Tuesday, December 23, 2008

It’s Becoming A Tough Economic Environment Out There

OK, that’s a nice general statement, but if you’re like me the real issue is, yeah, it’s tough out there, but what does that mean to me and to my practice?

Obviously, it differs between practitioners, but most of my clients are seeing a couple of changes that are reflective of the times. The first is that their AR is lengthening and their cash positions are weakening. The second is that clients are pushing back on fees and write downs (or write offs) are increasing. Taken together, this is not a good combination and I know you are putting considerable thought into softening these effects upon your practice.

Many of you would feel very comfortable advising a client experiencing these same difficulties. You could suggest they cut expenses, offer an early pay discount to their AR list, focus the marketing & sales effort on the most profitable lines, stop offering products or services that don’t make money, string out the AP a bit more, renegotiate with vendors, maybe even looking at factoring or asset sales, etc., etc. I have no doubt that you will consider all of the above, and many more, to ameliorate any negative effects you may be suffering.

I have always been an advocate of making changes when the sun is shining; not when the wolves howling. But, we don’t have that luxury at the moment because the wolves ARE circling the campfire a bit closer than they have in the recent past. In response, I want to suggest two additions to the elements you may be considering for your “Survival & Prosperity Plan For Today’s Tough Market.”

The first addition is cleaning up the management of your practice. If you’re like most of us you’ve been doing the same things to run your practice pretty much forever. You have your way of doing things; it’s comfortable the way you do it, and so far its worked, so why change? Well, one reason could be because the business climate is changing.

Did you ever think there might be a better way to manage your practice? No doubt you’ve noticed some sole practitioners and firms just seem to have it together. They get good clients; they are busy and it seems they are very successful financially. Is it possible they know some tricks you don’t? Maybe they have a better approach to planning; their internal communications are superior, everyone is on the same page, they are organized to make the most of each employee’s talents, they set good goals and hold people accountable, they hire and retain the top talent in town and their senior partner(s) seem to motivate their employees to consistently deliver a superior work product.

When you received your degree and earned your CPA you didn’t suddenly acquire these management skills out of the blue. Unfortunately, of all the owners and managing partners out there, only a few are lucky enough to naturally possess exemplary management talent.
If this economic downturn has put you in a frame of mind where you would like to acquire the practical skills to come out of the other end of this period poised to achieve unprecedented success, here’s my first suggestion:

If you are in, or can travel to the Western US, there is an exceptional 2 ½ day management training program you should consider – and no, I have no financial connection with this outfit and won’t make a nickel if you were to attend – by the name of MAP, inc. KPMG, E & Y, Grant Thornton and hundreds of other accounting firms have sent people to this management workshop over the past 30+ years and I believe it not only has a great bang for your buck but also is a totally practical program that starts paying off as soon as you get back to work on Monday. The knowledge you pick up there can be a real game-changer for your practice. A knowledgeable, no BS guy with MAP who has worked with clients of mine is Joe Mohorovich, who can be reached at 707-258-1300 (O) or 707-363-7950 (cell) if you want to check this out.

My second suggestion is that you immediately amp up your marketing and sales effort. Many other accountants will be pulling back and moaning the blues. Don’t do it! Exude a positive vibe! Get out there and make something happen. In the past few weeks I’ve given you a lot of ideas about how to a) get more out of your existing clients (assuming they are solvent and have the cash flow to pay you) and, b) get new clients. In the latter instance, make a point of requesting a copy of the current financials before meeting with the prospect “so (I) can add more value when we talk” and you’ll have a pretty good idea about how hard you want to pursue them.

Something on tap for 2009 for those of you who have, or are considering acquiring, ProfitCents software, I am working on a deal with them to offer a business development “how-to” process wrapped around the software. I’ve been using this with some of my clients and we’ve had remarkable success, so I am eager to tell you about the methodology.

Finally, let me wish you all a great Holiday season! Writing this blog has been fun and at a minimum I’m going to continue it through 2009. The next post will be another case study and it will appear in your In Box in the second week of January.

Craig Weeks

Business Development Case Study #1- part 2

Last week we took up the challenge of wooing Larry, a self employed consultant married to a high school teacher, to become a client of your accounting practice. At this point, you don’t know if he has an accountant or simply uses H&R Block, TurboTax or similar software. And, actually, you don’t care. It turns out you both work out at the same gym and that will afford you an initial means to make contact with him.

The first leg of the journey is to ripen the situation to the point where Larry wants to talk with you to explore whether he’ll become a client. With that in mind, all you are doing now – with apology in advance for the lame fishing metaphor – is trying to set the hook. Later, we’ll work out how you are going to – another apology – net him and pull him into the boat.

Specifically, building upon last week’s post, the challenge is to 1) get Larry to like, or at least feel comfortable with, you and 2) somehow differentiate yourself from other accountants and plant the seed that you are a cut above the rest.

You’ve made the first foray to reintroduce yourself to Larry, and what I suggest is that you make a point of saying hello and chatting briefly each time you see him at the gym. At some point, when it feels comfortable, ask him about his consulting practice. You need to find out what he does. What is his area of expertise? Who are his clients? Is his practice local or wider in scope? Keep this very casual. Just two business people talking … nothing too probing or specific.

If what he does could be of value to any of your clients, casually mention this and ask if he’s accepting referrals. Keep this very low key because it could sound contrived if you don’t. If he asks what you do tell him you are an accountant or CPA, but don’t elaborate. He’ll ask if he wants to know more. The main thing here is you do not want to become a blip on his “I’m being hustled” radar. Again, this is just two guys talking. You’re inquiring about him because you are interested; not because you are trolling (I did it again! What’s with the fishing!?!) for business.

If you’ve seen him a few times and he actively engages himself when the two of you spend a few moments talking, you can probably safely assume he at least views you as reasonably pleasant to talk with. For now, keep it simple. Don’t invite him to lunch or in any other way up the ante. It’s too early.

Once you’ve had the “so what do you do?” conversation, you can start thinking about how you are going to the next stage of this process.

By now you know what his consulting practice consists of and you have a sense of the type of people that make up his client base. Remember, the idea is to differentiate yourself from other accountants. So, how might you do that? One proven methodology is to access CCH or other accounting-specific data and information sources and look for something cutting edge (e.g. proposed rule, reg change, court ruling, IRS opinion, etc.) that relates to Larry’s practice and/or his client base.

You may have to get fairly clever here, but I’m willing to bet there will be some bit of esoterica you’ll unearth. Now suitably armed, we’ll jump ahead to your next encounter with Larry at the gym.

What you want to accomplish in the next couple of minutes you spend with Larry is straightforward. You want to impress him with your knowledge and initiative, you want to stand out, you want him to feel special and, if I may be very direct, you want to lessen his opinion of his current accountant, if any.

