Mark Wickersham explains why accounting and bookkeeping firms chasing new clients often trap themselves in low pricing, overwork, and stagnant profits. Fix your pricing first, he argues, drawing on his own experience and a member's story. Then pursue the right clients.
Mark Wickersham
June 30, 2020
Welcome. In this video, I'm going to share with you why an obsession with winning new clients might be causing you big problems. And I'm going to share with you what you need to fix first before you go out and win clients. I got an email recently from one of the members of the Value Pricing Academy, someone I work with. And I was doing an online session where I was talking about and sharing my story of when I started my accounting firm back in 1996 and how I was growing my firm from zero clients to over 200 clients in a couple of years. And in the email I got, this lady said, today's session was again full of fantastic content. Mark, you mentioned four prospects a week. Where I am, where I'm, where I'm located. I'd love to have four prospects every month. Some months we get four, then sometimes we go two or three months without prospects. But then she went on to say, I'm currently reluctant to do much marketing because of staffing issues. My fear is creating too much work. And it got me thinking that that's something that I understand that problem and a mistake that I did actually make. Way back in 1996 when I started my firm was, I was obsessed with winning clients. I thought being in business, having an accounting firm, a bookkeeping firm, was all about growth and being as big as possible. And part of that's down to the old fashioned valuation model of accounting firms, which is a multiple of grf, gross recurring fees. Very often people buy accounting firms at a multiple of whatever though that top line sales is. And so we have this focus on top line, not bottom line. We have this focus on winning more clients. And here's the big problem with that. Here's the big problem. If we are focused on winning new clients, then what often happens is we win more clients because we want to, because we, because we want, we want more business, we want to grow our firms, we want to make more money. So we go and win clients. Then what happens is we find ourselves getting busy. And if we find ourselves getting busy, we then think, okay, well how do we solve that? We need to hire somebody. So we go out and we hire somebody to do the work for us. And then what we find is that, and usually because as a profession we're not good at hiring or managing people, we tend to find that we now become even busier still because rather than doing the work, we love servicing, helping clients. We are now spending our time managing people, micromanaging, fixing problems, firefighting, fixing the thing, the mistakes that they make.
And not only that is, we've now increased our fixed cost base. Now we've increased our sales, but we've increased our costs because we have salary costs, payroll costs. Our profits haven't changed. We find we're working harder for the same money and sometimes for less. So how do we solve that? We win more clients. The next time we win a client, we'll start making money. So we get obsessed with winning more clients, and then we find we're getting even busier still. So what do we do? We hire somebody and we keep doing the same mistakes over and over again. I was doing this between 1996 and 1999. I was growing like crazy in my accounting firm. I was winning clients left, right and center. I, I was hiring people. I went from zero to 13 team members and my life was a mess. I was working crazy hours. Here's the thing. Most accounting firms, most bookkeepers, probably even all, are way too cheap. And you know that's the case. Because if you're working crazy hard, crazy hours for not enough money, the root cause is your pricing's wrong. You're pricing the wrong way. You're pricing too cheap. If your pricing's wrong every time you win a brand new client at too low a price, you are making a bigger problem for yourself. You become busier and busier and busier. And you will never fix your profits, your income, if you're too cheap. Because you'll find, and I hear people say this all the time, Mark, I'm working crazy hard just to meet the payroll. You're working hard for other people to pay other people. And that's not a life. So before you think about marketing and winning clients, number one, get your pricing right. Most of the profession is way too cheap. We have to find a way to price better, to win clients at higher prices. When you get your pricing right, then start winning the right clients. That's the key to building a profitable accounting firm. If you like this video, click the thumbs up button. Please feel free to share it. If you've got any comments put below and below here, I've put some links to some other stuff for you. Thank you for watching. I'll see you on another video soon. Bye for now.
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