607 Stop Trying To Land LEADS In Your Accounting Firm. Do This Instead. [This is putting accounting firms out of business]

My friends, we are in the thick of my workshop tour right now. I'm visiting 20 cities in the US, throwing half-day parties, continuing education, snacks, a dinner, an open bar. These are events that I have built with my team from scratch. We host them and we pull in 50 to 150 local accountants who all want to hang and hear a couple of talks from me and meet each other and just vibe, you know. These are unbelievably fun events. We are in the middle of running them right now. If you haven't checked out the tour schedule yet, please do head over to JasonOnFirms.com/tour. /events to see the list of all the cities. If you know somebody that's in one of those cities, give them the heads up. It's a super fun hang and I want to see you there. Okay, on to the show. Enough about your workshops, let's get on to the actual episode. Listen, every accounting firm out there wants better clients. Wouldn't it be nice if they would just pay you more and appreciate you more? Whether you're building your very first client list or you are just tired of the stinkers you got, we all want better. But my modern thought leadership today around how to run a business and lead generation and all this, it doesn't really map very well to accounting firms. And this is for two reasons. Number one, there is an astronomical demand for accounting help, for tax help right now. You are not a power washing company that's trying to find people on Facebook that need you to clean their driveway. But the second reason this stuff doesn't map very well is that the buyer doesn't understand what we do. There's not a verifiable outcome. They can't see, ooh, driveway now clean. And so they make buying decisions based on do they you? Do they like you? How did they perceive the experience of working with you? And this makes advice like Wisdom around how to find a better client very different to other types of businesses. And it is what we are digging into today. We're gonna go deep on this subject and we're gonna get into a number of listener questions. Might feel familiar. Try this one on for size. I feel like I'm delivering gold level service at bronze level prices. Oof. Are there situations when you should discount your pricing? And my clients keep coming back asking for work that's outside the engagement scope and I'm losing, losing setting my shorts on fire as a result. Let me share with you the best practices I've gathered after working with genuinely thousands of accounting firms in the last 5 years. Come on, let's get into it. My firm's on fire. I'm all burned out. Clients are calling. I'm pulling my hair How do you do, fellow accountants? My name is Jason Staats. Welcome to the Jason on Firms podcast, where we talk all things accounting from strategy, whether you run one, whether you work in one. The couple thousand accountants that tune in here each day, they just want to grow, just want to get better. Okay, now you might have heard that little jingle if you watched the video version. You saw myself, you saw me and AI me line dancing. What is happening? We are midway through a series called The Dirty Dozen. And these are the 12 biggest pains ailing accounting firms today, as sourced from the over 1,000 accountants that came out to my live events last year. This problem, brother, I gotta, I gotta juice up the client list. Be it more clients, be it better clients. Right now, I don't have what I need. And I think a lot of people actually cruise past this because they're at capacity. They're like, well, the clients aren't the problem. We have more work than we can handle. You know the solution to that? Better clients. Clients who will pay you more so that you can reduce capacity. An accounting firm— I'm— I so much believe this— is only as good as its client list. Because if you're running a 40% margin firm, the client who will pay 40% more is twice as profitable. Means you're making the same profit in half the time. So the North Star is just that. How to find a client that better values what I do so I can— so I can leave at lunchtime, so I can get back to playing video games, so I can go kick a soccer ball in the backyard with my 7-year-old son faster than green grass goes through a goose. I've got 5 specific flavors of this better clients problem that we called out. From the folks that came out to those events last year. I want to run you through all 5 and how to navigate each to ensure you can get your firm to a better place. The first one, the first version of this is the feeling that you kind of just sitting on the wrong clients. This is what it might sound like. These are actual quotes from folks. We need to get better about client acquisition and move our client list towards our more ideal client profile. We're looking for better and higher paying clients, but we also need the processes that can go along with it. Sidebar, want your processes to look amazing? Run half as much client volume through them. They'll look really, really efficient. Problem with most firm systems is we are just trying to pack too much through those pipes. Last quote here: I need more clients and better fit clients. We're actually overstaffed. Been cutting some bad fit clients, but it's been crickets out there for new prospects. A big thing to watch out for here when you're trying to build a better client list is you can't upgrade your book of business when your book of business runneth over. If you've got too much to do, if you are behind, which frankly is probably like like 85% of the profession right now. We are up to our eyeballs in work, just scrambling to do right by the people that we've already committed to. When you're in that place, you don't have time for the actions that will lead to a better firm. Like, it's, it's, it takes time, and it's a new skill set. And it becomes so easy when we're busy to mistake action for progress. We're trying so hard, man. I worked 80 hours last week. Woo! Really? What were you doing a year ago and 2 years ago and 3 years ago? It is easier to run into the same wall for the 10th time than it to stop and be like, hmm, maybe something needs to change here. Honestly. And I mean, this is speaking from experience, man. When the solution is infinite hours, it's easy to trick yourself into thinking that you're doing your best. Okay, take a lap, have a cigarette. I know that was a lot. When you come back, there's a solution here. Let me give you the 3 steps. Number 1, you got to get really honest about your margin per client. I don't care about your revenue. Nobody cares about your revenue. Get real about the margin per client. Most of us have clients on our client list that are simply not that profitable, or the headcount-to-profit ratio just, just doesn't make sense. At one point in my firm, an 80-year-old firm that I bought, 70% of the client headcount accounted for less than 20% of the profit. First, get honest about who's profitable and who isn't and cut your worst performing 15 to 20%. You're going to get a bunch of time back with very little to no hit on the bottom line. Second, we got to stack this with a price increase. One benefit of a price increase is you find out who loves you and who doesn't. We all know who doesn't like us on the client list because they complain. They say, wow, this is— this is