Jacob and Edward are best friends from a mid-sized American city. The two men grew up together, went to the same university, and even sat for each part of the CPA exam together. They both worked at a local, mid-sized accounting firm for a few years before deciding to head out on their own.
Given their lifelong friendship, they first considered opening a practice together. Despite their commonalities, however, they both agreed that they didn’t want business to ever ruin their friendship, so they chose to open separate practices.
Several months before tax season began, they both leased offices in nice parts of town, about two miles away from each other. Both offices were close to arterial streets and close to middle and upper income residential areas.
Together, they both attended a couple of local marketing workshops offered by the Small Business Administration and their local Chamber of Commerce. They also read through most of the AICPA resources that were available to them on the subject, and read a few of the same books on marketing.
While learning about marketing, they both get really excited about the possibilities. Working together, they actually create a powerful marketing plan, complete with radio, TV, Internet, direct mail, and newspaper components. This marketing plan will work for both of them, based on what they’ve learned from workshops and books, even though they’re implementing it separately.
When January rolls around, both friends launch awesome new web sites, with great lead generation offers and local SEO campaigns. They both send off their first direct mail pieces to their surrounding neighborhoods, and have both advertised in all their local HOA newsletters for the quarter.
They both wait, giddy with excitement for their phones to start ringing.
They both get a few phone calls, mostly from people asking for price quotes. They each schedule a couple tax preparation appointments, but that’s it.
Jacob, distraught at the apparent failure of their brilliant marketing plan, pulls the plug on his planned advertising for February. He half-heartedly sends a much smaller than planned second mailing, mainly just because the postcards were already printed. The web stuff continues, because it’s already in place. He also decides to call up his former employer to see about taking on some of their excess 1040 work, and works out an arrangement to do so.
Edward, while still a bit distraught himself over the lack of results, vividly remembers the SBA speaker’s comments about “Top of Mind Awareness”, and a lengthy book chapter about response rate expectations and the necessity of multi-hit marketing campaigns. With these reminders in place, Edward continues with his overall marketing strategy for the tax season, including several daily radio spots, a short TV commercial on a local financial affairs show, weekly ads in the local newspaper, direct mail pieces to the same houses near his office, and more.
By late February, with tax season in full swing, both Jacob and Edward are fairly busy. Jacob has received a few more appointments from his second mailing — enough to make him half-heartedly do a third for March. He’s also received from referrals from friends and family, plus a substantial amount of overflow work from his former employer. That overflow work only pays him about 1/3 what he’d be making if he were bringing in his own clients, but he figures that some work is better than none. Overall, he’s doing about 20 returns per week — far below his goal, but enough to keep the lights on, bringing in about $2500 per week.
At the same time, Edward is already into preparing his 4th mailing. He’s also re-written and re-recorded the radio spot, and is having the radio station alternate the playing of the two ads. Each ad has a different phone number, so that he can track the response based on call logs. He’s now doing the same thing with his newspaper ads, running two small ads in the lifestyle section of the paper twice per week, and tracking the results from both. His local ValPak rep finally returned his phone calls, and he’s taken out space in the March and April mailings for that. Due to complete lack of response on the TV commercials, he pulled those, and split the money between the additional radio spots and some additional SEO work from his web guy.
Edward has been averaging about 30 tax returns per week so far, bringing in about $8500 per week in revenue. While not stellar, he’s been seeing the number increase steadily, and that has him excited. His marketing is not only paying for itself, rather than consuming his life savings, but also starting to produce a pretty nice ROI.
By the end of March, things are really looking up for both Jacob and Edward. Jacob is getting a lot more work from his former employer than he originally expected. On top of that, he’s continued to get a trickle of his own business from his once per month mailing, a small trickle from the web site, and the occasional referral. For March, he’s averaged 30 returns per week, making about $3750 per week from that. That brings his season total to about $25,000, and he’s pretty happy with that.
Edward is also pretty happy with this tax season. With eight weeks down and only two to go, he’s really locked in his marketing and is booked solid every day with back-to-back appointments. In fact, he’s so busy that he can’t keep up, and has contacted his former employer to see if he could borrow one of their seasonal tax preparers for a day or two per week. Since the firm has Jacob available to take some overflow work, the former employer agrees, and lends a seasonal preparer to Edward for two days per week. This has allowed Edward to average 50 returns per week through all of March, bringing in over $13,750 in revenue per week. That brings his season total to almost $90,000.
As both teams head into the home stretch, things keep on pace. For Edward, he’s so busy that he starts filing extensions for a lot of new clients coming, which essentially extends his tax season through the end of April. Jacob blissfully waits for April 15th to come, after which he takes a well deserved break for a couple weeks.
All told, Jacob finishes the tax season with over $32,500 in revenue, and over 50 of his own tax clients that he’ll have to start next year with. Considering the fact that his salary at his previous job was about $45,000 per year, Jacob is pretty happy with this, since he figures he can easily make up the revenue difference from occasional accounting and payroll clients he’ll find through the rest of the year. After his office rent and his marketing expenses, Jacob actually nets about $25,000 from his tax season. Not bad for 10 weeks of work.
Edward finishes up April exhausted, but thrilled. Having banked an additional $50,000 in revenue for April, his tax season total is about $140,000. More importantly in his mind, however, is the fact that he now has a well tweaked marketing strategy that he can deploy again next year, on top of the fact that he has over 500 personal tax return clients that he has established a relationship with and will work hard to maintain them for next year.
With all of the marketing that Edward did, especially doubling up some things when he was split testing, his total marketing bill for the season comes to a whopping $30,000. Add in the additional help from the seasonal preparer, his rent, and other expenses, and Edward discovers that tax season required an investment of almost $40,000. But since that leaves him with about $100,000 in profit from the season, Edward is incredibly ecstatic.
Jacob and Edward are both very pleased with the tax seasons that they’ve had, and their families are proud of them for their success. But as an outside observer, these two best friends had very different tax seasons. That difference was driven by how they responded to the adversity of their first ever marketing efforts. Edward took massive action, while Jacob did things the average way, thus guaranteeing him average results.
Success is obviously not measured by money alone, but since we’re talking about business, the difference in results can’t be argued.
So which are you: Team Jacob*, or Team Edward*? For me, the choice would be obvious.
*For the sake of this article, I’ve obviously excluded the way my tax practice operates: Non-seasonal, no tax prep, niched tax resolution, while I sit on the beach in Spain. We’ll call that business model Team Bella. Ahem. 🙂