Selling Advisory Services with Josh Lance

Joshua Lance, CPA, CGMA, shares his best practices for selling advisory as part of your accounting firm's services. Learn how to extract the value of advisory services you're already providing on an ad hoc basis by formalizing the advisory relationship as part of a subscription offering. Discover the most common advisory services leading cloud firms are providing today, figure out how to scope and price advisory services, and much more.

Blake Oliver: Can I back you up for a second?

Josh Lance: Yeah.

Blake Oliver: How do they get to the sales call?

Josh Lance: Yeah. So, for us, and I think what you kinda have to [CROSSTALK].

Blake Oliver: -'cause I can't just call you up, can I?

Josh Lance: You cannot call me up. If you call me, I will not answer your phone, I will not talk to you; it's not gonna happen. So, we have a process, and I think a lot of firms are trying to adopt this - of either having a web form, or a Typeform, or something, where they're putting information in about their company, and answering some questions.

I think that's a good kind of way just to start that kind of qualification process with a client. Especially if you're a niche firm, you don't want non-niche clients wasting your time on a sales call. You already know it's not a good fit for you. You're more likely to add them on, and take on a bad client, than doing that, right? And so, you want to weed those clients out.

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Hey, everyone, and welcome to another episode of the Earmark Podcast. I am your host, Blake Oliver, CPA, and I'm joined today by Josh Lance, CPA. Josh, welcome to the show.

Josh Lance: Thank you, Blake. Thanks for having me here.

[00:01:27] About Josh Lance and his practice

Blake Oliver: Can you tell us a little bit about yourself and your practice?

Josh Lance: Yeah. So, I am the Founder, and Managing Director of Lance CPA Group, which is a virtual and remote CPA practice that I started about six years ago. We specialize in working with craft breweries, and digital agencies. So, we are highly niched, and we are really focused on providing those accounting, and consultant, and tax services to our clients.

Blake Oliver: Craft breweries, digital agencies; great combo there. Fun fact, you teach a class on entrepreneurship at Northwestern University.

Josh Lance: I do, yeah.

Blake Oliver: Where I used to- where I was a student; although, back in the day, I was a music major, not an entrepreneur student, or a business student, so I never got the benefit of your predecessors.

Josh Lance: Yeah, no, it's a fun class to teach, for sure. That's for sure.

[00:02:19] Selling Advisory Services 101

Blake Oliver: Well, we're here today to talk about something that is a very entrepreneurial, probably one of the hardest things that we do as CPAs and as accountants, and that is selling; specifically, selling advisory services. This is a challenge because advisory is often not well-defined, and so, we need to talk about your definition of advisory.

I'm very eager to hear it; what types of advisory services that you sell in your firm. And then, let's talk about how we actually do the sell; how we do sales, and that's hard, because it's not something that, as accountants, we are taught how to do; it's something that we- well, at least I, anyway, learned by accident. I'm not sure how- how did you get your sales training, Josh? Did you just get dropped into the fire?

Josh Lance: Yeah, pretty much. It was mostly by accident. It's just like, you're dropped in, you're trying to figure it out as you go along, and see what works, and what doesn't work. And that's [not] always the best way to do it, but I think that's the way a lot accountants get into doing sales, is you just go out and try to do it, and you fall on your face a little bit, and you try to figure it out as you go along.

Blake Oliver: And are you doing the sales in your firm, or have you managed to delegate that?

Josh Lance: I have managed to delegate that, yeah. I do some sales from time to time, but mostly, it's delegated, which is nice.

Blake Oliver: Well, that's impressive, 'cause you're still a fairly small firm, right? How many staff do you have?

Josh Lance: We have 22 people on staff.

Blake Oliver: Well, you've grown a lot since the last time we talked. I think last time, it might've been a dozen or something.

Josh Lance: Yeah.

Blake Oliver: Congratulations. Great. Well, let's get into it then. Let's talk about selling advisory services. Where do we start? I suppose I already have a question in my mind, which is- I ask it to everyone who talks about advisory- how do you define it, Josh?

[00:04:08] Defining "advisory services"

Josh Lance: I think when it comes to advisory, it is really looking out for the needs of your clients, and trying to help them achieve their goals, from a broad-range perspective. Now, how you actually do that from a day-to-day, or a type of work perspective may be different. You may be focused on KPIs, you may be focused a lot on cashflow, or whatever that may be. But the end goal is, our clients need help in a certain area. They're coming to us as the expert, and we're able to provide that insight and expertise to help them achieve their goals, or achieve the outcomes they're looking to obtain.

Blake Oliver: Well, let me play devil's advocate. I mean, aren't we already doing this, when we do bookkeeping, when we do tax, when we do payroll, bill pay? A lot of us are doing stuff for clients all the time. What's the difference between that and advisory?

Josh Lance: I think we- a lot of times, we already do it. We do it for free, or we're not putting a value price or something on it that shows it adds value outside of the work we're currently doing. And I think we struggle having that conversation with our client, to say like, "Hey, you should be paying me for this advice. You may have contracted me to do your tax return, but that does not mean I give you tax planning."

Now, I think, historically, and with a lot of accountants, we do that. Client calls up, asks a question, we answer the question. We help them out, and we aren't really identifying that as advisory services. I think that's stuff that we already do inherently, and I think the question is, how do you actually sell it on its own- on two legs, and make sure that you are getting the value that you are providing for your clients?

Blake Oliver: So, that's interesting. We may already be doing this. We just haven't surfaced it for the client. We haven't sold it. We haven't attached a value, or a price to it. By formalizing it, you're saying we can get more out of these client relationships.

Josh Lance: Yeah, I think part of it is that formalization of, this is an actual service we provide, and this is how we provide, and this is what you expect to get from it. I think the other part of it is just changing our mindset on how we actually operate the fundamentals of our firm. If our firm is very much a compliance, transactional type, work-focused firm, it's hard for us to get out of that mindset of doing that type of work, and we prioritize that, or that's what we come to market with.

