Have you inherited or bought a firm? Are you afraid to raise your rates? Well, that dilemma is addressed in this episode to help you take control of your firm. Today, Denise Mandeau, a Business Growth Strategist, discusses the elements that you need to consider when you buy or inherit a firm full of low paying clients. Don’t be afraid of making any changes in your firm because change can be the biggest leap you need to take to grow your business. It is time to remodel your firm with Denise. Don’t miss this episode today!
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Take Control Of Your Firm: The Elements To Consider When You Inherit Or Buy A Firm Full Of Low Paying Clients With Denise Mandeau
In this episode, we have a very special guest, which is my business partner, Denise. I am very excited to have her here. For those of you that don’t know, Denise is a business growth strategist and she’s had proven success as a business owner, a financial planner and an award-winning sales professional with years of experience.
She’s learned what it takes to produce results. She’s been working with professionals and sales teams for years to generate millions of dollars of new business. She’s closed over $1.8 million in new businesses. Denise is passionate about teaching others to learn how to sell without being salesy. That’s why she’s on my team. She’s also passionate about pottery.
Before we welcome Denise to the show, if you are a tax or accounting firm owner and you are sick of grinding fourteen hours a day, sacrificing time with your family, postponing vacations and you want work-life balance, then here’s what I have for you. It’s maybe time for you to step up and take control of your firm’s revenue. You can double it with ease and also feel confident so you can charge premium fees.
The challenge is that no one’s been teaching you all of this to fix the problems and connect the dots. If you want to explore what that looks like, head on over to TheAbundantCall.com to book your call with me or Denise. You must be a firm owner, bookkeeping tax accounting, tax resolution, tax planning, CFO services or any of those. We will get crystal clear on where your firm is, the areas that are keeping you stuck and also the things that are scary about making any change.
Let’s welcome Denise to the show. We’re going to be talking about if you’re buying or inheriting a firm or getting a firm passed down from your family and the old clients want to stay the same, you’re terrified of raising your rates by 200% to 300%, what do you do? What are some elements that you should consider in doing that?
Denise, welcome to the show.
Michelle, it’s great to be here.
I’m glad we are finally having a conversation. It has been a little while. For everyone that doesn’t know who you are, why don’t you introduce yourself? Denise is my partner in crime on the East Coast since I’m on the West Coast but just so you have a little bit of context and background on who she is.
We’ll dive into our topic about those of you who have inherited, bought a firm or maybe got your family firm and all the old clients who want to stay the same. They’re not open to change and you fear that you’re going to lose all your clients. That’s what we’re going to talk about in this episode. Denise, why don’t you share a little bit about yourself with those readers that might have not read any of our past episodes?
I am Denise Mandeau. I’ve been in the financial industry for many years. I love everything sales. That’s why I’m with Michelle, The Pitch Queen because we found that we had that in common. I’ve sold millions of dollars of services and products. I love working with accounting professionals and helping them to learn how to have clear communication with their clients, sell more and work less.
That’s what we talk about here at the show. This topic is one that we’ve seen quite a bit in our clients. The clients that buy a firm, inherit a firm, maybe you bought it from a family or maybe it was passed down from your family. You fear making any change because all of the old clients want to stay the same or you fear increasing the fees to where they need to get to. You’re terrified all your clients are going to leave you.
We’re going to talk about some ways on what you can do and how to communicate to make changes so things don’t have to stay the same. We have some case studies we’re going to talk about too with actual clients whom we’ve worked with. Denise, when someone is inheriting or buying a family firm or getting it passed down or even acquiring a firm full of low-paying clients, what do you think the most important element is to consider when you get donated? I don’t even know if you call it a donation.
I don’t think it is.
When you get this passed down or for those of you guys who are investing and buying up a firm but yet, you know you need to make a change and these clients can’t stay the same.
The super important and very first thing is to start getting clear on your value, what you bring to the table and what distinguishes you as an expert. Even though you may have inherited a client base that is used to paying lower prices, you have to make sure that you can communicate that they’re getting more value and it’s going to end up being more valuable to them and give them better results. The number two thing is you’ve got to establish clear boundaries for anyone new that you’re working with so they know how to play by your rules.Even though you may have inherited clients that are used to paying lower prices, you have to make sure that you can clearly communicate that they're getting more value and it's going to end up being more valuable to them. Click To Tweet
Not only understand your value and boundaries but I want to share a story. I’ll call her Anna for this conversation. She inherited a business from her father. Her father was an accountant for a long time. During the tax season, it was always the way it should be. She was never able to make any changes and she was never seeing her family. She was never able to see her kids on weekends and she knew she needed to make a change.
