Last I checked, we all have a say in the clients we choose to work with. We all have the right to serve clients that respect us, listen to our advice, are prepared when we need them to be, and pay us on time. But this should be the bare minimum: We should also seek out clients that allow us to grow and develop our expertise in targeted areas, which in turn increases our value to them.
I know that some clients don’t check all these boxes, and sadly some check very few. It’s these clients that hold us back from finding and serving those who do check all the boxes. Additionally, this kind of nonideal client base exacerbates the effects of fatigue, burning out, and potentially driving out the very team we’ve worked so hard to hire and retain.
Bottom line: We are not, cannot be, and should not feel as if we are a victim of our client base. It’s time to do something about it. Here are four simple steps to build a client base you love:
The time you free up by ejecting nonideal clients can be redeployed toward your ideal clients and can result in additional projects that offer more value and greater goodwill (which often includes referrals of other ideal clients).
1. Evaluate your client base. Set up a matrix of criteria, including minimum fees, realization rate, referral generation, within your sweet spot of services or preferred industry, timeliness with payments and requests, number of services used, and more. Remember that every dollar of revenue is not created equal. A client that pays you $5,000 and checks all the boxes is worth more than five $1,000 clients who don’t. And make sure to bring your staff in on this exercise. Why? You’ll undoubtedly have a few more excuses for your clients’ behavior than your staff who interact directly with them.
2. Determine who’ll be cut from the firm and how. Some clients will simply need to go due to chronic bad behavior (these are the easiest to spot). The next tier of clients may simply be too small to effectively service, or the fee too low to be worthwhile. Perhaps you refer these out to a smaller practitioner. Remember though, it’s probably not enough just to raise fees until your clients leave, because some nonideal clients will simply stay and pay more. Further, don’t use a hatchet with this exercise—use a scalpel and make precise and deliberate moves to cut the client roster.
3. Establish a new filter to prevent this from happening again. If you don’t actually make changes to what clients you choose to work with, you’ll end up with the exact same problem a few months or years down the road. Implement a new, higher minimum fee and number of services used requirement each new client must meet to ensure you only serve your defined ideal client. Your billing rates should keep up with your staff raises and overhead costs. A good target is three to five times compensation and overhead. This will enable you to capture the true cost of serving each client, help to purify your realization rate, and make sure you’ll love serving each and every one of these new clients!
4. Repeat annually. You should see immediate results, and you’ll love more and more of your client base every year.
A final note: Don’t fear a revenue decrease. In fact, in the worst-case scenario, expect revenue to remain flat. But more often, you’ll see your revenue increase. The time you free up by ejecting nonideal clients can be redeployed toward your ideal clients and can result in additional projects that offer more value and greater goodwill (which often includes referrals of other ideal clients). And by creating more room on your plate, you’ll have the capacity to serve those new ideal clients when they come your way.
Bottom line: Serving a client base that you love and that loves you back is every practitioner’s dream. But it doesn’t have to be a dream—you can make it a reality. While not necessarily an easy exercise, the outcome of cutting your client base can be significant. And you, your staff, your firm, and your dream clients will all be the beneficiaries of the outcome.
Learn more about Art Kuesel and Kuesel Consulting at www.kueselconsulting.com.
Reprinted courtesy of Insight, the magazine of the Illinois CPA Society.