more than I thought it would be. Why? Why do you charge me so much for this work? We know who all those people are. What we don't know is the other people, the other end of the spectrum, who would happily pay you more. And you have many of those people on your client list right now. Evidence that I have to support this. Pretty much universally, when firms do a big, scary, dramatic price increase, they're shocked at how few people left. I mean, I have so many people who are like, we're just in an awful spot and we basically doubled our prices and nobody left. A friend who does coaching for tons of firms, Geraldine Carter, she has helped so many accounting firms navigate these big, scary price increases. She says in most accounting firms, you see virtually no price resistance. Until the increase is over 50%. But here we are. We're like, oh, what was the CPI index this last year? Well, should we do a 3% bump or a 4% bump? Pull up your bootstraps. Pull up your bootstraps and make the price increase you need to make. Don't be afraid to put a price increase on a quote unquote good client. A key qualifier of what makes you a good client is whether you will pay me money. But it can be easy to mistake good client for good people. In order to be a good client, you have to be good people. But there are many good people who are not good clients. So first thing to do, find the lowest margin clients, let 'em rip. That is, let them go ideally to another firm that is earlier on in the journey for whom those clients are great clients. Second thing to do, stack a price increase with who's left. Third thing to do, fill the gap with better clients, not more clients, not different clients, not that one weird thing that's like, oh, that looks fun. Fill the gap with better clients. One of the most popular ways that we ensure that we will not do this is by putting minimum prices on our website, because who does that attract? The people who expect to pay your minimum price. And so if you think about like the distribution of clients that you have, do you want a whole ton of clients just piling in the door at your minimum rates? Not at all. You want the opposite. You want them coming in at the premium end so that that minimum grows over time. But advertising your minimum has this reinforcing effect of just like stacking more and more clients at that minimum. And before long, you can't service people at that price anymore. And you're like, what am I going to do with all these people? You won't do that though, because you listen to this podcast. We're having a good time. Okay. Second thing here, second version of the better client problem is feeling like you're hitting the wall or hitting the ceiling with word of mouth. Word of mouth is the ultimate get out of jail free card for, for marketing. So many people will say something like, well, we get so many referrals, we get our word of mouth is so strong, we've never had to advertise. You just fling those doors open and your friends of your friends, they're all welcome aboard. But what is best for them doesn't necessarily mean that's also best for you. Because the, the best, most optimized business probably isn't just gonna walk in the door. This isn't a very high-agency approach to building an accounting firm where you can go out and see a premium rare problem and be like, hang on, has anybody else found this yet? No. Oh my gosh. Let's go and work with these people who have money. And this is a very expensive problem. We know how to solve confidently. That looks like a cool business. Instead, we're just happy to have the work. And, and like, we just, we, most accountants have this service mindset, right? Where you don't wanna get too big for your britches and you want to support the folks that you're already supporting and helping their friends feels like an extension of that. But that doesn't in all likelihood lead to the business that you want to run, at least not the version of it where the doors are flung wide open. A few quotes to this end from accounting firm owners. We capitalize on relationships to grow. We've never had the need to market or advertise in the traditional sense, but we need to systematize how these people come into our firm. Another quote: We need to better leverage our network to get a predictable, predictable lead flow for ideal fit clients. Quote, ensure that our referrals don't take us back in the direction of a generalist firm. Now, referrals, they can be a trap, but there's usually just a more restrictive version of referrals that make them really effective because most of us right now, we just sit back and sometimes stuff comes in where we may be afraid to ask for referrals. I would, I would bet a very small percentage of accountants have ever actually asked for a referral because it's kind of a cringe thing to do. It's kind of weird, right? You're asking somebody to do you a favor, but there's absolutely an approach to systematizing referrals. And step one is to figure out who your A clients are, who the people on the client list are that you want more of. Because there's someone on your client list where if you could clone them 100 times, you would have a vastly better business than you have right now, right? Now, now the definition of what makes an A client, that is very important because again, they're not just good people, they are good clients. This means they pay you top dollar with a big smile on their face. This isn't because they're fast and loose with their money, isn't because you've, you've pulled the wool over their eyes. It's because you're solving a valuable, an expensive problem for them and they can't get that solution cheaper elsewhere. If you're doing the exact same thing as the dude across the street, you have very little pricing control. If you're solving a problem for boat builders who ship boats internationally but are struggling with the local invasion of the brown-bottomed buffalo beetle, you are an incredibly unique solutions provider. So your A clients see you as just that. You're solving expensive problems for you, so they're willing to pay you pay you well, and they're good people. You enjoy working with them. For these A clients, I want you 2 times a year, spring and fall, to send out a message to say, hey, here's the deal. We are basically doubling down on clients just like you. We enjoy supporting businesses like yours so much. We're kind of building an entire firm around like, what would the ultimate firm for a business like yours look like? And so we are, we're excited to continue growing and improving to, to better help you, but also we wanna know where people like you hang out. Where can we find other folks like you? What are the publications you read, the events that you go to? And do you have any friends for whom we might be a fit? Now, there's a version of this communication that is like, can you refer me clients? And it feels like an ask. The better version of this feels like flattery for the receiver because we want people more. If only we could, we could clone this person 100 times. I'd have the business of my dreams. We love you so much. Like, that's a very complimentary thing to tell somebody. And by and large, people are actually very happy to help out. Like, we, we're worried they're gonna say no, or is it gonna be weird or something like that? Most people are very happy to help out. So I want you to do