Elevate your Elevator Pitch

“So what do you do?”

As an accountant, I used to dread that question. If I answered by simply saying “I’m an accountant,” I generally received one of two responses. The most common response was a glazed eyes stare, quickly followed by a mumbled “Oh, how interesting,” while my partner made furtive glances around the room seeking a quick escape.

The other response I got — which was especially annoying on ski lifts — was a request for free tax advice, generally based on a complicated situation or a series of hypothetical what-if scenarios. Or questions about tax brackets or how much they could make before their Social Security got taxed.

Except for the year I took the CPA exam, all those numbers — standard deduction amounts, tax rates and bracket cut-offs — just slide past my brain. Since they change every year, I can’t keep them all straight. Besides, my tax software does a fine job of tracking those numbers and calculating the tax due.

Instead of just answering with your job title, a better approach is  to pull out your elevator pitch. But what I mean by an elevator pitch isn’t that memorized string of words you came up with when they brought a business coach into the office, and you crafted that perfect pitch.

Most likely, you composed a long sentence that tried to pack everything you do into a few big words. It sounded great at the meeting.

But when you try it out in an actual conversation, it falls flat. It ends up sounding like meaningless jargon. And your conversation partner still has no idea what you do.

The intention behind an elevator pitch isn’t to win a new client, but simply to start a conversation. The best elevator pitches aren’t  memorized strings of words, but spontaneous responses to your conversation partner. If you can find out something about the other person first, you can tailor your response to their situation.

Your objective is to say something memorable as a first step to building a relationship with the other person. As Josh Bernoff recently wrote, the best conversation starters are open-ended with an invitation for a response.

Last October, I heard Ilise Benun describe four approaches to memorable elevator pitches for professional copywriters. Here I’ll adapt her approaches for accountants and bookkeepers.

  1. Emphasize their pain.

What are the pain points of your clients? What are their struggles? When you talk about their pain, and how you help, that can immediately spark interest if they have that particular pain.

I work with small business owners who hate doing their own bookkeeping and payroll.

I work with owners of closely-held businesses to help them lower their tax bills.

I help non-profit organizations with the maze of regulations they need to comply with.

  1. Emphasize their perceived need.

What do your clients need help with? This can be a need your clients ask you for help with, or something you’ve noticed your clients struggling with, but they haven’t asked you for help with this yet.

I help small business owners manage their cash flow.

I work with owners of closely-held businesses to find ways to pass those businesses on to the next generation.

I help non-profit organizations get audit-ready by building streamlined accounting systems.

  1. Emphasize the outcome or results or benefit

When clients work with you, what outcomes or results do they achieve? What benefits do your services offer?

I help small businesses make better business decisions.

I help people grow their long-term wealth.

I work with non-profit organizations to help them do more of what they’re passionate about.

  1. The “you know how” angle.

Here you paint a picture of what your work looks like, of the benefits to a client.

You know how stories can help you understand complicated ideas? I do that with numbers. I help people understand what the financials for their businesses mean, and how they can build on those numbers to create the business of their dreams. 

Did you notice how none of those mentioned the word “accountant” or “bookkeeper”? Did you also notice how they all focused on the benefits that a client receives by working with you? And they’re all pretty simple, mainly focusing on just one thing that you do. Plus, they’re all more interesting than simply saying “I’m an accountant.”

So the next time you’re at a gathering and someone asks you what you do, try out one of these ideas out and see if you can make yourself sound interesting and helpful.

The idea is to start a conversation. That’s all your elevator pitch has to do.

A Definition of Price and Value Found Where?

I recently came across this discussion of price and value:

“If paying is equated with getting, you will set the price low but demand a high return. You will have forgotten, however, that to price is to value, so that your return is in proportion to your judgement of worth. 

“If paying is associated with giving it cannot be perceived as loss, and the reciprocal relationship of giving and receiving will be recognized. The price will then be set high, because of the value of the return. 

“The price for getting is to lose sight of value, making it inevitable that you will not value what you receive. Valuing it too little, you will not appreciate it and you will not want it. 

“Never forget, then, that you set the value on what you receive, and price it by what you give.”

I’ll tell you at the end of this post where I found this, because the source astonished me, and I don’t want to bias readers against this perfect explanation of price and value by revealing the source right away.

Let’s parse this out and look at each piece.

If paying is equated with getting, you will set the price low but demand a high return. You will have forgotten, however, that to price is to value, so that your return is in proportion to your judgement of worth.

This part makes me think of playing the lottery. Each ticket is inconsequential in price, but with a potential for a huge payoff. Who wouldn’t take a chance?

Yet how many lottery winners quickly return to their pre-winning state of poverty? Only a few can make the adjustment to a new, higher level of wealth and their responsibilities to safeguard and nurture that wealth.

It also reminds me of a friend who received a life insurance payout many years ago. It was only $10,000, but in his eyes, a kingly sum. He was overcome with gratitude for this windfall and wanted to make amends for prior bad behavior. So he promised his friends extravagant gifts: a new car, a trip to Hawaii, and a down payment for a house.

In his grandiosity, he mentally spent that $10,000 many times over. Paralyzed by indecision, he returned to his old ways and squandered it on drink and drugs. Last I heard, he was living in a trailer in someone’s back yard.

Expecting a high rate of return for a low price severs the link between effort and payoff. If your commitment in terms of money, time, or work is low, your commitment to the outcome is also low. By setting the initial commitment too low, you have also judged the ultimate value too low.

If paying is associated with giving it cannot be perceived as loss, and the reciprocal relationship of giving and receiving will be recognized. The price will then be set high, because of the value of the return.

I love the notion of reciprocity here. Both sides receive something of value in this ideal exchange. The seller receives payment, which is more valuable to them than the goods or services they hand over to they buyer, and the buyer receives something they value more than the cash they relinquish to the seller.

For a seller of accounting services, the fees charged and the cash collected are clearly valuable. But what else could an accountant — or any other knowledge worker, for that matter — receive in exchange?

