You're Transitioned

^{March 2020}

BY: MARK FISHMAN, CPA, MST CAIN & DAVID

PLEASE NOTE: The views and interpretations reflected below are those of the author and do not necessarily reflect an expression of opinion on the part of the Georgia Society of CPAs.

A short time ago, I had one of those milestone birthdays we all dread but have to face. One where your friends' only way to make you feel better is to say it beats the alternative of not having a birthday. Well, yes, having a birthday beats being six feet under, though you don't feel much better.

So, in the process of "celebrating" that birthday, I had some of those rare come to Jesus moments where I was reflecting on my work and how I can make it better. (Don't laugh, we are all accountants reading this, and we are always thinking about our work.)

It was at that moment that I decided I need to change my practice. I wanted a business that was an A+ practice. So, I made a list of things I needed to change to get to that A+ point. One of the items on the list was my client base. I wanted to change the perception of my practice from one where "we just did a tax return because someone wanted it done, to only doing returns that people want us to prepare."

You don't go to the new hot restaurant in town because you are hungry; you go there because you want to. Even though it may cost more, you want that service and experience; I want to be that new cool restaurant.

When I first started my practice, it was pretty much an eat what you kill mentality. Well, you cannot have a bunch of B, C or even D or less clients in your practice if you want it to be an A+ practice.

The accountant motto has always been that we are too scared to fire a bad client, so we do not have enough time to work on the great clients. At that point, I knew what I had to do. I had to go where no CPA had gone before or would never even talk about; I had to "fire" my clients.

Yes, I was scared and nervous, and I didn't know what they would say or even what I would say, but if I wanted to get to where I was going, I needed to do it. As I mentioned this plan to colleagues, they would look at me like I had three heads and say, "What are you going to do if you can't find more work?" "What is your staff going to do?" "Do your other partners know?" "What if you fire a bad client today that could be a great client in the future?" I get it; there was no guarantee I couldn't answer any of those questions positively, but I had to trust myself, my staff and commit to my decision.

My first step was to identify clients that had to go. A friend helped me develop an idea to classify my clients. I put a pad of paper next to my phone and made three vertical columns: 1) transition, 2) fire and 3) raise rates.

As I worked over the next couple of weeks, specific clients would fall into the various columns. Clients in the "transition" column would move to a younger staff member. For clients in the "fire" column, they would shift to another firm. If they were in the "raise rates" column, I was going to start billing them at a competitive rate and see if they wanted to stay or go. Also, I looked at how long clients took to pay, was there any chance of growth, or were they becoming a risk.

Note, these are not "bad" people or clients, they are great people, they just did not fit what I wanted my practice to be in the future.

Then before the end of the year, I looked at my columns and decided to make some phone calls. As I was putting together this plan, most people would tell me I didn't have time to make the call and just send an email. I thought that was like breaking up with someone via email or text, and how awful I would feel if that happened to me, so I stuck with my original plan of calling each client.

I planned to make the transition all about the client and be truthful. I told them that my role had changed with the new tax law, was focusing on a different area with the firm and was working with our larger client base. The shift is an excellent opportunity for me, and as I am not getting any younger, this was something I wanted to explore. With this change, I would not have as much time for them; my rate was going up and I didn't want to bill them more and give them less. I let them know how much I appreciated all our years of working together, and while this decision was not easy, I thought it was best for them and me.

So, with my heart beating out of my chest like a cartoon character, I made the first call. You know what? The client could not have been nicer; they congratulated me and thanked me for all my service to them, and most of all, they were appreciative of the fact I took the time to call and not send an email. They asked if they owed me any money. They then asked for a referral, and we talked about what would be best for them going forward. It was like hearing your obituary before you die; they were terrific, which made it a little harder. It made me realize how lucky I am to have clients that respect me and the work we do at the firm. Let's face it, when you work with someone for many years, they are not just clients but become friends.

Now fast forward a year. I was talking to the friend who helped me develop the category plan, and they asked how the first year went, and if I could see a difference in my practice. I thought about and said the most significant benefits I saw were:

• My A clients were starving for my attention, so I was able to see them more, involve my staff further, and provide added services.
• Since I spent more time with my A clients, I realized about seven of my last ten referrals had come from my A clients. Not from attorneys, bankers or other services industries, but the top clients I was servicing.
• My revenue went up as I was only working on those clients that paid full rates on time, so I didn't have to write off time.
• My collections came in faster.
• My staff was happier as they worked on the A clients more and enjoyed the challenges instead of some of the more cookie-cutter work.

Now each year, I go through my list and try to transition out the old clients that do not fit and focus more time on the clients I want to work with, consistently working towards the goal of an A+ practice. I now look back at this learning experience as one of the best decisions I ever made, and I enjoy my work much more.

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Mark Fishman, CPA, MST  Cain & David Mark joined Cain & David in 2005 as a partner. His areas of practice include manufacturing, technology, telecommunications, distribution, entertainers and athletes, and services companies. He also is the partner in charge of the firm’s state and local tax practice (SALT) with a specialty in multi-state tax planning, tax credits, nexus requirements, sales tax and ad valorem tax issues. Learn more about Mark and Cain & David by visiting the website.