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Want to Start a Tax Planning Business?

Jeff has a tax planning business but has a great story because he tried to start his own firm before. What year did he try to start from the first time? 2014. And what did you get up to in sales on an annual basis when you quit that time and started the business? I don’t know if you can call it annual sales. I think I was making like $500 a month for about three months, and then I went back to work for another public accounting firm.

That was in the 2014 timeframe. Now the other great part about Jeff’s story is when he came back, you actually joined up with us and then right after you joined up with us, you got fired, right? Yeah, then everybody went in the group and said, congratulations, Jeff, you got fired. So I guess, walk us through—first off, how old are you? I’m 37 years old. What are the current services that you’re offering?

So, we are just doing a tax planning and tax preparation and quarterly planning, maintenance, and implementation with our clients. What was happening right when you first joined up with us?

At that time, October, 2017, I was let go for my job. Luckily for me, I had already started the process of Next Level Firms of making LinkedIn connections and sending out emails. 

So, I was in the process of gaining clients at that point. I also had people that had reached out to me while I was working at the firm to come aboard. So, basically what I did is I kind of set up some meetings because I had their contact information and their emails and stuff in my cell phone, because that’s how I had originally met them, on the street or through referrals, through referral partners and everything. I had the opportunity to at least make a little extra money when I started in October of 2017.

One of the things I didn’t cover with Julie, but I wanted to, in a couple of cases here, what you guys will see on these charts when I had these people put these together is look at how many times…you’ll see this as well, share your screen. If you go back on Julie’s you can see it. And so when you look here, whenever they hit bottom parts, it tends to be right before they peak out. 

So, I wanted to ask you that as well. I mean, obviously we’ve got this chart here, what happened in November, because remember this is before COVID. So in December you hit $84k a month. Is that right? Yeah. So that was before we lived in this new reality we live in, so this isn’t even COVID related work. Why the dip and how was the dip? Remember you, you had a reduction in sales going all the way back to September, 2018, so almost a year, but at the same point that catapulted you to bigger.

Yeah, I think we had talked maybe in August or September about my next phase and my next step being, I need to bring in a sales person to handle the volume of appointments. So, last year we talked to 648 real estate agents and brokers, which I did on my own without a salesperson. The volume was there. The appointments were there, we needed a salesperson. So I intentionally slowed the growth of the firm so I could go in and find a salesperson and trainer. I spent two full weeks with her training her and then I left on Thanksgiving break and just threw to the wolves and she made money while I was out. That was the first time I’ve ever made money when I was out on vacation. That allowed me to hand off the sales appointments really to her, where she was probably doing 75% of the new prospects.

I was doing 25%, and I went in and I rinsed the business in December. At that time, I began putting together packaging for my clients,  because I was getting a lot of complaints that my clients felt like they were being nickeled and dimed. Every time we chatted, every opportunity was an upsell opportunity because that’s kind of what we’ve been taught. So, we went ahead and we put together an a la carte package. People could just pay as they go, or they could work with us and do a quarterly package where they meet with us quarterly, they get their tax prep done. Typically we meet with them about six times a year with that package. And then we have an annual package where we meet with them about 14 times a year and do planning and everything.

So, at that point, I gave them an incentive in December with like 10% off, if they decided to pay the year full in December. We had a lot of clients reach out and do that. Then my sales person really hit her stride. I think she sold about 11 units that month and it all just started kind of falling into place. We had really started finding a formula that would work going forward. So now, we’ll do another rinse probably in December, but we got rid of a lot of our headache clients and our low paying clients.

So, you had to get rid of people to be able to go to the next level and change the pricing, the packaging. I think I talked to Julia about that before this as well. She said a very similar thing, that the bottoms were related to rinsing moments. I guess one big thing that I think is unique about you is your niche is real estate agents…awesome real estate agents, mostly even more than the brokers and the investors. So, how do you get people that are smaller to pay?

You know, I  think it’s really the value that we show them, the slide decks have been tremendous. I think it’s really about connecting with them and, it’s not necessarily the prospects are bad or anything. If they’re able, willing to get on a call with you, there’s an opportunity to sell them. You have to be able to connect with them and find that opportunity and we’re willing to pretty much talk to anyone now, we’ve gotten better in our process about qualifying those leads before they get on the phone with us. We’re not wasting as much time. 

