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What do you want client-wise in 2016?
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What do you want client-wise in 2016?

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5th Jan 2016
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Mark Lee invites readers to consider their ambitions for changes in their client base in 2016.

As we start a new year many accountants are still having to cope with dilatory clients and the 31st January SA filing deadline. I thought it would be helpful to invite you to consider what do you really want client-wise?

The conventional approach

This is to distinguish prospective clients include by:

Type of person - e.g.: retired, non-resident, young entrepreneurs, mumpreneurs etc.

Business activity - e.g.: restaurant owner, dentist, consultant, contractor, buy to let owner etc 

Services required - e.g.: quarterly management accounts, company accounts, audit, payroll, partnership and partners' tax returns etc, what issues and challenges are they facing?

Location - e.g.: your local area (which often makes sense rather than targeting people all around the UK who are unlikely to appoint an accountant who is based many miles from where they are based.

Size - e.g.: turnover up to £150,000 or over £1m

Other factors

Rarely do I see anyone distinguishing their targets by reference to whether a prospect has any past experience of dealing with an accountant:

1 - New business start ups.

Typical issues:

  • They want help at the lowest cost. 
  • They're not really sure what they need. 
  • They've never had an accountant before so they don't know what to ask about. 
  • Maybe they come to you early on and you can help set them up to produce the information you need. 
  • Or maybe they come to you at or after the year end, or maybe just before the filing deadline. 
  • They lack clarity re the distinction between bookkeeping, accounts production (where required) and financial advice. 

Unless you take control of this type of client from the outset you will get an inadequate briefing. They need your help to scope the recurring client work they really need.  If this business grows so will the work.  If they are comparing your fees with other accountants they probably won't be comparing like with like.

They will also assume that all accountants do the same things.  And you may be tempted to quote a fee without clarifying the full range of the work. Does that generally work out well for you?

2 - Previously struggled without an accountant.

Typical issues:

  • They are now overwhelmed by the pressure of filing deadlines.
  • May have paid late filing and late payment penalties once or more. 
  • Finally giving in.
  • Realises accountancy fees should be a better investment than paying more fines and interest charges. 

Do a good job for these people and they will praise you to everyone they know.  You have saved them so much money and so much time.

3 - Not happy with current accountant.

Typical issues:

  • Although these may be represented as fee related, it usually means that your predecessor is not providing value for money.
  • They may be charging very little and then doing as little as possible. This makes what the client is paying seem expensive for limited benefit. 
  • They are paying peanuts so it's no wonder they're not happy with the monkey. 

These clients may need more service and support than the current accountant provides and this may cost more. But the benefits of having a fuller support service should more than compensate for the additional accountancy fees.  You should not assume that such people will not pay more than they currently pay their existing accountant. But they may need help to understand the issues summarised above.

Real life

The first time I had a quasi-mentoring conversation with an accountant was in about 2003. He had a small number of clients who were each paying significant fees. He was about to lose one of them and wanted to know what he could do to replace the fees.

In discussion he recognised that he was unlikely to be able to go out and simply win a new client paying comparable fees.  He had never done this.  Each of his clients and the fees he charged them had grown over time. 

Although he was only losing one client I recommended he seek to need to replace them with around five new ones. In time he hoped that at least one of the five would grow to become a significant client. In the meantime the aggregate fees from the five new clients would compensate for the lost fees.  He had another challenge beyond getting those five new clients.

Five new clients mean five sets of relationships to manage and five new batches of deadlines.  This would all take more time than everything related to the one client being lost. The accountant needed to ensure he had the time to manage and service five new clients and how much he would want to earn for doing so.  I suggested that the aggregate Fees should be higher than the total fees being lost.

More than this he also needed to put in the time and effort to speak with more than five prospective clients. At this stage he didn't know how many conversations it would take to win each such client or how many prospects he would need to meet with to be sure of having five new clients of the size he was seeking.

This is all part of the active approach that can lead to you getting the clients you want to have, rather than just taking on all and sundry.

Insights

Your client base will comprise a mix of clients. Exactly what will satisfy you depends on all of the above factors and on the nature of services they will require. If you want to be able to provide advice over and above the basic compliance work, the clients will need to be paying more than your basic minimum fees.

A good mix

Maybe you want the variety of a mixed client base. You don't want to limit your ability to take on anyone and everyone who approaches you. You don't want to discourage anyone.

That's fine. If this approach has worked for you in the past then carry on doing what you do. Plenty of other accountants operate quite successfully on this basis.

Having said that, the more clearly you can identify who you can best help, the easier it is for everyone to help you to win more such clients.  And the more interested your target clients will be in your services if they perceive that you specialise in helping people just like them.

Mark Lee FCA is consultant practice editor of AccountingWEB and helps individual accountants who want to be more successful in their practice or career.  

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By Mark Lee
05th Jan 2016 15:09

Building a more successful practice

This article is based on the first element of the Successful Practice Pack - a series of 52 weekly emails focused around 4 key themes to assist you in building a more successful practice.

Mark

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By mjshort
06th Jan 2016 09:06

Great ideas bookmarklee

Mark- thanks for ideas

 

Thanks (1)
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By johnjenkins
07th Jan 2016 10:57

@Mark

In the not too distant future (5 years max) there won't be one man band business and I include Accountants in that statement. Very few business will be able to cope with this unending onslaught from HMRC and their strive to get rid of staff in favour of automation. We are on the brink of monthly returns via RTI for business. So perhaps your efforts might be directed to what a small business/practice will need to do to come to terms with in the "digital" age, because I feel that the next few years will see a decline in the Accountancy profession. Doctors and teachers have already stated to move.

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