Every time we provide our expertise, we have the opportunity to enhance that expertise. A chance to learn something new, or to fine-tune one’s skills. To discover a new way of serving another that’s more effective or more efficient.

It’s also an opportunity to extend our expertise, our ideas, our knowledge out to the world. We all have unique skills and abilities. Those skills are not diminished each time they are shared. This is not a finite resource we’re tapping into. Our skills are increased every time we use them. We are only constrained in our ability to grow that expertise by our willingness to share it with others.

The price for getting is to lose sight of value, making it inevitable that you will not value what you receive. Valuing it too little, you will not appreciate it and you will not want it. 

When we don’t pay much for something, or receive it as a gift, our tendency is to place less value on it than its true worth.

Recently, my step-daughter was in a car accident. Fortunately, she wasn’t hurt, and her children weren’t with her. But her new Camry was totaled. She was sideswiped when a young woman ran a red light with her parents’ new Lexus SUV. She tried to flee the scene, but the impact broke the front axle. This young woman was well-known to the police for her involvement in other car crashes.

Would this young woman perhaps have been driving a bit more cautiously had she earned the money to pay for that car herself?

Never forget, then, that you set the value on what you receive, and price it by what you give.

What are you willing to give up in exchange for something that matters deeply to you? As Peter Block writes in his thought-provoking book, The Answer to How is Yes, “What is most valuable cannot be purchased at a discount.”

When you think about your proudest accomplishments, aren’t these things that have required a substantial commitment of time and effort?

Where did I find this discussion of price and value? This passage comes from the spiritual text A Course in Miracles, Text-9. II. 10:1-11:1. A discussion of price and value was the last thing I expected to find there, and while the context was spiritual rather than commercial, I find it one of the clearest explanations I’ve come across. What do you think?

Do Your Clients Know About Everything You Can Do for Them?

Do your clients know all the good things about you? They know you’re great at providing the services that you’re already providing. And they know, like, and trust you. You know about their businesses and their financial lives.

But do they know about the other things you can do for them? More importantly, do you know about all the things you can do for them?

Clients don’t always know what they really need from you. They know they have a problem, and need help solving it. But the problem they see might just be a symptom of a deeper problem. If you only solve the superficial problem, and ignore the deeper one, you’re missing out on a great opportunity to transform their businesses.

When you move beyond solving superficial problems and into the realm of transforming their businesses and their lives, you’re increasing the value of what you’re providing them.

When you increase the value of what you provide for your clients, you can charge more for your services. 

How do you let them know about everything you can do for them? You can start by asking questions. You’re not trying to sell them anything. You’re just trying to find out more about what they might need. You would be surprised at how few accountants ask their clients these probing questions. And at how much clients love to be asked these questions.

These questions shouldn’t be an interrogation, but rather a gentle probing that demonstrates that you’re interested in their business and in their success. By finding out what they need now and in the future, you can help them reach their goals.

Here are some questions to get started:

  • What is your succession plan?
  • Where do you want to be in five years? in ten years? in twenty years?
  • What do you need to do to get there?
  • What’s your plan to get you there?
  • Do you have a financial advisor and an attorney? Can we talk to them?
  • What are your goals and dreams?
  • When you started this business, did you think you’d be where you are now?
  • Are you as far along now as you thought you would be at this point in time?
  • What are the particular challenges facing your business now?
  • If I had a magic wand that could make one problem disappear, what problem would that be?

When should you ask these questions?

This can be a part of your onboarding process, and part of your annual or monthly review with them. You can also write blog posts or newsletter articles that address these topics and encourage readers to call your firm to get more information.

By asking these questions, you’re doing several vital things.

You’re deepening the relationship with you to make it sticky

The relationships your clients have with you are among the deepest and most intimate of all relationships. I’ve seen accountant-client relationships that span decades and generations. The longer these relationships last, the more valuable it is for both parties.

You’re helping them define where they want to go

It’s easy for business owners to get caught up in the cycle of always doing the work and ignoring strategic planning and thinking. By helping them to step back and see the bigger picture, you’ll help them define what they want their business to do for them.

You’re learning what other services they need now and in the future

The services your clients buy from you are most likely based on what they already buy from you. While it’s true that you have these additional services listed on your website, your clients aren’t likely to look there when they need something extra. Instead, they’ll ask friends and business associates, or they’ll look it up online. If you haven’t talked to them about the other things you can do, they’ll go somewhere else.

Don’t make your clients go elsewhere for services you can provide. By letting your current and future clients know about all the additional services you can provide them, you’ll help their businesses thrive while adding additional revenue to your firm. A win-win all around.

Do You Have the Right Mindset for Success?

Why is it that some innately talented athletes never fulfill their potential, yet others, with less natural talent rise to the top? Why do some charismatic business leaders rise quickly, then crash and burn, while lesser-known executives lead their companies to long, sustained success?

Carol Dweck’s book Mindset has part of the answer. Though this book was written in 2006, its lessons are still relevant today. Powerful in its simplicity, applying the core ideas in this book will transform your entire life, from the way you interact with colleagues at work to raising children and your relationships with loved ones.

Dweck describes two basic mindsets that guide our approach to the world: the fixed mindset and the growth mindset. These mindsets are extremes on a continuum. Most of us have a fixed mindset toward some aspects of our lives, and a growth mindset towards others. These mindsets are not set in stone, and change over the course of our lives.

A fixed mindset is finite and limited

A person with a fixed mindset believes their success is a reflection of their innate abilities, and there is little they can do to alter them. Success validates their self image, while any failures or setbacks are a personal affront. Any failure must have a source outside of the self.

John McEnroe is one of Dweck’s examples of the fixed mindset in the sports world. McEnroe threw screaming tantrums on the tennis court when games didn’t go his way. Losses were always attributed to the weather, his shoes, the court, problems with equipment, the crowd — anything but his own effort and ability.

