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What is your client recuritment strategy?

What is your client recuritment strategy?

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I am thinking about the future of my practice and the way I want to go in terms of client fee level.

So far I have aimed for bigger few clients. I have very fee small fee clients - £700 or less. This has been intentional. My thinking has been the admin involved in managing 100 clients is far worse than managing 25 clients.

One of the big downsides of my approach is yf one clients departs it has a big impact on my fee level.

I am rethinking my whole approach as which way to go.

I have found the small fee client as time consuming as big fee clients it terms of asking the same questiions again and again.

Which way have you gone? Is it worked for you? Any pearls of wisdom you can offer?

Thanks

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30th Jun 2011 19:32

Train them and accept referrals

I have 200 clients ranging from £100 to £6,000. I would say most are around £500 to £1,500. The £100 clients are for employment income tax returns. I have a lot of self employed clients who are well trained and don't need a lot of time spent on them for around £250 - £400. They also provide referrals.

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30th Jun 2011 20:17

Smaller clients

We have had the opposite experience to you, FirstTab. We have found the majority of 'bigger' clients to be more demanding, more time consuming, and less profitable, overall. There is also a cash flow problem if they leave, as you have already mentioned. The smaller businesses very rarely need support, unless they are in their first year of trading.

Our biggest client pays over £2K, but she is among the minority, and she is very cooperative, very reliable, and very appreciative, as her previous accountant defrauded her for thousands, and got her into trouble with HMRC and the VAT man (he was ACA and the police got enough evidence to charge him!). We helped her get everything straightened out and she has gone from strength to strength. I doubt she will ever leave, although business sale remains a possibility.

The majority of our clients pay under £700 per year. Give me the little guys anyday :)

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30th Jun 2011 21:14

Agree with the above

It's the little guys for me, much less demanding, less risk, much less ego, much more profit, much more trusting and much less of a dent if they cease trading.  No reliance on any one big client, easier to say goodbye to if they don't play ball, invest time training them at the outset and they use up hardly any time.  They also tend to refer more.

I have been thinking about this for my practice - I think I will stick with the big ones we have but not seek out or take on any more.

The 50 - 150k clients are perfect for smaller practices where the principal or one assistant does much of the operational work.  My advice would be to build up a base of them - good resale value for your practice as well should the time come.

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By DBlood
30th Jun 2011 23:23

Mixture

You need a good mix.

One thing I have noticed over many, many, years is that the small clients pay better.

Present a set of accounts to a medium sized company, send them your bill, and you might, with luck, get paid in a couple of months.  Take a set of accounts back to a sub contract bricklayer in a council house on a council estate, and you will get offered a cup of tea and his fee will be on the kitchen table counted out in crisp 20's waiting for you when you arrive.

I would say for a sole practitioner 100 small clients at circa £200-£400 each (2 a week) is ideal as it pays Tescos etc - and then maybe 20-30 larger (£2k+ clients) to put the jam on the bread.

 

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By Lahtac
01st Jul 2011 00:01

client size type

In taking on clients at the start up phase like I was 5 years ago I took on anything and everything which ultimately caused some headaches but cashflow was often a driver of work.  If you target small tax return clients while they are generally not too demanding you can end up with large spikes of work near the tax filing season. However if these clients are routine and uncomplicated the work can be delagated to junior staff (or even outsourced) with a tidy margin. The problem arises when the number grow over 100 plus , (depending on your service style) this can involve 100 plus client meetings, numerous telephone calls and redrafting of the final tax returns. Licence fees need to be paid for software, you need to have tax cpd so slowly the "tidy margin" is erroded . Typically clients socialise in clusters of like minded people so the €500 client will refer other €500 clients. The larger company client will probably refer company type clients with higher fees and better margins. Fish where the fish are- do you want small fry or maybe a nice side of salmon?  I would target to grow your practice by having no more than 100 clients where a client may include a company, its directors and the immediate family. Running a small practice is about managing relationships and the key limiting factor is time.  Once you hit the magic 100 you need to start grading clients as A, B or C and start culling at the bottom by increasing minimum fees (or alternatively set up a tax return sausage factory like some firms do) etc. Based on the Pareto model 20% of the clients will need a lot of attention and will probably pay very good fees and hoover up all your advice while the remaining 80% just need monitoring. within the 80% will be few to be nurtured into the 20% pot and a few to be culled at the bottom .  No doubt the pile em high sell em cheap model works for some     

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01st Jul 2011 02:27

This is a really good question

Hi

I'm just starting in practice this week.  Because of this being a new practice I will focus solely on small businesses eg sole traders or just SAs.  However, once I become more confident I will seek out a small number of slightly larger businessnes or more complex ones.  But sticking mainly with the little guys.  I also hope to carry out a certain amount of consultancy work to supplement my income and keep my skills fresh in the areas I have knowledge of.

