Monthly Archives: October 2012
Acquiring $255k in 28 Months
In the fall of 2009, there was a CPA who attended our Accounting Marketing Workshop program and at the end of the day, he approached me about our Outsourced Marketing program but wanted to talk privately about his personal situation and explore the potential of engaging BYF to help him acquire $50k to $75k annually for three years. Well, this CPA ultimately enrolled and has acquired $255k in new business clients over 28 months and will ultimately acquire $325k at the end of three years.
Background on This Person
After everybody left our workshop, I sat down with this CPA to better understand his situation. His first question was about his age, and whether that would be an issue. He was quite concerned that his age would work against him and whether we would consider working with someone over sixty years of age (maybe older). I explained that his age did not concern me at all and was not a factor for participation in the outsourced marketing program. I did explain that we’ve declined engagements with prospects due to declining health and poor communication skills but he did not fit those situations.
The second concern that he had was if we had a concern about him building a book of business from scratch. Again, I explained that the size of his practice was not a concern and we had experience working with start-up CPA firms and established firms as well. The more important consideration was whether he could stick to a marketing system over the course of three years that would deliver small, simple service business clients to him and then he would follow the process for closing them.
The third concern was about his geographic marketing location, which was a very small city. It turns out that his market was relatively stable economically with a metropolitan population of just over 500,000 (slightly larger than Winston-Salem NC or Modesto Ca or Portland Maine). This was a challenge but we developed alternate strategies to overcome this issue.
To help this sole practitioner acquire higher quality clients, we focused heavily on service businesses like law firms, healthcare, information technology and various professional service firms. The CPA managed to close 50% of all leads (105 out of 212 leads) and the typical annual fee was $2,500 – $5,000. We avoided compliance oriented businesses (e.g., no reviews or audits) so the processing was relatively easy and peer review could be avoided.
At this point, the practice operates with two people and they will probably need to add a third staff accountant when the firm reaches $300k or $325k.
Overall, this accountant is thrilled with the progress and quality of the clientele. He is working hard but is really proud of the practice he’s built in a short period of time.
Despite soft economic times, there are many, many accounting firms who are having success marketing their practice and growing each and every month. Below is an example of a client we worked with and how he managed to grow his practice throughout this terrible economic period. I will not disclose his name and location, because many accountants will want to pick up the phone and call him. It also enables me to be more open about his situation.
In May 2008, we were contacted by a CPA who had been operating for one year. This practitioner was located in a city with a population just over 100,000 people and the nearest major city was 35 miles away. His practice was approximately $100,000 in fees and declining. In the prior year, this practitioner had purchased a practice generating $125,000 from a retiring CPA and the attrition rate was 20%. To compound the issue, the entire practice was debt financed ($150k) so this practitioner was very nervous and did not know how to market and sell accounting services.
The base practice purchased was primarily traditional write-up, payroll and 1040s. The average fees per business client were very low (assume $1,000 per year) and individual tax clients were charged $250 per. Most of the clients required lots of interaction and 1040s were processed in-person (by appointment, in front of them). The tax software being used was Lacerte.
To dig himself out of this hole, the sole practitioner desperately needed to double the size of his practice from $100,000 to $200,000 within twelve months so his annual revenues exceeded his practice debt. The practitioner’s preference was to work with construction companies, but the market for home construction was collapsing.
To right the ship, this practitioner attended our Accounting Marketing Program and wanted to outsource the marketing to BYF even though he was lacking funds. Over the next four years, this practitioner managed to grow from $100,000 to $450,000 by following the program and dramatically reduced his debt service. There were moments when cash was tight but he has successfully grown the topline, overhauled the workflow process so his practice operates more efficiently, and now has two attractive niches which improve the quality of clients he acquires. Fortunately, we avoided the construction market because of economic uncertainty and the niches are very solid despite the economy. By the middle of 2015, his practice will be at $750,000 – $850,000.
This is an example of what a motivated accountant can do, even in these economic times.
After 4-5 years of a soft economy, there is tons of skepticism out there about whether it’s possible to aggressively grow an accounting practice in this economy. The naysayers have a strong argument between unemployment, uncertainty and tight credit, it’s easy to stay on the sidelines and do nothing. However, the naysayers still need to offset attrition to tread water.
From my vantage point, I have had the opportunity to work behind the scenes with small accounting firms all over the United States which provides me with a much more diversified view of what works and whether it’s possible. Here are some insights that I can share with you as you consider whether it’s worth taking the plunge:
– If your local market has an unemployment rate above 10%, then it’s far more challenging than most markets around the country. I fully respect your apprehension to aggressively market your accounting practice because your concerns are well founded and eventually, things will improve. By all means, you should still be marketing your accounting practice but the level of financial investment should be moderate, not aggressive. With our Outsourced Marketing Program, I have avoided engagements in markets that are extremely soft economically because it is very challenging to persuade small business owners to spend $3,000 – $5,000 per year for accounting/tax services when many businesses are struggling to survive. Personally, I have stayed away from markets like Las Vegas, Detroit, Fresno, Bakersfield, Reno, and Providence because the local economies have been very very soft.
– If your local marketing area has a professional sports team (NFL, MLB, NBA, NHL), there are plenty of businesses to target even if the local economy is soft. We’ve been shocked by the results in a couple markets. Bigger markets are far easier to grow than small markets if you know how to market your accounting practice. For example, we had one client in Miami that knocked it out of the park despite terrible economic indicators in South Florida.
– If your practice has a unique service or area of expertise, this can draw prospects from a broader geographic region to you because there are very few accounting firms providing this unique service. We have tried to make everyone aware of the amazing capabilities with niche marketing on the internet but many accountants are afraid to pull the trigger. This is a huge opportunity if you have the right area of expertise.
– Internet marketing is bigger than nearly all accountants realize and provides a great ROI. By internet marketing, I mean everything from a well organized website, search engine optimization, blogging, multiple websites, social media, email newsletters, social media marketing and online reviews. Not two or three of these elements, all of them together into one holistic marketing effort.
If you have questions, feel free to contact me offline at 888-999-9800 x151.