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.