Accounting Practice Business Development

Blog Site Change Effective September 10, 2010

2010-09-10T12:46:00.000-07:00

Dear Reader ...
I have moved my accounting practice business development blog over to www.acctbizblog.com. My most recent post is today, September 10th. I will no longer be posting on this site. Please look for my blog on the new address.
See you over there!
Thanks,
Craig Weeks

www.acctbizblog.com

This Really Works

2010-08-22T09:16:00.000-07:00

Before we get into the meat of this post, let me offer a mea culpa … yes, I realize what follows will read like a commercial. I’ve actually avoided writing about this for a long time because I don’t want to come across like I’ve suddenly become Ron Popeil, hustling pocket fishing rods, Veg-O-Matic and rotisseries on TV.

But, you need to read about this because I know it really works and, no, I’m not getting a penny for writing about it.

This is a tool that not only helps your clients, it also elevates and differentiates your services from competitors AND it is a powerful means to both acquire new clients and obtain more work from existing clients.

Alas, it isn’t free, so if this posting is intriguing you’ll have to contact the source and determine if the expense vs. value is right for your practice. I can tell you about the benefits from a business development and client service/retention perspective; they’ll have to tell you how much it costs.

The products are the Snapshot (formerly ProfitCents) reports you can create from software offered by Sageworks, Inc.

Snapshot provides value for an owner/manager of a small- to medium-sized business by offering recommendations to help improve its financial performance. Snapshot analyzes the business’ financial data and generates easily understood narrative text reports. Many accountants find these reports to be very helpful when trying to explain the meaning and prospective impact of the P&L and balance sheet numbers. The reports include constantly updated comparative performance data so you and the client can see how the business is doing vs. similarly situated enterprises. If applicable, it also offers automation of the pre-audit process. For these reasons, a growing list of accounting firms (approx. 4,000 at present) subscribe to this software.

But the reason I’m writing about Snapshot today is specifically because it is a powerful – almost unsurpassed – business development tool. As noted above, it offers differentiation and elevates the value of your professional services to your clients. Beyond that, it has exceptionally potent persuasive impact upon prospects. Here are two examples of how it can be used with the owner of a small-to-medium size business:

Using Snapshot to get more work from an existing client. If you are a regular reader of this blog you have read about my “stickie” strategy. Here’s how it works if you are a Snapshot subscriber: 1) you have just completed a client’s tax filing, P&L/balance sheet, what-if cash or profitability analysis, etc. where the business’ performance has been reduced to numbers. You then, 2), enter the performance data and create a Snapshot Extreme® report for the business. 3), you compare the industry averages (these are highly localized and relevant, e.g. Architecture & Engineering firms in Southern California, so the results are apples to apples) to your client’s numbers and find one or more areas where their business falls short vis-à-vis the averages. 4), you grab a stickie and in your own handwriting (don’t type it) write, e.g. “Sharon, note where I’ve made highlights. These are below your industry’s average. I think you’re leaving money on the table. Call me and let’s talk about this. Dave” 5), the client docs, relevant section(s) of the Snapshot report are bundled together; the stickie placed on top, and the package sent off to the client. 6), a few days later the odds are overwhelming that Sharon will call you.

You then get together with her, discuss the performance gap and strategize how she can improve her results. I’ll leave it to you to suggest remedial steps, but it isn’t difficult to see how it will involve you, and this translates to billable hours. For example, you help her assemble a package that you will then use to approach her bank to press for expansion of her bank line or, perhaps, to liberalize covenants. Or, you can do an analysis to determine what the impact would be if she closed down a marginally profitable sales office in the neighboring city. Or, you can determine the impact if she changed her sales team’s compensation scheme so it had a reduced salary but larger commission component. Or, how would the numbers look if she upgraded her computer & software capability and based upon greater prospective efficiency, reduced her admin staff by one person?

Using Snapshot to convert new prospects to clients. If you have my manual or have read this blog for a while, you know that there is an imperative that you identify the prospect’s issues, concerns, needs and then provide spot-on, workable solutions. To do this you rely initially upon information the prospect gives you (ideally, that includes some current financial data) and then what comes up during the discussion. During the conversation when you are setting the appointment to meet, you say, e.g. “Pete, I have access to a proprietary database that can provide you with some really good input. If I can get your (tell them what you want) data I can prepare a report for you. It will really add value to our discussion.” They’ll almost always give you the data.

Then, when you meet, you leverage off the report to engage the prospect. You then leave the report with them at the meeting’s conclusion. It, of course, has your and your firm’s name prominently placed. They’ll read it later because, after all, it's all about their own business.

What does this process gain for you? First of all, it adds clout to your presentation. Secondly, it provides differentiation because the odds greatly favor that you will be the only one offering this benefit. Third, it empowers you to point out and focus upon areas the prospect should be talking about (they might not even know their pretax margin or debt-to-asset ratio is below average). Fourth, it gives validity to the courses of action you recommended. Taken together, this is an almost insurmountable advantage for a competing accountant to overcome.

There are other benefits and advantages I don’t have space to cover here, but as a final thought I want to point out that the use of Snapshot in the business development process gives your prospect an objective reason to pick you ... you were the most prepared, you offered solid data, you have positioned yourself a cut above any competitors, you proposed courses of action that the report agrees will be impactful, and you have demonstrated a high level of client service. Other things being reasonably equal, you will be their choice.

Here are links to check it out: Home page: www.sageworksinc.com
Specific information about Snapshot and other reports:
https://www.profitcents.com/USEN/runreport/allproducts.aspx?GUID=afb0e04a-d75d-4b36-a44b-4104bfe6afe9

A Book That Will Put Money In Your Pocket

2010-08-17T10:05:00.000-07:00

Hinge is a marketing firm in Reston, VA primarily focusing upon helping professional service firms (including those of the accounting persuasion) achieve uncommon growth and financial success.

Lee Frederiksen, Hinge’s Managing Partner, recently sent me an advance draft of their new book titled Spiraling Up: How to Create a High Growth, High Value Professional Services Firm. It is tentatively scheduled for mid-September availability.

I confess I am drawn to the book because its marketing message is so closely in sync with my own. In summary, find one or more niches and then tailor your marketing just to them. Don’t approach prospects remotely (telemarketing, email, etc.), instead focus upon personal marketing. Make sure your message is clear and that you differentiate your services from your competitors. Finally, you provide superior service and give your best clients plenty of love.

If an individual accountant or a firm follows the action steps Spiraling Up lays out there can be no result other than success.

Chapter One of the book begins with this provocative statement, “There is a group of highly successful professional services firms that grow 9X faster than their peers and are 50% more profitable. And incredibly, these firms spend less than average on marketing and sales.” The book then takes the reader through an easy to read and understand explanation of the factors shared by these über-successful firms.

While some of the book’s how-to is borrowed from what Hinge has found produces the most success for their clients, those lessons are augmented by the extensive research Hinge has conducted (in partnership with two other firms) with the goal of isolating those factors that are consistently present in these most successful firms.

When Lee and his co-author blended the lessons from Hinge’s experience with the conclusions of their research, the result became the contents of Spiraling Up.

You can download a 31 page summary of the underlying research at www.hingemarketing.com/highgrowth.

I do not know the details of how the book will be distributed, but if you download the research you’ll have Hinge’s web site and can check with them in mid-to-late September.

The draft I read doesn’t talk about how you actually convert prospects to clients (that’s more my niche), but it most assuredly provides solid insight about finding high quality prospects.

Check it out. It will be well worth your effort. And, just to make sure we’re transparent here, I have no pre-existing relationship with Lee or Hinge and am not receiving any compensation whatsoever for promoting their book. I just think its contents are spot on and you need to know about it.

I’m very interested in hearing about your reaction after the book comes out. Please take a minute and shoot me an email.

The Best Way To Meet With A Prospect

2010-08-07T12:16:00.000-07:00

A prospect can be defined as any person who represents the opportunity for additive billable hours. This can include both present clients as well as non-clients.

If you are contemplating meeting with a prospect who is not a present client you have to decide where (and perhaps how) you will get together.

Rachel, who practices in New York, told me how she liked to set up a formal time to talk with prospects on the phone. Asked why she didn’t instead meet face-to-face, she replied that getting around was simply too difficult and took too much time out of her day.

Her strategy was to schedule the discussion in the morning, during mid-week so the Monday and Friday pressures weren’t present, and get a commitment that the prospect could talk for at least a half hour (and hopefully longer). She would send over in advance an agenda plus whatever documents she desired to refer to during the discussion. The package would also include a transmittal letter, brochure, testimonials and her business card.

So, how did Rachel’s system work? She may have saved a lot of time, but the results she obtained were poor; estimated to be about a 10% conversion rate.

As last week’s posting discusses, to convert a prospect they need to a) like or at least have a good “gut” feeling about you, b) believe you are competent and, c) become convinced that you understand their issues and can provide the needed solutions.

Since so much of interpersonal communication, both in terms of understanding and clarity, comes from non-verbal cues, Rachel was at a severe disadvantage with her telephone-only approach. She simply couldn’t establish the desired comfort level most prospects were looking for, especially if another accountant was competing for the business who did arrange to meet the prospect in person. She has now switched to face-to-face meetings and her conversion rate is greatly improved.

So that’s the first rule: meet with your prospect in person. OK, but where? There are several choices that can include your office, their office (or everyday environment), or a neutral site.

Generally speaking, the best choice is their office. I don’t have hard numbers, but anecdotally the vast majority of feedback I’ve received over the years strongly reinforces this conclusion. There are many reasons, e.g. it is their turf and they will be more comfortable, they are in an environment where they are used to making decisions, you are respecting their time demands by going to see them, you can see their operation and how they construct their surroundings, there will be real time access to necessary data (“Tom, where are we on the depreciation timetable for the crane?”), and more.

How about a neutral site? Typically, this will be a restaurant, but it could be many other settings, e.g. you decide to meet for a round of golf and talk. My distrust of these alternatives primarily stems from their potential for unanticipated distraction and/or disruption.

For example, if you go to a restaurant you may be placed next to a very loud birthday party, or it may be a table that is located too close to other diners. Or, the table is simply too small. In the golf example, your prospect may be quite competitive and even if they “win” the match, perhaps they will be furious they played very poorly that day. Talking business is the last thing on their mind. Also, depending upon the setting, you may discover it is daunting if not impossible to work with files, forms, notepads and other tools of the trade.

What if the prospect is an existing client and you wish to acquire additive work from them? The rules are similar, but not exactly the same. Again, the first choice is to personally visit them in their environment. A strong additional reason for this is retention … they’re already a client and every survey ever conducted among clients reinforces the value they place upon the personal attention you give them. And, just like when you are speaking with a new prospect, you will have a superior level of communication and that’s always good.

Because there is a strong pre-existing level of trust you generally don’t have to rely upon the same level of “proof” to make your case. For example, if you know your client is contemplating growing their business, your suggestion that she engage you to run some what-if scenarios that explore her expansion funding options will probably be “sold” on the basis of your descriptive narrative, not by carefully prepared examples of the sort of data you are talking about.

Therefore, you often have greater flexibility in how you choose to meet. A restaurant, happy hour after work, golf or even a noon time jog might do it.

That’s rule number two: meet the prospect at their office or everyday setting, especially if they are someone you don’t know. With a present client you have greater flexibility, but if you are unsure, you can’t go wrong by defaulting back to structuring the meeting as though you are meeting them for the first time.

It is all about the odds. You want the highest conversion rate possible for the limited time you have available for business development. Make the meeting in person and in their environment, embrace the methods we’ve looked at in many prior blog posts and you will make the most of your opportunities.

What Does The Prospect Want?

2010-07-26T12:37:00.000-07:00

We know what you want from the prospect: an engagement. But, what does the prospect want? What are they looking for? What criteria will they rely upon to choose an accountant?

The answer can be distilled down to three things they are looking for. Fail at one and you have a good chance of being passed over. Meet their expectations for each and you are in the running (and may win by default). If you excel in one or more criteria and meet the others, you will almost always be the one they select.

Number One, and the easiest to satisfy, is that the prospect must feel you are competent. I say “easiest” because consumers already believe you know how to do their work. They know you have gone to college and obtained a degree in accounting; you do accounting work for others, your card says you are an accountant and you may be a CPA. Their supposition is reasonable because a vast majority of prospects have mainstream accounting challenges you deal with on an everyday basis. So, their trust in your ability to do their work is generally not misplaced. The exception is when the prospect is seeking esoteric knowledge, e.g. international tax issues, etc.

It also means you don’t have to spend ANY time telling them how wonderful you are unless you need to demonstrate knowledge in a niche such as noted above. If you have a box of those expensive full color brochures, then by all means pass them out, but do so at the end of the meeting, e.g. “Really a pleasure meeting you Pam. I’m looking forward to our follow up next Thursday. By the way, here’s a brochure about our firm. As you can see, we’re only about a mile down the road.” And then you shake hands and walk out.

Perhaps being with a larger firm and/or having a bit of gray at the temples enhances the initial perception of capability, experience, etc., but generally speaking all accountants can meet the basic requirement for apparent competence without breaking a sweat.

Number Two is the prospect needs to feel good about you on an instinctual, gut-level basis. You must “feel” like someone they are comfortable doing business with. This criteria is a killer if the perception is negative. My last two blog posts were about how to create a good first impression and the reason I wrote them is because this is such an important requirement. Ditto the section in the manual. They don’t have to like you or, as I joke in presentations, want to double date with you, but they do need to feel good about you on an interpersonal level.

Therefore, please follow the basic rules for creating a good first impression even if you already know the prospect. To explain … you can know someone – perhaps you see them regularly at the gym or a local civic organization – but when you are meeting them for the purpose of discussing a professional service relationship, they have a different hat on. They won’t be looking at you as their acquaintance/friend Good Old Charlie; instead they will be reassessing you through a somewhat different prism. For that reason you go through the make-a-good-first-impression sequence because, as you’ll see when you review it, it incorporates elements that enhance the perception of competence and professionalism, not just your stellar interpersonal qualities.

Number Three is addressing and solving whatever issues they really care about that are related to accounting services. You can’t address them if you don’t know what they are, and that is why there is so much emphasis in the methodology on the how-to of identifying the key issues, problems, wants, needs, etc. as perceived by the prospect.

These issues will be both logical and emotional. For example, a logical issue is a cash shortage and the bank line is almost maxed out. This issue is also emotional, because the prospect may fear the consequence of the cash shortage could be failure of their business. Not all issues contain both elements, e.g. flat revenue may pose no threat to the business’ health, and the prospect simply wants to continue her history of steady growth, but she doesn’t have any particular angst about it. However, if the hours she spends at the business are becoming a problem with how much time she has available to be with her children, she may be quite stressed about the situation.

The second half of Number Three is to not only isolate the key issues, problems, etc. you must then propose solutions for them (or, a means to reach a solution). In the examples above, you can propose strategies to address the various elements that affect cash flow and retention, and offer to work with them to approach the bank to obtain more generous terms, covenants, etc. on their line. You might suggest breaking down her sources of revenue, isolating the lagging areas and then doing some what-if analyses projecting how different strategies might affect revenue growth. In the last example, you might talk about how she could hire a key manager to whom she could delegate some of her present responsibilities and then offer to do a projection re how that additional expense would impact overhead, margins/profits, etc. so she’ll have a solid basis to consider the option.

If the prospect likes/feels good about you, believes you are competent to address their accounting challenges, and sees that you understand what issues/problems they are concerned about and have reasonable, workable approaches to solve them, there is no reason why you shouldn’t get the engagement. When price is discussed, I recommend you set your rates to reflect current market place standards and don’t negotiate them down.

If they press really hard for a lower price, one strategy that consistently works is to suggest that fee reductions may be available if you can receive their raw data in a form that closely comports with your internal system. You then offer to analyze and suggest how they can package the information they send to you so that it is easier to work with and offer to pass on the savings to them. Usually, this is a good win-win compromise.

If you nail these three elements you will convert a significant majority of your prospects into clients.

You Must Create Instant Rapport With A Prospect – Part 2

2010-07-16T15:57:00.001-07:00

The idea of Instant Rapport as I’m defining it is when you and your prospect quickly form an initial degree of positive rapport and begin communicating on a similar wavelength.

In Part 1 we looked at the first moments when you meet your prospect. In these few seconds both you and they are interpreting visual cues and forming first impressions of one another. If the prospect’s impression is negative, their desire (and ability) to fully engage and effectively communicate with you is greatly reduced.

This and the last post discuss how you can manage this phase of the meeting to greatly improve the odds the prospect’s first impression of you is in fact positive.

In the sequence that occurs after you first see each other, the next thing that happens is you will physically approach each other to shake hands and vocalize mutual greetings (e.g. “Hi Ted. It’s a pleasure to meet you.” “Thank you, Alice. Would you like some coffee before we get going?”). This gives you both the opportunity to assess posture, ease of movement, assess the other’s handshake technique (firm but not hard, never limp, hold for 2 - 3 seconds and release), study facial expressions in more detail and listen to their voice. More impressions are formed.