In business, a fixed mindset is characteristic of many of the “larger than life” CEOs and business leaders who may lead a business to a brief triumph, but who struggle to maintain the growth trajectory. One of Dweck’s examples is Lee Iacocca, who led Chrysler out of bankruptcy, but then focused his efforts on enhancing his public image, believing that he was inherently smarter and better than anyone else.

When Japanese imports began to dominate the US market, Iacocca refused to use that as an impetus to develop new cars that would appeal to buyers who preferred the Japanese cars which ran better and looked better. Instead, he lashed out against the Japanese car makers and demanded that the US government impose tariffs and quotas to make them less available to Americans.

A growth mindset sees infinite possibilities 

A person with a growth mindset, in contrast, sees their success as the result of their hard work. A growth mindset acknowledges innate ability, but is always seeking to improve. With hard work, they can always improve their skills. Their success comes from the effort they put in. Failures are lessons, messages that more work must be done, or that a different approach is required.

Michael Jordan is one of the many athletes cited by Dweck as exemplifying the growth mindset. Jordan was cut from his high school basketball team, which to a fixed mindset athlete, would have put an end to any athletic pursuit. Yet Jordan, as we all know, used that failure as a challenge to overcome, an opportunity for greatness.

Another athlete with the growth mindset, Bruce Jenner, said, “ If I wasn’t dyslexic. I probably wouldn’t have won the Games. If I had been a better reader, then that would have come easily, sports would have come easily… and I never would have realized that the way you get ahead in life is hard work.”

Business leaders who exemplify the growth mindset are rarely household names. Lou Gerstner, who was brought in as CEO of Xerox in 1993, is one such business leader described in Dweck’s book.

Gerstner came on board when the company was flailing. Customers were angry at the high prices for mainframe computers and the lack of support to integrate the computers into their systems.

Gerstner transformed the company by opening channels of communication and attacking elitism within the company. “Hierarchy means very little to me. Let’s put together in meetings the people who can help solve a problem, regardless of position.”

He encouraged teamwork by basing executive bonuses more on the company’s overall performance and less on the performance of the individual units. Nine years later, IBM’s stock had risen in value by 800 percent and the company was once again number one in its market.

A growth mindset listens and learns

Having a growth mindset means looking bravely at failures and setbacks, and charting a new direction, even if that means dropping a pet project. It means learning new ideas and mastering new technologies. It means listening to feedback. It means seeing things in a new way.

A growth mindset takes personal responsibility for mistakes, and makes changes to prevent their recurrence. Growth mindset leaders encourage everyone on the team to seek their highest potential, even if (and especially if) that leads to displacement of the current leaders.

Growth-minded leaders dispense praise not for the mind that produced the brilliant solution, but for the dogged persistence, teamwork, and creative thinking that made the solution possible.

Mindsets can change

As Dweck points out from her own personal experience, a fixed mindset can be transformed into a growth mindset. All that’s needed is the desire to grow and improve. As Dweck writes in the last chapter of her book, those who change from a fixed mindset to a growth mindset “change from a judge-and-be-judged framework to a learn-and-help-learn framework. Their commitment is to growth, and growth takes plenty of time, effort, and mutual support.”

Here are Dweck’s takeaways to help develop a growth mindset in the business world:

  • Turn off the self-judgement. Try to be less defensive when you make a mistake you or you receive constructive criticism.  See mistakes as opportunities to learn and grow instead of lashing out.
  • Notice how you treat others. Do you judge others when they challenge your ideas? Do you focus more on your own status and power or on the well-being of your employees and co-workers? Be tolerant of mistakes.
  • Help your employees become the best they can be. Explore and implement programs to help everyone at your company master their jobs. Give feedback that recognizes hard work, effort and creativity.
  • Think of your employees as a team of collaborators who are ready to build a better business. Create an environment of self-examination, open collaboration and free communication.
  • Beware of groupthink. When no one speaks up out of fear of rocking the boat, or because they assume that the leaders have everything under control, this can lead to disaster. Foster open dialogue and constructive criticism. Encourage some team members to play devil’s advocate.

As I have worked with accountants and bookkeepers around the world, I have found many who embody the growth mindset. These are the accountants who are always seeking ways to better serve their clients and who encourage their staff members to grow and develop to their full potential.

With technology and artificial intelligence automating much of what we as accountants have done ourselves for decades, a fixed mindset sees the new technologies as a threat that will make our jobs obsolete.

With a growth mindset, the new technologies are a tool that enables us to give deeper insights to our clients. The leaders who embrace the “learn-and-help-learn framework” will guide their clients to their fullest potential.

A fixed mindset sees only limited possibilities. But with a growth mindset, we can guide today’s business leaders to levels of achievement and satisfaction beyond those limits. There is no limit to what can be achieved when we apply our imagination to today’s problems.

 

How Your Blog Posts Can Help You Stay Top of Mind with Your Market

“Why didn’t you hire me? I live just over there!”

I looked up as a young man yelled at me from the window of his pickup truck, which had just screeched to a sideways stop at the end of my driveway. I recognized the driver as a neighbor who lived a block away with his father. I had been talking to the foreman of the the crew I’d hired to re-stucco my house.

“I started a new stucco business. I gave you a flyer and all,” he whined. I vaguely remembered receiving a primitive black and white flyer advertising his services, but that was months ago. Maybe even a year ago. When he gave me that flyer, I wasn’t even thinking about a new stucco job, so I tossed it out.

Then when I was collecting estimates for our stucco job, I had completely forgotten about that  xeroxed sheet of paper. And I didn’t have his contact information anymore. Now, with the chosen crew busily setting up, it was too late to even give him a chance. And his attitude wasn’t helping matters.

If he had made sure that everyone in our neighborhood knew about his business, I would have at least asked for an estimate. And I might have hired him.

If you don’t keep your name in front of prospects, then you risk making the same mistake this young man made. A mistake that may have cost him a nice paycheck.

Most advertising falls on deaf ears and blind eyes if the audience isn’t ready to buy. Or they’re not concerned about the problem this product or service is supposed to solve. Unless that bit of marketing catches your attention, you probably won’t remember the name of the company if you ever need their solution.