But when we do advisory services, what we're really doing is really changing the fundamentals of our firm up. We really are operating first from an advisory perspective. And, yeah, we'll do that bookkeeping, or, yeah, we'll do that tax return, but you come to us for that advisory perspective. You come to us for the expertise we are bringing to you.

And in doing-so, we will be able to help you achieve your goals and help you maybe look at different outcomes you want to get to. But that's where we're going to start first, and then, yes, we may be doing these other things, as well, but I think it's a fundamental shift in how we operate our firms, because it takes the onus of advisory off of the owner of the firm, and it really changes to everyone has participated in that advisory work within your firm.

Blake Oliver: And the impact can be pretty significant financially. There was a study that was done by, a division of the AICPA. I think it was called the Business Model Trends Survey. They found that you could increase revenue by 20, 30, 40 percent just by adding in advisory to existing services. If you're already doing bookkeeping and tax prep, people are willing to pay more for 24 percent more, if you add advisory to that.

Josh Lance: Yeah.

Blake Oliver: That's incredible.

Josh Lance: I think that really gets to that point of, what the clients actually value is that expertise. They like the tax return for it to be done, because they don't wanna go to jail, and it’s a requirement of what needs to happen here, but they really value what that advice is. And so, we package that in with other services, like the report had. You see that substantial change because clients are so much more willing to pay for that.

I think that's where that missed opportunity lies, is we're so focused on selling that bookkeeping service, we're so focused on selling the tax service that we miss what the clients actually need, and we're not selling that. And instead, we give it away for free because we're doing it as part of our tax service, or our bookkeeping service.

Blake Oliver: So, I like this idea a lot, of advisory around the existing services we already provide, because it means we don't have to go out and figure out how to do something new, like CFO services, when we've never done it. So, let's dig into that a bit. What are the most common services people are doing these days, when it comes to monthly ongoing stuff that’s accounts payable, payroll?

[00:09:11] What are most common services firms provide on a subscription basis?

Josh Lance: I mean, there's lot of things we already do. Like you say, accounts payable is a good example, I think a really, really good example of this. When it comes to accounts payable, your client says, "Hey, can you handle our A/P?" And so, you enter the bills in the bill pay software, and you schedule them for payment, and the client approves them, and that's the work we do. We take a very transactional approach to it.

Blake Oliver: To the point where we're even charging per bill in many cases, right? That's how a lot of us-

Josh Lance: Right. Yeah. We're charging per bill. We'll charge you- we'll do $10 per bill, right? And then so, we've really labeled it as a transactional type service we are providing in that way, but the reality of why someone wants us to handle A/P, and what's actually going on there, is really more along the lines of cashflow management, and how do we manage our cashflow, and how do we understand where we're spending our money, and what is going on there?

The work isn't the paying the bill. The work is actually the, well, what does this mean in context of their business? And what does it mean in context of managing their cashflow, and do they have enough cash to pay this bill, or should we wait to pay that till next week, 'cause we have other expenses we need to incur this week?

And so, if we go to the A/P process and take it from really, an advisory perspective, there's a lot more insight we can unlock, and there's a lot more value we can provide there. And yeah, we'll do those bill pay things, 'cause we can do that as part of trying to manage that process, and provide that advisory service, but that's really where the value is, is in there.

I think payroll is another example of that too. Payroll, very compliance-based, get people paid; it's the payroll taxes and all that fun stuff. Very in that realm, but, a lot of times, when you're providing payroll services, the questions you get aren't about, "What's the state unemployment tax rate in my state I'm in?" It's, " I'm looking to hire more people. Can we afford to do that?” Or, “What kind of benefits can I provide?" Those are the advisory opportunities that exist there.

And if we think about that first, then really, that's what matters to the client, not so much that payroll happens. They're gonna expect you to do payroll, and they're gonna expect you to pay the people on the right timeframes. But it's really, the things that come along with that. And so, that's where that fundamental change needs the flip of, are we thinking about it in terms of what is the client actually trying to get out of this? What’s their needs from this? Or are we just trying to do that transactional service because we're accountants, we know that's what we do?

Blake Oliver: Well, I think a big part of the problem is that a lot of this advisory work does take folks like partners, directors, manager-level folks, and above. And in a small firm, you're typically a pretty flat organization, so, it's the partner who ends up having to answer those questions, but they're often really busy. You've got to- in deciding to sell this service, you have to make time, so that you're available to the clients when they do come to you for these questions.

Because the worst thing would be if you sold it, and you said, "I'm gonna do cash management," but then you never actually have time to look at their reports, and do that for them, or sit down when they have questions. Because you have to be in it more than just every now and then. It has to be a regular thing. But I guess then, the benefit is you get to charge more, so you can have fewer clients.

Josh Lance: Correct. And I think that's really the value, too, of getting your whole firm involved is, some of those insights, we tend to have that partner-level one person do that work. But the problem with that, that's not a very scalable service. If the partner is the one that has to be able to deliver those advisory insights, and do that type of work, they have a limited bandwidth to do it; they're not going to be fully into it. They're not seeing a lot of what's going on.

And that makes it for- where I think where a lot of firms have frustrations with advisory services is yes, we want to do it. That makes sense, but the owner's doing all the work, and they're like, "Hey, this sucks. I don't want to do all the work here.”

Blake Oliver: So, how do we get staff doing that kind of stuff?

[00:13:09] Teaching accountants to forecast/advisory roles

Blake Oliver: Do you have any examples in your firm? Do you do this A/P advisory work, or something else, where you've got your higher-level staff doing this advisory?

Josh Lance: We do, yeah. So, again, I'll use A/P as a good example of this. We see A/P more in the sense of, it's cashflow management, it's how do we track our spend? It's what we're spending things on, and advising clients, “What should we do in the upcoming weeks, as we think about how we run our businesses?”

And so, that's something that I think would traditionally fall on my shoulders, but we've taught our team, “Well, here's how we do it. Here is the Lance CPA Group way of providing the service. Here's the things we would look for. Here's the things that we want to make sure we're keeping aware of.”