As you are walking to a nearby meeting room or the prospect’s office, you both have already reached your initial conclusions about each other. Unless something has truly triggered you, these conclusions are amorphous, lacking solid shape and boundary, and are subject to modification. Nothing is set in concrete yet, but the cement is hardening all the time.

You have been responding almost exclusively to visual cues and interpreting them through the prism of your life experience. Have a thing about red haired people and the prospect has red hair? You can’t help but take that into consideration when you form your first impressions.

It is important to note that at this point both of you have been operating at a reactive and emotional level. The logical side of your brain hasn’t been engaged yet in any meaningful way.

Later, as you talk and interact, your brain will kick in and may override your initial take on the prospect and determine that no, Ted isn’t one of THOSE kind of red heads, so it’s OK.

Now, back to the actual process … Walking to the place where you will have your meeting may or may not include some conversation. Just keep it neutral and light. Don’t toss out any opinions or rash statements.

When you arrive at the room where you will conduct the meeting, the first decision is where to sit. You never want to convey, however unintentionally, your desire to encroach upon the prospect’s domain or authority. If the prospect gestures or says something, indicating a chair or side of the table, then simply follow their directions.

If there is no indication, then avoid selecting the “power seat(s)” at the table. Why? Because you are in the prospect’s house and you want to defer to them. The dynamic is they are the host and you are the guest. If you do select one of those chairs the prospect may react very negatively at a gut level … perceiving your choice as the initiation of a contest or power struggle. Obviously, this is not what you are seeking to accomplish. Your goal is instead to create an environment where you have the opportunity to cultivate a potential engagement.

What chairs should you avoid? These will generally be at either head of the table or nearest the door. Instead, select a seat that is, a) on the table’s side and, b) is located on a side that is not closest to the door. These are not viewed as power locations and therefore should be safe.

You can also unintentionally signal your desire to exhibit power by scattering your things around, e.g. hanging your overcoat over the back of one chair, putting your briefcase on another and sitting on a third. By doing this you are claiming and acquiring territory. Another unintended territorial cue is to adopt a slouching, sprawling posture. By doing so you are again acquiring territory and appearing to stake your claim in unneeded real estate.

Assuming you arrive at the point where you and the prospect are now seated across from one another (by the way … if there are more attendees than just the two of you it is best if you sit so you are directly across from, and facing, the prospect’s decision maker), the next opportunity to make an important first impression is how you organize, arrange and handle your props.

By “props,” I mean your briefcase or folio and whatever documents, reference materials, notepads, pens, calculator, etc. it contains. I believe your briefcase or folio should be placed on the floor next to your chair (best) or on the seat of the chair next to you. Never put it on the table because it is not only assertive, territorial behavior, it can also distract the prospect, especially if the table is wood and you have any metal on your briefcase. If they become concerned that you may scratch the table they will hear very little of what you say.

If you will be using exhibits or other documents, have copies for the prospect (and their team), highlight important text, sequence the documents in what you believe the agenda will be, use folders with neat, printed tabs, keep pens that are certain to work handy and also have a clean note pad nearby. Why? Being organized is a trait every prospect wants to see in their accountant. If your competition isn’t, then that’s a check in your column.

Now when you begin the actual content portion of the meeting you can feel confident you have done the right things to create a positive first impression and nothing that will trigger negativity in the prospect’s mind.

You Must Create Instant Rapport With A Prospect – Part 1

2010-07-07T11:30:00.000-07:00

Why is quickly obtaining a connection with the prospect is so important?

It isn’t because you want them to like you. The real reason is because until rapport develops they aren’t engaged and don’t really hear what you are saying. Instead, their mind will still be wandering; little thoughts of other things they need to do pop up, doubts whether the meeting with you will be a waste of time appear, etc.

Rapport also leads to creation of other positive feelings – an obvious example is trust – but that will come later. First they need to hear what you are saying.

Once a connection is formed, they begin to listen, then become engaged in the discussion, and from that point onward you have the opportunity to persuade them. The sooner you can get them to that point, the better.

There are two phases to creation of rapport. The first one occurs in those initial seconds when you first meet with the prospect … when you both first see each other and only visual cues are processed.

Think about your own experiences. For example, you are at a party and a friend points out someone across the room. They say, “That’s Jackie. She’s the one dating Harold.” You have never met Jackie in your life … never even seen her, but based upon what she’s wearing, her age, how her hair looks, her height and weight and apparent physical condition, how she is standing, holding her drink and gesturing, you have already formed your first impression.

An hour later another friend asks, “What do you think about Jackie, Harold’s new girl fiend?” If you are like me, you’ll probably respond something like, “She looks OK,” or “I don’t know. She looks a lot classier than him. I wonder what she sees?” The point is, we’ve already formed an initial opinion, even though we’ve never even talked with Jackie and don’t know anything about her.

Why does this happen? Why don’t we reserve judgment? Why don’t we instead respond, “I really don’t know. I haven’t met her.”

It is because Jackie has, in fact, communicated with you. To explain: an equation that is frequently quoted in articles about body language is that interpersonal communication is comprised of approximately 7% of what is said, while 93% is made up of non-verbal cues. You looked at Jackie and based solely upon visual cues – many of which she deliberately selected when she decided what to wear, how to fix her hair, etc. – formed a first impression of her. And, it wasn’t just you. Everyone at the party did exactly the same thing.

This is what your prospect is processing when they first see you. As we discussed above, it is very important that they arrive at a positive first impression. The good news is you have it in your power to avoid the negative and emphasize the positive. Let’s look at some actions you can take to accentuate the positive.

Show up on time. Good heavens, does anything say, “You’re not important” more than being late? If you are going to be late, call the prospect and tell them you’re stuck on the interstate or whatever. If you give them an estimate for your arrival, say ten minutes, make sure you will arrive very closely to that estimate.

Dress appropriately and be well groomed. With males, there are four basic levels of dress. The first is blue collar – jeans, tennis/casual shoes and shirt. The second is business casual – Dockers or slacks, casual/nice shoes and a nice shirt. The next level is still business casual, but probably has a tie and a sport coat. Finally, we arrive at formal business attire, which is a suit and tie. The basic rule is to be at the prospect’s level or one above. Never below, because the prospect wants to believe he or she is choosing a winner, a professional, someone who is respected within the accounting community, and you don’t want them to find reason to question your level against that standard. Ladies, I won’t pretend to describe the feminine equivalents, but you fight this battle all the time and don’t need any wardrobe tips from me.

Have nice accessories. Short story: the production of a salesman (“Ray”) I hired many years ago fell off rapidly. We talked and everything he was doing seemed to be good, but it didn’t get any better. I scheduled a day we could spend together meeting some new opportunities. When Ray and I met that morning for breakfast, one look said it all. His elderly grandfather, a retired lawyer, had died and Ray had inherited the grandfather’s briefcase. It obviously had great sentimental value, but looked like it barely survived the apocalypse. I didn’t say anything. We went to the first meeting to meet Ned, the prospect. As Ray withdrew documents, etc., Ned’s eyes kept darting over to the briefcase. No sale. For the rest of the day I made Ray to use my briefcase. He did great. Problem solved.

The briefcase’s shabby appearance created a conflict within Ned’s mind. I suspect the fatal blow was a suspicion that Ray wasn’t successful and couldn’t afford something better. No one wants to buy from a failure. From the Ned’s perspective, he concluded that if he was unsure he wouldn’t buy.

Good posture has been validated by extensive research to identify you as someone who is credible, with something to say that is worth hearing. If you are directed to a chair, sit straight in the waiting room or lobby, face the door where you think your prospect will appear and avoid any appearance of slouching or excessive casualness. When you arise, stand tall, pull your rib cage up, flex your knees and look directly at your prospect’s eyes for at least three seconds (but no more than about five – that can be interpreted as excessive aggressiveness). Research has revealed these elements are the most impactful when a first impression is being formed.

Next post we’ll look at the moments right after the “visual only” phase of forming a first impression.

The Most Important Business Development Skill

2010-06-26T16:17:00.000-07:00

The business development model described and explained in the manual and also written about in this blog isn’t a simple, silver bullet solution. It isn’t daunting to anyone who has the capability to obtain an accounting degree, but nevertheless does require study and practice if your goal is to become a superior rainmaker.

But, we each learn in different ways and rarely become simultaneously adept at all the phases of any process. This means that you will get up to speed more quickly on some aspects of the method than others. And, to put it bluntly, you may simply not like certain a segment here or there and will skim over the related material. It’s human nature.

With that said, when you actually begin employing the method I doubt if you will be surprised if you find that for whatever reason(s) you are more comfortable and/or capable with some areas than others.

Now we get to the crux of this post. I’ll frame it with a question: Do you have to master every element of the method to be a superior business developer? The answer is “no.”

There is one portion of the method that is more important than the others, and if that is one of your strengths – or even your only strength – you will still obtain good results.

To explain: The process begins with identifying a prospect and obtaining a meeting. This is obviously a vital element, and in some instances may take a bit of social boldness, but it really isn’t especially difficult. It is more a matter of will. Then you do your research about the prospect, which is something every accountant can do well. Perhaps your investigation may be somewhat superficial, but if you are experienced you can probably overcome this because you’ve been there and done that so many times.

When the meeting does occur it is important to make a good first impression, but even then, if you are knowledgeable and eventually develop a good rapport with the prospect that won’t prove fatal.

Let’s skip ahead for a moment and look at the closing phase of the meeting. You have to say something to get the business, right? The method incorporates several variations of a “close” strategy, and in the manual and in this blog I’ve made the point many times that you need to have resolution … either they engage you, or they don’t or, if a decision isn’t made right then, you obtain an advance so that a decision will be made in the near term.

Surely the close is the most important phase, yes? Nope. Because if you really nail the most important element you often won’t even need a close because the prospect will begin making all the signs of wanting to be your client before the meeting is even over.

Just this one additional bit of set up and then I’ll reveal the answer. Your prospect has both an emotional and logical perception of their financial and tax situation. They want to work with an accountant who has the skills to handle their various reports, filings, etc., and also understands their needs, wants, priorities and motivations. The latter is the key.

Remember that the vast majority of clients already believe all accountants are technically competent to handle their needs (with obvious exceptions for specialized areas). Therefore, it is rare that you need to “sell” your accounting skills to a prospect because the logical side of their brain is already comfortable with your presumed capability.

You can omit segments and even make outright mistakes during the meeting and still win the client If you demonstrate you understand and can relate the services you propose to the prospect’s emotional needs.

Mastering this skill begins with asking for an overview from the client. You say, e.g. “Susan, I’ve had a chance to review some of your financials and have an initial understanding of your physical therapy practice, but it will help me focus our discussion today if you would provide me an overview of where you are and where you want to go with your business.”

Her response will initially center upon her practice, but if you listen carefully (and perhaps provide a small prod or two) she will make clear her emotional concerns. For example, if at some point she says, “Ben, who shares the practice with me, is starting to talk about retirement. I’m not to sure what that means for the future,” this is a clear indicator that she has emotional concerns and also raises other, more straightforward financial issues, e.g. can she afford to buy Ben out, does it make sense for her to stay in that facility if she practices alone, etc.

To ensure you understand Susan’s emotional anxiety you can next ask her something like, “How would you like the situation to come out … what’s the future you’d like to see?”

With her answer in mind, you will propose solutions that allow her to see the real probability of achieving the future she desires with you as her accounting professional.

When what you propose resonates with her on both practical/logical AND emotional levels, 90+ times out of a 100 you will get the engagement unless (and it’s unlikely) someone else is similarly adept at recognizing and addressing the issue(s).

Asking a well-framed “overview” question, really hearing the prospect’s answer, and then proposing solutions that exactly address their needs and concerns is the skill that will more than any other factor positively influence the prospect’s buying decision. Every other part of the business development process is secondary.

See “Obtain An Overview From The Prospect” and the following two chapters in your manual for a much more detailed exploration of this topic.

The Four Elements For Business Development Success

2010-06-20T10:21:00.000-07:00

After I’d racked up some experience training industrial salesmen back in the ‘70s, a number of truths became apparent.

The most important one I learned is that sales success required the presence of four elements.

Alan’s experience illustrates this statement. He took to the training program like a champ. He read the materials, accurately completed the exercises, listened to the tapes and did well in the role-playing. Once he was in the field he attacked his assigned territory with vigor. He visited the existing accounts and met with those who made the buying decisions. He reviewed everyone’s stock position, updated inventory, actively worked his to-do list, created schedules for follow up and generally invested a lot of energy revitalizing the customer base.

Because it is a process, not an event, it takes time for a business development campaign to bear fruit. (This is true for your efforts, too.) In his first six weeks, Alan produced a nice revenue spike within his existing customer base. This jump in revenue was the result in Alan systematically calling upon them after the prior salesperson’s relative neglect. However, a problem was becoming apparent.

In our sales management system, we would meet each week and talk about various performance metrics. One metric was the number of new accounts each salesperson brought in. Historically, a new hire would begin to generate these in the third or fourth week after being turned loose.

Alan didn’t have any. Realizing we had a developing problem, I brought him in for a day and we reviewed how things were going. When we focused in on his results, I brought his attention to the zeros in the “new customers” column. He had a lot of reasons and excuses for his lack of success, and we spent the balance of the day talking about various things he could do to turn things around. We parted with Alan vowing to improve, and the next morning he gave me a plan detailing exactly what he was going to do to succeed.

He didn’t improve (in fact he never brought even one new customer), and Alan left the company a month later. All the pieces were in place … good technique, good attitude, a territory rich in potential … but Alan failed. So, what went wrong?

There is an answer to this, and it is an answer that applies to all of us who wish to build or improve our practices. The bottom line is that as simple as it may sound, you have to actually do it to succeed! Nike has it right: Just Do It.

A proven, effective business development technique is readily available to you in the form of the manual most of you own. And, as you’ve read numerous times in this blog, you can employ these techniques in your own interpersonal style that is both more effective and gentle on your psyche. Technique isn’t the barrier, for Alan or for you.

Alan’s real limitation was that he wanted everything to be right … no mistakes, no awkward tongue-tied moments, nobody saying no and no negativity. The “perfect” circumstances he desired never arrived. The effect was that he couldn’t take the necessary steps to develop new customers.

In contrast, he felt safe with the existing clients, all of whom were pleased to see him. But he was terrified of talking to someone who might not respond positively to him. The result was that talked to none. Zero results.

Yes, business development can be messy. It involves people. It is unpredictable and, depending upon how far you want to extend yourself, can even be psychologically uncomfortable every now and then.

How does this affect you? I’m going to assume you are reading this because you want your practice to have more revenue, more margin/profit, better clients, more clients or some combination thereof. This is the first element. You have to want it. Like you, Alan had desire … he wanted a six-figure life style.

The second element is patience. You shouldn’t expect to go from zero to 60 in 2 seconds. Nobody can do that. It is going to be a few months before you see real results. Alan had this, too. He was patient … he knew it would take some time to succeed.

The third is that you have to do it. This is what killed Alan. You have to put your toe in the water, even if you step on a pebble or two, and then wade in more deeply as you gain confidence. There is absolutely no substitute for taking action.

To overcome the “Alan” barrier, I suggest you begin by talking with your existing clients about doing more work for them. In both the manual and in this blog we’ve explored several ways of going about this that are very, very easy on your internal “I-don’t-want-to-sell-used-cars-for-a-living” meter.

Once you are comfortable with the techniques related to obtaining additive revenue from your present book of business, then it is a relatively small step to wade in a bit further and begin converting prospects who are more or less strangers.

Desire, technique, patience and Just Do It. It works every time, all the time.

How To Make The Best Of Business Development

2010-05-29T13:51:00.000-07:00

The following interview was just published on AccountingWEB.com and you may find it to be of interest...

When revenue or gross margin isn’t generating the income you need or want, your technical knowledge and the efficient workflow processes you’ve developed aren’t enough. The solution is inescapable … you need a bigger or more profitable book of business.

When the need becomes great enough, you set the client files aside and put on your business development hat. And – let’s be real here – the vast majority of you would rather have a root canal than take on the role of salesperson!

Craig Weeks claims it doesn’t have to be this way – that successful business development need not be an exercise in self-punishment.

AccountingWEB interviewed him so you can decide for yourself.

