiencing, in addition to what their current tax needs are. Let them know you care and appreciate their business.

Reinforcement: Educate your clients on the areas of tax and finance that affect them, as well as strategies that may benefit them. Reinforce your ability to HELP them.

Endorsement: Building a highly successful business is all about referrals. After you have taken the time to show how much you care, it is time to have a discussion of referrals, in this order:

• Think of someone you know that may need the services your client provides. Provide the referral to your client.
• Think of someone you know that may provide a needed service for your client that you do not provide. Refer your client to them.
• Remind your client of all the various services that you provide. Let them know how much you value their referrals. Reciprocating interest in each others businesses will strengthen the relationship.

Although important, client relationships are only one facet of business development. We will cover other business development issues in greater detail in our blog during the weeks to come.

We recently surveyed more than 1000 accountants on issues such as economic pressures, client relationship management, business development and marketing activities. Over our next several blogs, we will discuss some of our findings along with related tips to leverage tax season to increase the value of your firm.

More than 40% of the respondents in our survey said that their team was responsible for business development activities and only 25% disagreed with that statement. To leverage tax season and the face time with clients to expand the business, a team effort is essential, yet only 24% of our respondents report that their team is trained in business development. Taking the time to work with your team on a business development strategy will increase profitability, more sales per client, and potential referrals.

So what is a business development strategy? A business development strategy is used to support your main business plan and effectively it sets out a methodology for developing new opportunities, either from existing clients or by actively targeting new client prospects to develop new business.

Here are examples of steps you might take to develop a strategy to increase the value of your firm:

• First step is a thorough firm evaluation. A SWOT analysis to identify and analyze the Strengths and Weaknesses of your firm can be used to formulate actions and strategies.
• Determine your annual revenue goals. Analyze your revenues. Ask yourself questions such as:
  • Where were they earned?
  • How much of your revenue is earned from January to April?
  • How much business from May to December comes from the same client base?
  • What services are you providing for them?
  • How do you expand this to the rest of your client base?
• Take a look at the issues that your clients are facing.
• Develop a mindset in your firm of client relationship management strategy involving your entire organization. Important aspects:
  • Communication: Listening and understanding the client
  • Consider up-sell and cross-sell opportunities for additional services that you may provide to them.
  • Grow your referral network
  • Utilizing social networking and other technologies

We’ll address many of the elements above in more detail in blogs to come.  

Here are three steps you can take to help increase the value of your firm:

• Implement a new business development process
• Stop discounting and selling your services on price
• Train your staff to become more profitable

Implement a business development process

High quality practices do not become successful by accident. They are built by prudently developed plans to create as much value as possible for the practice, both now and over the long-run. Successful practices develop a culture of practice development, or rainmaking.

Stop discounting and selling your services on price

Most buyers base their decision process on factors other than price.  Only a small percentage of buyers make their decision based on price alone, and those clients will be the least loyal and most likely to move to another firm with lower rates. Furthermore, the economic factors that are creating more price pressure mean that it’s more important than ever for accountants to utilize a business development process. There are only three things you can offer a client, quality, service and price, but you can only provide two of these.  Which would you choose?

Train your staff to become more profitable

While it may seem counter-productive to take people away from billable work or sales calls, the return on investment can be valuable. At a minimum, ensure that your team understands and can articulate the value of your services. Training in the business development process enables your team to focus the customer’s attention away from price and onto value.

If you are serious in your desire to increase value of your practice, implement these steps and watch the potential impact to your bottom line.