And I think in doing that, and developing an [INAUDIBLE] for our team, they're able to deliver that. And when there are questions or things that come up, they're not gonna be able to do 100 percent of it, but they're gonna be able to do 95 percent of it, and they can come to me for that other 5 percent, and I can step in there.

So, I think that's one. Forecasting is another one; we've just been talking a lot about that in our firm. A lot of our staff accountants struggle with forecasting, because there's not a right answer there. You're doing a forecast; you're getting some data, and inputs, and things like that, but then you're making some assumptions, and you're coming out with some numbers. And you know inherently, in doing a forecast, that number you come up with is likely never going to be correct. It's going to be close, it's gonna be in the right direction, hopefully, but it's not going to be the exact answer.

And I think for a lot of accountants, there's a struggle with that of, “Well, I do my work, my balance sheet balances, debits equal credits,” everything is- there's a right answer to come out to. And forecasting, there's not. There's a guess as to what the right answer is. And so, it's trying get to that mindset shift of like, “Well, when you do this, you don't have to come up with- there's not gonna be a perfect answer here.”

I could give that same problem to three different people in our firm, and they’re coming up with three different forecasts, and that's okay. As long as we have the right inputs, we're thinking about it critically, we're going to get close to where we need to be. And so, I think helping people get out of accountant mindset of, “Well, everything's gotta be right,” then everything's gotta be budding up to, “Okay, well, this is a little bit of an art. This is a little bit of thinking creatively, and thinking outside the box as you do this work.” And so, I think that-

Blake Oliver: That’s a struggle.

Josh Lance: It's a struggle. It's a struggle, but you have to train that in and say, "It's okay, try this out. You're not going to get it perfect. It's not going to be right all the time, but it's okay, as we do that.”

Blake Oliver: In my firm, Cloudsourced Accounting, which I have sold in 2015, we did a lot of bookkeeping, cloud bookkeeping. And one of my big struggles with our bookkeepers was helping them understand materiality. Because the last thing I wanted, and the last thing the client wanted- well, we were on fixed fees, so the client didn't care, but I cared a lot- I didn't want them hunting for $10 when the client had 10,000 moving through the bank account, or hundreds of thousands. It's a waste of time. So, I would periodically educate them. And I suppose it's true for that forecasting. There's uncertainty, and that's okay. We have to be okay with the uncertainty.

Josh Lance: You have to be okay with the uncertainty. You have to be okay with the art of this, and as long as you get that, and you get the concept, you'll do okay. And you don't have to try to be perfect in this, and there'll be someone reviewing it, and you can talk to each other, and talk to me, but you can do this work. It doesn't take a rocket scientist to create a forecast, just understand who the client is and what's going on, and what they expect to happen in the future. And then you can craft that, [CROSSTALK].

Blake Oliver: So, I think we've identified a few different places in the firm where we could look for advisory. There's obviously, the stuff we're doing already; the A/P is a great example. Go from paying bills to doing cash management. Go from doing payroll to doing people advisory. Go from doing bookkeeping to doing some light financial forecasting. There's a lot of tools out there that can help you do this, and that's important, too. You gotta have the right tech to make sure that you, as the partner, don't get bogged down doing it all yourself.

[00:17:15] Starting The sale

Blake Oliver: So, let's talk about then, starting the sale. Let's say I'm a firm owner, and I've never done this before. I've always done the transactional kind of work. Where do you suggest, since I've identified an area- and we can use A/P as the example; I think it's a great one. Where would you have me start fixing up my sales flow?

Josh Lance: So, I think it first starts with you as the owner, and the person doing the sales. In taking an approach in this, you are the expert. I love this. There's a quote from Blair Enns, who has a great book on sales called "The Win Without Pitching Manifesto," and in that book, he talks about, you are the prize to be won.

The person's coming to you. That client is coming to you because you are an expert. You're the person that can help them solve a problem or help them get to where they need to go. And so, too often, we forget that in the process of sales, and we jump in there, and we're talking price right away, and we're negotiating against ourselves, and we struggle with actually selling what we want to sell.

Having that idea in mind of, one, I'm the prize to be won, is that it allows me to go into that conversation knowing that I'm the expert here. I am the one who's going to lead this client, not have the client lead me. And if this is not the right fit, if this is not going to work out, then that's okay; I'm okay with that. I want the right clients for our firm, and not everyone's going to be the right client for our firm. Even if they're in our niche, um, or even if they want the services we can sell, they may not be the right fit for our firm.

And so, instead of just trying to sell everyone who comes to us, or everyone who has a pulse, or everyone that wants to give us money, we have to be discerning and selective about that. I think even more so now, as firms struggle with staffing, and trying to get that work done, is you have to be very selective about the work that you do, and take that kind of expertise in mind of, yes, I'm the expert here. So, I think that's first and foremost, for the person who's selling the work. You have to have that mindset going into it.

I think the second part of it is you have to have a really standardized sales process that you're following through each and every time. Ensuring that you're bringing the right clients in, ensuring you're asking the right questions. Getting people who are just trying to find out what the cheapest price is, or whatever that is for that service, you're getting them out before they even qualify in. And so, having that sales process developed, and to have that followed each and every time, I think is pretty key, because that helps us get the right sales in the door.

[00:19:57] Assessment fees

Blake Oliver: One thing that I used, that I stumbled into in my practice, was an assessment fee. We would charge a $500 fee, which I understand is actually fairly low these days, but that was my minimum fee to have us look through your QuickBooks file, and figure out what was wrong with it, give you a little write-up of what we would do to fix it. You could fix it on your own, or you could hire us, and that was wonderful.

Once I implemented that, it got rid of all those people who were just looking to get as much free advice as they could out of me, because I could say, after that first 15-minute call, or 30-minute call, "If you want to proceed, here is the fee to do this assessment. We'll dig into your file, yada, yada, yada," and those who weren't really interested in paying for anything, they fell out of the process there. What are your feelings on that? Or do you have any other thoughts?

