The Revenue Replacement Strategy: Future-Proofing Your Accounting Firm

In this episode, we have a very special guest. She is the President of Boomer Consulting , a company focused on guiding CPA firms to sustainable success and innovation. She has been on Accounting Today’s Top 100 Most Influential People in Accounting and CPA practices and is also Top 25 Most Powerful Women in Accounting for several years. She has a passion for facilitating great conversations and watching everyone she meets a little bit better every time.

Before we welcome our special guest to the show, a lot of people reading are tired of working long hours, the low pay, and little freedom. If that’s you, then make sure to keep reading. No matter what’s happening in your firm, it is possible to work fewer hours and get paid more. You see it all around you, firm owners grinding fourteen-hour-plus days with little to show for it, burnout, anxiety, and on the verge of a heart attack but that is not how we lead or do things here at the Abundant Accountant.

I will show you how to build the firm you have always wanted, charge the fees you deserve, serve only the clients you choose, which we will talk about with our special guest, and finally have the time for what matters to you. If you’re ready to make a change and create the firm you’ve always dreamed of, make sure to schedule a free breakthrough session with me and my team at AbundantCall.com .

I have helped hundreds of firm owners gain freedom, get paid first, and have the confidence to communicate clearly and confidently to their clients. Our system works but you must take the next step. Every success has started right here. It’s turned into confidence, charging premium fees, doubling revenue, less burnout, and excitement for the future and your firm. Book at the AbundantCall.com . Stop settling for less. Let’s create the firm that you know you deserve. It’s time for a change. I hope to speak with some of you soon. Let’s welcome our special guest, Sandra Wiley, to the show.

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Welcome to the show, Sandra.

Thank you so much. I’m so happy to be here. It’s going to be a pleasure.

I’ve been excited to have you here on the show. It’s an important topic about revenue replacement strategies, how to take your firm to another level with revenue increasing, and how to grow smarter, not doing it harder. There are a lot of people here who are on board for that conversation. Before we get started, I’ve already done your intro but it’s great to have it come directly from you. For those readers who might not know you, could you share who you are and what you do?

I’m Sandra Wiley. I’m the President of Boomer Consulting . We are a consulting firm. Our entire niche is public accounting firms. We have been working with firms for many years. We work in the area of helping to transform firms from the business model of today into the business model that they need to be in the future. We work in the areas of leadership, process improvement, technology, talent development, and growth. Those are areas that the firms need to grow and innovate in. We’re going to be talking about revenue replacement and that is in our area of growth.

We’re going to talk about the growth department, which is the first thing on your P&L, revenue, sales, or income, whatever you want to call it. I’m excited to go through this. Sandra, you have a great case study that we’re going to be sharing on maybe where they were revenue-wise when they went through your revenue replacement strategy, how they grew smarter, how they didn’t grow with working more and working a lot harder, and banging their head up against a brick wall.

We’re going to call them Jones and Company. I’m excited about that. What do you think for a firm owner or maybe smaller firms? You’re not a public accounting firm and you’re smaller. You’re in a job and trying to start your firm but the same principles apply. What is the first thing that one might need to do? Can you share a little bit about Jones and Company when they came to you, where they were struggling, and what were some of the roadblocks and hurdles in that first step that you took them on the revenue replacement strategy track?

When firms start thinking about who their clients should be, and a lot of people talk about their ideal clients, we might say it’s your target client who you want to go after. One of the hardest things that people have to think about is what types of clients they want more of. When some of our clients start their businesses, they want any clients. They have a tendency to take anybody. In Jones and Company, the client we’re talking about, that was the case.

One of the hardest things that people have to think about is what types of clients they really want more of.

They had a couple of owners that got together and said, “Let’s start a business,” and they did. You can imagine. When they started that business, it might have been coupled with $100,000 worth of business. They grew that business to be about $3 million in revenue. All of a sudden, they said, “If we want to grow to a larger firm, we got to do things differently.”

The other thing that started happening was the profession started changing. When you talk about, “We want to grow smarter and not harder,” the larger you get and the more clients you have, the more complexity you have, all of a sudden, life gets super hard. It gets much easier if you have fewer clients at a higher level of revenue and you are able to do more with them. That means you have to let go of some of the clients that may come in the door with you, to begin with. That’s hard work to let go of some of the ones that you’ve always had. You can imagine how hard that might be.

