A Key to Growing Your Bookkeeping Business

So you've been working on growing your bookkeeping business?

I've got both good news and bad news for you.

Bad News First

I'm hearing from more and more bookkeepers who are getting really frustrated with the changes that are being thrust upon us as a profession.

  • Key apps are being acquired, aren't working anymore, disappearing, or are becoming over-developed or overpriced (or both!)
  • Clients seem to be getting more demanding, yet think our service fees should be “cheaper” with expanded scope and faster response time.
  • Competition is growing from big accounting firms and software vendors alike. It seems everyone wants to offer low-cost bookkeeping services and squeeze us right out of the picture!

Have you been feeling the pinch from these changes happening around us yet?

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Workflow, Convenience, and the Value of Your Services

Workflow is something most of us want to improve. In fact, it's a buzzword in our profession right now. Why? Because done right, your workflow means you can get more done, more consistently, more profitably and in less time.

We all want that, don't we? And guess what? So do our clients!

Good workflow makes it easier to scale your business, expand your workload capacity, or even take more time off, no matter what your business model is.

But what does your workflow mean to your clients? Can good workflow help you attract new clients? Can it even make them happy to pay you more, instead of always trying to get you to lower your fees?

The answer is, YES!

Workflow and Your Clients

Here's an example that illustrates what I mean. This is what happened recently in my own bookkeeping business…

While on a phone appointment with a potential client (which had come through my website), the first thing out of his mouth was how impressed he was with my automated appointment setting system. He was delighted at how easy it was to use, how professional it was, and how convenient.

Needless to say, this started our conversation off on a high note because he viewed me asĀ  professional and cutting edge as a bookkeeping service business. It served as a great first impression, but also positioned my practice as a leader in my field. That also means that I likely don't charge budget fees (I don't).

So your workflow is not just about getting client work done quickly and efficiently for your internal processes. It's also about your clients' experience when working with you. When you can set up your workflow so that it's smooth and easy for your clients (most of them hate the details of their financial records), your value as a bookkeeper soars in their eyes.

Client Experience Workflow Success

When considering improvements to your workflow, could you include automation too? Think about how it will affect your client's experience. Will it contribute to an impression of professional and high quality services?

With the example of my automated scheduling system, I put that in place years ago. The first reason was for my own convenience. It's much easier to give a link to my calendar than attempt the tedious back-and-forth to coordinate meetings via email.

From there, I added the new system to my website so it's easier for potential clients to reach me as well. So a win-win automated scheduling tool that integrated with Google Calendar was a good fit for my bookkeeping practice. (There are many available now for free or paid subscription. I use Schedule Once and love the functionality, but a popular free tool many use and like is Calendly)

The lesson here is that when something is convenient, it is worth a lot, both to you and your clients. What part of your workflow that affects your clients could you make more convenient? Could you remove any existing pain or friction?

Workflow Pain Relief = Premium Value

This is an important point. If you want clients to view you as highly valuable, your workflow needs to make it easy for them to work with you. Clients hire us to remove the pain of keeping up-to-date and accurate financial records. Making this a smooth (even pleasant) experience for them so that they truly feel served is of very high value. That's value that will set you apart as a premium quality bookkeeper who deserves a premium level fee.

Oh, and value goes both ways. I pay a monthly subscription price for automation convenience too when adding automation to key areas of workflow. But I'm fine with that because it saves me time and frustration. The convenience and reliability contributes toward high quality relationships with existing and potential clients. In turn, that makes me more profitable. Good automation should more than pay for itself and contribute to your bottom line.

So how can you use this idea in your bookkeeping business? It begins with recognizing what your workflow is now and how you're interacting with your clients. What does it feel like to work with you?

Have you documented your current workflows? Have you considered how you can improve them with automation? If you'd like a deeper dive and some practical steps you can take right away, then you may want to join us this month in The Freelance Bookkeeper Premium class that's all about Engineering More Effective Workflows.

What have you found to improve your workflow and boost your value in your clients' eyes?

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Virtual Bookkeeping Security – What You Need to Know About Dropbox

Do you share information with your clients using Dropbox? Many of us do. But in an online world where cyber-crime is advancing almost as fast as technology, there are security issues we need to be aware of since we routinely have access to sensitive information.

Here's the Challenge

We work via the Internet because it is a win-win solution for bookkeeping services. It's convenient, efficient and faster to do everything online. So cloud-based document sharing makes a lot of sense. After all, it's much more secure than attaching documents to unencrypted email messages, right?