There are many ways an accounting firm can stay top of mind for prospects and clients, from attending networking events to speaking at local business meetings. But if you’re like many of the accountants I know, those activities are waaay outside your comfort zone. Some accountants are terrific at speaking — and I truly love hearing them at conferences or when I attend courses.

But for those who don’t like speaking, what are some good ways to stay top of mind for your prospects and clients? In this blog post, I’m going to suggest ways you can leverage your blog to get your message out to more people who need your services.

Writing a blog positions you as an expert

Sharing your knowledge with the world shows that you know your field. This isn’t giving away the keys to the kingdom — your best prospects will be wowed by what you give away for free. And they’ll be eager to learn what you’re not  sharing. They’re looking for someone who can guide them to fulfilling their dreams, and by sharing what you know, you’re showing them that you’re the one to help them.

Raise your search engine ranking without tricks

Google is continually revising its search algorithm with the goal of helping users find the information they’re looking for quickly and easily. Adding content to your website on a regular basis tells Google that this is a website with useful and current information.

How do I know this works? I’ve done almost nothing to optimize my website in the search results, but I’ve been told by accountants looking for a writer that my site appears high in the rankings, sometimes as high as #1 or #2, depending on exactly what the search terms were. When I first launched, I couldn’t find myself on Google. Now I’m consistently on the first page.

This takes time and patience. Despite what some SEO experts say, there are no magical ways to significantly raise your search rankings. There are some things you can do that will enhance your profile over time, but don’t believe anyone who says they can get you on the first page with just a few tweaks to your website. If they’re using tricks to game the system, Google will eventually punish you for that.

Build the foundation for your newsletter

Reuse your blog posts in your newsletter. You can copy the whole post into your newsletter, or include a link that takes readers back to your website.

The wonderful thing about email newsletters is that they can be forwarded to others. A newsletter coming from your firm adds a personal connection that a canned newsletter from your software provider can’t.

Communicating with your clients on a regular basis is a great way to tell them about services your firm offers that they may not be aware of. If they don’t know you offer these other services, they may go elsewhere if they need them. And it can remind them of tax-saving ideas they need to talk to you about.

Spread to other social media channels

Where do your ideal customers hang out? Scope out the different social media channels and search for your clients. Where do they hang out? Where are they most engaged? If you work with young entrepreneurs, you’re more likely to find them on Twitter or FaceBook than on LinkedIn.

Every social media channel has some means of sharing content. LinkedIn has its own publishing platform where you can simply copy and paste your blog post. Add an image at the top and you’re done. Or you can just add a link back to your blog in a regular post.

Use as a helpful followup after networking events

If you’re like most accountants, you’ve got a stash of business cards collected at various networking events, I’ve got scads of them myself. And if you’re like most networking event attendees, you’ll add your latest fistful to that growing pile.

Here’s a way that you’ll really stand out from the crowd: pick out your favorites — these are the people or businesses you’d like to work with most of all — and send them a short email. Thank them for meeting you and send them a link to a blog post you think might be helpful.

I hope this has given you some ideas for getting more mileage out of your blog posts. And if you’re not already blogging, you can see that the many ways you can re-use your blogs makes this activity a worthwhile investment! And if you need help getting your blog written in the first place, send me an email at liz@farrcommunications.com!

78 Ideas for Your Tax Blog

“I don’t know what to write about.”

This is a common excuse I’ve heard from tax practitioners for not keeping up a regular blog on their website. As tax practitioners, we deal with the tax code every day. It’s easy to forget that our clients and prospective clients don’t share our depth of knowledge. What seems obvious to us may be completely unknown to them.

A regular blog on a variety of topics will never take the place of your guidance as a trusted accountant who knows the intimate details of your clients’ financial matters. But it can enhance your practice by educating your clients about methods for reducing taxes and building long-term wealth. It can also save you time by providing you with posts you can simply point your clients to when they ask a question you’ve heard over and over.

Adding fresh content to your website on a regular basis is one of the criteria used by Google for search engine rankings. Google is continually revising its search ranking algorithm in an attempt to make the search experience a positive one for users. The emphasis is on quality and quantity, not on tricks designed to increase ranking at the expense of providing useful information to the searcher.

Here are 78 topic suggestions for your tax blog. These should keep you busy for a while — and serve as a starting point for additional topics to write about!

