December 30, 2000 was a great day.
I got my first serious business advisory engagement in the morning and fired 233 tax clients that afternoon. The fees from the single new advisory project were more than the fees, that went goodbye, with 233 clients combined! But that wasn’t the best part. I started into the journey of being a trusted advisor, coach and mentor – an unbelievably rewarding journey that allowed me to grow myself as I helped my clients grow themselves!
Here’s the backstory on the events and decisions that led up to that fateful day.
I started my accounting firm 10 years earlier at age 29. It grew as a “compliance” practice. My main job was to keep my business, farm and professional clients in compliance with the government for tax, payroll, etc. I had grown the firm with three dedicated and hardworking team members, but I was still the tax guy, “the technician”. I had created a very time consuming and stressful job for myself. Long hours and weekends were required to keep it going! Especially the dreaded tax season – forget about having a life from January until after the April deadline. What’s worse is I was now 38 and still single. I was a workaholic thinking hard work would improve my matrimonial prospects. The reality was the opposite. What woman wants to date a workaholic?
I was getting tired and burned out and something needed to be done!
What I wanted to achieve was quite simple:
- I wanted a fun and rewarding business life
- I wanted a fun and rewarding personal life.
The opportunity for change happened when I heard Ric Payne speak, at a half-day seminar, a year prior to that great December day. He was able to describe my current trajectory of working too hard and working too cheap even though we hadn’t even met yet. He was quite clear how it might end badly if something didn’t change! It was like he hit me on the head with a two by four! It hurt – but I needed it!
Ric’s firm focused on helping compliance firms transform into business advisory firms. I was ready to listen and learn. The new business model made perfect sense. They had created the systems and tools to be implemented. The problem was that I was too busy working inside the current business model, which is where I made the money I needed to stay afloat! I needed a way to pivot out of the current situation and launch into the new one without running out of money or courage along the way! December 29, 2000 was the culmination of the two-part strategy to transform my business model. It worked brilliantly!
The new advisory model required a new mindset and a new set of resources. Ric’s firm created the resources and sold them to me for $44,000. (That investment alone is a motivator!). They coached me through the mindset changes and then it was time for the courage to find a real live business advisory client.
On the morning of December 29, 2000, I meet with a potential advisory client.
The offer is made during an event we call a “discovery meeting”. It is a structured process to find out what the client needs and then offer a solution. I offered a 2-year program to increase the business cashflow while giving them more freedom for a total fixed fee of $51,500 over the two years. They said yes.
The event of the same afternoon was only part of the bigger challenge to pivot from the current bad business model to a better one without going bankrupt doing it! The key to this pivot was to change the service offering to be better positioned. We needed to be different. Here is a summary of what we did:
- We went through all the services we already offered for our clients and made sure to position them properly. (For example – We will provide copies of your information to lenders any time during the year for no additional charge)
- We added a guarantee – to complete your return in 14 days.
- We switched to simple and higher fixed fee pricing and got rid of trying to figure out how many hours to bill for each return.
- We asked for a 50% deposit to confirm commitment to the new offer.
The price increases were from 100% to 300% of the previous year’s fees! The only way you can accomplish this is to change the product or service offering to be more valuable! This includes some of the same service being positioned differently.
The other vital component – testing the offer first!
This part is as scary as it is funny. We eventually made the new tax offer to 387 clients, but we tested it on 10 clients first. We mailed them a three-page letter explaining everything including the new price on page 2. When I did the test mailing – I mixed up the page with prices by accident – so I didn’t know what final price the test people were offered! Soon after mailing the tests out – I got a call from one of the clients. It was Archie. He calls me by my hometown nickname, Doc, and we were proposing to take his $135 fee from last year to $350 under the new plan.
Archie: Hi Doc – I gotta come and see you. Are you at the office now?
Paul: Sure – “Come on by.”
Paul: (After the call thinking to himself) – “Holy crap!”
Archie walks in, steps up to the counter and plunks down $350 cash. He says, “Doc, I just wanted to make sure I get in on this new deal!”
Paul: (After he leaves thinking to himself) – “Holy crap!”
We passed the test! The next and final part of the pivot was to stop doing the stuff that consumes the most resources for little or negative profit. I had 233 personal tax clients that were simple “H&R Block” type returns that didn’t need our expertise to prepare them. On the afternoon of December 29, 2000, I mailed out the 233 “goodbye” letters. It wasn’t an easy decision, but it was the right business decision. Those clients produced total fees of $18,500.
Here are the bottom line numbers on the personal tax return business model pivot:
The prior year we prepared 620 returns with an average fee of $110 – $68,200 in revenues.
Out of the 387 clients offered the new deal, 310 took it for a new average fee of $220. – $68,200 of revenues with only 50% of the work. We got our life back. We could generate the same revenue in roughly half the time, therefore, eliminating any tax season overtime!
Plus, we freed up time for our new advisory engagement! The first-year results were life-changing for the client and us! We facilitated a profit improvement of hundreds of thousands in the first year. We also helped the business owners break free and get more time away from the business as well!
Helping clients accomplish their dreams is so much more rewarding that doing tax returns! I had so much to learn, but my business life was fun and rewarding again. I am sure this change helped me become more fun personally, too! Not to mention the life lessons I have learned since then. Although it has been 20 years since that fateful day, it is still a lifetime of learning for me.
Just like back then, I learned to surround myself with people smarter than me. This pandemic of 2020 has challenged us all and forced everyone to pivot their business models! I look forward to 2021 with optimism, energy and renewed focus. I am also thankful every day that I don’t do tax returns anymore!