The first challenge most new or aspiring freelance bookkeepers face when starting their bookkeeping business is…
Q: How do I find my first few clients?
A majority of bookkeeping businesses get most of their clients through referrals. But the problem when you’re just starting out is, how can you get referrals if you don’t have any clients yet?
Your first few clients often come from networking and reaching out to your existing contacts. What other ways can a fledgling bookkeeping practice acuire new clients?
Here’s the story of what one of my students attempted, the pitfalls that plagued him, and how he can course correct to set himself up for success going forward.
I’m sharing the actual email exchange so you can see what happened, fly-on-the-wall style… (He gave me permission to share his story, since it may be helpful to other freelance bookkeepers)
I actually talked with my second [potential] client that I will hopefully be working with as their bookkeeper. I quoted a rate of $19hr through a website for the service they needed but I know they are going to need more. I used your engagement letter [template] with the terms and limitations of what I will do and what I will not. I feel that after I am on-board with them I am going to be teaching them how to use QuickBooks Online. Would it be wise to charge that as a separate price in the beginning until I feel they are knowledgeable about the software?
Gabrielle’s initial response:
When you say you have communicated with this potential client through a website, is it one of those bidding sites (like eLance)? Is that why you have quoted such a low fee? ($19 is extremely low for even very basic bookkeeping services). Will you be doing cleanup services, and then the client wants you to teach them to do it themselves thereafter?
I can better answer your question if I understand the engagement. But in general, yes, training should be charged separately from bookkeeping, unless you are only giving them small pointers to make it easier to work together (when you’re doing the monthly bookkeeping, but they are handling other aspects, such as the invoicing, for example).
Please let me know the situation and I can give you a more helpful response.
Yes, the client reached out to me through one of the bidding websites which I just quoted a rate of $19. After speaking with the client I found out that they did not actually have an accounting system, but they are recording their transactions on Excel. In the agreement letter that I sent to them (waiting for approval) I mention that I would provide invoices to their clients and data entry. First they would have to purchase QBO by working with me to see which system is best. This would be only my second client for the business to get in the door, but I know I will have to address different prices for me to train them. What range would be best in training the client?
With a client project like this, which is going to be a lot of work, I recommend that you get a retainer up front (I hope you asked for one in your engagement letter). They also need to realize that this is going to cost them quite a bit because there are really TWO engagements here (without consideration of training).
If the prospective client is currently keeping his books on a spreadsheet, then he is going to need a complete setup of new books in QuickBooks Online (likely including catch-up work). I would not recommend taking on this client if they want to continue with their Excel system. If they don’t want to pay for QBO (and paying monthly for software is an issue for them), you could recommend Wave, which is free.
For you, please remember that you’re not an employee-like person in this scenario, but a professional and have some standards that they need to meet to make this a win-win situation. I’d recommend in general that you charge at the very least $35/hour for bookkeeping services and $45/hour for training and set up services. Those are absolute bare minimum. The national average is higher.
If the client thinks that’s too high, it means that they are looking for an employee. It would be very difficult to run a viable business on only $19/hour. So just be careful about backing yourself into a corner so that you’ll regret taking clients on at too low a rate. If you really want the client, you could make the $19 rate apply for a limited time only, and then go to a “regular” higher rate. It’s a common mistake to undercharge, but if you’re busy slaving for this client, it means you don’t have the capacity to take on clients who will pay a professional rate on which you could actually turn a profit.
If you haven’t seen it yet, here’s the latest Intuit survey that shows the basic rates others are charging. Hope it helps.
You’re awesome, I really needed to hear your expertise in this situation. Along with your virtual guide that I purchased from you, I see that I made a mistake and that it would be a lot of work. If they really want my service and they wish to grow there business, they should have no problem paying the rate of $35 to do things correctly. Next time I will make sure to ask the right questions that you provide in your guide to see if we are a good fit or not. Thanks Gabrielle.
There is no teacher like experience! Glad it’s helpful.
Here are some key lessons to be learned from this case study:
1. Don’t price services at the rate an employee would be paid. Charge professional rates that will support your business and communicate that you are providing true value to your clients. Never compete on price alone.
2. Don’t quote a rate blindly. Ask questions that will help you know as much as possible about the client and the results they are looking for so you can adequately quantify the results the client wants, the work that needs to be done, and the rate that would set up a win-win working situation.
Some key questions to ask are…
* What is the #1 reason you want to hire a professional bookkeeper?
* What results do you expect and are there any deadlines involved?
* How is your bookkeeping getting done now? Are your records up to date?
* What software are you using to get the books done?
* Do you require on-site service or is online access / virtual bookkeeping preferrable?
3. Use effective marketing methods for bookkeepers, not online commodity bidding websites. Effective marketing comes from building relationships and leveraging proactive, online and in-person strategies. Marketing that gets results needs to become a regular practice, not an event.
The challenges faced in this case study are all too common, and can slow us down when trying to build a profitable bookkeeping business that we love filled with clients that pay us well and are great to work with. That’s why in October the TFB Premium lesson will be on “How to Get & Keep Top Quality Clients” If you’re ready to kick up your client base to the next level, join us in TFB Premium!
What war stories do you have to tell (and the lessons learned) for getting your first few clients? Please leave a comment below and get a discussion going.