065 A Better Way To Fire Clients In Your Accounting Firm

We're talking old timey legacy accounting isms today. We can't fire those clients. If only these kids knew how hard we worked for what we have. You'd be more grateful. The age old never firing clients or not firing as many clients as you should fire. Big problem in legacy firms. If you're a staff person in one of those firms, you see it. They're just not letting the stinkers go. But hey, you. You running your own accounting firm? Yeah. I'm looking at you too. Easier said than done, right? When it comes to cutting the ties with those folks. Come on in. It's Old Timey Tuesday where week by week we develop a field manual for how to work with legacy accountants. Let's do it. Let's talk about firing clients. I'm trying to get away from day of the week based things on this show because I try to just do stuff that's evergreen. So like I need a non day based name for Old Timey Tuesday. Interesting sidebar. If you want to like get into the habit of doing a recurring thing and making it easier on yourself, it's helpful to like design some structure. So like Old Timey Tuesdays, Q and A Wednesdays. I think like the challenge format may be a fun thing. We did that last week around like trying to build firms around weird niche hobbies. The challenge format could be a fun recurring one to come back to. But abstractly like you think about this like daily podcast. Oh my gosh, that seems terrible. That seems like so much work. Those things that are hard, like you gotta break them down into kind of recurring formats. That makes it way easier. Think about that when you are like posting to social for clients or doing a weekly newsletter, stuff like that. So you're not recreating the wheel from scratch every day. Okay, Firing clients. Boy, I was up against this one big time. In my early accountingdom days. You had those clients and like the worst version of this was like they were the crusty old buddies of the partner and they were just weird. But they were like friends with that partner. But nobody else liked working with them. And I think most accounting firms still. And we probably made some progress on this during COVID where we had to get drastic and cut some clients maybe for the first time. But honestly, I think most small accounting firms still are not doing this. And it, I actually think it comes from a healthy personal place like the servant mindset, which is an admirable human quality. Like don't get me wrong. But when you lean into that too hard, when it goes too Far it becomes almost like virtue signaling and people get hurt ultimately when you're trying to be everything for everybody. So I always got a ton of pushback to the whole notion of firing clients. And like, I mean, the common wisdom is like, every single year you ought to be chopping off some of the bottom of that client base and adding perfect fit stuff to the top so that each year it's getting more and more refined. I've always loved the notion of like curating a client list. If you run a firm, you are the curator of that client list to ensure that they're cool people to work with, that they align well with your firm so you can do the work profitably and they're on like an interesting trajectory. Like it's not something that is, you know, gonna get disrupted tomorrow. So I've always loved that kind of curation methodology, but that's not where most firms are. So this is another example. And this is kind of the recurring theme with Old Timey Tuesday is you can shout this stuff from a mountaintop, but that's not usually the way to get the message across to people. That's not what will get them to change. Change starts with breaking that problem down a little more and making it as easy as possible for them to lean into that change and get some small wins so they can kind of start to taste the rainbow. And the one thing that I found with firing clients, that is my best piece of advice. Whether you are a cool hipster, skinny jean wearing firm that is this new startup, new ag thing, or somebody that is just fist fighting the man at a big firm, the more we can make retaining clients not personal, the better. Because what's really the hard thing about it? I think, like when I think of legacy accountant, they do things like say, okay, well, how are we going to replace that revenue? They make it all like, very businessy or, well, that person knows this other person who's a client. That we want to keep like 90% of it is personal. It's the fact that accountants, we generally don't like conflict. We don't want to have to have that conversation. We don't want to disappoint that person. We don't want to get the feeling that we are now, ooh, too big or too good for them. Like, we don't want to be that person. But we gotta, we gotta make it about something else. We gotta make it part of a business process. It just needs to be part of the process. It's not. You're dating this person and you're breaking up with them. Which is like a. Which is how I think we can sometimes view it, which I think is a kind of an immature viewpoint of what doing business with people is. Doing business with a hundred clients every year is deciding who are the best hundred people for us this year. Not ultimately like this very personal thing that, like, I don't know, needs to be this sort of complex social thing. So making this a business process means telling clients every single year, hey, each year we revisit our client list and we keep curating it to ensure it is like the best mix for our firm, to ensure that we can do this work at as high a level as possible. And every single year, that means adding clients. And every single year that means removing clients. And come renewal time, we go through a process every year where we will add some clients and we will remove some clients. Be totally upfront about that. Tell that to those people every single year. Remind them. It's amazing how much that planning, that little seed changes the relationship. When we were in the heat of COVID relief and we came to some really hard decisions and realized we were kind of anchored to some pricing of like, more of like the previous