  1. Are you on track with your retirement saving?
  2. Roth vs. Traditional IRA — how to choose
  3. Rules for taking distributions from Roth and Traditional IRAs
  4. What happens when the IRA owner dies — why your beneficiary choice is critical
  5. Rules for borrowing from your IRA
  6. Qualified charitable distributions from IRAs — how to do this and what are the tax benefits
  7. Rules for rolling over a retirement account into another account
  8. Time value of money — how a little invested early can beat large sums invested later
  9. Retirement plans for self-employed and small business
  10. Defined benefit plans — why this may be a great choice for some small businesses
  11. What the new repair regulations mean for your business
  12. Taking advantage of the safe harbor de minimis election for purchases of small items
  13. Repair regulations — when is it a repair that you can expense and when do you have to capitalize it
  14. Business use of vehicles — when is your drive a commute, personal or business use?
  15. What kinds of vehicles are eligible for a 100% write-off in the year you buy them
  16. Documentation requirements for business use of vehicles and how to make it easy
  17. Estimated payments and how to calculate safe harbor amounts
  18. Nexus for income tax — what are the rules overall and what are the rules for your state and those nearby
  19. Nexus for sales tax — how is ecommerce changing this, and how can you monitor this
  20. Domestic Production Activities Deduction: What businesses are eligible and how to calculate it
  21. Research & Development credit — what are the potential tax savings and what businesses are eligible
  22. When does it make sense to do a cost-segregation study for the building you use for your business
  23. Qualified leasehold improvement rules — what improvements qualify for 15-year depreciation
  24. Vacation home rental rules
  25. Selling your personal home — Timelines for excluding gain for personal use
  26. Depreciation recapture from business use of your personal home
  27. Converting your home to or from a rental property
  28. Step-up in basis of your home at death of spouse — how this works in a community property state vs. a separate property state
  29. Choice of entity — Advantages and disadvantages of each type
  30. Agreements and contracts for your business — why you need a formal agreement and why your CPA needs to see it
  31. S-corporations — overview of this entity type and how this can save on self-employment tax
  32. Reasonable compensation for an S-corporation owner
  33. Formation and dissolution of a business
  34. Late election relief for an S-corporation
  35. Distribution issues for S-corporations — must be proportionate and when they can become taxable
  36. Shareholder loans — what you need to do to avoid reclassifying these as capital contributions or distributions
  37. Basis issues for S-corporations
  38. Accumulated Adjustments Account (AAA) — what this is and how transactions affect it
  39. Partnerships — overview of this entity type and benefits of complete flexibility in agreements
  40. What partnership income is subject to self-employment tax — recent IRS cases
  41. Partner loans, partnership debt, and basis issues
  42. Section 704(b) allocations in partnerships
  43. C-corporations — overview of this entity type and when this is an appropriate choice
  44. Best ways to get cash out of a C-corp and avoid double-taxation
  45. Like-kind exchanges — how to structure and execute these for maximum tax savings
  46. Mortgage interest deduction rules — how to calculate allowable amount when your mortgage is over $1.1 million
  47. How a recent IRS decision on mortgage interest is a bonus for unmarried couples
  48. Estate tax — how the portability rules can affect you and your spouse
  49. Charitable deductions of non-cash items — when do you need an appraisal
  50. How to document donations to charities
  51. Household employees — reporting and tax issues
  52. Taxability of barter transactions
  53. Stock options — how to decide when to exercise and when to sell
  54. How investing in muni bonds can save you taxes
  55. Harvesting losses in your portfolio to save capital gains tax
  56. Passive activity loss rules — what you need to know before investing in a passive activity
  57. Rules for qualified real estate professionals — how to meet them and the tax benefits this classification accords
  58. How to structure gifts to maximize the benefits for all parties
  59. Section 1202 stock — gains on sale are tax exempt
  60. Setting up an accountable plan to reimburse an S-corporation shareholder for expenses
  61. Section 179 limits explained
  62. Gambling income and losses — what you can deduct and what records you need to keep
  63. Hobby loss rules and your small business — how to protect yourself in case of an IRS audit
  64. What to do in case of tax identity theft
  65. Tax breaks for higher education expenses
  66. What expenses qualify for the childcare tax credit and what documents you need from your provider
  67. Rules for claiming someone as a dependent on your tax return
  68. Avoid underpayment penalties by increasing tax withholding from salaries
  69. Cash vs. accrual basis on tax returns
  70. Dependency exemptions for children of divorced parents
  71. Lease accounting rules — how the GAAP rules differ from tax rules
  72. When does it pay to outsource your bookkeeping
  73. How hiring a remote CFO can help you grow your business
  74. Changing from cash-basis accounting to accrual (or vice versa)
  75. How to correct mistakes in depreciation
  76. What to do when you receive a letter from the IRS or your state tax authority
  77. Ways to structure the sale of a business to save on taxes
  78. What is AMT and how to reduce your exposure

I hope this list give you plenty of ideas for your tax blog. Your client base, your practice and your team are all unique. Your blog will be most successful if it reflects that uniqueness.

11 Advantages of Choosing a Specialty Niche for Your Accounting Firm

When I began my career in public accounting, I was fascinated by the great variety of businesses I worked with. Every project taught me something new, and as an eager new accountant, I was ready to apply what I’d learned in the classroom to real life.

But with the quick rotation from plumber to manufacturer to attorney to restaurant, I felt that I was never able to truly understand these businesses. Some clients were the only ones in that industry I worked on. Many had unique tax and accounting rules and regulations that were tricky to understand and apply. And some required a steep learning curve when I worked on them the first time.

No problem for Liz and her big brain, as one of the partners frequently told me. So I eagerly dove in and learned.

After several years of endless cycles of learning new industries, I was exhausted. My big brain was full. All the businesses blurred into each other. I didn’t feel I was able to offer much in the way of specific advice to really help those clients grow their businesses.

A different way forward

When I began exploring the idea of freelance writing, my teachers and coaches almost universally advocated choosing a specific niche to focus on. The best niche would be one that combined my passions, past experiences and talents to work in a field where my writing skills would be valued and well compensated.

For me, the obvious field to work in is accounting. I’ve discovered that being a CPA who can write and who understands marketing makes me pretty unique.

As I’ve worked with accountants and have studied high-performing firms, I’ve learned that choosing a niche can be a great plan for accountants and bookkeepers as well. Here are some reasons you might consider developing either a niche for your entire practice, or a specialty niche within your practice.

1.  An end to being a jack-of-all trades, and a master of none

As a generalist, you must be agile so you can quickly pivot from working with an electrician to a realtor to a manufacturer. This flexibility can be a wonderful asset because it means that almost every business is a potential client.

But as I experienced, this incredible flexibility makes it difficult to gain the specialized knowledge and skills needed to serve clients at a higher level. Serving clients at a higher level means you’re in tune with the changes in their field.

You read the same trade publications. You’ve got your ears tuned for new laws and regulations that impact their industry.

As a generalist with the entire world as your potential client, how can you decide what news to pay attention to and what will help your clients the most?

2.  Serve your clients better because you know more

When you know more about your clients’ industry, you’re able to help them in a more proactive manner. Your clients will benefit from your expertise. You’ll be tuned into the regulatory changes that impact them, and you’ll have ideas on how to mitigate the impact..

You’ll develop a keen awareness of what their financials should look like. When something looks odd, you’ll spot it immediately. You’ll ask  better questions because you understand how their business works.

You can recommend software tools that will simplify their back-office operations. You’ll be able to design streamlined processes for getting their work done.

