All posts by John Ezell, CPA

With tax season in full swing the last thing on most accounting and tax practice owners’ minds is buying, selling or merging their firms.  But for someone that hopes to sell their firm before the 2011 tax season, that is a year from now, the time to start is immediately after this tax season is finished.

We have found that those practice owners that start the selling process in April, May and June are much more likely to have a successful outcome (better choice of buyers, more money upfront and better overall price) than those that wait until October or November.

Many practitioners believe that buyers and merger partners will not want to close a transaction until the fall, or even just before the next tax season, and end up starting of the process too late.  Most buyers realize that in a competitive market, the time to buy or merge is when the best firm is available and that is not always on their time line. 

Another reason practice owners miss the sales window is they begin the process as a “For Sale By Owner” and work with only one or two buyers at a time.  They start talking to someone about buying or merging in May or June, and then let that process play out all summer, only to find out in the fall that the buyer or merger candidate is either not qualified or not as interested as they initially let on, leaving the seller less time to identify their successor.  

Keep in mind, most buyers see “For Sale Buy Owner” as an opportunity to get better terms from the seller and ultimately pay less.  A better way is to work through a process to identify multiple ready, willing and able buyer or merger candidates.  This aligns market forces so that you can identify the best successor for your clients (and staff) and ultimately end up with the best price and terms.

Comments (0) • Posted March 17th, 2010 at 10:35am

Rita Keller, in her recent blog Surroundings Really Do Matter, asks the question "do people perform better work in a neat, clean, organized environment than they do in an environment of disorder?"   She lists points to ponder that relate to staff and management issues, such as how cluttered offices hinder the working environment with loss of productivity and ultimately increased stress.  It is interesting because we often have to address this in the sale of a practice.

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.

Comments (8) • Posted March 3rd, 2010 at 4:38am

I recently got a note from a CPA who said “so far, this year has exceeded my expectations, and its only January!”

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?

Comments (0) • Posted February 17th, 2010 at 5:20am

For many firms, January through April is the most critical time of their year, with most of their revenues derived from year-end financial statement work and tax compliance services. The long hours leave staff and principals exhausted and often overwhelmed. During this period, maintaining a business development mindset can be vital, especially for practices that perform a wide range of services.

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.

Comments (0) • Posted December 16th, 2009 at 12:10pm

Most firms are looking at tax season as a stepping stone for 2010. New business development should always start with your current clients. Your current clients are the targets for other firms looking for more business, so maintaining your relationships is a crucial first step.  Improving that relationship and treating clients favorably, will lead to loyalty, repeat business, and referrals to additional clients.

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.

Comments (0) • Posted December 8th, 2009 at 11:50am

With the 2009 practice ownership transfers wrapping up, our upcoming blogs will be addressing methods of increasing value and developing business.  To start, I would like to highlight several key areas a practice owner should focus on to increase the value of their practice.  First though, I would like to make it clear that this is a seller’s market for the sales of tax and accounting practices.  However, it is ultimately buyers in your market that set the value of each individual practice.  Just like the old quote “beauty is in the eye of the beholder” the value of the practice is in the eye of the buyer(s). Therefore, practice owners should take a long hard look at their practice, years in advance, to increase revenues, profitability, efficiency and value before listing the practice for sale.

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.

Comments (2) • Posted November 25th, 2009 at 5:38am