It might go something like this, “Hey, Larry. Hello. We were doing some research for a client’s problem yesterday and what we found for them may be of interest to you. The bottom line is that the United States Tax Court just made a ruling that may possibly impact some of your client base. Here’s the deal in a nutshell … (this is where you explain what it is in 30 seconds or less). You may already have heard about this, but I thought I’d play it safe and let you know. I wrote down the page address (or citation) for you so you can check it out on the web.” You hand him the piece of paper with the address. “Sorry to bring business to the gym. Have a good workout.” And you head on over to the Stairmaster. You can wait for him to say thank you if it happens in a few seconds, but get away from him quickly because you don’t want it to look like you’re seeking approval or some sort of recognition.

How does this look from Larry’s perspective? Up to this point you’ve been a guy he says hello to at the gym. You are also a professional and you seem focused, pleasant and matter of fact; you do your routine and don’t take up a lot of time talking. He knows you’re an accountant, but he doesn’t know exactly what you do. Businesses? Audits? Non-profits? He doesn’t know. But now, out of the blue, you drop this on him. Yes, from what you said, it may impact some of his clients. Or, maybe not. But, it’s worth checking out. You seem to have clients, and knowledge, that overlap with his business. You obviously are staying current with developments and in fact are ahead of the curve because this just came out and Larry’s accountant certainly didn’t call and say anything about it. In fact, you haven’t talked with him in three months or more. You also remembered something of what he said concerning his practice and you made the connection when this information surfaced with another client and took the time to do something thoughtful. At no time have you hustled him for business.

Over the next few weeks or months you continue saying hello to Larry. If he warms up, maybe it’s time for a lunch. In any event, if that case is appealed, watch for the ruling and tell Larry the result immediately. No one else has ever given him this level of attention and service and he’s not even a client! The odds are very strong Larry will be your client within a year and it has only taken a few words at the gym and an hour or so with CCH. Plus, it is highly probable Larry has, or will, tell others about your initiative and that will broaden your referral base.

The foregoing can play out at any setting where you see someone regularly. Rotary, Toastmasters, volunteer work, church, neighborhood condo association, the list is endless. The key is to not rush the process. You can have several of these going at any one time and the total time investment is still minimal.

Business Development Case Study #1- part 1

You and your partner Lillian have a small accounting practice in a city of 200,000. The nearest large metropolitan area is over a hundred miles away.

You are just settling into a Stairmaster at your local gym when you spot Larry across the room. You met Larry when you both attended a web marketing seminar two weeks ago. He said he is a self employed consultant – but you can’t remember what kind – and you’re pretty sure he said his wife teaches at the local high school.

Your practice has a typical mix of individual returns and some small businesses and while Larry probably isn’t your ticket to the big time, he certainly has every appearance of someone you would like to have as a client. Because Larry will probably be a relatively small client, you can’t put too much time into the effort.

So, what can you do to make it happen?

Hmmm, you set the difficulty level to 8 on your Stairmaster, step on, and begin thinking about how to proceed. Of course, you could just walk over and talk to him. But, what if he becomes annoyed that you’ve interrupted his workout? Alright, maybe you should mail him something? How about a copy of your newsletter? It is pretty generic … would he even read it? Email? No. Everyone gets too much email as it is. Or, better yet, how about calling him? Yeah, but would he remember you? And, what would you say if he didn’t? Man, that could get really awkward.

First of all, let’s keep this as simple as possible. You’re at the very beginning of the process of wooing Larry, so let’s just take it one step at a time.

Before resolving this dilemma, let’s quickly revisit some things we discussed In prior posts. One is that people purchase professional services from people they like or at least feel comfortable with. One way or the other Larry is going to have to have sufficient contact with you to form this positive opinion. Another is that Larry in almost all likelihood believes all CPAs are good at what they do. This means you don’t have to make an “I’m the best” pitch a part of your approach.

Yet another is that you need some means of separating yourself from the competition. Maybe Larry and his wife use TurboTax or a similar do-it-yourself system, but the greater probability is that he already has an accountant. If we presume he is satisfied with the service he’s receiving now, what can you do to make him want to switch to you?

To summarize, 1) you need to get Larry to like – or at least feel comfortable with – you, 2) you don’t have to convince him you are a great accountant (unless he’s involved in some activity requiring esoteric accounting skills) and, 3) you’ll need to differentiate yourself from his present accountant, if any.

The proven way to make a connection with Larry is to do it face to face. Come up with some wording you’re comfortable with, but the best thing is to walk over and reintroduce yourself to Larry. You wait for him to take a break between exercises and approach. Smile, hold eye contact the last few steps, extend your hand with a few feet between you and say, e.g. “Larry. Stu Holder. Good to see you again. We met at the web marketing seminar a couple of weeks ago.” This will be followed by a period of exchanged pleasantries. At this point I recommend you take the initiative and say, e.g. “Larry, I didn’t want to interrupt except just to say hello. I’ll catch up with you when we aren’t in the middle of our routines.” And then you go back to your Stairmaster.

What impression have your actions created from Larry’s perspective? First of all, he feels good that you remembered his name and that you were sufficiently positively impressed by the prior meeting that you decided to walk over and say hello. He didn’t get annoyed because you kept it brief and didn’t waste his time nor even create much a break in his exercise routine. You didn’t ask for anything. You were polite and pleasant. You seem to be a good guy. All in all, I think we have a good beginning to 1) above.

Unless we need to, we aren’t going to address 2) while seeking Larry’s business. In a prior post I explained why you don’t have to sell your accounting skills unless there is a specific requirement to do so. The example I used to illustrate this exception was that the prospect needed someone who understood the ins and outs of European Union Value Added Tax. In instances such as this, you can bet you will be asked about your knowledge and experience.

Which brings us to 3), which will be the subject of next week’s post. We’ll also take a couple of further steps with 1) to ensure Larry forms the needed positive impression of you personally.

Wednesday, December 3, 2008

Where Do I Find New Clients? – Part 2

In last week’s blog we touched upon the traditional marketing efforts all professional service providers rely upon and then explored the first of two somewhat more unique approaches to finding new clients. The first one we looked at was becoming an expert. This week we’ll explore the second approach, which is to look in your own files. Your present clients represent the easiest path of all to bring additional revenue to your practice.

I have seen scenarios such as the following occur way too many times: Bob prepares the tax returns for Mark and his wife Mary. He sends Mark and Mary a reminder in January to organize their raw data, which is dutifully sent back and Bob notices that Mary has started a business. To top it off, there is another accountant’s name on the P&L! Dang! How did this happen!? Bob calls Mary and after some gentle probing hears her say, “I’m sorry Bob, I didn’t realize you worked with businesses too. I thought you just did taxes, so I went to a business accountant. He said he could do our personal taxes, but I told him you did that for us.”

How could Bob have prevented this? You know instinctively the answer lies in communicating with his clients. One way or another Bob must ensure his clients understand what he can do for them so they don’t stray off the reservation.

