Monday, November 2, 2009

Learning & Teaching Business Development – Part 4: Teaching

The prior two posts took an overview look at the challenges of teaching students how to become effective business developers. This post concludes the Teaching thread.

When each meeting is concluded, the student makes a critique of how it went. They should explain to their instructor the good, bad and ugly of the meeting and what they – the student – have learned from the experience.

Remember that the student, who is almost invariably younger, possibly considerably younger, and doesn’t enjoy partner status, has neither the presence, experience nor clout of a more senior member of the firm. For this reason, expectations and goals should be adjusted downward accordingly.

When the student is ready to get their feet wet, they should be given prospects generated from the firm’s marketing and/or networking efforts that can be described as simple and straightforward. If they’ve accompanied more senior accountants on at least four or five actual business development meetings and otherwise seem to be “getting it,” I think it’s time to let them solo.

To get the experience and practice, they should over-prepare for the meeting. The meeting plan I like for the first solo effort is to go in with the idea the student will touch all phases of the method they’ve been taught. However, only three elements will be really focused upon because if they try to be perfect on the whole method it will simply be too much, too soon. That too frequently leads to discouragement. Just commit to do a few things “right” in the beginning and then expand and ramp up expectations.

The first element is the preparation. The second element is the phase that makes up the first five minutes of the meeting; the “make a good first impression” phase. The third is to decide in advance how the student will ask for the prospect’s business at the end of the meeting. Usually, it will just be one or two sentences, e.g. “I think we’ve covered everything Ted. How would you like to proceed?” If they don’t get this in mind in advance I’ve found they can get very tongue-tied when the moment arrives.

For the period extending from the “good impression” phase to when the “close,” if necessary, occurs, the newly-soloing student only has to remember to ask questions to see what the prospect thinks is important and explain briefly how they/the firm can solve these issues. Just muddle through the process initially; expand the envelope as time passes.

None of this has to be perfect for it to be effective. You'll probably be a skeptic when I say this, but if you only did what is written in this and the prior paragraph you would be a superior business developer than at least 75% of the accountants in your trading area. Probably more.

For subsequent prospects, the student is expected to master more of the lements until they have become comfortable with the entire method. My experience suggests it will take at least 20 meetings for this to occur.

Once the teacher thinks their student has become reasonably competent with the method, I suggest the student take the lead on a business development meeting and bring the teacher along as the observer. Kind of like a check ride when a co-pilot is promoted to captain. If it doesn’t go as well as hoped, then do it again.

When you are satisfied the student has sufficiently mastered the method, it is “graduation” time. They are thereafter assigned prospects with the assumption they will routinely convert them into clients.

Friday, October 16, 2009

Learning & Teaching Business Development – Part 3: Teaching

The prior post took an overview look at the challenges of teaching students how to become effective business developers.

In summary, Rule #1 was you can’t teach your student to do it “your way” unless your interpersonal styles are very similar. Most often, they aren’t. Rule #2 is that accountants learn business development best when they do so by taking bite size bits within a logical structure. You can either create one or use mine. Rule #3 is the lessons cannot be learned intellectually. Instead, they must first be understood and then practiced. In the hundreds of clients I’ve worked with, I have never seen even one who could ace it the first few times. It is better to make your initial (and usually more egregious) mistakes in a training environment where there is no money on the table.

Let’s get right to exploring the specific actions you can take to effectively teach your student to become a competent business developer.

Create or obtain an outline, manual or book of the method you will be using. The student should have a decent grasp of the overall structure before you begin. Break it down into chapters, phases, stages, milestones, or in some other manner to create bite-size segments that can be isolated, discussed and eventually practiced.

My suggestion is to always connect each lesson or discussion to real or constructed client situations. Every discussion with your student should tie the topic to a real world setting and context. If possible, always use examples that reflect the real world the student will be facing when they are implementing the lessons.

Once the basic “rules” for a given phase (e.g. how to prepare for a business development meeting) are covered, I believe you will achieve a better level of comprehension if you switch to a Socratic teaching method. Instead of simply nodding that they understand what you are saying, you ask them a series of questions to draw the points of the lesson back out of the student, thereby ensuring they really do understand.

For example, you might say, “Laura, we’ve taken a look at an overview of how you prepare for a business development meeting. Let’s explore it in more depth. How do you think your preparation might differ if you knew you were only meeting with one person vs. if you weren’t sure how many people might be in the meeting?” or “How would your preparation change if you were meeting with the owner versus the CFO?”

In short, have the student demonstrate to you they really do understand the lesson content.
When the student has begun to get the gist of how business development works my experience is that it is good practice to get them out in the field right away. Not on their own, but accompanying more experienced accountants to real meetings with real prospects.

This can begin by having the student do the preparation for the first meeting they will be attending. Once this is completed the teacher and student should develop a meeting plan so each attendee’s role is defined.

A proven way to structure the first training meeting is for the “lead” accountant to take a close look at the prospect’s situation and identify a given area that has a degree of potential complexity to it. Let’s use 1031 exchanges as an example. Then, when the meeting introductions are made, the student is introduced something like this, “Joan, I’ve brought Pat with me because I see you are considering making the sale of your warehouse subject to a 1031 exchange. He probably has the most current knowledge of anyone in our office about these transactions and their tax implications. His input may be valuable in our discussion.” (Obviously, Pat will bone up on 1031 exchanges before the meeting.)

NOTE: when two or more accountants attend a business development meeting things can go quite wrong in terms of coordination, presenting a united front to the prospect, etc. My blog archive is at ( Go over on the right column, scroll down, click 2008, then click April, then click “Who’s On First.” About halfway down it talks about having a meeting plan. The text that follows gives you some ideas about how to ensure your presentation will go smoothly.

This will be too long. We’ll conclude with Part 4 next week.

Monday, October 5, 2009

Learning & Teaching Business Development – Part 2: Teaching

The last post addressed the two foundational keys underpinning the student’s journey to become a truly superior business developer. The first is they have to adopt an approach that allows them to be themselves. The second is they must understand and practice the people skills that allow them to establish a strong rapport with their prospect.

When you select prospective students, there is one overriding concern: they MUST want to learn business development. My experience, teaching literally hundreds of clients how to identify, approach and convert prospects into clients has taught me The One Great Truth – learning effective business development is impossible for those individuals who are predisposed not to.

They know their manager wants them to learn; they know any thoughts of eventual partnership depend upon them learning; they know their income will never rise to the level they desire unless they learn, but they still won’t/can’t do it! This is a whole separate subject, but as a teacher who is busy with your own practice you don’t have time for students who can’t or won’t learn, whatever the reason.

Another lesson from my experience that may be helpful is that the average accountant doesn’t need any additive technical training as a precursor to learning business development skills. The reason I say this is because they’re going to be starting with “basic” prospective clients with issues that are mainstream for the firm’s practice focus. If the student needs specific upgrading of their technical skills it can be done on their time.

A final lesson is that you will get much greater mileage by focusing upon teaching the humanistic side of the equation. It is that element which is a foundational key for your student to become an ├╝ber successful business developer.

Now to specifics.

Rule #1is that unless your interpersonal style and that of the individual you are teaching are very similar, you will almost NEVER be successful teaching them how to do it “your” way.

They won’t be able to do it because they’ll be acting. Even if they are good actors, the greater probability is the prospect will sense the disconnect, and the accountant will feel uncomfortable because they aren’t in their own skin. In the long run, the odds are greatly stacked against success if you force feed an unnatural style upon your student.

Your challenge is to devise approaches where your student can be effective but do so in their own skin.

Rule #2 is creating a structure or process for your student. Accountants are very good at operating within a framework of rules and predictability. As a teacher, you will be better served by providing such a structure. It is true a highly skilled professional salesperson can “wing it” from the first moment they begin talking with a prospect, but your student can’t.

I suggest breaking down the business development process into several phases. This creates bite size segments the student can deal with. And, each segment falls within a general sequence, which is easy to comprehend and learn. What you end up with will be something like the following:

The first segment is approaching prospects. I believe this is best taught by selecting leads generated from referrals, responses to the firm’s marketing efforts, etc. which can be described as simple or uncomplicated. An accountant who is just being introduced to business development should never be encouraged to initiate contact with a so-called “cold” prospect. This is a recipe for almost immediate discouragement and frustration.
Number two is preparation. What should be done to get ready for your business development meeting with the prospect?
Number three are the protocols surrounding the first few minutes together. Who sits where, how to avoid any social gaffes, handling the paperwork you’ve brought to the meeting, etc.
Number four is what you actually ask and say to the prospect. What subjects will be the highest priority? How should they be broached? Is there a preferable sequence?
Number five is concluding the meeting. What will you say at the meeting’s end? Is there a chance to secure the engagement? What do you do is no decision is forthcoming? What if they say “no?”

There are some manual excerpts at In Section 2 of the Table of Contents there is a general sequence you can use as-is or to develop your own approach.

Rule #3 is that the skills you teach MUST BE PRACTICED.

