Greater accountability is needed in giving away free information, free tax tips per se. Not only that you have to be 100% sure that your information is correct, but you also have to ensure that it is not hurting you and your business. Mike Meilinger, an owner of a CPA firm focused exclusively on litigation support, forensic services, divorce accounting, and business valuation, recalls how giving away tax tips and other information for free hurt his business and firm in the past. Mike shares what kind of information is safe to share with your client.
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How To Stop Giving Tax Tips Away For Free with Mike Meilinger
Welcome, Mike, to the show.
Michelle, how are you doing?
I’m good. I’m happy to have you here on the show because you are one of those who has the life of abundance and has done a great job growing a firm. You’ll have a lot of knowledge to share with some of your peers. We’re talking about what information to share, sharing the right information and how to stop giving away tax tips away for free. That’s what we’re talking about. Mike, do you want to share where you’re from? What do you specialize in?
My practice is located in Greenville, South Carolina. Our specialty is high-income tax planning and accounting for successful business owners.
How many total clients do you have approximately?
We have less than 100 clients.
Probably everyone is thinking, “Mike, how do you do that?” That is what I want to talk about because by you not giving away too much information for free anymore, I know you came up with a good term for that. You’ll be able to share with a lot of other accounting professionals out there on how they can have a thriving practice with fewer than 100 clients. Let’s start with what you may be used to do. How has giving away tax tips and other information for free hurt your business and firm in the past?
It started recently and in the past because it commoditizes your knowledge. It cheapens it and the client doesn’t get it normally and nothing generally happens. You don’t get retained or what happens a lot with CPA firms is then when you retain clients, you have ride downs because it takes you so much time to do it. It’s a negative cashflow to get new clients.A lot of people will tell a client anything, but you want to talk to them about something that's valuable to them. Click To Tweet
Can you explain that a little bit more?
Marketing takes time. Looking at implementing, bringing on new customers and putting them into your software takes time. A lot of times if you’re not getting a good upfront fee from a tax planning engagement, it’s negative cashflow. For example, I don’t key in any returns and I don’t key in any data so I have to pay people to do that. If you’re a smaller CPA firm, you have to take your time to do that. It’s important for several reasons that you share the correct information with the clients at the correct time. We have a whole strategy, thanks to you. I always would go in and not share all the information. I did go into your class and realized I was the sales whore and I would give a lot of the free information away and not close the business or not get the client to act in an appropriate way. It wasn’t only hurting my business but it would also hurt them because a lot of times they would not go with us or they would delay for a couple of years. When we got them on, they would see how much money and taxes they saved and we couldn’t go back and get a few years in some instances that we could have gotten.
Share with us a story when you commoditize your knowledge and you cheapened your knowledge because you were a sales whore in your business. Share that one story that was impactful and made you say, “I’m changing it. I’m no longer going to do that anymore.” Not only because it hurts you and your firm, but it also hurts the clients when we do this.
There’s a perfect story and it’s almost a before and after story because it’s the same client.
Let’s talk about the before part.
I was talking to this client and it was in 2018. We were discussing and he knew I had helped one of his other clients, but I couldn’t get him off his butt to act. Finally, he came in and signed the engagement letter. What we saw was in 2017, he had paid over through some simple planning through accounts payable management. It’s nothing complicated. He could have lowered his taxes by about $120,000.
Now that you’re reflecting on that, where do you feel that you commoditize your knowledge in dealing with him where it took him over a few years to get off his butt and engage with you? The other accountants and accounting professionals reading can stop doing what you’re about to share.
We focus too much on our knowledge instead of his pain. Unless you can get a client where they’re ready to act, giving them free tax tips doesn’t do that. You’ve got to bring the problem to their attention. You’ve got to bring the knowledge of where they’re going if they don’t do anything.
Focusing more on the client’s pain points versus what you were doing, which was your knowledge and what you could do for them. It didn’t move them in order to engage with you. What do you do different now in the front? What is the biggest shift that you did at 180 that someone is reading who might not have been to class? Mike was a student of our eight-week mastery training sales course. He did amazing. For those of you that are still dabbling with trying things out, what are one or two things that you have changed in your firm and are no longer doing anymore? The guy that could have saved $130,000 in taxes hurt him by not engaging. When we feel we’re giving away all this information for free or tax tip, that’s not solving our client’s massive problem. It’s our job to move them into action. What’s the one or two things that you do now to moving people into action that might be a little dormant?