Yes, even consumer-level online file sharing apps do have more security than emailed documents. No question. However, if you're using the free options, such as Dropbox, Google Drive, OneDrive and others, you must remember what these apps are designed to do. They are intended for individuals who want to save and share family photos and largely non-sensitive information.

They're not designed for accounting professionals like us.

So the first question to ask is, ‘What level of security is built into the online file sharing tool I'm using?' Is the information encrypted while it's being transferred and while it's being stored?

An Important Distinction with Dropbox

Have you ever noticed that if someone shares a Dropbox folder with you, it can hog a lot of space on your hard drive? Have you ever wondered why that is? The files are sitting in the cloud, aren't they? In fact, if you use more than the allotted amount of cloud storage in the free version of Dropbox, you will need to start paying for extra space.

Here's what's going on.

The reason you need at least as much hard drive space on your local computer as all the folders attached to your Dropbox account is because all of those files are, by default, being copied onto your hard drive.

Did you realize that?

There is no security to protect those files once they are on your hard drive (or on the hard drive of the person you are sharing folders with for that matter), unless you are using encryption on your local computer. Additionally, where Dropbox is storing those files is not obvious. If you later retire the computer from business use and say, give it to your college-aged child, those files will still be there. Yes, you might disconnect that computer from your Dropbox account and remove the app, but that doesn't remove those copied files from your computer's hard drive. Removal needs to be done manually, if you even remember they're there.

Do you really want the risks of having clients' tax information, payroll or other sensitive documents sitting on your computer with no protection for anyone who uses the computer (or hacks in) to see?

Because the files are automatically copied to your hard drive, it has long been a reason that I do not recommend virtual bookkeepers use this tool as your client portal. However, I also recognize that in reality, many of us are still using it. (Heck, I have clients and colleagues who insist on using Dropbox for everything; I even use it for administrative / non-sensitive files.) I get it. It's convenient and cheap.

The real takeaway here is we need to think through the tools we're using, especially those that involve sharing sensitive information. The risks are real for both us and our clients.

If You Do Use Dropbox, Use Smart Sync

The good news is there is a way to save both hard drive space and improve security when using Dropbox. It's by adjusting your settings for how the files are synced with your computer.

Do this with the desktop icon app in the system tray. Here's a short one-minute video from Dropbox that shows you exactly how to do it, quick and easy.

Sometimes it's just a small adjustment that can make a significant difference. This is one of those situations.

By making folders that have sensitive information ‘online only,' you will at least remove one of the ways hackers could access your clients' sensitive information.

Remember 90% of data breaches are caused by human error. Let's not contribute to that statistic or the often disastrous consequences that can result. Let's think proactively about our workflows, from a security perspective as well as efficiency and convenience. Consider how you are interacting and sharing information with your clients. That includes not only how we send them information, but how they provide it to us.

This is one reason why I highly recommend using a client portal program that is designed for accounting professionals. Personally, SmartVault is my go-to tool for my client file sharing and absolutely for any information that is sensitive (credit card information, social security number, tax documents of any kind, etc.). Using the mapped drive feature is nearly as seamless as using Dropbox, but a lot more secure.

In fact, if you'd like to see SmartVault in action, on Wednesday, February 5th there's going to be a re-broadcast of a wildly popular webinar I did that includes a full demo entitled,
“Your Streamlined Workflow Workshop:
How to Map It. Standardize It. Automate It.”

Learn More About the Webinar Here

It's free and it might give you some ideas on how you can tighten up online security in your workflows, while improving efficiency and effectiveness during even busy times of year.

Which online tools do you use and trust to keep your client information safe?

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Marketing Letters: Spread the Word by Reaching Out

(This is an updated article written about using marketing letters from back in 2008! Some simple marketing principles just don't change, and this is one of them.)

One question I'm (still) asked quite often by bookkeepers who want to start their own bookkeeping business is, “How do I get my first few clients?”

My response to this question is usually, ‘What have you done so far?'

Have you considered using marketing letters?

While most bookkeepers get the majority of their clients from word of mouth, the catch is, how can you find new clients when you need or want them? it's certainly not effective to sit around just hoping and wishing someone makes a referral to you, is it?

I'm a big believer in attraction style marketing (that's getting clients to find you), but at times we just need to be more proactive to get what we want.