It goes without saying that accountants are smart. Considering your student’s greater than average ability to listen, read, reason and analyze on a “book learning” level, it’s no surprise they will easily understand – on an intellectual level – what you are teaching them.

Unfortunately, while comprehension is necessary, its importance pales by comparison to the value of learning how to actually DO the skills. It is here where the disconnect between promise and performance frequently appears.

The reality you will face is that more often than not your student will demonstrate a distinct lack of enthusiasm for any type of role-playing or practice.

To explain: Any learning process almost always begins with the student performing poorly and then, with practice, they improve. But, whether we’re learning to roller skate, play the piano or business development techniques, initially we can expect skinned knees and/or bruised egos.

People don’t like psychologically exposing themselves to potentially negative events, and they don’t like being in a position where a manager, owner or partner will see them performing less than competently.

What this translates into is you will more often than not get some form of push back from your student when you attempt to incorporate practice into the training regimen. But, they have to do it to really succeed.

This post has looked at the teaching process from an overall perspective. Next time we’ll explore the nuts and bolts of how you can effectively implement your training plan.

Monday, September 28, 2009

Learning & Teaching Business Development – Part 1: Learning

When I became a Senior Consultant with a California business consulting firm in 1996 I gravitated to working with professional service firms and quickly realized that most engineers, accountants, surveyors, attorneys, etc. weren’t very good at securing the most desirable prospects as clients. This is a problem, because if an accountant wants a great practice they have to become a great business developer.

A root cause of the problem appeared to be that while there was a lot of business development/sales how-to information available (Borders, Amazon, etc.), it wasn’t sufficiently focused to be of value to most accountants.

A second impediment is that “Mainstream” marketing techniques simply don’t reach the most desirable prospects; these sophisticated clients instead find professional service providers by referral or personal assessment, e.g. hearing someone at a CE session, reading an article they authored, etc. So, how do you reach out to these people?

To compound the problem, virtually nowhere could a practitioner find a credible guide for what to actually do and say to convert your all-to-rare premium prospect into a client. (NOTE: There was often lots of input from more senior members of the firm, but only rarely could their suggestions be translated into actionable behaviors my more junior accountants. That’s what next week’s post is about.) Where do you learn how to conduct an effective business development meeting once you’ve arranged to get together with them?

There are answers to the foregoing challenges, and that’s what this blog has been about since its inception.

With time, as I worked with accountants in diverse settings ranging from individual practitioners to KPMG practice groups, successful behaviors and techniques began to emerge.

Expanding upon, and further refining those, and blending in a light version of the most highly developed sales behaviors employed by American corporations, a very effective method took shape. With a bit of additional tweaking, the skills proved to work with virtually everyone who learned and practiced the method.

This post is about learning, so we’ll begin by asking the question, “How do you improve your business development skills?”

Most accountants begin the process by observing more senior practitioners. Learning with one-on-one instruction from someone who has a strong business development track record converting prospects into accounting clients is – in theory – the best way to learn, but only if that person can teach you how to succeed using your own interpersonal style.

Why is that? Because if the process doesn’t feel psychologically comfortable to you, the reality is you won’t do it. Or, you will do it for a while but then retreat back to what you are doing now.

In the majority of the instances where I’ve been retained by a firm to help an individual accountant develop their business development capability the managing partner has told me they have essentially given up hope the subject will ever become competent. Then, when I talk with the individual to get their take on the situation, they say things like, “I just can’t do it her way,” or “Dan wants me to say things that aren’t me,” or “I don’t feel good about being that pushy.”

That’s the first big barrier to learning. You must be able to conduct your business development efforts in your own voice; your own style. Any effort you expend to do it “like Susan does it,” is eventually doomed to failure unless your and Susan’s interpersonal styles are similar.

Instead of learning from Susan, another option is obtaining formal sales instruction. SPIN selling, Sandler, Integrity and others are out there and do a fine job. But you aren’t selling a thing, you are selling a service, and you aren’t a professional salesperson. These courses are geared for people employed in full time sales roles.

The accountants I’ve spoke with said that with the time demands of servicing their clients, course relevancy and not having a steady stream of prospects to practice with, formal sales training didn’t prove to be a practical solution.

Now to the second point: Accountants are smart. They are skilled at absorbing details, examining and interpreting data. Not surprisingly, most accountants are excellent “book learners.” And this is a vital skill if what you are doing is generating accounting-related work product or explaining accounting and/or tax nuances to mystified clients. But, this capability takes a back seat when you are in business development mode.

The secret is that excellent business development relies instead upon an entirely different set of skills: empathy, listening, relating, rapport, understanding, etc.

You already have sufficient technical knowledge to address the needs of the vast majority of your prospective clients. The challenge when attempting to convert your prospect into a client is to become adept at the people skills. Too frequently you won’t understand the prospect’s real needs unless you can establish a strong rapport with them. This capability is where you clearly differentiate yourself from the other accountants you are competing with in your market area.

And here’s the thing – you can’t just read about people skills. The only way you can learn them is through practice. Over the last year and a half of this blog I’ve periodically focused on the people skills that have the most impact.

In summary, these are the two foundational keys to learning how to become a great business developer: The first is to adapt the techniques so they feel comfortable and you can be you. The second is to place your priority upon the people-oriented techniques I’ve discussed in prior posts and practice them. (Or, you can go to to get the whole process in one package.)

The next post will address the challenges of teaching business development skills.

Tuesday, September 15, 2009

Most Newsletters Disappoint … Here’s One That Is Easy To Do, Eagerly Read AND Gets More Clients

The typical newsletter sent out by accounting firms is not very engaging. Actually, “boring” is probably a better word.

It’s a challenge for any accounting firm newsletter to be all things to all people. The content (usually entirely generic) is selected for its relevance to the firm’s client base. But, the clients are almost always quite dissimilar. This means most of the clients reading the newsletter only care about a fraction of its contents. This is not a good formula for reaching out to, and maintaining a meaningful “conversation” with, your client base.

But, back to the point of this post … how can you leverage a newsletter to not only connect with your existing clients, but also generate new clients from a desirable pool of prospects?

Here’s an example. I invite you to think about how this strategy might work for your practice.

Karen, a local CPA, has a private practice populated with small to medium business clients. She has all her costs covered, but isn’t reaching her pretax income goals. She wants to add some more clients because the additional billing hours will result in greater utilization of her staff and a reduction of her overhead percentages. If she can do this, her profitability will disproportionately increase.

She reviews her client list and focuses upon several architects and interior design firms. She likes working with them, understands their issues, and thinks they have excellent growth potential when we come out of the current economic difficulties. She concludes she wants to add more of these clients. But, how to do it?

She decides to reach out to the prospects via a highly focused newsletter.

Her first step is to contact a number of list providers. These can range from online outfits that supply mailing lists to more sophisticated sources such as Dun & Bradstreet. My recommendation is the latter because she can also find out how many employees each prospect has in additional to the contact information, address, names of executives, etc. In a small market she may wish to send a newsletter to them all, but if she is in Chicago, Atlanta or Los Angeles she may only reach out to those with, say, 10 or more employees. She will also include her existing clients as well as members of applicable trade/industry associations on her list.

Her newsletter will be a single sheet of paper printed on both sides. You can get help from a PR, marketing or advertising firm for layout, etc., but the essence is that on the front side you decide upon a title (e.g. “Architectural & Design Firm Financial Newsletter”), and put a box over on the right side with your picture and a brief bio with contact information. In the remaining space you will create appropriate content. There are free newsletter templates available on Microsoft’s web site or you can purchase inexpensive custom templates.

Three subjects is typically a good number …. not too many; not too few. Pick one as a lead and the other two as secondary. The remaining space can accommodate approximately 800 words, and you can proportion the three topics within that total as you assess their relative importance. Begin all three with an appropriate title on the front side and continue each on the reverse.

The subject for each article should be something specifically applicable to architects and designers. What do they want to know about? Dive into CCH and other accountant data and news services such as AccountingWEB and other online sources. Is there a tax court decision that impacts this group? A change in depreciation schedules? Treatment of expenses? Something to do with asset characterization when buying/selling one of these firms? Maybe a new ruling about how independent contractors are qualified? Select things that have high impact on the owners and managers. The possibilities are endless. Oh, and by the way, you do NOT need to include a sales pitch. That isn’t necessary.

If some white space on the back needs to be filled, Karen can buy one-time-use cartoons from various sources on the web. There are tons of them for financial topics, accountants, and related topics. Or, she can put some humorous, financially-related quotes from famous people. Or? You get the idea. Just make it interesting to the reader.

Karen will load the prospect list into her (or a staffer’s) computer and then use a mail-merge program to create the mailing labels. She’ll use a nice business envelope along with good stock to print the newsletter on. By the time she gets it all done and the first issue mailed, she’ll have made a modest investment with the purchase of the list, printing, paper, postage, staff time, etc.