What was interesting is that she had no idea about what our number one thing was, which was her worth. When we don’t have a grasp on our worth, there are a lot of things. If you want to write this down, you could. Think about how many years you’ve been in this industry. How much schooling have you done? How many hours have you done of CPEs? How many books have you read?
Those are all of the different ways you can start to think about what is your worth. From there, you have to make the boundaries. Where are you going to draw the line? Otherwise, if you’re like Anna, she was feeling annoyed and frustrated with her clients all the time. When she was making small increases in fees, like 10% or 15%, it wasn’t moving the needle. She was fed up. When we can help people is when we’re fed up.
I shared that because Anna inherited 450 clients and she wanted to do $400,000 revenue with half the clients so 225 clients. That’s a lot of change to place on a current existing client base that either you acquired or inherited from a family member or this firm was passed down to you. A lot of times and some of you might feel this way but she felt like a hermit. She couldn’t do it anymore.
She had no idea what to charge her clients and she was the total bottleneck for her whole firm. Until it was when she could figure out her value and say, “Enough is enough. I’m going to go spend time with my two daughters, visit colleges with them, sit on the couch with them and enjoy that time instead of being on my computer.” That’s when she realized what was the most important. Otherwise, nothing’s going to change.
I don’t know how many of you reading have AR but in an 8-week period that she was working with us, she collected $67,000 of accounts receivable. That was the way things were. This is not only about your old clients wanting to stay the same, not having a change or you fear them losing you but also a lot of firm owners don’t want to make a change until you get to a breaking point. We’re here to help educate you so you can read and implement what we’re sharing. 1) Value. 2) Know your boundaries.
What are you going to allow and what are you not going to allow? Denise, what do you think would be the third thing that someone would need to implement or an element to consider when either you’re investing in buying a firm full of low-paying clients or you’re inheriting the firm that’s getting passed down to? It’s been the same way for 10, 20 and 30 years.
You have to do your due diligence and maybe even consider interviewing some of the clients before you consider buying or taking on a firm with low-paying clients and take the temperature to see if it’s the value that’s being presented. Let’s say one of our clients bought a firm with $1,000 that does approximately $1,100 tax returns a year but the average return was $100. The person that originally started the firm was almost maybe 25 years ago and $100 was a lot for a return. They never raised their prices. They kept doing the same thing and had clients that were with them for a long time. Even if the clients grew, they never upgraded their fees or services.
That’s important too and that could be the fourth thing. You have to look at your client list and make drastic changes, instead of having it be scope creep or whatever is happening on your end. Anna left tens of thousands of dollars on the table. She lost track of her AR. She didn’t even know what it was when we first had our phone call together. I made her figure it out and get to the final AR number so we knew exactly how much we had to collect.
Otherwise, you’re not going to be happy. You’re going to feel like you’re pretty much done, stick a fork inside your eyeballs and call it a day because it’s exhausting. If you’re not going to make these changes, nothing’s going to change. It’s going to get worse. That’s what we see time and time again, especially with the people who are getting firms of 450 or 500 to 1,000 clients at an average price of $100 per client. It’s not going to get you very far.
If you’re considering buying a firm, interviewing some of the clients to see what you’re getting yourself into might be a good idea. Unless you’re willing to do an overhaul and get yourself from being a hermit into being in action so you’re no longer a bottleneck in your firm. You don’t have to feel like this is all coming down on you. I know a lot of people, the legacy clients or the clients that you’re acquiring, you feel held back that you can’t charge more and make any changes. That’s not the truth. It’s a current belief that you have and that’s okay.
If you think about it, it’s like buying an older home. I was thinking about you, Michelle. It looks good on the outside. You look at the house, it looks beautiful and you go inside, maybe they put a little paint on it so it looks fresh. You need to get an inspection because you got to look underneath all that to make sure there are no termites and all that stuff. It’s the same when you’re looking into a practice or you’re buying. You’ve got to put money in sometimes. It’s the same thing when you’re inheriting or buying a new firm. You’ve got to look at all that to make sure that everything’s up to speed. Otherwise, you might as well start from scratch.