that 2 times a year, but then ensure the landing place they have, what they see when they come to you. Maybe this is a website you include in the referral request. Maybe it's just the homepage of your website. I, I, I say that because it could potentially be a landing page that is not your normal homepage, but But either way, make sure when people come to that, they see something that feels tailored to them. They're like, oh my gosh, yeah, this Buffalo Beetle's just been blowing up my business. But if I can go work with Bruce Brown's Boat Building Bookkeepers, like, they're gonna, they're gonna understand the problems I'm going through right now. So if they see that on the landing page on the website, they're gonna be like, oh my gosh, where's this person been all my life? That is a referral that you wouldn't otherwise get unless you ask for it. Those are the best referrals. They're bringing you more A clients. I would argue by default, referrals actually skew more towards cheap clients than they do great clients. One, because there's just more cheap clients out in the world. And two, doing work cheaply increases the likelihood that someone will refer their friend because they can get them a deal. This is coming to you from someone who had a quote unquote niche where people referred other people like them just because we would do that work for less than anybody else would. That is not a niche, man. I don't want to be the $5 footlong of accounting firms. Hey, real quick, do you need to hire any humans inside of your accounting firm, I wish you could see what I'm seeing through my own two eyes right now. I'm staring at a portal of qualified pre-vetted candidates that are champing at the bit to come and work for your accounting firm. These are real human beings. Aubrey, a bookkeeper with 3 years experience, $3,100 a month. Samuel, an executive assistant with almost 10 years experience, $3,000 a month. Maycol, a bookkeeper with 6 years experience, he's got a CPA, experience with, with Bill.com, accounting CS. Deal, Power BI, QBO, NetSuite. Let's find a tax person. Mia, US tax accountant, experience with CCH Access, Drake, and UltraTax. Oh, bless her heart. $4,000 a month. Gang, these are all super talented accountants that are ready to come and work with your firm through Cloud Accountant Staffing, longtime sponsor of the channel. They have a portal where you can go around and see all the folks that they have pre-vetted and even book an interview directly with those people from the portal. You don't even have to hop on a call with Cloud Accountant Staffing. All these applicants have— they've got resumes, they've got intro videos. Can't tell you how many firms that I know who have been very happy with Cloud Accountant Staffing. Accounting, it is a universal language. Luca Pacioli, buckle up for this one. Not American. Italian. You know why? Because accounting knows no borders. Here accounting, there accounting, everywhere accounting, accounting. Okay, you need some human talent in your accounting firm? Talk with Cloud Accountant Staffing. Check out the link down in the show notes. If tax season just punched you right in the grief bone, I have good news, my friend. There's a better way. Hey, we talk a lot about AI on this podcast, and the group that is using AI to automate a whole bunch of the 1040 process, it is, it is one of this episode's sponsors, Soraban. With every like new headline you see around new AI models and new AI this, new AI that, the companies that are moving fastest using AI, they get better with every new AI model. And especially when it comes to the 1040 prep process, like if you're a US tax firm, oh my gosh, is there so much tedium still associated with collecting information from clients, getting it into the tax software, delivering it. It is a nightmare. If you are a firm doing like volume 1040 work, say 300, 500 1040s a year plus, this is a no-brainer. Take a look at Sorban. We've actually done some demos of them on my YouTube channel. You can even see how it works. Definitely worth checking out. More information down in the show notes. Last, we gotta maintain the discipline to, to decline referrals that are not a fit. And maybe there's fear of doing this 'cause it's like you're telling a client no, but this is also The upside of more proactively going after referrals is you're communicating exactly who you want. But for a client to be able to bring to you anyone that they want to bring to you and you say yes, obviously that comes with a tremendous amount of risk to your business. All right. Version number 3 of this, I gotta find better clients problem is folks stuck at this threshold of, I know I want to get more specific. I know I want to niche down, but I'm scared. Here's what this sounds like in the wild. Still struggling mentally to overcome the hurdle of niche services versus general services and struggling to turn down general business since there is so much out there in the world. Another one, I'm overcoming imposter syndrome and trying to set up leverage, build more leverage for my firm, and then ultimately nail down a niche. I know I can do it. Another one, I'm starting out, so I don't have a particular niche yet. It means I'm helping just about anyone, but that comes with some trade-offs. Being willing to help anyone feels like safety, feels like the lowest risk approach, but it comes at a cost. It's just a different type of risk. Now, most people's book of business has clusters of clients that can be the start of a niche. You may not have even identified them yet. They're folks that will, that will pay you well, that you enjoy working with. I, I, I say this, if you don't, if maybe you're not there yet or you don't have one you like, you also don't have to think of this as a prerequisite to being able to niche down. Like if you don't have any of the people that you actually want to work with yet, recognize you don't have a lot of data about those people yet to know if they're a great fit. But that shouldn't preclude you from going after something that you're into. And depending on the type of firm that you want to run, if you ultimately want to build a firm around yourself, then follow something you're passionate about. Like, there's a lot of people now who, like, kind of speak against the whole following your, your passions, following the things that you're into. Cal Newport sort of popularized the notion that with learned expertise comes the fun, comes fulfillment. When you become an expert in something, it becomes more satisfying to do that thing. And that's true. But what is also true is people are born with things they're into. And for all the hours in your working years that you're going to spend toiling, building a business, whatever that looks like, actively avoiding the things that you love, to me just feels like bad life advice. Don't make your hobbies your job. What is the downside of that exactly? It will— it will take the fun out of it? As if that is the last hobby on earth that you will ever enjoy and it is now joyless. I know a lot of people who have something they're incredibly passionate about. And the, uh, the, the benefit of building a business around it is they get to talk with those people all day long and it doesn't feel like work. And that is where anyone is at their best is when they're doing work that doesn't feel like work. They're passionate about