How often should Karen send her newsletter out? Probably every two - three months is a good compromise, but more or less often probably isn’t fatal. The most important test is making sure the content is really interesting to the readers.

Finally, Karen will update her practice’s web site to include an archive of her newsletters and also include some verbiage in her bio about how she especially enjoys working with her (many, several) architectural and design clients. She will additionally note that she is available for speaking engagements and can provide articles for related trade publications.

What is the payoff for Karen? First of all, she reaches, say, 100 highly specific prospects and gets her name in front of them. She will provide them with a periodic source of data they care about in an easy to read format. She is positioning herself as an accounting/tax expert within the architectural/designer communities and applicable organizations. She’s connecting with her existing clients and confirming to them her professional competence. She WILL be contacted by some of the prospects, especially after she’s sent out two or three issues, and she WILL get some new clients from her distribution list.

Saturday, September 5, 2009

Keys To Retaining Clients – Part 2

Retaining a good client is much, much easier than finding a new one. They key to retention is charging reasonable fees, doing the work well and on time and maintaining an appropriate level of communication. The first two of those are straightforward; the third is the challenge because you are so busy. How and when can you make the time? What follows is a continuation of a list of tactics I’ve collected over the years.

— Lunch. You eat lunch every day, right? Why not occasionally invite an “A” level client to join you? Lunching with clients is the cornerstone of the practice building process used by an accountant I believe is one of the best, if not THE best, business development practitioners I’ve ever met. I explained his method in much more detail in my blog post of June 22nd titled “Learning From The Best.” You can also quickly find that post at

— Events. Is your client a baseball fan? Music? Theater? Charitable functions? Invite the client to join you at a suitable event. You’ll enjoy the event and have an opportunity to bond more closely with the client.

— Tax time. When appropriate, schedule a face-to-face meeting and go over relevant details. This meeting can morph into a mini-planning meeting or even future additive work. In any event, you will be interacting with the client, refreshing the relationship and once again getting paid for it.

— Personal notes. When you mail, say, a filing to the client for signature, also put a 3M “stickie” on the top with a short, hand written personal comment. The presence of your signature on the formal transmittal letter is not a “warm” communication. In contrast, the stickie is very personal. You might write, for example, “Notice the gross margin is improving. Good news for the bottom line,” or “We have some tickets for next month. Interested in a Giant’s game,” or “Your bank line is topping out. We should talk to them while your numbers are so good,” or “Let’s schedule a lunch. Call me.” You can’t do this every time, of course, but a couple of times a year is good.

— Have a system in place so when clients contact you someone will always get back to them quickly. What gets clients really cross-ways with professional service providers is when they get NO response, nor is there anything on the VM explaining why you aren’t being responsive, e.g. “I’ll be in Europe on vacation beginning August 3rd and back in the office September 7th. While I’m gone you can contact Jane at etc. etc.” Some accountants have a client email list and they send out a blast notice informing them of any prolonged absences from the office. You can always use call forwarding. Calls can be sent to you at another number, a staff person’s number, etc.

How many times should you be in communication with an “A” level client over the course of a year? Experience suggests a safe answer is four. So, if you, for example, meet briefly with the client in April to cover the major points in their tax return, send them a stickie three months later, have lunch three months after that and then meet for a planning session in January, you won’t have that client leave you because they didn’t feel they were getting enough attention or that you didn’t appear to value their business.

The final point is that when you are routinely engaging in qualify communication with a client the relationship is strengthened. This will naturally lead to more referrals and other good things, but it also has the effect of creating a stronger resilience should something become a problem. If there is a filing problem, an AR issue, an error in preparation, etc., resolution of the problem will be easier because the two of you are comfortable and familiar with one another. Considerable good will have been created, and this will be very helpful as you both reach for a mutually agreeable solution.

Monday, August 31, 2009

Keys To Retaining Clients

Just spent a little over a week at Arch Cape on the Oregon coast. Had a rental house almost on the beach. Perfect weather. Hiking, bicycles on the beach, firepit going at sunset. The whole program. It was great. When we got back home we discovered the cat had “eliminated” several times on our bed. That had never happened before. I think we can infer she was annoyed by our absence! Welcome home, dad. Sheesh! OK, back to work.

Keys To Retaining Clients

Retaining a good client is much, much easier than finding a new one. In fact, the better the client the harder they are to replace. Accountants are busy – often VERY busy at various times of the year – and it is daunting to find the time to give even your best clients the attention they should receive.

Surveys of clients who leave accountants and lawyers are pretty consistent in their findings that the number one reason unrelated to excessive cost or poor work quality is lack of communication. Lack of response is right up there too, which is a pretty close cousin if not in the immediate communication family.

With time so scarce, whom do you stay in touch with? If the client is a $400 1040-only client you probably shouldn’t worry much, if at all, whether you talk with them during the year. If they are a $20,000 business and personal returns client you most assuredly will communicate with them. More than once, in fact.

Somewhere in-between is a demarcation below which you won’t have the time to talk with them with any consistency. And that’s OK. You do what you can do. Don’t beat yourself up over it. Just make sure you never let an “A” level client – one in the top 20 – 25% in terms of revenue – come to the conclusion you aren’t interested in them and their business.

Let’s assume your fees are consistent with your market and that the quality of your work is similarly in tune. So, the number one retention requirement is to maintain a sufficient level of communication with at least your better clients. Over the years this issue has been a fairly constant problem in my consulting engagements and I’ve kept a file of how various clients have dealt successfully with this challenge.

Here are some of the communication tactics extracted from those notes:

— Planning. You always want to do more business with your clients and a planning session accomplishes a number of things simultaneously. The planning session will cement the relationship for the coming year, perhaps identify some additive work you can do and occasion a heart-to-heart, bonding discussion with the client about all manner of topics that are important to them (e.g. retirement, sending kids to college, buying the vacation house, expanding the business, etc.). If you have the planning meeting somewhere near year-end or January, and then have another meeting around tax time, those are excellent first steps. Plus, you get to bill them for the time for both.

— Projects. Often a planning meeting results in project work, but you can also create project work by leveraging your knowledge of the client’s financial circumstances into a project. For example, it probably makes a lot more sense to engage you for a few hours to run some projections to determine how much revenue the client’s new sales office needs to break even before they invest the $100,000+ it takes to get the office open, staffed and subsidized until it is paying for itself. Like planning, projects are the perfect opportunity to have a meaningful discussion with the client. One or more hours of quality communication that once again you get to charge for!

— Advice/consulting. Pretty much the same as the prior two bullets. Your time with the client serves multiple purposes of bonding with the client, enhancing your probabilities of working with them well into the future, having a quality communication and getting paid for your efforts.

— Birthdays or other major anniversaries. Suspend appropriate date(s) in your or a staff person’s computer and a week before the event send them a hand-written note or card containing appropriate congratulations and/or best wishes. Surveys have consistently shown that hand written notes are greatly valued by recipients. Combine the note/card with some flowers, candy, or something more individualized and you have just created an impactful communication that may have required only the time to scribble your signature.

This is going to be too long, so I’ll save the rest for the next post.

Thursday, August 13, 2009

Pressure To Lower Fees – Part 2

Thanks for your comment and emails. Based upon the interest shown, I’ll continue further with this subject.

Gail, whose firm is in Miami, spoke about having a bottom line. She has experienced some fee pressure from clients and initially was uncertain about how to approach these discussions. She found she was more confident once she had decided upon a go-no-lower minimum fee amount. A subset of that decision was to accept the fact that a client might walk away and to let that happen if necessary. She reports that she feels she is conducting these discussions more competently now that she has established solid negotiating parameters.

Matthew, whose practice is in Australia, said that he’d lost a client who had fallen for a very well-worn sales “trick.” The competitor who wooed the client away has a rate structure the same as Matthew’s firm but quoted the client a lower fee based upon including less in the way of services. In other words, the extras the client received from Matthew on an “all-in” basis would now be charged separately which, of course, will result in little, if any, difference in the overall expenditures for accounting services. Matthew has mixed feelings about taking the client back should they change their mind.

A point several of you mentioned is to have a face-to-face meeting with the complaining client whenever possible. The human connection is important when engaging in a difficult discussion and the telephone, let alone email, is a poor substitute. In the meeting you want to ensure the client really understands what you do for them. Remember Matthew’s experience: Enumerate whatever it is you do and ensure the competitor who is romancing the client offers the same level of service, i.e. is this really an apples-to-apples competition?

Asking for something in return is the best way to build a win-win renegotiation of fees. This is the flip side of Matthew’s situation. For example, when your client comes to you with the goal of lowering your fees, you can respond with something like, “Helen, I understand your concerns. I can see from your latest P&L your business is dealing with a period of declining margins, profit and cash. Since we began working together we’ve been sending Jennifer over each month to collect and massage your raw data into a more manageable form. The reason for this is it allows us to do your accounting work in fewer hours. What I propose is to have Jennifer train your bookkeeper, Thomas, how to do her functions. This would save you approximately $400 dollars a month, which is close to $5000 a year. This will reduce your annual accounting costs about 1/3rd and make an immediate, positive monthly contribution to your bottom line. Does this sound like a workable idea?”