ownership approach that was just like, way undervaluing what we did. And we had to rip the band aid off, do some big old price increases and support fewer people. Cause we were in Covid relief and everything was just taking longer in the kind of annual deliverable we sent out with tax renewals. We were like, here's the deal. Really sorry to do this. We've got to increase prices pretty significantly. Here are the reasons why. We'll give you a price up front so that you know exactly what you're getting into. But we've had to make this decision for our business and part ways with almost a third of our client base. We put all this stuff in front of people. And you know what the reaction was? We're so happy to be on the list. Thank you so much. We were so worried for a minute there that we weren't going to get to work with you. Still. There were like a few people that left, but we're talking about a thousand plus people we put this in front of. And by and large, there was this entirely different tone of like, gratitude. And we tried to. And it's really hard to commute these. Communicate these things to clients in a way that isn't just like, really whiny and oh, woe is me. Like, oh, really? You're in the heat of COVID and your biggest problem is that you have too much work to do. You really want me to feel sorry for you? Like, that was a really tricky thing to communicate. But the framing of the. Just the reminder that we part ways with clients. Like, we're constantly trimming that bush. No, we're constantly curating that list to, like, ensure that we're just working with the folks who are most aligned with the direction that we are headed. That's a great reminder so that your clients don't forget that. That it is genuinely a privilege to work with you. But it also goes a long ways towards depersonalizing if you ever did have to let somebody go, because they know when it happens, you can build a process around it within your firm. And they know each year they're either gonna get a renewal or they're gonna get a termination letter. And I think with the right messaging, you can get this across in a way that doesn't feel cold or impersonal. Fundamentally, the way I frame it is we absolutely have to do this to be at our best. We can't just take whatever walks in the door and somehow do a great job for everybody. This is our way of ensuring that we can take phenomenal care of not only you, but everybody else who's on that client list every single year. And if you keep reminding clients of that and ensure that, like, they understand it, then if that day ever does come where they don't make the cut, it doesn't have to be this big, dramatic thing. It still sucks. Like, that's a bummer. And they may not be happy about it, but to me, that's way better than arbitrarily at some point in the year, just cold calling a client and saying, surprise. You gotta find a new accountant. Right? That's really hard. As opposed to every year. This is part of our business process. This is what we do. And if your clients understand that, it's much more palatable for them. And this whole conversation, if we're talking about it through the lens of working with legacy accountants and how to move the needle just a little bit in a big machine and help them to make the right decisions, this whole thing is about making it as frictionless as possible for that person who is the stopper to that change. And that person is stuck on. They sat down, they met with that person and their spouse, and they built a relationship with them. And everything hasn't always been great, but that doesn't make them want to have to pick up the phone and have that really, really hard conversation. Like, in 90% of cases, that is what they're stuck on is having to pick up the phone and have that conversation. So like this, this more kind of mechanical way of handling it is a way of chipping away from the most uncomfortable aspects of having to do that tricky thing. This episode is sponsored in part by dark horse CPAs. 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Cloud account staffing is 100% dedicated to the accounting industry and founded by a former accounting firm owner that understands your business, knows your pain points. They had to hire some accountants and they said, you know what? We're going to build our own pipeline in the Philippines, going to pull in some super talented people and then open that up to other firms. Basically, that's the story. I've been talking about a lot about staffing, building more resilient Staffing pipelines for your firms. I had staff in the Philippines, like totally red pilled me to like, oh geez, like we need to globalize the way that we get our work done. Check these folks out. Link in the show description Cloud accountantstaffing.com now the counter arguments that you get to this and kind of how I've thought of navigating those things, you will get like partners that will say, these are my clients, not the team's clients. Why should I care like what the rest of the team has to say about whether we should keep or get rid of our clients? Ultimately, I think the better framing is the fact that all of that work gets done by the team. And you're always going to have different personalities in this team and clients that jive with one person and not with another person. You know, when you have those points of friction, maybe there's an opportunity to move a client from person A to person B. But sometimes there will just be people that are really hard for your team to work with. And it would be one thing if there was this boundless ocean of talent that you could go draw from, go hire somebody, run them into the ground with your crappy clients, and the next year go hire another person. But that's not the reality that we're all living in. So like as much as we can stomp our feet and maybe that was how it used to be, is it used to be more authoritarian than it can be now. That doesn't change the fact that today if you run your team off, you are well and truly up a creek and you're gonna have way bigger problems than that one client that you let go. Right? You're gonna have a bigger problem of how do we get any of the work