Surviving the recession.
What would happen if the tax law truly were simplified? If it were simple enough that clients could do their own returns, what would happen to our profession? We need more than the promise of ever-changing tax laws to stay ahead of recession. We need a system of creative measures designed to ensure the profitability of the firm today as well as growth potential in the future.
When dealing with the recession, reverting to the accounting mentality is tempting. Unfortunately, we must have a creative approach, one that encompass the supply side, or the revenue side, of total client service.
A newsletter from a well-known accounting firm recently offered these tips for surviving the recession:
1. Turn off lights when not in use. Will that get you thought a recession?
2. Pay bills when due, not before. Unfortunately, in our society we need to teach some clients to ust pay the bills, period.
3. Minimize retirement contributions.
4. Use two-sided copies. How much money will that save?
5. Lock the supply closet. Don't improve your hiring techniques by hiring honest people, just lock the supply closet.
6. Check the postage scales. If you put nine pennies on the postage scales, it will equal one ounce.
7. Send out semi-monthly, rather than monthly, statements.
8. Comparative shop for supply costs, and
9. Save the aluminum cans from the company pop machine.
Few people will dispute the merits of cutting costs to weather difficult economic periods. However, surviving a real recession requires addressing the larger picture by generating more revenue through client trust and satisfaction.
Several years ago, a survey of accountants asked, "Why do your clients come to you?" The accoundants responded by saying, "Because I'm more technically competent than my competitors. Also, I have experience in their industry, my clients are cost conscious, and I give them a fair deal."
Then the clients were asked why they had chosen their accountants. Interestingly, their response was quite different. The key to getting their business was "timeliness and business advice." Notice that cost considerations were not even mentioned.
Our firm has a client who began eight years ago with two shareholders and now employs 250 people with a subsidiary in Japan. They wanted to form a subsidiary in Germany and needed to be in operation by a specific date. They contacted one of the big six accounting firms for assistance and were impressed by the tax partner who referred them to his office in Germany. What do you suppose happened? Have you tried getting information from a big six accounting firm? A simple answer usually takes 30 to 90 days. In this case, the timeliness failed, the client was dissatisfied, and we gained a new client.
While we certainly don't have the resources to compete with an international firm, if we'll resolve to give our clients service and meet their needs, they'll reward us with their loyalty.
What do clients want? They want navigational tools to help them that's what we must provide. A tax return is yesterday's news. An audit of a financial statement is worth absolutely nothing unless it provides some direction for the client, feedback on which to base important management decisions.
How do we handle a recession in our businesses? Obviously, we increase revenues and reduce expenses.
Increase in revenues comes from three sources: recruiting new clients, developing new services for existing clients and retaining clients by increasing client satisfaction. How can client retention generate more revenue? If we experience continued growth but lose our present clients, our business stagnates. If we gain new clients while keeping old clients, there is true revenue growth.
Recruiting New Clients
Satisfied clients will spread the word to friends and colleagues who are looking for an accountant. Don't be afraid to ask clients for referrals. If you did a good job, they will generally be pleased to pass your firm's name along.
One tremendous way to get new clients is through networking. A gentleman named Chris Friedrickson from California tgeaches a course on how to build a million dollar practice. One of his key programs is the TALL program. T-A-L-L - Take A Lawyer to Lunch. Cultivate your associations with other professionals - lawyers, bankers, stockholders, etc. Their clients are all in need of accounting and tax services. By establishing a rapport with other professionals, they will likely send new business your way.
Establishing the best professional image is essential in recruiting new clients. The right image can instill in potential clients a sense of confidence and will increase the potential of selling you and your firm.
What contributes to a solid professional image? Think about investing in a quality firm brochure. Four years ago our firm invested $7,000 in a color brochure. As accountants, we were uneasy about that, but the project has gotten us several large obs. In fact it generated one client that brought $40,000 in annual fees to the firm.
Consider distributing a client newsletter. Write one tailored to your clients' needs or use one of the many newsletter services available. NSPA publishes a newsletter, the Client Report, six times a year for use by its members. Clients appreciate the information and will remember your taking an extra step for them.
Examine your report covers and letterhead. Make sure they are fresh, have a professional look and sell your practice.
Getting involved professional, charitable and community groups will enhance your image and increase your visibility. Take part in your state society, service clubs and local government.
Consider the United Way or becoming a board member for a local charity as perfect opportunities for you to attain clients and true referrals. Also, accept speaking engagements when occasions arise. Public exposure offers ideal circumstances to meet people, impress them and lock them in as your clients.
Developing New Clients
I read a book recently that pointed the way to reaching new clients. Ask the golden question, "What is the unmet want?" By learning what other accountants are not providing, we can offer prospective clients a better plan and win them for ourselves."
Create a reason to telephone your clients. Through personal contact, they will know their concerns are important to you. Often a look at a client's financial statement or tax return will generate a planning idea, one you can easily capitalize on with a simple phone call. The client is impressed, and you've generated additional revenue by providing a new service. Inform them when there is an accounting change or pronouncement or a new tax law.
