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.

 

, ,

The following two tabs change content below.

Mark Lee

Mark is a speaker, mentor, facilitator, author, blogger and debunker. Mark Lee helps professionals who want to STAND OUT and be remembered, referred and recommended using his 7 fundamental principles to create a more powerful professional impact, online and face to face.
by
2 replies
  1. David Lewis
    David Lewis says:

    As you say Mark there is no right answer. I think the driving motivations and comfort zones are both very important. At one end of the spectrum I’ve seen an accountant regard his clients as first and foremost a ‘cash cow’ refusing to visit them as he feels it detracts from profitability. I guess I am at the other end of the spectrum, to the extent that I’m not really a traditional accountant as I don’t do compliance work and instead focus on the work I enjoy. which is project based. Doubtless there are many who are in between – I guess we have different motivations and comfort zones.

    Reply
  2. David Lewis
    David Lewis says:

    As you say Mark there is no right answer. I think the driving motivations and comfort zones are both very important. At one end of the spectrum I’ve seen an accountant regard his clients as first and foremost a ‘cash cow’ refusing to visit them as he feels it detracts from profitability. I guess I am at the other end of the spectrum, to the extent that I’m not really a traditional accountant as I don’t do compliance work and instead focus on the work I enjoy. which is project based. Doubtless there are many who are in between – I guess we have different motivations and comfort zones.

    Reply

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *