New Business Start Up

[Rachel]

My father and I are in the process of starting a Tax Service. We were wondering if anyone could give us some suggestions as to what worked and what did not work when you started yours?

There are two H&R Block locations in the town we are looking at starting up.

Any help would be greatly appreciated.

Thank you.

[jainen]

compete with the national firms

Last year Quickfinder introduced a CPE course on establishing and operating a tax practice, which I am currently working through. It's underlying philosophy and guidance is how to compete with the national firms on their own terms.

I don't agree with that at all, although it has many fine suggestions useful for any business. I think a small business should stand on its own, with a clearly defined service niche, low overhead (which will allow under-Block pricing if you wish), excellent year-round tax service, and (if you wish) related services such as bookkeeping or financial help.

[Rachel]

Thank you for that advice.

[jainen]

Sure

Sure. I forgot to mention what is in the course. The have a lot of ideas about the technical problems of locating an office and signing the lease, hiring and training staff, and PR and marketing. They don't offer a "system" or tell you how to resolve these problems, just raise the questions you should be thinking about.

Of course, you can find similar reference material in any bookstore, but this one is specific to the tax industry. We have particular issues such as seasonality and the overwhelming presence of H&R Block.

[Bees Knees]

One thing I heard years ago at a seminar that I will never forget is: Never turn down a referral. Only a small percentage of your clients will refer you to friends and family. Referrals are your best source for new clients, as most people shop for professionals (i.e. doctors, lawyers, accountants, etc.) by asking their friends and family who they use. Then, once you get a new client, give them the service they deserve. No amount of advertising can compete with quality service.

[jimmcg]

Agree, client referrals are the only way to grow in this business. Advertising, yellow page listings, etc. are a waste of money. Give your existing clients an incentive to produce referrals with a price discount on their next visit. The downside of referrals is they take time to produce but that is the price to pay when you provide a professional service. This business is a long term investment and is built by quality work which produces referrals which grow geometrically as time goes by.

[veritas]

If you wish to do payroll services I would recomend the yellow pages, but not for bookkeeping. It will work for taxes but the ad must be substantial so it can be cost prohibitive.

[taxmandan]

Define who you want as your clientele, there are many variations: the EITC/RALs which the national companies want; the middle income/1040-Sch A clients; high income HIGH maintenance clients like Doctors, Attorneys and other +$150K AGI who are good for high fees, but difficult to establish your credentials with them.

Once you decide what you want in a client that will tell you where to do your marketing and advertising, they each have different venues for locating them and getting them to try your service.

Daniel

[Safire]

If you want the RAL crowd, advertise early and often.

Otherwise, I agree with those who said that referrals are the way to go.

Word of mouth really is the best advertising in this business.

If you are going to add bookkeeping services, I had pretty good luck with sending out brochures that told about my business that included a list of clients ( with their permission of course ) .

[Black Bart]

Agree; referrals are best,

but you might also try sending out a client letter stating that you're new, open for business, and -- like Uncle Sam -- you want them (people like to be asked for their business). Maybe draw in a cut-out coupon of $10 off. $20 would be more effective if you can stand it -- I've had people drop me for ten, but most won't switch for that. The client letter simply tells them about new rules, regs, money-saving angles, etc. You can buy a pre-printed letter that has your name and address on it, but the ones you compose yourself will usually be more successful (the "personal" touch, you see).

If you don't know any tax angles to tell them, then you can subscribe to Tax Hotline (P.O.Box 58464/Boulder, CO 80321) and they'll sell you a monthly newsletter (about forty or fifty bucks a year) that tells you all the latest and greatest developments in the tax biz and you use some of their stuff. It's a bit hyped-up for flavor and tends to overstate how much can be saved by doing this or that, but, still, it does the trick by giving self-defense tactics against IRS and various tax-dodge gambits.

Our phone book lists everybody in town and their addresses, so if yours is the same, I guess you could use that for your mailing list if you want to give it a shot.

Best of luck and keep those comments and emails comin'.

[geekgirldany]

Referrals & Yellow Pages

I have to disagree about Yellow Pages being a waste of money. Some of my best clients have come from my yellow page ad. I don't even have a large ad. I have a small block text ad with all the other listings and have red lettering to make it stand out. The ones that have come to me through yellow pages came to me because of several reasons.

I list the following in my ad:
One: That the business is locally owned and operated.
Two: I specialize in helping small businesses
Three: Free Efile.
Four: I'm first in the listings

People ususally go down the list and I just happen to be first. My ad is pretty good for a text ad as I list all my services. Payroll, Bookkeeping, & QuickBooks. I have a listing under Accountants, Tax Preparation, and Bookkeeping. I have got alot of quality referrals from these customers. I pay $260 a month for my yellow page ads. I think the charge depends on what area you are in.

Definately decide on weather you want the RAL customers or not. Now its not so much the customer I am talking about. Its having to do all the RAL paperwork. Just to much headache. I did it one year and it was not worth it. But if you do it charge for it!

[veritas]

For $260 a month I would get about a 1/4" ad here in PDX.

[Roberts]

Yellow Page pricing is expensive - some would say worth it. My small firm pays $85 per month for a BOLD listing. I'd get a little box about and inch by 2 inches for about $300 per month. That's pretty large pricing considering my ad would be surrounded by all my competition. Seems I could spend that much and get a little more specialized advertising. Just my opinion.

[ED SMITH]

For anyone in a small business, especially someone just starting up, I would recommend they get a copy of "Guerrilla Marketing" by Jay Conrad Levenson, the creator of the Marlboro Man. This is the first in a series of ten or twelve that he wrote, but it is probably the best.

The book presents many different forms of inexpensive advertising and ways to carry out ad campaigns. There is a chapter on power words, some words being more powerful than others, FREE being the most powerful. Offer something for free, free Efiling, free review of the last 3 returns, free consultation, whatever.....

Evaluating the effect of advertising is very difficult. If someone says they spent $300 a month on advertising and only got one customer a month, each of which paid $150 for a return. So, the conclusion is they lost money to the tune of $150/month. WRONG!

If each new client returns for 5 years and brings one referral who also returns for 5 years, then the $300 ad cost has returns $1500, a $1200 profit. Obviously, there are a lot of different possible scenarios.

[Unregistered]

Free review of the last 3 returns sounds good. You'll want to see past returns to begin with, especially now during the off season. Possibly make money doing amendments as well. Newspaper ads, mailing lists, flyers in public places such as laundrymats would be better than a $260 a month yellow page ad. People are going to look in the phone book when looking for you so catch them off guard.