This was a question posted on AccountingWeb and drew some interesting comments. The first is, why? Small ones can be really tasty!
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The question "Why? goes to the route of motivation. There is no right and wrong in all this but I always challenge accountants before doing any marketing because many haven’t thought through all the implications.
Some tell me there is no profit in small clients, but that’s not true. You can often make higher margins with smaller clients (if you have the right systems and processes). And, with marketing for accountants there is a good argument that a practice built on small fees will command a higher price on disposal because the clients are easier to serve.
Remember the phrase turnover for vanity, profit for reality? Well, cash is the reality and if a large client or two does not pay (or you lose them) it can be really painful.
Another thing to think about is the role of the practice owner. If you want to build a business where you take a management role and move away from client work then small clients are ideal.
One reply suggested the firm’s location, presentation and image really matter, and that’s true. Mark Lee of the Tax Advice Network made the point that you need to choose between higher level services and messy records. There are plenty of firms charging thousands for job which take forever because the books are a mess.
A few people made the point that some small clients will grow and may refer larger clients. However, I assumed the person wanted to take control and win larger fees now. Plus, I believe birds of a feather flock together so small clients tend to refer small clients, so I made a few suggestions.
Choose a niche
I recommended a niche strategy and asked the question, if you had a really severe earache would you prefer to see a GP or an ear specialist?
When choosing a niche you need to be sure that it is big enough to achieve your aims. So, if you niche around an industry you could focus on restaurants or widen it to hospitality or go even wider with the leisure sector. Do some research and here is a great resource to help http://www.cchbusinessfocus.co.uk.
If you are going to be a local provider and there are 1,000 businesses in your region and you believe you can get 5% then that’s 50 clients. If you go wider and deeper with your service the fee could be £6,000 which will give you £300,000 and maybe £90,000 profit. Is that enough?
You can niche into an industry or a service. A good example of an industry specialist in SJD.
Marketing collateral
Very few firms have good design and most have little or no collateral apart from budget summaries and tax facts cards.
A firm should have a strong Corporate Identity, brand guidelines and appreciate that when it comes to marketing perception is reality. Well branded firms get higher prices and I've worked out based on some industry averages that if a firm could eliminate write-off time this would be worth circa £58,500 per partner per annum.
Well branded does not mean a flash logo, it means being well known so PR and seminars play a key role as well as high quality collateral.
Sales skill
Most accountants are order takers. Clients and prospects come to them with a problem; the need for accounts, a tax return or a high tax bill.
When a firm sets out to build fee income proactively they need to win business and good sales skills are vital Not only will you convert more business but you will get a wider service mix and a higher price.
There are a number of marketing methodologies and tactics that firms need to employ but strategy, design and sales are vital.