Building Relationships: It’s not all about the Sale!
Welcome to episode 14 of the Podcast. And to all of you who subscribe to and follow this series, a big heart-felt thank you! I’m Paul Rosenblum.
Today’s episode is not just for a bookkeeping business, (although I will use examples for a bookkeeping business, since I know my field firsthand), but for many kinds of service businesses, not as much for selling a product.
When I started my own business in 1995, I was concentrating on getting part time freelance bookkeeping gigs, and as I mentioned in the last episode, stumbled into teaching, which became a full-time gig for about a year and a half.
However, when I left that first teaching job and wanted to go back to doing bookkeeping and consulting, I thought long and hard on what i can do to make myself different from other bookkeepers as my practice grew. And so, it took a year or so, but I figured out, as I started to work with people doing bookkeeping or training them to do their own bookkeeping, that having a good business relationship with them is crucial.
The more I learned about a client, the better bookkeeper it made me, since I was beginning to think almost like the client. If I saw a piece of software that I thought the client would like, I’d call them and suggest it to them, even if it wasn’t business-oriented software. If I knew the client loved Italian food, and I discovered a really good Italian restaurant nearby their office, I’d call or email the client about that. Only once in the last 25 years have, I ever done anything socially with a client other than dinner and discussing their books. (I don’t feel comfortable crossing that line) --. However, I do try very hard to have ongoing good phone, zoom, and email relationships with clients. There are clients who I call just to say hi to, even when I’m not working on their books. What this does is to let clients know that I’m thinking of them even when I’m not doing bookkeeping for them. As my practice grew and grew, it became harder to keep up with everyone. However, many clients don’t really want to have any relationship with their bookkeeper. Many clients want a relationship with their tax preparer, but not their bookkeeper. I still don’t understand that one! They have a business to run, and some don’t really care if the books are 100% accurate or not, and don’t really want to know about the process except for the things that they have to do to get taxes filed.
Just because some clients are like that, it doesn’t mean that I should make any less effort putting together their books properly. I haven’t walked away from more than 6 or 7 clients in the 25 years that I’ve been a bookkeeper, but it does occasionally happen. If I sense that something is being done illegally, or if I get no help or response from the client when information is needed, or if they look at a profit and loss and immediately say to me --- this is wrong. I feel like I made more profit than you show --- I don’t have a whole lot of patience for that anymore, and I’ve been known to walk away from those clients. I consider myself to be part of their company, even though I’m not an employee - not just someone who works remotely putting together the books that some business owners don’t even look at. Yes, I get paid for my work, even from the tougher, problem clients, but having that ongoing relationship is important to me and should be important to the business owner as well.
I have always charged my clients per hour for my services. I do have a sliding scale, since I work with small businesses and start-ups, so I understand that their budget at the beginning is small. So, I work with that. In reality, I’m the first person to see that their profit is going up, so I can increase my hourly price as necessary to be fair to myself and give the client some advanced notice. I have separate fees for consulting, training, webinar teaching, cleaning up books, setting books up, and managing finances (cash flow) and managing debt.
However, there has been, in the last 5 or 6 years, a new way of charging clients that accounting firms are doing for bookkeeping. And Bookkeepers have jumped on the bandwagon. Retainers have always been around for accountants and CPA’s (for one example - if a corporate tax return costs $2400.00 a year, the accountant might put the client on a retainer of $200.00 a month, so when the tax return is done, there is nothing more to pay for the taxpayer except the actual tax owed). Retainers, for accountants, also can cover phone calls and things that might come up during the calendar year. But now, not only accounting firms who have their own bookkeeping department (which I don’t recommend most of the time, which is a whole other story), but bookkeepers are starting to take monthly retainers as well.
For $165.00 a month, there is a bookkeeping service that provides services on a cash basis only, quarterly reconciliations (not monthly), 90 or fewer quarterly transactions, and using classifications. I assume that there are some reports as well for the client (but the website doesn’t say), with an additional $1050 setup fee at the beginning. For $405.00 monthly, they include cash basis accounting only, monthly reconciliation, period closeout and review, and classifications. Also, an additional $1450.00 initial setup fee.
