5 Things To Start Doing In Your Tax Practice Today

Woody Allen once said, “Eighty percent of success is showing up.”

When you run a business, showing up means more than just physically being at the office. If you look at it a bit deeper, it’s easy to see that it means starting things, and taking action has long proven to be the key to success at anything. The world is full of dreamers; rare are the people that did something about it.

In that light, I’d like to present to you the top five things that my experience has proven are keys to success for tax professionals in private practice. These five things are individually of high value, but if you start doing all five of them, you will find yourself catapulted into the ranks of the most successful practitioners in our industry.

gears-med1. Use systems.

Every tax practice should operate like a well oiled machine. As a busy professional, having systems from which to operate your entire practice makes life far less stressful, and allows you to accomplish much more than you can now.

When you have systems, you and your staff operate more efficiently. That efficiency allows you all to handle far more work than you currently believe is possible.

What exactly do I mean by systems? In reality, this boils down to have written procedures and checklists for how everything in your office is accomplished.

For example, one of the greatest efficiency improvements I’ve ever created is my new client checklist for working representation cases. This detailed checklist guides me and my assistant through the first two weeks of a new tax resolution client case, which is generally the most critical time on such a case.

The checklist ensures that nobody misses anything, and prevents us from having to rely on memory, illegible hand written notes in a file, or having to scour through emails or billable time notes in order to know what needs to be done next on every case. This is particularly important when working a large case load. In fact, the checklist literally lets me almost double the case volume I can effectively handle, which equates directly to bottom line profits.

Some people may proclaim, “I’m well organized” or “I’ve got a great memory”, and so they don’t think they need procedures. Procedures make things more than efficient. Systems ensure that every client has a consistent experience when interacting with your firm. Systems ensure that things get done, rather than swept under the rug.

Systems also allow you to improve over time. You can use feedback mechanisms to gauge the results of the system, and then make incremental improvements to the written procedure. Once the new procedure has been used for a while, you can tweak it some more to make it more efficient, or to add a step that’s missing. When things are systemized, they can be measured and then improved upon.

Systems create efficiency, consistency, continuous improvement, boost revenue, and just plain make life easier.

2. Make marketing a year-round activity.

Too many tax professionals make the mistake of only marketing during tax preparation season. Don’t forget that there is a significant market out there for late filers, payroll service, bookkeeping service, audit representation, collections representation, tax planning, and more. All those other services that you offer (or could offer), can all be marketed year-round.monthly-calendar-hi

Even if you focus solely on tax return preparation, however, you can (and should!) still be doing year-round marketing. You should continue to engage with people on social media sites such as Twitter, Facebook, and LinkedIn, in order to make connections that turn into paying returns next year. Attend networking functions and leads groups in your local area, in person, every month, year round. These connections also turn into paying clients.

Networking, offline and on, is still marketing. So is direct mail, holding seminars, writing, and countless other things you can be doing to market your services. If you want to increase revenue, add new service offerings, or get better types of clients, constant marketing is fundamental to achieving your practice goals.

3. Implement active client retention strategies.

Here’s the one that really gets folks that focus exclusively on 1040 preparation: You should still be doing year-round tax prep marketing, primarily to your existing clients.

Every tax preparer loses clients each year to a competitor. It’s impossible to get every client to come back every year, and it’s getting harder. Between free filing options, tax software, and retail tax stores all competing for the same 1040, you need to step up your client retention game a bit.

Take a look at your per-return profit from this last tax season. I would hope that in your profit margin on a 1040 you could find $5 to $10 per year to stay in contact with each and every client. Something as simple as a quarterly, two-page newsletter will go a long ways towards making sure your existing clients come back each year.

Every January, send out a letter to every old tax prep client, reminding them to schedule a time to come in for this year. This is the absolute minimum, most basic thing every tax professional should do for client retention, but an astonishing minority don’t do so (at least among the ones I speak to).

Go a step further, and in September or October, send out end of year tax planning letters to your past clients, inviting them to come in for a paid tax planning appointment. (Revenue tip: This should not be a free service).

