Monthly Archives: December 2016

How to Fire a Client

There is perhaps nothing more unpleasant than firing someone, yet you can’t make a business case for keeping an employee on board if that person isn’t doing his or her job. At the end of the day, the company – and most likely the employee – will be better off if he or she is someplace else.

We’re all conditioned to this scenario in the workplace and most of us have had many years of experience reacting to someone being fired. Why is it so hard, then, when you have to fire a client?

fire-a-clientSevering the relationship between you and your client is even more difficult when you like the client. Nine times out of 10, unless your client commits a crime, there’s really no reason why you should fire a client, right?

Wrong. Once you look at what a problem-client is costing you in terms of money and resources, not to mention stress and angst, there are probably more reasons for letting a client go than there are for keeping that client. Nevertheless, some thought must be given to the “why” and “how.”

Three Primary Reasons to Fire a Client

There may be more than just three reasons to sever the provider/client relationship, but through my years of work with accountants, it boils down to percentages, unethical behavior and lack of interest.

  1. The client takes up too much non-billable time. By far, this is the number one reason to let a client walk. Most of us have heard of the 80/20 rule in which we spend 80% of our time on the bottom 20% of our client base. To put it another way, the time you’re spending with a client often monopolizes your non-billable time. Sure, you could make it clear that you are going to bill the client for each and every phone conversation, e-mail exchange, text (yes, even texting) and other interactions, but that isn’t really realistic.  These kinds of clients aren’t adding to your bottom line, and without fail, you will come to resent the time the client is taking up. In a profession where it’s sometimes hard to measure a return on investment, you definitely can determine if the time you spend with a client isn’t adding to your bottom line. As a result, it’s far better to get rid of the bottom 20% of your clients so you can focus on the remaining clients who will generate more revenue – and bring you more referrals.
  1. The client withholds information or wants you to do something unethical. If you find your client is not being honest with you about a particular situation or withholding valuable information that enables you to do your work in the most ethical, legal manner possible, it’s time to part ways. Asking for a questionable deduction on a tax return is one thing, but hiding assets without your knowledge, for example, is another matter. You cannot afford to damage your reputation when a client who has the potential to do harm to himself, and in turn, to your practice.
  1. The client does not want to be helped. As odd as this might sound, we’ve all had clients who did not want to be helped. The client did not want your professional counsel and expert assistance, and will neither accept your advice nor respect your intentions. It’s time to find clients who will benefit from your professional experience and knowledge. You’ll feel much better about your business acumen, not to mention the inherently altruistic factor of helping someone solve a problem.

Giving the Pink Slip

pink-slipIn 2006, Radio Shack made headlines when it relieved 400 employees of their jobs – not for the fact that they were let go, but because they were told by e-mail.

While that is an extreme example, it’s also illustrative of today’s always-on culture where text and e-mail are the de facto methods of communication. Don’t let this happen to you; as unpleasant as it may seem, it’s far better to have a conversation than it is to send someone a note. Yes, sometimes for legal reasons you have to send a letter instead of talking to the client. That’s fine, but unless you are legally prevented from talking with the person, send the letter after you have had the initial conversation.

Looking at the three primary reasons above, it’s easy to see why you would want to fire a client, but one of the main traits we have as human beings is we tend to like each other. For example, you may have a client who will literally give you the shirt off his back if you ask him for it, but you need to separate your personal feelings from your professional beliefs. After all, you may see the client in social situations at Rotary, the Lion’s Club or some other venue. What are you going to say to the fired client the next time you see each other?

The best way to move on is to have a professional conversation with the client and explain the reasons why. Just as you owe it to a fired employee to provide concrete examples of how he or she wasn’t doing the job up to standards, you must do the same with a fired client. Explain in plain terms what the problem is, and once you have the conversation, follow it up with a letter, not an e-mail.

Unless there is a sudden ethical problem, the actual “firing” shouldn’t be a surprise – and it may even be a relief. Whatever the outcome is, it’s not going to be entirely pleasant, so the client’s initial reaction may be anger. Reassure him or her that this is a completely private matter between the two of you and should remain so. You will not talk to anyone about this and you would appreciate it if the client would do the same.

Impact of Social Media

You don’t want your conversation to be on Jerry Springer or making the headlines of the local paper, yet you have to protect your reputation, so be wary of the power of social media! Today, a negative blog or Twitter posting can go viral in a matter of moments; you will want to ensure you do not suffer any potential negative consequences.