Greg, from Los Angeles, has taken an inspired approach in his response to clients who have talked about reducing fees. I have not personally met Greg, but by all accounts his practice has grown by leaps and bounds. If this is indicative of his business development creativity, I’m not surprised. What he has done is proactively approach selected clients and essentially made the following pitch: “Howard, I’ve noticed that over the past two quarters your financial results have slipped. While this may be due to the overall economic situation and not necessarily reflective of any problems with your company’s operation, I’m sure you are not pleased with the direction of things. The reason I requested a meeting is because I have what I think is a win-win proposition. Here’s what I propose: As I was studying your results and thinking about how you might cut costs, one obvious thought I had is that I can reduce the fees I charge. This would give you some immediate relief and we could raise them back to present levels when your profitability improves. The problem is, it has the opposite effect on my business and, to put it bluntly, the recession is hurting me too.”

“Thinking it through a bit further, a solution presented itself that I think is perfect for us both. Here it is in a nutshell: If you will refer and/or introduce me to some of your counterparts who also own production companies, and if I can sign one of them up as a client, I’ll reduce your fees while we’re both being affected by the current downturn. I get a new, significant client and you save some cash each month. Is this something we can do together?”

Les, on Long Island, offers an added service, e.g. “Rhonda, we’re under some pressure too, so I’d like to propose an alternative to your request for a fee reduction. At the present the only services we are providing is preparing your company’s quarterly filings and corporate taxes. I have a great deal of experience advising businesses and providing consulting services. Because I believe you are a client with growth potential, I propose to offer you three hours of personal consulting time each month without charge. That is the equivalent of $1050. My involvement should, based upon my experience with other clients, help your company improve its results. For now, we keep your rates where they are and then, in the future when the profitability is there, we’ll start billing for my ongoing advice and consulting efforts.” (This is a clever way to get your nose under the tent for consulting services. Nice move, Les.)

Terry, from Iowa, said she has had a couple of instances where clients demanded lower fees or they’d walk. In both instances she agreed to a compromised, but still reduced fee structure. However, in the spirit of quid pro quo, she received a return concession where the clients agreed, in writing, that they would pay her bill in 15 days from receipt. If they don’t, the fee is at the old rate. To emphasize the point, she sends the invoice out with the historic fee structure and then shows the reduced amount if they pay in 15 days. She has already decided that if either client is even a couple of days late she will fire them. As she phrased it, “A girl's got to have her standards.”

Good stuff, all. Thanks for the input, and I hope one or more of these ideas resonate with you.

Thursday, July 30, 2009

Pressure To Lower Fees

Al, who has a practice in North Carolina, contacted me to ask about how he might deal with a local competitor who has begun promoting their practice by offering clients a, “… low, realistic price structure during difficult economic times.”

Sure enough, when Al checked it out he learned this individual has reduced his fee structure (when compared to average fees in the community) approximately 25%. You can guess how this came to Al’s attention: a client essentially told him that for cost savings of that magnitude he would switch to the other accountant unless Al matched the reduction.

Al is anticipating this may not be the first time this happens, so he wants to have a strategy in mind should the situation present itself. What should he do?

Like so many things, there are a lot of variables. How important is the client who is agitating for a discount? How much is the prospective reduction? How is your practice doing … can it afford to offer meaningful discounts for its services? Aside from profitability, how is the cash situation? How about AR? Are we talking short-term reduction or will the impact extend well into the future? And, are we considering discounts for all or just some clients?

In the short term, Al may, for example, simply ignore this one accountant’s potential negative impact to Al’s client base. If he loses a couple of smaller clients, so what? But, what if he is faced with a situation where other accountants in his trading area also begin lowering fees and the threat of losing existing clients as well as signing up new clients becomes meaningful. If Al’s cash flow and/or margins begin to falter, he may need to do take some steps in response. He could reduce costs (e.g. layoff staff), or lower his fees to some extent. Or both. Of course, if he has the balance sheet to pull it off, he may simply do nothing for the present and reassess the situation periodically as the year plays out.

Some long term considerations might include competitive positioning, i.e. is your practice a full service firm with a strong client list sitting on one of the top rungs of the local pecking order? Do you lose some of that status if you reduce fees or services? And, once you lower fees, no matter who your clients are, how difficult will it be to restore fees in the future to the present level?

Generally speaking, I believe an effective strategy might include these two major elements:

a) It isn’t an option to lose your “A” level clients. They contribute too much to your practice (revenue, profitability, quality referrals, potential for growth, etc.) and they are too hard to replace. If you are experiencing downward fee pressure, or sensing it is approaching, I recommend you immediately adopt a defensive strategy with these most desirable clients. Give them more attention and deepen the personal connection. Take them to lunch, a baseball game, or golfing. Thank them, inquire about their business and how things are going in today’s potentially difficult times, pass on some ideas, be helpful, stay in touch, and the like. You can forward a CCH article that is relevant to their business, warn them about a potential IRS ruling that may affect their operations, etc. The greater the level of personal involvement you have with these clients, the less likely it is they will leave because of fees.

Don’t unilaterally offer to reduce fees. Instead, increase the level of service and attention you provide these most desirable clients. A related defensive tactic might be to tell them that as an accommodation to your most important clients during this period of economic difficulty you are freezing their rates. If, at the end of the day, you are forced to make a significant reduction it is very helpful to have a strong personal relationship because you can then say, “Bill, I’m willing to provide this help for you because we’re in the boat together, but can we agree that when things turn around we can get back to where I can actually realize some margin for my efforts on your behalf?” If you and Bill have a reasonably good connection he should have no problem agreeing to this request and that permits you to raise the issue (and the fees) at a later time. I’ve even heard of a firm that has given a written offer of fee reduction for, say, six months; at which point the fees return to the present level. Both the partner and client sign the document to memorialize their agreement.

b) if you do make the decision to lower fees; do so selectively. Your clients don’t typically talk with one another, so if you reduce your fees for client A, it would be unusual for client B to know of it. I’d first consider reducing fees for your less desirable clients (“less desirable” being defined as those clients who are typically smaller, less profitable, provide fewer referrals, don’t offer much potential for future fee growth, require more hand holding, are slow pay, or any combination of these factors); ones that are perhaps more susceptible to being swayed by your competitor’s lower fee structure. And, they may be highly resistant to later efforts to return fees to earlier levels. The loss of these clients if their demands become excessive doesn’t, in the final analysis, negatively impact the long-term success of your practice.

I encourage your feedback on this issue. It may be on the table for many more months to come and if you have experience you think others might benefit from, please let me know.

Wednesday, July 22, 2009

Can Social Networking Help Build My Accounting Practice?

Facebook, MySpace, YouTube and Twitter are certainly hot right now. How hot? YouTube has almost twice as many page views as Google! If you have teens and twenties around you have probably seen them utilizing one or more of these networks to do, well, whatever it is they do.

If they aren’t familiar, let’s begin with a capsule description of each.

Facebook and MySpace are designed to make it fun and easy for people to keep in touch. They are direct competitors. You have a page dedicated to you and you can create a network of people who connect with you. The idea is you interact by sending and receiving messages, blogs, music, videos, photos, etc. with one or more members of the group.

YouTube is a video sharing website on which users can view, upload and share videos. The number of videos available is in the tens of millions. If you care about almost anything, you will find it there. Music? Entering “Elvis Presley” produces 15,900 videos! Or, something less known: Don McLean’s “American Pie” has 627 videos.

Twitter is a free social messaging utility for staying connected in real-time. Each message is limited to 140 characters, so each “tweet” is short (and hopefully sweet).

A lot of marketing gurus are trying various approaches designed to translate the popularity of these sites into a competitive advantage for their business clients.

How can you use social media to promote your practice? The nature of what accountants do for their clients falls into two basic categories. One is financial, accounting & tax documents. The other is advice, consulting and planning. The former is a “hard” deliverable and doesn’t lend itself to social media. Of course, you could use Twitter to tell a client their tax return is ready, but why? Just pick up the phone or email them.

Advice, consulting and planning requires precise communication. To obtain this you rely upon not just words, but body language, tone of voice, etc. to ensure both parties are really achieving an accurate mutual understanding. Again, I don’t believe this activity directly lends itself to social media.

However, there is an indirect use you might consider.

To explain – it is well accepted that professional service web sites (legal, accounting, engineering services, etc.) are more effective if they have a strong personal component. For example, in your bio you might consider not just the traditional “head shot” photo, but also one of you river rafting, holding a bunch of your prize roses, attending your daughter’s graduation from college, etc. These more personal photos help both present and prospective clients get a feeling for you as a person, not only a provider of accounting services. It enhances the connection by humanizing you.

Ditto in the write up accompanying your bio. You talk about your education, professional accomplishments and the like, but you also mention your love of raising Arabian horses, trip to Sturgis with your son on your Harleys, or other personal interests and experiences.