Especially for some of these bigger firms like Jones and Company. This is something we preach and talk about all the time, one way or another. To work a lot smarter and not harder, we have to work with fewer clients that generate more revenue and get rid of clients. That is a difficult part. What were some of the first steps that you did with Jones and Company when they had to make that initial step on figuring out who their target client is? It’s the ideal client but it’s about who they want more of. Can you define the difference between how you explain the target client versus the ideal client for us?

It’s one of the same. However you feel comfortable talking about your best clients, that’s the target client you want to go after. That’s what we’re talking about. It’s an analysis piece. You sit down and take a look at all the clients you have. Ask yourself, what are the best characteristics of the clients that you have that you love?

You have to get down deep into who are the clients that you love. Not the ones that are the easiest to work with but the ones that value you, pay you on time, refer other work to you, do other work with you besides just one thing, and come to you and ask for your advice about business, not just their tax return. There’s a bunch of different things.

If you look at all of those things, we do what a lot of firms feel comfortable with, which is do a spreadsheet. Take all your clients down the left-hand side of the spreadsheet and all of the attributes across the top ledger, and then start scoring them. This is the hardest part. Do not put how much money they pay you yet. That will come but that doesn’t come first.

It’s not about do they pay on time and refer the work even if they’re paying you $10,000 or $20,000, and they’re your top paying point. Sometimes, top pain points might be your biggest pain point. You then go through this analysis piece.

Go through that first. Score those, get a total, and then sort by the highest to the lowest number. Put in two other numbers after that. The first number you put in is how much money they paid you last year. You’re going to put in the money and in the next column after that, how many hours did you spend working with them. You’ve got data that you can work with. What we tell people all the time, and it works out every time, is to slice off your top 20% of what you scored. About 80% of your income is going to be coming from that 20% of your clients.

The 80/20 principle is at play right here, Sandra.

It applies to everything we do. That’s the 80/20 principle and that’s what you’re going to look at. What you want to do is take that and ask yourself a couple of questions. If that’s your top 20% and that’s where most of your revenues come from, then what are the common services that those clients are asking for? What additional services could you develop or create for them that they would want to do more work with you?

You’ve got your target client or ideal client. You know what kind of services you should be going after. You also will probably figure out what niches will become apparent to you that you’re good at. You also know what some of the new services are. You may have to go and do some interviewing with those clients to find out what some of the other things that we could be doing for you that would help your business and help you personally because that will help you see what new services you need to be building. That will give you the foundation for how to build your business.

How long did that whole process take to go through that step?

That’s going to take you a whole year, at least. That is not an easy process, nor is it a fast process. It shouldn’t be. This is going to foundationally set your firm up for the next 50 years. You do not want to make this like a weekend project. This is something that’s going to take you some time but it is also going to set you up for success so do it well.

When Jones and Company did this well, where did they start? What did they transition to so we have some context around going through all these steps? Revenue-wise, if you can share that.

They started at about $3 million and ended up at about $2.8. They did let go of some clients but then they grew the next year to about $3.5 million. Another thing happened to that particular firm. The two owners that were there were the ones that started the firm. They were the founding partners. One of those founding partners decided not to stay at the firm. It was a painful process for him.

He decided to leave so they had another person who decided to become a partner. They replaced the one-for-one. The other founding partner said, “I like being a part of him, not with the other.” Roll forward 2 years, they’re at about $3.5 million. They ended up with the 2 founding people leaving and there are 4 brand new partners. We have four partners.

Here’s the great news though. They had a foundation to catapult off of. They knew exactly what clients they were going after, what niches they were going after, and what clients not to let through the front door. That’s an important part of what we’re talking about. They had fewer clients and were more focused. They grew to $6 million in one more year.

They almost doubled their revenue in a year once they got very focused and got some juice, I would call it. They have some juice in the engine with some new partners who were highly motivated to go out and sell the firm. This is unusual in some firms. They got rid of some of the baggage that comes with, “I built this firm. Those were my clients.” New owners didn’t have that.

That’s the hard part for so many people and all the firm owners I work with. It’s like, “Michelle, I’ve had these clients for 20 or 30 years. They’re fourth generation and fifth generation. I’ve done their kids for free.” That goes against the whole working smarter, not harder. They wonder why they feel tired, exhausted, and burnt out all the time. When they made these changes, as you saw, the two original partners exited. They couldn’t handle it anymore. What would you say to someone who’s struggling with letting go and doing this? Everyone’s heard this a million different times in different ways.