This wouldn’t happen to you … your “fired” client would never do this … well, wake up! No one can predict human behavior. While the client may seem well-adjusted when he or she leaves your office, it could be only minutes before something is posted that you cannot undo. You have to be realistic and cautious.

When your now-fired client says something negative on Yelp or Google reviews, you may have to get an attorney involved. However, watch your temper. It would be unprofessional of you to lash back and post a response or something you’ll be sorry you said. Take the high road; the best stance is to do nothing. It’s better to let the client stumble over his or her words than to react to them.

If it turns out that your colleagues and even your other clients are aware of the social media problem, it is time to communicate via letter or e-mail to them to allay their concerns. Don’t reveal any information that can be used against you later on; an attorney can guide you through this difficult situation.

Your Practice is Changing – What Happens to Your Clients?

For various reasons, an accounting practice does change over time. You may find you want to devote your expertise to other kinds of specialty services or a niche industry rather than being a generalist.  If this is the case, maybe you should consider selling a portion of your practice rather than severing the relationship.  This enables you to offload the less desirable service to another accounting firm, and cash out.

Your practice may change for other reasons, too. For example, some accounting services generate a lower hourly fee realization. Rather than continuing to accept this, you may make the business decision to depart lower-margin types of services such as payroll and traditional write-up for something more lucrative.

If this happens, you may want to “package” up these clients and sell them to another practitioner or even selling them through a broker. Of course, people are not commodities, but this is business, after all. By selling them to another practitioner, the client still gets service and attention, and you can focus (or refocus) your practice on what you do best – and avoid firing the client!

Keep Calm and Carry On

We may have tax law and regulations that standardize the accounting profession, but practice management and human resource issues definitely are not cookie cutter. There is no manual or Dummies’ guide that gives you all the answers.

As the British government imparted just before World War II, the best advice is to “Keep Calm and Carry on.” Don’t do anything rash. Think about what you want to do with a client before you take action. You can’t get the client back once you’ve let him or her go, so be rational and sensible, but also be honest with yourself about the way you want to grow.

Fire a client for the right reasons. In the long run, you’ll feel better about yourself and your business will prosper.

What’s Wrong with Your Sales Process?

The sales process can be arduous when you have a steady flow of leads coming into your office and plenty of existing work sitting on your desk.  Between the appointments that stand you up and unproductive consultations, many accountants get discouraged with the process and wonder how to perfect it.

Conceptually, the sales process is an upside down funnel (a.k.a. inverted pyramid) that has several layers which lead-gen-funnelyour prospects must go through.  In other words, you start with a wide base of leads and the prospects work way down the funnel to a tiny spout at the bottom when you close clients and bring them into your practice.

Much to my surprise, most small accounting firms struggle with separating the wheat from the chaff (e.g., qualifying leads), how long it takes close prospects, and then wonder why diamonds are not dropping thru the spout of the funnel.

Breaking your sales process into individual steps makes it much easier for non-sales professionals to appreciate how the process (or dance) works.  Below is an illustration of twelve steps that you can take to capture more diamonds.

Step 1 – Define your target audience into monthly buckets – Rather than target businesses based on proximity to your office location, target businesses by industry sector (e.g., restaurants, lawyers, manufacturing, wineries, etc.).

field-of-dreamStep 2 – Build your “field of dream” – To establish yourself as a subject matter expert, develop a niche website which establishes your firm as having an expertise within an industry.  Build a compelling story to address their pain points.  To overcome their skepticism, acquire certifications and/or become a member of an association which gives them the confidence to hire your firm over their current “generalist” accountant.  In other words, the niche website should become the needle in the haystack they are searching for…

Step 3 – Craft a targeted message – Develop a direct mail letter that speaks to your target audience.  You want a letter that is compelling and identifies with the problem that keeps the prospect up at night and how your service helps to solve this problem.  The most effective message will have emotion and passion wrapped into the letter, not industry jargon.

Step 4 – Send a follow up message – Develop another letter that builds upon your first letter.  If need be, break the target audience into sub-targets (e.g., break general construction into HVAC, electricians, painters, roofers/siders, etc.).  Craft a letter targeting this specific subsegment (e.g., HVAC/plumbers), not to the general construction industry.  Hit this audience 3-5 times within a six month period.