Josh Lance: Yeah. I mean, I love that from a practice because, one, it gets those tire kickers, those people just looking for the cheapest provider out the door. But it also helps you do your sales proposal better, because if you're going actually digging into the books, and spending the time to figure out, “What actually needs to happen here?” you're going to craft a much better proposal to that client than just someone who's like, "All right, well, my cleanup price is X, and it'll cost X dollars per month to do your bookkeeping."

And you can really hone in on maybe some issues you're seeing there, or uncover those advisory opportunities that you can bring up that you may not have come across in the call. And it also compensates you for that diagnostic work. And that alone, in itself, I think is valuable. Even if that client never goes with you, you spend the time to go through and give them a report of, "Well, here's what I'm finding. Here's our recommendations." It has value in and of itself, and too often, we give that away for free, and it's a lose-lose, if we ignore that. Giving that opportunity to get in there and dig in, get compensated for that work, but then also, being able to craft a better proposal to really hone in on what their needs are, I think is key.

Blake Oliver: And whether or not you charge a fee for it, it is important to emphasize that it takes a lot of time to do this right, and you can't just- well, let's rewind for a second, and just talk about how most people do this today. I don't know if it's most people, but the old-time process was, do a call with a prospect, give them some free advice. Say, "You wanna work with me, here's an engagement letter, and my hourly rate. Sign it, and return it." No payment upfront, no- generally, no retainers.

Lawyers use retainers all the time, but accountants, for some reason, even when they're billing hourly, forget to do it. So, that's the old process. Walk me through your standardized, non-old-timey process.

[00:22:54] A better sales process

Josh Lance: So, I think when you come into a sales call- and really, our objectives in that first sales call, and in our process that we do, there's really two sales calls, or one-and-a-half sales calls in the process.

Blake Oliver: Can I back you up for a second?

Josh Lance: Yeah.

Blake Oliver: How do they get to the sales call?

Josh Lance: So, for us, and I think what you kinda have to [CROSSTALK]-

Blake Oliver: 'Cause I can't just call you up, can I?

Josh Lance: You cannot call me up. If you call me, I will not answer your phone. I will not talk to you. It's not gonna happen. So, we have a process, and I think a lot of firms are trying to adopt this, of either having a web form, or a Typeform or something where they're putting information in about their company, and answering some questions.

I think that's a good kind of way just to start that kind of qualification process with a client. Especially if you're a niche firm, you don't want non-niche clients wasting your time on a sales call. You already know it's not a good fit for you. You're more likely to add them on and take on a bad client than doing that. And so, you want to weed those clients out.

Blake Oliver: So, you're asking, "Are you a brewery? Are you a professional services firm?"

Josh Lance: Yeah.

Blake Oliver: If they're not, you might respond, and say- when they put in the request, you say, "Well, that's not an industry we serve. Here are some recommendations for other providers."

Josh Lance: We even have it. We use a Typeform for our thing, and so, when they answer that question, and they answer it, in our way, incorrectly, it kicks them out of the process and says, "Hey, we're not a great fit for you. I'm sorry, we won't be able to serve you at this time."

Blake Oliver: Oh, that’s great.

Josh Lance: So, it automatically disqualifies them off the bat, which is-

Blake Oliver: Automatic rejection. That's nice.

Josh Lance: Automatic rejection, yeah. But again, it saves you from wasting your time on clients that aren't the right fit. In our qualification we do, is all of our clients have to be on either Xero, or QuickBooks Online. That's the platforms we work on. If you're not in that platform, you'll get kicked out. If you're on QuickBooks Desktop, we'll ask, "Hey, are you willing to convert to being on the cloud?" And if so, then you continue on with the processes. If not, you get out kicked out again.

And so, when you're doing that qualification process, make sure that ultimately, that person you have a sales call with is in the ballpark of the right fit of the right type of client you want; they're the right industry, they're answering the questions correctly of what their needs are. I've seen firms where they'll put even brackets of budget of, "Hey, what's your budget for doing this work?" And give some options there. And if you only check the cheap option, you're gonna get kicked out of the process. And so, just getting the right client on the sales call, because you do not want to have a sales call with someone who is not the right fit. And so, have that-

Blake Oliver: Got it. So, they make it past your first round of the form, they get the sales call. Now, we're in the sales call. I'm not gonna make you enact a sales call with me, although, that could be fun. I don't know if my acting skills are that good. Tell me, how long is this initial sales call? Do you keep it short? How do you do it?

Josh Lance: So, we try to keep it no longer than 30 minutes. Longer than that, you're starting to get in the realm of giving away free advice. You're starting getting the realm of prescribing without diagnosing. And so, we want to avoid that as much as possible. So, that first call is really a, “Is this the right fit, from a people perspective? Do they gel with us? Do they get us? Do we get them? Do they understand our value proposition?”

You come work for us as a niched brewery firm and you're a brewery, you should expect to pay more than a generalist accountant who is out there. If we're providing more, bringing more to the table as a result, and so, there's gonna be a different value proposition there. We also want to know, what do they actually want and what do they actually need? You have a client that comes to you and says, "Oh, I need to get my books cleaned up, because I haven't touched my books in nine months." But then you dig into it, and they haven't filed returns in three years, and you start to uncover that stuff.

We're really trying to think of, what's actually- what are they actually trying to accomplish when you work with a firm like ours? And then, we start to talk about getting into a scope component of if we were to give you a proposal, what things would you find valuable in that, what things are you looking for, what things do you not want? It's just so we can start to narrow down that scope conversation. And that's really that first call. Again, keeping it short and sweet. From there, we assess internally, is this a good fit or not? So, [CROSSTALK].

[00:27:13] When to give a price

Blake Oliver: Question for you, though. Before we get to that, question. This is one that happens all the time. Client wants a price on the first call. What do you say?

Josh Lance: We say we don't give prices on the first call, for two reasons. One, we need to understand a little bit more about you. And so, maybe doing that diagnostic component of digging into your books. But also, we want to talk internally about our own capacity and how we can best serve you. So, just throwing out a blanket price says, “We have capacity to fill that,” or, says that, “That makes the right sense for our trade-in value in price.” And so, we wanna make sure we can do this right by you, right? So, we get that question a lot. There's always that question that comes up. Well, how much do you think it is? Well, we can't give that price now.