You’ll be more than just the CPA who does their tax return every year — you’ll be a trusted advisor who helps them succeed.

3.  A faster path to becoming the expert in your field

Now that you’ve learned more about this field and have worked with clients to successfully help them grow their businesses, you’re on your way to becoming an expert in your field.

You can capitalize on this by writing articles and blog posts on this industry on your website and on social media. You can speak about this at local events or on podcasts.

When you specialize in one area, you have the advantage of being able to focus your time on honing your expertise.

4.  Specialists get higher fees

A general medical practitioner doesn’t earn as much as a cardiologist or a neurologist. This is true for accountants as well. When you become an expert in a field, you can charge higher fees for your expertise. Clients who need that expertise would rather pay you more when they know they’ll get precision advice, and they’re not paying for you and your staff to get up to speed on their industry.

If you were a business owner, would you rather work with an accountant who serves small and medium enterprises, or an accountant with expertise in their industry? Your specialty will separate your firm from the thousands of other accountants who don’t have a specialty.

5.  Familiarity leads to efficiency

When you understand an industry well, you’ll be able to leverage your experience to become more efficient. Efficiency means getting more work done in less time. It means you and your staff can have a life beyond work.

You’ll learn which key predictive indicators are the most relevant for a business. Maybe you’ll develop a spreadsheet tool that gets you an answer quickly when you just enter a few key numbers and let the formulas do their magic.

When they need to implement a software tool, you’ll be able to help them integrate it into their systems painlessly.

6.  Specialization helps your prospects find you

When you become an expert in an industry, and your marketing messages reflect that, the prospects you can help most will have an easier time finding you. Sure, your pool of prospects has now shrunk from “anyone with a business” to “owners of restaurants” or “HVAC contractors” but there are still thousands of potential clients out there.

The internet and cloud accounting make geography less relevant. You’re no longer limited to serving only the businesses in your community. You can work with clients across the country, and even around the world.

7.  Only those you can help with seek you out

Having a specialty doesn’t just help your ideal clients find you — it also screens out those who aren’t suited to working with you. If you specialize in restaurants, you’ll likely get very few calls from construction contractors.

Having an advertised specialty also announces to the world that your services come with a premium price. You might scare away the ones who are especially price-sensitive, but as my late father used to say, “You’re not doing this for your health.”

8.  Marketing just got easier

Choosing a niche means your marketing can be focused like a laser instead of taking a scattershot approach. As you work with more clients, you become aware of their particular pain points and can address those in your marketing. You’ll also figure out what advertising media work best for them. You’ll find out which social media channels they spend time in, and you’ll be able to focus your attention there.

9.  More of the work you love

An argument I’ve heard against choosing a specialty is that the lack of variety will become boring. I agree that it was pretty exciting at first to learn about plumbers last week, then microbrewers this week, and food manufacturers next week.

But if you’ve chosen a field that’s interesting to you, then the constant jumping around will be replaced by a deep dive into a field. Every business within an industry will have its quirks and unique facets simply because they are led by unique people. This keeps a niche exciting.

One of my writing clients is a CPA who specializes in dentists. I have had a blast learning about the business and accounting issues unique to dentists. Every week I learn something new about the industry, something I had no idea about.

10.  Greater confidence in your knowledge and abilities

When you focus on a particular industry, you develop a keen understanding of how their business works. You learn what the cost drivers are, and which financial ratios are early signs of success or failure. You learn what measures will help boost a sagging bottom line, and which will be a waste of time and money.

Think of the confidence you’ll have when a glance at a set of financials will be all you’ll need to determine what this business owner needs to do.

11.  Create a firm that suits you

A recent newsletter from copywriting guru John Carlton discussed two successful models for building a successful writing business. At one end of the spectrum are the writers who truly love their craft and spend long hours at work, achieving financial success partly by the sheer volume of their work. These writers don’t tend to have much of a life beyond writing, but they’re spending their days doing what they love most.

At the other end of the spectrum are the slacker writers, who spend very little time writing, but that little time is focused and high quality. This short time spent on writing allows them to do other things in their free time. The money they earn writing buys them the freedom to do other things they love. John Carlton places himself in this camp.

Most accountants I know spend long hours at their work. But I’ve learned about a few radical and revolutionary accountants who spend much less time working and who focus their time on a handful of clients. They can do this because of the value their expertise brings to the relationship.

What does your perfect firm look like?

What’s your vision of a perfect work-life balance? Choosing a specialty can help you find the right balance. Imagine working fewer hours but for the same income. There’s no one answer for everyone. There are just as many ways to run an accounting firm as there are accountants running accounting firms. My hope is that you create a firm that’s just as unique as you are.

Happy New Year!

Do you make New Year’s Resolutions or set goals for the next year? Until this year, I hadn’t even considered making resolutions for the coming year.

But this year, I spent some time thinking about where I want to be in a year’s time.

I still couldn’t quite bring myself to set goals for the next year, but looking ahead four months seems less daunting. Four months because that’s after the US tax filing deadline on April 15. And instead of concrete goals, I decided to focus on establishing new habits that help me achieve personal and business goals. This approach has worked well for me in the past.

On the personal side, I’ve been writing daily in a journal for almost 4 years. It’s a way to clear out the muck and begin each day fresh. On the business side, January marks the fifth month for my newsletter.

For me, every day is a chance to make a new start. I look at it as 365 (or 366) opportunities to resolve to be a better person and a better writer and to do more of the things I love and more of the things that will help me help others.

Establishing habits is easier than making a commitment to do something new every day or every week for a whole year. When an action becomes a habit, it’s more automatic. I feel more accountability to keep doing it. When I write in my journal each morning, I track how many days I’ve been doing this. So far, I’m up to 1443 days.

Charles Duhigg’s excellent book, The Power of Habit, describes how to establish new habits and how to substitute good habits for negative ones. Successful habits have a three-part loop: a cue, a routine and a reward. The habit gets locked in place when you begin craving the reward. Satisfying the craving begins the habit loop again.