it. They'd be reading about it whether they were doing this or not. As an adult, that is your competitive advantage. What is the thing for you that doesn't feel like work to other people? That is what sets you apart from other folks. Now, it doesn't mean that won't evolve over time. Let's say you build a niche practice. I've, I've, people have asked me me this before. What if I build a niche practice and then I burn out? I'm just— I get super bored of that thing. You know what niche practices trade at relative to generalist practices? Like, what a problem to have. I have a wildly profitable business that I'm now ever so bored of at a time when it has never been easier than it is now to sell an accounting firm. Not a bad problem to have. Now, niche doesn't have to mean industry. Could be business size, delivery model, uh, something else. Just know that specialization is a spectrum. Spectrum. So to say that you work with small businesses from $1 to $5 million, that is definitely on the general end of the spectrum, right? To then say you enjoy working with millennials that run those businesses, maybe a little more specific. Folks that want to work asynchronously, not do live meetings, maybe that's a little more specific. Almost always for me, industry comes into play because you still need to find a specific valuable problem you're solving. That is almost always a step better than demographic. Specialization because even for people of a certain ilk, they won't necessarily all have like the same valuable problem that you can solve. And, and the problem of I gotta get my bookkeeping done, I gotta file a tax return, I don't know how much taxes I owe. These are generalist problems that every accounting firm will say that they save or that they serve. But a golf caddy who works all around the world is paid in a weird way, you know, gets percentage of winnings, has all these compliance headaches from all the place that they work. That's a very, very specific problem, even more specific than saying working with athletes that pay— sorry, that play all around the world, because the way that a caddie is paid is different. It's unique to them. So be the person for that. The more you get down that specialization spectrum, it is increasingly hard to avoid industry. But your job as a leader in a firm is to take it down that spectrum. Every step down that spectrum gets you into more premium, more rare and valuable problems. But most of us, we are afraid to take step one because it feels like we're closing the door on maybe other things that we enjoy or our curiosity. That's often— niching down is also often framed as the death of curiosity and getting to see lots of things. Best framing I've heard for this, I've said it so many times, comes from the Win Without Pitching manifesto. You're standing in a room full of doors and you're afraid to walk through a door because it means you'll never get to go through any of those other doors. What you don't realize is once you walk through it, you're in another room full of doors and you never would have known they existed had you not gone through it. Share the story of a guy I was chatting with at an event in Phoenix last year who's like, I got a problem, dude. I niche down into legal. We just did a whole like 6-month rebrand around legal. We're just finishing the rebrand and I'm now realizing there's like 3 sub-niches within this that are way juicier for us. And those are the only things I want to work on now is now this sub-niche within legal. And his question was basically, should I do the rebrand again? There's levels to this and they never stop. And that's the goal is to like find the problems other people don't know about that are super scarce and super valuable. Like that is the dream firm. And if you're afraid of a given industry, industry or something like that going out of business, like having this extinction event with the people who you work with, just know that once you're into that next room, you're afforded access to more premium doors. And so the one that you go through, like along the way you're meeting an entire ecosystem of people that are like supporting that industry and doing different things within that industry. If that entire industry really goes belly up, where do all those people go to? Where do all those relationships end end up. It feels exceedingly unlikely that a switch just flips and that business stops and those, those people go nowhere and there's not, you know, an adjacent industry you discovered along the way that isn't still valuable. Heard an amazing framing for this the other day: don't be the best, be the only. So much easier to be the only than it is to be the best. All right, 2 more to go here. Fourth version of this feeling of needing a better client is a lack of visibility around your firm. And this is an issue maybe the most so for firms who are overcapacity. The firms who are saying, I don't need more visibility, I already have more work than I could ever do. They're now overcapacity. And so they don't have the time to put efforts into the right type of visibility, the visibility that will yield a client that's 3 times as profitable as anybody else on the list. That is the path out of capacity is a better client. Here's what that sounds like in the wild. Our biggest challenge is increasing visibility, getting in front of more of the right service-based business owners who are ready for a true financial partner. Partner, not just a bookkeeper. We're wanting to streamline our marketing efforts to increase the volume of conversations we can have with ideal clients. And we have the systems, but we stink at the marketing. Now, oftentimes this starts with the channel. Should I make a podcast? Should I post on LinkedIn? Should I get into YouTube? Should I go to trade shows? That's secondary. Start with 3 questions. Number 1, who's the specific person that we're gonna serve? And this helps if you have an example of, of this person that you could point at within your business or, or, or or in the wild as well. Second, what is the specific problem that you solve for them? The more expensive the problem is for them, that is, the more it is tied to how their business makes money, the better. And the more rare the problem, the better. Everybody needs a tax return filed. That's not a rare problem, right? Then third, you ask, where do these people already hang out? Where are they already? Once those are locked in, the channel where you should be hanging out, that answer becomes becomes super clear. There is a path to building your own audience wherever you want to build it, but the much shorter path is going where those things, those conversations are already happening, borrowing from other people's audiences, influencers, software companies, membership organizations. A lot of people right now are into social media and they are building their audience. That is a slog, man. It is a long journey. It's not to say that it is not, not worth doing, but the much faster path in is going where those people already are. Uh, just, I was at an event last week. We're in the middle of my live workshop series. We're gonna have over 1,500 accountants out at 20 events in the US. Uh, Jason on firms.com/events to see all the cities that we're going to. But I was just chatting with somebody that was going into like, they wanna do more CFO stuff and it was something, it