AW Is the common wisdom that accountants dislike business development really true?
CW As a general rule, professional service providers, whether they are engineers, surveyors, accountants, therapists, orthodontists, or piano teachers generally dislike self-promotion. I don’t think accountants are any more “sales shy” than the other professions.
AW Historically, most firms seem to have grown fairly passively … by having a community presence and positive word of mouth. Does that still work?
CW Yes. The problem is that there is more competition today, the pace of business is constantly accelerating and practices are finding they want to build their revenue more quickly.
AW Is traditional marketing still effective in today’s business environment?
CW If you mean sending out direct mail, placing ads in the Yellow Pages, employing telemarketing firms, putting a sign on the billboard across the street from your office and the like, the answer is yes. But, the R.O.I. is declining – mostly due to increased competition, information saturation and our current recession. Practitioners who undertake a traditional marketing campaign need a well thought out plan incorporating a budget, performance metrics and frequent monitoring of results to ensure they are getting a positive return for their investment.
AW Is there an approach that works better?
CW Yes. Personal marketing works the best, but it is dramatically different than the traditional marketing we were just talking about because it requires the accountant’s direct involvement.
AW Which gets us right back to a practitioner feeling trapped into having to do something they really don’t want to do…
CW But, it doesn’t have to be that way. It is all about personal comfort. Competent business development puts, literally, thousands (if not tens of thousands) of dollars in the accountant’s pocket. If they can find a way to do it that is “natural” for them, they’ll keep with it because the payoff is so dramatic. At one end of the scale is the person who is socially bold, who can easily change hats and become an effective salesperson for their practice. This individual will feel comfortable approaching that new member of the local service club, introducing themselves and then, as time passes, establishing and then nurturing a relationship and eventually asking their new friend for their accounting business.
AW But, that’s not the average, is it?
CW Not even close. The average accountant would, as my grandson puts it, rather eat worms. They aren’t as socially bold, so to try and act that way is extremely difficult. Even if you could fake it for a period of time, the psychological strain will eventually cause you to stop. But, what if you could be just as effective and NOT have to fake it? What if you could just be yourself? What if you could not only drive more profitable revenue to your practice but you could also acquire the business development skills to successfully entice and sign up the best, “A” level prospects?
AW That sounds pie-in-the-sky. It doesn’t just automatically happen that prospects become clients. Someone still has to persuade them to do so … to “sell” them.
CW It is true you do have to talk with the prospect. Nothing substitutes for that. But, there are easy ways to do it. You don’t have to be that rare kind of person who walks all alone across the gym floor at the high school prom and boldly asks the best looking guy/gal there to take a turn on the floor.
AW But, even if you find a way to just have a low-key conversation with your prospect, don’t you still have to close them? Ask them for the business?
CW If you are pitching something that isn’t actually needed, then yes, there has to be selling, e.g.” Your 8330 Blackberry is passé, you ought to have the new 8530 because it makes social networking even easier.” But, we’re not doing that. People NEED accounting services. They’re going to buy them from someone. At the bottom line, they’ll buy them from an accountant with three qualities, a) likeability, b) awareness of and, c) solutions for, the prospect’s needs, wants, motivations and desires. If you can establish in their minds that you have these three attributes you will get their business because it’s what they want. Of course, things can go wrong if there is poor quality work, overcharging, not returning phone calls, etc., but we’ll assume those things aren’t problems.
AW Easily said, but how does a reader of AccountingWEB learn how to do what you describe?
CW I have a blog devoted solely to accounting practice business development – it’s free – there is an archive of about 80 entries. It can be found at www.acctbizdevelopment.blogspot.com. If I may be more mercenary, they can take a look at www.cpaprofitplus.com where I offer a comprehensive manual explaining everything.
AW Any final words for our readers?
CW The bottom line is every accountant can become a really effective business developer and rainmaker for their practice. And they can do it while remaining comfortable and true to themselves. What it takes is utilizing proven methods coupled with good techniques, both adapted so they become a natural part of their interpersonal style.
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Biography: Craig Weeks is located in Vancouver, WA and since 1996 has specialized in helping clients as diverse as sole practitioners and KPMG practice groups become more effective business developers. He believes all accountants can become highly effective rainmakers while maintaining their individual interpersonal style.

Being TOO Nice Can Be A Business Development Mistake

2010-05-25T12:16:00.001-07:00

You’ve read many times in this blog that a cornerstone of establishing rapport with your prospect is to create an environment where they quickly conclude you’re a likable person. This is important because nobody – not you, nor your prospect – wants to do business with someone they don’t have a good interpersonal feeling about.

The positive first impression you seek will be formed in 30 seconds or less at the prospect’s gut level. In other words, they’ll “feel” that you’re an OK person. Your body language, appearance, voice tone, eye contact, handshake, etc. are the building blocks forming this initial opinion.

Then, as the meeting progresses and they hear what you have to say, they will form their secondary, reason and logic-based impression. When the prospect blends these impressions together, the result becomes what they think about you and your professional competence.

Some readers have difficulty balancing these two factors and conclude the best strategy is to make darn sure they are “nice” so the prospect will like them.

But, this is NOT what the prospect wants. Think about it from their standpoint: they’re looking for two things. The first is they want a professional service provider who is pleasant to be with (or at least easy to work with). That’s the reason for the “make a positive first impression” strategy you follow when you first meet them … you want them to feel comfortable with you.

The second thing they want is an accountant who is “competent,” and I believe they define the term differently than you might. They think competent means a) you have the appropriate technical knowledge AND, b) you know how to apply it to their circumstances.

If you fulfill these two requirements (or, if there is a competition, you fulfill them better than your competitors), they’ll almost always engage you.

OK, let’s recap where we are. You’ve made a positive first impression and you are now meeting with the prospect. How do you demonstrate competence to them?

Step one is to know your stuff. You’ve talked on the phone and at least superficially discussed their situation, you’ve asked for some financials, and you’ve hit the internet and also accessed local sources to do some research about the prospect. The point is, you know what you have to know about, so you have taken the necessary steps to be appropriately informed, thereby fulfilling a) three paragraphs above. Only b) is left.

Now we arrive at the point of this blog. It is solving b) that separates the adults from the kids. You generally only have about 25 – 30 minutes in a typical one-hour meeting to figure out the prospect’s issues, needs and wants. That’s not a lot of time! Once you learn what they are, you need another 10 – 15 minutes to demonstrate you can provide the solutions.

To accomplish this, you have to stick to business. You must focus the discussion upon bringing to light what matters to the prospect and how you can scratch that itch. Here’s the danger: the prospect begins talking about their emotionally driven concerns. They’ll stray from the point, veering into irrelevancies that are important to them, but not germane to what you need to find out about.

For example, you ask about provisions for the children’s college expenses and the prospect launches into a diatribe about the one child with bad grades who doesn’t seem interested in anything but video games. You nod sympathetically. But they go on. And on. And on. You glance at your watch and the minutes are evaporating right before your eyes. Should you say something? Well, the last thing you want to do is be rude, right? You want to be nice because, after all, if you don’t exhibit compassion and understanding the meeting may turn sour. So you sit and listen, uncomfortable with the dawning realization you’ve lost control of the meeting.

Before you know it, the time is up and your prospect has another meeting they must attend. They shake your hand warmly and tell you they really enjoyed meeting with you. Two weeks later, you find out they selected someone else to do their accounting work. This shouldn’t be a surprise, because you never really satisfied b).

To demonstrate you are the right choice to provide the prospect’s accounting services, you simply MUST focus the meeting upon discovering their issues and how you can successfully address them. Easily said, but how do you do that? Of many choices, I offer two alternatives.

The first is to manage the prospect’s expectations. When you are sitting down and the initial pleasantries are behind you, you can say something like, “Julie, based upon our telephone conversation (and the financials you provided) I’ve done some preliminary analysis and we really have quite a lot to talk about in a fairly short period of time. May I have your permission to drive the agenda of our discussion today so we don’t miss anything that’s important?” She will almost always graciously say “yes.” In effect, she has given you permission to control the discussion. If it strays, you have her advance consent to make eye contact, smile, and tap your watch. 95% of the time she’ll also smile, nod and get back to the point.

The second technique is where you don’t say anything in advance, but is a variation of the first. If you get part way into the meeting and Julie goes too far down an immaterial path, you politely interrupt and convey the same message, e.g. “I apologize, but I want to make sure we have time to cover all the issues, so could we, etc., etc.”

The primary competitive differentiation you’ll enjoy at the end of every business development meeting is when you propose solutions that really meet the prospect’s needs and wants. You MUST have the time to discover what they are and that means you have to control the meeting and stay on point. Don’t let a misreading of what the prospect really wants lead you into the trap of being too “nice.”

You Don’t Have To Fake It – You Can Be Yourself

2010-05-15T14:28:00.000-07:00

I get one or two emails a month from accountants who have become discouraged with their business development efforts. We discuss the poor results they’ve achieved and, almost without exception, the toll it has taken on their self-confidence. Hopefully, the suggestions I offer help them get back on track.

Most of the time the root cause of the problem is that they are pursuing their business development efforts in a manner that isn’t “them.” In other words, they’re playing a role – perhaps mirroring how they believe a top-notch business developer would go about the task – instead of simply adapting the techniques we know work to their own interpersonal style.

There are a ton of studies concluding that people who are placed in circumstances that are psychologically difficult will eventually “crack” from the effort to maintain the façade.

In practical terms, the effect of this reality is that when you are undertaking business development activities you have to be yourself or it will eventually get to you. The result is you will cease (or at least greatly curtail) the activity.

I’ve asserted many times in this blog that personal marketing is the most effective means to attract the most desirable prospective clients. It is – psychologically speaking – also the most difficult because you are directly exposing yourself to the possibility of having someone reject you. Ah, but there are ways around this, so please continue reading.

It should be mentioned at the point that personal marketing in virtually all forms is less expensive when compared to so-called “traditional” mass/indirect marketing. For example, it costs nothing to approach and talk with that ideal prospective client you meet at a local civic function, but it will cost you real money to sign up for a big Yellow Pages ad, send out 5,000 postcards or rent the billboard across the street from your office for six months. And, are the people who respond to those efforts going to be the prospects you most desire? Well, it’s hit or miss, but probably not.

Now, back to ways around the psychological burden of directly targeting an individual … how do you approach them in a comfortable manner that’s “you?”

One way is being an expert. Write articles, make speeches, appear on panel discussions, be interviewed by the media, write a blog, send out a niche market- specific newsletter to carefully selected addressees, etc. Anyone can do these.

Select a narrow topic, gather the relevant regs, code sections, decisions, BNA interpretations, online discussions, seminar notes, etc. and suddenly you know more about the subject than anyone around. Examples are endless. It can be something like Enterprise Zones, the new health care or HIRE legislation, fractional ownership of larger capital items (e.g. business jets, heavy equipment), etc. Pick something that is relevant in your market area and become The Local Expert. What’s the result? There will be some of those populating your particular area of interest who will, with no further effort on your part, contact you! What a concept.

If you are a bit more socially bold, you select activities you enjoy, e.g. vintage automobiles, hang out with others so inclined and promote yourself. How? One effective way is to again do the “expert” thing. For example, you get up at your vintage car club meeting and note that there is proposed legislation that, if passed, will change how the gain from the sale of a historic automobile will be calculated beginning in the 2011 tax year (don’t panic – I just made that up). How will this be received? Well, first of all you’re one of them; not an outsider, they know and like you, you’re being altruistic and helpful, you’re demonstrating knowledge and you are establishing yourself in their minds as an accounting professional. This is still a relatively passive approach, but with time you will probably get a nibble or two or maybe a referral.

At the end of the scale – if you are really socially bold (you’re the one who walked across the gym floor, all alone, and asked the best looking guy/gal at the high school dance to take a turn on the floor) – you form relationships with other members of the club and if you decide one of them is a good prospect you simply ask them for their business. “Fred, I’ve really enjoyed hanging out and getting to know you. We’ve talked about our work and I just want to lay it out there … I have several other medical groups as clients and it’s an area of the practice I understand well. So, here it is: If the opportunity arises, I want to compete for your business. I know I’d like to work with you as a client in addition to enjoying our friendship.”

How will Fred react to this? The vast majority of the time it will be very positive. He already likes you, you’ve (hopefully) made a few comments in the past that have demonstrated your knowledge and professionalism, you’ve flattered him by telling him you want his business and his friendship, and you mentioned that you have several other similarly situated clients, which should give him further confidence in your skills. The odds are he won’t bite now, but the bait is certainly dangling right before him and everyone knows the future always brings change.

There’s so much more that can be said about how you can adapt your interpersonal style to business development, but the primary message I want to convey in this post is that you can be effective while being yourself. Most of you have the CPA Practice Builder manual and it contains lots of examples of successful adaptation strategies.

If you don’t fake it and are yourself you will be comfortable. That comfort will greatly minimize the probability you will quit. Instead, you will give yourself the time to become adept with the techniques. With good technique, your initial, small business development successes will build upon themselves and become larger successes. Do this for a few years and your good practice will become great!

When The Business Development Meeting Goes Very, Very, Wrong

2010-05-07T10:36:00.000-07:00

A recurring mantra in my posts - and the focus of the practice manual - is how marketing and business development meetings must be focused upon determining and discussing the client's needs. This should be self-evident, but in practice things often don't work out that way. Because it is so obvious, clients will literally tell me I don't need to even mention it. But I persist, because I have seen these meetings go sour too many times. They patiently listen, as I first explain the why, and then how this can be accomplished.

So, in the real world, how does it go once the actors are in their positions and the curtain opens? Act One usually begins OK; everyone more or less sticks to the playbook. That's a good thing. To win the engagement, the team should exercise self-discipline and make sure they stick to the plan. Frequently, however, they stray. To illustrate my point, I am going to reveal an actual example - with names changed for obvious reasons - of how bad it can get without a real meeting plan, an agreed upon team leader and a solid, shared commitment to follow the plan.

My client had an appointment to pitch the firm's services to a growing manufacturer of fiberglass lawn and garden furniture. Their revenue was approx. $6MM with better than average P & L, a good cash position and low debt. They were a highly desirable account to capture within my client's relatively small market. We were about 30 minutes into the meeting when Ed, the owner, mentioned in passing he probably needed to cut down the square footage dedicated to raw material storage because they were getting more into Just In Time purchasing. He brought this up as part of a larger discussion about cost containment and the impact of excessive production square footage was having upon margins. Ed then mentioned offhand he'd recently broached the subject to his management team and they'd agreed it was worth exploring a future move to a more optimal facility.

At this moment in the proceedings my team spontaneously decided to create their version of Alice In Wonderland: Tom, who focused his practice on corporate clients and had a special interest in tax-free exchanges, processed Ed's comments in his own special way. Sensing a potential real estate transaction and an opportunity to demonstrate his knowledge, he jumped in and began to expound upon the glories of tax-free exchanges. The tax advantages, what "like-kind" meant, the mechanics, the exclusions, examples of how it had worked with other clients (Big, Important Clients, mind you!). He waxed eloquently ad nauseum, dazzling us all with his grasp of a process that had no relevance to why the prospect was interviewing my client.

One and then two minutes passed without letup. I'm could feel myself dying; life forces inexorably being sucked into the black hole that Tom was creating. Time slowed down; each tick of the wall clock became a death knell for my team's chances of obtaining the engagement. Like a slowly unfolding horror movie the prospect's body language initially evidenced confusion, then boredom and finally started to morph into impatience. I knew from experience that exasperation, or even anger, was just around the corner.

The Managing Partner was too far away to kick. I couldn't even get his eye. The entire team was oblivious to the opportunity spiraling away as Tom basked in his moment in the sun, trumpeting his reputation as The Man for tax-free exchanges in the entire area. I could practically hear their thoughts: "Let's see those slackers over at Dinkum, Doofus and Sloth top this!"

To ensure destruction was complete and no wrong path untraveled, some of Tom's partners-in-crime needed their share of the glory, so they chimed in with their own irrelevant comments ("As you can see Ed, Tom's knowledge is extensive and is representative of the skill and experience we bring to the table. Why, back in 1999 I remember the time Tom ... blah, blah, blah, and the tax court agreed with him ... blah, blah, blah.").

By this time Ed was sending out vibes like a treed cougar surrounded by a pack of baying hounds. He finally pushed his chair back, looked at his watch and said he had to get to another meeting.

None of my team had a clue about what had just transpired. As we walked out of the building, the consensus was that it was unfortunate we didn't have time to cover all the issues, but hey, we showed them our stuff. It went well, they crowed. I'm sure we'll get the engagement. Let's celebrate! We kicked butt. If they don't choose us, they probably don't deserve us. Laughter, smiles and high fives.

We piled into Dan's SUV. Heading out of the parking lot, I asked Terry, the firm's managing partner - who was a pilot - if he'd ever fallen out of the sky from three miles up, one wing gone, engines on fire and no parachute. "Of course not," he replied. "Well, you have now," I said.

Predictably, another firm got the engagement.

My recent excerpts have touched upon this subject from a number of different directions. It is always about the prospective client; their priorities, concerns, fears, desires, needs and wants. You typically only have an hour or so to do this better than your competition. Then your job becomes straightforward: you wrap up the meeting by proposing only the necessary solution(s) and asking for the business. That's it in a nutshell. No more. No less. Later, once you have a history with the client and the relationship has deepened, opportunities will appear to challenge your creativity - and maybe even give rise to the suitability of a tax-free exchange.

Want Some Effective Marketing Ideas For After 4/15?

2010-04-15T12:06:00.000-07:00

My last post was an explanation of the simple but highly effective 3M “stickie” marketing technique you can use to leverage off your tax season efforts. This is a form of personal marketing that studies and personal experience have affirmed is the most effective way to “sell” personal services, i.e. those of accountants, lawyers, engineering firms, architects, etc.

We’ve examined personal marketing techniques, i.e. how you actually go about converting your prospect into a client, many times throughout the life of this blog and the topic is covered in detail in my CPA Practice Builder manual, so we’re not going to get into conversion techniques now.

Today’s blog is about addressing the question of how do you meet the prospects in the first place?

