I grew up sailing off the shores of Savannah GA, and as a sailing family, we were in a constant battle against barnacles. In case you haven’t heard of this little sea pest, a barnacle is a living creature that attaches itself to large objects like boats, docks, bridge supports…even whales. Then, they use this stable position to grab food – mostly microscopic – that happens to float by. Unfortunately, these bothersome little creatures also transform the streamlined, perfectly engineered hull of a sailboat to a momentum-killing source of drag. So, to maintain the best sailing speeds, boat owners must periodically hoist their boats out of the water and scrape off the barnacles.
Accounting firms have their own form of efficiency-killing “barnacles” like problematic employees, partner politics, antiquated workflows, outdated technology…the list goes and on and on. But, perhaps the largest, most tenacious and most pervasive barnacle we face is the unhealthy client relationship.
To keep your practice moving forward at peak speed, you must avoid entering client relationships that you believe will be toxic for your practice (daily chanting the mantra – “Not Every Client is a Good Client”), and you must proactively dismiss clients who drag down the practice. With the proper interview processes in place, it is manageable to avoid bringing toxic client relationships into the practice.
Consider the following when interviewing prospective clients:
The company doesn’t have to be in perfect working order for you to engage, but it must have core functional elements. In other words, if you are going to help shape the business as a trusted advisor, you must begin with moldable “clay.”
Before engaging the company, consider:
If these questions raise concerns, consider if you are in a position to work alongside the client to remedy the issues. You may need to engage in management advisory services before the client is a good fit for your accounting practice.
A healthy, thriving business with a coachable, respectful business owner may still not fit your profile of an ideal client – not if you set your standards on the ideal, not simply the functional/profitable.
As yourself if the prospective client…
Though client selection is key, firing clients (i.e. scraping the barnacles) is, unfortunately, a necessary part of the equation. Use the same criteria above to evaluate your existing clients and selectively terminate relationships that are unhealthy and/or unprofitable.
If you regularly terminate high drag client relationships, you will certainly see a measurable dip in revenues. However, you will not see a proportional drop in profitability. Hard decisions may ensue, like reducing the size of your professional teams, but if you are marketing aggressively and bringing in new clients with professional discernment, you can probably scrape your practice in this way each year while growing your teams and the overall size of your client base.
And, remember that employees can be barnacles as well. By reducing the number of problematic clients and by reassigning accounts to high performing employees, you may be able to scrape both the client and employee “barnacles” each time you lift your boat.
Keep your hull clean…and Happy Sailing!
Joe Woodard culminates his 20+ years of experience as a small business consultant and trainer of over 150,000 accountants, bookkeepers and other small business advisors to bring you this ground-breaking webinar series presenting practical ways for you to move into a Transformative Advisory role with your clients. Register here.
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