was like masonry related. He shows up at a trade show, all these, all these big groups there, $10 million companies, literally the only financial person there. Like not even exhibiting, just bumping around, having conversations. Figure out where those people are already hanging out. And if you're serving a specific enough person and problem, those people will be so excited to work with you. I still remember Remember, like, I changed barbers when I moved, and I told this guy— he was asking about what I do— and he's like, oh yeah, no, I gotta— I got an accountant. Not great. I was like, you know, there's accountants that just work with barbers. And he was like, shut the front door. Like, I made that guy's week. He clicked his little heels, and I made a recommendation for him. But he'd been in business for 25 years and had never worked with an accountant that just worked with barbers. And we're all like, what's the difference, man? Like, that's a cash basis company. That is a very straightforward company. Tell that to this guy, because he was over the moon at the idea of finally being able to talk to somebody that understands barbering. And funny enough, this guy, like, I was telling him about how I do thought leadership. He's like, yeah, there's like, like, thought leaders on how to run barber businesses. What do I— don't— what, what do they call barbershops? There's like thought leaders in his space that he's super, super into. Who's the accountant that is doing the collab with these influencers, with these publications, the membership organizations, whatever they are? There's so much of this opportunity out there right where you can meet people where they're already hanging out rather than having to plant the seeds on social media and be like, well, yeah, give me 6 to 18 months to build this YouTube channel and then we'll see if it was worth it. To be clear, my take, like, if it's me, I'm doing both. But going where the audience already exists, that is step one. Spring is here. It is spring cleaning season, the perfect time time to clean out the dusty corners of your accounting firm and just get rid of the stuff that you don't want to be doing still. And for most of us, one of those cobweb-laden services that is just stuffed into the corner of the garage, it is bill pay. Well, good news, my friends, artificial intelligence is here to help. You might have heard of it, the platform that's crushing it right now, this video's sponsor, MakersHub. Listen, nobody likes bill pay, okay? It sucks. But almost every business has to do it. And oftentimes it's high stakes, it's messy, it impacts inventory. You're going after like savings. The details matter. You miss a zero or a comma here or there. Oh my, oh my, oh my gosh. That's a big deal on bill pay, right? We are getting wildly good new AI models seemingly by the week right now. And honestly, MakerSub are the folks that I trust to like put this work, MakersHub have been like arguably making the best use of AI models over the last 3 years to solve a very, very specific problem. The problem of Bill Pay Nobody Likes It. So if you do this stuff for your clients or you have clients who deal with project tracking, receiving, like construction people and manufacturing folk, HVACsmen, super recommend you check out MakersHub. A great example of AI done well. To learn more, check out the link down in the show notes. Hey, I know you love Cloud Cowork as much as I do, but have you heard the news about Canopy Coworker? Subtle. It's a new AI assistant they launched inside of Canopy, one of this episode's sponsors. Canopy, a practice management system that is a feature nerd's dream. They're trying to cover as much of everything you need in an accounting firm in a single place. But as we talk about on this podcast often, it is much easier to roll out an AI agent inside of a closed system than it is to roll out an AI agent that works across, like, all of my systems, right? That's the trade-off. I want the AI that works across all my systems, but we're struggling now with, like, what's the most secure way to do that? The AI agent that works inside my all-in-one system? Buddy, that is easy. Flip the switch, count me in. Strap in, buckle up, I want it. Canopy is so convinced that you're gonna love what they got to show you, they're gonna cut you a check for 75 big ones. They'll give you a $75 gift gift card to Bed Bath Beyond. What's that? Okay. I'm, I'm not sure where the gift card is for, but if you book a demo with Canopy via getcanopy.com/jason, I'll put that link down in the show notes. They give you a $75 gift card just for coming and demoing. Do it. What do you got to lose? The last pain around this whole having to find a better client is struggles with the mechanics of 3-tier proposals because more people are going hard on this. And what I find commonly is people fall into 2 buckets once, once they start doing doing it. First bucket is, uh, everybody's picking gold. I got a lot of work to do. Second bucket is everybody's picking bronze. Why did I go through the effort of doing all this? Let's start with the goldies. If everybody is picking gold, all together now, what do we know this means? Uh, your prices are too low. And, and to be clear, the first time you send out 3-tier proposals, if you've never done it before, it feels like a bit of a YOLO moment where you're like, I don't know how people are gonna react to this. I don't know if anybody's gonna opt into the premium stuff. Uh, we'll see how this goes. Bulk send. The better way to do this is to send it out in tranches. Basically like, like don't send them all out at once because you don't know how they're gonna respond. Do this for anything. Price increase, firing clients. Don't go 100% at the same time. Start with say 20%. If everybody in the 20% says yes, guess what price the next 20% are getting? A, a bigger one. And you may be like, this is unfair, man. We've always given like more level prices to, to people. We get, we get so hung up on what we think is a fair price with what we think the price should be. We're not the ones paying it. Like, price is 100% in the eye of, of the beholder, of the person who is paying it. And it's why that new entrepreneur who's never had to hire a bookkeeper before, before, or a tax pro before, they just have no understanding of the value of it, versus the grizzled one who just went through 3 awful accountants. They're like, please, is there anyone in this universe who will answer the phone? That person is in a— like, they know the pain of getting it wrong and they're much more ready to pay, right? I could care less what you think the price should be, what I think the price should be. I care about what people are saying yes to. So if you're pushing out 3-tier proposals for the first time, this is why it's worth doing in batches. Same for, same for folks that are where everybody's saying yes to silver. Like, it's good to know before 100% goes out if the first 20% I say silver, bronze, the first 20%, everybody picks bronze. I maybe, maybe we need to change something up for the next 20%. Now, if you have the problem of everyone picking bronze, no one is going up to the premium tiers. It goes without saying you're not offering them something that they want, right? Like something about that, either the price or what's included in it is not attractive enough for people to go up to