done. Other counter arguments, how are we going to make up for the lost revenue? Will I make less money? It's funny. It's funny. This is probably a bigger discussion, but we, we have such a. And I can absolutely relate to this as like an entrepreneur, we always have this scarcity mindset. Even when we're like a million miles beyond abundance. There's always this, this very human fear of going backwards and of scarcity and of what if the work just stops coming in even though it never has. Like, we've got this kind of scarcity mindset regardless of what stage we're at in our career where we think if we let something go, we're somehow not going to be able to make it up. And that's just like honestly unrealistic for most of Us, because there's always new clients coming in the door. But the bigger opportunity is going deeper with the people that you have. I mean, there are a hundred examples in every firm of where we cut corners and are not as hands on as we can be due to time constraints. And for whatever reason, we perpetually over. We seem to perpetually overextend and not go quite as deep with people as we should. Just as a trend, we just do that and I don't know why. And like, examples of how that, of how that's framed sometimes is like you automate a thing and you now have time to go to something else or go deeper with a specific client. When in reality, what usually happens when you automate that thing, like 95% of the time you're gonna do one more client, right? You're just gonna fill that bucket back up and you are straight back onto that same sweaty treadmill just doing it for more people. So, like, somehow we have to get ourselves to have a willingness to go deeper with the people that we have. And maybe that's an introduction of like a service line that is a different level of depth that people will pay more for. Maybe they opt into it with annual renewals or something like that. But we have to find a way to go deeper with the best people. Like, those are the coolest firms, in my mind are the ones that are doing phenomenal stuff for a specific type of person. So all of that is to say, for as much fear as we have of letting revenue walk out the door, very few of us are struggling for revenue ultimately. Like, that's not generally something that becomes a long term concern. And most of us don't have a huge appetite to work more right now. Honestly, like, is there a way that you can let the worst revenue walk out the door without losing profit? Like, the answer is probably yes. And get some time back. This annual cadence we talked about, how do we approach this in a way that doesn't feel arbitrary and mean and like a popularity contest or like a survival tribal account survivor tribal council where we're like voting clients off? You need to have some system of scoring your clients. And there's, there's probably way more robust systems out there that you could go seek out. I can tell you, like, my approach is pretty darn simple. I'm going to basically look at four things, and these four things all need to be weighted in a way that makes sense for you and for me sometimes, like how I think about that weight changes. But I'll run you through these Four things. First, the first factor and kind of how you grade these clients is how well do they align with your ideal, ideal profile? So is this client like something that. Where if that client walked in again tomorrow, like a new version of that same client, if they reached out tomorrow to begin work with you, would you be like, I'm bored of this. I don't really want to do this. This doesn't really fit what I'm looking for. Or would you be like, score, where can I find 100 more of these? That client that's like, where can I find 100 more of these? That's an A. The client where you're like, man, like, if you're not tickled, that's not a good grade. And if you work within a larger firm or even a legacy practice, this whole house of cards is probably already falling down for you because you're like, what is an ideal client? The ideal client, according to who? Well, honestly, part of going through this scoring exercise, the beauty of it is people have to work through that. Like, it creates some meaningful conversations. And if you're thinking like, well, like, the wheels are just absolutely going to fall off there, that might be okay. Like, getting everybody in a room and being like, okay, like, we have to somehow grade these on a spectrum of how well they align with our ideal profile. Having really hard conversations and getting some fist fights to break out around that man, that could be a really good thing. Even if you're. Even if, you know, you are the only quote, unquote partner in your practice, having those conversations with your team is absolutely valuable. We talk about issues around, you know, for example, growing beyond the clients that just you can manage. If you're bringing in clients that are great, a great fit for you, but not a great fit for your team, what is your goal ultimately? To build a little firm where you enjoy working with the folks that you enjoy and that do the things that you enjoy. If so, that's cool. If your goal is to scale the firm beyond where you're at today and you're at your limit, you got to stop taking in clients that are great for you. You got to start taking in clients that are great for your team. So even in a smaller practice, having this conversation with your team is really, really meaningful to ensure that folks are on the same page, to kind of keep your arms around how this changes over time, because it absolutely does change every single time. If we got a beekeeper that listened to last Thursday's episode and said, yeah, baby, I'm going to build a Niche beekeeping accounting firm and things are kind of trending in a different direction. Man, that's a conversation you got to have with the team. That's like a bigger organizational thing you need to be thinking about. So like a really like valuable thing thing to come from the process of scoring clients is having to have the conversation of like what even is the right client right now? Is it the same as it was 12 months ago? Has it changed? Is it