So you’re sitting there thinking I can’t get accounting clients, I just can’t do it. I can’t work with anybody. I Can’t bring on any new business. I just don’t have capacity. My staff can’t do it, can’t onboard anyone. I’m overwhelmed. One of the biggest problems people have when they start really growing, and sometimes by mistake, with word of mouth and referrals, you start thinking that you can’t take on new business instead of asking the question. This is a key question, what would it look like to be able to continue to grow the business and alleviate the pressure on service delivery and increased profit margin? There’s this process that our team came up with probably about a year ago now. It has completely changed the game for people. I see people so many times that have grown their business but can’t add any new clients. Our process helps you to increase price for accounting services.
I can’t add any new clients, but at the same time, they’re not really making the kind of money that they want on the business. They have a low profit margin. Typically, when we think about profit margin, we think about the owner salary plus net profit. So, a lot of times people say, well, I can’t get accounting clients to the business. I’m going to pull something up here to show you guys. I can’t add new people to the business until I hire new people or until I get a better process. So, you’re at capacity, right? You’re at full capacity. Well then look at your profitability. Where is your profitability? If you’re at $250,000 in sales, your profitability should be 60% or 70% in terms of salary and net profit—could be even higher than that.
If you’re at a million in sales, you should be at 50% between your salary and net profit. So, if you’re not at those levels, in terms of your take home on the business, but you can’t grow, you feel like you can’t add new people. The question is why? The reason oftentimes is that the clients that you brought in negotiated the pricing and the packaging, it just doesn’t work to go to another level. A lot of times when you’re first getting started, you go out, you add all these clients, but you’re not really factoring in your own payroll costs. So, then when you start to realize, I’ve got to hire people and I’ve got to have payroll costs after the sales of this client…and then I’ve got to have enough profit in there for me to be able to pay myself and all the overhead.
When you’re first getting started, you kind of muscle it through you, you work nights, you work weekends, you work all this extra time. You don’t really price the engagement to have revenue, direct labor costs, operating expenses and profit. So, you have to go through this process. We call it the rinse, where you actually continue to grow the business, continue to add clients every new month. But, you never stop adding new clients and you don’t stop working on the backend processes. You not only grow, you increase profitability at the same time. Now this seems simple. This seems simple, but when you see this, this is going to be a simple little piece and you say, “Oh, that’s simple.”
Everybody knows that. Just increase price for accounting services. What you have to understand is that common knowledge is not common practice. And while this is a simple process, and this is logical, it is intuitive. When I tell it to you, you might think well, “Oh yeah, obviously that makes sense.” But the question is, why is it not in your plan? Why are you telling yourself you can’t grow? When you see this, you’d be like, “Oh, well obviously I could do that. That makes sense.” So, I’m going to show you a quick example here. We call it the rinse. Let’s say you have two clients that are paying $300 a month, right? So they’re paying $300 a month…then you get a new client. That new client is paying $1,500 a month.
Great, that’s awesome. Then what you’re going to do is you’re gonna go back and renegotiate those two clients that are $300 a month, and you’re going to say, “Hey, look, we loved working with you. I mean, honestly, we’ve crushed it together. But the problem is at this point, we’ve realized that when we look back, we’ve been losing money on this account since we started. We’d love to keep working with you. Honestly, we think we can work with you for years, decades, even, but we’re going to have to do this a little bit differently. Our new minimum pricing is $750.” So, we go back and renegotiate those people. Now let’s say they all stay. You have one person at $1,500, the new person, then you added one at $750, one at $750, that’s three total clients at a total of $3000 a month recurring.
So, you’ve gone from two clients at $600 to the three clients at $3000. Now that generally doesn’t happen just because you want to increase prices on somebody, not everybody stays. So let’s take a look here. Let’s say they both leave. They both say, “Hey Andrew, I gotta leave.” They leave, so then you went from two clients at $600 bucks a month to one client at $1500. If you negotiated the scope on that $1500 a month client the right way, you’re in a better situation, just getting somebody to pay a higher price. It doesn’t mean it’s a better client, doesn’t mean there’s better margin. You have to have the right price and the right package and scope. So, assuming you nailed the scope on that, you’ve got that one client at $1500 and then you go back.