As long as there’s a small business out there, there’s an opportunity to sell them. Real quick, I skipped this one question here, what do you estimate your salary and net profit will be in 2020?

About $400,000. What has made you stay in the group? I think the opportunity to have a community of like minded individuals who are trying to grow their business, they share similar values and they want to be able to network and get that information from them.

And, you know, honestly, I’m just truly grateful for the opportunity to be in this group. Seeing you guys pivot with this COVID world and help us with that, it’s just been a tremendous value to myself and my family, so I’m really grateful for that. A lot of people don’t have that opportunity right now. I mean, you see that with the unemployment rates.

So one thing I skipped over here, between now and 70, what do you want your biggest year in sales to be?  37 years old, you said right? 37 years old, probably a million a month. So we’ll go with $12 million. Love it. And what is the number one problem today in the business right now?

The number one problem today is I’m mainly doing the service delivery work. So it’s taken me away from sales. I actually enjoy doing the sales a lot more than I do the service delivery. I haven’t been able to find a great accountant to join our team yet. I think Andrew, you told me in 2018, “Jeff, you’ve got to go out and hire an accountant” and I’ve been trying, and it’s been a real tough challenge to find the right person to bring into the organization. We’ve got active job ads and we’re looking for people and I think that’s going to see our next step in growth to consistently being over $100k a month. In April we hit a $100k, that was the first time in the business. 

So we did get a couple of questions and I’m going to go through one here. Okay. Jeff, can you talk about your process of pre-qualifying leads and is $84,000 monthly recurring? So he is not all monthly recurring. So when you look at this $84k and then these other months above $75k, most of that is not monthly recurring, correct?

Correct. So my businesses main product is tax planning. If people don’t buy some sort of tax planning product, we will not take them in as a client. What I kind of realized is I was getting burnt out with starting every single month at zero, because you work so hard every month with all these tax plans then, bam, you’re at zero the first of every month. So, we’ve kind of built in quarterly or monthly planning structure to continue to maintain the existing client base. So maybe they’ll pay us $6,000 for the year or $1500 bucks a quarter, so that we have some monthly recurring bringing revenue and that’s really been a game changer. So a lot of the operating expenses are taken care of each month when we come in the door on the first of the month.

So, you look at it as kind of like rebills and then new cash every month. It’s kind of like a Julie. So she’s just looking at her monthly recurring revenue, you’re looking at here’s what’s in my AR to hit, and then I’ve got to generate new cash and create more AR. Exactly. Got it. And okay, this one’s from Kathleen, I assume you’re handling clients from multiple states. How do you handle potential licensing issues for each state when recommending strategies? Not every state will allow agents to be S-Corps. Do you make the advertisement and let them seek out licensing issues?

That’s a great question. I’m an enrolled agent, so I can practice in all 50 states when it comes to preparation and advising on tax law. Now each real estate board does have requirements regarding S-Corps and different things. You have to be aware of that. Most of the states that we’re in, we see a lot of duplicates. Our top four states, top four most populous states. And so it’s the similar issues that we deal with on a monthly basis. So it’s not like we have to reinvent the wheel or anything.

Love it. And one question I’ll do before wrapping this one up is, so you hit the $84k in that December. Where are you going to see COVID and how much were you able to recover that by changing the packaging of the pricing?

Up before COVID in March, we were on track to probably do about $125,000 in sales. When COVID hit, we did $7k in sales that was in March.  I’m planning my vacation to The Bahamas and then COVID hits and I do $7k in sales and I’m like, “Oh no, what’s going on here?” So the business dropped dramatically to go from basically $33,000 a week down to $7,000 a week, that was scary. We got on a call together and I think I was kind of moping around like I don’t want to change what I’m doing and kind of complaining about the whole thing. You gave me a kick in the butt and I think that was March 31st. I was at $59,000 in sales. So that was like three o’clock in the afternoon, by the end of the day, I think we’re up to close to $75k in sales. Whatever you said worked, that week we did $60k in sales. That’s my highest week in the company ever. 

So then we’ve kind of just kept that trajectory and then in the last two weeks or so, we’ve really seen people come back around on tax planning. In the last two days we’ve already picked up five new clients and I expect that to continue to grow. It’s great to have a tax planning business.

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