I believe that a reasonable mix is probably best though simply because you won't want all your eggs in one basket.  My strategy will be target driven based on anticipated fee income - I know this might sound optimistic but it was all I could think of initially??

The answers given here certainly provide an insight into an area I hadn't given that much thought to though, so great question.

Eve

 

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01st Jul 2011 08:45

Quality is what counts.

 My standard fee for the smallest a sole trader is £300. Now, would I wan't do deal with someone who gives me a carrier bag of cr## for that or someone who keeps their accounts on a spreadhseet with a neatly indexed file as back-up? Eliminate (or educate) the messy ones and £300 for a few hours work each year doesn't sound so bad.

In my experience certain trades such as builders & other mobile trades are a nightmare and I simply don't quote for them anymore.

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01st Jul 2011 09:08

prefer the small buys

we try and stick to the small clients where possible, we find that they present less risk, less hassle and are generally nicer to work with.

We have fixed fee pricing and find that we can  complete 2 - 3 jobs per day giving a much bigger earning that if we stuck to just the bigger clients

whilst its a nice ego boost to get some big clients and fees they are usually more demanding and less profitable

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01st Jul 2011 10:32

A different take on this

I sometimes wonder if the split between big and small clients is the correct one.

In organising a successful practice one of the sissues is the different approaches to providing inbound and outbound services. This predominantly means does the client visit you or do do visit the client.

On the whole small clients will come to you and you visit the larger ones, although this is not always the case.

So my thought was should you just concentrate on being office based OR site based and eschew the other type of client, as I believe to optimise your profit the practice structiure required for each type would be different.

My own firm falls between two stools. I have larger clients which I tend to visit myself to do mgt accounts etc, and the staff handle the small jobs with fairly minimal input from me.

However I wonder if I am actually trying to run two business rather than one, and if I would be more successful just by picking one or the other. Just to complicate matters I have a couple of other busines interests too!

I know the above rambles on a bit but I hope it makes sense!

Steve Holloway: if you dont have builders or smallmobile clients, I am struggling to see what type of sole traders you do act for?

 

 

 

 

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01st Jul 2011 10:43

Not crap

"Now, would I wan't do deal with someone who gives me a carrier bag of cr## for that or someone who keeps their accounts on a spreadhseet with a neatly indexed file as back-up?"

I get some clients who can't use spreadsheets and I ask them to put expense vouchers in categories in envelopes. That usually makes it easy to do the accounting. Most clients use spreadsheets though.

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01st Jul 2011 10:51

zarathustra

You have struck a chord with me!

I do not 'do' client visits. Well, sometimes, but very rarely, I go out to a larger businesses to help with a particular problem, but only where no other option exists. All meetings are normally held at my offices.

I was very uncomfortable visiting clients at their home and I don't want to work anti-social hours (evenings & weekends). I did the ususal home visits when I first started, and I found it quite scary on a couple of occasions.

Maybe it is the fact that I am female, and old (but not quite grey yet) that I am aware of my mortality! Or maybe it was my 6 week stint in Force Intelligence, where I learned how sick and violent some people are, and I am now aware of the nutters that walk our streets who can strike without rhyme or reason.

On a more practical level, it also seems uneconomical to pay for a shopfront/office, and then incur additional time & cost travelling around to clients.

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01st Jul 2011 11:11

@ zarathustra --- other trades are available!

... and these are some of mine.

Small retailers

Gardeners

Administrators

Cosmetic car repairer

Podiatrist

Decorator

Dance teachers

Taxi drivers

Voice over artist

Electricians

Sports coach

Interior designer

Hairdressers

Bookkeepers

Musicians

Carpenter (best records in the world!)