And, to underscore the importance of this, I can tell you without reservation that your existing clients are predisposed to give you new business when it makes sense to do so. Why wouldn’t they? You know them; they trust you, they think you are professionally capable and even if they don’t want to hang out socially, they at least feel comfortable working with you. Unlike the challenge of a stranger, who has formed none of these beliefs or feelings, your existing clients offer virtually no sales resistance. All you have to do is demonstrate an acceptable value equation and they will authorize the work.

And, more often than not, it’s good business. As they strive to achieve their definition of success, your clients are constantly on the move. They buy things, start businesses, get into investments and do all manner of things that they might do more profitably or at lower total cost if they ran it by you first.

Let’s be clear that we aren’t just talking about damage control here, i.e. taking steps to ensure business isn’t lost. We’re also talking about taking proactive steps so that if a client gets into something really good you can also share the ride. This leads to my suggestion that when (not if) you review your book of business for opportunities you look not at just the 20% - 25% of your clients that generate 80% of your revenue, but also at those who exhibit potential. They are trying things, innovating, looking for markets and niches and you need to be aware of what they are up to.

Two posts ago I emphasized how important it is to meet face-to-face with your most valuable clients. It’s probably an obvious statement, but both surveys and empirical experience underscore the conclusion that a telephone conversation just doesn’t work as well. The post discussed the personal meeting in the context of maximizing retention, but any meeting represents an opportunity to find out what they are up to. Ask some questions, offer a bit of free advice, get involved, position yourself as their go-to source, emphasize your availability if they have a question, etc.

Maybe they want to start a business. Did they know about the benefits of doing so in a local enterprise zone? Are they thinking about buying an airplane? Have they considered purchasing it in their name and then leasing or renting the aircraft to their own or a third party’s business on either an ad hoc or hours per month basis? Could their cabin in the mountains be made available to employees for retreats or reward? Is there some way to structure such activity to generate a deduction?

The point is that you want to be a part of the financial lives of these dynamic clients. You want them to seek your input and advice before they make moves that have the potential to meaningfully impact their financial circumstances. By doing this you are giving them the best professional accounting service they have ever experienced and it should come as no surprise the result is a loyal client base and a steady stream of excellent referrals.

Thursday, November 27, 2008

How Do You Ensure A Superior Client Retention Rate?

You’ve worked hard; followed the model, honed your skills and obtained a number of desirable new clients. And, with practice, you’ll just get better at it! OK, but now that you have them how do you keep them?

The most obvious first component is to provide superior accounting services. A lot of this is terribly basic stuff I won’t get into. You already know how to do your job. But, it might be refreshing to look at it from the client’s perspective. What makes them want to stay with you and not look elsewhere?

The bottom line is that they want you to be someone a) they have a personal connection with and, b) whom they believe provides a reasonable value-to-cost ratio. “But wait! But wait!,” you say. “I’m the best accountant in town! Isn’t that what they want?”

Clients don’t place as much value on your skills as you might think (or wish). This is primarily related to not understanding the technical aspects of what you do. Their default belief is that all (or at least almost all) accountants are reasonably knowledgeable and competent. After all, your card says you are an accountant/CPA and you have all those “I’m really an accountant” things up on the wall of your office. This means that they rarely appreciate the level of skill it can take to come up with, e.g. an especially clever tax or estate planning approach. If you assume they will stay with you because you are “the best” it is almost always a mistake except with highly sophisticated clients who can appreciate your efforts. Most clients aren’t like that.

That takes us back to the client’s desire for an accounting professional they feel connected to and being comfortable with the belief they are receiving fair pricing for the services provided.

Let’s get the latter out of the way first. This is easy: You charge the prevailing local rate(s). We talked about pricing in an earlier post, but that’s the bottom line. Couple that with getting their work done accurately and on time and you’ll be fine. If a client leaves just for price – you don’t want them! Sure, keep them at a reduced price if you really need the cash flow, but don’t ever count on them to stick around. Plus, I’m sure you have noticed that the odds are that if they low- ball you on price, they also have a high hassle factor and are a slow pay. These clients are like a trifecta of bad!

It’s the connection aspect of your relationship with the client that makes the real difference with retention, so let’s focus upon that and how you can use this to engender extraordinary loyalty (and quality referrals).
Of course, it’s a given you’ll always be cordial, polite and pleasant with your clients, but then again, so will most other accountants. Displaying a pleasing persona isn’t enough. You’re going to have to expand your efforts a bit.

What might you do to influence the client to regard you as someone who a) values them individually, b) isn’t only looking at them as a source of income, c) is a particularly competent accountant and d) understands and cares about their particular circumstances?

First of all, you must force yourself to meet face-to-face with all of the clients who comprise your list of top 20% revenue sources. Do it at least once a year. Plus, you add to that list any clients who have a real upside in terms of revenue growth and/or quality referrals. The classic way to do this is to invite them to lunch. You have to eat everyday anyway. You pay for lunch and you don’t bill them for the time. It doesn’t have to be expensive … it’s more about having an opportunity to communicate without interruption.

What do you talk about? Firstly, it’s about them and their family. Why? Because you’re exhibiting a), b) and d) above. Then, you morph into asking about their business or job and factors influencing their current and immediate future financial circumstances. Weave this in with some free advice, e.g. “It would be smart to explore in greater detail your cash needs for 2009 with how we want to acquire the new fork lifts and overhead crane. Before you do anything we should run a number of lease vs. buy analyses and go over the results.” Mix in some personal needs, e.g. “I think we should revisit funding of the girl’s college fund every six months since we’re on a tight time line there. We should be very diligent in adjusting how much is being earmarked based upon how the business is doing so you aren’t over or under committing.” Now you’re covering a) through d) and creating the very real perception of value. This is all very casual and personal. Don’t pontificate. Don’t hustle them for work. Make the meeting be about them. If there are any action items coming out of the lunch, immediately follow up with what you have committed to.

Secondly, provide them with one or more things of value they don’t expect. In the last post I talked about ProfitCents. This is perfect if your firm subscribes to this data source (or, remember, you can find outfits on the net that will run a report for you for a fee). But, there are dozens of other opportunities. Send them a copy of a relevant article out of your association publication; or a book you’ve run across that will be of value to them, or something in an alumni publication that gives some insight on the college his daughter is looking at, etc. Whatever it is, either hand it to them or send it to them with a short hand written note. This really stands out because no one does this anymore. What you send them is limited only by your imagination.

This is easy stuff to do and they’ve never before received this level of attention from a professional service provider. They’ll love it! It will make them feel valued. It will make you stand out. It will give them something noteworthy to talk about to their circle of business contacts (“I can’t believe my new accountant. She’s really taking care of me. Etc.”), and this directly leads to first class referrals.

Thursday, November 13, 2008

Sealing The Deal – Part 6

You Asked For The Engagement And They Didn’t Say Yes

Now What Do You Do?

