Cowardly CPA

[TaxBird]

Wow Bob!

This is great advice!

I have printed it out and plan to incorporate your wisdom into my on-going 2007 planning. I especially like the metrics you provide. Aside from the AICPA MAP surveys, I don't know of a good source for metrics like these.

This is very valuable help!

Thank you very much!

[BOB W]

Personal experience.......

....is the only metrics I can give you, nothing scientific............

[Armando Beaujolais]

....is the only metrics I can give you, nothing scientific............

That's what's great about this message board. A wealth of personal experience.

[TaxBird]

I agree

That's what's great about this message board. A wealth of personal experience.

The 'scientific' stuff has never served me quite as well.

[BOB W]

Word of warning....

.... Advise can come from many practioners on how to do this or that, but every practice has something unique about it. One huge item is where the advisor is at in his/her practice life and where the student is in his. Older practioners can only talk about getting top dollar for their labor but fail to admit to all their freebee time building their "Core". Yes, older practices should be capitalizing on their "goodwill" which they have slaved for during the "begining years".

The point I"m getting at, is to know who you are talking to (years in practice) before you can say they are doing it right or wrong. There is a tendency to want to help someone by them not making the same mistakes you did. But chances are you did do it correctly and the "hard knocks" road was really the best route.

The real problem with growing a business is "within" each practioner and how they can recognize what stage they have just completed. Most fail to "raise" their fees every year, just for the sake of letting their clients know that time ($) does not stand still. Most fail to weed out clients at the proper stage. ( As I mentioned before "weeding" and "big fee increases" to the client you want to get rid of are the same thing).

[Armando Beaujolais]

I heard good words of advice at a tax seminar.

"If you don't fire clients every year, you're asking for headaches."

Make your career, and your life, more enjoyable. Why play games? Send them a letter that says you won't do their taxes anymore. Don't beat around the bush. Don't get into the explanation game. Two sentences, then "Sincerely."

[BOB W]

Warning ?

This is what I'm talking about, giving advise as a general statement without knowing where the student is at in his/her practice.

I fully agree with the speaker at the seninar, but I am at that stage in my practice.
Some new practioners need to continue with some of these clients as they are not ready to take such a bold step.

[TaxBird]

But Bob

Wouldn't that also be a part of the learning curve? That is, learning when advice applies & when it doesn't?

As for me, I would rather someone give me all the advice they have and let me judge when & whether or not it applies. In the end, my mistakes are mine. Whether or not I acted upon someone else's advice, I still decided to act (or not). That makes the wins 'ours' and the losses mine.

That's my philospohy anyway. So with regard to me, please continue to give me the straight poop - no filters.

[BOB W]

Yes..

.. that is the proper way to react to advise, see if it fits your business concept model. Interpetation is a life-long personal decission we all have to deal with. I'm very impressed by your understanding of the " growth process" and the filtering one must go through to be successful.

"Knowing that something exists is better than not knowing, so when you make a mistake you know how to fix it next time"

[TaxBird]

.. that is the proper way to react to advise, see if it fits your business concept model. Interpetation is a life-long personal decission we all have to deal with. I'm very impressed by your understanding of the " growth process" and the filtering one must go through to be successful.

"Knowing that something exists is better than not knowing, so when you make a mistake you know how to fix it next time"

Thank you for the compliment and the quote. I like them both.

[BOB W]

The only other topic.....

..... left is "How to excelerate core building".

Maybe others will chime in on how they did it.

[Armando Beaujolais]

I don't believe it's necessary, or even beneficial, to do volunteer work for clients, even at the beginning stages.

Too many practitioners are afraid to ask people to pay them for their work. Do plumbers make free house calls when they're starting out? Does a new convenience store in the neighborhood let people walk out without paying just to build up a client base? Of course not. Why should tax practice be any different.

I see it time after time. Tax practitioners are afraid to ask clients to pay for services, then they complain that the clients are deadbeats looking for free advice. We all want to help people, that's one of the reasons we got into the business. We'd rather not have to worry about billing, it's awkward. But it's our job.

I think it's a natural tendency, and not a positive one, for tax practitioners to not want to bill for all of their services. I'm not sure it's good advice to suggest a new practitioner give in to that negative impulse.

[BOB W]

Armando...

.... you are most certainly correct in doing FREE tax returns. Just to be clear, and I see that I wasn't, I would not advise new preparers to do tax work for free, just not for full value.
I've always talked about being under FMV during the initial "core building" stage. Slightly under FMV during the next stage and then onto FMV & above when the practioner feels his core is solid (all the unwanted are out) and still growing.

Thanks for bringing this up.

Can you think of any other holes to throw into my posts?

[Armando Beaujolais]

I didn't intend to throw holes in anyone's posts. I simply disagreed. I hope that's O.K.

At what point do you start charging the real rate? After you've had a client for three years you start charging them more? That's sorta like the "Discount for New Clients Only." You'll make your long-standing clients mad doing that.

In my opinion doing work for less than its worth is using the wrong solution for the wrong problem.

[BOB W]

I didn't intend to throw holes in anyone's posts. I simply disagreed. I hope that's O.K.

At what point do you start charging the real rate? After you've had a client for three years you start charging them more? That's sorta like the "Discount for New Clients Only." You'll make your long-standing clients mad doing that.

In my opinion doing work for less than its worth is using the wrong solution for the wrong problem.

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Have you always worked for top buck, even when you started? I know CPAs that started out that way and after 5+ years they are still very small, doing 100 tax returns and 15 businesses. They had plenty of time to keep up with education areas but no one to practice that education on. They simply didn't have the variety of clients.

Pricing structure moves up for everyone at the same time, even new clients as your core starts to get above 300 tax returns and/or 35 business clients. Everyone should have been geting annual increases (minimal) up to this point. 300/35 is a point where client weeding should be put in place. (I happen to like larger fees to those I want to weed out instead of saying good-bye.)

My whole premise is using "Fee Structure and Compitency" to attract referrals thus building my core as soon as possible. Only then can I play with the $ because I have volume.

An example of "Volume" is, a retail store sell 1,000 items a day, that's 365,000 items per year. If he raises his price on every item by .05 he will increase his net profit by $18,250 that year.

When talking about taxes and businesses I am looking at increases of $25 for taxes and $25 a month for businesses.

tax returns 300x$25= $7,500
business clients $25x12x30=$9,000 > $7,500 + $9,000 = $16,500

This increased income is for the same work as last year and your core is still growing.

Again, all new clients are coming in at your current rates.