I started my CPA accounting and tax practice in Dayton, Ohio sixteen years ago. Little did I know of the challenges I would run into such as poor cash flow, low client retention and high employee turnover. As a result, I accumulated debt of approximately $100,000 during the initial years of my business. I began to become frustrated, asking myself why had I left a large company. I decided to become a student of "business" and learn everything that I possibly could about running a successful business. I read every available business book, I attended seminars across the country and absorbed as much as I could in an attempt to solve my business issues so that I could pursue the levels of financial success that I desired.
What I learned has been truly transformational. As I acquired this new information, my role changed from "accountant" to that of a trusted "business advisor". My clients started seeing me as a CPA who not only understands the books, but also has a wide and in-depth knowledge of business. I meet with my business clients regularly throughout the year to not only help with tax compliance and financial reporting, but also to coach and advise them in all 12 areas that I have covered in this report to maximize their finances and minimize their tax liability. This special report contains information about what your CPA should be helping you with.
Failure to recognize this could be costing you thousands of dollars. In fact, many businesses are not aware of the role that their CPA should, or could, be playing in their businesses. Once you finish reading this report, you should have a firm understanding of the role that your CPA could be playing in your business, and how to initiate conversations to facilitate changes in your current relationship.
#1: Pricing Incorrectly
Far too many small businesses have thinner profit margins than larger companies because they tend to under-price their products or services. Pricing is critical to the success of any business. In fact, many books and articles have been written solely on the subject of pricing.
If you sell a product for too little, your company may not be able to cover all its costs or you might be leaving potential profits "on the table". If the price is too high, there may not be any sales or enough sales to cover the business’s overhead costs.
The price of your product communicates information to current and potential customers. Customers often infer the quality and value of a product based on price.
Commodities are products or services that can easily be purchased from many sources. If your product or service is a commodity, then you will have very little ability to price above the competition without adding substantial value in other ways such as additional services, expertise, or "one stop shopping". In cases where your product or services are unique or highly differentiated, there is the potential to charge a premium price. Of course, the unique value must be communicated to, and appreciated by the customer.
I’d never want to be in a business that procured its customers with the lure of the "lowest price". You never want to sell based upon price. Rather, you want to sell the quality, value, service and unique benefits of your product or service.
There are a couple of things to keep in mind when it comes to pricing. The first one is not to overestimate the importance of price. Let’s assume you’ve got a great product, at a fantastic price, backed up by great service. You’ve advertised, and now you expect people to flock to you? Trying to sell on the logic of product/price/service will only have you tearing your hair out. Certainly these things matter, but not half as much as the EMOTIONAL NEED your client is actually satisfying by purchasing your product or service. If you don’t know what that emotional need is, or how to communicate to your client that you can solve it, then you will certainly struggle.
The second is to find a niche market. If you find yourself in a market place that does not allow price increase, then you want to look at underserved niches; specialize. In virtually every industry, specialists earn more than their generalist counterparts. For instance, in the U.S., a general registered nurse (RN) earns $42,000 a year. But a nurse practitioner—an RN who has completed additional courses and specialized training— earns an average of $49,000 a year, almost 17 percent more. Certified nurse midwives can earn more than $58,000 per year, while certified nurse anesthetists often hit the $80,000 mark. That’s 90 percent more than a general RN! You’ll often find the same patterns in industries such as consulting, real estate, construction, information technology, accounting and law, where even just having the industry’s certification can
boost your income by 25 percent or more.
I believe the CPA should play a pivotal role with the pricing strategy of their small business client. The profitability of a small business is directly correlated to the prices/fees charged by the business. So, it is critical that the business implement an optimal pricing strategy. The CPA should be involved in that process.
When my firm is hired to help a small business owner with the accounting needs of hisor her business, one of the first things that we look into is the businesses’ pricing structure. More often than not, we find a hidden goldmine resulting in a surge of new cash flow and profits.