In the last post we looked at what happens when you either didn’t connect personally or didn’t offer solutions that resonated with the prospect. Whether it was one of those reasons or a combination thereof, you did not get the engagement. We looked at some things you can do to overcome that initial “no” – which you tried – and, guess what, they STILL said no. Or at least didn’t say “yes.”

However good it might feel as you stumble out into the parking lot to curse their lack of perception and judgment while you mentally apply a tourniquet to your hemorrhaging ego, it won’t change anything. So let’s explore one final methodology that might help you eventually snatch victory from the jaws of defeat.

The idea is to stay in touch with the prospect, but do so in a manner that is more than a wave and “hi” at the local little league game. Of course, you’ll still do that if the opportunity presents itself, but what we want to do manage their perception of you so that eventually you become someone they want to do business with.

Along with staying toward the front of their memory banks, you also want to set yourself apart; to stand out from competing accountants.

One of the most successful approaches to ensure the prospect doesn’t forget you is to provide them real value. For example, you can send them a short email saying, e.g. “Hello Ted. I was just reviewing the new tax regulations for 2009 and I see that there are some new rules related to farm equipment depreciation that might impact your situation. I recall you said Abe Brown is doing your taxes but that you don’t do any forward planning. This is an instance where it might be to your financial advantage to do so. Regards, Alice.” After reading this, what will they do? Well, they might call Abe, but it is just as likely they’ll call you. It won’t be the worst thing in the world if they do call Abe and he quickly reveals he doesn’t know what they are talking about. If you do this you’re not being overly aggressive. There’s no pressure; you’re not being pushy, just helpful.

Or, you can do something more sophisticated and unique. For example, if your firm subscribes to ProfitCents you can easily and quickly prepare a comparative report that gives your prospect an idea of how their business is doing vis-à-vis other, similarly situated companies. You can use this to absolutely knock their socks off with data they’ve never seen before. You offer to go through the report in more detail and relate its contents to their circumstances. If that happens, I’m sure you can see where this goes and how it reawakens your opportunity to close the prospect.

This is an opportunity to differentiate you from other accountants. You can modify the ProfitCents form so that only you and/or your firm appear on the document. Unless you have very sophisticated competitors (and you are just plain unlucky) no one will recognize where the information came from. It’s powerful stuff.

(ProfitCents is a program that interprets financial statements into plain-language, narrative reports that include ratios, graphs, industry comparisons and trend analysis. It is available from SageWorks, Inc. There are also some companies that will run a report for you for a fee. I’ve encouraged many clients to use this technique and there have been some spectacular results. Check it out on the net.)

My experience is that providing valuable content is far more persuasive to the average prospect than, say, giving them tickets to a baseball game or similar. You need to demonstrate that you aren’t just a nice person … shoot, everyone plays that card … and instead up the ante by doing something that separates you from the herd and gets their attention. I’ve given you a couple of examples, and I’ll leave it up to your fertile imaginations to come up with even better ideas.

Topic Change

I received a couple of emails asking for further explanation about the last post when I talked about withdrawing before the prospect says “no.” The scenario is ripe when you feel the conversation with the prospect isn’t going well and the chances are poor the meeting will be successful. So, I proposed you preempt the situation by taking yourself out of the game. I said one means was to essentially state that your services are overkill for their circumstances and they should seek a more basic solution to their needs. The unspoken message is that you are too knowledgeable, skilled, experienced, expensive, etc. for them. It also says you are honest and have the forthrightness to tell them the truth. In sales, this is called a scarcity play. Many prospects are surprised by this withdrawal tactic and it is not at all unusual for them to do a 180 degree turn. Why? Because you have said “you can’t have this” and, of course, people immediately want it. This is a very powerful motivator.

Saturday, October 25, 2008

Sealing The Deal – Part 5

You Asked For The Engagement And They Didn’t Say Yes
Now What Do You Do?

In the last post we looked at what happens when you’ve done a good job preparing for, and delivering your message during your meeting with the prospect but they didn’t say “yes.”

But, what if you become aware during the meeting that it isn’t going as well as you had hoped and, sure enough, they say “no.”

It won’t be helpful to follow the template presented in the last post because you and the prospect aren’t in a place where it will be effective.

Let’s look at what might have gone wrong. First of all, you may have simply not connected with the prospect on a personal level. I recall with great clarity a pitch for consulting services I made to a younger woman at an engineering firm and we just didn’t connect. It was evident she felt it too and no matter how I tried to somehow bridge the invisible wall that separates all strangers and move on to a place where we could begin developing some rapport, it just didn’t work. I tried every means I could think of and it wasn’t happening. It should come as no surprise that I didn’t get the engagement and in retrospect I shouldn’t have. Why would she want to contract and work with someone with whom she felt no connection?

The other primary possibility is that the solution(s) you offered – which you felt were the right ones at the time – simply didn’t resonate with what the prospect considered to be their primary drivers. Did you really unearth what the prospect needs and wants?

There can be other reasons, of course, but they tend to be far more unlikely. For example, you may remind them strongly of someone they dislike (“Paul, I can’t tell you how much you look like my ex-husband.”), or you have a mannerism that really bugs them, or they’re only seeing you to give window dressing to the appearance of having a competition for their accounting work. Or a hundred other reasons. I’d ignore these and assume it is one of the two biggies.

Looking at the first scenario, what can you do now to help you connect with the prospect? I’ll offer a couple of possibilities. First of all, you want to live to fight another day, so don’t burn your bridges. Don’t, for example, acknowledge the disconnect, e.g. “Julie, you probably feel the same thing I am. We seem to have a communication disconnect. You will probably be best served by finding some other accountant.”

Instead, I suggest you, in effect, make a preemptive strike and reject them. You might say, e.g. “Julie, as we’ve talked and gone over your financial circumstances, I think what I have to offer is overkill for your situation. At this stage of your (personal or business) finances I think you would be best served to find an accountant who will provide more basic and cost-effective services.” What you’ve done is give her a reason to want to connect with you; if not now then in the future. We all want to deal with the best. Obviously, you have exemplary skills and are an honest person. That’s a good basis for her wanting to have a relationship with you. She may change course and actively want to engage you. If not, the plan is to reconnect with her every now and then and perhaps someday you will have another bite at the apple.

If you feel the lack of “yes” is because you didn’t either a) unearth her motivations, wants and needs or, b) you understand them but offered one or more solutions she didn’t like, the recommend response is different.

The idea is that while you can’t unwind what has already occurred, you can add new material that might be more persuasive. Go back in your mind to what you believe is the most important need or want the prospect has. Apply your accounting knowledge to that issue and come up with something esoteric that you typically wouldn’t know right off the top of your head, e.g. “Julie, I’m uncomfortable with the circumstances surrounding your net operating loss carry forward problem because the rules are quite detailed and really in flux right now. I’d like to do a bit of research and get back with you so you can have an up-to-the-minute understanding of your options before you make any decisions. Would you have a half hour available on Thursday or Friday?”