Marketing your firm can become a habit also. First, pick something you enjoy doing. Discuss this with others in your firm so they can share in the effort.

Do you like to write? Start a weekly blog or a monthly newsletter. Then share that on social media. Find out where your best prospects hang out, and share your posts there.

Are you better at speaking? Consider doing a series of videos to walk viewers through bookkeeping tasks. Or seek opportunities to speak before different groups.

Do you like meeting new people? There are probably local networking events you can go to.

Next, commit to a schedule and figure out how often this new marketing activity should be done. This is your cue. Be realistic. It’s better to start off with a low frequency — say, writing a monthly blog post — and ramping up the frequency than to be too ambitious and burn out quickly.

Then settle on a routine for getting the work done. If you want to write blog posts weekly, waiting until the last minute doesn’t work too well. A good practice is to write out what you want to say, quickly, then let it sit overnight, or for a few hours at least, before your final editing pass.

The final (and crucial step) is to figure out a simple reward for getting the task done. Maybe it will be as tiny as checking it off your weekly to-do list. Or maybe you’ll treat yourself to a favorite coffee drink when it’s done. For my journaling practice, adding another day to my consecutive days of writing is sufficient. For my newsletter, the occasional feedback from readers makes it worthwhile.

Making marketing a habit can turn a task you might not like now into something that’s part of your routine. So far, I’ve kept up with all the new habits I wanted to establish. I’ll let you know in four months if I’m still keeping up with them.

Did you make New Year’s Resolutions? Are you still keeping up with them? Do you think marketing can become a habit?

Is the Customer Always Right? A Look at a Recent Marketing Sherpa Study on Customer-Focused Marketing

A recent discussion in one of my LinkedIn groups for accountants asked this question as a provocative intro to a study released this past December by Marketing Sherpa. This study posed a series of questions to 2400 individuals, half of whom were queried on companies they were highly satisfied with, and the other half on companies they were highly dissatisfied with.

But first, let’s take a look at the evolution of marketing.

The most basic is product-centric marketing which focuses only on the attributes of a product, without relating those attributes to the needs or desires of the customer.

The next step up is customer-centric marketing, where marketers put themselves in the shoes of a customer in order to sell to them better. Empathy is used to evoke an emotional response.

Next in evolution is customer-focused marketing, where the company is an ally in the customer’s pursuit of their goals, and the long-term interest of the customer is placed above short-term goals of making the sale. The focus is on serving the needs of the customer above all.

To make this concrete, let’s look at how cars might be sold under these three models.

Product-centric — Here are the cars on our lot today. Here are the prices and the models. Do you want to buy one? I can make you a great deal if you decide today!

Customer-centric — I see you have small children. Their safety is your priority. This car has anti-lock brakes, air bags and accident avoidance technology. The traction control means you won’t have trouble driving in winter. You’ll feel safe and confident driving this car. Your children will be safe.

Customer-focused — Our website has a tool that lets you choose the features you care most about so you can compare across all car makes. It also lets you compare costs of owning all the cars. This lets you select the car that’s best for you, even if it’s not ours. And there’s a link that finds all the dealers in town who have that car, so you can pick the one that gives you the best deal, and is closest to where you are.

Which dealer would you rather buy your car from?

Put your customer’s needs first

The Marketing Sherpa study found that “highly satisfied customers say the company’s marketing puts their needs before the company’s business goals more often.” Highly dissatisfied customers said the opposite. Highly satisfied customers also said:

  • I consistently have good experiences with this company
  • It’s easy to do business with this company
  • The company doesn’t always try to sell me but tries to provide value
  • I feel like I have a relationship with this company

Happy customers refer more, and come back more

Keeping customers satisfied leads to more business. The study found that satisfied customers were eight times more likely to refer friends and family, and seven times more likely to continue using a company’s services than dissatisfied customers. Satisfied customers give 8x the referrals

That’s a lot of new and repeat business you didn’t have to spend marketing dollars to get.

Customer-first marketing is a part of everything you do

Customer-first marketing isn’t just about the messaging on your website or in your brochures or in your elevator speech.

It’s about the entire way you interact with clients.

Do you make it easy and enjoyable to do business with you?

Do you provide value that exceeds their expectations?

And, most important, how are you helping them achieve their long-term goals?

The customer isn’t always right

Customer-first marketing is more nuanced than “the customer is always right.” When your firm is committed to helping your clients reach their goals, you’ll help them make decisions that are in their best interest.

You may even call them on poor decisions. You certainly won’t encourage them to indulge in unethical behavior that could get them in trouble down the road. And you’ll help them to be pro-active so that those last minute requests for financials or copies of tax returns don’t happen as often.

A product-centered firm provides a tax return for a client. A customer-centered firm helps the client pay less in taxes this year, and maybe in years to come.

But a customer-first firm looks at the client’s entire financial picture and their long-term goals to help them with business and investing strategies to achieve those goals. Such a firm focuses on educating their clients and prospective clients to empower them to make the best decisions.

Even if the best decision means using a different firm.

Customer-first firms don’t just provide a service. They solve problems for their customers.

As I work with accountants around the world, I’ve had the opportunity to peer inside a broad spectrum of firms.

The product-centered firms can only compete on price. A customer-centered firm can charge more, and may have  long-established relationships with many clients.

But the firms that excite me the most, and make me the most optimistic about the future of accounting against the onslaught of technology, artificial intelligence and off-shoring are the customer-first firms.

Many of these firms embrace technology and create amazing integrated accounting and back-office solutions for their clients. They take the time to truly understand their clients’ businesses, families and dreams for the future.

Some of these firms have scrappy bookkeepers who keep their fingers tight on the pulse of their client’s businesses. And these scrappy bookkeepers don’t hesitate to contact the client when they see something out of the ordinary. Or when they notice an opportunity that might be missed.

