CPA - Accounting
Firm Marketing Newsletter:
Increasing the value of your practice
In this issue,
we will discuss the tested and proven techniques for achieving
a CONTINUOUS increase of value for your practice while augmenting
the monthly billing at the same time.
Essentially,
there will come a time when you'll want to cash in your life's
work and sell the practice. And at that point, the burning questions
is whether or not it will be worth what you had envisioned.
Valuation can
be a crushing experience or it may be a positive surprise. As
an accounting expert, you know the basis of valuation and thus
you can prepare for that day.
The income
of your CPA / accounting practice — and the degree of confidence
for its continuance that can be proven to a potential buyer —
will determine the value of your accountancy firm.
So let' have
a look at this important subject - and sorry that it's a rather
lengthy issue for this is not a short subject!
Methods of increase
the value of an accounting practice / CPA firm
The most fundamental
method of increasing the value of your CPA firm / accounting
practice could be called boring, tedious and even unrewarding
on short-term basis.
It is the good
old plan of increasing the number of your clients and increasing
the per-client income and profit margin little by little, year
after year.
This is what
we attempt to do, of course. But it is tedious and not lacking
of problems.
Yet, it's the
best of all methods and, if you know how to set it up and what
to ADD to your systems so it becomes virtually AUTOMATIC, then
its rewards are nothing short of amazing.
Now, I'm talking
about a system that will standardize these functions and become
a set of tools that the future buyer can inherit with your firm
so HE, too, can be certain of future growth.
Such a system
will not only increase the value of your practice at a rate you've
never seen before but also increase your monthly billing CONTINUOUSLY
from one month to another, year after year.
This "magical"
method is not dependent on chance, luck or even current trend
of economy. Your knowhow is unique because it is needed during
uptrend as well as downtrends.
CPA firm valuation:
Adding a practical step-by-step client-acquisition system with
a difference
The most effective
way to increase the value of your practice is to increase the
number of active clients.
But that's
not anything special, of course... unless the system you choose
enables you to increase...
- your per-client-billing
average
- your profit margin from each client
- the average length of client-relationships
... while at
it.
The harsh competition
withing accounting service providers puts a tight lid on hourly
rates. There's a glass ceiling there and clients will predominantly
choose the lowest-cost accounting service.
This is known
to everyone, of course. And there'll always be a few practitioners
selling their services at bargain-basement prices in any given
area.
So what can
you do?
Well, you can
specialize, you can create a service model that will be perceived
as extremely valuable AND completely UNIQUE by your target group.
Or, if we're
to be accurate, "that segment of your target group whose
goal is to be successful and who can appreciate the expertise
of others too."
Frankly, the
biggest segment of business owners will always seek for the lowest
quote on accounting. But what you don't know is that this segment
is NOT EVEN 50% of all businesses.
I know you
find this very hard to believe. I understand that you've had
quite a few disappointments in trying to make people understand
the true value of your expertise.
But the fact
still remains that more than half of all business owners are
genuinely interested in QUALITY of consulting rather than attracted
to the lowest cost.
Yet this interest
is but POTENTIAL for the time being.
It's there,
I can tell you, for I've surveyd thousands and thousands of business
owners and some 68% want it... if you help them understand the
format of the consulting.
To tap into
this vast potential you need to TRIGGER that interest with a
very specific set of tools so it is communicated in such way
(and in such step-by-step manner) that the average business owner
fully UNDERSTANDS.
Of course,
you also need to HAVE the service model that delivers what you
promise.
And THEN you'll
have pull for your service. And expansion, increase of profits,
increase of per-client income... the works.
And then you've
installed the system that will double, triple or quadruple the
factor by which the value of your CPA firm or accounting practice
increases its value.
To achieve
this, certain basic policies need to be formed. Here are a few
suggestions:
1. A step-by-step
CPA client-acquisition system
A permanent
system for obtaining new clients continually must be based on
a step-by-step system. It must also be based on ready TOOLS —
such as scripts, forms, interviews, letters, policies, plans,
that spell out how each step is performed — to have any
value.
Value comes
from permanence and continuance. Hire a brilliant salesman, go
into a project with someone else... and you've made yourself
totally dependent on the continuance of these people.
But set up
a system that TELLS PEOPLE WHAT TO DO, how to do each step, spells
out each sentence they need to say, gives clear and unequivocal
instructions on how to do every phase... and YOU will be in control,
YOU will have the solution...
...and you
will be independent of anyone else. The system becomes part of
your accounting practice, a tested and proven "machine"
you can start and stop at will...
...and that's
VALUE for you and for the future buyer of your CPA firm or accounting
practice.
In other words,
you need several smaller systems following each other and with
each feeding "raw-materials" to the next system.
There's no
magic pill that would handle it. You need to "think big"
but in terms of "small, consecutive steps" and "lots
of contacts on a level casual enough for ease and success."
First in this
chain you need a system for finding business owners who are thinking
of changing their CPA or accountant... or who are ready to BEGIN
thinking about it.