Blake Oliver: Give me a range. Give me a range.

Josh Lance: Or give me the [CROSSTALK]. And it's like, “Well, we can't give that price now.” We even say, “We're not trying to be sneaky about it. It's just, we have to make assessments about, now that we've heard from you, and heard from what your needs are, we have to assess, “How can we best serve you in this way?” Part of that determination is, do we have the right people to help serve you in that way? So, that's the time when we end the call, and then we get together, myself and my partner.

So, my partner is the one who is typically doing those sales calls, and she'll explain like, “Here's what's going on. Here's what I think we need,” and then we talk price together. I may even have some questions, like, “Well, they're saying this. Well, maybe they want this, or maybe we should offer something else.” We look at then, our capacity internally and say, okay, “Well, do we have the right people to serve this or not? If it's a more senior person, that's going to change the pricing dynamics, and things like that. We have that conversation, and then we go to the proposal component.

Blake Oliver: And I really wanna dig into that proposal component, 'cause I think that's really important. And this is not a pricing episode. We could do a whole episode- we could probably do a series on pricing. But I'm just curious, before we move on, how do you tend to price? Do you come up with one price for the whole engagement, or do you build it up using different services with different prices? Do you estimate time?

Josh Lance: Yeah. It's very much an art, and I think as we think about it, I think for us, in some ways, pricing changes daily, just depending on what's going on. So, if we had that same conversation in the week before, we may have given a different price, depending on capacity changes, or things we have going on, or, other opportunities that are in play.

We really take it from a value pricing perspective with the caveat that we use a variety of factors to think through things. So, we do back of the envelope, like, “Well, if we do this work, how much time do you think it's going to take, and who's going to be on there, and what's our desired profit margin on that work? Let's figure that out from a floor perspective of, what's the minimum we can go here, and does that even make sense in this scenario?”

We talk about- we'll bundle services together. So, we usually go with a three-option proposal, generally, for our services. And so, we'll think about, “Well, what different things are we gonna include in those bundles, or not?” In a lot of ways, it's standardized, but then, sometimes, as you start to dig in, we may take things out because we don't think it's necessary, and replace it with something different.

And so, it really becomes this art and dance that you have to think through of, “What does this look like? How do we staff it? What are we trying to get as a desired profit margin? What are we trying to accomplish here, internally, by taking on this client?” And then, come up with a price from there. And usually, it's delivered as a fixed fee on a monthly recurring basis.

Blake Oliver: And I think the really important thing you said that I wanna highlight, is that you weren't doing your pricing alone. You and your partner get together, and check each other on this. And I think that's really important. Not everybody has a partner, but they often have a life partner. And so, I have heard it suggested before that if you don't have a business partner, have your spouse check your pricing 'cause they're your best advocate, a lot of the time. It's important.

Josh Lance: Yeah. It’s good to have those two perspectives on it, too, 'cause we all talk it through and think about scope. And then we'll come- I'll write my number down on a piece of paper, and she'll write her number down, and then we share it, and see how close we are in that. And sometimes, we're way off. And then we have to [INAUDIBLE], why are we way off? And sometimes, in doing so, that may uncover other ideas as to how we're going to approach this.

I think it's helpful to talk it through with someone else. Even if you have an employee in your firm, it's you, and just a sole partner, but you have some employees, talk it through with an employee. Just say, "Hey, I have some ideas. We have this new client. I'm gonna throw some prices here, or I'm gonna throw some ideas out. How would you price that? What do you think here?" Just to get some gut checks on stuff, 'cause sometimes, you can, I think, as accountants, downplay your own value. And so, you come up with a number that's probably too low, and if you talk to your team, they'll probably say that's too low, too, 'cause they're thinking, "How are you making profit, if you're paying me to do this, and I'm [CROSSTALK]?"

Blake Oliver: I want my bonus at the end of the year, so we'd better make sure we hit our number.

Josh Lance: And so, we've found even, sometimes, when we're unsure, or we're thinking about, “Well, there's a desired team member we wanna put on this work. Let's run the price by them and see what they think.”

Blake Oliver: Yeah, that's good.

Josh Lance: 'Cause it just kinda helps gut check some of that stuff, too. And they see the price. They do the books for our clients, and they see our charge come through. They know what we're getting from them. So, they have a sense of when things are rightly priced, and when things aren't priced correctly.

[00:32:46] Getting the team involved in pricing

Josh Lance: We've even had some of our team members come to us and say, "I don't think we're charging this client enough for the work we're doing. I know what we get paid, and this doesn't seem to be enough for all the things I'm doing for them.”

Blake Oliver: That is amazing! How did you get them to do that? Because my problem was always, we were doing work, and the scope would grow, and then, we weren't charging enough. So, this is what we really want, is our staff telling us when we're not charging enough on existing clients, right?

Josh Lance: Yeah. I think part of that's just being transparent with the team. So, we're pretty clear on the team as to our profit margins; we share our financials with our team. We're pretty open book as far as that goes, but in doing so, that helps empower the team to help make decisions, whether that is pricing for a client, or how we spend our money on different software, or other expenses that we incur. Give them some opinions into that, 'cause sometimes, they'll see things or know things that we're not seeing, and that can help us out. But I think-

Blake Oliver: That's great.

Josh Lance: -especially when it comes to that, how you price your client, I mean, they know how much we get because they see that come through every month. As to what the price is, and they know how much work they do, and they know their work for the other clients they work with too, which are all either breweries, or digital agencies. So, they know like, "Hey, this seems off compared to what we're doing else. Maybe we should raise our price.”

