Hello there. Labor day weekend is around the corner and I want to wish you a happy and safe one.
I’m a big believer in the 80/20 rule, also known as the Pareto principle. What the 80/20 rule says as it pertains to the CPA practice is that 80% of the money is made by only 20% of the CPAs; and of course, 20% of CPA practitioners are making 80% of the money.
This is important to be aware of because it means that if 10 CPA practice owners are asked how business is going, 8 of them will say “Man, it’s a hard business. I can’t make any money in this market; all the clients care about is low fees and it’s impossible to get good staff.” And those eight out of 10 practitioners will form the average person’s opinion how the accounting and tax business is going.
But the reality is that 2 out of the 10 CPA practitioners are making all the money, and they are doing so because they have a reliable CPA practice marketing system. They’re not just relying on word of mouth or attending chamber events to hand out their business cards, cold calling, etc.
They are proactively marketing, and as result of that marketing, they’re working less, but making more, because their clients behave the way clients should behave. Their clients, gained through their marketing, are attracted to them, not repulsed. The clients are not asking them to cut their fees. They are not threatening to take their business to their competitors.
I have observed that CPA practitioners usually emulate the habits and tactics of the unsuccessful practitioner, not of the successful one. They do this because they focus upon the majority…..the 8 out of the 10 practitioners that they see doing things “the way everyone else in this industry does them.” They never take the time to understand how the successful CPA practitioner became successful.
Maybe it’s hard to pick the successful ones out of the crowd. By the way, by successful, I don’t mean working 60-80 hour weeks during tax season and getting burnt out. If you are working that number of hours per week and making $150k or $200k per year, that to me is not successful. Your family will certainly not think of that successful.
I look forward to your comments.