Marketing letters are a tried and true (albeit old fashioned) way to get the attention of prospective clients who may, in fact, be in need of a bookkeeper at the time they receive your letter, but didn't know where to look for you!

It will feel serendipitous to them!

Sending out personalized letters via postal mail was one of the most effective tactics I used when I got my business started way back in 1990. Of course, times have certainly changed, including effective digital marketing methods. But here's the thing. Because of all the electronic upgrades, this ‘old fashioned' method can be even MORE effective than it was back when I got started! You'll certainly have a lot less competition, which is an advantage right away.

Build Your List

The most responsive recipients will be those who already know you. So the first people you write your marketing letters to should be family, friends, and those who currently provide services to you, such as your doctors, insurance agent, accountant, etc.

The next best list of people to write to are those who are part of a specific industry in which you would like to specialize.

What types of businesses are you already familiar with? Are there any clubs or associations for that industry? If so, you may be able to purchase a list of their members in your area to whom you could announce your services.

If your specialty is not very narrow, you may also be able to send a mailing to a list of members for your local chamber of commerce or other business organization. If you are a member, you can position yourself as reaching out to fellow members, and even offer them a special one-time deal.

The purpose of your letter is to get the attention of business owners who may need your services. The trick is to get their attention. The challenge is, you have competition. Small business owners are constantly bombarded with sales messages.

So how can you rise above the “noise” and get your audience's attention long enough for them to recognize the benefits you have to offer them?

Write a Compelling Letter

When composing your letter of introduction, be aware that the receipient is looking for what matters most to him or her. The question they are asking themselves is, “What's In It For Me?” (also known as WIIFM).

Don't make the same mistake 95% of the bookkeepers I've seen make when attempting to market their services. Don't talk just about yourself! Your prospect doesn't really care about you. Sorry. What they care about most are the benefits you have to offer them and their business.

Here are some important points to keep in mind when figuring out what to write in your letter of introduction:

Point #1 – Your letter must focus on the big benefits your prospect gets for working with you. This is made more powerful if you offer something of value that isn't available with just any bookkeeper. (This is one reason specializing can give you an edge with a targeted audience.)

Point #2 – Let them know that you feel their pain. Usually the reason your prospects know they need your help is because they are experiencing some type of problem that's hurting their business. Maybe they are getting slapped with a big, unexpected tax bill, or they're afraid they will because they have no idea how much money they've made without up-to-date bookkeeping records.

You can use this common situation to demonstrate how your services will save them from the need to ever feel that pain again, but instead, put them in control of their taxes and their profits.

Point #3 – Keep the letter to one page with a clear call to action. Most business owners are short on time, so they will want to get through your message quickly. Use bullets and short sentences, and bold the most important points. Make it clear what they need to do next. Tell them to call you or email you to get the benefits they want.

The Fortune Is in the Follow Up

Sending out just one mailing will not fill your business with new clients. To get the most reward for your marketing efforts, you must follow up, and do it consistently.

Repeat your mailing at least three times, a month or two apart. You can use the same letter, or write a few different versions. In either case, your name and what you have to offer will start to become more familiar to your prospects. This alone, over time, almost guarantees you'll get results.

For the fastest response, pick up the phone. If you follow up your letter with a friendly phone call a week later, you will immediately distinguish yourself as a serious professional. More often than not, these calls will turn out to be surprisingly positive.

And there's no need to worry. When calling prospects, no hard selling is necessary. Just a brief call to confirm that they received your letter, to answer any questions they may have, and to see if they, or someone they know, are in need of your services. Quick, friendly and to the point.

When it comes to getting new clients quickly, being proactive can really pay off.

The fact is, there is a huge number of small businesses truly in desperate need of help with their bookkeeping. When you focus on the very real value you have to offer your prospective clients, you will not only get their attention but, very likely, their business too.

If the idea of sending out marketing letters make sense, but you're still trying to figure out how to get your bookkeeping business off the ground, or you want to move your existing practice to a completely virtual business, then my free report surrounding how to get started and market an online bookkeeping business will help.

Learn more and get your free copy here

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How Much Should You Charge for Bookkeeping Services?

What do you charge for bookkeeping?One of the first questions bookkeepers and accountants ask when getting started in their own bookkeeping business is, ‘How much should I charge for bookkeeping services?' But that question also lingers long after you've been running your practice for years!

