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    How One Firm Created a New Client Selection Model to Extinguish Employee Burnout

    By | January 26, 2018

    There are three types of accounting firm clients.

    Please forgive that previous sentence, which is absurdly reductive. Every client is different, and sorting them into three discrete groups only makes sense if you’re a blogger who wants to express a larger point about client selection that an accounting audience might find interesting. Which is what I am and what I’m about to try to do. So…

    There are three types of accounting firm clients.

    First, there are the big clients. The ones that work you to the bone with nonstop projects and endless billable hours. The ones that could also shut off the lights at your firm if they ever took their business elsewhere.

    Then there are the small clients. These tend to be less of a bother, as their needs are minimal. But they seem to multiply faster than nerds at a Star Wars movie opening, their paperwork stacking higher and higher on your desk until they take up even more time than the large clients.

    And then there are the middle guys. Clients that aren’t so big they can take the firm down with them, but big enough that the bosses won’t need to sign hundreds of them to make rent.

    The way these three groups are handled at most firms can lead to a potentially dangerous structure. At the top are too few high-earning clients; at the bottom, too many small fish. Is there a better way to structure a firm that’s good for both the bottom line and employee workloads? One manager thinks so.

    Ringing the bell curve

    Matt DePretis, Managing Partner at Bay Area, California accounting and tax firm DePretis CPAs, has developed a new client selection model he thinks will boost revenue while minimizing employee burnout.

    “I was looking at our clients and realized that we had a very small number of clients that bring in almost all of our revenue,” says DePretis. “And on the other end, there’s a very large number of clients that bring in a very small amount of revenue. I realized it’s kind of lopsided.”

    As he analyzed the client list further, inspiration struck. “If I could just make the firm the way I wanted to, what would I do? I’d want a bell curve,” says DePretis.

    The bell curve structure would divide clients into one of three families: 1) the Top 50, clients bringing in $35,000 a year or more, 2) the Core 100, clients worth about $10,000, and 3) the Final 50, clients that bill at $3,000 or less.

    Achieving this curve will take some work. “I need to add some more clients to fill out our Top 50,” says DePretis. “But I also have too many currently signed to our Final 50. So for now, we’re not signing any new clients that bring in less than $10,000.”

    Focusing on the middle

    One thing this structure does is put more of the firm’s growth focus on middle-earning clients, which is good for both the business and employees. Middle-earners can’t “shut off the lights,” but they also don’t demand more employee time than they’re worth. That keeps the firm financially solid–and the CPAs out of the liquor cabinet during mandatory all-nighters.

    “By managing our clients properly, all of our clients get exceptional customer service. And our staff isn’t overworked,” says DePretis.

    Why the Final 50 still matters

    So why have Final 50 clients at all? If they aren’t earning much and it’s smarter to focus on the middle, what purpose do they serve?

    “We need small clients. They’re our marketing force,” says DePretis. “They’re out in the community telling people about our firm.”

    But limiting the number of small clients, and number of clients overall, is still important. Most firms manage too many clients, to the point where they often need a friendly reminder that they’ll have to fire some every now and then to prevent employee burnout.

    DePretis understands this, and has designed his model to strictly limit the number of low-earning clients.

    “We don’t just sign anyone,” says DePretis. “There is a four-page application that a potential client has to fill out. The process is as much about us selecting them as them selecting us.”

    Saying no to some potential clients is vital to the health of any firm. But with DePretis’s bell curve model, it can be done in a way that’s part of a larger strategy of business growth.

    Apply to work at DePretis CPAs now

    If you’re looking to work at a firm that intelligently limits client capacity and cares about reducing employee burnout, look no further than DePretis CPAs. They’re hiring now, so just click on one of the links below to apply for an open position.

    Pleasanton, California Office

    Senior Tax Accountant, CPA

    • Big4Veteran

      This firm turns away clients? I call bullshit.

      Bull. Shit.

      • guest

        There’s turning away clients, and there’s giving fee proposals to small clients that are so high you expect to be turned down. A small-to-medium firm shouldn’t be taking on clients whose only work is going to be a tax return worth $300. Tell them that your fee is $1000, and they’ll go find someone working out of their den.

        • Big4Veteran

          Just to be clear, if that prospective client is willing to pay $1,000, then the tax firm will gladly take on the work, right?

          • guest

            Probably. But then they’d try to find a way to nickel and dime another $4000 out of them. Things get expensive when you have partners with several ex-wives/a vacation home to support.

        • Big4Veteran

          Back during the great recession, my B4 firm proudly announced that they would not be doing any layoffs (unlike all the other asshole firms). So we went through busy season, and wouldn’t you know it, the bar for being rated “performing” on year-end assessments was raised bigly. That year we ended up “counseling out” a record number of under-performing staff…but at least we didn’t do layoffs.

          • guest

            Hey! My firm did that, too. Did we work at the same place?

            First, they got rid of all the truly low performers. Then all the senior managers over a certain salary. And then a bunch of people they could let go due to “performance”, even though they’d been doing great up until the recession hit.

        • Smack That

          I do this when i get cold calls from small business owners. I always talk about how they, as clients, need to bring us very organized information in order to keep our fees down. Then I tell them their 1040 will be $1,000 and their little S-corp return will be up to $2,000. I don’t hear back from them.

          These guys are pretty easy to pick out from how they talk about fees at the beginning of the call. I would rather have them tell me I’m crazy for wanting to charge them $3,000+ annually, than to end up doing $5,000 of work for $1,000 of fees.