This system
feeds leads to the next system which could be interviewing the
prospective client on the telephone to find out what he really
needs and wants from accounting services.
A few prospects
will drop off here and the rest are "fed" to the next
phase - a meeting with you at your office.
The meeting
then has its own agenda, carefully planned to induce as many
new realizations for the prospect in terms of what he could do
with his company, how much more he could get out of his hard
work.
There are tools
that allow you to remain in a consulting role without having
to become a salesman... and yet achieve the "impossible:"
Have most business owners sign onto your services right then
and there, without going away "to think about it."
There are systematic
instructions on how to start each client on an added-value service
and stabilize them... and then sell more to them "without
selling" (they'll be ASKING for it)... and you will NOT
SELL HOURS but something else, allowing you to pass through the
glass ceiling of hourly rates.
There are systems
that make it easy to pass each phase to others, including the
consulting, so that you can expand and not have every client
demand YOU as their accounting expert.
And so on,
step by step.
Every step
documented in detail, with clear-cut instructions, with troubleshooting
tools... everything that's needed to perform each step successfully
WITHOUT ANY PRIOR KNOWLEDGE OR TRAINING (except the consulting
part, which does require knowledge of accounts of course).
You can hire
a person, brief him for an hour or two... and have him at his
desk PRODUCING RESULTS that very same day.
It's that simple
when you have all the tools.
This system
will soon establish definite success ratios for each phase. Then
it's simply a matter of mathematics:
Ensure that
the first phase produces ENOUGH leads monthly so that you get
1-3 new clients out from the other end of the system on regular
basis.
2. CPA marketing
system: Use on what's proven
Marketing is
an art as in "skill"... but it's NOT art as in "creativity
roving freely."
It's a skill
whose principles MUST be based on tested and proven tenets
the way exact sciences do.
If you want
success, you have to test, pilot, research, troubleshoot, tweak,
retest, repilot, research again... and so on until what you
have works uniformly, always producing the expected results in
a viable range of quantity.
For success,
creativity MUST be put in the service of evidence, and it must
pass the test of producing the expected results consistently
without variation.
A tool worth
its name works the way it should, fixing the problem it should,
producing the expected results EVERY TIME if used correctly.
A wrench opens
a nut if used correctly, every time. A hammer drives the nail
into wood every time, if used correctly.
So why would
you accept a prospecting tool or a presentation tool or a sales
tool not to pass the same test?
Don't accept
it.
Use only what
WORKS.
The temptation
- and the principal error - in marketing is to keep creating
new approaches, letters, ads, presentations, phases, tools and
whatnots before the old ones have been tested... or, as often
is the case, without regard to the fact that the old one
WORKS.
Yet another
trick is to fall for "interesting new ideas" developed
by some bright person. It's fine if all you want is mental stimuli,
but do remember those ideas have NOT been tested, researched,
piloted, nor proven in practical use.
They're interesting.
They're ideas. And, I'm sorry to say, they're equivalent to a
hammer with a balloon for a head, a wrench knitted of wool, or
a jackhammer built of rubber.
They can create
some interest... but they don't work with any consistency or
viable ratio of success.
So don't go
for untried, untested or unproven systems.
And don't go
for ideas which leave YOU to figure out how to sell them...
This applies
to your ideas as well, I'm afraid. Don't use them before you've
tested their functionality and improved them until they work
uniformly. And if you can't get them to work with any acceptable
degree of prediction, drop them.
Otherwise you're
simply wasting a lot of money and time. No point hiring a carpenter
and paying for materials if he can't drive the nails into the
wood. Nothing but wastage is going to ensue...
There is a
kind of "creative frenzy" in which we employ new ideas
continuously. While those ideas may be great, the effect is caused
by the fact that these are NEW, UNTRIED, UNTESTED and UNPROVEN
changes to a system that works.
If the system
DOESN'T work, the problem is with some individual phase or part
of it. It needs to be found and adjusted, after which the system
will work.
But if you
throw everything away or change without testing, it becomes a
very confusing (and expensive) mystery.
Go with what's
been tested and proven to work.
3. Select a
CPA system based on your strengths
As an accounting
professional, you have many highly developed
abilities and skills.
Choose a system
that bases its foundation on your strengths and natural abilities
rather than something that requires you to become a master of
something that's NOT within your natural abilities.
If it's based
on your strong points then it will work. You will use it because
it accentuates your abilities. It feels GOOD and it produces
results.
If you choose
a system that forces you to do something you don't feel comfortable
doing then it's based on our weaknesses, not your strengths.
Honestly, a
lot of the guides and workshops and whatnots offered to CPA firms
and accounting practitioners can be summarized in two sentences.
They'll ask
you "What is it that you do NOT want to do?"
Once you tell
what it is, they'll say: "That's what you have to do!"
Of course,
it takes them 2-3 days to do this at a cost of 2-3 thousand dollars
to you... but that's it in a nutshell. They say it nicely, it's
all intriguingly INTERESTING... but that's the meat of it.
Obviously,
if you did not have that aversion doing this thing you would
not have searched for help in marketing and/or practice management
and/or development in the first place...
My bet is that
you feel relatively confident about understanding finances, being
able to notice opportunities and problems in someone's books,
analyze their finances and give advice in various situations
relating to accounting, finance or taxation...
These are among
your highly regarded and sought-after skills which business owners
need and want from you.
Thus, the system
you acquire for client-acquisition MUST BE BASED ON THOSE ABILITIES
AND SKILLS.
It must UTILIZE
those skills in the main. It must allow you to obtain new clients
and sell more BEING A CONSULTING ACCOUNTING PROFESSIONAL and
nothing else. If you're required to become a motor-mouthed used-car
salesman... forget it.
You're not
going to use the system. And even if you do, its results are
based on your weakest areas... so the odds are dead set against
you from the onset.
But when we
speak of a marketing system that WORKS and is based on your abilities,
it would have to be based on your superior capacity to keep things
rolling, make corrections when needed, implement vital activities
into weekly or monthly routines so they get DONE... that sort
of thing.
That's exactly
on what your Modern
Accountancy Marketing Course is based, actually. If you ARE an
accounting professional then you will be successful with this
system because it does NOT require you to become a salesman.
Thus, choose
a system that's tailored for your strong points, making it reasonably
COMFORTABLE to use and without the need to face your greatest
discomforts or produce impractical miracles to achieve results.
One could say
that the more "boring" an effective marketing system
is then the more DOABLE it is... and the more likely it is to
produce results because those who are supposed to USE it will
be able to do so... and will want to continue using it.
4. Choose a
CPA system that's inexpensive to run
Marketing is
a long-haul activity. Results can rarely be whipped up within
days or weeks - and even then, the system shows it true results
only if used CONTINUALLY for several months.
Obviously,
this requires that your system is inexpensive to run.
The cheaper
the weekly cost, the better. It needs to be low cost to keep
going so that you can afford to keep it going and adjust it until
the results start rolling in. It takes usually about six weeks
minimum to start BANKING any money from even the best marketing
campaign. And that's if you're lucky... and that's the first
of any kind of money.
Thus, it can
take 8-12 weeks or more from the moment you start USING the system
(outflowing) until you have a hope of receiving money that could
sustain the system.
Of course,
most system NEVER repay the investment in any such way that could
be logically backtracked to the expense. That's because most
systems offered have no tools that could be used straight off.
Thus a motivational
seminar (the one where they tell you to do that which you don't
want to do - grin!) can definitely bring you a period of heightened
activity... but it's YOU who does that, not the seminar, see?
So, choose
a system which won't require big investments and which CONTAINS
the tools to use in ready-to-start format so you can start without
long preparations.
That way, it
won't disrupt your daily routines much and risks are practically
eliminated... and you can keep it running continuously.
5. Select a
CPA system you can run indefinitely
And that's
the last point — choose a marketing system which can be
kept going indefinitely. It needs to be such that it won't disrupt
your other duties, tasks and routies in your accounting practice.
It needs to
be such that it doesn't require a lot of time weekly.
Once you have
a system like this you can then keep it going indefinitely.
Or, to be more
precise, keep it going on and off indefinitely. The system must
be such that it can be turned on and off without totally disrupting
it.
Unavoidably,
there will be times when the pressure for delivering to all these
new clients invites you to put the marketing on hold.
But the system
must be easy to RESTART. Quick and easy so the future owner can
keep using it... and, above all, can see that he can when he
evaluates whether or not to buy your firm.
Successful increasing
of the value of your CPA firm / accounting practice
Truly intelligent
marketing is really all about increasing the value of your CPA
firm or accounting practice so that it will be worth what you
expect when it's time to cash in.
To ALIGN your
short-term goals (more income, profits, more and/or better clients
now, next month next year) to build your long-term objective
of adding the value of your practice, you need a system that
does just that.
The system
must be functional, easy to use, easy to turn on and off, something
that's based on detailed ready-to-use tools so anyone can use
it instantly and the successful actions remain there... something
that's based on your STRENGTHS rather than weaknesses and is
inexpensive to run, requiring as little time as possible.
Your Modern
Accountancy Marketing & Sales Course is tested and proven
and it was originally PLANNED to align these two sets of goals
of an accounting firm.
So it might
be worth you while to read (or reread) the presentation of the
Modern Accountancy Marketing System from this viewpoint. Compare the cost
with what you can achieve by gradually implementing user-friendly
systems into your practice, systems which in themselves and through
their results will continually increase the value of your CPA
firm / accounting practice.
Increasing
the value of your practice with these principles is a very worthwhile
goal whose positive consequences will multiply with time.
Whatever you
do, give some thought to the principles introduced in this issue
of your CPA Marketing Newsletter. Who knows, this could be the
start of a permanently higher billing and value for your practice!
Keep up the
good work,
Best wishes,
Harry Kafka
HDK Consultants
Ltd
32 Manning Close
Richmond Square
East Grinstead RH19 2DR
West Sussex, United Kingdom
Tel. 01342-328 116
From U.S: 011-44-1342-328-116
CONTACT
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