Providing New Services
Budgeting and Forecasting
Most clients don't use budgeting. Some who need controller-type capabilities cannot afford them on a full-time basis. You can provide these services. Inform them of your expertise in managing cash flows and budgets, thereby becoming their controller on a monthly basis.
Accounting System REviews
Offer to set up accounting systems for your clients. Review their methods and recommend areas that need improvement. And who's the logical person to improve and implement new design changes? Their accountant. So you get two for one - review and implementation.
New clients come to your firm for compliance work or tax returns, but give them more. Help them plan and reduce taxes. By promoting tax projections, you'll find they are eager for that service especially when they realize the saving will more than pay your professional fees. When tax projections are done correctly, they also lead to additional work.
Tax compliance for retirement plans is an exceelent area for accountants. Insurance companies and banks generally perform these administrative and accounting duties. But what does it take to do this properly? Accounting and tax compliance. Who's better equipped - banks and insurance companies or accountants? It's pretty logical. This work clearly fits into to accountant's role. Some expertise is required for completing forms 5500, but once your homework is done, its a natural extension of your practice.
Don't overlook the possibilities in setting up and administering a cafeteria plan for your clients. With the plan in motion, you get a continuing client with compliance work filing the 5500s. Your client wins and so do you.
Litigation support is a hot new area for our profession, much of it coming through divorce. When a couple divorces, both the husband and the wife need accounting expertise in planning and in court. This is a tremendous area for expansion of service in the 1990s.
We've asked the golden question of prospective clients, now let's put the platinum question to current clients: "How are we doing?" Offer an opportunity to discuss how you can better serve them. It will lock them into your business for life.
American business invests about 600% as much time and resources into getting new clients as it does in keeping existing clients. That's clearly putting the cart before the horse. To keep existing clients, reward them. They'll come back to you and refer new clients.
What's a reward? There are the obvious - a technically correct product and timeliness at a fair cost. Then there are the less obvious that keep your practice separate and apart from your competitors. Tom Peters in his book, In Search of Excellence, talks about underpromising and overdelivering. The concept is simple - if you promise something and you don't deliver, your clients are upset. But if you promise something and you supply over and above, they are extremely pleased because you've rewarded them. For example, on Thursday you promise that someone in your office will call on Monday; make sure that call is made that same afternoon, if possible. This tells the client that he is important and that you want his business.
Send letters to a select group of clients informing them of tax law changes. For example, if there's a tax law change affecting Mercedes Benz' deductibility on a Schedule C, notify clients in that category. Let them know you're thinking about them.
Upon receiving a referral from a client or other source, always send a letter appreciation. "Thank you for showing confidence in our firm in referring us." If you can, send a plant. It's a visual reminder of your thanks and, they will refer you again.
As accountants, sometimes we are too shy. We need to inform clients what a great job we're doing for them. Usually they don't understand the time and effort necessary to supply a perfect product. In fact, most think all you did was push a few computer keys, input the information and you were done! How could you possibly charge so much for something so simple? It's incumbent upon us to educate our clients concerning the effort, skill and professional know-how expended for their benefit.
We've discussed obtaining a new clients, maintaining old clients and expanding our practices. The real test before us is making the transition through major industry changes into the year 2000.
Consider for a moment your accounting practice five years ago. How many firms had a FAX machine? Could you live without one today? If you were using computers, what did your hardware and software look like? We had a 40MG hard drive system that took a two-drawer, legal file cabinet to house. Today, you can carry it in your briefcase. E-mail was non-existent and in-house tax processing was there, but not as dominant as today.
Consider the tax laws jjust five years ago. Will the next decade see a reduction in legislation? Not likely. Think about your personnel five years ago. Are they the same; have they changed? Today, competition is incredibly keen, and you must be extremely competitive to survive in the 1990s.
Think about the year 2000 and what your practice may look like - the continued enhancements in mechanization, the amount of computerized information available to you and your clients, and the potential impact of in-house tax processing software.
What will clients need in the year 2000? Navigational skills, and that's what you must sell them. They need your business sense, so why not capitalize on it?
What's going to be the shape of the firm in the year 2000? The old classic accounting firm was a pyramid with the partner on top and the seniors, managers, and staff accountants below. Now, with all the technology available, staff accountants at the bottom may not be needed. The firm may be diamond shaped instead of a pyramid.
Continuing professional education will be a factor. We must remain current. And, finally, we've got to reinvest a percentage of our profits in the firm every year, upgrading computer skills and all systems for staff utilization.
In conclusion, we are not recession proof. Recessions, however, can be negotiated successfully by generating additional revenue. But, what's going to tell whether your practice survives in the '90s and into the year 2000? Your ability to deliver what your clients need - total client service.
Roger Sample is a principal partner with the accounting firm of Sample & Bailey in Fort Collins, Colorado. He is a frequent speaker and lecturer on continuing professional education and various aspects of current and proposed tax law at accounting seminars nationwide.
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|Title Annotation:||accounting practice and management during the economic crisis|
|Publication:||The National Public Accountant|
|Article Type:||Cover Story|
|Date:||Nov 1, 1991|
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