[00:34:07] Thank you to our sponsor, Practice Ignition

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[00:35:23] Back to the flow of the consultation process

Blake Oliver: So, let's get back on track. So, thank you for taking that tangent with me. And so, where were we in the process? We had just finished our consultation meeting, our first meeting with the client. I assume that before we let them go, we schedule the second call to go over the-

Josh Lance: Yeah. Generally, it depends on how we are approached with that client, and how complex they are. Either, we'll schedule another time for a call, so we can deliver that proposal in person, via call, or we'll say, "Hey, we'll follow up in a couple days." And we may deliver the proposal in another format; through email, with a video, or through another means, even set up another call later on. We'll at least prep them to say, “Here's what to expect next.” Anytime we do anything sales-related, we always want to end it up with here's what's to expect next in this process, so we're not leaving them hanging.

[00:36:18] How to decide on proposal methods

Blake Oliver: So, you do it two different ways. So, you'll sometimes do the proposal in person, or you will also deliver it via email with a video?

Josh Lance: Yeah.

Blake Oliver: So, what makes you decide which one? Is it the size of the client? Is it how much time you have? Because some people say you should never, ever give a proposal without being there to answer objections.

Josh Lance: Answer questions. So, some of it depends on, I would say, the size, and the simplicity, or the complexity of the client. The more complex the client, the more things that we'd be proposing, or maybe even off-the-wall ideas we're gonna throw out there, we're gonna do that over the phone, or a video call, just because we do need to handle objections, and there probably needs to be some clarification on the client's end as to what we're saying. For some things that are simple, like, "Hey, we're gonna do bookkeeping services, or we're gonna do a tax return, and some tax planning," that's a little bit more standardized. And so, as such, we can say, “Well, here's what it is,” or, “Here's the three options we have, and here's how we work this.”

So, tax is a great example of this. Generally, we'll never give a proposal for tax in live person, or over video. Typically, we will send it out with a video, Loom-type thing attached with it, and just talk them through what's going on, 'cause it's- really, we're often- at that point, there's really a limit of what we're going to be offering in doing that work, and limited options they can choose from. And so, it's pretty clear cut as to, “Well here's what you do next. Either take it, or leave it, at that point.

Blake Oliver: And for our listeners, Josh mentioned Loom, which is a very simple app that lets you record your screen, and yourself, and send a video to a client where you are in a little circle in the corner of the screen and you can walk them through your proposal. So, it's a great way to get that in-person feeling without having to actually book a meeting.

Josh Lance: Exactly.

Blake Oliver: So, great for those smaller clients, or smaller engagements, or one-offs.

Josh Lance: Exactly. It makes it simple, it makes it clear, but also gives that personal touch. What we don't want to do is just to blind send the proposal and say, "Well, here's our proposal. Let me know any questions," and then walk away, right?

Blake Oliver: Yeah, that's when you hear crickets, normally, right?

Josh Lance: Yeah. That's when you're gonna lose proposals because you abandoned the process at that point.

[00:38:44] Three proposal options

Blake Oliver: So, you are using Practice Ignition-

Josh Lance: Yes.

Blake Oliver: -for your proposals, and you mentioned that you do three options, typically-

Josh Lance: That's correct, yeah

Blake Oliver: - in a proposal. Obviously, there are way too many variations, and combinations to go through all the different types of proposals that you do, but maybe you could give me an idea of the three different tiers for a very common situation.

Josh Lance: Yeah. So, let's take a brewery client coming to us, wanting us to handle their bookkeeping, and accounting needs. Generally, the three packages, at least, we're going to start from initially- now, again, that could change, client to client. We could add things, or take things out, but generally, when we think about three options, there's either that really high option that has basically, everything we do. So, they're basically, at that point, almost subscribing to our firm and the services we provide.

And then, you have the low option, which is like the bare bones, “We are going to do transactional-level work only. Do not think about any advisory work, do not think about asking us questions. Here's what that is.” The middle is an in-between of all that. It would be like basic bookkeeping services would be at the low end. Then, we would probably do- in the middle end, we usually do like bookkeeping, plus a quarterly strategy call, and maybe some KPI analysis.

And then the high end, we're moving into more like monthly strategy, forecasting, KPIs, people advisory, all those type of things. And so, we give those different optionality in there depending on where they want to go. We talk a lot about what happens in option three, and all the things we do, typically, on the sales call. And then, they've seen those options, and when we discuss it with them, we're "Well, here's where we're peeling out now. Here's that new scope, and then here's where we’re peeling out again, and here's what that low-end is.”

And so, it really gives them that optionality; either, you're gonna work with us, and do everything that we do, and we're really going to take care of you. And they're that concierge type client with us, to, “Here's that middle-of-the-road package. You're not getting everything, but we're going to provide you some more than just the basics. And then here's the basics.” So, they really have a clear distinction of what you're really getting from us.

Blake Oliver: And it's important, in that highest-tier proposal, to really throw everything in there because otherwise, how would your clients, or prospects know everything that you offer? And it also helps to anchor the prices, because I assume that that highest tier, which- how many people actually choose that? It's probably a very low percentage.

Josh Lance: Yeah, usually 10 percent or so are going to choose the highest tier.

Blake Oliver: Exactly. So, it's a small percentage that are in the first class, or business-class seating on your airplane of your firm. But that sets the expectation for everyone else that, “Well, I guess what I'm paying for coach is actually a really decent price, because it's an order of magnitude perhaps, less expensive-

Josh Lance: Exactly.

Blake Oliver: -than what I would be paying if I got everything.

Josh Lance: Yeah. And it also helps them understand, too, by making that choice, you're choosing not to get other things. So, by choosing the middle option, you're choosing not to get forecasting services, or a monthly call, or a weekly call from us, right? You've elected out of that scoping provision. And so, if you do want it, we're going to come back to that third option to say, "Well, if you really want these things, and you're asking for these things, you need to be in the upper tier to get those things."

And I think it also helps to understand, particularly, if clients are comparing you to other firms, all the things that you offer. We can't make the assumption that our clients know what we do.

Blake Oliver: Yes.

Josh Lance: I think, sometimes, we do that, and we say-

Blake Oliver: We do.