With this “personalizing” of your practice in mind, one thing you can do is create links to and from your web site to social media.

A recent post was about “branding” your practice and the example was a CPA in California who is in the process of becoming the go-to accountant in her area for all manner of green-related tax deductions, strategies, credits, etc. She will almost certainly use social media to try and augment the buzz she hopes to create with her new branding. Links to green groups, events and activities, announcing where and when she is giving a presentation, a green-related blog she will initiate, photos and/or video of a new green building one of her clients is building, etc. are all candidates for social media.

The bottom line is I think social media is most useful as a means to communicate within a given community or interest group. Your practice really doesn’t have those characteristics. However, as seen in the prior paragraph, you can use social media to attach your practice and its web site to a community or interest group you are part of. In the example above, that would be the “green” community.

Another example might be that you are a member of a “No Value Added Tax In America” advocacy group. Your loathing of this European tax mechanism won’t directly bring business to your practice, but it will raise your profile among those with similar beliefs and social media would be a great way to stay in touch with this group. Links would connect to and from your practice’s web site, blog, etc. and no doubt some members of the group will become your clients and/or source of referrals.

If you wish to learn more about these most modern of all communication mediums, Wikipedia has several entries that are current and succinct. See and enter Twitter, MySpace, etc. in the search box.

Saturday, July 11, 2009

Website Blahs

Because my professional niche is helping accountants enhance their business development skills, inevitably some of what we talk about touches upon marketing. With the exception of a couple of a couple out-of-the-box marketing techniques I’ve touched upon in this blog, I believe the vast majority of practices can effectively utilize mainstream marketing methods to generate a suitable pool of prospects.

One of today’s marketing tools is a web site. And, most of the owners I’ve spoken with are not exactly thrilled with their web site. It is technology they don’t understand, it requires expensive outside help, it needs frequent updating when changes occur (e.g. personnel come and go), and the majority don’t think their site really adds anything positive to the practice. It’s there, the complaint goes, because everyone else has one, so we’d better have one too or appear to be not “with it.”

Like every other profession, the cream rises to the top, and there are web designers who really know how to construct an effective site. Seminars are held, papers published, interviews printed, etc. and from these some “best practices” have emerged. Here are three for you to consider.

1. Know what people are doing on your site. You can use site analytics (i.e. Google Analytics, Web Trends, Site Catalyst, Coremetrics) to find out what pages visitors look at, how long they stay, etc. What this does is tell you what they want to look at. You can then decide whether you wish to enhance these areas or stay with what you have. Measure the results from the ongoing changes and optimize your site over the following months. If you have a number of pages no one cares about, then get rid of them. You site designer can fix you up with one of these analytic sites in a matter of minutes, and there is little to no expense.

2. Keep it simple. Your site needs only to intrigue the visitor to the point where they contact you. Or, a prospect may look at your site to verify you are “real.” Yes, they will develop some opinions of you based upon your web site, so keep it simple, well done – even elegant, use mainstream colors (a site emphasizing various shades of bright orange is probably NOT a good choice), everyday neutral fonts such as Arial or Verdana, and leave some white on the pages, that is to say don’t make the content so dense that it becomes a sort of visual mush. Lower the barriers. Describe clearly how to contact everyone.

3. Personalize your site. It doesn’t need a big Wow! factor. Its purpose is to describe an accounting firm – who the people are and what they do. The most highly rated sites include a good bit of personal information. What this means in practical terms is that in addition to a photo of the partners and staff, there is an accompanying bio that touches upon education and professional accomplishments but really focuses upon humanizing the members of the firm. It might mention, for example, two sons currently attending University of Ohio, she shares the house with three cocker spaniels, husband owns a landscaping company, finished 5th in this year’s Founder’s 5K race, etc., etc. If it is suitable, an innovative option is to include a link to a video. One site’s bios included a statement that the individual was learning how to ski and that it was a slow process. The reader was invited to click a link and see how he was progressing. The humorous video showed him falling (several times) on his backside on the bunny hill. He later reported that almost every new client he obtained in the next year mentioned the video. To him, this was anecdotal evidence people were in fact looking at his firm’s site.

Regarding photos, you can opt for studio head shots, but consider something more intimate. For example, a photo showing you kneeling by an inflated child’s pool in the backyard with your daughter splashing away tells a much more compelling visual story about you than a mug shot.

An Easy Promotional Tool To Use With Your Site:

There is no cost to list your practice in Google Local. This is a passive, free, 24 hour a day addition to your marketing effort. For example, if you are located in Eugene, Oregon, there are 76 listings in the Yellow Pages for “accountant.” But, if you list your Eugene practice in Google Local, a search reveals you would be the 11th listing. So, you’ve scrubbed off 65 potential competitors, and it also shows your location on Eugene’s Google map.

If you open your Google Search box, type in “google local” and click enter. When the screen opens up, click “Local Business Center” to find out how you can register your practice. Amazingly enough, It is quite straightforward and manageable.

The listing can contain a link to your website, a brief description of your services, and you can include a picture if you wish.

Check it out in your area: go to Google. Click Maps, then type in, e.g. “accountant Newark, CA” or “accountant des moines, IA” and see if this is something that can raise your visibility.

Tuesday, July 7, 2009

Getting People To Say “Yes”

Accountants are often involved in situations where they are attempting to obtain agreement. Examples include negotiating terms, reaching compromises and a host of other instances where you, “as the keeper of the numbers,” are seeking to persuade one or more people to adopt/accept your (or your client’s) viewpoint.

We begin with the assumption that the negotiation isn’t a scorched earth situation. In other words, you’re hoping to obtain the “yes” without use of undue pressure and/or destruction of the relationship.

While experts will disagree about how to classify the basic elements, there is a generally agreed upon series of negotiating best practices if you are attempting to get others to say “yes.” What follows is a quick hit on each.

#1 – respond with your brain, not your emotions.

Just like business development, you need to be deliberate in your responses. Words once said are like toothpaste squeezed from a tube – impossible to take back. Emotionalism breeds emotionalism and you don’t want the discussions to be at the mercy of unfocused passions. If that occurs, you have lost control of the situation. Always respond with thought. Just like business development, you want to understand as quickly as possible what it is the other side really wants, because your negotiating approach will be structured around that reality.

If you find yourself strongly emotionally triggered, it is always OK to request a couple minutes to stretch and walk around, or for an opportunity to talk with your client privately or to take a bathroom break. Collect your thoughts and return to the table.

#2 – eliminate Us and Them

In a real negotiation the other side shouldn’t be your opponent, and it isn’t a war. If you treat it that way, they’ll feel your mindset and respond in kind. Instead, you’ll achieve better results if you can see the situation from the other side’s perspective. Instead of advancing your agenda and seeking to persuade them to your viewpoint, first look for those things you can say “yes” to. Where you can, agree with them, find common ground and build a consensus. To emphasize agreement, highly skilled negotiators eliminate the word “but” and replace it with “and.” There’s a limit to this, of course. The take away here is that many studies have made it clear that emphasizing what you can agree upon will disarm the other side, greatly reduce the typical adversarial nature of many negotiations, and foster an environment that will more frequently result in a successful agreement.

#3 – meet objections head on

The key here is to understand what the other side really wants and cares about. Once you understand this, you can anticipate their objections to your negotiating positions. The question then becomes how to resolve them. The wrong answer is to try and duck objections. The more clever negotiators focus upon reframing each potential objection by phrasing it as a mutual concern for both sides and then offering ideas for addressing the objection.

#4 – make the negotiation a win-win

To the extent you can, it is desirable to include the other side’s ideas into each of your proposed solutions. This evidences good faith, flatters them, brings the two sides closer together and fosters collaboration. At the bottom line, give them some ownership in reaching a successful conclusion to the negotiation.

Additionally, there are typically any number of less important things you can agree to as part of the give and take leading to the eventual deal that is agreed upon. Since the other side doesn’t really know how you value each of these, you have the power to influence their thinking. If you lead them to believe one or more of these is important to you, but you then – in the spirit of compromise – soften or even forego each “important” concern, it can lead to them pulling back on their demands.

Don’t give these up too quickly. The idea is give a little and get a little as you inch along toward an agreement.

# 5 – make it easy for the other side to say “yes”

This is a powerful closing tactic, but can be overdone. I recommend you tread lightly. It has been said that in a successful negotiation you bring the other side to its senses, not its knees.

The tactic is used after both sides have had the opportunity to explore their differences and isolate where the real issues are. You are at that point in the negotiation where the resolution – if it is going to happen – is starting to become apparent. You begin by starting to, a) propose your solution and then, part way through, you, b) shift gears and describe – in neutral terms – the problem (and its real or potential downside) that led you both to enter the current negotiations and then, c) continue and complete the description of your solution. In effect, by doing this you are highlighting both the cost of not reaching agreement and emphasizing the value to both parties of reaching an agreement.