If you’re struggling with letting go of some of your clients, I will tell you, first of all, that I understand why it’s hard if you want to protect your firm and your legacy. You want to see your firms succeed as you’re getting ready to exit. For your firm and the people who are coming behind you and are going to pick up the firm and carry it forward, you simply must allow some of the lower-producing clients to go. Quite frankly, it is better for them too.

If you do what you’re supposed to do, which is charge them what you should be charging them, if all they’re doing is a 10/40, they can get that done at a lesser price somewhere else. They do not have to come to your firm to do that. Quite frankly, you shouldn’t be doing those things anymore. That should not be in your wheelhouse. It’s hard. On this show, if you’re reading, what I’m telling you is it’s not easy but it is necessary. It is more necessary now than ever because there are less of us doing what we’re asking you to do. There are more people who need a higher level of work than ever. That’s what you should be playing.

It takes a year for firms that have been around to go through this and create the spreadsheet with all the different columns. If you did not catch that, make sure to grab your notepad, pen, and paper and reread it. What would be the next thing that you did with Jones and Company for them to see this growth originally starting at $3 million, let clients go, got down to $2 million, did the 80/20 cut-off, got rid of all the original partners, got in the new team, and they’re at $6 million? It didn’t happen by identifying the target client. What was another element that was important to this revenue replacement strategy?

There were two things that they did that I thought were important to their growth and success. The first one was they created a solid client intake process. They made a decision early in their change in leadership and philosophy. If they were going to go through the pain and the process of letting go of some of their clients they should not be working with anymore, they were not going to allow the same type of client to walk through the front door anymore.

They were going to make sure that they have this profile of their target client and only let those target clients come through the front door. Only the clients would play the way they wanted to play. When I say that, they had a very specific way that they were using their technology. They wanted the clients to use that. They have portals that they’re using. They had very specific reports that they were going to use. They use QuickBooks Online so the client had to use QuickBooks online.

There was some training involved. They took someone from within their team and made them the client intake the guru. It’s anybody who wants to do business with them. If they came to the front door or the website, they had to get through the gatekeeper. The gatekeeper was the one who would interview them, identify whether they had the business they wanted to work with, and get them to the right accountant to talk to them.

Once they had been screened and identified, “You are a client that we will work with,” then they went back to that person. She did all the training to make sure that they knew all of the technology before they started working with them. For a new client, it would take up to 30 days before they started working with them because they would teach and train them their way of working. That intake process was super helpful to their growth.

You may think that a client would say, “What a pain. Why would I have to go through all of that?” It was the opposite. Clients felt so important by the end of it. They were so important that they had to go through all of that to work with this amazing firm that they felt special. It made them refer more people like them. That’s where part of their growth came from. The client and take piece were a big change for them and very important to their growth.

On the intake process, was there anything specific that you can share with anyone and firm owners reading that you think is a must to have? I like to call it a qualification application. Are there any must that you suggest to have on a client to take form or process?

The must-have is you must understand what you are willing to take and not take. You have to be super clear on what you are looking for. You cannot waiver. You can’t look at somebody and say, “They’re close. It might be close to what we want.” No. It’s either they are the client we want or they’re not. You and your partners or your team members must be very clear on the client you are looking for. It’s not just their books. It’s their culture, attitude, and how they are willing to work with you. You have to be willing to let them go if they don’t.

In Jones and Company, one of the most interesting things that happened early in their tenure was one of their rules of the game of playing with them. You have to pay monthly. They have it worked out. Their packages are worked out so that you have to pay them monthly for what they do for you. One of the clients that they were onboarding said, “We don’t work like that. We will write you a check.” It had to be ACH and they said, “No, it has to be ACH.” This person threw in a fit and said, “I will not do that. I write checks. That’s how I do my business.”

This was not a small client. You need to understand that it’s not like it was an okay business that went, “No big deal.” This was a good client, a client that was worthy of having. Jones and Company said, “I’m sorry but if you can’t function in the ACH world, we cannot have you as a client. This is how we work.” They said no and they said, “You’ll have to find somebody else.” You have to have your go and no go leverage pull.

I call it the red carpet. Who are you going to let on your red carpet and who you’re not? You have to be picky to the point where you say it’s ACH. I have a lot of other ideas for those readers and maybe you have a few founders that you can chime in with. You won’t work with anyone who will do the paper. If no one is willing to go electronic, use your online portal, and submit documents with that or some other service, then you’re not going to work with them. Thinking about your tools and software in your firm, they must adhere or they are not going to work with you. That’s a big one too.