Legal guardian

Web games hoster

Chauffeur

Design engineer

Air conditioning engineer

Cleaners

Garden irrigation

Personal care providers

Man & van

 

 

 

 

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By Locutus
01st Jul 2011 15:06

Each to their own

Larger clients (which in my case are £1k - £2k) jobs work for me, but if lots of £300 jobs work for others that's fine for them.  Horses for courses, really.  It's a good idea to have a bit of a mixture, though.

Putting the mixture argument aside, for a client base of £100k, you would need about 67 £1.5k jobs or 333 £300 jobs.

The problem in this case is that for the tiddlers generate about 4 or 5 times the admin (handover letters, 64-8s, money laundering, engagement letters, chasing up records, chasing up signed accounts/returns, debt collection, weeding out bad clients, etc.) compared to the bigger jobs.  When you have over 300 that's a REAL big issue.

Another problem with the tiddlers is that they will mostly be SA cases.  So the records will virtually all come in during the June - January window and worse still probably more likely in the October - January period.  Certain overheads such as software, stationery, etc will also be higher.

I don't feel client losses are inherently more of a problem.  The chances are if you lose 6 or 7 of the bigger jobs in a year for whatever reason, you would lose 30 odd of the smaller ones.

Debt collection for the bigger clients is as big of a problem as you make it.  Your business your terms.  Why not invoice quarterly or get them to pay by standing order / direct debit?  If they start messing you about then you dump them at an early stage and give them their money back if you haven't done anything.

Technical requirements for the £1.5k jobs are obviously higher, but ought to be within most qualified accountants capability.

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01st Jul 2011 15:39

Steve H

Yes fair enough - I would have actually lumped a fair few of those in the category of mobile or builders, but I gues its down to nomenclature.

I defo charge more for sole traders if they are say shops or salons as I find there is more work to do

 

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01st Jul 2011 17:38

Why should size matter?
I've never refused a client due to their being big or small, either in terms of fees, turnover, profit or staffing. It's not relevant.

I take on clients based on their trade/profession - i.e. I don't take on farmers or CIS subbies, but usually take on IT consultants and guest houses. There is massive difference in size between my largest and smallest guest house client and also the IT consultants with the highest and lowest fee incomes. What I've found is that some trades/professions are more likely to provide quality referrals than others - I.e. IT consultants are usually a goldmine for referrals as they're usually working one-to-one with other IT consultants and usually change contracts every 6 months, so a steady stream of working alongside new people to be referred to me. Same with guest houses, for some reason, they are like their own micro-community and again once you've got one, you'll get a stream of referrals.

Once a potential client has passed my "what is the trade/profession" test, I then move down to the person themselves. If I get bad vibes about someone, I trust my instinct and don't taken them on. Within this, I try to decide whether they're likely to be honest, whether they're going to co-operate as regards quality of records, timely submission of information to me, and probably most importantly, whether I'm likely to get on with them. I simply don't want clients I don't like, or are going to be a pain with poor record keeping brought it at the last minute. I don't care whether I can charge the PITA clients more - I just don't want them at any price. This also creates quality referrals - If I regard a particular type of person as being "nice" for want of a better word, I find that their friends/relatives likewise pass my personality test as people like being around similar people.

My fee range has been between £100 and £6,000 using my strategy, with an average fee of currently around £850 which is fine for me. I think it's a little silly to refuse small clients below a certain fee level or above a certain level. I just don't regard it as relevant.

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03rd Jul 2011 11:56

Changed my perspective

Thank you. This thread has changed my thinking from only going for bigging fee clients to having a balance small fee and larger fee clients. The key aspects I got from this thread are:

Peter - Train clients to give me the information that makes it easy to prepare accounts/tax returnIt is not the size but the quality of the client that is important. Ken made some really good points 0103953 - point about admin time is a key point for me. Dblood also struck a cord with me by saying having a mixture. The difficult bit is getting the balance right.
Shirley's comments interested me. Her practice is in the main made up of small fee clients. It works for Shirley.

0103953 - point about economics of small v big fee clients remains a question mark in my mind. As he/she says (I agree) its the admin time of managing a larger number of small fee clients. I am not sure if this is a good economic model. Having said that Shirley and others I am sure have made it economic viable. This may be through good systems and economies of scale.

 

 

 

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