Just like the best practices business development methods discussed in this blog, certain behaviors are especially valuable in conducting successful negotiations. The five elements briefly described above are among the most important.

An interesting publication that gets much further into these tactics is a book by William Ury titled “Getting Past No: Negotiating With Difficult People.” Check it out.

Thursday, July 2, 2009

Can You Become A “Brand?”

In marketing-speak, the word “brand” can be defined as an identity that distinguishes one product from another. It can be a logo (think Apple Computers), a name (think IBM, Rolex or Coke), or other identifier (think of a FedEx envelope or a brown UPS truck). How about YOU as a brand?

What can you do to stand out against the noise? In other words, what can distinguish you from the other competing accountants in your trading area?

One of my clients is exploring how she can go “green.” Her idea is to become the go-to accountant in her area when the discussion turns to green practices and the potential tax implications. To do this she is going to explore the myriad of Federal, State (she’s in California) and local laws, regulations, rules and court interpretations that impact personal and business tax exposure.

Her basic promotional tool will be a high quality multi-color handout. The handout will summarize her findings in a graphic matrix organized by jurisdiction. It will be, in effect, a, “one or more of these factors could apply to your situation and are you anticipating the potential effect?” teaser. Her contact information will be prominently featured on the handout.

The marketing plan will focus upon two tactics. The first is to write a number of relatively brief (300 – 600 word) articles about the subject that will be suitable for local newspapers, accounting trade publications, web sites, meeting handouts, etc. The second is to look for public speaking opportunities. These can be with real estate, business, “green” organizations, investment groups, etc. The list is almost without limit.

How will she benefit from this exposure?

She will become recognized as a local expert. This can lead to media exposure - appearances on radio, television and interviews for various publications.

Her expertise will be valued by a population who not only desires her services; they can afford them.

Her efforts will frequently produce immediate results. In other words, if she speaks at a gathering of, for example, general contractors, she may have members of the audience request appointments as soon as her presentation is concluded. Or, if someone reads one of her articles, her contact information will appear adjacent to the article.

What she is doing is MUCH more persuasive and targeted than any form of typical commercial advertising and should be quite inexpensive. Designing and printing a thousand handouts isn’t very costly.

Finally, her efforts have spin-off possibilities. For example, the research, article preparation, presentation materials, etc. all have potential to be recycled into a book, online course, or an audio/video program she could sell to other accountants wishing to replicate her success in their area.

Is her “green” idea the only one? Absolutely not. Topics are only limited by your imagination and areas of interest. Scanning the articles in accounting-specific web sites, various trade journals and a host of other media will give you ideas about what’s hot and what’s not.

Pick a niche. Do your homework. Become an expert. Let everyone know you are that expert. Create opportunities to write and speak.

As stated so succinctly in the movie Field of Dreams, “Build it and they will come.”

Monday, June 22, 2009

Learning From The Best

Of all the accountants I’ve had the pleasure of working with, Michael is the best business developer. His practice focuses upon businesses with annual revenue ranging between one and twenty million dollars. The billings his efforts have generated since 2004 average over $3,000,000 annually. He personally manages a book of business approximating $1,000,000 and has spread the other clients among younger, but nevertheless highly capable accountants in his firm.

We had a pleasant lunch recently and in response to my prompting Michael gave me an overview of his success formula.

He began his practice with a few clients he “inherited” from a retiring accountant. By conventional personal marketing tactics, e.g. encouraging referrals, networking, socializing, getting involved within his community, etc., he slowly grew his practice to the point where he was working approximately 65 – 75 hours a week.

He then made his first hire. He selected an experienced, knowledgeable and relatively highly paid former staffer for one of the national firms. He delegated everything he could to her, and within a month her efforts had freed up almost half of his time. (Since then several more professional staff have been added; each one hired only when revenue growth could support the added overhead.)

The strategy was then to contact every one of his business clients and arrange an informal lunch date. When he met with each client he had a simple business development strategy he refers to as “casual probing.”

Here’s how it works: (In advance of the meeting Michael has reviewed the client’s latest financial docs so he’s very familiar with the numbers.) He begins by thanking them for their business. Then there’s a bit of chit chat to catch up on personal events and at an appropriate point he asks, in effect, “So, how’s the business doing?”

As the client responds, Michael interjects comments like, “Yes, I noticed your year over year margins have dropped about 5 percent,” so the client knows Michael is up to speed and they can discuss details. By asking more questions (probing) Michael isolates various issues the client perceives as problems. Michael then offers casually phrased suggestions about possible courses of action, e.g. “The best way to anticipate what funding package will be optimal to purchase the tractor is to do some projections so we can predict where you’ll be with cash, the bank line and profitability,” or, “We know that closing the Kansas City sales office will cut expenses, but it’s more complex than that. You need to run the numbers out so you have a handle on how this impacts longer term profitability, cash, quantity purchase discounts with vendors, and other factors.”

As Michael makes these comments, he’s mindful to never suggest any course of action that doesn’t have intrinsic value to the client. In other words, he never suggests anything that doesn’t have an obviously excellent ROI. In the first example above, the tractor will cost around $250,000, so paying Michael, say, $4000 to run a fairly detailed projection is an easy decision to make because a funding package that is poorly thought out could cost much more in terms of interest, lost opportunity, etc. In the second example, closing or not closing a sales office is another action that has significant ramifications. It involves personnel, leases, revenue, costs, client/customer service, and a host of other meaningful issues. Again, the prospective dollar impact will be much greater than the cost of the study to examine the elements.

Michael never goes into business development mode during these meetings. He keeps the luncheon discussion completely conversational and he picks up the tab.

If he doesn’t act like he’s looking for work, how does Michael benefit from this process? First of all, he retains ALL of his clients. They don’t go somewhere else because they aren’t getting enough love. They send him an inordinate number of referrals because he’s helpful and expresses an interest in them. And, approximately half of them will engage Michael on the spot to do some sort of project work or schedule a consulting session!

Whenever his client activities involve interaction with an attorney or consultant, he ALWAYS repeats the above procedure and invites them to lunch. He thanks them for their help and cooperation; talks about mutual interests and asks them about their business. Because he is so experienced with this methodology, he can “wing it” as they talk about their business and toss in valuable suggestions and ideas.

Even if they don’t hire Michael as their accountant, they more frequently than not become part of his network and send him referrals.

Michael averages about 75 lunch dates a year with clients, attorneys, consultants and others individuals who are centers of influence. This process has made him millions of dollars and generated hundreds of loyal clients. The other accountants in his office are expected to adopt the same approach.

As a caveat, Michael mentioned that these lunch meetings are not the only time he interacts with his clients. He deliberately creates situations where he will be talking with and/or actually visiting his clients, especially the ones that generate significant revenue.

As Michael points out, with this method he doesn’t ever have to “sell.” He only talks, asks some questions, expresses interest in the client, makes them feel appreciated, picks up the lunch tab and offers some casual advice. He recognizes that an important element of his continuing success is that the suggestions and ideas he offers are based upon solid knowledge and a sophisticated understanding of how for-profit enterprises really work. This level of acumen has taken years to acquire, but when he began he knew no more than any other accountant with a couple of years experience. Nevertheless, the method worked well right from the beginning.

There you have it. That’s how one of the masters does it. Can Michael’s method work for you?

Thursday, June 11, 2009

War Stories

I’m getting more war stories from readers. Some are very businesslike, and I respond to those in a serious manner, but a few are humorous and I think you will enjoy reading one of these every now and then. Here’s something from Diane, who has a practice in New York (facts are slightly altered to protect the client’s identify).

“For several months I have been cultivating a gentleman who owns a large automotive body repair and painting shop and he recently invited me to meet him at his office and discuss the possibility of using my services.

It turned out to be a large facility, with at least twenty cars being worked on. His office is on the second floor and overlooks the shop below. His wife was also there. She majored in accounting and has been acting as his in-house bookkeeper and tax preparer since the business was started in the mid-‘70s. I was told she wanted to step down from that role and that’s why they wanted to talk with me.

Surprisingly, the office has birds. Lots of birds. Parrots, macaws and a host of others whose names I had never heard before. Big, small, blue, yellow, red and more. A few were in cages, others were on perches and some were free to roam about the room. They weren’t noisy, but it was disconcerting to have this sense out of the corner of my eye that there was constant movement all around us.

Things went well for awhile and then, without looking, I reached down into my briefcase I’d placed next to my chair. Instead of the folder I sought my hand wrapped around a warm, feathered and suddenly highly agitated trespasser. I screamed and the bird screeched. This set the rest of them off and for a few seconds every other bird in the office was squawking at the top of its lungs. Then, as though a secret command had been issued, all the birds went back to whatever it is they were doing as though nothing had happened.

Whatever sense of professional competence I’d been projecting had evaporated. My heart was jumping out of my chest and for a moment I thought I was hyperventilating. The owners apologized for the ruckus, but didn’t seem all that surprised. I got the impression that this wasn’t a particularly unusual occurrence.