If you have some people doing paper or electronic, or some people are paying you a check and ACH, you can’t create the efficiency. Jones and Company got $6 million. It was a well-oiled machine. To do that, we have to say, “Who are we letting to our Emmy party? Who’s coming and who’s not?” You’re the Emmy party and this is your invite-only with a certain dress code. The same thing applies to certain payment codes. We only allow these forms of payment. That’s it. Nothing else.

The other thing that is worth mentioning here is also that they did sit down and create core packages of services. I want the audience to think about years ago. This was a long time ago. Probably some of you weren’t even born then but it was when McDonald was put together. It was probably one of the very first fast-food restaurants that ever put together small, medium, and large packages of food.

You go in and look at the menu. You can either get small, medium, or large. You paid more for the large but you got more. Most of the time, people go, “I’ll take the medium.” The same thing holds true for a package of services within a company. If you go in and look at what a firm has to offer a client rather than go in and say, “I need my tax return or financials done,” you sit down with them and say, “Here are the packages that we have.”

What I would tell people is first thing, sit down and write down every single thing that you have that you could offer a client. You might do that by niche, depending on how many niches you have. Look at every niche you have and then ask yourself, “What are the things that we offer that we could offer any client that walks through the door? Here are all the things that we could do. Make a checklist. Say, “If they are going to perform well, they at least should do these things. If they didn’t do at least those things, the very least they would do with us is these and we could still work with them.”

You’ve got your small, mid, and large. Maybe you call that bronze, silver, and gold or basic, premium, and enterprise. Whatever you want to call it, you can name them anything you want but here’s what I would advise. First, sit down with your people and do that. Figure out your packages. Never take a client unless they’re willing to do one of those three packages. If they come in and say, “I want to do payroll,” say, “We don’t do that.”

Sandra, I don’t know if you’re into Tesla cars but that has always been my dream car, and I got it. I either have to buy my car or get a new one. I’ve been looking at releasing the car. Tesla has done it the same way. There are only four buttons you can click when getting a new lease. I can click the color of the car, the tire wheels that I want, if I want the autopilot self-driving option, and if I want to purchase or lease. That’s it. I can’t do anything else and that’s important to think about.

If you look at where that company is, the more options we give in the work customization is a recipe for disaster. I had an experience. I had a food company back in the day. It closed in 2017. That’s what I’m doing and that’s why I’m here. We customize food. We didn’t do it like McDonald’s. We did have food sizes. My whole mission was to help people get healthy one meal at a time by having a personal chef in a package.

We had small size, medium, large, and family-style sizes but that customization, along with twenty other recipes on a rotating menu every week, was way too many options. When you have too many options, it doesn’t help to have a well-oiled machine. We had to close the business. We couldn’t keep up with the competition anymore. Everyone was getting $20 million and $30 million investments.

If you look at some of the other places you go to, the places with too many options are too overwhelming. With your clients, we want to steer them in the solutions that will solve their problems. Whether it’s silver, bronze, platinum, gold, or whatever you had mentioned first suggestion, know that for the client, every option has to solve their major problems. It’s just some might have more of your time, direct access, or something along those lines.

I love what you’re saying. Some have a hard time wrapping their head around you don’t only do payroll. How does that solve a business client’s problem? It doesn’t. They need the bookkeeping. They might need the payroll too. They need the planning and preventative work. Business owners especially need more from a firm owner on the front end versus a one-and-done, see-you-once-a-year type of situation. They need more, which is why you’re getting rid of 80% of the volume and working with the top 20%.

After you have these packages put together, the complexity of your business becomes less, which is what you want. When we started this whole thing about growing smarter, not harder, I would say that businesses are always going to be hard. It’s not like you just walk out there and go, “I got business. Come get me.”

Business is always going to be hard.

Otherwise, everyone would have a business or there wouldn’t be any people who had jobs or employees.

It’s hard work but what you want to make is it’s not so complex. Accounting has made their business super complex sometimes. What we’re trying to say is it doesn’t have to be. Know your clients. Only take certain clients with certain niches. Know that you have certain services that you can do well. Put those into packages and offer packages to your clients so that you can go super deep with the clients that you have and give them lots of things.

Here’s one of the things that I will predict, what happened with your packages of services. They will start with maybe the small or the medium-sized but once you’ve worked with them for a little while, they’ll go, “At the beginning, you showed me those other things that you had. What were those again? We’re doing so great with you. Maybe we do need that other group of services.” They will grow to those higher levels of services simply by you doing your job well.