The first thing is you have to strategically assess your use of information based upon what you know about the client. Michelle, we were talking about this in one of our coaching calls. We were meeting with a large client that we know we can help with tax planning and everything. You want to share some information with the client to show you are credible sometimes, but you want to share the right amount of information. We’ve focused on helping him with some outsourced accounting information and some knowledge about that. With that client, we were able to share that we can help them somewhere with some outsource accounting. His controller was happy with some of the ideas that we shared with them. We were able to move him to where he was sharing tax returns with us and then we were going to go back to a tax plan. He wanted us to come back with some tax plan and what we normally do is we’ll charge an implementation fee with our tax plan. That’s a strategic use of information.
Sometimes we had a referral but it was what I would call an unusual referral where one of our smaller clients was referring to a large client about $26 million or $27 million a year by $2 million or $3 million net income. The guy who he was referring to us had $100,000 income a year. He shouldn’t be a client, but he was such an entrepreneur. I love him. He was a young kid. He got three locations now and everything. He’s a fun guy to hang with. We were talking about him, my assistant and me and said, “We wouldn’t have even accepted him under Michelle’s rules.” He still does cause some problems and stuff, but he referred us to his great clients. The client was sophisticated tax-wise, but he was not getting any tax planning and was already talking about moving some Puerto Rican corporations and stuff.
The one idea that I feel safe sharing with people sometimes is a captive idea because the captive is complicated and hard to implement. You can still make a lot of money and we didn’t give it away, but all of a sudden it changed the discussion because he was looking at us as someone like, “You’ve worked for the small guy. I don’t know if you can help me,” to, “You’re much more knowledgeable. Why don’t you take a look at our returns, meet with my controller and then see if we can do a tax plan and implement some ideas to save them some money on taxes?” That was a strategic use.
For those of you reading, you’ve all gotten to know me now a little bit and you know I’m not the techie person. That is why it’s up to you as to what is the safe idea to share. This is a great topic. It’s knowing that you don’t want to give away the farm and give them all this information because when you do it for free, no one values free. No one will ever follow through on what you say, number one. Number two, with this guy that was sophisticated, he was talking about the Puerto Rican stuff, he’s doing $27 million. There’s an opportunity for you to shine, but it’s what can you give away as a safe idea to share where you’re not going to be a sales whore and you’re strategic about it. Let’s come up with a couple of other ideas for everyone. If they don’t have a $27 million client, but let’s say they have $100,000 client like your guy with the three locations. Knowing what you know now, what would be another great use of a safe idea to share with a client that shows that you’re sophisticated, but doesn’t give it away where they can take your idea and run with it and go somewhere else? What would be another idea of some safe information to share?
What I would do is when I meet with the client, I assess what the best way I can help the client is. How can I serve this client the best? How can we pay for ourselves with this client? Most of us out there, we’re selling three things. We’re selling a tax plan, we’re trying to help a client save money and we’re selling compliance work. We might be selling an outsourced accounting so you can tell I’m a good CPA and we’re selling consulting work, the profit first. I always think it’s a good area to go into some of the areas that you don’t think is the highest and best use of where you’re selling or bringing some ideas for their business that they can implement themselves. You can always talk about key performance indicators with the clients. Start talking about their finances, their accounting, about managing those, about moving the business forward and get the credibility. Get the conversation going and get them to talk about themselves.
A lot of people will tell a client anything and to me that ruins the rapport but you always want to talk to them about something that’s valuable to them but it might not be what you’re trying to get them to do. When I look at our best clients, we do a lot of work for clients and consulting and in the other areas, the outsourced accounting and things like that. They all have come from meeting them and helping them lower their taxes daily. To us, that’s one of the best ways to secure value so that’s where we usually want to start. If you go in and you save a client $80,000 in taxes, $40,000 in taxes, that creates a lot of loyalty and value. When you start moving into the other areas of service, they already trust you, you can still get good fees.
First, focus on something they can’t implement themselves, but don’t go into any detail. Keep it high level. Talking about the KPIs and moving their business forward would be another one. Talk to them about something that’s valuable to them may be in the future or not right now, but it’s not the service that you want to help and serve them. You do all that after you figure out what’s the best way to service this client. What’s another client story? I know everyone love stories. That client story that you messed up on because you were giving away all of these tax tips away for free and you had to figure out like, “I can no longer do that and I have to start sharing the right information.”The client is worth money. You’ve got to get rid of them if it’s not going to be profitable. Click To Tweet
I have a lot of those.