Both those people leave. So, you’re in a better position because you’re managing one client for $1,500 a month revenue versus two clients for $600. Now what we typically see happen, is that one person stays and one person goes. So when you look at this, you’re going to see one person stays. one person goes, in which case we’re going to have two clients at $2,250 a month. Now it doesn’t really matter what happens because if both clients leave, you’re better off. If one client stays, you’re better off. If, both clients stay, you’re better off. You have three ways to win. The only way you lose is if you add that client at $1500, and then you renegotiate these, they both leave and that client leaves, which it is possible, right?
It’s not outside the realm of possibility, but it is highly unlikely. Now, when you do this, you basically go through the process of increasing revenue and I’ll even show you this. I write this out on this slide here to just give this presentation. You go through the process of increasing revenue. At the same time, you increase profit margin, keep the same team without hiring work with the same number of clients and reduce the amount of time that you and your team put in. When you do that, you grow the business and you grow the profit margin of the business. The first time I learned this was in the year of 2018, where I was able to grow our company and massively grow the bottom line at the same time, by going through this rinsing process. I first kind of figured that out and it sounds easy, it sounds simple, but the reality of it is that it is simple, but it’s not easy. Simply increase price for accounting services..
It is not easy to have these conversations. It takes a lot of courage. It takes knowing what to say. It takes getting that new client to be able to go back through and do the rinse. This is how to get accounting clients. We have a very similar process on the tax side. Now the tax side, it’s a little bit different because you got tax season and tax season price increases. You got tax planning. That’s an example on the monthly recurring accounting side, but we do the same thing on the tax side as well. So, if you’re interested in seeing the tax, I put a link below for you to go ahead and sign up for actually apply for our coaching program. Over the course of 12 months, the rinse is one of the things that we do. When somebody comes into this stage where “I can’t add any new business”, I start talking about the rinse and “of course you can add new business.”
In fact, you have to add new business because how are you going to get these clients to pay more? You have to renegotiate. How are you going to feel confident renegotiating, unless you can walk away? When you add a client at $1500, if they don’t go for it, you walk away. You say, “Hey, this isn’t going to work. You’re still better off. So you, you can’t stop growing the business. You can’t stop getting new business, but at the same time you have to rinse. You have to go back and do the renegotiations. Otherwise it will pile up. If you keep working with people paying $175 a month, like I know you got one…I mean, I know what you’re saying. “Well, Andrew, it takes like literally 30 minutes a month.”
It’s a person. It’s an entire QuickBooks account. It’s an entire invoice. It’s an entire engagement letter. It’s an entire person that can ask questions throughout the year. Guys, you can’t hardly email for $175 when you start thinking about yourself in a different way. So, I put a link below for you to go ahead and apply. We’ll talk about the rinse on the tax side. We’ll talk about the rinse on the accounting side, I’ll go through some case studies and examples of people that have done this. I’ll show you actual P&L statements that people that have gone through and done it. You’ll talk with me or somebody from my team. We do a 12 month program over the course of a year, grow the business, increase profitability…and like I always tell people, if you fill out that application below, you’re going to come on the other side, you’ll go through a slide presentation with our team.
It’s about 300 slides. We’ll talk about what we do and how we help. If at the end of that, you don’t think you can make an ROI, you don’t think you can make more than the investment of the program, then don’t sign up. I’ll tell you right now, you don’t need to do it. The last thing we want to do is have somebody come in that doesn’t think that they can take their business to another level with us because then you won’t. If you don’t believe it’s possible, you don’t even try. If you don’t believe it’s possible with us, the whole process will get sabotaged. So, go through, fill out the application and make the decision for yourself. Do you think you have a better chance of doing more in gross cash, sales, net, cash profit on your business this year? If you come in and you work with us and we work on some of these things, or if you keep doing what you’re doing, then keep doing what you’re doing. But if you want the help… you think we’ll do it faster, we’ll go bigger. I’d love to work with you. We want you to get accounting clients. Put a link to the application below and I will see you on the other side.
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