It’s very true. What Denise is bringing up is this very expensive fixer-upper I purchased. I’ve always loved this house. From the outside, you would think nothing was wrong with it but on the inside, it has diabetes, cancer and all of the things. It’s like your low-paying client list. They drive you nuts. My low-paying client list comparison to this house is I met the landscaper who did the landscaping and decided that he was also going to be a gutter company and put gutters up.
He put mobile home gutters on a single-family house with a lot of seams in it. When it rained, it was leaking everywhere. He said, “The last homeowner asked me to do it and I went to Home Depot to do it cheaply.” That’s the same thing that’s going on in the firm with the clients that are paying you $100,000.
You’re probably not cutting corners or maybe you are because you’re so overwhelmed and inundated with the number of clients. You’re overworked, tired and sleepy. You might not be making mistakes on purpose but it might be an accident. This guy came and met me here at the house to share all of this information.
I said, “On the back wall, there’s a brick wall and it’s not to code.” He said, “I know. The previous homeowner wanted it flat.” I said, “Yeah, but flat on a slope is not to code.” We get to fix that, the gutters and the foundation. I bought not a family firm but a house that had a lot of challenges. The inspection of what Denise was talking about is also maybe compared to you interviewing some of the new clients that you will be inheriting. I would also interview some of the higher-paying clients or possible higher-paying clients such as bookkeeping clients or business-type clients. At the end of the day, the 10/40 business is probably not going to be the best bread and butter in your business or firm.
Even if it’s not 10/40 business. Even if it’s compliance business or advisory, you may want to consider asking some interesting questions to the person who’s trying to sell the business such as, “How did you acquire these clients? Have you discounted your fees?” Find out what their process is.
If you’re buying a discount firm where that firm owner was used to discounting, doing some free work or giving credits on invoices, then that’s what you’re buying. You’re buying the Ross or T.J. Maxx of tax firms. Some of you are trying to get out of that. You’re done with the hamster wheel, working weekends and not having a work-life balance.
Those are all of what you wanted in the past. You’re done with working long hours during tax season. If you’re done with that, then consider doing a few of these things that Denise is sharing if you’re thinking about acquiring a firm or taking over a firm. To be honest, now you know what you’re walking into. I knew what I was walking into when I purchased this home. There’s been my fair share of surprises but the big one about the foundation I knew about and was okay with, I’m going to fix it with no problem.
Even for someone like me, I’ve been in my home for a while. Maybe you’ve been in your business for a long time and you got comfortable that you don’t even realize some of the bad habits that you started to sneak into your practice. Maybe you’ve discounted or let people “pick your brain or ask you questions.” You forget how exhausting that is and then you got to remodel your reality or make a new reality.Remodel your reality and make a new reality. Click To Tweet
To be honest, Denise and I are having this conversation on a Saturday because the amount of construction, banging and house shaking that I see on a Monday through Friday is crazy. Think about how you are going to remodel your firm. Change is hard. I get it. All of our clients tell us that. It’s even hard for me and Denise. We’re not any different from you. We’re all humans.
While change is what you need and I get that being fearful to make these changes or make the phone calls, will involve losing or giving up a lot of your clients, even the ones that you acquire. If you’re going to acquire the business or inherit it and you know you didn’t even make a change, you’ve got to be ready and prepared mentally that you will lose or give up a certain number of clients.
If your end goal is to get off the hamster wheel, work with premium clients, charge higher fees and do more advisory work with less 10/40 compliance if you’re doing the business stuff on the accounting and tax side, then that makes sense. Sometimes you got to let go of that guilt and put yourself first. What were you going to say, Denise?
We hear that over and over again. People are so afraid of losing clients. The fact is that fear is not even real. What’s bad about losing clients that don’t want to pay your value? We have to shift our thinking and point of view about that. Even when I had my financial planning firm, I had to do a review every year and look at who was profitable for me, whom can I solve big problems for and whom should I be referring out and moving on. What clients should I fire? It’s not that they’re not worth it. It’s that I can’t serve them to my best and highest because there’s not anything I could do better for them. It’s a service for them and me to free up that time.