Assuming she says “yes,” you will naturally be prepared to discuss the subject when you get back together. When you sit down, you can begin with asking questions about the NOL situation that will hopefully get you in the correct ballpark to provide the solution(s) she finds valuable. To make sure you are where you want to be, you can always ask, “While we’re together, let’s not lose the opportunity to revisit your most important concerns. Since we were together two days ago and you’ve had a chance to think about things, have your priorities changed? Is the NOL still the most important issue you face?”

The point is that by introducing the “I’ll research it and get back with you” gambit you have another chance to get it right. You have also demonstrated that a) you care enough about her to do some extra work on her behalf, b) you are proactive and reliable and, c) you are a knowledgeable professional.

When you’ve covered the NOL issue and explored if there are any other issues she wants to discuss again or in greater detail, it is time to make your pitch for the engagement (see prior Sealing The Deal posts).

Sealing The Deal – Part 4

You Asked For The Engagement And They Didn’t Say Yes

Now What Do You Do?

In the last post I suggested a proven end-of-business-development-meeting strategy to convert your prospect into a client. You did it, but it didn’t work. Now what? Let’s frame the problem with a scenario. We’ll assume you made the following call to action: “Joan, I think we’ve covered all the issues and I’m confident I can deliver the services you want. If you wish me to perform these tasks for you, I need to get all the raw data we discussed. What’s the best way to do that?”

Joan pauses for a moment and says, “Well, Bob, I’m still torn about how to do this. Or even if I should. Roger has been doing my taxes for many years and I just don’t feel comfortable taking it away from him even though he said he’s retiring next year. I’d like to think about this some more.”

Or, she might say, “Bob, I have no doubt you can do the work, but Roger has been my accountant for many years and he’s a bit less expensive than the estimate you’ve given me. I feel like I should stick with Roger until he retires next year and then rethink my options.”

Or, “I appreciate your presentation Bob, but I’ve also interviewed another accounting firm and I need to think about which I will choose.”

Ouch! Not what you wanted to hear. How do you respond?

First of all, as you go through the meeting you must continually assess how it seems to be going. Have you followed the process? Are they listening? Asking questions? Engaged? Have you balanced the technical and human factors so you have both unearthed the clients needs and wants and then connected your solutions with what’s really important to them? Plus, just as importantly, have you connected with the prospect on a human level?

Let’s begin with the assumption you’ve done well to this point but she didn’t say yes. In the first two examples above the prospect uses the word “feel” in her response to your question. The third is simply a stall. Recall I talked in an earlier post about how some people just don’t make up their minds quickly. They are conservative. They don’t feel comfortable with change. They need awhile to come around to something new. I also talked about the psychological underpinnings related to this; the conscious vs. unconscious brain and how they need to be in sync before people can be comfortable with taking a new direction. Therefore, your best shot to turn the “no” or “maybe” into yes is to address the emotional side of the equation.

Your immediate challenge is to determine what really drives your prospect ... as you have gone through the meeting, what was the one issue Joan appeared to be the most emotionally invested in? What did she care about the most? While a person may have several emotional triggers, you’ll need to pick one because you don’t have time to explore all the options.

Quickly reviewing the meeting in your mind, you decide Joan’s real hot button is that she is stressed because her business is only marginally profitable and she is very anxious that if it slides any further she’ll be in a difficult cash position with limited resources to draw from. From that you conclude she needs to feel good about a prospective change because she is frightened of doing anything that will make things worse.

So, in her first response, she doesn’t want to change from Robert to you. There may be a loyalty element there, but you can bet there is a larger “I’m afraid to rock the boat” imperative. Her second response has the same loyalty flavor, but also speaks to lower costs and preserving the status quo. I would interpret the third response as simply a ploy to avoid making a decision.

Considering either of her responses, what would be the effect if you said the following? “Joan, please understand I admire and appreciate your loyalty and that I am not being critical of Roger, but the reality of your situation is that right now you need more than a financial scorekeeper. Accountants have a great advantage in that as we work with our client companies we see repetitive patterns of what works and what doesn’t. My greatest value to you is for me to help you adopt those financial practices that the great majority of successful companies seem to share. That’s the quickest path to your success. Let me give you some examples. We can project ahead to determine cash requirements and then talk about the best way to make sure it’s available when needed. We can look at your cost structure, margin and profitability data and compare it to similarly situated companies. Having hard data like this allows us to make a workable plan to get your company back on solid footing with greater profitability and growth. We can ensure your internal financial operations are accurate and efficient. I know a couple of really talented marketers who would be happy to talk with you perhaps provide some fresh ideas for added revenue. The bottom line is I want my clients to be successful and I believe working together we can achieve your goals and alleviate your fears for your business’ success. (3 second pause) What do you think?”

While Joan may not blurt out, “When do we start?” I’ll bet you have an excellent chance of obtaining her as a new client because you have provided a reasonable solution (logical) for lessening her anxiety and fear (emotional). Notice I didn’t even address the cost? That’s because I don’t think it is really an issue. Her fear of change is the issue.

Wednesday, October 8, 2008

Sealing The Deal – Part 3

How Do You Ask For The Engagement?

Let’s assume your meeting with the prospect has included the elements we know have a positive impact upon the eventual moment when they have to decide whether or not to engage you. We’ll further assume you have arrived at the last ten or so minutes of the meeting and there are no overt signs the prospect has eliminated you from consideration. In other words, there are no apparent reasons to delay any further your attempt to sign them up as a client.

You’ve made your points, you’ve answered the questions and there’s really nothing left to say except to – somehow – ask for their business. OMG! as the kids would text; what do you actually say? The good news is that you’re not breaking a new trail here; there is a proven approach you can use.

I’ve alluded in the past to the very extensive business development/sales methodology study done on behalf of Xerox and IBM in the ‘80s. And, if you are thinking this only applies to hardware. I.e. copiers and computers, I want to emphasize that both companies sell consulting services and the results are 100% applicable to the challenge you now face. In that study, two successful behaviors rose to the top in this phase of the business development process. The first is that you make a “call to action.” The second is you obtain an “advance.” If the “call to action” is successful you won’t need the “advance.” Let’s look at these in turn.

In its most basic form, a “Call to action” in this instance means that you propose a course of action that requires the prospect to do something. The psychological rationale behind this is that if they take an affirmative action that reasonably leads them in the direction of becoming your client, there is a high probability they will eventually complete the journey.

I’ll give you a couple of examples. If you have a strong, confident interpersonal style you might simply say, “Before I can begin to work up and prepare your tax filing I’ll need you to sign an engagement letter. It defines all the terms and conditions that relate to our relationship as accountant and client. When is a good time for you next week so we can get that done?” And then you simply wait for them to respond. If they agree to your proposed course of action, you have just obtained a new client.

