How to Explode the Growth of Your Firm by Pruning Your Client List

How to Explode the Growth of Your Firm by Pruning Your Client List

Roses are one of the most treasured garden flowers because of their soft petals and sweet scent. Seasoned gardeners routinely water, fertilize and prune their rose bushes to foster growth. Adding water and fertilizer is common sense to the non-gardener, but pruning? It seems counterintuitive to cut away the plant to make it grow. But, if a rosebush is not pruned, it will flower less and be more prone to disease. Lack of pruning reduces the plant’s growth, whereas thoughtful pruning prepares the plant for maximum growth.

The same is true about your firm. Pruning your client list may initially sound like the worst thing you can do to grow your accounting firm. In actuality, pruning your client list may be exactly how your firm will flourish to its peak beauty.

Here are some specific details of how to cut back your firm’s client list:

  • Create a spreadsheet in order to keep track of your thoughts as you evaluate each client. Put the client name in column A, then add some columns for demographics about each client, such as number of years in business, industry, number of employees, last year’s annual revenue and type of ownership (Partnership, Sub-S, etc.). You may also add the accounting application they use (i.e., QuickBooks® Online, QuickBooks Desktop, Xero, Wave and Excel), your monthly revenue (if fee based, or an average hourly rate) and maybe the types of services you provide them.
  • Next, think about each client, and pay attention to your instinctive reactions when the client’s name is mentioned. Note which clients are a joy to work with. Which clients make you feel like you are part of their team? Which clients are you reluctant to work with? Your internal reaction to the client says a lot about the kind of fit they are for your accounting firm.
  • Ask your staff about each client. There may be difficulties or benefits related to each client that only your staff can see from their unique perspective. Ask your staff about the day-to-day interactions with each client as part of your evaluation.
  • Determine if you have outgrown any of your clients. Perhaps, you have clients on your list who have been with your firm for years, but are unwilling to move to cloud technology or processes. Perhaps, you ask for digital records for tax returns and they insist on mailing you paper. These may be clients that are no longer a good fit as you grow your firm. 
  • Identify client challenges that you can meet. While thinking about each client, go ahead and list any challenges that the client is facing, and any tools you may be able to offer to meet that need.  (This may not directly affect your pruning, but may highlight opportunities and growth potential for after the pruning process.)
  • Ask additional questions and rate each client to get a point system. Some possible questions include: Does this client value my services? Does this client trust our accounting expertise? Do I have to convince this client to follow our advice? Do I have to chase down information from this client constantly? Does this client make unreasonable expectations of our team? 
  • Now, review your list. Do you see a clear pattern of the types of clients you WANT to work with and that want to work with you? Do you see any clients that clearly are at the bottom of the list in terms of revenue, poor communication/unresponsiveness and bad “fit” for your firm? 

If you release those clients, you will have more time and energy to serve the right clients with even greater excellence. You would also pave the way for additional clients who are a better fit.  Keeping the clients who heed your advice makes for maximum growth, not just for your business, but for theirs as well.

If you are looking for a niche market, this pruning process can also help as you make that determination as well. You may see a group of clients that you and your team enjoy working with, and that value your services. You may also find that those outside that niche are the ones you need to prune.

A Firm of the Future thinks beyond the current growing season. Pruning today’s client list prepares the way for future growth. 

If you need some help in doing this, please feel free to reach out. Often, an outside “gardener” can provide perspective.