Like I was sharing, you might feel that guilt or whatever it is that comes up for you but you’re going to understand once you go through some processes that it’s okay to let that go and put yourself first. Denise, I know you’ve shared this before. If a client were to ask for a discount like, “Can I pick your brain? Can you do it for this price,” and they own a business, I would put it back on them.
If I were to come to your business and need the foundation work, it is what it is. Do you want your house to move down the hill anymore or do you want it fixed? For what all of you do, do you want your taxes done properly the first go-round or do you want it done cheaply with mistakes? How many of you have seen a tax return or accounting book for a business that was messed up, had errors and wasn’t done accurately?
Probably all of you are saying, “I’ve seen it.” The reason is that when we don’t have a work-life balance, we’re tired, stressed, not seeing our family, overworked and underpaid, mistakes happen. Unless machines and robots take over to do that, they’ll probably make a mistake too because what you all do is so intricate and customized that you have to be at the top of your game.
However, we can’t be at the top of our game if we feel like we’re on a hamster wheel. That’s where something needs to change. If you need to make a change, then that’s the part where we can help or there are other things you can do. If you’re going to buy a firm or inherit one from a family member, the old clients want to stay the same way, which they do. Why would old clients want to pay you more when they’ve been getting a good deal for a very long time?
Most of the people we’ve worked with even told us, “My client said I knew I was getting a good deal for quite a while.” We also have proof that most people won’t leave you. Denise, are there any other elements that one should consider when inheriting or buying a firm from a family member or getting it passed down? What to do with the old clients that want to stay the same and be a bump on the log?
We’ve been laying that foundation but get clear for yourself on what you want your firm to look like. You don’t have to be mean to people for them to either rise to the occasion or look somewhere else. There’s an elegant way to do that and that’s what we teach people how to do. You want to serve people and be kind, no matter if they’re a good fit for you or not. You never know. They could be your best referral source even though they might not be a good fit for you now.You have to serve people and be kind no matter if they're a good fit for you or not. You never know they could be your best referral source even though they might not be a good fit for you right now. Click To Tweet
Honestly, if you’re reading and you own a tax or accounting firm, you’re thinking of buying another one because you want to grow or you’re part of a family and they’re going to pass it down to you, you’ve been grinding, cranking out fourteen-hour days and burnt out every tax season and you keep sacrificing your time with your family or you postpone the vacations, I want you to know that you’re doing what you know you can do and it’s not your fault.
What Denise and I teach is nobody’s training you on how to fix these problems and connect the dots. To be honest, Denise and I are the only ones who only work with accounting and tax firm owners. We had a bunch of calls and people were like, “I’ve done this program and none of them ever worked.” We know what you’re going through and how to fix it.
If you want to step up and take complete control over your acquisition of a new firm, dealing with the change and pass-me-down of a current firm and you want to understand how to do the inspection process like I was sharing about my house, I recommend that you book a call with me and Denise. You can do that over at TheAbundantCall.com.
We’ll go over whatever your fears are or whatever’s terrifying you. We’ve seen it and we know how you can overcome it and fix it. Once again, head on over to TheAbundantCall.com if you would like to explore for about an hour with us and dive deep into your firm. You must be ready to make a change and fed up with the way that you’ve been doing it. If you’re buying a firm from the beginning, you must be like, “I don’t want to make all the mistakes that you talked about.” Denise, thank you so much for being here with us on the show. It’s always great to have you here. Is there anything else you would like to add before we wrap up?
What popped into my head is that you may have some goose eggs but let’s turn them into a golden egg-laying goose because that’s what’s possible.
You can double and triple the fees to your current low-paying clients. We see it done every single week. It just has to be done the right way. If you want to speak to us personally, head on over to TheAbundantCall.com to book your call. Whatever your biggest challenges and fears are and what’s the scary stuff that you need your handheld on, we will discuss it. Thanks so much for joining us here on the show. Denise, it was an honor to have you. We’ll do this again very soon.
- Denise Mandeau – LinkedIn
About Denise Mandeau
Denise Mandeau, Business Growth Strategist and has proven success as a Business Owner, Financial Planner and award-winning Sales professional for over 35 years. She has learned what it takes to produce results and has been working with professionals and sales teams over the last few years helping them to generate millions of dollars in new business. She has personally closed over $1.8 million in new business in the last 12 months. Denise is passionate about teaching others to learn how to sell without being salesy!