So you’ve started your own tax or accounting practice, and now you want to make money—not just enough money to stay afloat, but enough money to make a nice profit from all your work and efforts. Turning your practice into a lucrative practice can be difficult. After all, there isn’t just one way to go about it, and you may have to experiment with different services, pricing models, and marketing tactics before you find what works for you. But it’s good to start somewhere, and there are some methods that are tried-and-true. In this post we go over four keys to building a lucrative practice from three tax and accounting professionals who have done it.
Respond to clients in a timely matter
One of the keys to getting your business off the ground is providing your clients a positive experience, and that starts with timely communication. If you want your clients to keep coming back to you, they need to feel like their questions and concerns aren’t being ignored.
Daniel Vincent, JD, CPA suggests responding quickly to every email, text, and call, even if it’s just to say, “I got your message, and I’ll get back to you on that in a couple of days.” He also suggests setting up out-of-office email and voicemail messages when you go on vacation.
“Clients want to feel like you are there for them and they are being heard, and if they have that feeling, they are likely to tell their friends how much they value the work you do,” Daniel says.
Which leads us to the next key to building a lucrative practice: referrals.
Ask for referrals
“Personal referrals are the best way to grow your business,” says Keith Vincent, CPA, CITP.
In fact, 82% of Americans say they look to friends and family for advice when considering a purchase. If you’re not asking for referrals, you’re missing out on tons of business. It may feel awkward to ask your clients to refer you, but chances are, most people won’t do it (or won’t think to do it) until you ask. Plus, asking for referrals is completely free. It’s one of the only things that you won’t have to invest any money into that will greatly impact your business.
Update your books weekly
As a third tip, Daniel Vincent, JD, CPA suggests updating your books on a weekly basis, including making sure your mileage, expenses, time, and billings are up to date.
“The longer you put it off, the less likely you are to have an accurate record at the end of the year—meaning you are probably missing out on deductible expenses or forgetting about time that you could have billed your clients,” he says.
Daniel says he likes to schedule a specific time each week to work on administrative tasks.
“Canopy’s accounting software also goes a long way towards helping you stay on top of your billings,” he says.
Consider value-based pricing
Lastly, when you develop your pricing model, Gabrielle Luoma, CPA, CGMA recommends that you consider value-based pricing.
Value-based pricing is the method of setting a price by which a company calculates and tries to earn the differentiated worth of its product for a particular customer segment when compared to its competitor. In other words, value-based pricing is setting the price of your service based on its perceived value by a group of your clients (or a single client) and taking into account what your competitors’ prices are.
Value-based pricing can be difficult to understand at first. To learn more about how it works, check out this Harvard Business Review guide.
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