Banker/Lawyer/Retailer/Ship's Captain?

[Black Bart]

Phone call five minutes ago: "Y'all doing the holiday loan refunds this year?"
Response (silently gnashing teeth and cursing Jackson-Hewitt): "No ma'am, we're not."

Courtesy demands restraint, but it would be gratifying to add "We do taxes -- income taxes!. We do not act as a bank, draw up wills, perform marriages, survey lots, shine shoes, or sell flour. And...our tax returns don't include Happy Meal coupons."

When I began this business long ago, the few minor changes were several years apart (excepting the advent of that out-of-control mushroom -- the EITC). When significant change debuted, I naively took it as a mere form improvement (the next year would be "normal") -- and I was dead wrong. The pace of change encompassing new angles, forms, and laws accelerated from toddler's crawl to full gallop and hasn't quit since.

How I envy the practitioners of yesteryear. A historian of 19th century tradesmen wrote that, once a craft was mastered, no further instruction was needed. CPE was an unknown concept -- shoemaking or sausage-grinding was learned as a teen and done the same way 'til death. How perfectly satisfying. I know our business only began in 1913, but it's still a nice thought -- maybe a nice, quiet clerical job off in a corner somewhere.

"Far from the madding crowd's ignoble strife." -- Gray, Elegy in a Country Churchyard.

[jainen]

what you mean

Sorry, I'm not familiar with the expression, "shine shoes." I've seen young girls put glitter on them, is that what you mean?

[ChEAr$]

Pardon me boy

"...and you can give me am shine."

First you brush off your shoes, then reach for a tin of Kiwi shoe polish and a rag,
and strike a match.... and......

ChEAr$,
Harlan Lunsford, EA n LA

[Snaggletooth]

Meeting the Challenge

...of Lotto Tickets, IRAs, Used Car discounts, RALs, etc.

Recognizing the competition:

1) My proverbial "guy across town." There's no kid he won't claim for a customer, no deduction he won't take. And if you use due diligence in your practice, customers who become angry (when you refuse to claim $50,000 in Inventory purchases/Cost of Sales, against $10,000 in sales) get up and leave and go "across town." This guy has always been there, and a predecessor before him.

2) HRB and JH. There's also franchise outfits like Quality Tax and Mr. Tax, but they haven't made the inroads. Multi-million dollar advertising budgets who claim they are better than you are. Promotional gimmicks which have nothing to do with cutting taxes. A mixture of preparers ranging from very bad to very good, but on the average certainly nothing which matches your expertise. Drive by one of their offices on Jan 23rd and the parking lot is full, while most of your customers haven't even made their appointments yet.

3) TurboTax. Maybe the biggest joke of all. Appeals to Engineers, Computer Geeks, and erstwhile do-it-yourselfers who have been sold on the idea that the only difference between the layman and a CPA is TurboTax. We're kidding ourselves if we can go behind TurboTax and save a client money if he only has a W-2 and a 1040EZ. But we can fill out a short form for about the same money as the cost of the software. The biggest problem is those who use TurboTax will never know how much money they've left on the table.

I'd like to hear some ideas as to how to effectively combat our competition. We can't just be better -- we've got to find ways to win. The guy who said "Build a better mousetrap and the world will find a way to your door" obviously knew nothing about marketing.

[jainen]

if they did come to you

>>how to effectively combat our competition<<

Why do you define "the guy across town" as your competition? You don't even want his clients--they're the ones who insist on $50,000 in Cost of Sales against $10,000 in sales.

>>Jan 23rd and the parking lot is full<<

Sure the parking lot is full. They have 10 preparers! But they still only do about 2500 returns, mostly low-end. Not too hard for you to beat that average. And they don't advertise that they are better. If you really see an ad like that, call your local consumer affairs office and the D.A. will shut them down.

>>those who use TurboTax will never know how much money they've left on the table<<

If all they have is a W-2 and 1040EZ, they will at least know how much they've left in their own pocket--the extra hundred you would have to charge them. With your minimum fee there is no way to satisfy a customer like that. And by the way, a lot of those guys have problems like barter and cash earnings, girlfriends with kids, and computer stock day-trading. It wouldn't be worth your time even if they did come to you.

[Snaggletooth]

No Answers

Jainen - this is typical of your responses. Keenly crafted and replete with correct observation.

However, the real world facts are that these guys are getting more and more returns, particularly low-end when the market is young, and then they keep them when they get older and need something other than short forms.

We still need to meet the competition. I regard all three categories as inferior to a diligent tax practioner in most cases. But they are getting customers who don't know that they need something better.

Example: A very good friend of mine did about 1000 returns - for a reasonable price in a small town. Jackson-Hewitt opened an office right across the street. For a few years, my friend refused to do RALs because he felt like he was stooping to their level. His customers, however, would ask for "instant refunds" and when he told them they were going to get ripped off, they would still get up and leave and go across the street, even though he had E-filing and refunds in 10 days. In a couple years' time, Jackson-Hewitt took about half his business. Reluctantly, he decided to offer RALs.

A "purist" approach is not what we need, even though it might be "righter than right."

[Snaggletooth]

Estate Planning

One way to combat the increasing commercial invasion of inferior tax preparation:

Attorneys in my area (and maybe in yours as well) are doing an absolutely miserable job with tax planning when they handle estates and gifts. They concentrate on ownership and defense against the forces of probate, and leave tax planning out of their equation altogether.

For years and years I stayed out of estate planning, gifting, etc. When you save your client thousands of dollars, they realize that they won't find what they need with TurboTax, with HRB/JH, or with the guy across town. Attorneys can be competition because they think they know everything. But if you find a few you can work with they can actually bring work to you.