Josh Lance: “Well, yeah, we do. We're a CPA firm. We do CPA things.” But our firm does things that are different than other firms, and we think about it in ways that are different than other firms, just like any other firm there is. And so, being clear about that upfront helps create that distinction and really shows, “Well, here's what you're going to get when you work with us, and if you're looking at other proposals from other firms, you're going to see those distinctions, and even more clarity as you compare.”

And so, we want to make sure they understand, “Here's all the things we can do,” because what we don't want to do is- and this has happened to us- we've learned this the hard way- is we do bookkeeping services, and they're like, "Oh, I was needing to help with some forecasts, and so I called this virtual CFO service, and they're gonna do the forecast." And it's like, “Well, we could have done that for you,” but we didn't really- we’re giving them that information and knowledge to tell them that. We gave them a proposal for bookkeeping services, and so, that’s all they assumed that we would do.

Blake Oliver: Really good points.

[00:43:17] How does new technology come into play in sales?

Blake Oliver: So, we've mentioned the technology, but we haven't really talked about the benefits of it, yet, of using proposal-management software, or engagement-letter software, whatever you wanna call it. To set the context, let's think back to what many firms still do, and what I was forced to do when I was a manager in a large firm for about a year. And it was to copy a Word template onto my desktop, and then customize that Word document to create an engagement letter for my client, which I then emailed to them as a PDF. I hoped they signed it, and returned it, and then we could begin the billing process.

So, for those who are new to this concept of proposal software, what are the key benefits for you, and your firm to using a system for this? to paying for software for this? Because I could do it for free, pretty much, with Word, right?

Josh Lance: Right. I think there’s- I mean, there's a lot of things. I think one is the standardization, making sure that you're doing this for every client that you work with. So, I think it's very easy to get a client that comes to you and says, "Hey, I'd love you to do some tax work, or some bookkeeping work, or this cleanup project. Can you start today?" It's like, "Oh, yeah, I can do it," and you start just working on it. And you haven't set scope, you haven't sent that engagement letter out. You haven't gone through the proper process here.

And so, using proposal-management software forces your hand to do the right process for each and every client that you do. I think it also helps you automate that process and make it simpler on your end, and simpler on your client's end. So, you mentioned, “Hey, we do that Word document.” We save it, we update it, we send it out. Maybe when you do it on one-offs here and there, that's not that big of a deal, but with firms that are doing tax work, or you're doing a lot of sales work, that's a lot of work all the time that you're doing, and that can really be slow. And again, you can try to bypass or skip things, or shortcut it, which is only going to hurt you later on.

So, then, having a system in place that allows you to quickly send out that proposal to your client, that's completely branded to you, that has your logos on it, that's very easy from a customer experience perspective of understanding what's going on, I think it's helpful. Making sure you collect payment details when you send all that together and get that engagement letter signed is key.

Blake Oliver: I gotta say, that is my favorite. It's, you can require the client to enter payment information, and schedule the payment when they sign. So, your team doesn't accidentally start working before they've really committed to you.

Josh Lance: Exactly, yeah, which is key. And that also makes sure you're not doing work for free, and it makes sure you're not spending a bunch of time after the fact, trying to collect on that invoice and that bill. So, getting that payment detail in there, and then having the engagement letter signed and all together is, I think, pretty critical. That's what Practice Ignition does. You take it from that proposal to paid component in a really short period of time. And then also, automate the invoice, and the billing process.

So, the front-end piece of getting your client to sign that engagement letter, accept your terms, and accept your scope, and then, at the backend, of actually getting paid all that work. I think a lot of times, we throw- either we do it, or we have an administrative assistant that does it, and we spend a lot of time there that we don't actually need to spend. We can automate that, make it simpler, automate the invoice, and then billing, so you're not having to think about, “Well, it's the beginning of the month. Let's get the invoices out,” or, “Let's try to collect on these deadbeats who aren't paying us.” That stuff is automatically happening, and you're ensuring that it's automatically happening, and you're automatically getting paid without having to do that legwork to get paid.

[00:47:13] Getting clients to sign proposals
Blake Oliver: So, you've put together the proposal, you've done it in PI, and you're meeting with the client. How often do they actually sign the proposal right there in the meeting? Is that a common thing, or do they typically go back, and think about it, and then sign it?

Josh Lance: It's interesting. I think, it's more common than you think, where we'll have them either sign in the meeting, or we'll get off the call, and two minutes later, we get the email saying, “It's been signed and we're ready to go.” Making it easier for the client ensures that it's something that happens quicker, rather than not. and I think clients, especially if they buy into- if you did your sales process right, they've bought into you. They had said, "Yeah, I wanna work with you. You're the expert who can help me out with this problem. You work in my industry, you understand my pain points, and my issues. I'm bought into what you're doing. I agree to this option I'm going to choose," and then, "Let's get going here."

Given that option or basic ability for the client to sign right away is key, versus, "Well, I'll send you the engagement letter after this call." And then I don't get to it for a couple hours, or till the next morning, and then it gets sent out. And then, it sits in their inbox for a while, and then they've gotta figure out to sign it, and send it back in my direction. It just takes too long. And that's a way you can start to lose sales that way. We've made it a more painful process to engage with us. The simpler we make it for them, the simpler it is for us to close that sale.

[00:48:38] Scoping out advisory services

Blake Oliver: So, I want to finish up with actually, probably the trickiest question for you. I apologize. But it has to do with scope, scoping out the advisory, because we're talking about selling advisory. To sum up, we've talked about how, if you're selling advisory, you can't just have a quick and dirty sales process. You gotta have this extended process, where you're gathering information, you're doing at least two meetings, potentially more, with the client, you're really being thoughtful about the proposal, you're talking it over with your team. You are using multiple pricing methodologies, because advisory services are ambiguous. You gotta try a few different things to get the right price. When it comes to actually what is in that engagement letter, what is in the scope of the service, how do you make sure that it doesn't become a total shit show?

Josh Lance: I think there's two things. I think it's, one is understanding the skills that we have. So, not telling our client, “We can do whatever you want,” if that's not in our skillset. So, we don't have the skillset to do R&D credits. I know it, I understand it, but I don't have the skill set to necessarily do all that work myself. So, I better not be putting that in the scope, or saying I can do all these things for my client, when I can't. So, it's understanding, “What are our own limitations of what we can do?”