Personally involving yourself in marketing does require you to carve out the time to engage prospects. That typically means you select a few activities that will give you access to a population of desirable potential clients.

When thinking about which activities/organizations to get involved with, first pause and consider the competitive landscape. For example, a well-established hypothetical group with the name, “Greater Dallas Business Owner’s Association,” would be a magnate for lawyers, accountants, consultants and related service providers wishing to join.

This leads to the observation that there are some organizations that are such obvious business development opportunities that their membership is skewed by the number of ancillary networkers wishing to fish in that particular pool. This is a challenging scenario for even the most skilled anglers. As someone relatively inexperienced with personal marketing, is this an environment that lends itself to your success?

If experience is any guide, the most effective approach is to mix your choices up a bit so that you include some mainstream choices (Elks, Merchant’s Associations, Rotary, et al) with others that are less traditional.

As the first example, let’s assume your practice focuses upon small to medium businesses. Go ahead and join one or two local service clubs. Pick those whose mission you believe in … sure, you want to create opportunities for yourself but it is always good to give something back and be a positive force in the community.

Now, how about something a bit more creative. Two examples jump into mind. The first one from an accountant in Pennsylvania who describes herself as a “fanatic” about keeping her practice’s costs under control. Her office is in a large complex of small businesses, both retail and service. In 2006 she went around to all the local businesses and promoted a mutual or joint purchase group to pool their buying power and thereby obtain paper, toner, office equipment, etc. at lower prices. She would, she told them, cut a good deal with a local supplier and they’d all save. Because she was an accountant, she wound up becoming the coordinator of the control process. A few people signed up and the program limped along for a couple years … successful in saving the members money, but in a minor way.

Then the present recession hit and many more of the local merchants joined. She quietly demonstrated her competence and built trust by handling the details and without really any specific intent on her part began to acquire more and more of the businesses as clients (Blogger’s note: personal marketing without even trying!). Contrary to the gloomy national experience, she estimates that her practice has grown more than 30% in the past two years, virtually all of the growth attributable to members and referrals she’s received from them.

The second example is a CPA whose sister owned an independent (non-chain or franchise) restaurant. He handled the accounting needs for her and a couple of her friends who also owned diners. He became conversant with their issues and wondered how he could attract business from other, similar owners. There was no association, club or group, so instead he created a highly focused newsletter that addressed specifically their relevant tax and financial issues. He wrote his first newsletter and sent it out to about 30 local eateries. Each three months thereafter he sent another, and the list began growing. After the second and third issues he began getting calls. A year and a half later he obtained 9 new clients, and he’s getting one more approximately every month. [NOTE: this example has been an inspiration to me to create the same sort of focused newsletter for my clients. We’re just getting this going and once we have some results I’ll report back to you. This may turn out to be a low cost form of effective personal marketing that works for everyone.]

Does your practice focus upon high wealth individuals and estate planning? An obvious choice is the local symphony support organization. As a group they’ll generally be older and reasonably affluent. Sounds like a perfect opportunity. Want something less obvious … how about the CPA who suggested his mother join her country club’s “women’s investment group?” When they had a capital gains question, he attended a luncheon meeting, was as charming as he could be, answered their inquiries and became the de facto “go to” technical source for the group. Within a year he was handling the accounting service requirements for virtually all the ladies in the group. I’m told subsequent referrals led to a total of over 20 new and very high quality clients.

Do you have a high volume 1040-based practice? Another CPA is a gun fancier and enjoys target shooting. He joined a local gun club and from that met a lot of law enforcement personnel and firefighters. Both groups have steady work, decent incomes and tend to hang out with their “own.” Taking a further step to fit in, he then became an associate member in local police and firefighter groups. After some time he was fully accepted and eventually leveraged his presence within these two populations into dozens of new clients.

As you can see from the foregoing, there are no rules – the essence of your search is to determine the best ways to reach “your” type of prospects. Do these examples provide some inspiration for how you can create an effective personal marketing campaign of your own?

A Modest Post-Tax Season Marketing Suggestion

2010-04-03T09:28:00.000-07:00

I have extolled the virtues of personalized marketing on numerous prior posts. I define “personalized marketing” as an approach that is focused upon an individual prospect instead of, for example, a print ad in the Elks Club newsletter, a radio spot or post cards to a given zip code.

So, here’s a simple process with proven effectiveness that is both easy to do and very appropriate right after tax season. To set the scene – it’s just after April 15th you will have just been involved in prep work for dozens of client returns. Now that they are fresh in your mind, the first step is to think about which of these clients you could be doing more work for.

Are you doing a business return for someone but not their personal returns? How about the flip side: the owner of a business who only has you doing their personal returns? Or, the client who has the temp help business, but you don’t do any work at all for his wife who is a doctor with a thriving medical group just down the street? And maybe you’re doing the returns for the owner of the local theater who is close to retirement … what are his plans for funding his retirement, etc.? Is he taking advantage of all the options available to set aside pre-tax money for later years? How might he minimize his tax exposure if he wants to get rid of the theater? The potential examples are endless.

There are a lot of billable hours hiding in the files of your present clients.

Your present clients are your easiest source of additive business. There’s an existing relationship; they like you, they have nothing but good will for you, they trust you and believe you are competent. There’s no reason why you shouldn’t be doing all their work.

The second step is a simple procedure. First, scan through your files and set aside all those that fall into the, “there might be more business in here” category. The third step is to grab the file on top of the pile, open it and look for some opportunity to, a) increase their income, b) cut their expenses/costs or, c) reduce tax liability.

Opportunities are everywhere. If they have a business it usually is not difficult to scan the numbers and pick up something, e.g. the client has a reasonable amount of AR but too much of it is 90+ days out, while at the same time he is experiencing a cash squeeze. Or, a client’s business is profitable but his bank line that was put in place years ago is now too small … maybe he’d better raise the limit while he still can. Or, a client mentioned she wanted to expand her warehouse and storage area … what’s the best way for her to do this? Lease? Purchase? Sublet? And, what about taking title … should she, for example, acquire it personally and then lease it to her business?

Another way to isolate issues is to look at one or more prior years and look for trends. Perhaps the pretax percentage has been declining, or certain cost categories have risen faster than expected.

If you are only preparing personal returns for a client the opportunities are fewer, but if a client mentions that they are looking into the possibility of starting a business, buying a franchise, selling a major asset, etc. there is certainly the suggestion that some planning or “what-if” projection would be in order.

Here’s the fourth step: You have selected a file (“Laura’s), found the a), b) or c) hot spot, and now, e.g. you make a copy of her Schedule C’s from TY 2008 and 2009 and put yellow highlight on lines 7 and 28. You then take a regular 3M stickie and hand write, “Laura, check out the highlighted lines. Your expenses have risen much faster than your revenue. I think you are leaving some money on the table. Let’s talk. Please give me a call.” And, you sign it with your first name. The fifth step is to tri-fold the two Schedule C’s with your stickie affixed so she sees it when she unfolds the envelope’s contents, and then mail it.

What’s her reaction when she sees what you’ve sent? First of all, the two copies are highlighted, so she knows immediately what to look at. She reads the stickie and has several conscious and unconscious impressions. They include noting the personal touch communicated by the handwritten note, that you have a personal interest in her situation, that you didn’t treat her like a number and instead noticed – and took the time – to put this together and write her, that you care about her success and welfare, that you have taken the time to make it simple for her to understand the issue, that your note conveys concern, that you are trying to help her, etc. etc. Even if Laura never calls you, she will retain all these positive impressions. If nothing else, the likelihood of her referring you to a prospective client is higher than it has ever been. As my son says, “It’s all good.”

My clients who have taken these steps report they get calls back from about half of the clients. Each one represents a marvelous business opportunity for more billable hours. Planning, project work (e.g. running what-if projections for the client contemplating acquiring more warehouse/storage space), advice, consulting are all on the table.

The percentage of responders you convert into additional work will be maximized if you meet with them personally, but if you have a strong relationship with the client you can do well on the telephone. The positive result isn’t just more short term billings. For example, it is axiomatic that the more different things you work on for a given client, the greater the probability they’ll remain loyal, less fee sensitive and stay with you long term. Another bonus is the more proactive you are for a client, the more apt they are to refer business to you.

Elliot told me that in 2008 he spent part of the Saturday following April 15th reviewing files and writing stickies. He put together 22 that afternoon; had 13 return calls and he converted 7 to project or consulting work.

Not bad for an afternoon’s work.

Successful Strategies For Raising Fees – Part 2

2010-03-26T14:25:00.001-07:00

In Part 1 we talked about how the “best practices” employed by professional sales people can be of value when you are raising your fees while at the same time maximizing the probability of maintaining good relations with your clients.

I received some feedback on the subject from readers you may find both interesting and humorous.

Eric in Tennessee has a long time client/semi-friend whose billing rate hadn’t been increased for many years and needed a significant jump to be in step with 2010. The client is a painting contractor and Eric had recently engaged him to paint the exterior of his house, so he thought that would soften the blow. He was wrong. The client became absolutely apoplectic, got red in the face, began yelling and carrying on like this was the worst thing that had ever happened to him. The meeting ended badly. Still distressed by the experience, when Eric got home he plopped down dejectedly and told his wife about the confrontation. She listened politely, excused herself and he headed to the liquor cabinet to make himself a stiff one.

His wife returned a couple of minutes later with a file. She showed him how much they had been charged by the same client when he painted their house in 1995 and then what the price was in 2009. It was two and a half times as much! Armed with the evidence, Eric drove to the client’s office in the morning, put on his angry face, and stormed in waving the painting contracts, demanding to know how it is that he’s expected to pay more when the contractor’s costs go up, but Eric’s cost increases somehow don’t count. He continued his rant and the client finally held his hands up in submission, called it even and agreed to pay the new rates. Two weeks later they had a beer together and laughed about the experience. Eric is still shaking his head.

Janice, in Phoenix, has a neighbor Marco who is also a client. The client owns an insurance agency and does very well. Once again, a great deal of time had gone by and the rates hadn’t kept up with costs. Marco has a big personality and is, as Janice puts it, intellectually aggressive. She had a strong sense of trepidation about approaching him to talk about the increase.

She made an appointment and met the client at his office. Laying out her case, she began explaining the reasons for the increase. Marco interrupted her and asked, in effect, “Are you telling me you’re going to charge me more money for doing my accounting?” Not knowing what would happen next, Janice nodded yes. He said nothing further, so she continued.

After a few minutes he interrupted her and said he had a great idea. He began explaining how this was a perfect opportunity for a quid pro quo – a tit for tat – he would consider paying the higher rates if she would consider expanding the coverages of the insurance she carried through his agency. Marco launched into an explanation of the advantages the upgrades he envisioned for her would bring, noting the risks covered, the reduced deductibles, the greater peace of mind, etc. Janice couldn’t get a word in edge-wise and realized very quickly that he’d turned the tables on her and now she was being pitched to add revenue to his agency instead of the other way around.

Taken completely out of her game plan, and feeling the situation slipping away, apparently Janice’s facial expression revealed the distress she was feeling. Marco paused, and then began chuckling. He reached across the table, patted her hand and apologized for upsetting her. He explained that he’s a sales guy; that he couldn’t help himself when faced with the temptation to, as he put it, “play around a little bit.” He told her he had been expecting an increase for the past couple of years and that she shouldn’t be concerned because he was OK with the change. Like Eric, Janice is probably still shaking her head.

Ray, whose practice is in Northwestern Florida, talked on the phone with one of several clients whose rates he was determined to increase. The client listened and then asked if he could get back to Ray. About a week later the client phoned and said that he’d obtained several bids for his accounting work and began naming some of the firms off and the rates they had quoted.

Now, we all know there are any number of questions related to what is included in “accounting services” and what is extra, and that if someone claims their rates are “low” you need to check into exactly what you will be getting for that price. Ray’s client didn’t do that. Instead, he simply obtained hourly charge rates, not the number of hours to perform any particular set of services. And, of course, this is meaningless for comparative purposes.

Nevertheless, the client pressed on, saying that he intended to conduct an “auction” for his business; that he’d select the most competitive firm to do his work. He was going to “accept email bids between the hours of 10:00 a.m. and noon” on the appointed day, etc. etc. Then, he’d take two days to evaluate the offers, and notify the winning bidder no later than, etc. etc.

Ray pointed out to me that his client owns a landscape maintenance business that is neither large nor especially profitable. He was only charging the guy about $2600 a year and wanted to raise him to approx. $3000. Ray decided he didn’t want to play and didn’t send a bid in. Three days later a competitor whom Ray considers to be a bottom feeder called and asked Ray to send over some of the client’s documents, to which Ray agreed. Later the same day the (former) client called over to boast about how he was now only paying $115 (!) per hour for his accounting work and how glad he was to have discovered Ray had been overcharging him all along.

Ray is very glad he decided not to bid. Some clients really shouldn’t be clients. Maybe you have a couple like that?

Successful Strategies For Raising Fees

2010-03-17T15:56:00.001-07:00

In previous posts I have offered several reasons supporting why I believe it is a poor choice to raise fees in today’s economic environment. I have also written about tactics you can employ to maintain fee levels in the face of client pressure to reduce them.

But, what if there really is a strong reason (or even a need) to raise fees? For example, you may have a long time client who is paying you below market level and after an analysis you realize you are literally losing money with the client. Their fees need to be raised. Or, you realize your charge rates are below the market and to arrest your eroding profitability you need to raise your fees. Or, you acquire additional/upgraded capability (personnel, space, computers, etc.) and you want to not only cover these new costs, but you want your rates to reflect your practice’s higher service level.

There is a source we can draw from that tells us in clear terms the best strategies for raising your rates. That source is the group comprised of tens of thousands of sales people who sell goods to America’s businesses. The underlying challenge facing an accounting practice and the owner of a manufacturer of swimming pool sweepers, is exactly the same. Neither has a client/customer base wishing to pay more; both will encounter resistance, both want to reduce the number of lost clients/customers to the absolute minimum, and both want to implement the increase with a minimum of disruption. These “best practices” have been hard won, because poor technique offers up the potential for lost business, unhappy clients/customers and a very negative experience.

A) Understand the reason(s). First of all, ensure you really clarify to yourself why you need the price increase. What’s the rationale? What factors are relevant? This sounds self-evident, but you may be challenged by a client, e.g. “Maria, you say you wouldn’t do this unless you had to, but what does that really mean? Why do you have to?” In this instance you should be prepared to respond without stumbling around, sounding unsure and lacking conviction. As a general statement, you want to avoid talking specifics, i.e. “Our pretax profit percentage is down to only 17% and all the partners have had to reduce their annual bonus.” That’s too much information and doesn’t help anything.

B) Leverage your status as an owner and/or partner. You are a professional accountant and your client is well aware you understand numbers. Take the position that the increase is necessary (why else would you do it in today’s troubled economic times?) and is a final decision reached after much deliberation and analysis. Convey that it is final; the decision won’t be rescinded.

C) Discuss and offer suggestions how the blow can be softened. In industrial sales it is common to tell a client, “Arthur, the price of 24” rolled .060” steel is going up 9% in July. That gives you three months to place an order at the present price.” The idea is that it both generates an immediate sale and gives the customer a means to soften the impact and defer the increase’s effect. In an accounting world this may come out something like, “Victoria, for reasons I’ll explain in detail if you wish, we’ve concluded we have to increase our rates. Now, this won’t occur until July 1st. We have a couple of ways we can soften the impact of this. The first is that we can get your next quarterly filing accomplished at the lower rate. I’ll make sure that happens. Also, you also talked about doing a cost study analyzing the feasibility of opening the new sales office. If we can get going on that before July I can freeze that at today’s lower rate.”

D) Don’t surprise your best clients. It is overly impersonal and just bad form to send out invoices with previously unannounced higher rates. While a letter sent to all clients is OK as far as it goes, you will get far better results if you personally contact at least the top 20% - 25% of your clients. Face-to-face is best. If you have been proactive about maintaining contact with your “A” level clients (meetings, lunch, conversation when you see each other at the Elks, etc.) and there is an actual relationship, they expect this from you and will react much more positively.

E) Be empathetic. If your client gets angry or annoyed, let them do so. Don’t debate or argue (if you do, it may carry the suggestion that the increase is rescindable or negotiable). And, don’t, in effect, tell them they are wrong for being upset. After all, you’re telling them you’re your services are going to cost them more. When things settle down and you can continue your discussion, an effective approach is to talk about how you and your partners agonized for months about this; that it is necessary to maintain services, acquire key resources, etc. In other words, it was unavoidable. The idea is to give the client a plausible, believable rationale. That it makes business sense and gives them confidence that your decision was considered, sound and not capricious.

F) You might offer a delayed date of effectiveness. In addition to the techniques described above designed to soften the impact of the price increase, you also have the option of simply delaying the effective date in some instances. For example, you might compromise with a good client by agreeing to do their compliance work at the old price for the rest of the year, but the projections and P&L/balance sheet work will have to be at the higher rate.

G) Finally, your staff should know about the increase(s), when they become effective and how you would like them to react should a client broach the subject to them.

The foregoing best practices won’t guarantee your clients will openly embrace your upwardly revised fee structure, but will go a long way to ensuring the angst and potential loss of clients is kept to a minimum.

