Starting a Tax Business is an entrepreneurial leap that many self-motivating individuals are finding more and more appealing. With the Tax Code becoming more complex every year, the portion of the population of taxpayers who seek out professionals to assist in their tax preparation and filing is growing steadily. Start-ups face some big questions. What is the best location for my new tax prep office? Who are my competitors? What is my target market? How am I going to get new customers in the door? I would like to try to help shed some light on these questions as you move forward toward the coming tax season.
What is the best location for my tax service?
You probably are familiar with the national chain tax businesses in your area. They are easy to spot. The three big players are H&R, Jackson Hewitt, and Liberty. It is tough to come across a strip mall that does not have one of these guys already in it, but you should ask yourself: why do they choose these locations? You can rest assured they have done their homework. The reason they choose their locations typically are due to population density, average adjusted gross income (AGI) in that surrounding area, and proximity to their target market. You should use the same factors when considering locations for your tax business. If you are familiar with the specific area you are considering you probably have a pretty good idea how many people have access to that location, what income level they belong to, and you can do a survey of competitors by driving around. There are specific demographical and socioeconomic reports that provide specific detail relating to these topics. But you should be thinking about all of these factors before signing on lease for your tax service. Later in this article I will provide you a free source for this information!
Who are my competitors?
It is commonly known that franchise tax preparation offices typically gobble up around 25 to 30 percent of the market of taxpayers who seek out paid preparers to assist with their returns. The other 75 percent of the market is split up among non franchised tax preparation businesses. Many of these businesses are in the same position you are and ask themselves the same questions. How do I get more customers in my door? They do not have a nationally recognized brand and do not have the budget to run television and radio commercials. This is where your tax business has an opportunity to take advantage of these tax businesses and steal market share. I will get into affordable, high return on investment marketing programs in another article, but before you implement these programs, you must identify who these non-franchise competitors are. Once you are confident in your office’s product, skilled tax preparation, and have a defined marketing strategy, you can then also go after customers from the national chains! Later in this article I will provide you with a way to find out exactly who is preparing tax returns in your area!
What is my target market?
This should be an easy question to answer. What tax payers do you want to go after? Do you want high income, affluent customers and business owners with difficult returns or do you want lower-income, blue-collar taxpayers whose returns are fairly straight forward and similar from customer to customer? If you say that you want a piece of both of these markets; I like your drive, but for marketing purposes we need to have an individual strategies pinpointing certain demographics and socioeconomic groups. If you want to go after both market segments; you will need to have more than one campaign to achieve this goal. If you are just starting out, I would suggest picking one target market. This keeps it easy to implement and manage. Again, hold tight, I will provide you with the means to get the information on who is in your area shortly, allowing you to determine if your target market has access to your location!
How am I going to get New Customers in the door?
This is literally the "million dollar question". There are many different schools of thought on what marketing strategies and medias produce the best results, and if you do not have the luxury of working with someone who has put many of these methods to test, you might be spinning your wheels for several tax seasons before you figure out what works for your tax office and your target market. My biggest suggestion is to keep it simple. Try to reach potential customers in groups as opposed to reaching individuals, and when you get new customers, do not be afraid to ask them for referrals. If you think that you will simply open for business, and customers automatically seek you out, you will be out of business just as fast as you got into it. Effective tax office marketing does not have to be expensive; It has to be effective! If you are marketing challenged and need assistance I suggest seeking out the assistance of people experienced in the industry.