it. Now, the hard truth here is what they, what we want them to want is you you, is your team, is the people, is the interaction, the support. We can sometimes steamroll this when our 3-tier proposals are 100% technical and we pile all these things on silver and gold that are all accountant speak. Like, our clients don't speak accountant. They don't know what any of those things are. What they want to see, what they're going to look for is, am I allowed to call them? How long will it take them to get back to me? But those are the last things we usually put on our proposals. My take here is half of the line items on a proposal should be scope related and put it in as normie language as possible so they can understand it. The other half should be around service delivery. That is the only part of the process they understand is how you interface with them. The proposal needs to be really, really clear on that. That's just as important as the doing of the work when they don't understand what any of the work you're doing is. So if everybody's picking bronze, there's a risk here that you have just loaded all sorts of technical things on this 3-tier proposal and they're like, I don't even know what that more premium stuff is. I'm pretty sure I've never had it before. I'm just gonna pick bronze and if I really need any of those things, they'll tell me. But if, if you do this the way I would recommend and really stress the difference in support level and access to an accountant that they get, and they're still saying no to Bronze, then it means they, they just want the thing done. They're paying you now for a transaction, for a service rather than for support. And, uh, the clock is ticking on us being able to get paid for that sort of stuff because AI is getting better and better at it. This may be a situation where they have fallen out of love with the person that they first met when they came to work with your accounting firm, and this can happen as a byproduct of capacity problems. You take on too much work. You don't have any time to continue to foster that client relationship. In fact, they reach out and, and you're frosty. It's like the opposite. It's like when they want to talk, it gets in the way of you getting the stuff out the door that you have to get done rather than you trying to draw them in to have more conversation. And so they, they can fall out of love because you have kind of pushed them away and you no longer have that interaction. Connection. Just know, like, the problem here, it's usually capacity. It's usually simply leaving the room for those conversations to happen. Last possible, uh, factor on why everybody's picking bronze prices: if you right now are winning on price, then you've attracted the people that want to buy on price. You know the expression, you get what you pay for? We love saying that, don't we? Cuts both ways. You put cheap prices out there, who's it going to attract? The cheapskates. And so if you are the cheapest shop in town, if you are the, the be one that is trying to win by doing more for less, then don't be surprised when everybody on the client list just wants less. Don't do more for less. Do more or do less. Don't do both. Either do less for less or do more for more. Doing both is just self-sabotage. There is no important thing in your firm than who is on that client list. If you're the big boss, your job is, is like a wine list. You are the curator of who's allowed to be there year. And somebody needs to be putting in the efforts to ensure that your firm and you are visible to the type of people that you want more of. Because it doesn't take— I don't care how big your client list is, it doesn't take very many clients to completely change the profitability of the business and how much work you have to take on. Every single one of us, our most premium clients right now, there is somebody out there who would pay twice the price with an even bigger smile on their face. And to be clear, that is not twice as profitable. It's usually 3 to 5 times as profitable because your margin is not 100%. Your margin is 20, 30, 40, 50%. And so when the price is 2x, the profit is much more than 2x. And it's why I always come back to what is more important than putting in the efforts to attract that next person who will pay you really well for that work? Because when they come in the door, it means you can drop 2 to 4 legacy projects. That solves a lot of problems. Overwork, your systems being overcapacity, it all boils down to how much money can I make on the next project that comes in the door. To that end, we're going to cruise through some questions from listeners around this same topic that would have absolutely punched me in my funny bone when I was running my firm because I was dealing with all of these. Let's take a look. Mailbag, mailbag. This segment is called Mailbag. These questions are sourced from email, from social media DMs, from comments under this podcast. If you listen to the audio version of this podcast, in your player you'll see a link to the YouTube version of this podcast. Pop a comment, say hello, make some friends. Questions are also sourced from my cellular telephone. You can send me a text, call Call me 1-516-980-4968. Leave me a voicemail. Over 1,000 accountants now have interacted with me via that phone number. First question: we offer gold level service but get paid at bronze level prices with our legacy clients. Do you have any recommendations on how and when to communicate a pricing change to those clients? Sometimes it isn't always just a pricing change. It is— they just, they just gotta go. If we go back to the example of what's the best way to roll out a big pricing change, you never do it 100% at once. You start with, you know, go 20% at a time and start with the people you most want to keep, the people you think are most likely to say yes. You push out that pricing increase to the first 20% and you see how it goes. If everybody says see you later, that impacts how you're going to handle the next 20%, right? But likewise, similarly, if every single person says yes— and don't be surprised if they do, this is the most common thing folks get wrong— is they, they badly estimate how many people will leave. Very few believe. But if everybody says yes to that first 20%, next batch got to be priced higher. Now, a, a, a, a, now a big reason how we can somehow end up in this situation where there are all these demands of me, everybody wants me, everybody's calling me, emailing me, but they're not paying me very much, is that we haven't scoped you. We've only scoped the work. And I mean, any 3-tier proposal template you see out there, even from like the major, uh, proposal providers, the vast majority of them, those proposals are simply around scope scope of work. They're not around scope of Jason Staats. They're not around scope of Becky Staats. Do you get her cell phone number? Is she going to call you back within 24 hours? She going to call you back within a week? Will she even call you? All we do is we scope the work. We don't scope the expectations of how available the individual is, even though that's the thing that the client cares about most. The client doesn't understand the work. They just want to know where they go when they have questions. Are you going to be an advisor to them? And so you end up being like overwhelmed. You have all these demands