trending in a certain direction? And some really meaningful things can come out of that. So that is the first of four kind of dimensions on which I'd score it. Second is revenue. Like it or not, you could swap that out with profitability maybe if you have a yardstick of how you measure that in terms of like how these four things are weighted. This is probably a smaller thing. This may be the smallest of the four for me, but reality is a still factor for me. Team this episode is sponsored in part by Copilot, the customizable client portal built for modern firms. Nacho Stanky O legacy firm for modern modern firms. Let me tell you about Copilot. Copilot lets you provide clients with a one stop shop experience, with a client portal that streamlines messaging, payments, file sharing, help centers, custom app access and a whole lot more. All that in one place used by hundreds of happy accounting firms. Copilot comes with a comprehensive API. Okay. And zapier support. I like it. You can set up automations that streamline sign up, onboarding, intake forms and more. Copilot comes with support for app embeds. Yeah, yeah, yeah. You can embed like notion pages to create a homepage for your clients. Embed calendly to make scheduling easier. All that inside a single portal experience. Check this one out at go co. What? @copilot.com use code Jason get the first month for free. You kidding me? Like what do you ever do for them? Copilot.com use code Jason and let me know what you think. Hey. This episode is sponsored in part by Firm360, the cloud practice management system that gives you a 360 degree view of your firm. Everything. Documents, projects, client facing stuff. That's why they call it 360. I'll just throw that around. Case study time. Let me tell you about Marion. Marion picked up firm 360 in August of 2020. The team was looking for a platform that could streamline their project management needs, increase efficiency and give them visibility into what their team was working on. Sound familiar? What's your team working on right now, 3, 2. If you didn't know, think about it. They also needed a way to securely communicate with their clients and send or receive documents. They were able to roll out firm360 and use it to improve processes and and predict their needs. They plan out work for their team with it. They predict when they need to hire more staff. They've grown their team by over 50%. Marion, bless your heart. Based on data for when they would need more employees and have made sure they're still delivering awesome, awesome service to clients along the way. 50%. How much have you grown lately? Okay, be like Marian. Be a Marion. Take a look at firm360. Could be just the one for you, right? Check out a link in the show notes to learn more. Third, phone pickup ability for me, if that client calls me and I see the caller ID on my phone, am I groaning? Am I going like, do I really have to take this or not? What if I just didn't answer it? Would they ever call me back? Or if I see it and I'm like, it's Steve, Steve, how you doing? And I like you immediately answer it. Like, you know those phone calls where you get it and you're like, pumped that this person is calling you and you swipe it and you're like, what's going on, man? That's an A. That is an A in phone pickup ability. We have clients that are on all levels of that spectrum. And in some ways, this is a very arbitrary, simplistic metric. In other ways, what else matters? Like, in other ways, like, this is kind of all that matters. Because when it comes to what you do, you are always energy limited, right? And that's why we talk about, like, how can you marry this firm running with the things in your life that you enjoy and make this more sustainable. Because at the end of the day, you're gonna be at your best when you turn up to work and you are pumped, man. Like, when you are maximum energy, you're gonna be really good at your job when you do that. But if you work with a bunch of stinkers and you don't enjoy the folks that are calling you. And I know there's a bunch of you that are like, how dare a client call me? Okay, just bad example. You get. You can replace phone pickup ability with email answerability, whatever you want to call it. They send you texts, they call you, they schedule something on your calendly. How excited are you when you see that thing come through? If you're pumped, that's an A. If you're like, honestly, if you're anything less than pretty tickled, that should be a pretty low grade. Like, in a perfect world, you're working with the people that most energize you. And this is maybe the best part of culling part of that client base every single year is every year it gets better. You're adding new stuff. You're just keeping the stuff that is good for you, that's profitable, that is energizing to you so that your day job ought to get better year over year. And if you haven't done this before, you will be amazed at how big of an impact just cutting a small number of clients will make on your well being. Not from a workout like total, like workload standpoint and all that, and that is a benefit, but just from a well being standpoint. There are certain people in our clients, in our firms, it's like kind of the 8020 rule. Like, there are certain people who are just really irritating. Maybe they just grind you the wrong way and there's just like not even any rationale. Maybe it's just a personality thing. But the people who demand a lot of you and demand a lot of your team, like, just making a few changes like that makes such a big difference in how fun it is to turn up and do what you do. So that is the third thing. Phone pickup ability for you. Fourth thing, and this is an uncomfortable one for some people, phone pickup ability for your team. You, you may love Steve. Steve may be a total a hole to everybody else, right? And we've all been in this situation where you bring this up with the partner and they're like, I don't know what you're talking about. He's always a really swell guy whenever I talk to him, and he absolutely could be. But we know that there are people in this world who are not that way. Like, if they think they're