What you want and what I would hope for you is that every one of the clients you have when you’re done with this, they’re all at that gold level. They’re at the highest level. That would be the best. That is important too. One of the things I was thinking about when we were talking about this topic was how you attract the right leads. It’s all about telling the story.

I’m sure many of you out there have heard about story branding. Story branding is something that’s been around for a while but it is all about stopping talking about yourself. I cannot tell you how many companies out there or firms talk all the time about, “This is how long we’ve been in business. This is how many awards that we have won. This is me.” Nobody cares.

I always say, “No one cares that you’ve got CPA after your name, EA, or have two Master’s in tax.” I talked to the firm owner, Sandra. She was like, “I have two Master’s. I’ve got an EA.” I’m like, “Great. How’s your business working out?” She’s $300,000 in debt and has no money to grow the business. I’m like, “It doesn’t matter what’s after your name.” Your clients don’t care, either. At the end of the day, it’s about what you said, the value that we deliver, and the results we get for our clients. That’s what matters.

It comes down to talking about your client’s problems, telling them how you can guide them, help solve those problems, help them see what results they can expect after they work with you, and talk to them or show them the results of other clients that you have helped by going through that experience. It’s all about them. If you can show them that, you will get more clients. What I love to hear are those amazing clients out there. My clients say, “Honestly, we almost don’t do any marketing.” Our clients tell other people to come and see us.

Ninety percent of the ones that I have phone calls with myself and my team think they have a lead problem. I’m like, “No, that’s not the problem.” It’s just what everyone thinks, “I need more leads and better leads.” If you spend the last year identifying your target client and going through this whole process, those clients want to share their success with you and your services and bring you more people. It’s a domino effect.

If you ask for referrals, you don’t have to have many clients, especially if you have annual clients and they’re paying monthly like Jones and Company was. It’s not a volume game anymore. When we can stop thinking about, “We need more leads. I need to get marketing,” it has nothing to do with that. It’s about attracting the right target and ideal client and having those people help bring more of themselves to you by sharing it.

We also have to ask for referrals and do other ways to share like the story, not about your licenses and how many years you’ve been in business. Unfortunately, none of that matters. Is there anything else that you can think of from the Jones and Company or other ways on the revenue replacement strategy on how one can grow their firm a lot smarter, not harder? Even though owning a business is hard, and owning a firm will be difficult. That’s why many people don’t do it. That could make an impact on someone reading.

It is hard and sometimes scary. Sometimes, it is like, “Why did I get into this?” It is also amazing and rewarding. It is also the days that you watch your clients thrive and the days that you find out, “I helped my clients and they’re better because I worked with them.” It is worth every bit of pain you go through with a few.

I would encourage all of those people out there who are going through the joy of having a business and the wonder of what it’s like to grow a business to not give up but also don’t quit learning. Read, learn, and grow. I’m not one of those people who goes out and says, “Go get a million letters behind your name.” If you want to, that’s fine. There are lots of ways to learn. Go to conferences and listen to webinars or shows like the one we’re doing. Continually feed your mind all the time. You will learn and grow. You will apply that learning. You will be amazing. I am convinced of that.

Continually feed your mind all the time. You will learn and you will grow and you will apply that learning and you will be amazing.

I am too. That’s why I’m here. I do this show on payroll dates for you, reading. Repetition is key. If you’ve read something similar to this before, know that it’s good to get it ingrained. Sandra, everything you shared was spot on. It is 100% aligned with everything I’ve talked about and even some new golden nuggets.

Thank you so much for being here with us. It was an honor to have you and an honor to hear the story of Jones and Company and how they doubled revenue in one year by taking this strategy and approach. Knowing that letting go of those legacy clients will be scary, hard, and depressing at times but on the flip side, you’re going to be so much happier.

Thank you so much for having me, Michelle.

Thank you.

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Thank you all so much for joining Sandra and me on the show. It was an honor to be here. For those of you who are ready to stop settling for less in your firm and tired of those long hours, low pay, and little freedom, make sure to head on over to AbundantCall.com to book your call with us. We are committed to your success.

We’ll give you the specific next steps to transform your firm during our free breakthrough session but you must act fast. Spots are limited. Make sure to head on over to AbundantCall.com to book yourself a slot with me or one of my team members. We look forward to speaking with you. I look forward to having you and seeing you on our next episode.