If that feels a bit more direct than you are comfortable with, you might instead say, e.g. “I think I’ve answered all your questions. If your decision is that you would like me to prepare your company’s returns our state’s accounting oversight department requires me to give you an engagement letter. Would you like me to go through that with you?”

Or, perhaps something a bit softer yet: “I hope I’ve answered your questions. I see we are coming up on the hour. How would you like to proceed from here?”

You’ll notice all three of these are questions that require the prospect to respond with something beside yes or no. They are essentially forced to make a decision … even if it is preliminary to actually formalizing the engagement. And it might be that they say “no” (we’ll deal with that in a future post), but at least you have a stake in the ground and you know what you are dealing with.

The point here is that you don’t want the result to be the client shaking your hand and saying, “I appreciate your coming over Glenda. Let me think about this and I’ll get back to you.” And then you say thanks, smile and walk out. Driving away, you wonder why they didn’t say yes and if they’ll ever get back to you.

The reason this is bad is because they have done nothing that gives you any confidence your efforts will pay off; nor is there any agreed upon follow up. This last scenario leads to the second of the two things you want to have happen. If you don’t get a “yes,” then you go for an “advance.”

Obtaining an advance means that the meeting ends with some agreement to take further action with the probability of moving the business development process along to a favorable conclusion. It just won’t happen now. For example, you are pitching a company that has a Controller or Senior Bookkeeper. You have a meeting with them and jump the appropriate hurdles, whereupon they say, “Well, I’m satisfied. I need to set up an appointment with the owner so the two of you can talk.”

Or, they might say, “Let me send you my paperwork for that botched exchange. Take a look and then give me your reaction. If it looks like we can re-file and the cost benefit ratio is reasonable, I’d like to do it.”

I want you to think about how you can broach the closing process. The approach should be comfortable for you personally. Don’t make it so aggressive or direct that it doesn’t feel like it fits with how you like to deal with people. Remember to include these two elements: Asking the prospect to take an affirmative step that if taken leads in the direction of forming a client – accountant relationship or, if that doesn’t happen, being prepared to obtain an advance that keeps you in the game.

As the Xerox – IBM study so forcefully made clear, if you can get neither, the odds of obtaining the engagement are very low.

Sealing The Deal – Part 2

How Do You Ask For The Engagement?

Skilled sales people and empirical research are in complete agreement: at the conclusion of your presentation or discussion you must take proactive steps to ensure the prospect becomes a client or customer. It will almost never happen by magic (“Alice, you don’t need to say another word … where do I sign up?”)

Why is this the case? If the prospect listens to you, agrees with what you are saying and believes the benefit – to – value ratio is acceptable, why don’t they just say “yes”?

Because that isn’t how people, including you and me, make decisions. If I am going to agree with you to do something it takes my two decisional elements to concur. Psychologists refer to these elements in different terms (e.g. conscious and unconscious, logic and feeling, etc.), but the essence is that you have a thinking, rational, factually based side to your decision making process AND you have a reactive, instinctive, knee-jerk, flight or fight side.

This latter mechanism is what kept us alive tens of thousands of years ago when we were as much prey as hunter. No time to think about it, just react! Analysis can come later, after your instincts saved you from the saber tooth tiger’s lunge.

When your prospect’s unconscious and conscious elements aren’t in agreement you will hear, “Hmmm, I’d like to think about what you’ve said and get back to you.” When they both agree that your solution is the best choice you will have a new client.

OK, so what is the real effect of this decisional duality? Most importantly, it is the reason people are so conservative when it comes to change. People don’t like change because (listening now to the inner unconscious voice) “up to this point we’ve done OK and if we change it may not work out; by changing we lose this present option, and I’m starting to feel anxious about this new thing you’re contemplating.” This is literally a vestigial survival instinct coming to the fore. In an earlier age the suggestion might have been to take a new path down to the river and your instinct kicked in and immediately saw the danger of this different behavior: you thought, “We could be ambushed, we don’t know what’s there, any number of dangers might lurk ahead … we just don’t know and should stick to what we have done before because we know about that. I think the idea of a new route is really scary.” Feelings are the driving element of this reactive, let’s-keep-the-status-quo side of the decision making process.

If they listen to the solutions you offer for their accounting related issues and their rational/conscious side likes what it hears they may just ignore any negative stirrings in their unconscious mind and go ahead and sign up. Great, you’ve just gotten a new client! Well, maybe.

You’ve heard of buyer’s remorse. Ever felt it yourself? I think we probably all have at some point. Buyer’s remorse occurs when your logical side says yes and the reactive/feeling/instinctual side says no and the difference hasn’t been reconciled. Logically the deal makes sense but it just doesn’t feel right. We all know that it isn’t uncommon for buyer’s remorse to be so strong that the purchased item is returned. Or, if it is an action, the action may be undone (“I can’t believe I agreed to go out with Karl to see a movie. He’s a perfectly nice guy, but I just don’t want to. I’ll come up with some excuse and cancel.”) Clearly, emotions are overriding what seemed logical and reasonable at the time.

By the time you reach the end of your meeting you want the prospect to become a new client. That means they need to be in a place where both their logical and emotional/feelings elements are in agreement. This isn’t an all or nothing thing; there’s a lot of gray between the extremes.

Your presentation/discussion with the prospect needs to incorporate elements that address both decision making elements. Not only must the prospect agree logically that your solution(s) are good, they must also feel OK about making the change signing up with you represents.

The meeting process I have discussed in prior posts – from beginning to end – incorporates these “unconscious” elements. My purpose for including this discussion of how your prospect will make the decision to either engage you or not is to emphasize how important ALL the meeting elements are. You are an accountant; you excel at using process, logic, rules, etc. to do your job. For many of you it may be very difficult to not make these factual elements the centerpiece of your effort to persuade your prospect to engage you.

But, if you aspire to a high closing rate you can’t do this! For you to obtain the engagement the prospect must FEEL good about committing to you, and to ensure they do you are best served to put equal effort into both considerations.

To accomplish this, the prior posts discussed the first few minutes of the meeting when first impressions are formed and the meeting’s tone is set; being aware of your body language during the meeting, and remembering that the solutions you propose must be connected to one or more positive impacts upon the prospect’s life – not just the raw dollars and cents impact.

The lesson from all this is that the closing techniques we will explore in the next posts are predicated upon the assumption that you have put effort into satisfying both of your prospect’s decisional requirements. If you haven’t done so, your chances of obtaining the engagement are slim, no matter HOW polished your closing technique is.

Saturday, September 6, 2008

Sealing The Deal – Part 1

How Do You Ask For The Engagement?

Everything you have been doing during your meeting with the prospect has been designed to eventually convert the opportunity into an engagement.

We are at that point in then proceedings when the challenge is simply stated: How do you get them to sign on the dotted line?