talking to a quote unquote peon, they're gonna like just be mean and like, what your clients think of kind of the client, or, sorry, what your staff think of the client list that you're building. Like it or not, it matters. And there's probably a varying degree to which it matters. If you want to build a little firm that is like you working with your buddies, like all of your clients are your buddies and you're going to be very hands on, you're going to do a lot of that stuff. Maybe there's a way to lean more into what works for you versus what works for the team, right? If maybe you're doing more of the heavy lifting. So ultimately it really matters what you think about this. If you're trying to grow out, like if you've gone from zero to one and you're at your limit but you still want to go from 1 to 10, where you have to transition from picking up clients that are great for you to picking up clients that are great for your team, those two things can't be in conflict. You can't have it both ways. You can't decide who gets to stay on the client list, you know, based on who you like, but then expect your team to do all of the work. So this is one of those situations where the weighting of that may change based on what you're trying to do. Maybe you're trying to build a new practice around your team rather than around yourself for the first time. Well, your team's phone pickup ability for that client, the weight of that ought to go way up because ultimately they're the ones dealing with them. And if you are not factoring this into your calculation, you're going to be hard pressed to keep a team happy if they are stressed out about these client conversations that they're having, having to have all the time. I think in public accounting and the quality of your client list is a big factor here. But as much as managers and all that can run people out of accounting firms, clients do the same thing. You got some bad clients that you work with, those people will absolutely run, run people out of accounting firms as well. And I don't think we always pay enough attention to that. I talked with one firm one time that said basically members of the team each get to pick a client each year and like they get to basically say it is very much a survivor tribal council sort of. They get to pick somebody to throw out each year, like whatever form it takes. Your team will super appreciate having a voice in that conversation. And I don't think it is beyond your team to take into account things like but are they a good client and is it maybe just a personality thing where they can move, move that client to somebody else? I think members of your team can be like rational and think about those sort of variables. But one way or another you got to pull in your team's perspective on all of this because ultimately they're doing the one. They're the ones in many firms doing the heavy lifting and without them, buddy, you are in big trouble. So to bring this home, maxims on how to make this as accessible as possible to that old timey manager to you, if you are a firm runner and you struggle with firing clients, the more you can depersonalize this process, the better. Like this is, I came a long way on this and I think the, the, it's kind of like the notion of like, I'm going to be friends with my employees. That's not a thing. Like, I get there's a lot of joy to be had there. But same thing applies to your clients. I'm going to be friends with my clients. That's hard. Like, I try not to cross that boundary. I definitely did many times. But the more we can depersonalize the process of curating your client list, the better. So make that something that happens on a fixed cadence. And there will be exceptions to that where you gotta fire, somebody comes in and like, curses out an employee. Like, there can still be exceptions to that where you gotta like, make a decision. But generally, if you can communicate to clients as, even as part of the annual renewal process, we already have kind of a communication workflow for this. Right. Just make them aware in a way that isn't going to make you look like an a hole. Hey, every single year we curate our client list. That means reaching out to the folks we want to work with for another year or reaching out to some folks who maybe we can't support anymore or no longer, like, align with where we're building. Our, our accounting firm put that out in front of them so that they know it's a thing that happens every single year. And then if it comes to having to make that hard decision, in my mind, it's much less emotional, it's a much less personal of a thing. And if these are people you really like, in my experience, like, you can still maintain a relationship with those people. And that was the hardest thing for me. Like, I had people that I really enjoyed working with and if we were going to get rid of them, like, I kind of still wanted to have a relationship with them. Like, I really liked those people and done the right way. The fact that that person isn't a fit for your business, like, doesn't mean that you are necessarily like writing that person out of your life. And maybe me saying that is in conflict with saying you can be friends with your clients. I just think, like, the work that you do for them has to be framed in a more professional context where you can be frank and real about the fact that it's like, hey, like, here's what you need and that's no longer us. And if I can refer you to somebody that's great for that. That's even better. But, like, what my business is and what it's growing into is not a personal reflection of that client. But done wrong, it can feel that way. Right. So how do we make that a more, like, mechanical part of the business process so it doesn't feel so personal for them? What do you think? Any, like, good tidbits you've got for navigating firing clients? It is an amazing drug. It is. And I don't mean to. I don't want to sound cavalier, but it is amazing in terms of morale. What a big difference just letting a few go can make. So if you haven't done that yet, encourage you to give it a try. Thanks for coming. Hanging today. I'll see you tomorrow. Sa.