Personally, I have only 2 or 3 clients who I charge $450 a month to, based on the hourly fee. I include phone calls (under 10 minutes – I don’t like to charge for phone calls, but do charge if they run more than ¼ of an hour), I provide virtually any reports that they need at the end of each month (usually, a profit and loss, a balance sheet, and some specific line-item detail reports, and, I do charge for zoom calls all at the regular hourly bookkeeping fee. And charging a fair price for a service only adds to the respect that the client gives you and the relationship that you have with that client. If I am undercharging a client because they are struggling, that’s my choice (I’m just trying to be a good human being). Don’t get me wrong, I make a nice living, but I try and balance that with providing a service at a reasonable price but not really kicking myself in the foot at the same time. Charging monthly retainers at any time for bookkeeping, just hits me wrong every day of the week. I will tell you that I have one client on a retainer, and it was their idea. They wanted it to help them budget money on a monthly basis. I can understand lawyers charging retainers or accountants charging retainers, but bookkeepers? NO *Sound effect*
Walking away from a client is very hard for me because of the relationship that I either already have with them, or the relationship that ‘could have been’. The ‘sale’ or ‘revenue’ is replaced immediately because I always have an overflow of work. But that doesn’t make it any easier for me to walk away from a client.
To me, It’s about relationships. If you have a brick-and-mortar retail store, you can’t have a personal relationship with all the people who come into the store to look around or purchase something. If you sell from a website, you can’t have these kinds of relationships. However, you can have newsletters going out to all the people who purchase from your online store in the form of a mass email from one of the online services and you can make these newsletters relatively personalized. Even if your company is an auto parts store, you have names and usually emails of people who are purchasing car parts from the online store. Send a thank-you email out that’s more personal than just an automatic email sent at the time of the sale.
I go all out trying to have relationships with all of my clients. It makes tax season when I’m stressed and yelling at clients on the phone much easier because they know that’s usually not how I am, and it’s just ‘tax season’. Having good relationships with all of your clients helps you keep clients for many years.
I also have become a ‘part time business therapist’ for some of my clients. Sometimes they need a cheerleader to help them get through bad times—a shoulder to cry on --- others need real help with handling the credit card bills. Some need help reading and understanding the profit and loss reports and balance sheets. How do you include that in monthly retainer pricing model?
I know bookkeepers who at 5pm close their home offices, or leave their offices to go home, and won’t answer or return a phone call or email from a client until 9am the next morning. And the same on weekends, except during tax season. I know bookkeepers who have just 3 or 4 companies that they are doing bookkeeping for, and by the middle of Feb., leave on vacation for 2 or 3 weeks. **NO**!
My tax season starts right after October 15th (after the extensions are filed by the tax preparer). I start ramping it up, running reports and going through the W9 information and trying to prepare for all the hundreds of 1099’s that I will create in Jan. of next year. In November, when the month is centered around Thanksgiving for most people, I’m working very hard getting all the books that I can up to date and ready to go. In December, when everything is about the holidays, I’m in my office 10 -12 hours a day working on people who have been referred to me by tax preparers who had no bookkeeping in that year at all, and need to get a completed set of books done so that taxes can be filed.
Even though by trade, I’m a bookkeeper, I realize that I really am in the customer service field. The means to that end happens to be bookkeeping. But many service-oriented companies don’t realize that. Airlines, for example, as far as I’m concerned, aren’t in the flying business, nor in the travel business, but they are really in the customer service business and that flying aircraft all over the country and the world is just a means to an end. The airlines have never really realized that. Relationships with clients is where it’s at.
If you are a bookkeeper or running any kind of a service-oriented company, please email me at Bookkeepermensch@gmail.com to share your story! I’m also on LinkedIn so you can find me there as well. You can also go to my website www.bookkkeepermensch.com and leave me voicemail by scrolling down the home page to find that link.
I hope I have given you some ideas to better your business moving forward!
As always, Thanks so much for listening. Until next time. I’m Paul Rosenblum