You Have A Website; Why Not Make It Add Value?

2010-03-09T12:38:00.000-08:00

As professional service firms move through the current recession with an eye to better days, each is making decisions about how they can best allocate their resources. Upgrading the computer system and/or software to improve productivity? Investing in more marketing? Culling the workforce of marginal performers and/or seeking upgraded skills among the accounting professionals who have been downsized? Taking advantage of low lease rates and relocating to upgraded offices?

Any of these may be the right choice for your practice, but one thing you can do that is inexpensive and has real upside potential value is taking another look at your web presence.

The reality is that the vast majority of accounting firms have what I call “placeholder” web sites. In other words, everyone has a site, so it was determined your practice should have one too. The money was spent on a web designer, some system was (hopefully) implemented to maintain it at reasonable intervals, and except for writing a check every now and then, you don’t ever think about it. So, is it actually doing anything for you?

My challenge to you is to reflect for a minute or two upon this state of affairs. You’ve already put the effort and money into creating a web presence. Unless you are the exception, your site is more or less just “there;” contributing essentially nothing to your marketing efforts. But, the hard work has already been done, so why not take another, considerably smaller step, and make it an effective component of your efforts to not only attract new clients to your practice, but to stay in contact with your existing clients?

The bar isn’t really set all that high. You aren’t competing against Amazon or the other really skilled online marketers. Instead, you are being compared to other accounting websites that are, in the main, ineffective. This is an opportunity to elevate your game and qualitatively differentiate your practice/firm from your competition.

There are specialists available who are highly skilled at optimizing your site. In fact, I’ll tell you about a couple in a moment. Both have worked with enough clients to establish track records of success and make it their business to be right on top of the latest internet marketing trends.

Yes, you have to write a check for their services, but you don’t have to invest much of your time at all. (And, their charge rates are a lot less than yours.) Even during the crush of tax season, you probably have the time to consult with these firms and have your enhanced presence up and running shortly after April 15th. Just in time for that summertime marketing push you’ve been promising to initiate, right?

The first outfit I’ll tell you about is Alesco Marketing. They’ve created hundreds of web sites for both professional service providers and other businesses. They are proven experts in effectively tying together the site’s design with how the web is really used. In other words, they design sites so they are a) easily found by prospective clients and search engines and, b) they are very user-friendly and contain the features visitors actually place value upon.

I think one of their most important strengths is that they have the experience and insight to stay on top of how marketing on the web is evolving and then adopting strategies to maintain their client’s advantage. Check out www.alescomarketing.com. If you contact them ask for the owners, Tim or Doug Williams.

By the way, if you would like a quick read that offers a sophisticated look at web marketing best practices, I recommend you order a copy of Doug’s latest book, “Website Marketing Mastery,” published in 2010. It is available through their website.

Another proven source for web expertise is E. Mochila. I believe they are unique in that their only business is creating and maintaining accounting web sites. Currently, they manage over 1800 CPA websites. They have a business model that operates somewhat like a subscription: for a low monthly fee they provide ongoing support, upgrades, client portals, newsletters, calculators, etc. You can check them out at www.emochila.com. If you would like more information, ask for Cameron Hendrick. He is intimately familiar with everything they offer.

In terms of marketing your services, your website presence will never be as important as consistently getting out and talking with people who are desirable prospects. But, it is an important part of the whole package that is you, your firm, its image and presence and, ultimately, how your are perceived in your marketplace.

Bottom line: it’s more than worth a couple of hours of your time to investigate how you can upgrade your online visibility.

Can You Help Me (or Us)?

2010-02-26T15:46:00.000-08:00

I am experiencing an increasing number of inquiries about what it takes to get my personal help in learning, implementing and/or managing an upgraded marketing and sales effort at your practice or firm.

Since the idea of this blog isn’t to sell stuff, I’ll make the answer succinct. If any readers want more info, you are welcome to contact me directly.

I prefer to conduct teaching sessions or facilitations on Mondays or Fridays. Southwest/coach and the Holiday Inn are fine. I eat everyday whether I work or not, so I don’t expect you to pay a per diem for meals and incidentals. My daily rate is $1500, whether working with an individual or group. Groups of more than about ten are generally too cumbersome to do much more than teach generalities. The smaller the group, the more individual instruction there can be.

Thanks. I appreciate the interest you have shown in CPA Practice Builder and the underlying process. Keep sending in your success stories. By the way, the blog topic ideas have slowed down … if you want me to write about any particular aspect of accounting practice business development, please let me know.

To your success and wishing you all a speedy recovery from tax season!
Craig

Cell 510-915-0529
Email craig.cpabizdevel@gmail.com

A (Really) Big Client Can Be Risky

2010-02-24T11:47:00.001-08:00

Over the years I’ve had two client firms that lost large clients with little, if any, warning. By “large clients” I mean a single large client that comprised at least a quarter to a third of the firm’s revenue. The resultant disruption to these firms presented a nightmarish challenge to firm management. Severe and rapid downsizing of personnel, the need to somehow reduce the costs associated with excessive office space, loss of skills as staff departed, the necessity for partners to contribute capital to the firm, staying within bank line covenants, etc., etc. occupied the partners almost 24/7. And, needless to say, all the other clients continued to expect high quality, timely accounting services.

The prospect of acquiring a (relatively) very large, prosperous client is incredibly seductive. For many firms this becomes a crowning achievement, allowing the partners to feel they have finally “arrived.” One partner told me about his human, gut-level reaction: that it was good to be playing on the same field as the bigger firms; that he no longer felt like a small timer. And the financial benefits can be considerable – a significant percentage of the revenue surge falls to the bottom line; cash flow improves, staff is fully utilized, profits blossom, bonuses increase and life becomes good.

That was exactly the experience of the owners of the two firms I noted above. And then the party ended. Suddenly and badly. I wanted to talk with them both about their experiences, but waited until the dust settled and the wounds had at least stopped bleeding. When the opportunity arose I asked, “What would you do differently if faced with the same situation today?”

First, let’s be clear. As a general statement, neither would turn down the client. However, they both would take steps to ameliorate the potential downside should a sudden, similar withdrawal occur. A number of possible actions were mentioned, including temporary and/or part time staff, client-specific staff, temporary extra office space that is available on short term lease or even month-to-month, farming out certain parts of the job to others (one specific suggestion was to outsource any and all personal returns associated with the client), etc.

The bottom line was that they would avoid undertaking an expansion that had the consequences of permanency and/or increased financial commitment (e.g. long term lease of much bigger facility, etc.) until such time as the rest of the firm’s business – excluding the big client – could support it. They would also refuse to take on a large client whose business was not very similar to their current focus and capabilities. It is much easier to upsize or downsize if the skill sets of the staff overlap. For example, a mainstream 1040 and small business practice might think twice about taking on a disproportionately large non-profit.

I’ve encouraged you to expand your business development efforts during this recession because I am aware so many of your competitors are not being aggressive seeking business, instead looking inward and focusing upon cost containment. This represents opportunity for readers of this blog, who clearly are interested in seeking new business. And never doubt for a minute that the process described and taught in the CPA Practice Manual (and the version for ProfitCents subscribers) that most of your have purchased is more than capable of securing these premium prospects as clients for your firm.

So, please, set your sights upward. If there is that guy you see every now and then who owns the industrial crane company at the edge of town with what looks like a hundred cars in his parking lot every weekday, target him for some personal marketing. We’ve talked about it here in the blog and the process is explained in your manual. Trust me, it is worth your time. There is no downside. And, who knows, you may just get the opportunity to take him on as a client.

But if he is suddenly going to be a huge fish in your pond, how are you going to expand your capability to service his needs? How can you do it so if it all turns upside down it won’t destroy your practice?

Well, one way is to get another big client. Or two. Or three. Spread the risk that way. Remember, big clients tend to give you big referrals, so it can happen. So, the point of this post is twofold: a) don’t bet the farm on one big client; instead hedge your permanent commitment(s) and, b) you can land these big prospects, and now’s a good time to go for it.

Can Business Development Help Me Maintain My Fee Level In Today’s Business Climate?

2010-02-15T09:07:00.000-08:00

There’s a lot of talk about fees in the blogosphere, with the primary questions being, “Can I raise fees? Keep fees where they are? Reduce my fees?”

Most accountants are experiencing significant downward fee pressure from clients. This pressure can be quite direct, e.g. “Brenda, my business is down and cash is tight. I can’t pay these fees. We’ve got to work something out,” or it can be indirect, i.e. the client either slow pays, doesn’t pay, or sends partial payments. In the latter instance the ball is typically in your court to contact the client and see what can be done. When that conversation occurs, the odds are they will ask for some form of relief.

Or, you may simply take the initiative and write down the invoice before you send it. Here’s a strategy you might consider when considering a write down: As noted in a post last year, I had been told by some accountants that they obtained the best results when making a write down if they clearly showed on the invoice that they were doing so. It is appropriate for the client to see what the amount should have been because from a service provider standpoint you always want the client to understand the reality of how much effort it takes to do their work. Several clients use the phrase, “professional courtesy” as a way to label the amount written down, e.g. the invoice gross billing is $6,500, then subtracts ($1,500) as a professional courtesy, and nets the amount due as $5,000.

By doing this you retain the ability to defend a future “increase” in fees by pulling out the prior invoice and showing the client that you discounted the amount due because you were, for example, aware of the client’s cash and margin problems and you value their business and elected to give them some relief. If necessary, you explain that this clearly implies that you were not offering a permanent, go-forward reduced fee structure.

No one I’m talking with has raised fees across the board for 2010. From that I would state the obvious and recommend you stand pat. I wouldn’t reduce fees because it is so difficult to raise them when the business climate recovers. Using the write down process retains your fee structure while at the same time provides you the opportunity to give selective relief to individual clients.

Now, because this is a business development blog, I want to pitch a way you CAN raise fees. To explain, if you are doing “regular” 1040 and small to medium business returns and compliance work, you are to some extent engaged in a commodity activity. Most of your competitors also provide these services. Your clients know this and everyone is aware there is a community standard range of how much you can charge for that work.

However, when you provide consulting, advice or engage in project work the standard is considerably grayer. If you don’t already do so, please consider scheduling look-ahead planning meetings with (at least) your important clients. And don’t limit your discussion to just the business stuff. Instead, ALWAYS ask about life issues the client may have. For example, if the client is in their 50s or 60s you inquire about their desires about retirement timing, or their thoughts about disposition of their business, etc.

All manner of opportunities can arise from these discussions. Project work such as cash projections, what-if scenarios, coordinating with attorneys re estate planning, etc. are all possibilities. Or, the client may inquire, “Victoria, I’d like to explore how I can acquire one of my competitors. Obviously, there’s the price, but what’s the best way to structure payment of the price? How do we allocate value of, say, good will, inventory and so forth? Does the transaction’s timing have any effect upon my tax exposure?” Obviously, this discussion can result in both project work and consulting/advice. To my way of thinking, these are premium services. This is you operating at your highest professional level. My belief is that by developing these options and solutions you are providing maximum value to your client. You should charge accordingly.

In fact, every accountant I presently work with charges a higher hourly rate (when compared to everyday work) for consulting, advice and project work. Take a look at the hourly rates of local attorneys. While you probably won’t be able to get the same level, their rates do provide a reference point. Specific locations will vary, but as one example, in San Francisco, my clients employ a two-tier structure that pegs their rates $50 - $100 more per hour more for these premium services.

I believe that even in today’s recession you will find clients who not only value the expertise you bring to the table, but will pay your invoice and consider it money well spent.

Note: there are two relevant earlier blogs that address fees: See Pressure To Lower Fees, Parts 1 and 2, dated 7/30/09 and 8/09/09 respectively.

Ouch, Look At Those Write-downs!

2010-02-08T09:21:00.000-08:00

Virtually every accountant I’ve spoken with in the past six months has told me their write-downs (or write-offs) have increased, both as a percentage of total hours expended on client work and as a percentage of what can be theoretically invoiced if all hours worked were billable. Some of the larger firms adopt “realization rates” that anticipate a given percentage of staff and/or partner hours will be written down or in some other manner go unbilled. From the feedback I’ve received these percentages have grown also.

The reasons for more write-downs can be complex, but the most obvious driver is pressure from disgruntled clients. The partner reviews the invoice, comes to the realization they’d better reduce the total or possibly lose the client (or simply not get paid), and makes a write-down.

In firms with multiple partners/shareholders, peer pressure about write-downs can be onerous. If partner A is able to bill all their work and partner B is writing down 25% of their invoices, then A may be quite upset with B if the profit pool is an equal split or in some other manner the firm’s profit distribution doesn’t penalize write-downs.

Faced with tightening their belts, some firms have found their partners are doing more of their own work and delegating less. Assuming for a moment the partner’s compensation scheme encourages delegation, we find the reason for the partner doing more of the work is because they can do it more quickly than the staffer and thereby avoid write-downs and the subsequent snarky glances and dark mutterings from their fellow partners.

But, what if the staff are on salary and get paid no matter how many hours they work? Now things can get truly messy because the partner’s failure to delegate can become a double whammy. To explain, the partner retaining the work saves preparation time, but the firm is paying the staffer to sit there. If the staffer’s salary is predicated upon a formula that assumes, say, 1500 hours a year at a charge rate of $125, and he or she doesn’t bill an average of 125 hours per month, then they are “upside down.” In other words, they aren’t being fully utilized and yet the firm is paying them as if they are. The net effect is that delegating work to this staffer is, essentially, free. The firm is going to pay her anyway, so shouldn’t they be given the work?

On the other hand, the partner’s time isn’t free. Failure to delegate means first of all the partner is doing work a less expensive resource can accomplish, but even more painful is the partner is not performing work only he or she can do, i.e. providing management input to the firm and finding new and/or additional work to increase the number of available billable hours (which, stating the obvious, will get that staffer busy again).
Because of their status as shareholders/owners, partners are really the only effective business developers. The combination of ownership, status, experience, contacts, etc. uniquely position them for this role. Staffers CAN’T develop meaningful revenue streams.

If your firm is suffering increased write-downs, this blogger’s recommendation is – Delegate everything you can to staffers (it may even be “free” as explained above);
– Accept that the staffer can’t do the work as quickly as the partner;
– Coach/mentor the staffer so they learn and become more efficient in the future, thereby increasing their future value to the firm;
– Dedicate the time you free up to business development and looking at things you can do to reduce costs and make the firm more efficient (in reasonably well-run firms partners should focus less effort on cost containment because the bottom line upside is much less than adding high quality clients);
– Begin with examining your present (solvent) clients and look for more work you can do for them. This is the lowest hanging fruit on the business development tree. And, put your efforts into finding new clients. Various techniques to do so have been addressed many, many times in this blog over the past couple of years. See, for example, the post explaining how to use a highly pointed newsletter to find niche clients (9/15/09), or tips to make your marketing pay off (6/15/09), or even basic approaches to personal marketing (12/3/09);
– Take an aggressive approach … there are great prospects out there no one is even talking with. Many firms are circling the wagons, cutting costs and hunkering down. Don’t fall into that trap. It’s not just the short term benefit new clients bring, there’s also the inertia you can create and maintain that will pay huge business development dividends when the recovery kicks in.

More about Alan

2010-01-20T14:47:00.000-08:00

In the previous blog posting I attempted to make the point that if the basic model is followed the probability of you securing an engagement from your prospect is excellent even if you are going up against a competitor (“Alan”) with a strong history of business development success.

In the example I wrote about it turned out that Alan did NOT in fact possess an effective technique beyond his determined and widespread networking skills. In essence, he positioned himself in the front of the collective mind of the local business people and became, for many of them, the default accountant, i.e. the first one they thought of. Not a bad way to go about finding clients, but much, much more effective when combined with good technique.

Subsequently, I received some great feedback from readers, and it illuminates how varied the challenge can be when a prospect is up for grabs.

John in Salt Lake City described a remarkably similar situation as last week where it turned out “Alan” wasn’t even a “competent” (John’s word, not mine) accountant. Instead, he maintained client contact while others did the work. His time was spent attending seemingly every meeting in town and smoozing desirable prospects with golf, dinner, drinks, etc. John easily won the particular engagement he sought by focusing in upon the prospect’s needs and demonstrating his expertise and experience in those areas.

Anita, from Wisconsin, found herself in competition with the biggest business development player in her market area and augmented her effort with a unique psychological approach. She followed the model, especially as it related to isolating the prospect’s priorities and issues, and then took a bit of a risk to gain an advantage. During the meeting she found an opportunity to comment about her competitors.

I wasn’t there, so these aren’t the real words, but as Anita described it to me, her approach went something like this: “I really appreciate being given the opportunity to compete for your accounting business. And, I’m flattered that you have considered me to be in the same league with (name #1, her main competitor) and (name #2). As you know, #1 serves many of the biggest clients in town, such as (names), and I’m glad to see they are now seeking business from other prospects. And #2 is renown throughout the mid-state area as the go-to firm for green and not for profit entities.”

Needless to say, the prospect was neither very big nor connected to the green movement.

Anita talked about the advantages of personal service, how the prospect would – if Anita was engaged – be one of several key clients she served, and her specific expertise with the prospect’s issues. In the end, they chose Anita because they wanted to be with a firm which considered their business to be important and, because they were neither, they didn’t really relate to the other firm’s emphasis upon green and NFP clients.

So, in effect, she poisoned the well. Hey, as the saying goes, “all’s fair in love and war and winning the business from desirable prospects.” Well, maybe it doesn’t go exactly like that, but you get the idea.

Bill, from Seattle, was on the other end of some game playing. He was one of four competitors for an account and was third on the interview list. With a few minutes to go he completed his agenda and began a gentle close by asking what the next step was in the selection process.

To his surprise, one of the two interviewers (the owner and his CFO) asked if he was going to stay in the Seattle area after he retired. Bill, who is in his mid-50s, recovered from his surprise and asked what prompted the question. He was told someone from one of the prior two firms mentioned he would be retiring shortly. Bill said he responded emotionally by blurting, “Wow, he must really need your business. I’m not retiring for at least another ten years!” The prospects, who now understood they’d been gamed, started laughing and when the moment passed Bill realized he’d not only sunk the competitor’s ship, he had also experienced a solid bonding moment with the prospects.

Bill didn’t get the account because of his relative inexperience with the specific industry, but the owner told him he wanted Bill to take over accounting services for a development start up where the owner was the general partner. This was right up Bill’s alley, and a perfect outcome.

So, again, follow the model. You can’t go wrong in that regard. If you need more prospects, find ways to talk to more people. Maybe not to the extent Alan does, but nevertheless more. Finally, as Anita and Bill’s stories demonstrate, games will be played every now and then. Whether you are on the giving or receiving end, a five figure addition to the revenue column can be plenty of motivation to generate some bumping between competitors in the race to the checkered flag.

Don’t be afraid of Alan

2010-01-20T14:46:00.000-08:00

Brad, a long time reader of this blog who has his practice in the outskirts of Chicago, made the decision to take the steps necessary to upgrade his book of business to include a greater percentage of larger, more profitable clients.

As a result of some low key, one-in-one marketing, he subsequently met a business owner who was just beginning the process of finding a new accounting services provider. Along with two other candidate firms, he asked Brad to make a presentation to him and his executive team.

When he heard who his competitors would be, Brad had a deer-in-the-headlights moment because he realized he’d be going up against Alan, a locally notable business development ace for another local firm. Alan is gregarious, has a big personality, seems to be involved in every local organization and knows almost everyone who is anybody by their first name. He has a busy and apparently lucrative practice and has been responsible for signing up many of his firm’s most desirable clients.

Brad emailed me and then we talked on the phone. I reminded him that he doesn’t have any evidence that Alan is, in fact, an above-average business developer. I asked him how much time the so-called “average” accountant spends networking like Alan; being involved in the business community and positioning themselves for higher visibility? He agreed that Alan was much more proactive than probably anyone else he was aware of. OK, if that’s the case, I argued, how do you know that it isn’t just a matter of numbers – that Alan is simply throwing out a much larger net than his competitors – and he isn’t actually that good when it comes right down to it?

It is axiomatic in the sales profession that (assuming you are at least reasonably competent) if you talk to more people you close more sales. So, yes, ultimately it IS a numbers game. Alan may be a great business developer, but on the other hand he may simply talk to more people which in turn results in more conversations occurring that reveal new business opportunities for Alan and his firm.

Don’t be intimidated by Alan, I counseled Brad. Instead, do those things that have been shown again and again to enhance the probability that your conversation with a prospect will ripen into an engagement. Make Alan leap over the bar YOU have set if he is going to win the business.

Brad began his campaign by first calling the prospect and asked which days had been set for the three interviews. Told it was Thursday and Friday the following week, Brad said he would be out of town/unavailable both days but could be back mid to late afternoon on Friday. Yes, it was a fib, but there is strong experiential evidence that being first or – even better – last enhances your chances of being selected. It’s basic human nature: making the last impression, freshest memory, etc. (Another application of this truism we’ve all experienced is that in marketing-savvy restaurants the dessert or special entrée your waiter wants you to select will never be mentioned in the middle. It will almost always be the last or, less frequently, the first he suggests.)

After settling the day and time of his appointment, Brad asked if he could see applicable financial data. The prospect wasn’t prepared to give him carte blanche, but did send over the most relevant bits of the 2008 corporate return.

He then spent a good hour finding out everything he could about the prospect’s company. He checked the internet (local news sources, Yahoo/Google, et al), found a Dun & Bradstreet listing, and made a few calls to local contacts who might have had some dealings or other helpful knowledge.

Sure enough, just like we preach in this blog an in the CPA Practice Builder sales manual, he found gold. The prospect had recently hired a new VP Sales and Marketing and also replaced their advertising/PR agency. Obviously, this meant he wasn’t sitting on the status quo or rounding the wagons to try and hold on to what he had. Instead, he was being proactive and planning to attack his markets.

Brad then made some preparatory assumptions: he anticipated the executive team would be interested in accounting-related expertise that would help facilitate the prospect’s aggressive plan. To that end, he prepared to discuss bank lines, cash production and retention techniques, asset acquisition options, financial & tax implications of joint venture and partnership relationships, and other strategies relevant to companies with an expansionist mind set.

On the day of the meeting he arrived on time, dressed and groomed impeccably, and went through the recommended steps to quickly build rapport with the executive team.

Brad petty much went by the numbers in terms of structuring the discussion, and he was very pleased to discover his instinct was correct: the company was in fact adopting an aggressive two year plan to begin in 2010. Accordingly, he specifically emphasized how his services could help facilitate their plans and offered a number of suggestions they hadn’t considered.

At the meeting’s conclusion, he gently inquired how they wished to proceed? The owner asked him to give them a few minutes of privacy and when recalled, Brad was told they had selected him.

This occurred in October. Two weeks ago Brad was told by the controller that his was by far the superior presentation; that Alan had essentially spent the hour talking about people the owner knew who were already being served by Alan’s firm, and the third candidate talked about their experience with similar-sized businesses, their long time presence in the community and how up-to-date their software and technology was. Fatally, neither presentation addressed the prospect’s specific issues/challenges.

The lesson: Don’t be intimidated by a competitor’s business development reputation. If you follow the model, they should be worrying about you.

Client Loyalty

2010-01-20T14:00:00.000-08:00

When I am talking with a brand new client, I always ask about the client turnover in their own practice. I do this because turnover is a good overall indicator of how well their practice fulfills its client’s expectations. If the client turnover appears excessive, or if my client wants to reduce their turnover rate, then our analysis turns to individual factors that can affect client loyalty.

An obvious driver can be pricing. Most of my clients adjust their pricing at the beginning of a new calendar year. Not surprisingly, one or more of their clients may find the increase excessive and seek a lower cost provider. Most readers know that client size isn’t necessarily a factor when it comes to price sensitivity. Large clients can be just as price conscious as smaller, and it isn’t unheard of for the CFO of a major contributor to your practice’s revenue to call up and put the pressure on for some fee relief or an invoice adjustment.

It can be argued, of course, that any client whose primary concern is cost is never going to be motivated to stay with you except by a very competitive price structure. I’ve always assumed a given percentage of any practice’s clients are price sensitive and may be lost when fees are adjusted upward. It is almost a cost of business issue; some clients are just bound to leave. Nevertheless, no accountant wants a good client to leave, and so the challenge is to enhance the sense of loyalty they feel to you.

You do have some control over what percentage of your clients are primarily driven by price. If your practice has been built upon impersonal, price driven marketing, which I describe as advertisements delivered via any medium that say, in effect, “Your 1040 taxes prepared for as little as $149,” your client base will be highly price sensitive.

If you lose some of these people when fees are adjusted upward, you will in all likelihood be able to amp up your ad campaign and replace them. I am familiar with some 1040-based practices, and have learned they anticipate having not-insignificant client turnover each year and if it occurs, they adjust their marketing effort accordingly and deal with it. Their practices earn them a good living and in some ways are less draining and stressful because their relative lack of client involvement means they aren’t fighting and dying as their clients careen between various ups and downs.

If instead, you market your practice based upon a promise of service coupled with a close working relationship with your clients, the opportunity for greater loyalty and reduced turnover is greater. By its very nature, this approach means your clients will be relatively larger and fewer, because each will take more marketing effort. It is the process of successfully signing up these prospects that is the basis for this blog.

Client service levels are a more subtle, yet the most impactful factor in client loyalty. Assuming your fees are consistent with other local accountants, the key differentiating factor in client loyalty is how they perceive the treatment they are receiving from you and your support staff. Do they feel respected, important, valued, etc.? And, to state the obvious, accuracy and meeting filing deadlines are crucial.

As advocated ad nauseum in prior posts, I believe experience has demonstrated repeatedly that you should have at least three, and preferably four “touches” with clients during the calendar year. They need to “feel the love” as current phraseology would put it. All your clients? Probably not. If you have 200+ client you are too busy for that. However, I think the top 20 – 30% of your revenue producers are worthy candidates. More, if you have an exclusively high end practice.

Every client I have ever worked with who has wished to increase client loyalty/reduce turnover has been successful when they initiated a plan to ensure these “touches” occur on a consistent basis. Lunches, birthday and various life event greetings, planning meetings, shared social events, etc. all offer potential occasions to make contact.

It’s just like a recipe: then add a marketing plan that doesn’t emphasize price. Stir in accurate and timely client services and your client loyalty will be off the chart with virtually no turnover.

Are they REALLY an ideal prospect? – PART 2

2010-01-20T13:51:00.000-08:00

I used to work with a good number of clients in the San Francisco Bay Area, and many of them were located within, or operationally connected to, Silicon Valley. The unique nature of the environment meant that there was a strong possibility that a new business venture would either expand rapidly or expire quickly with hardly a whimper; the employees immediately dispersing and reattaching themselves to the Next Big Thing.

Many national law and accounting firms recognized the upside potential and invested millions locating satellite offices in the area. Out of the many start ups arose Apple, Oracle and hundreds of other highly successful technology businesses. In the years following hundreds of millions of revenue dollars flowed to those firms that had placed their bets on the valley’s entrepreneurs.

How does this relate to you? Here’s a story to illustrate one possibility: Frank worked for one of the big accounting firms in Silicon Valley and experienced the explosive growth in his firm’s office. In 1999 he and his wife felt the whole California scene was becoming a bit much and moved back to Texas to be closer to family. He set up a one-person practice and began doing exactly what thousands of other accountants do – 1040s, small business compliance and tax, some transactional services and providing advice and counsel to his client base.

Frank didn’t forget what he’d seen in Silicon Valley and he began networking with start up and new business forums. He didn’t invest much of his time, maybe 5%, in this effort, but he’d seen enough successful entrepreneurs to be confident he’d know one when he saw one, and he felt he had been around enough business plans to have a good idea when a winner appeared. So, he was patient and kept his eyes open.

His patience was rewarded when he ran across a small company with some unique approaches to robotic miniaturization. Frank approached the engineer who was the force behind the effort and offered his services at a greatly reduced price in exchange for assurances of a continuing relationship if success was forthcoming (“we’ll bet on the future together”). A deal was struck and to fast forward to today, the little business became a big business and Frank’s firm’s annual billings for that one account are now approaching $200,000. Plus, out of that relationship have come several lucrative referrals. Ten years later, Frank’s one person firm is now a very profitable medium size firm.

The bottom line is that a really great prospect may not just be the one that offers immediate substantial billings, but may additionally be one offering a significant future upside.

How might you expose yourself to the entrepreneurs in your area? If you are in or near a large urban area there are seminars, incubators, on-line groups, etc. Could you provide a free or low cost presentation to help them create an accounting structure suitable for businesses with the potential of rapid growth? Perhaps a seminar discussing basic approaches to wealth retention for the suddenly successful? How about strategies for extending the life of first stage(s) investment cash? Venture capital ins and outs? Bank line strategies for rapidly growing businesses?

It goes without saying that for every so-called can’t miss venture twenty will fail and one might make it. But, if you invest just a small fraction of your business development time – like Frank did – in future winners, the payoff can be huge.

If you never hit one, well, you’ll have met some interesting people. Perhaps REALLY interesting. I mean, how boring can someone be who claims to have invented an implantable recorder so the implantee can actually re-live their alien abduction in stereo and HDTV once they get back to earth? (yes, someone actually invented that device)

A clever strategy employed by an accountant in Sacramento, CA is to approach patent attorneys with the goal of creating a relationship that can lead to growth opportunities with the attorney’s clients. I am told this tactic has worked very well for him. A nice collateral benefit of this methodology is that the attorney in all likelihood has a pretty good idea of not just the client’s financial condition but also an opinion of their intangible qualities, such as focus, dedication, maturity, energy, drive, reasonableness and other factors that can impact the probability of future success.

A more difficult challenge (because larger accounting firms have worked this ground for many years) is establishing relationships with venture capital firms and/or individuals. Obviously, these firms (as well as angel investors, later round financing entities, etc.) work very hard to separate the wheat from the chaff because their livelihood depends upon it. Many of them prefer to have “their” CFO installed to watch the investment, and there is no doubt they can greatly influence which accounting firm is hired by the company being financed. If you can nurture one or more of these relationships the upside can be dramatic.

However you identify your future growth prospect, at least charge enough to absorb your overhead and don’t commit to more than you are truly willing to do. Finally, get the agreement in writing. Create a suitable engagement letter detailing what you are going to do for the client and what you’ll receive in return.

Yes, they are long shots, but the payoff can be huge. The secret is to be selective and only devote a small percentage of your time chasing them down.

Are they REALLY an ideal prospect?

2010-01-20T13:49:00.000-08:00

I’ve received several comments from readers who have had bad experiences while prospecting for new clients. A recurring theme is that they hadn’t previously experienced these problems, suggesting that the present state of the economy may be introducing some new wrinkles into the finding-new-clients challenge.

Marsha in Florida attended a local networking get together and met a couple who own several home/internet based businesses. She wasn’t familiar with the business model, so Marsha began asking some questions about how they made it all work. One thing led to another and she was told they were not happy with their present accounting services and would prefer to work with an accountant who understood their economic model and could provide advice and financial projections for new ideas as well as competent compliance and tax work.

Marsha rose to the moment and described how she might be of assistance; talking about her practice areas, how she interfaced with clients, and the like. A meeting at the couple’s house was scheduled.

The house looked very impressive as Marsha drove up and when she saw the computers, boxes of products ready to ship, a dedicated shipping area and a couple of employees scurrying about, she felt comfortable she was viewing a going concern.

A deal was struck and Marsha drove away with a box of records and data. She worked up a needed refiling, did some timely compliance work, cleaned up a couple of other areas and completed everything by the agreed upon due date.

She submitted a bill for $2800. In the meantime, some more compliance work was due, so she prepared that also. The bill was now $4100. To make a long story short, the bill still hasn’t been paid after over 180 days. Marsha had another client run a credit check and found the couple was in arrears to practically everyone, including the lease payments on the big house. She eventually found out the prior accountant hadn’t been paid either, which explained the couple’s presence at the networking meeting.

Marsha had previously operated on trust and her instinct. She’s changed her approach when evaluating prospective clients in light of this experience, and will be considerably more careful in the future.

Gino in New York has a lot of clients who invest in real estate. The essence of his practice is working with high wealth individuals and providing accounting services for their (primarily) commercial real estate investments. Most of it is old money, and his practice has been in mild decline for several years as clients passed away, sold assets to free up cash and generally tightened their belts in a declining market.

Sarah, a client and heiress, recommended he talk with a gentleman – we’ll call him Stephen - she had done some business with who she felt would be a “wonderful” contact for Gino. A meeting was set and Gino was introduced to a man in his 50s, quite elegant, and apparently heavily involved in commercial real estate.

Stephen told Gino he had heard “great things” about him from Sarah and other clients they shared and that Stephen was always on the lookout for an accountant who understood the nuances surrounding real estate investments of this magnitude. Suitably flattered, Gino made his case that he was indeed the right guy for any of Stephen or any of his clients who might need accounting services.

At a subsequent lunch, Stephen again talked about how Gino’s revenues could really take a jump if he began doing work for his clients, and Stephen promised to “see what he could do” to make this happen.

When Gino did Sarah’s 2008 taxes he noticed some irregularities in the data for one of the properties. As it turned out, it was the property Stephen had brought Sarah in on. He was struck by a series of events and transactions completed just before the end of the reporting period that had a disproportionately positive effect upon operational results.

When he called Stephen, his questions were downplayed and deflected, and Stephen again emphasized how Gino’s skills could be particularly valuable to some of Stephen’s large clients.

With the hair rising on his neck and sensing a scam, Gino carefully began to probe around. Sure enough, Stephen was being investigated. Several complaints had been filed and at least one other accountant had blown the whistle on him.

In retrospect, Gino believes Stephen’s vision of more revenue was a subtle bribe to either keep quiet or perhaps it was a first step in recruiting him to become part of the scam. In the following months Gino has been drawn further into the investigation and spent untold hours dealing with frightened clients.

It’s tough out there. A lot of people are in trouble. Why is your prospect looking for a new accountant? Are you sure it isn’t because they couldn’t pay the last one? None of us can afford to expend hours on activities that don’t produce collectible revenue, let alone spending billable time participating in a fraud investigation.