But all of them focus on keeping their clients happy and providing exceptional service. They take the time to explain the numbers to their clients. They look at the big picture and consider each business decision in light of their clients’ long-term goals.

Sure, this takes time and extra work. But the study from Marketing Sherpa shows that it can pay off hugely. And wouldn’t you rather be known as a problem-solver than a service provider?

Connect with your Clients to Keep Them Coming Back for More

“These Americans don’t know anything about saunas. This isn’t nearly warm enough to be a sauna in Switzerland.”

I opened my eyes and recognized Kurt Wüthrich, who had just entered the sauna with his wife and daughter. Dr. Wüthrich had been the keynote speaker for the symposium we were both attending at Keystone Resort in Colorado. The topic was nuclear magnetic resonance spectroscopy (NMR) of proteins. The symposium was conveniently scheduled in mid February, with ample time between sessions to hit the slopes, which was why I was warming my bones in the sauna.

The three continued to chat in Swiss German, and I could get the gist of what they were saying but not the details. Feeling it was rude to eavesdrop without alerting them that I spoke German, I introduced myself.

“Hello, my name is Liz Farr, and I work in John Markley’s lab at the University of Wisconsin,” I began in German. “I’ve been writing you letters about your research articles, asking for information we need for our database of protein NMR data.” Surprised to hear a German speaker in the US, Dr. Wüthrich swiveled his head and stared at me. He scrutinized me carefully, then broke into a friendly smile.

“Ah, yes of course. Now I remember your name. I will answer those letters immediately on my return to Zürich.” Dr. Wüthrich was a pioneer and perhaps the most revered and respected researcher in the field of protein NMR. A decade after our meeting in the sauna, he won the Nobel prize in chemistry.

Seizing the opportunity for a personal connection with a leader in the field was the beginning of a dramatic shift in his cooperation with the project. After that, he answered my queries for missing information promptly. Winning support from the great Kurt Wüthrich for the project was huge.

Client relationships = job security

For accountants, the need for connection with clients and prospects is crucial. As technology evolves, many of our services are becoming automated. This automation removes the tedium of data entry from our work, but it also can turn our work product into a commodity, if that’s all we offer our clients. But as Blake Oliver noted, contrary to the fears of many that this increasing automation will bring Uberization to accounting, it’s our connections to our clients that prevent this from happening.

Here are some ways to develop and deepen the relationships you have with your clients.

Start with your website

Your website is the first filter a prospect will typically apply when seeking a new accountant. Does your personality shine through? Or is your website like that of most accountants — inoffensive, bland and focused on your team’s experience and qualifications?  Does your Home page or your About Us page extol your firm’s values of professionalism, quality and responsiveness? As Hitendra Patil noted in August 2015, so do the websites of  over 462,000 other CPA firms .

If you’re not much different from your competitors, then your prospects may judge you solely on cost — which may be the only variable they’re aware of. Most non-accountants have only a vague notion of what it takes to become a CPA, CA, CGMA, CVA, or any of the other alphabet soup certifications you’ve earned. And they may have only a vague idea of the additional services that accountants can provide.

The most successful marketing focuses on the needs and desires of your prospects. Your prospects don’t really care about the letters behind your names, the awards you’ve won, or how many years of experience you have unless those attributes have a tangible benefit to them. Too many websites for accounting firms just focus on the accomplishments of the owners and ignore the needs of their potential clients.

Instead of focusing on your years of experience, describe how those years of working with a variety of industries and situations have given you insights to help your clients navigate through challenges. Case studies and testimonials from happy clients are golden here.

Who is your ideal client?

Remember that you don’t need to be attractive to everyone seeking a new accountant. You  only need to get the attention of the prospects that you want to work with. Do you prefer working with startups and entrepreneurs? Or with high-net worth real estate investors? What services does your firm provide? What do your ideal prospects need from their accountant? What keeps them up at night?

Can you save a business owner on taxes? Do you have the expertise to guide a company from kitchen table start-up to millions in sales? Can you help them find and plug the leaks in their cash flow? Can you help with succession planning and estate planning? Do you know how to get the IRS off their back? Can you bring a business owner peace of mind that their taxes are done right? These are the types of questions a prospect wants answers to.

If you can articulate answers to those questions, those answers should be the first thing a prospect sees on your website. Use those answers as the starting point for the text on your website. You want that text to resonate with the people you want to work with.

Website visitors generally land on your website because they’re seeking answers to questions, and they won’t stick around if those questions aren’t addressed quickly. They’re less impressed with how much an accountant says they know than with how much an accountant is willing to share with them.

What sets your firm apart from your competitors?

Every accounting firm has something that makes them unique. Maybe it’s a unique expertise. Maybe you’ve found ways to leverage technology to get the work done faster. Maybe you only do tax returns. Maybe you don’t do tax returns at all.

But most likely what keeps clients coming back year after year, and what gets them to rave about your firm is the experience they have with you. If you don’t (yet) have any raving fans, then consider how you interact with your clients.

Communicate with your clients and prospects

The power of the internet means we now have the information of the world at our fingertips. We’re used to getting loads of information for free. Keeping top of mind is crucial. Customer loyalty goes to those who provide the most and best information in easily digestible bits. Every firm should have a blog where they post helpful ideas and answers to the questions they’re asked most frequently.

That blog can be repurposed as a newsletter. Or assembled as an ebook of tax and accounting tips offered as a free download in exchange for their email address.

Do you ask the questions that can change their lives?

As accountants, we’re more comfortable with questions with quantifiable answers. But those questions don’t always lead to the insights that can help a business owner transform their life and their business. It’s in asking those kinds of questions that we can help a client the most.

If you’re not quite sure how to come up with those questions, Paul Shrimpling has a brief report  you can download to help you formulate powerful questions for your clients.

Seize the opportunity for a connection

These ideas should serve as a starting point to help you find ways to connect more deeply with your clients. Without that connection, your firm’s services run the risk of becoming a commodity, and you’ll be competing solely on price. There’s always someone else willing to go broke faster, so nurture those relationships!