Yes, we are speaking about business development to engage a prospect for the purposes of providing professional services, but, when you get down to it the underlying elements are exactly the same as every day, garden variety “sales,” The same forces are at work and the same hurdles must be overcome. In the end the goal is for them to hire you. And if that is going to happen you must a) make a winning presentation and, b) seal the deal.

All the prior posts have been about making a winning presentation, now it’s about the end game. Getting someone to formally commit to your services is a highly fluid dynamic. It is undeniable that while there may be only one destination there are many paths to choose from. What will work for you? It needs to feel right so you will actually do it, and it has to be effective.

There are no magic words. No “speech” will work all the time. Consider Joe, who’s at his favorite watering hole and spots an attractive lady who appears to be alone. He approaches her, preparing to deliver his favorite ice breaker. If Joe has successfully used a particular opening line in the past) with success (“Hi, I’m Joe. Heaven should take a quick count; obviously they’re missing an angel.”), you can bet – especially with this lame spiel – that Joe’s fortunes won’t always be so rosy. It’s not the words, it is how you go about it and, as noted above, it has to feel comfortable for you.

In a perfect world, the meeting would begin with you preparing well and arriving on time. You would do the things that help you connect with the prospect and use body language to keep them relaxed and connected throughout the hour you are together. You successfully determine their priorities and discover any accounting-related problems they are having and then provide a summary of how you will provide the desired solutions. At some point you got into price and when you did so you connected the projected fees with specific tasks the prospect places value upon. If objections were raised you addressed them effectively, recognizing they can arise from both emotional and rational bases.

When you answered their last question they say, “OK, Bill, what do we have to do to get started?” Outstanding! You obviously conducted the meeting very, very effectively. The prospect made up their mind to go with you sometime earlier in the process and has now expressed their decision.

If only it were always so easy!

More typically, you get to the meeting’s conclusion and the prospect hasn’t expressed which way they are leaning. You glance at your wristwatch and see there are just a few minutes left before the scheduled end of the meeting. What should you do? What should you say?

If neither of you say anything, the meeting will conclude with platitudes, e.g. the prospect says: “Great to meet you Bill. I appreciate your time and coming over and talking with me. I know I’ll have to do something one of these days. I’ll give you a call.” You dutifully shake her hand; offer some cheery words of departure, e.g. “You have quite an operation here, Ann. I’ve enjoyed meeting you and learning about your business. I hope we have a chance to talk again.” And then you leave, wondering silently as you walk out to your car “What the hell just happened? It seemed we were doing great! Where did it go wrong?”

Obviously, this alternative – saying nothing – isn’t the answer. So, what do you say? We’ll begin getting into that in Part 2.

Tuesday, September 2, 2008


Let’s first understand where objections come from. It’s typically from two places. And, because people are never simple, there is a lot of gray in between the two opposites. At one extreme the objection(s) are completely emotionally driven. It (or they) can be unrelated to anything you said and instead be entirely due to the prospect’s psychological makeup. It is common for many people to offer up one or more objections simply because they need time to think and don’t like making decisions quickly. They are looking for comfort and time to gain confidence in their decision.

At the other end of the scale are objections relying entirely upon factual bases. In this instance they are looking for an organized, point by point, factual recitation of the reasons why the right choice is to choose you.

But, how do you know which it is? Or is it a combination of the two? Unless you are sure, the best practice is to split the difference and respond in a manner that honors both.

Before you even begin responding, remember the body language lessons from earlier! You must honor Gail’s emotional side. To do this you mirror her body language so she feels as comfortable with you as possible. If you are unsure what to do, default to a relaxed posture; sit back unless she is really energized and leaning forward, and even then only sit up straight and use a few mild gestures. Let her process the information and make the decision in her own way at her own speed. The important thing is not to “chase” her … you’ll just prolong the process because she’ll continue to move away – emotionally and physically – until she is ready to decide what to do.

You’ll respond to Gail’s questions in a low key, honest, straightforward and conversational manner. Do not become defensive or annoyed. Honor Gail’s words and feelings, e.g. “That’s a good question. Let’s take a look at this chart together and I can clarify this for you.” Blend in factual responses to each objection as appropriate, but don’t make your response overly detailed. Provide enough specificity so Gail can understand the points you are making, and if she wants to drill down any further she can ask.

Objections are a very common part of business development. They are best met head on in the manner described above. Far from being entirely negative, they frequently offer insight into what the prospect is thinking and where their priorities are.

The fundamental problem that causes objections that aren’t entirely emotionally based is that we have offered one or more solutions that either don’t address a need the prospect finds sufficiently important, or the solution we proposed is perceived as falling short in terms of efficacy or value vs. cost.

Finally, many studies have shown that when a prospect tosses up multiple objections (assuming you have done a reasonably competent job identifying their priorities and offered reasonable solutions and value) that they are objecting emotionally and simply stalling for time. If you receive multiple objections I recommend you don’t allow yourself to get bogged down. Don’t let No Decision become the decision of the meeting because you ran out of time. Address the one or two that you judge to be the most important and then proceed without responding to those you have decided are minor. The odds are that if you do this Gail won’t bring the others up again; they were just to stall the process while she gathers herself up to make a decision.

In the next post we’re going to begin talking about the Moment Of Truth this has all been leading up to: How do you get the prospect to actually hire you to perform accounting services for them? In sales parlance, it’s time for The Close.

Tuesday, August 19, 2008

Setting And Talking About Fees - Part 3

How should you broach your fees during our hypothetical meeting? Either the prospect will ask (“What are you going to charge me if you do my tax work?”) or you can introduce it. I suggest the latter because when you discuss fees in the meeting is important.

Quoting Fees Rule #1: Do not discuss fees until you are ready to do so. If you are part way into the meeting and the prospect says, “We could save some time if you tell me how much you charge because if it is too high we won’t be working together anyway.” Don’t respond directly! Instead, say something like, “Charlie, we’re both busy and believe me I’m not in favor of wasting time for either of us, but at this point I don’t really have a sufficient understanding of the issues to give you any numbers. Just bear with me a bit longer and we’ll discuss fees in detail.”

When fees/costs are eventually discussed, I suggest you don’t try to minimize or hide it (“Say, how about those Red Sox? Uh, your taxes and stuff should cost about $2,000. Do you think they’ll make it to the World Series?”), nor should you give it center stage spotlight treatment (“I have a rate card here that lists our entire fee structure in glorious color. As you can see – there, where I’ve made the underlines - I’d estimate your annual fees for my services will be approximately $2,000. Of course, if your work for any reason exceeds the scope discussed today, additional time will be charged at the hourly rate – listed over here on the card – of $175 per hour.”)

The reason you don’t respond directly when first asked is because extensive studies (empirical field studies with actual sales people and real prospects) were conducted in the ‘80s with the goal of discovering the most effective methodologies for broaching price. Both examples in the preceding paragraph scored poorly.

