Is it better to have lots of small clients or a smaller number of larger clients?

The question I was recently asked by an accountant was actually: “Is it better to have 500 small clients paying me £500 pa or 50 larger clients paying £5,000 pa?”

A little background from the accountant concerned:

“The reason behind this question is that I have been running my practise for many years looking after clients that perhaps most others accountants wouldn’t entertain. However, these small clients are always polite and pay on time even though they can be quite messy i.e. Shoe box or carrier bag type book keeping. But I do enjoy preparing their VAT, payroll and accounts, and they are always appreciative. I also have a few much larger clients where fees are £3k – £5K but find these clients are typically very demanding and often impose strict deadlines for when their work needs to be delivered. They rarely say thank you, even when we deliver before the deadline.”

My reply picked up on the following:

The answer as to what type of practice is best depends on a number of factors including:
  • what work do you enjoy?
  • what client base do you currently have?
  • how easy do you find it to win new clients (and what type of clients)?
  • how much effort do you want to put into winning new clients?
  • where do you want your practice to be in a few years time (taking account of regulatory changes and your own plans)?
  • how do you want to make your money?

You also need to consider where and how you will find the larger new clients. Inevitably they are tougher to win than are the smaller and less demanding clients. Some accountants are happy to only go for the larger fees. Others prefer to take on up all-comers – some of whom may grow into larger clients in the future. You need a very different strategy to win larger clients than smaller ones; also different marketing messages and a different approach to sales. It suits some people, but not everyone.

I do not believe there is one perfect solution that is ‘best’ across the board. The grass often seems greener on the other side.  At meetings of The Inner Circle for Accountants the members often note that they each run their practices in different ways and that no one approach is perfect.

One member said his practice is on course to reach: 5 clients paying £25k pa and ten clients paying £5k pa.  He says he won’t take on a new client that pays less than £3,000 for recurring compliance work. And he doesn’t do any bookkeeping for clients.
Most other members have much lower average fees and minimum annual fees ranging from £250 to £1,600. Some want to grow their average site here. Others want to grow their numbers and like to play the volume game, passing over any extra advisory work to specialists. That way the accountant can just focus on doing what he does best.

 

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5 tips from Stephen Lansdown’s entry on The Accountancy Rich List 2015

I was intrigued by elements of the Accountancy Rich List 2015 published by economia magazine.

The magazine itself, as distinct from the online list, contains pen portraits of ten of those on the list, described as “inspiring entrepreneurial chartered accountants”. In each case a sentence or quote has been given explaining ‘How he made it”. One of the quotes stood out as offering important lessons that are more widely applicable.

Stephen Lansdown – ranked 5th on the Accountancy Rich list 2015 – is one of the founders of Hargreaves Lansdown which began life in 1981. It has since grown into one of the UK’s best-known financial services firms.

In the box summarising ‘How he made it’ Stephen is quoted as saying: “It was a combination of marketing our business, getting clients or potential clients on board and then convincing them to do business with us.”  Having been on the receiving end of Hargreaves Lansdown’s marketing for some years I am inclined to extrapolate some specific tips from this quote:

  1. Marketing is key. People need to be aware of your business before they can buy from you.
  2. Prospects need to know exactly what you can do for them and how they can benefit from using your services.
  3. You need to make it easy for prospects to decide they want to do this.
  4. You need to keep in touch with clients so that they keep coming back and doing more business with you.
  5. You need to follow up. Getting in touch once and hoping someone will remember you when they need your services is rarely sufficient. Following-up effectively is key and this is why it is one of the 7 key elements in my STAND OUT framework.

 

 

 

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When you DO get a second chance to make a first impression

During the summer, at The Magic Circle, one of our more distinctive members gave a short lecture. Laura London stands out in a crowd even though she no longer wears the tight leather outfits she did a few years back.Laura London, entertaining Prince Charles

She still has bright red hair and lips which I am sure command attention wherever she goes. However, despite her distinctive look, Laura adopts a softer, gentler approach to many of her close-up performances and ensures that the spectator appears to be doing the magic themselves.

Laura is a firm believer however that “It’s not about the magic, it’s about you. The first words you say, the way you look, the person that you are and the kind of personality you portray are the first things that people judge you on.”

In Laura’s case I imagine that many people she meets assume her character will be something different to how she comes across one on one. I am sure this works to her advantage.

It got me thinking though. Normally we say that ‘you never get a second chance to make a first impression’. The implication being that the first thing people assume about you will determine what they think and remember about you. I have always taken this to mean that if you don’t create a positive first impression you won’t get a second chance.

Watching Laura deliver her lecture and chatting with her afterwards has caused me to rethink the idea which I now see as too simplistic.

If the real you is distinct from the first impression people perceive, this can work for or against you. For most of us there is a risk in cultivating a degree of incongruity, which is what Laura does. It works well for her and the ‘real’ Laura is typically less ‘outrageous’ than her appearance might lead one to expect.

If someone forms a less than positive first impression of you as a professional or a performer they may well switch off.  Typically you will struggle to recover from this disadvantage. If however the initial impression you give commands attention. you want to avoid disappointing people unless what you do or say is truly impressive and memorable in its own right. This is what I think Laura does and it’s not easy.

Who else do you know, or know of, who stands out through their appearance and first impressions but which seem to be misleading as compared with their natural style and approach? Does the incongruity work for them or against them?

 

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