on you. All these people want to talk to you, but that isn't factored into the proposal at all. It's just the scope of the work. We got to handle both those things in our proposals. And the great news here is, is it is easier to sell more client service, more client delivery than it is to sell more work. There are people who will happily pay 2, 3, 4, 5 times the rates for more premium client service, but the same work. And one of those people, they say, yes, great, now we can cut 3 legacy projects. Now we've got the bandwidth to be so hands-on. Imagine if you were doing one out of every 3 projects you do right now, just how hands-on you could be with your clients. And to be clear, you're making the same money. So we got to think about how we scale both the work and your availability. Hey, real quick, the most important question accounting firms are asking right now in 2023 26 is how do I use AI securely in my production workflows? I've said this many times, don't take security advice from a YouTuber. What you need is actual, like, proper IT help, like this episode sponsor, Barido. If I had to shoot from the hip, uh, with what I've seen from folks, Barido might be the fastest growing IT solution for small accounting firms. I say small, I mean that like 100 employees and under. You need an IT group that just works with accounting professionals, otherwise you are you are paying this IT group to learn accounting firm things. Like, I had a local IT guy that I once brought over and spent 2 days watching him learn CCH Engagement, like how the, like, database worked on my server. Oh my gosh, please don't do that. Work with an IT group that only supports accounting firms, particularly right now as it is so important that we are beginning to implement AI effectively inside of our firms. You to do that responsibly too, right? You need better help with this stuff? Look no further than Verito. They do hosting, they'll be your entire IT group, they'll do your whisp. Can't recommend them enough. Check out the link down in the show notes to learn more. Hey, just real quick, if you're using Outlook or Gmail to manage email inside of your accounting firm, brother, those were tools that were built, uh, 20+ years ago and not for accounting firms like like yours. If you haven't heard of them, let me introduce you to one of today's sponsors, Missive. Missive, M-I-S-S-I-V-E. It is exactly what I needed. I actually used a bunch of like off-the-shelf help desk sort of email tools in my accounting firm. Man, man, do I wish I had Missive. It's a vastly more efficient way to manage email across your entire team, because email is not a hill that anybody should be dying on alone. We did a demo on the main channel of it. If you want to see it in action, just search my name and The Missive. Really cool, doing some cool AI stuff as well. Worth checking out to learn more about just what you're missing by using Outlook or Gmail. Check out The Missive info down in the show notes. Next question: would you ever recommend discounting your prices in order to close a client with a plan to bring it back up to full price once you've proven your value? I get so many versions of this question because people know the answer, but there's always an extenuating circumstance where it's like, well, in this situation, would you consider it? It's like the reason you're asking is that you know that it's probably no. I mean, I can speak to all the reasons why I discounted prices in the past. It was a client in a niche that we really wanted to get into and we're like, wow, man, we get, we get a foothold in here. This is going to be huge for us. We would discount because they were good people and we end up collecting all this low-bono work that's like kind of sort of discounted. And then they would refer their friends because they're getting it cheaper from us than anybody else. I mean, the real answer here is they're a good client if they can pay your premium. Rates. That's a pretty big factor in what makes a premium client. And even if you're trying to get a foothold, trying to get a start in a specific client base, the plan can't be to discount every client when they come in initially. Now, a different framing for that is avoiding the problem of overselling. So if somebody comes to you and they've never worked with a professional bookkeeper before, and they're like, my mom just said she won't do my bookkeeping anymore, don't sell them CFO services. Sell them what they think they need right now. They are They're hungry. Give them a sandwich now. Don't give them 5 sandwiches and be like, listen, listen, listen, listen. I talk to people like you every week. I know every need you're going to have for the next 8 years. Here it is. And it's $7,200 a month. And they're like, brother, my mom did this in 30 minutes a month. Some people think of this as discounting, only doing the bookkeeping. Start with just what they need. Don't oversell them. You know right now what their next problem will be. When they feel that next problem, sell them the solution to that next problem. And so if we flip this question on its head a bit, oftentimes we will get on a high horse and we're like, oh, we need, we know everything that you actually need. And this is the only way that you can work with us if we do all of these things. There's some scenarios where that's important, particularly around compliance and able to do the work correctly. You don't really want to go below the scope at which you can, you can do the work properly, but we got to resist the urge to get on that high horse and pull them straight into the, the CFO mastermind when they just aren't they're not there yet. Like, they don't feel that pain yet, and so they don't value it and, and are not willing to cut a check to solve a pain that they haven't even experienced yet. So no, don't discount your price. How do I figure out what my minimum price should be when starting a firm? Brother, it is all made up. Points don't matter. Pricing, two different ways to approach it. One, you sell a service, bookkeeping, tax prep, something like that. And when you give them a number, the person will be like, how much you do bookkeeping for over there? My friends getting tax work for $50 cheaper in that. Second way you can do pricing: ROI-based. What are they going to get out of this? How can I make their company more money? Because if I will give you $2 in exchange for you giving me $1, you don't care that that's 50% of the money that I just made you. You will do that until the end of time. There is no end. That, that doesn't stop at $100 or $1,000 or $1,000,000. You will keep giving me dollars for as long as I give you $2. That's the second way to frame your prices. That leads to much more premium pricing than than selling a service, but it requires finding a specific pain, an expensive pain for someone that is also a rare pain. Everybody else isn't solving the same pain. Third thing to do, which is especially important starting out, is be aware of the other productized solutions out there. When you're first getting started and taking rock bottom prices, people are also looking at productized services like TurboTax Live Bookkeeping and Bench and literally, you know, like consumer tax software be able to confidently explain, here's what these services do and here's what my service is and how it's fundamentally different. If