Which brings us to Quoting Fees Rule #2: Always discuss fees in the context of matching fees to specific activities or goals. This rule is so important that you’ve already read it in two prior posts. You want the prospect to connect what they will be paying to accomplishing the things that are important to them.

Essentially, what was demonstrated to work best is a two-step process.

I have good news … you’ve already accomplished the first step: your questions of the prospect have already identified their financially-related issues/challenges/ problems are and how they prioritize them.

The second step is to link your fees/fee structure to solving/addressing each of them. For example, let’s assume Christine and Doug are in their 50s; fairly well off from appreciation and cash flow from three apartment houses they own and manage, blessed with three children, all of whom are in their 20s, and two grandchildren.

An activity-based fee proposal might sound something like this: “Based upon my review of your prior year’s returns, I’d estimate the fees for your annual federal and state personal returns to be $1500. Preparing trust returns for the two grandchildren will be $500 each. The annual P&Ls and balance sheets for the three apartments will be $650 each assuming we can clean up the cost collection issues you brought up earlier. In that regard, Wanda, one of our associates at the firm, is an expert on Quick Books, and is familiar with their application to income producing property. I’d like her to take a look before I commit to a specific dollar amount, but I think it would take her about five hours to clean things up. Her rate is $125 per hour, so it should be around $625.”

This has been empirically determined by multiple studies to be a much more successful approach when compared to, e.g. “Doug, I’ve looked at the returns and we can do it all – the various returns and clean up the cost collection problem – for an estimated $5075.”

In the past I have participated in spirited discussions about which task & fee module you mention first. The issue is whether you mention the most important one first (start off with a bang) or last (end with a bang)? My observation is the majority of experienced business developers believe the first item you price should be the activity the prospect appears to care the most about. The idea behind this is that the prospect will have a higher probability of finding this price reasonable because accomplishing this task is important to them and this, the argument goes, will tend to lead them to conclude the subsequently mentioned task & fee items are also reasonable.

Finally, remember that everyone; you, me, everyone, is generally willing to pay for something they want. Obviously, one purpose of the questions you ask the prospect is for you to determine what work needs to be done, but of equal importance is establishing what their priorities are so you can develop a successful pricing proposal. If you don’t, the odds increase that you won’t get the job and you will have to chalk up the meeting to experience instead of adding the prospect to your book of business.

Monday, August 11, 2008

Setting And Talking About Fees – Part 2

What are the plusses and minuses relating to the choice of quoting hourly rates, e.g. “my hourly rate is $150”, versus task rates, e.g. “preparing your personal tax returns will be $1500”? From the prospect’s perspective, an hourly rate is considerably more open ended than a firm price for completion of a given task. Therefore, if the client isn’t really “sold,” and/or perhaps still hasn’t arrived at that point where they feel they know and can comfortably trust you, the hourly rate quotation clearly represents a greater potential for uncertainty than a task price. In an earlier post I noted that extensive research has demonstrated clients are more accepting of price when it is directly related to completion or accomplishment of a goal or deliverable they care about. These are strong arguments for quoting task pricing for “everyday” work such as personal tax returns, quarterly corporate compliance work, calculating balance sheets and P&Ls. The risk for you is small because you are sufficiently experienced with these activities to estimate very closely what your time investment will be.

One pricing technique that not only embraces good business development technique but also retains pricing flexibility is as follows: With a new client first ask them for a verbal description of the work. Let’s assume it is doing both personal and a (small, simple) business return. Ordinary stuff. You then quote a range, noting that the fee(s) will tend to the lower number if their raw data is complete and well organized. If that is acceptable, then have them send (or give) the data to you. Tell them you will call if there are any surprises. If you get into their data and see there is more work – perhaps due to an issue they hadn’t mentioned - you can justify a price increase because of scope creep. When you call to explain the increase and finalize the fee, their default is to agree to the price increase – of course, there’s a reasonableness test – and have you go ahead and do the work because a) by virtue of giving you the data and verbally agreeing to the tentative price they have already invested a degree of trust and belief in you and, b) it is a hassle to first have you send the data back, find another accountant, explain everything, give them the data, maybe get charged more, etc. etc.

Again, notice how you are coupling what you are charging to a given activity the client values and not just letting the price float around, e.g. “Our basic hourly rate at Solo, Venti and Grande is $175 per hour.” (client thinking: “Man, that’s a lot more than I make … do they charge that for everything … is there some kind of limit … what about for making copies?”) All you’ve done is create a barrier that must now be overcome.

On the other hand, it can often be very difficult to quote planning, consulting and project work on a task basis. If you know you will be attending a half-day meeting at your client’s company, it’s no problem. But, if instead the description is to meet for lunch to discuss acquisition strategy for the new product line and then keep talking into the afternoon as necessary, well, there’s no way you can quantify this in advance. The only way to approach this is some time = fee equation, whether you charge, say, $750 for a half day and $1400 for a full day, or by the hour.

You improve the odds of obtaining the work if you can reduce fee uncertainty. If the prospect – either a new client or an exiting client looking for unique or one-off services – can see an upper limit they feel much safer agreeing.

The technique described in the second paragraph above also adapts quite nicely to planning, consultation and project work. And, it provides the additional benefit of giving you a logical and client-friendly mechanism to adjust pricing upward if circumstances so necessitate. Here’s an example of the technique in an open-ended situation.

Bob calls you and you answer the phone:
“Hi, Bob. Have you decided when you want to get together to talk about the expansion funding?”
(he tells you he would like it to be on the 9th)
“Let me check my calendar.”
(you check your calendar)
“OK, that works. I’ve marked it down. Let’s make sure I understand the requirement so I know how much time to earmark for this project. Here’s my recollection: the two of us will meet for an hour or so to discuss the overall strategy and the relevant numbers, then I’ll prepare the funding options and we’ll meet again in a couple of weeks – this time with the bankers to get their input – and after that meeting I’ll narrow the options to the one that is most suitable and flesh out all the details with the goal of having everything finalized before the 1st of next month. Is that correct?”
(Bob agrees that this is what he wants and asks how much this will cost him.)
“I think the two meetings will total about 3 hours. The initial work up of the options will be around 4 hours, and I’m assuming preparation of the final option will take another 2. That’s 9 hours, so we’re probably in the $1,800 - $2,000 ballpark. It could be somewhat less, but if the bankers get overly involved and require more than one submission it could be as high as maybe $3,000. We can talk about it as we go through the process and I’ll alert you if it looks like we’re going to be any meaningful amount over $2,000.”
(Bob listens; agrees the time estimates are reasonable. He’s used to hourly rates in the vicinity of $200, so the hourly rate isn’t a shock. His experience is that bankers can be unpredictable, so that part also makes sense. You’ve told him you’ll keep him informed if it looks like he might have to pay more, so he feels he has some upside protection. He agrees to your proposal.)