Be careful. When in doubt, run a credit check. Another strategy is to use retainers, so you are – even if it is only partially – working with the client’s money. When in doubt, check ‘em out!

Blogger’s Note:
You may have noticed I’m not posting as often as I have in the past and this is because I began Proton treatment for prostate cancer a month ago. My prognosis is excellent and the treatments will last through mid-January. In my case, the side effects are tiredness. Coupling that with the several hours each day dedicated to going and coming, standing by, dressing/undressing, getting zapped, etc. and my current production is less than stellar.

By the way, if any of you of the male persuasion are or in the future become similarly afflicted, I can not speak more highly of the Loma Linda Proton Center in Loma Linda, CA. Incredible technology, facility and people. Check it out. I’m very glad I did the research and made what I strongly believe to be the correct treatment choice. Oh, and a final note, they treat over 40 different types of cancer and are just now embarking upon a breast cancer study and looking for volunteers.

Even Good Business Developers Can Strike Out

2010-01-20T13:23:00.000-08:00

A CPA – we’ll call him Tom – had a great prospect handed to him by Ray, a consultant who has been a reliable referral source for many years. The prospect was a good size commercial interior design firm with historic accounting billings in the $20,000 range.

Even better, Ray was going to be at the meeting where Tom’s firm would be evaluated as a prospective provider of accounting services. Further, Tom’s competition was a local accountant who Tom knew did not have nearly his familiarity with design firm tax and accounting issues.

The topping on the business development cake was that Tom knew Ray had given Tom’s firm an excellent recommendation because Tom already served several of Ray’s design and architectural clients, all of whom were satisfied with his firm’s services.

The meeting attendees would consist of Tom, Ray and Joyce, one of the prospect’s owners.

Tom was unable to see the prospect’s financials and tax returns until the beginning of the meeting. This was not a problem – in fact it was probably an advantage – because of Tom’s nuanced knowledge in this area. He scanned the documents and quickly confirmed the prior accountants had not taken advantages of several strategies to reduce the prospect’s tax exposure.

Knowing it was highly unlikely his competition would know about these solutions, he exploited this knowledge gap by explaining to Joyce how her firm could improve her bottom line.

Ray, while not an accountant, has a sophisticated lay understanding of the subject, and with Ray’s occasional input Tom was able to illustrate in concrete terms why Tom’s firm was the desired choice for Joyce’s design firm.

The meeting adjourned cordially and on time. Tom was told a decision would be made in a day or two. Tom has a strong record as a successful business developer and walked away with a very positive feeling.

Two days later Tom was told by Ray his firm didn’t get the engagement.

How could a “can’t miss” prospect, a potential contributor of $20,000+/- to the firm’s revenue, get away? What went wrong?

If you have been reading all of the approximately 60 prior postings of this blog, you already have a good idea of why Tom’s competitor got the work.

Let’s begin with a truism you MUST be aware of: unless your prospect is exceptionally knowledgeable, or the engagement has a highly unique nature to it (I have an investment … it’s a fractional share in an offshore oil rig owned by Royal Dutch Shell … do you know anything about that?), they think all CPAs are capable of doing a decent job.

As it turned out, Joyce had taken some notes as Tom made suggestions to her and when she met with his competitor, Charles, she asked Charles if he was aware of the various approaches. Ray reported that Charles simply nodded and smiled, muttering an occasional, “Yes, that’s standard treatment,” and “I can see he (Tom) is up to speed.” Ray knew he probably didn’t have a clue, but it wasn’t his place to say something. And Joyce never considered that Charles and Tom might have a significant knowledge gap between them. After all, both their cards say CPA; both have accounting degrees and both practice accounting in the area. Tom’s demonstration of knowledge accomplished nothing.

The second factor is that there was a reason why Joyce’s firm fired the prior accountant. Why was that? What behavior do they need assurances will not be repeated by the new firm? Tom never asked.

Charles asked Joyce what happened with the fired firm and was told they wouldn’t return calls, had missed a couple of deadlines, quoted a five figure fee for a project and then came in 50% higher with no advance warning, and never really demonstrated any particular interest her firm’s business. Charles ticked off the reasons why that would, of course, NEVER happen with his firm and made a real point of emphasizing that Joyce could call him anytime, no matter the problem, etc., etc.

You MUST discover the prospect’s needs, desires, fears and motivations. Those factors are what they feel are the most important considerations. Put simply, they have an itch and they’ll hire the outfit they think will do the best job to scratch it.

Tom knows all this. He’s an excellent business developer and has a large and profitable book of business. But, this so-called “can’t miss” turned his head, got him away from the basics, and reminded him how you can never ignore the basics.

Learning & Teaching Business Development – Part 4: Teaching

2009-11-02T17:19:00.000-08:00

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.

Learning & Teaching Business Development – Part 3: Teaching

2009-10-16T13:50:00.000-07:00

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 (http://acctbizdevelopment.blogspot.com). 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.

Learning & Teaching Business Development – Part 2: Teaching

2009-10-05T18:02:00.000-07:00

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 über 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 www.cpaprofitplus.com. 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.

Learning & Teaching Business Development – Part 1: Learning

2009-09-28T10:58:00.000-07:00

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 www.cpaprofitplus.com to get the whole process in one package.)

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

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

2009-09-15T18:18:00.001-07:00

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.

Keys To Retaining Clients – Part 2

2009-09-05T10:10:00.000-07:00

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 www.acctbizdevelopment.blogspot.com.

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.

Keys To Retaining Clients

2009-08-31T14:30:00.000-07:00

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.

Pressure To Lower Fees – Part 2

2009-08-13T14:22:00.000-07:00

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.

Pressure To Lower Fees

2009-07-30T11:58:00.000-07:00

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.

Can Social Networking Help Build My Accounting Practice?

2009-07-22T13:52:00.000-07:00

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 en.wikipedia.org and enter Twitter, MySpace, etc. in the search box.

Website Blahs

2009-07-11T11:24:00.000-07:00

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.

Getting People To Say “Yes”

2009-07-07T18:59:00.001-07:00

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.

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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.

Can You Become A “Brand?”

2009-07-02T09:40:00.000-07:00

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.”

Learning From The Best

2009-06-22T08:38:00.000-07:00

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?

War Stories

2009-06-11T11:58:00.000-07:00

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.”

Sometimes You Get Lucky

2009-06-08T13:31:00.000-07:00

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.

Making Your Marketing Efforts Really Pay Off

2009-06-05T08:54:00.001-07:00

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.

Consider Firing Some Of Your Clients (Yes - Seriously)

2009-06-02T10:17:00.001-07:00

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.

A “Conversation” With Your Clients – Part 2

2009-04-21T10:56:00.001-07:00

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

2009-04-21T10:54:00.000-07:00

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.

Good medicine for your practice

2009-03-05T17:41:00.000-08:00

I was with a client in January and he was very concerned about the future of his practice as the nation sails into these uncharted economic waters. His AR is already beginning to get longer; reliable clients are cutting back on some of the optional project-type work he has come to count on and he’s getting some price pressure from a number of his clients.

We talked about his situation and explored a number of options to keep his practice on course and avoid a drop off of revenue and profitability as he goes forward into 2009.

First of all we looked at his client base. He has a general practice with a typical mix of about 240 – 250 active clients; some are quite desirable and some fall into the I’ll-take-them-for-the-cash-flow category. In this latter group it turned out there were three that were quadruply undesirable: slow pay, marginal (if at all) profitability, low billing rates and a disproportionate need for personal attention and unbilled time. He handed these clients off to a new, young accountant who, even after being told of the difficulties she would experience, took them willingly. “Paid experience,” as she called it. My client found the departure of these clients to be quite emotionally liberating.

We then looked at the revenue side of his practice. How long had it been since he’d adjusted his rates? Like many other accountants he does not have a blanket rate policy … he charges more or less with individual clients based upon any number of factors including their personal circumstances, how long he’s provided services for them, ability to pay, and others. There were over 30 clients whose rate had not been increased in three or more years. In response, he raised the rates of approximately 2/3rds of that group’s members. Most expressed understanding, some accepted the increase stoically, but he lost two. He considered neither of these to be a meaningful loss. On the positive side, the additive revenue from the others will boost his bottom line by something like $3000. He’s now looking at the group that hasn’t had an increase in the last two years and is confident a few will be adjusted upward. In the future he is considering adjusting his rates annually across the board. A quick poll of a few of his friendly competitors revealed the majority of them do it this way, but he’s not convinced yet.

The file clean up netted a loss of five clients (and maybe a couple more when some of the two year group is adjusted); none of whom will be sorely missed. In summary, a quick rate analysis and resultant situational adjustments boosted revenue, margins and profit. A few difficult clients were offloaded, and that in turn freed up more than a few hours.

Because business development is my consulting specialty, I encouraged him to devote all or a portion of his newly-liberated time to seeking up some new clients. He agreed, and we put together an action plan with a series of milestones.

The highest priority step in his action plan is to analyze his active files ASAP with an eye to developing more work from existing clients. These are people who already like him and trust him to do their accounting work. He doesn’t have to convince them of anything except that what he proposes has a desirable ROI.

We began by looking at any client operating a business. There were over 50. For only 11 of those did he do any work besides tax preparation. That means he is NOT providing advice, consulting services, planning or project work to about 40 opportunities!

We’re getting into tax season now, so he can’t act as quickly as he’d like, but the plan is to look at each of the files while he has their 2008 tax return in his hand. What story does the return tell? What is the year over year picture? Is the business growing, is cash declining, is debt rising, what’s happening to the owner’s equity, how about AR and AP, etc.? As he looks at these and other factors he is examining the situation and determining how he can add value to the businessperson. As noted above, the obvious activities are planning, advising, consulting and project work. There are no doubt others.

He’ll create a list of names and proposed services; each quantified by potential value added, cost reduced, margins increased, etc. When that is compiled he’ll schedule a series of meetings – tentatively three a week – to visit with each person sometime after April 15th.

At those meetings he will talk with them about how his professional accounting expertise can add value for them beyond tax preparation. Before the meetings begin he and I will talk about how to frame his proposals in a way that feels comfortable for his interpersonal style.

From these meetings he will develop quite a bit of work. The resultant hours will produce profitable revenue. But also of value in a shaky economy is the positive effect upon retention of these expanded services. It is axiomatic that the more services provided a client, the higher the rate of retention. The other positive related to providing more services to clients is that besides sticking around longer, they provide more referrals! Referrals tend to reflect the characteristics of the person making the referral. Hence, he’ll see more business referrals. Exactly what my client wants.

The bottom line here is that there are steps you can take to position your practice to weather, and potentially excel during the accelerating economic disruption we’re experiencing. Your accounting services are needed, arguably more than ever. This is a good time to give your practice a housecleaning. Sweep out the bad stuff and take steps to not just preserve your book of business, but expand it.

Hard Sell vs. Soft Sell … What Works Best?

2009-02-23T13:54:00.000-08:00

Frank, a CPA in Colorado, wrote me about last week’s post and wonders about the relative effectiveness of direct marketing (hard sell) vs. indirect (soft sell)? First of all, let’s define the terms. “Direct” in practical marketing speak means those messages that are targeted to a group and directly appeal to them to purchase your services. An example might be an accountant who specializes in working with musical acts and targets them with ads in various music industry publications. A more basic example (which I wouldn’t recommend but illustrates the point) is placing 3” X 5” cards under people’s windshield wipers in front of the local supermarket saying you’ve just opened your office nearby and are accepting new clients.

“Indirect” refers to activities that place you and your skills before an audience (your clients, speeches, writings, interviews, etc.) and members of the audience decide independently to inquire about your services, refer you to someone else, or otherwise develop client opportunities for you.

Now, back to Eric’s question, which approach works best? As a general statement indirect works best but suffers the disadvantage of taking longer to realize revenue from your marketing efforts. That’s a balance you’ll need to individually make based upon your own circumstances. In a perfect world, you try one or more versions of both and go with what has the superior ROI and develops the most desirable prospective clients.

The late Howard Shenson, widely regarded as an especially competent consultant and frequent speaker and writer of business development practices, wrote: "I have long been an advocate of indirect marketing techniques. ... I believe that the direct, hard-sell techniques (cold calls, advertising, direct mail) are not as effective as the indirect strategies, which are more like public relations activities. As an added bonus, these indirect, low-cost/no-cost techniques are much less expensive."

In advocating the indirect approach, Howard wasn't relying on guesswork. He did periodic surveys over the years and received responses from thousands of consultants about what sorts of marketing efforts they used and what worked. The results? The lowest-paid consultants marketed themselves via cold calls and paid advertising. The most successful and highest-paid used the public relations techniques: writing and speaking.

The gold standard for indirect marketing of your services is to speak and write for audiences populated by desirable prospects or those who frequently deal with these prospects, e.g. attorneys, consultants, bankers, financial advisors, brokers, etc. When Gloria Allred- the feminist & discrimination lawyer - appears on Court TV you can bet that there are literally hundreds of women viewing who silently file away the thought that if they are ever sexually harassed they now know who to call.

Closer to home, when you appear before a group of real estate agents at their Association’s weekly breakfast and give a 15 minute presentation on the latest regs and interpretations relating to 1031 exchanges, you can bet a number of them will file that away anticipating the day when a client needs help in this area. It is good customer service and makes them appear on top of things for their client when they can quickly offer up your name as a local expert in that area.

If you host a seminar, or speak at a relevant seminar, or write a book or publish a blog or newsletter, or engage in a whole host of similar activities you and your expertise begin to gather traction and become a known commodity within the population you wish to influence. This leads to both direct expressions of interest and referrals.

When might that happen? Who knows, but if you do enough of these type presentations there will eventually be a large group of potential clients and referrers out there. As that number grows the odds tip in your favor and at some point a slow but steady stream of high quality prospects will be the norm.

What is it you can speak and write about? Accountants, like lawyers, have the advantage of dealing within a highly complex and technical environment that abounds in regulations, opinions, appellate rulings, and a host of local, state and federal laws. There is no shortage of subjects. The first step is to find something you find interesting that is reasonably esoteric and then becoming the local authority. Jump on every opportunity to be interviewed, give a presentation and write something for local/regional publications.

Business Development Case Study #2 - Part 2

2009-01-31T15:30:00.000-08:00

In Part 1 we identified Fiona’s Flowers as a prospective client. Using a very direct approach to the owner, Fiona, was illustrated first. By “direct” I mean that you clearly stated to her what you had in mind – a desire to provide Fiona’s accounting services in the future – and then waited to see what her response would be.

I emphasized that while your approach was direct, it was also polite, respectful, complimentary of her and her business and broached when it didn’t interfere with something she needed to get done right that second. You didn’t demand she do anything, only that she be aware you wished to compete for her business.

There’s a lot to be said about a really direct approach that is done in this manner. It gets right to the point. Fiona knows exactly what the deal is and the decision she is being asked to consider. You will know immediately what her reaction is and if it is a firm “no,” you can get onto thinking about other prospects and not wasting time wondering about how you’re doing with Fiona. You’ll also know right away if it is, “Yes, I’d like to talk with you about that.” or “Maybe after year end. Let’s talk then.” or “Probably not, but I’ve never really thought about it. Maybe I should.”

Everything considered, I recommend the direct approach if you can find a way to be comfortable with the relative brashness of it. It is a lot like crossing the ballroom and asking that stranger to dance. Or approaching that person you see periodically and asking if they would be interested in getting a cup of coffee/tea/ adult beverage and getting to know each other a bit better.

An indirect approach has the downside that it may not be enough to get the discussion away from – in this instance – a storekeeper & customer relationship and instead into the potential of an accountant & client relationship. In other words, you can be so indirect that you don’t ever get there. The analogy is that while you’re considering asking them to dance somebody beats you to it. For the rest of the evening you watch them dance and then they leave together. Shoot, I hate it when that happens.

So I offered a subterfuge as one way to be indirect and also get the subject matter in the right place. “Subterfuge” may be too soft a word for what some may regard as an outright prevarication, but I’ll leave that debate up to the eye of the beholder.

The point of all the foregoing is to set the foundation for a) ensuring the prospect finds you to be pleasant and agreeable to be with and, b) establishing your credentials as a proactive and uncommonly capable accounting professional.

Where you want to be at the end of the first phase … I’ll call it the Introductory Phase, is to have a casual and pleasant relationship with the prospect and they are aware you are a local accountant. When you see them they wave, take a minute to say hello and pleasantries are exchanged.

So now we move to b) above, that of ”establishing your credentials as a proactive and uncommonly capable accounting professional.” How are you going to do this? You will accomplish it by doing one or more apparently spur-of-the-moment things for the prospect. It may take some time on line or pouring through CCH materials, but you’ll find it. A benefit of accounting is that the controlling Federal, State and local laws, statutes, regs and various court decisions are a gold mine for the sort of thing I’m talking about.