Finally, consider collecting email addresses from your clients, and asking their permission to add them to a bi-weekly or monthly email newsletter. The majority will actually say yes, and you’ll have an affordable mechanism for keeping in touch with your clients year round.

All these client retention strategies help you build a stronger relationship with your clients, which keeps them coming back, and also assists greatly with our next big item…

4. Ask for referrals.

handshake“Birds of a feather flock together,” goes the old saying. If you have particular clients that you enjoy working with, they most likely associate with people that are similar to them. Therefore, ask them for referrals.

If you don’t feel comfortable asking for referrals, then you can implement a simple system that will do the asking for you. This is one of the oldest referral generation techniques in the world, and it still works because of human nature.

All you need to do, while a client is sitting in front of you, is point out the brochure or flyer for your “Refer A Friend” program, and then let them read it. A basic Refer-A-Friend program simply provides a free gift of some sort (hats, t-shirts, steak knives, interesting puzzle toys, etc) in exchange for the client passing along your brochure, coupon, or business card to a friend. The client’s name should be written on it for tracking purposes.

Another way to do this is to offer a set fee credit in exchange for every referral that becomes a paying client, and simultaneously offer the new client being referred a fee credit. Your existing client provides a coupon or voucher to their friend, with their name on it, which the new client then redeems.

This works great for tax season, by offering a $25 or $50 discount to both the existing client and the new client on their tax prep fees. However, it also works for other professional services, including representation and bookkeeping.

For example, offer your existing client a $250 account credit for every tax resolution referral they provide that becomes a client, and offer the new client a $250 account credit towards their representation services as well. In some circles, this is referred to as “client-get-a-client” programs.

5. Be aware of the business(es) that you’re actually in.

Lastly, I want to make you consciously aware of something that most tax professionals never give consideration to.

The reality is that no tax professional is purely in the business of providing tax services. Sure, that’s the end service that you deliver, but it’s not the business that you’re actually in.

Say what? Think about it this way: Why does somebody actually come to a tax professional like yourself?

It’s not because they want a 1040 prepared, or because they really want an Installment Agreement. Rather, those are just the things you do behind the scenes to deliver to the client what they really want. Starting to make sense?

See, your clients really want peace of mind. Most people are scared to death of the IRS, and are willing to pay us to deliver that peace of mind. In many respects, tax professionals are in the “I’ll worry about it for you” business.

Sometimes, tax professional are also in the “consoling” or “empathy” business. I can’t begin to count how many times I’ve felt like a therapist for clients, particularly in collections representation cases. I’m sure you’ve experienced similar situations.

Let me also point out that, as uncomfortable as this may be for any CPA, Enrolled Agent, attorney, or other tax professional to admit, your primary business role happens to be in the marketing and sales arenas. Without clients, you have practice, and no food on the table. Your ability to feed yourself is directly connected to your ability to find people that need your services (marketing), and convince them that they should give you money (sales).

Most licensed professionals never think about these roles, but they are fundamental to having a business of any sort. You don’t need (or want!) the super-slick, unethical used car salesman level of sales skills, but you need some ability to sell yourself. Same with marketing. The very fact that you’re in business dictates that before you can ever deliver your professional services, you need to find somebody to provide that service to in the first place.

Truly understanding what business we are actually in helps make decisions regarding the use of your time and money much easier. It creates a lens through which our priorities become much clearer, and guides our decision making process.

Start Today

Start working on implementing these five things in your tax practice today. Starting requires, well… starting. Remember, “life’s what you make it, so let’s make it rock!“. Life is short, so you might as well start making it rock right now.

Comments on 5 Things To Start Doing In Your Tax Practice Today

  1. Cathy says:

    This was a wonderful article. We all have to remember that in reality we are sales people first and tax professionals second. I know we don’t want to see ourselves that way, but it is very true.

    We use procedures and I think they have made the office run so much more efficiently. It is very rare when we don’t have a procedure in place for a problem that comes up. If it happens we put a procedure in place to handle it the next time.

    I personally believe that putting procedures in place was the best thing I ever did for my firm and my staff.

    Thanks again Jassen!

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