We got back to business and things seemed almost normal. Except, of course, for the 20 or more sets of beady eyes I now imagined were watching my every movement. Was this going to evolve into something out of Hitchcock’s “The Birds?” What would my family think? “Accountant pecked to death!” Film at 11.

I heard movement behind me and correctly surmised a bird had landed on the top of the back of my chair. I was determined not to lose my composure and pressed on. The owner and his wife glanced at each other and I could tell she was suppressing a smile. The reason became clear a moment later when the bird latched on to my left earring. Struggling mightily to not completely lose it, I slowly reached up with the intent to gently push the bird away. It repaid my concern for its welfare by drawing blood on my index finger. Now angry, I snapped my head around to face my tormentor, who quickly flew away before I could punch its little lights out.

The owner and his wife were laughing hysterically. After we all recovered our composure and I had stopped the bleeding with a Kleenex, he apologized and inquired if this meant I wasn’t interested in becoming their accountant. I hesitated because I really was thinking about whether or not I wanted to. The wife, who was still chuckling, broke the silence by wondering if it might help if we scheduled any future meetings at my office.

That worked for me.

My feedback is that the business development method works well. I don’t suppose you could provide an update explaining how to avoid situations like this in the future? No, I didn’t think so.”

Monday, June 8, 2009

Sometimes You Get Lucky

Todd, who has his practice in the Chicago area, sent me a recap of a recent business development experience that contains lessons for all of us. I then phoned him and got the details so you can really get a flavor of what happened. The names have been changed to protect the client’s privacy.

Todd has a 1040 client who works as a nurse at a local hospital. Her annual income from her work is in the mid 60s, but she additionally receives disbursements, amounting to low six figures, from a trust.

When “Shelly” picked up her return she unexpectedly said to Todd that she wanted to look at engaging another accountant for the trust, and would he be interested? Having come from several years of blue chip non-profit experience with a national firm, Todd replied that yes, he would.

Shelly said that she’d set up an informal meeting so her two siblings could meet Todd and he could get a feel for the situation. True to her word, a couple of weeks later Shelly called and said that they’d meet at her sister’s house and gave Todd the address which, not surprisingly, Todd recognized was located in an area of expensive houses.

The appointed date and hour arrived and Todd entered the circular driveway of a large – make that very large – estate. Impressive, with a number of upscale cars parked in front.

Shelly’s sister, “Kate,” greeted him at the door and after a brief introduction he was ushered into a formal living room and offered something to drink. There were nine people in the room, and Shelly introduced him to her brother “Tom,”
and six (!) other professionals – four lawyers and two accountants; only one of whom he had met before.

They all seemed to be sporting full briefcases. Documents were scattered around on various tables. He sat down next to Shelly with a dawning understanding he was there to represent her interests and a growing feeling of dread, knowing that he was completely unprepared to participate in a substantive discussion about any aspect of the trust. In fact, he learned there wasn’t just “a trust,” but instead three, with a total value exceeding two hundred million dollars!

Hardly an informal, let’s-chat-and-kick-things-around gathering, Todd watched as things immediately evolved into a contentious, tension-filled meeting wherein the participants were voicing strongly held and widely different opinions about the trust and how its assets were being disbursed. The lawyers postured and competed and highly detailed spreadsheets were produced by the accountants who then advocated their respective positions.

It turned out that Kate was the dominant sibling, and also the oldest. Tom was a manager of an insurance office and quite aggressive about accelerating the pace at which the discretionary portion of the disbursements were finding a home in his personal bank account. Kate’s agenda seemed to revolve around passionately advocating any position that stood in stark opposition to Tom’s. Todd learned Shelly was the youngest and both Kate and Tom were dismissive and uninterested in her opinions as they conducted their own private war.

Fortunately, Shelly didn’t have any convictions she was seeking to advance, so she wasn’t relying upon Todd to cross swords with the other participants. He spoke up every now and then, but for the most part kept his head down in his foxhole as the bullets flew overhead.

At the end of the meeting Shelly formally engaged Todd and he is, perhaps as I write this, quickly coming up to speed so he can effectively advise Shelly in the future.

He is fully aware he got lucky and hopes he learned from the experience.

As Todd phrased it – He:
a) didn’t understand anything about Shelly’s siblings or their dynamics
b) didn’t know anything about the trust(s) and the dollar magnitude
c) accepted Shelly’s interpretation that the meeting would be informal
d) didn’t ask any questions
e) was completely unaware of the agenda
f) didn’t realize Shelly was relying upon him to represent her interests
g) didn’t ask to see Shelly’s copies of the trust accounting/returns/etc.
h) didn’t know who would be at the meeting
i) (here’s my favorite) will never again show up at a shark feeding frenzy armed only with a couple brochures, a yellow legal pad, some pens and a few business cards.

Good advice for all of us.

Friday, June 5, 2009

Making Your Marketing Efforts Really Pay Off

If you wish to find prospective clients for your practice the options available to you are relatively straightforward and well understood.

If you have a general practice primarily serving individuals, small businesses and organizations you can reach your target audience by conventional marketing avenues. Almost every city or trading area with a six figure or greater population has marketing services available. If you do your homework you will be able to mount an appropriately scaled program and the upfront costs shouldn’t break the bank.

On the other hand, if you have, e.g. an audit practice, or service non-profits, high wealth individuals or larger businesses, classic direct marketing isn’t very effective. Instead, you will be better served to rely upon more personal marketing such as, e.g. referrals, speaking, authoring articles or a book and meeting prospects at appropriate gatherings, etc.

In this blog we’ve talked about some techniques to get your own personal marketing campaign going and, if you are a ProfitCents subscriber the new business development manual I’ve written for Sageworks has some very specific, step-by-step suggestions for how to do this.

Whatever the nature of your practice or how you market it, the bottom line is you want to create opportunities to talk with, and persuade, the “right” prospects to become clients.

If your goal is to add clients whose annual billings are almost always less than, say, $500 - $1000, then you will in all likelihood interview and close them over the phone or a relatively brief meeting in your office.

But if your practice consists primarily of clients with more complex situations and annual billings ranging into four figures or above you will almost always meet with them in person before a client relationship is formed.

In this latter instance there is, as Shakespeare famously put it, “Many a slip between the cup and lip.”

I conducted a survey for several years in the mid ‘90s with the goal of determining the conversion rate of accountant – prospect business development meetings. The results were sufficiently consistent to conclude that the industry average was a success rate of roughly one out of three, i.e. if an accountant had three meetings with prospective clients, one would become a client.

Personal and/or relational marketing can be time intensive and you are balancing lost time you could be billing against the up-side opportunity you are pursuing. If you improve your conversion rate it can dramatically alter this equation. Either you can derive more revenue from the number of hours of marketing you currently allocate, or you can maintain the same level of revenue and invest fewer hours to do so.

The second half of the survey was to determine if the conversion rate was meaningfully improved after the accountants were given appropriate training.

Yes, it was. From approximately one out of three to one out of two. A dramatic improvement!

For a given level of marketing, improving your conversion rate is the most effective thing you can do to immediately improve your financial picture.

Since the ‘50s, the business and academic communities have spent countless hours and hundreds of millions of dollars to figure out how industry can “sell” products and services. Not surprisingly after this much effort, what works and what doesn’t is almost universally agreed upon.

The techniques I write about in this blog and that are contained in the ProfitCents business development manual (and the generic manual I’m writing that will be completed in July) have been specifically adapted for use by accounting service providers and are exactly the things that will improve your conversion rate.

If you are already good at it, then hopefully I can provide a few ideas that will drive your success to new heights. If you are new to business development, please take advantage of these techniques and hit the ground running.

Tuesday, June 2, 2009

Consider Firing Some Of Your Clients (Yes - Seriously)

I’ve lightly touched this topic in the past, but considering the general trajectory of the economy this is a good time to revisit it in more detail.

You are uniquely equipped by both knowledge and experience to examine a set of numbers or data points and then organize them into a spread sheet that can be analyzed with the goal of acquiring a “real” understanding of the situation.

I encourage you to analyze your own practice with the goal of determining the relative profitability of the individual accounts populating your client base .

To explain: You would advise a client who is a retailer to look at turnover and margins and thereby gain an understanding about which of the products they sell are the most profitable. Then (with some obvious caveats) you would tell them to give more shelf space to those items, or ones like them, and less to the items that have low margins and/or slow turnover.

The same thing applies to your accounting practice. Do you know which of your clients are the most profitable? There are a number of things that can contribute to a client’s low (or no) profitability, but typical causes can include:

— no pay/partial pay/slow pay/billing write offs
— a client requiring significant hand-holding; excessive phone calls, etc.
— a “legacy” hourly or job rate that has not been raised in a long time
— clients whose work was suitable at the time but really no longer fit with the workflow or subsequent direction of your practice
— work taken on for cash flow that never has been especially profitable
— client work that is just too small and/or inefficient for your practice (a classic example are the smaller 1040 clients from when your practice began)

Profitability, as a stand alone criteria, is often insufficient to make a decision about the value of an individual client. Many accountants have clients who are relatively small and unprofitable but are centers of influence and for that reason are valuable as sources of referrals, social conduits, etc. Also, you may take on a small client because you believe they have an upside – it just may take a few years before their organization grows to the point where they are a major contributor to your revenue base.