Step 5 – Qualify ALL leads generated – As the leads come into your office, ALL leads must be pre-qualified by answering a series of questions before you agree to a meeting.  Start the selling process on the phone before meeting in person.

Step 6 – Add ALL prospects to your LinkedIn profile – Add each new lead to your LinkedIn profile.

Step 7 – Add ALL leads to your email newsletter list – All existing clients and prospects should be getting your email newsletter.  This will add value to your relationship and educate them on the breath and depth of your services and keep your firm top of mind.  Even if they don’t come on board after your initial consultation, keep them on the list.  They may come on board many months later or refer someone to you.

Step 7 – Keep a running list of all leads generated and status on a spreadsheet – Every lead that comes into your office should be recorded onto one spreadsheet with the source of the lead, date, contact info, service requested, quote, and next steps.

Step 8 – Send follow-up letters to promising leads from 1-3 months ago – For those consultations that are pending and getting cold, it’s time to warm them up and send them a letter that keeps them luke warm.  Customize it around their situation and why they should get started now.

Step 9 – Call the luke warm prospects again – Make a follow-up phone call to your prospects that are still on the fence (e.g., prospects you met 2-6 months ago).  Try to identify why they haven’t taken a step forward and address their fear.  Try to make the move risk free for them and address their inertia.  Get them to take a baby step forward.

Step 10 – Invite the old prospects to meet you for coffee – Send an email and invite the fence sitters from 6-12 months ago to coffee.  Create a compelling reason to get together and mention that you have something to share with them (e.g., free book or special report) that is relevant to their business and can help them improve the quality of their life.  Soften up the approach and use the meeting as a vehicle to discuss their business in this economy.  Operate like a business coach trying to help them oversee their business, not an accountant.

Step 11 – Send invitations to clients and prospects for upcoming events – Create a prospect event that is informational in nature.  For some events, you can be the presenter and others can be done by outside professionals.  The more you make the event specific to their industry, the better off you will be in getting them to attend.

My point is that the selling process is ongoing because some prospects take 1-3 years to close while others are instantaneous.  Yes, the courting process takes ongoing effort to remain top of mind and overcome their inertia.  The challenge is to recognize that the process is not transactional, it’s evolutionary and takes a series of steps to capture more than your fair share of new business.

Marketing Is Not a Department

marketing-deptIn small businesses, marketing is what YOUR business is all about. That’s right, there is no such thing as a marketing department in a small business.

Yes, I fully understand that marketing is not your forte and most accountants hate marketing.  However, marketing is the heart of every successful business.  And if you do it well, your business will grow easily each and every year despite the overall economy.  Quite frankly, marketing enables you to continuously improve the “quality” of your practice and grow at the pace you desire.

Marketing is the responsibility of each business owner, regardless of the industry.  And when done well, shrewd business owners turn their employees into marketing evangelists, to spread the word and generate word-of-mouth advertising and referrals.

To give you a classic example of grass roots marketing, think about Harley Davidson in the early 1980’s and the phenomenal turnaround they accomplished against competitors like Kawasaki, Honda, and Yamaha who were underpricing Harley and providing higher quality motorcycles.  While Harley made enormous investments to improve their manufacturing operations and product quality, they were facing the fight of their lifetime to stay in business.  Their advertising budget was zero from 1984 to 1996.   However, they created a groundswell of support by creating the Harley Owners Group (HOG) and creating a sense of community.  Using newsletters and club magazines, they managed to grow from one HOG chapter in 1983 to over 1,300 chapters around the world (over 750,000 members).

Keep in mind, I don’t ride a motorcycle but this is truly a classic example of using grass roots marketing to help a company turn around their business.

To improve the quality of your accounting practice, embrace marketing holistically and turn your employees into evangelists.  Marketing is what YOUR business is all about!


Free Webinar – Social Media Posting

social-mediaSocial Media Posting Webinar – Join us on Dec 15th at 12pm EST. This webinar is for DIYers who want to post content onto LinkedIn and other social media outlets in the months ahead. It assumes that you have a BYF website.
The BYF content library has 350 pre-written articles available to push onto social media.  That’s right, professionally written articles that save you tons of time.   Learn how this time saving tool enables you to quickly post tips and articles at no extra cost.
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