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E-Myth – “Why most small businesses don’t work & what to do about it”

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Flat Monthly Fees & Value Billing | Edmonton Accounting Firm

So how are all your clients build? They’re all flat fee per month clients.

Yeah, I can see why because it’s not,

hi, thanks for joining us for another episode of Askpat [inaudible] CPA. Today we’re talking about flat monthly fees and value billing. I have Trevor here with me again from a inspire method and, and you know, inspire methods is kind of the same as a sterling associates. These are value billing, right? Yes. Um, flat monthly fees. Edmonton Accounting Firm, when I first thought of the idea was I was, I was, I was not for it. I was against it. Um, but then, you know, moving forward, it just makes sense because it’s a very predictable for the customer and it’s predictable income for you as well. Yeah. Yeah. So the, the court that we have here is a zig Ziglar quote and it says, you can have everything in life that you want if you just give enough people, other people what they want. Um, and you know, Industry Canada, you know, the statistic that we’re always fighting in Syria that’s important to us is 50% of all Canadian businesses fail within five years.

And we think that’s completely avoidable. I think cause they fail for predictable reasons and there’s a proven strategies to avoid it. Edmonton Accounting Firm, and the story is, you know, we used to bill by the hour here at Berlin associates and inadvertently created an adversarial relationship. No clients, they didn’t hesitate to ask the re APP reach out with the really important questions for fear of triggering unnecessary or uncertain costs. Right. Um, so, you know, what are the questions that you think, you know, potential clients should be asking? Well, what are the three types of clients that you generally take on Josh? Generally the three types of clients that we take on. Our number one is unincorporated businesses. Um, you know, the, the small guys, um, you know, we’ll help them organize what expenses they need to do and, and, and complete their compliance process. Um, but our main two are our annual clients, so our annual corporate clients that we take on and we’re not just a, um, you know, doing financial statements and tax returns for them.

Uh, we’re also doing financial plans and business plans for them as well. Uh, so it’s kind of a, an all encompassing service. Edmonton Accounting Firm, and then we have our outsource clients and with those all sorts of clients were actually functioning as their outsource accounting department and we’re processing their payroll person, their payables and meeting with them every single month to go over the performance and you know, what an analyze the data for them to give them suggestions on how to move the business forward. So how are all your clients build? They’re all flat fee per month clients. Uh, every once in a while we’ll get, you know, a one off. You don’t finish a project, but even those, you know, we’ll give them a flat fee on it. The rest of them are flat fee, a recurring each and every month. Wow. So do you charge extra for financial and tax plans?

So we do not charge anything extra for financial plans and tax plans. Um, you know, you know, it’s my view that it should be part of the service. So, you know, when you’re operating a corporation, if you don’t get a financial plan, a tax plan, you know the, there’s a good possibility that you’re not going to make maximum use of that corporate structure. You’re going to pay too much tax. You know, so I don’t want to do financial statements, you know, knowing that we paid the government more tax than it would have cost to do the work properly. So we’re always doing a financial plan and a tax plan with every single a corporate client that we do. Okay. So do you charge extra for business plans? Don’t, you know, we made that shift a couple of years back and we started to realize that the business owners who need business plans the most are usually the ones with the least ability to pay in that time crunch, right?

You know, they’re, they’re struggling. So you generally need a business plan when you’re making major changes to a business, you need financing or you’re struggling with that business. And, you know, when we found if we don’t do the business plan, you know, bad things happen, they’re no longer going to be a client. Um, so we have to make that shift that it was kind of more of an investment in the future. That’s the way to keep the client, whether they’re happy with you or not. If they’re no longer in business, they can’t pay you anymore to be the accountant for that corporation. So we’re going to do everything we can to keep them in business. And you know, doing a business plan, it makes the average business owner even a bad visit, fun. It makes the average business owner 50% more likely to grow their revenue.

Um, you know, when we feel our business plans are quite outperform that. Okay, so the financial plans and business plans are not part of some platinum plan. I don’t believe it. You know, a lot of people, you see these, you know, he offered the bronze, silver and the platinum or gold type, uh, Edmonton Accounting Firm, um, procedures. And I just do, there’s the right way to do it. And there’s the wrong way to do it. And in our firm, it’s more the right way costs this much and the wrong way. It doesn’t matter how much it costs, we’re not going to do it for you. So we’re only going to take clients on if we helped, we, you know, when we feel that we could a, you know, do the work that’s required to help them minimize the tax that they’re going to have to pay and help them accumulate wealth as quickly as possible or do the planning that’s necessary to make sure that they’re staying in business and actually grown their business.

You know, we’re not, I’m not a big fan of the, uh, the bronze, silver and gold. You know, we have the, the outsource clients and the corporate clients, but it’s more based on need. And I can normally establish what you need and the meeting rather than giving the client the, the, Edmonton Accounting Firm, the options on level of service. I’m only gonna give them one option. That’s the one that I think that’s going to create the most chance of success for them. That makes it a lot of sense. So do you make more money on new clients or returning clients? We make uh, more money on returning clients and in fact sometimes I wonder if we make any money at all on a new clients. It’s more of an investment is that we have to look at it. I will a longterm relationship. It takes us a lot of time to set up financial plan.