At the bottom line, every practice has a spectrum of clients that range from the least desirable accounts at one end to the premier clients at the other end. The idea – at the risk of stating the painfully obvious – is to have more of the good clients and fewer of the bad.

So, how do you do this? The accountants I’ve had who have undertaken the process of optimizing their client mix have taken steps to ensure the clients who they jettison have a soft landing. The first thing is to consider how you might place them with a suitable alternative service. One way is to prepare in advance a list of accountants, tax services or EAs who can do their work. Or, you could do a hand off to, e.g. a relatively new accountant in town. If you do so, you might consider discussing a quid pro quo, where the recipient accountant would in turn refer any larger and/or more complex opportunities to you they don’t feel comfortable taking on yet.

When you “fire” the clients it is always preferable to let them down easily. You can tell them the nature of your practice has changed, e.g. “Tom, my practice has evolved so that almost all my clients are non-profit organizations and the underlying procedures and due dates are very different from what’s needed to process regular 1040s like yours. I think you will get better service from an outfit that does lots of 1040s. They will be less expensive, have their internal systems optimized for your type of work and be absolutely up to the minute on any new developments that touch your situation. Here’s a list of suitable alternatives you can contact.”

Or, you’ve grown too big, e.g. “Tom, we’ve evolved into a business-only practice and just don’t do individual tax work anymore. I’m concerned your work will not get the attention it deserves with all the demands related to the complexity of our business client’s work. I’d like to refer you to an accountant whose work I think is good and whose practice is really aligned with your needs. Please understand this has nothing to do with the size or fees for the work I do for you. It’s just that in accounting everything tends to become specialized and our organization is focused in another area.”

After completing the analysis of your book of business, you will typically find that approximately a fifth of your clients will fall into the could-be-or-should-be-fired group.

What will happen to your practice if you actually get rid of these clients? Your gross income will go down, but remember we are talking about profit. Their revenue has helped absorb overhead, but you’ve already factored that in your Excel spread sheet analysis. Various costs will go down and some of your hours can reallocated to clients that will pay for additive services such as advice, consulting and planning. When you net it all out, the reality is that you are going to have some more free time but only a slight (if any) loss of pretax income.

Which means you now have the time to undertake a campaign to find more of the good clients. With a focused and sophisticated business development effort you will be able to accomplish that. And that’s what this blog is all about.

I hope you will begin your analysis immediately. Make goals to, e.g. cull the client list by the end of June; have one new “major” client by the end of August, and two more before the end of the year. Optimize your practice one client at a time.

Tuesday, April 21, 2009

A “Conversation” With Your Clients – Part 2

Congratulations! For so many of you whose professional life is driven by the Form 1040, I applaud your survival of the annual scramble to put four pounds of work into a two pound bag.

To continue the theme from the last post, I am writing from the perspective of a consultant who is suggesting some options you might consider to maintain a close relationship with your practice’s most valuable clients. This is important because- assuming other factors are essentially similar – client retention rates are greatly influenced by how the professional relationship is viewed from the client’s perspective. More contact is better and less is, well, worse.

Of course, you can overdo it, but we’re talking about 3 – 5 “quality” contacts a year as a nice base. This is enough contact to develop a real relationship – which will include some personal elements – as opposed to a professional, working only relationship. If your client is someone you meet with monthly or quarterly on a steady basis to, for example, review financials, you still need to ensure there is some personal time thrown into the equation. This can be a relaxed lunch, golf, attending a baseball game or the like.

The best way to do achieve and maintain connection with a client is to have an ongoing “conversation” with them. By “conversation,” I mean you find the means to engage them several times throughout the year. Some of these “touches” can be remote (e.g. send them an article relevant to their situation along with an accompanying note) or personal (e.g. have lunch together). The most important thing is that the touches not be “canned.” In other words, sending out the same Christmas card you send all your clients and contacts is not a touch as we’re using the word. It has no personal quality about it. However, if you sent the client a personalized card; addressed to them individually with a hand written note enclosed, that would pass the test.

What action steps might make up a well-crafted plan designed to accomplish this goal, and how do you know which clients you should select for this effort?

First of all, we know that not all of your clients are really important to the success of your practice. However, there is a minority that you consider to be really important. They may be valuable for several reasons, e.g. their annual billings are among the highest from your client base, they send you great referrals, they are expanding rapidly, they are a center of influence, etc.

My recommendation is that you select these special clients and develop a communication plan for each one. This doesn’t need to be as formal as it sounds, but it should include a number of touches spaced relatively evenly throughout the year. Suspend the plan in your (or a staff member’s) calendar so you will be reminded on a timely basis to, for example, invite Ted to a Charger’s game or Gail to lunch.

Maybe send a personal note of congratulations when Marsha’s son graduates from West Point or the local college. Or, make a habit of getting together with each of them right after tax season and have a “so-what’s-the-upcoming-tax-year-look-like” meeting. It’s a good time to talk about long term plans, goals and strategy. Generally these discussions get into personal aspects of the client’s life. It affords you an opportunity to weave the financial picture and personal elements together and make sure what you are doing for them really is helping the client get where they want to go monetarily and personally.

You are only limited by your imagination in terms of what are the most effective or desirable touches for each special client on your list. You’ll come up with good ideas so long as you make sure they aren’t cookie-cutter, formularistic or otherwise impersonal.

By becoming closer with these premium clients, you are creating the foundation for very long lasting and rewarding relationships characterized by excellent revenue, interesting work and long-term tenure.

A “Conversation” With Your Clients – Part 1

I realize all of you are doing double duty as April 15th approaches, but here’s a bit of light reading for a respite from the weightier tax matters you are dealing with…

One thing corporate marketers are paid to do is maintain a link between their company and its customers. The marketers often refer to this effort as first establishing and then maintaining a “conversation” with their customer base.

Why do they do this? Their goals are multiple – placing their company in a positive light, creating loyalty, reinforcing the “brand,” generating future sales and promoting positive word of mouth by the customer.

Accountants have the same need for their business. The reality is that most readers of this blog don’t talk with their clients – even their good clients – often enough. The reason is that they don’t literally need to. To explain: If the client has their data and documents in decent order that’s pretty much all that is needed to prepare the necessary filings. Oh, there might be a quick phone call or two to clarify some point, but nothing like a real conversation.

But, so what? Do you HAVE to talk with clients more than is necessary to do their work? I believe the answer is ‘yes’ if they are an “A” level client (businesses or non-profits, high worth individuals, big trusts, etc. that populate the list of your high revenue clients). Here’s why: I advise accountants all the time about how they can convert desirable prospects into clients. Invariably, these prospects already have an accountant. In effect, I am coaching them to succeed in their campaign to lure that client away from you. I proceed with the assumption that these clients aren’t receiving sufficient attention, and only rarely am I wrong. It may take six months or even more, but we are successful often enough for you to be concerned. Don’t make it easy for a competitor to seduce one of your good clients away from you and over to their practice.

Therefore, my advice is that you maintain an ongoing conversation with your best clients. If you stay in touch with them and build a real relationship, do their work competently and charge prevailing rates in the community, you will be in pretty good shape if someone else comes along with the objective of stealing them.

How do you maintain a conversation? I’ll write a more detailed post after tax season, but here’s one suggestion that is perfect for tax season: First, complete the return and prepare it for mailing. When everything is ready to seal in its envelope, grab a colorful 3M “stickie” and handwrite a message with a similar effect to the following: “(name) take a look at line (X) on form (X). We should talk about this as you go forward. Rgds, (your first name).”

You can find some issue in ANY return that merits discussion. If they are making a killing, then the focus can be upon ameliorating future state and/or fed tax burdens. If there is some sort of decline of revenue, margins, pretax, bank line, borrowing ability, etc. then the issue can be to talk about strategies to reverse the trend(s).

Why a handwritten stickie? It shows that you took a special interest in the client’s personal situation. You have demonstrated a concern for their individual welfare/success. You are reaching out and honoring them as a person. The handwritten stickie reflects a bit of you. You are giving them attention. It is not the action of a cold, withdrawn “professional” maintaining a formal and distant connection via form letters signed by staff but instead a humanistic action undertaken by you personally. The act isn’t one by someone who is treating the client as merely one account among hundreds who are processed and spit out by a high volume, impersonal production line. And so forth…

Yes, you are correct… it is all about feelings. The client will feel a connection. In all likelihood that little stickie will lead to a later conversation – a real one – where you will have the opportunity to talk about issues that can lead to project work, consulting, planning, etc. Even if it doesn’t, you have touched your client in a humanistic, individual manner and that always positively affects retention and referrals.

Powerful stuff. Give it a try.