they don't get a relationship with an actual human over there, what you do is different. If they don't get the same persistent year-over-year relationship, what you do is different. If they can't give you a call when they get a tax notice, if that other service won't customize how they do the work in a way that makes sense for their business, what you do is different. All we have to do is be able to confidently explain, here's what I do, here's actually the market value. And if all you want is that, go to that. Best of luck to you. See you back in a couple of years when it's not good enough for you. Last question: my clients keep coming back asking for work that's outside the engagement scope, and my team doesn't read the statement of work before jumping in to help. How do I catch scope creep on both ends? What do you think they mean by both ends? All right, I can tell you what I did. I ended up making it mandatory that we had this file in like the perm folder for every client tracking scope changes throughout the year, bigger small. Anything changes, we put it in there. And then each year when we do the renewal, there are some kind of key metrics in the companies that we would look at from total revenue to employee headcount, things that genuinely impact the scale and volume of work usually that we have to do for them. It's very common you get into working with a company and it will quadruple in size and you find that your fee only increased 15%. We got to keep up with that. When the company is bigger, there is more in it for them to find tax savings. To make sure everybody's getting paid. There are over-the-top company metrics like that that we would watch, but it then became the responsibility of my team members to track those scope changes in a centralized doc over the year. Now, first year I did that, I'm like, well, this will solve the problem. I get to the end of the year and I do the renewals and I'm like, all these docs are empty. What did I expect? What changed this was putting the staff who are closest to the work in charge of the renewal. All of a sudden, boy, you wouldn't believe how detailed those docs were the next year when they were on the hook for doing the renewal. Totally solved that problem. So if you, the big boss, are doing the scoping over here, but then the person doing the work is totally disconnected from that process, don't expect them to have the uncomfortable conversation or raise their hand or tell the client no when that doesn't impact them at all, right? Their incentives different than yours. Which brings me to what actually are their incentives? Are they making any money when the firm makes money? Is there anything in it for a staff person to suggest a price increase? In 99% of accounting firms, there is not. There is, did you work for 40 hours this week? There is maybe what is your realization rate, which in many ways is actually impacted by the price. But just play this out in your head. What if that staff person made money based on production, made money based on what that client was paying the firm? Then the next time there's a client that's like underpriced, or the next time the client's like, hey, can you take this thing on for you? You know what starts happening in that person's head is they're like, let's run the numbers on this. How much should that be? Ooh, that would be X amount of money for, for me. All of a sudden that, I mean, that changes everything, right? Like now they are raising their hand. Now they're thinking about pricing strategy. Now they are geeking out on my podcast episodes around how to optimize 3-tier proposals, because if we can get to a 20% bigger number, that impacts them. But in most of our firms, they're completely disconnected from that. And so the big boss sees the behavior of the team and you're like, we talked about scope creep, why aren't you doing this? And it's like, well, because the client asked for something on the phone and the person didn't want to say no and there's, there was nothing in it for them in the same way that there's something in it for you. Like, consider why do you care about scope creep? What are the reasons? Probably the profitability of the project. If the profitability of the project doesn't come into play at all in that person's performance, how they're paid, how they're incentivized, then obviously they're not going to be as motivated around that as you are. Now, if you are like a business owner like I am, when you were in their role, you were probably much more profit minded than the average staff person, where you're like, what do you mean? My job is to make the company more money and go all out and do all these things. Like, that's the reason why you own a firm now and are not a staff person. Like, I think you have to enter this with the assumption that a staff person is going to try to find the most comfortable 40 hours, not the most profitable 40 hours. And to be clear, not everybody is wired that way. Like, all people are not that way, But if you, if you design your systems with the assumption that they are, it solves the problem of having different incentives. But as long as that change in scope has no connection to, you know, how they're incentivized or anything like that, it is asking a lot for them to wade into an uncomfortable interaction with a client, even if that is the rule. And, and for sure, like, they should— like, that's the rule, they should. But follow the incentives. If there's something in it for them, they will be much more proactive about doing it. Of all the talking points around accounting firms and workflow and technology and AI and this stuff. Like, there is literally nothing more important than this. What's my client list today? How do I get it to an even better place? How do I find people who will pay me more with an even bigger smile on their face? Because they're out there. You want proof? Look back at what you were charging 18 months ago, 5 years ago, whatever it is. There's always a more premium client. And when I say premium, that is not bougie, that is not a stuck-up client, that is a client that just has more expensive problems that you can solve for them. Easier said than done navigating that and ensuring that you do right by the clients that you already to have, but it is what solves all problems in an accounting firm from capacity to profitability, getting home in time for dinner. And if you are the big boss and you're not working on it, who will, right? Unless somebody is working on this, then we are just, we're just, we're on the hamster wheel. We are working with what we've got instead of thinking about how do we make this hamster wheel even wheelier, some flames on it, something like that. All right, gang, appreciate you coming and hanging today. Tell you what, I mean, I told you I'm in the middle of my workshop series right now, seeing, meeting like hundreds of you every single week right now. So much fun, uh, unbelievably good vibes. Amazing seeing so many of you meeting each other at these events too. If you haven't checked out the tour schedule yet, head over to jasononferms.com/events. I'm gonna be within 40 hours of 80% of the US population. And yes, we have so many people driving from 4+ hours away for these. It's amazing. But want to see you there. Either way, I'm gonna see you in the next episode of this, right? Can't wait for it, okay? See you there.