Grow your practice by serving fewer clients (not more)

Some tax professionals believe there is no “busy season;” instead, busy season lasts all year long. It’s great to be busy and feel as if you’re always in demand, but if you’re just working harder and not working smarter, are you really moving your practice and your life forward?

Not likely.

I know this probably isn’t what you want to hear during these uncertain times, but you need to let a bunch of your clients go. Most CPAs and accountants I know have way too many clients—and it’s holding them back.

As business strategist and CPA coach Geraldine Carter recently mentioned on my podcast, when you start out, the way to grow is to say “yes” to everything. But then, especially if you’re hourly billing, you hit a ceiling and you just cannot find more hours in the day.

“What they end up doing is still wanting to make more money, so they add more clients and try to build a practice by volume,” she said, “But you can see what happens when you’re stuck with hourly billing. You just end up kind of in this swirl where you’re always behind, always backed up against a deadline, and never really doing what you know you could do for your best clients.”

According to Carter, the best way off the hamster wheel is to get rid of the bottom 20% of your clients as quickly as you can. It may seem counterintuitive, but they’re actually getting in the way of business growth. Because CPAs and accountants want to help everyone and are no strangers to working extremely hard, letting clients go is the hardest step of the process, “Because these are people with whom you’ve developed relationships,” said Carter.

Disengaging can also very good for the clients you part with. It frees them up to another firm that might be a better fit for them at a better price point. Again, you must force yourself to let go of your bottom 20% of clients every year, so you can free up more time to focus on developing the services that are going to best serve our best clients.

It’s not just a matter of time management. According to Carter, if you take the time to do the analysis, you’ll see that the price differential between serving your best clients vs. your least desirable clients is at least 3x–5x.

Carter and others believes basic services such as monthly write-up or glorified bookkeeping should be removed from your offering.

“This is like spiking the ball in celebration after getting the ball to the 40-yard-line,” she said. “You’re not in the end zone. The real value is way down the field.”

That’s where you can help your clients make better decisions about their cash, where they’re going to invest their cash in order to grow their business, and whether they should buy the building or lease it. It’s about helping them get the documentation pulled together they need to bring to the bank; having conversations with their financial planner, lawyer, and other advisors; and quarterbacking those relationships on the client’s behalf. That’s where the real value is.

So shift your focus onto what is most valuable for your best clients. You’ll earn higher fees and run a much simpler tax accounting practice. As I’ve always believed, “fees follow value.”

Warren Buffett likes to say, “The difference between successful people and really successful people is that really successful people say NO to almost everything.” As a CPA, learning to say no to all but the best opportunities and clients frees you up to focus on building out your services in a way that maximizes outcomes for your best clients.

Tell me what you think by leaving a comment below.

Key Takeaways

• Not all clients are created equal. Do you know who your most and least valuable clients are?
• Warren Buffett: “Really successful people say no to almost everything.”
• I know it’s scary, but you need to let your bottom 20% of clients go. They’re just getting in your way.

Editor’s note: Randy Crabtree was featured on a recent AccounTrends podcast, “The Magic of Specialty Tax Advisory.” Check it out.