Accounting is considered the most profitable profession with a 2016 gross profit margin of 18.23%, yet if you work for one of the Big Four, you lose out in terms of job satisfaction. The solution may be to leave the rat race and become the neighborhood accountant.
Now the accountant’s sense of risk aversion speaks up. Price competition has changed the industry, driving down fees for the average individual tax return.
When Henry and Richard Block founded H&R Block in 1955, business was slow, they advertised in the Kansas City Star and got an office full of people. Today, if you are the neighborhood accountant, you want business owners, professionals and generally wealthy people, while the rest can be handled by the mass market tax preparation services(like Block).
Technology has changed the business. What about social media? In “How Accountants Use Social Media for Business”, Michael Alter positions it as “a place to engage in discussions you or others instigate.”
You maintain a blog or contribute to the conversation on others. You build name recognition and establish expertise. Being present on social media and participating for six hours weekly is the magic threshold to increase traffic.
A professional in the financial services industry said it differently: “Once you have a back and forth exchange going about eight times, you have them interested.”
To find clients you need to get into their heads. In “How To Find a Good Accountant” three criteria have been to ask for referrals, look for accountants that get what you do and find an accountant that meets your needs. Where does technology fit? In “3 Ways Accounting Firms Can Meet Millennials” Jon Baron makes the points: Embrace technology, establish value and build relationships.
Two Stories About Neighborhood Accountants
You still want to be a neighborhood accountant? The object is to the “go to” person is the community, the first name that comes in their heads.
Our first CPA runs his practice from a small NJ town. Here’s his market: Population 3,900+. The median household income is $ 79,000+. At the county level, with $ 105,000 median household income, it’s also the wealthiest county in NJ. (FYI: Although the town has only 7 accountants listed on Superpages.com, according to Angie’s List, there are 2 top rated accountants and 707 to avoid.
How does he establish himself as the “go to” accountant? How did he get started?
He worked for a bank, the bank was bought out and he said: “I want to work for myself.” He bought the building on the main street opposite the Church.
He got a good tenant to bring in rental income. Initially he starting doing tax returns for friends. Then he decided to advertise all over.
We see the exception of the example listed below, advertising yielded few if any clients. His entire business was built by word of mouth. His practice of about 500 clients is split about 80/20 between individuals and businesses.
He is amazed at client loyalty because he is fairly priced. His clients are loyal too. They move to Florida, but still send their tax returns north.
Even better, he gets envelopes from their Florida neighbors with a note: “I’ve been told about you. Please do my taxes and send me a bill.” However, it all started in the local community:
- He has a market – His storefront office is across the street from the local Catholic Church, the only one in town.
- Advertises – He runs a weekly business card in his Church bulletin.
- Volunteers – He serves as lay clergy, meeting parishioners every week. He volunteers on other parish committees too.
- Fire Company – He is also an active fire company volunteer.
Two points mentioned above bring in his clients:
- He is referable because everyone in his circle knows him. They see his sign daily commuting to and from work.
- It’s a small town. He builds relationships with his clients and the next generation, even when they move out of state!
Our second CPA left a major accounting firm, initially entering in a Manhattan partnership and later setting up business in his Brooklyn neighborhood. Early on he specialized in marketing to taxpayers who were in trouble with the IRS.
He later transitioned into the neighborhood accountant, where he is one of several. His practice involves several hundred individual accounts along with business or professional relationships. Here was his approach:
- Anchor Clients – When he initially separated, he brought a travel services company along. He was not bound by a non-compete clause. The travel company freely chose to follow.
- Get What You Do – Why did the travel company move? He had previously learned about their business and designed an accounting system unique to their needs.
- Bought Another Practice – Another Brooklyn CPA was seeking to retire. He eventually bought their business, met the clients and absorbed them into his practice.
- Referrals – He prefers face to face referrals over social media. His is a local practice where to meet clients frequently and continue learning about them. He remarked that social media is excellent to building name recognition, yet there’s no guarantee they will not take the advice you provided online and use it elsewhere.
Establishing yourself as the neighborhood accountant is all about raising your visibility locally and creating an environment where clients are comfortable providing you with referrals.