In Fiona’s case it could be something like this: You stop in to buy some flowers for the receptionist’s birthday. You hang around until Fiona has a moment. You say, “Hi Fiona. I just have a second and you look busy too, but take a look at this summary of a tax court decision affecting how you have to account for spoilage to support it as a business expense. It may lead to some new regulations in that area and could affect you. Just a heads up so you’ll be on top of it. Great seeing you. I’ve got to get back to the office with these flowers.” Don’t make a fuss about it. Just be pleasant and matter of fact. Don’t stand there and wait for her to react except to acknowledge it and (probably) say thanks. Then say a pleasant goodbye. Or change the subject to asking why your African violets keep dying, or? The point is you don’t want her to get the idea you are expecting something back in exchange for your initiative.

She stands there and watches you walk out. No accountant has ever done anything like that for her before. She glances at the copy you’ve given her and places it carefully in her pocket. She briefly wonders if Barry, her present accountant over at Snow & Slush, knows anything about this. And, of course he doesn’t because, after all, why would he? You deliberately ferreted this out for Fiona and made sure it was fresh, topical and relevant to her. About every four to six months you can pull something like this off.

What if she saw you in the store sometime in the future and asked you straight out why you had brought this information to her? In this instance you really can’t be indirect. She’s putting it to you and you have to step up. You might say, “Well, I’ve always been impressed with your shop, Fiona. And I confess I would very much like to work with you (or, I’d still like to compete for your business). It must be in my mind because when I come across something that appears to have a potential impact on the financial circumstances surrounding your operation it has just sort of jumped out at me. Just like it does with my clients.”

A client of mine on the golf course once overheard an acquaintance he slightly knew in the foursome say that he was getting ready to sign a new lease for his wholesale distribution business. My client said, “Oh, are you locating to the new Enterprise Zone?” The guy didn’t know what he was talking about, but listened with great interest to the explanation. The guy’s accountant hadn’t said a word about that option and the potential advantages it offered, so it was never considered. The guy phoned my client the next day with a request he calculate some projections comparing the two. One thing led to another. The guy didn’t sign the lease; he moved instead into the Enterprise Zone and switched over to my client for future accounting services.

Once the prospect is acquainted with you and has formed the opinion that you are a pleasant, bright and professional person, then it is up to you to come up with some initiatives like the foregoing to set yourself apart from your competition. None of them do this stuff. You’ll stand out more than you realize.

None of this takes much time. We’re talking about maybe a half hour a month on average per prospect. You can have ten of these going at any one time. I promise you a fair percentage will ripen into client relationships. At least a third if not more. Be persistent. Stick with it. It works.

Getting More Business – Quickly

2009-01-31T15:19:00.000-08:00

Jan, a CPA in Atlanta, sent me an email with an interesting question. She said that her growing practice is in the “tweener” size where she is in need to increase her staff but doesn’t really have the revenue to support a new person. She asked if there was a way to find clients quickly, even they aren’t optimum, to ensure there is cash flow to support the increased overhead?

There are some tactics that can give you the desired result. Let’s look at a few.

The first step is to decide who populates your target audience. Who do you want to reach? Obviously, Jan in the large metropolitan area of Atlanta will select a target audience that is more narrowly defined (e.g. retail businesses on the west side with revenues of less than $3MM) than an accountant practicing in Bismarck, North Dakota (all businesses in the trading area with revenues of less than $3MM).

With the target audience now in mind, the first tactic to explore is if you wish to aggressively engage in short lead-time mass marketing. By “mass” I mean shooting promotional material out to your target audience in your trading area. What media reaches those you wish to reach in your area? You might use post cards, letters, radio spots, flyers, handouts and a host of other “standard” marketing methods. In larger trading areas there are marketing consultants who will be more than happy to give you ideas with the hope you will engage them. If this option isn’t available, you can still head over to Borders or peruse Amazon’s offerings to find some good books on the marketing options you have. What promotional messages do you receive from other businesses? How are they conveyed? Would a version of any of these effectively reach your targeted audience? And remember, you can always try putting a toe in the water first and see what happens. Analyze your results, tweak things, and try another test group. Once you have it optimized, then it’s time to risk your advertising budget.

Once you get past these third party, i.e. indirect, business development efforts the question becomes what can you do individually to make something happen quickly?

A very effective method is to simply ask for more business. First of all, let’s be very clear about how we are going to go about this. We are NOT going to ask from weakness (“Gee, costs are up and I’m running short on cash. Can we maybe do some planning or something and you pay me 50% in advance?”). We are NOT going to be a victim (“This economy is rough. A lot of my clients are starting to use do-it-yourself tax software. I really need some income. Is there something I can do for you?”). Why not adopt this tone? Wouldn’t it generate sympathy and they’d be more apt to help you? Absolutely NOT! Why? Because your clients want their accountant to be a winner – a professional who is busy and prosperous because others in the community also believe in them. Nobody wants to deal with a professional who is only marginally successful, if at all. We are NOT going to give them that impression.

Secondly, we are NOT going to reduce prices or offer discounts. First of all, it suggests weakness (see the preceding paragraph) and secondly, you will find it difficult to raise prices in the more prosperous future and, based upon a ton of marketing research relating to promoting professional services, more often than not it won’t have the desired result of obtaining more meaningful revenue in the near term while at the same time solidifying your reputation as the low cost provider. This is a double bad.

Instead, we are going to go about this from a position of strength.

My first suggestion is to look at your clients and select those that have more complex financial pictures. If you aren’t doing planning or project work for them, you should be. When you discuss their 2008 taxes I recommend you suggest planning and/or project work that will have the effect of anticipating where the new administration’s tax policy will go and put some contingency plans in place. Examining and projecting capital acquisitions, hiring, bank lines, managing cash, creating/adjusting reserves (e.g. bad debt), examining benefit packages, insurance, etc. are all fair game.

My second suggestion is to tell every client you have any contact with that you are pleased to report that your practice has grown to the point where it requires expansion of staff and that you now have the bandwidth to handle a number of new clients. Would they kindly consider referring you to others who they believe could benefit from your services?

By doing this you are saying to them, in effect, a) their accountant is a winner and, b) they can help facilitate your further growth and thereby become even more of a winner if they refer you to others. Your clients like you. Many of them will respond favorably to this request. None will think badly of you.

A third suggestion is to talk with your friends at larger firms (whose overheads and rates are higher than yours) and mention two things. The first is an extension of the second suggestion wherein you will say that you have capacity to help them with any overflow they’ll have this tax season. In other words, you can do some sub-contract work for them. The second topic is to reach an understanding with them about referring business to each other. The quid pro quo is that a) you will refer clients to them that are too large and/or specialized and/or complex for you to handle if they, b) send you the clients that are too small, or too rate sensitive or don’t have the upside the larger firm is looking for.

Jan, the foregoing three ideas are hardly inclusive of all the options you have, but they are tried and proven action steps successfully undertaken by others faced with the same challenges.

Good luck.

Business Development Case Study #2- part 1

2009-01-19T10:29:00.001-08:00

The Case Study in December was about approaching a consultant whom you briefly met when the two of you attended a seminar. When you realized you both worked out at the same gym we went through a business development sequence that would have a high probability of eventually leading to him signing up as a client.

One of the cornerstones of using a relational approach to adding new clients is the opportunity to see the prospect on a regular basis. I may only once a month, but it needs to be pretty consistent because you need a fair number of “touches” with the prospect to achieve the first prerequisite for enticing someone to become your client, which is that they come to view you as a pleasant person with whom they feel comfortable. You also need a degree of frequency of contact so the person doesn’t simply put you out of mind. Then, once that is achieved, you are going to address the challenge of positioning yourself apart from other accountants, so that you are perceived to be a cut above them because of your knowledge, professionalism, concern for your clients and the like.

In this post we will do the same things, but in a different context when compared to December’s Case Study. There, the prospect was a service provider and a member of your gym. Here, let’s make them a retailer.

Fiona owns a florist’s shop. It’s a busy place, and Fiona’s Flowers are well known for fresh flowers, interesting gifts and excellent customer service. In fact, while you don’t really know Fiona, you purchase flowers there periodically for birthdays, gifts and similar occasions. You’ve decided you want some more small business clients. Fiona and her shop crossed your mind and you are going to give it a go.

You can always take the direct approach. How might it feel to go into her shop, browse for a few minutes until she was free and get right to it. Ask yourself if you would feel comfortable with the following scenario: You introduce yourself, mention how nice her shop is and that you’ve been a customer for several years (she’ll remember) and say something like, “You’re busy, so if I may I’ll be blunt and only take a moment of your time.”

(Pause and make eye contact; make sure there are at least three feet between you and don’t directly face her; instead position your body so it is facing an imaginary spot about six inches away from either of her two shoulders. This, in effect, ameliorates any sense of pressure she may feel because you are giving her a psychological escape route.)

Continue: “You have a great operation here and a marvelous reputation. I’m a CPA and I handle the business and personal tax returns for dozens of businesses in town, but I’m sorry to say I don’t work with you. I’d be honored to have an opportunity to compete for your business.” And then you remain silent until she responds.

She may say she works with your competitors Snow & Slush. Or, she may say she uses TurboTax or similar and does it herself. She may say anything. If she doesn’t specifically respond to your last sentence, then you can ask, e.g. “My real point is that I’d like to have a chance to earn your business; to compete for it. Is that possible?”

This is very direct, but it isn’t a bridge-burning tactic. You’ve been very polite. You’ve complimented her. You’ve made it clear you value her and her business. And, you have been very clear about what you want. Now it’s up to her.

If she says, “Oh, thanks. But, I’ve been with Barry over at Snow & Slush for several years and they seem to be doing a good job. I don’t really have any reason to change,” you have to be ready with a polite response and be prepared to withdraw from the field of battle with your head held high. And you most assuredly haven’t given up the chase. You’re on her map now. She knows what you do and has no reason to think poorly of your after your conversation.

Because you shop at Fiona’s periodically you will continue to have occasion to see her. In fact, you make a point of seeing her. When you do you say hello and are polite, upbeat and friendly. You haven’t pitched her since the first time. She’s feeling no pressure. She likes you and always lights up when the two of you say hello.

But what if this direct approach isn’t you? What if you simply don’t want to do it that way? You’d prefer something less, well, blunt.

If you just make a point of saying hello and having a brief “it’s a nice day” chat each time you shop there she will place you along with a few hundred others in her “nice customer” memory box. The relationship has, if anything, been solidified into the narrow definition of customer and shopkeeper and is now difficult for you to take to a professional place unless you do something proactive to break the mold, so to speak. So, what can you do?

Here’s an example of an indirect alternative. I’ll leave it to your sensibilities if you would find this objectionable, but a good salesperson, when faced with the same circumstances, could come up with something like this (first being sure to wait until Fiona wasn’t buried with customers or otherwise distracted): “Hi Fiona. Do you have time for a quick question? (she nods yes) I’m a CPA and I have a client with a relatively new business that deals with perishables – not flowers – like yours does, and they’re having real problems with excess spoilage. I don’t think their system for buying and rotating their stock is very effective in keeping the fresh items front and center and identifying the older stock that needs to be marked down and moved out right away. As you know, I’ve shopped here for years and always admired how you present your stock. You must have a really effective system and if you have a few minutes I’d like to hear about how you do it. The information could be very helpful to my client.”

All smoke and mirrors, of course. I’ll leave it up to your imagination to come up with something better. However, you’ve flattered her by asking her advice, you’ve made certain she knows you are a CPA, and she’s learned you care about your clients and that you respect your client’s privacy by not mentioning their name. And, she knows you’ve been in her “nice customer” box for several years, so that’s another plus. All very good stuff.

With both methods you are ready to take steps to differentiate and distinguish yourself from Barry over at Snow & Slush. We’ll look at that next week.

It’s Becoming A Tough Economic Environment Out There

2008-12-23T15:46:00.000-08:00

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

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

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

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

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

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

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

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

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

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

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

Onward!
Craig Weeks

Business Development Case Study #1- part 2

2008-12-23T15:44:00.000-08:00

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Business Development Case Study #1- part 1

2008-12-23T15:41:00.000-08:00

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

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

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

So, what can you do to make it happen?

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

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

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

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

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

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

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

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

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

Where Do I Find New Clients? – Part 2

2008-12-03T17:40:00.000-08:00

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

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

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

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

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

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

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

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

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

How Do You Ensure A Superior Client Retention Rate?

2008-11-27T13:28:00.000-08:00

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

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

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

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

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

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

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

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

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

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

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

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

Sealing The Deal – Part 6

2008-11-13T12:33:00.000-08:00

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

Now What Do You Do?

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

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

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

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

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

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

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

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

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

Topic Change

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

Sealing The Deal – Part 5

2008-10-25T14:51:00.000-07:00

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Sealing The Deal – Part 4

2008-10-25T14:48:00.000-07:00

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

Now What Do You Do?

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

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

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

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

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

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

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

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

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

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

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

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

Sealing The Deal – Part 3

2008-10-08T10:43:00.000-07:00

How Do You Ask For The Engagement?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Sealing The Deal – Part 2

2008-10-08T10:41:00.000-07:00

How Do You Ask For The Engagement?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Sealing The Deal – Part 1

2008-09-06T18:20:00.000-07:00

How Do You Ask For The Engagement?

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

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

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

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

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

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

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

If only it were always so easy!

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

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

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

Objections

2008-09-02T18:20:00.000-07:00

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

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

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

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

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

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

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

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

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

Setting And Talking About Fees - Part 3

2008-08-19T17:59:00.000-07:00

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

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

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

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

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

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

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

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

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

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

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

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

Setting And Talking About Fees – Part 2

2008-08-11T09:54:00.000-07:00

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

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

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

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

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

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

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

Summing Up And Positioning To Make Your Winning Pitch – Part 3

2008-07-31T11:56:00.000-07:00

Because it is so important to effective business development, I want to revisit the overarching strategy we’re employing here. If you have something you want to sell – accounting services in this case – the question becomes how to do so with the highest probability of success?

You are not selling a physical product, but in many ways the most effective practices to sell toothpaste, trucks, computers, etc. are the same as selling professional services. If you look at a mainstream ad on television or a billboard you will not simply see a picture of the product and off to the side the size and price. Instead, the ad will attempt to portray how your life will be enhanced if you buy the product. That’s why the ‘20s-something studly man with his big smile showcasing very white teeth is flanked by a gorgeous ‘20s-something escapee from the pages of Playboy while nearby a tube of Colgate toothpaste is prominently featured. The ad is selling boy-are-you-going-to-be-good-looking-and-attract-the-babes, it is not selling toothpaste. In other words, the product will improve your life. Madison Avenue has it right – decades of feedback from millions of ads has empirically proven the effectiveness of this approach.

This is why you don’t go into a meeting with a prospective client armed with a story about what you do, ready to explain why you are better than those other providers of your service and to defend your fees. The only way this works is if your competitors all take the same approach. And then what happens is the prospect will select the individual(s) they feel OK with that has the lowest fees. This is a terrible way to sell your services!

Instead, you want to sell your ability to help them achieve greater success in life. Rather than the (relatively ineffective) approach described at the beginning of the prior paragraph you will primarily focus upon the prospect, their financial circumstances and the connection of those circumstances to where they want to be in their life … a much more effective approach. After you acquire that knowledge, THEN you talk about your services, but framing them within the context of how those services help them get where they want to go.

I’ve suggested in prior posts that you might open the discussion up with a statement & question such as, “I’ve had the opportunity to review the financial documents you sent over and saw no surprises. You have a mainstream business with mainstream financial and tax challenges, and we/I am very experienced and comfortable with all the issues. So I can put our discussion in context, can you give me an overview of where you are with your business and where you want to be in, say, two years?”

If the person doesn’t have a business, you might say something like, “Bob, I’ve looked at your tax returns from last year and everything appears to be very straightforward. You and Rosa have about 25 years between now and when you probably will want to retire. So I can discuss how our/my services can be of the most value to you both, could you please give me an overview of where you currently are financially versus where you’d like to be and also project into the future a few years and describe where you want to be?

In both examples above you are seeking an understanding of where they are and where they want to be in their life.

As they respond, gently steer them so they stay on course. Ask questions as necessary so you obtain a fairly clear picture of what they perceive to be important (remember: perception is their reality) and what future goals have the highest priority.

Take notes. Write down their priorities and use some sort of a code to underscore those that appear to be the most important – perhaps a small star off to the side or simply an underline.

With about 10 – 15 minutes remaining in the hour you have to make your case for why the prospect should choose you. Glance at the issues you’ve written down. The one that has the highest apparent priority is the one you address first. Your initial statements incorporate this priority, e.g. “Helen, the number one thing you are trying to do is expand your hairdressing salon, and finding the funds is proving to be difficult. Naturally, our services include filing tax returns and other routine state and Federal requirements, but where I think we can really add value is helping you navigate through your current financial challenge, etc. etc.” You go on to propose some planning; some analysis of her costs to look for ways the salon can increase its margins, doing some projections with an expanded operation, etc. With each issue you have identified you weave your services with solving one of Helen’s problems or taking her where she wants to be.

As she listens, Helen will see you as someone who helps her get where she wants to go in life, not as someone to just do her tax returns, etc. When she reaches that point, you will win the engagement unless a competitor is even cleverer at this process than you are. But you’re going to get so good at this that that will never happen, right?