It takes us a lot of time to set up a business plan for a client and it just takes longer to do the year end for a client in their first year. So all of those items that you don’t take a lot longer than the first year, it’s a lot easier to update a financial plan. It’s easier to update a business plan. It’s easier to do the year, the second year after you set up the chart of accounts and imported the data. Um, all of those functions, you know, take a lot longer. So we, we, Edmonton Accounting Firm, you know, we just view it as a, as a longterm relationship. If it works for you, it’s going to work for us. Um, and that’s why we don’t have any, any, uh, motivation to sell something that we think is not going to work. You know, we don’t want to just sell you a year end because if you’re no longer a client in a year, it wasn’t even a profitable relationship for us.

So does this make clients see the firm? It’s more of a strategic partner? Yeah, I think they, they see that, they see that, you know, they start looking at what that monthly fee is and they start looking at the value that they get in those first few months and they get the financial plan and then you get that business plan and they get it out of the gate and they realize there’s no chance we would have done that in a month or two. And made a bunch of money off that cause they’re there. They’re clearly labor intensive. Even if you’ve just started adding up the hours in the meetings and we’re spending with them. Um, you know, even outside of the work that we do outside of the meetings, you know, it’s clear that we have to keep them on track over the long term in order for it to be profitable.

And I think clients start to, you know, they have a different perception than they know that you’re, you’re in this with them. Um, so if you’re giving them a, Edmonton Accounting Firm, an answer, sometimes you have to give clients answers that they don’t want to hear. They know that you’re only doing it because you want them to stay in business and you want them to actually grow their business. Um, so I think it starts making them view you as more of a, a, a strategic partner, you know, rather than someone who’s just trying to suck as much, you know, hourly fees out of you as possible. So how much time did you previously spent on billing? This was one of the other ones, you know, I went to flat monthly fees. I thought the clients would like it. Um, you know, they would reduce that adversarial relationship, but as I, you know, started to go through it, I would probably spend, uh, about two days every single month doing billing, answering billing queries.

Because whenever you said bills that are variable, clients ask questions. So why is my bill this? If your bill is the same, not every month, they don’t ask any questions, they know exactly what the bill is. Um, but yeah, you, so you have to review the, the time spent they establish at the time spent was reasonable. Sometimes you’d have to make some adjustments. Um, if they, if the task wasn’t reasonable and then you send the bills out the door, then he had to answer the queries, uh, that surrounded them. That would take about two days every single month. Okay. That sounds okay. But let’s think of what it is. Two days, every single month times 12 months a year, that’s 24 working days a year. That’s almost the equivalent of five extra weeks of vacation that I could done. Instead of chewing, Edmonton Accounting Firm, you know, hourly billing and the end day you get an hourly billing number and the customer is expecting to pay only a certain amount per year anyways.

So what difference did it make? Um, so it was, you know, five whole working weeks spent on billing, which was significant. Wow. Now does this free up a lot more time for you to help more clients? Yeah, 100%. [inaudible] it’s, you know, no, I want to spend time talking about bills or do I want to spend time giving, you know, better financial plans and tax plans or better business plans actually make a difference in these clients business. You don’t have those five extra weeks that, you know, I’m not answering, you know, why did you spend an extra 15 minutes on sending this document to Cra? Um, that’s not what the, the client or what I can add value to the client. What I can of value is coming up with a better strategy to us. She helped them grow their business or you know, optimize their profitability or give them analysis and data that’s going to help them make better decisions.

All right, so how do flat fees allow you to allocate resources and provide a high level of service? So now we know exactly what revenue is coming through the door. On average, we know exactly how many times if you just open the door all and clients are, you know, they have free access, they can ask the staff as many queries they can even book in to, you know, to see me or the other Cpas, you know, as the, we know on average how many times every, you know, corporate client, how many times they’re going to meet with us every year. Some of them meet more if they’re struggling, if they have a couple of different things, some of them eat less if it’s just on autopilot that year. Edmonton Accounting Firm, but we know on average how many times they need to meet, we know are our outsource clients, you know, they need to meet each and every month.

They meet 12 times a year. Um, so we know exactly how many slots we have in the schedule. We know exactly how many clients we can take on and offer a high level of service where if it was an hourly, a service, we never know. We could have too many staff or we can be too booked out to give them the service they want. Um, so we’re able to, you know, kind of predict reliably, uh, on who we can serve as and how we can keep our service levels high, Edmonton Accounting Firm, because we know exactly what’s coming through the door exactly what our costs are. You know exactly what usage on average every one of these clients is, is going to require. Um, so that’s, that’s how it doesn’t just help smooth out their revenue, actually helps us deliver a higher level of service for the client. So that’s what we have here today on a flat monthly fees and value. Billy, um, as always, please hit the subscribe button. So you need, you deliver your tips on how to beat the odds at business and we look forward to reading your comments, inquiries below. Uh, so we can respond back and, and, you know, use it to develop content for future videos. Thanks very much.