And then, when we translate that into a scope and get that in front of the client, being very specific as to what is in that scope and what is not in that scope, even with things that- with advisory, forecasting is a great example of this. If I say, "We're going to forecast services, for instance, for you," what does that actually look like? Is it I'm updating it on a daily basis? Are we having a lot of conversations back and forth about it? Or, is there a defined process as to, “When you sign up for these forecasting services, here's our process and how it works, and here's what you're going to expect. And this includes having a monthly meeting. This does not include daily check-ins, or whatever that may be,” right?

Blake Oliver: Yeah.

Josh Lance: And take some of that "assumptionality" out of the scope. Because again, I think for us, we understand it, and we get it, but our clients don't. And they may be coming from a firm that said they'd do these forecasting services, but they did it in a much different way, or there are different things going on there that we weren't thinking about. So, the more we can be clear about the scope, and what is in that scope, and nicely define that as much as we can, the better off we're going to be, because then, we're going to avoid those scope-creep, or scope-seep opportunities that can come into play, and avoid some of the assumptions that our client may assume one thing, we assumed another. And we want to avoid that as much as possible, 'cause that's where friction happens, and relationships go south, and things like that. So, the clarity is key.

Blake Oliver: We obviously can't get into defining the scope of every single possible service here, but just one thing that I like to think about, or two things, actually, whenever I'm defining scope, are frequency, and the deliverable, and trying to, for everything that's in that services package, define the frequency; so, daily, weekly, monthly, quarterly, annually. How often are we doing that thing? How often are we meeting with you? If our advisory meetings include you meeting with people, who are those people, and when? How often? And even if that's not what really happens, and you end up spending more or less time, you can always go back to that and point to it, when it comes time to do an adjustment.

If it ends up being you're calling us daily, and we'd agreed on weekly meetings, now, it might be time to bump you up to that premium package. And then, in terms of the deliverable, you mentioned this, it's the, what are they actually getting? So, when it's bookkeeping, what do they get every month? Do they get a set of financial statements? Do they get more than that? Do they get a dashboard? The forecast is a good example, too. How far out does the forecast go? How do we deliver it to them? How often does it get updated? Cash management, same thing, right?

Josh Lance: Yeah. You have to be clear there because again, that's where you're going to have issues in the relationship with your client, is when you're not on the same page. And then putting together an engagement letter, and putting together your scoping is a way to get on the same page with each other. And that's also a way, especially, when it comes to frequency and the deliverables, is how, if you're struggling to figure out even how to do a three-option proposal and differentiate a service over multiple tiers, that's a great way to differentiate is-

Blake Oliver: Frequency.

Josh Lance: “Well, maybe the frequency is gonna be monthly, weekly, daily, depending on the package,” or, “That deliverable is gonna happen in a certain way, depending on the package.” And so, that's also a great way to show that difference in there as well. But being clear on all that I think, is key. And I think, I've learned the hard way too often, of when I scope things too vaguely or took too many assumptions into play in creating my scope, where that came back to bite me later on when clients were asking for things, they said, "Well, your engagement letter didn't say I can't do this," or "I assumed that's what you meant when you put that in the engagement letter."

And so, you don't want to have that fight of what you meant six months ago, 'cause that's a fight you're going to probably lose. And so, you want to make sure you have that clear and upfront, and you have to make sure you communicate that to your team as well, because just because I sold it that way, if I just give it to my team, and say, "We're doing forecasts," and then they just do whatever they want to do, whatever the client asks, then you're going to get way out of scope real quickly, too. So, the team has to be on board with that as well.

Blake Oliver: That's so important. It's not just for the client. It's actually even more for the team, is the scoping. And that's why it's important to bring them into it, if possible, so that they know what they're- I mean, 'cause you're signing them up for work, so, it's good to have- if you can get them helping to price it, then they can help you scope it.

And the other factor is, who's going to be doing it, too? That's another good way to differentiate. So, just an example from my firm, we did bookkeeping, a lot of bookkeeping, and at the highest tier, it might be daily bookkeeping, then weekly, then quarterly, as you go down.

The frequency of meetings might go from weekly, to monthly, to quarterly. And that all just sets an expectation as to, how much are you going to draw upon our resources, but without us needing to count hours. I think that's really important because if- this is why advisory has failed historically, is we tried to bill hourly for it, and it becomes very expensive, and then people don't want to pay for it. So, by setting the scope in this way, we don't have to count the hours, but we also know that we're not going to run out of capacity.

Josh Lance: Well, and I think to your point there, again, when advisory has been typically getting done, it's been done by the partner level, which has a higher billing rate, and you're gonna get that bill up pretty quickly when the partner’s doing some time on it. And so, I think being clear on that scope, being clear with your team, and pricing that accordingly allows you to really leverage your resources appropriately. And that's one of your biggest roles as a firm owner, or a partner, or a manager in the firm is, how do you leverage your resources and manage that capacity? And that helps you in that sales process, if you understand that well, because that will help inform your pricing and ensure that you're taking on the right work for your team, that you can actually do.

[00:56:27] Finishing up/where to reach Josh

Blake Oliver: Josh, thanks so much for your time. If our listeners would like to connect with you online, learn more about what you're up to, where would you send them?

Josh Lance: You can connect with me on LinkedIn. Search me out there. You'll find me there. Otherwise, you can reach out to me via my email,

Blake Oliver: I've been speaking with Josh Lance, CPA. I'm your host, Blake Oliver, CPA. Thank you for listening to The Earmark Accounting Podcast. Josh, I'll see you around.

Josh Lance: Yeah.

[00:56:58] Sign up at for free podcast CPE

Blake: Hey, everyone, Blake here again. I hope you enjoyed that episode. If you'd like to get CPE for listening to episodes like this one, and many more accounting and tax podcasts, go to, sign up, and get early access, when the app launches later in 2021.

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