Are you caught in the dilemma that the only way you can earn a larger income is to work more hours?
As tax season approaches many accountants are bracing for the oncoming wave of work. It’s a love hate relationship. The time of year where your income jumps and so do the long hours of work. To compound the problem, we have the repeat offenders. The clients who get you the required documents just a week or so before deadline. You know them. They are the same crowd that did it to you last year. Many accountants just take the work because they feel they need it. Many afraid to say anything for fear of losing the work. You justify the acceptance of this by thinking they are so busy I must help them out.
There is a big difference in being a servant to your clients and serving your clients! It’s time to stop being needy.
Pareto’s Principle is everywhere. Yes, the 80/20 Rule. The lower part of your income comes from 20 % of your clients. The sad reality is this is where you spend 80% of your time.
What to do with your “D” clients has been a conversation in the accounting business now for quite some time. The big 5 firms sure know what to do with them. They outsource to work to smaller North American based accounting companies or offshore to India and the Philippines. That’s a smart strategy if you can get your head around a remote workforce. There is an abundance of choices.
So here is the skinny on the 80/20 rule. 80 % of your revenue come from 20% of your clients. Before you try to pooh-pooh these numbers, I will cut you some slack. Even if’s it 75% to 25% it’s a difference worth paying attention too.
You have two opportunities for change this coming tax season that will get you off the revenue roller coaster once and for all. Increase the fees to the repeat offenders of late document delivery and slow paying. Send them their Pre-Engagement letters of the requirements with drop dead dates. Extra fees for late to make the date. Pile it on. They will pay or they will leave.
The second opportunity to build your “A” list clients is to actually look for opportunities to help them improve their bottom line and not just for accuracy of the return. Turn them into a Business Advisory client. That is the result you want. Fewer high paying clients is a good thing. You can do it with planning and know what will get them the results.
Make this new year the year you make lasting changes to your accounting “Business” by doing fewer transactions and more transformations. Working less and making more is not a myth.
Paul Roy CPC
Co-Founder CPA Business Coach.