Let’s pick your best one because we want to learn from each other’s mistakes so that someone else can maybe learn from your mistake and never do it again. Talk about what happened and then reiterate one more time what you do differently now because you have to stop giving away the stuff for free. It hurts the clients as much as you.
One of them that hurt the most was with a guy who I knew well. We went in there and the first thing we did was I looked at his payroll. He was paying $1,800 a week for payroll service with some type of leasing company, but they weren’t doing anything. I said, “Let me introduce you to a source of Paychex.” Paychex charged them $250 a month. I saved $40,000. The second thing is he was using a factoring company and his business has started making money and this and that. I was like, “You’re mature enough to start using a bank. Why don’t we work with you and get you a bank together? You’re borrowing $300,000 to $400,000 a year and you’re paying somewhere around 24% in interest when you added the factoring and stuff.” We switched him to the line of credit and prime and got them in. That was saving them about $60,000. We started looking at his taxes. When he came, he was behind in his taxes and he was going to owe $80,000. At that time, I hadn’t been a certified tax coach and everything, but I was looking at his return.
I realized he was on the accrual method of accounting. You can switch people to the cash method of accounting. We switched and saved him $80,000. I did it all hourly. They always complain about the bills and everything. They were one of our more difficult clients because we commoditized ourselves. It was one of those things where I’ve eventually terminated them as a client, but the thing is they were going to fire us because we’re not happy with some of our fees and stuff and we were doing everything cheap. It’s that whole experience where we did much value for the client and it never made any real money. We never got them to the position of where we were starting to make money.
The thing is you’ve got to get rid of that belief. A lot of us, myself included, we look at a client like, “This client can pay us $25,000 a year from the next several years so I can take a beating on the first year.” You’ve got to get rid of them because you’ve got to be profitable. The client is worth money. I agree, but then you’ve got to make money immediately. The client could sell the business. The business can have a downturn. Something I’m telling you right now could happen. If you look at the things we brought to that climb annually, the tax savings was one time but the factoring and the other thing saved at least $250,000.
This was a referral client too so that adds a whole another layer that we’re going to have to talk about another time about not all referrals are good referrals. There’s so much in this and to sum it up, you commoditize the work and it’s difficult to recoup that money over time. At the end of the day, you let the client go too.
If you think how much easier, how much more profitable that engagement would have been if I were to kept some of the information to myself instead of trying to be the smartest guy in the room and said, “I’ve got some ideas. We can do this and we can do this if we don’t save you this much money.” On the operations side, you can do it on a contingency. With the taxes, having a nice little tax plan in place, it would have been much more profitable for us and it would also set the bar for the client too. This is the way we work. We make money, but that’s a good example of a completely screwing something up.
A lot of others can resonate with you. It’s important that we each learn from each other’s lessons. Are there any other last words that you would like to leave now that you’ve had a few mess ups and you no longer are a sales whore on how others can stop giving away tax tips away for free? How do you know what the safe area for sharing the right information is? Do you have any other last words?
The biggest thing is the fundamentals of preparing for your meeting and making sure you have a plan for how you’re going to talk to the client when you meet with the client. Where do you feel you could help them at the highest and best value for both of you because you want it to be a win-win? You want to be profitable for you and you want it to be a pleasurable experience for your client. That preparation is the most important thing. You should not walk into a meeting with a new client without at least a plan. You’ve done a little research on the client, you’ve looked at any financial information you have. Especially if you’ve already gotten the returns and you’re looking at him, you should have a plan like, “This is how we’re going to deal with this client.”
It was an honor to have you. Keep that info for yourself and stop putting yourself out there as a sales whore. Look at how much money you’ve made since you put all that to rest. You put that person to bed.
Like I told you in class, I’m working up. I want to get to a high-priced call girl, basic labor.
Thank you so much, Mike, for being here. It was an honor to have you.
About Mike Meilinger
Mike Meilinger started his first CPA practice in 1997, which he subsequently sold in 2005. Mike is not one to sit still for long, though, and in 2006, he started Meilinger Consulting, a CPA firm focused exclusively on litigation support, forensic services, divorce accounting, and business valuation. In 2011, Mike had the opportunity to start a new tax practice from the ground up within Meilinger Consulting. Today, Meilinger, having doubled in size over the previous three years and boasting 10 full-time employees, has further evolved into a business that caters to the top 1% of business owners, and Mike only sees more opportunities ahead.