Many bookkeepers still charge by the hour, while others use a flat fee, and still others use the method given the most lip service in recent years – value pricing. Alternative methods combine several of these, or use the number of transactions or revenue as the measure for arriving at a fee for services.

Until recently, charging by the hour was far and away the most popular bookkeeping pricing method. That's beginning to change. It must, given the ongoing disruption causing downward price pressure in our profession due to advancing automation and efficiencies.

When we can leverage technology to get the time-consuming tedious part of bookkeeping done more quickly, it's a losing proposition to charge by the hour. You will make less and need to spend the found time to take on more and more clients, just to make the same revenue as you did in years past with fewer clients. That's a losing battle.

While there are lots of theories on how to best charge for bookkeeping now, the truth is, technology or not, there is no one perfect way to do it. At least not yet.

How Much Do Others Charge for Bookkeeping?

Most of us try to take a cue from our colleagues who have (successfully) gone before us when it comes to pricing. Of course, bookkeeping clients and projects come in different sizes and levels of complexity. So we're still faced with the same brick wall.

There's no one best formula for charging for bookkeeping across the board.

That said, it does still help to know what others are doing as a starting point. That's why for years a helpful source of comparison has been the Intuit Rate Survey. It has been a go-to resource of at least trying to ‘ballpark' whether our fees are in line with what others say they get for their services.

In all honesty, however, I've personally found in the last few years the Intuit surveys to be less helpful than they used to be. (These surveys typically come out every couple years.) That's probably somewhat due to the changes in how we are charging for bookkeeping services these days. It's not simply an hourly fee anymore Additionally, I've noticed that what's being measured now doesn't fit as well to practically working with clients ‘in the trenches' as in prior years. Maybe it's just me.

But that's why I was happy to participate in a brand new benchmarking pricing study for bookkeepers that was conducted this past summer by Mark Wickersham, the well-known pricing thought leader. His new study, which digs into specific client situations, seems to be much more in line with what we need to know on a practical level. It provides an international sampling of over 2,500 bookkeepers and accountants – not just the US QuickBooks ProAdvisor community. So I'm happy to see the wider view of what's actually being done in our profession.

Interestingly enough, more accounting professionals participated from Canada than anywhere else. So that was a new twist as well. The full report is long (90+ pages!) and there are lots if interesting insights and even case studies about what is really happening with pricing in our profession. Some of those include:

  • We're moving away from hourly pricing (for the reasons mentioned above)
  • Flat fee pricing is becoming most popular, but many of us are still struggling with it
  • Value pricing, while popular in theory, is still not typical
  • The key factors involved in bookkeeping pricing challenges
  • The effect qualifications have on pricing
  • The effect specialization has on pricing

Clearly, pricing is not a simple matter, but it is vital to building a successful bookkeeping business. In fact, how we approach pricing, especially in these changing times, is something we need to give more attention to as a profession if we want to prosper. I firmly believe that. Otherwise we will be crushed by the increasing pressures that are pushing our perceived value down, and with it our prices.

A good place to start is digging into your own pricing. Take a look at the surveys. In particular, you can get a free regional version of the Wickersham study (or you can buy the full report, if you want to really geek out on the details)

Click here to get a free copy of the survey.

How to Make Pricing Easier AND More Profitable

There seems to be one leverage point that can almost automatically make it easier for you to raise your prices, no matter which pricing method you choose… and the evidence of this was in the Wickersham report too!

It's specializing your practice. It's another topic most of us have heard much about, but few have taken action. Finding a niche feels like it means saying no to potentially profitable business growth. A risky idea. The reality though, is counterintuitive.

The Wickersham study revealed that specializing your practice puts you in a position to charge much higher fees than those who run a general practice. In fact, you can reasonably raise your rates by more than 35% percent for the same services, according to the study.

Specializing has many benefits for efficiency as well… which also goes straight to your bottom line. The catch is that it feels a bit scary. And if you do settle on a niche, what do you do with all your existing clients who are spread across various business types?

Those are the questions I've set out to answer in this month's TFB Premium class entitled, “The No-Risk Way to Find Your Bookkeeping Niche.”

Click here to learn more about the TFB Premium membership

If you're running a virtual bookkeeping business, building a niche practice will be your easiest way to raise your rates, become instantly more profitable, while exploring the best pricing methods for you!

Which pricing methods have you tried, and with what results? Have you considered specializing your practice, or are you a hard core generalist? Please contribute your comments below.

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