There is no question that the current economy is putting the squeeze on many professional practices. While most accountants aren't in danger of going bankrupt, there is heightened anxiety throughout the industry as professionals grapple with flat or falling revenues and rising costs. You, too, are probably feeling the effects of the economic downturn, as your clients also look for ways to cut costs.
During tough economic times, a familiar pattern occurs in small business. As production drops, profits drop even faster. Even a slight drop in income sets off alarm bells in the minds of many owners. To stave off a serious decline in revenues, the small business owner will often feel compelled to offer services to customers that might previously have been referred out to "specialists", or to substantially discount products or services in order to obtain business. Additionally, the business owner will certainly seek to cut business overhead.
This last point has a direct impact on the livelihood of the professional accountant, bookkeeper or business consultant. When businesses tighten their belts, they may not necessarily do it in a logical manner. They may procrastinate by stalling on purchases or putting projects on hold indefinitely. They may buy smaller quantities of supplies, even if this means ordering much more frequently. And they may cut back on their reliance on accounting or consulting professionals.
These types of client
behaviors can be very frustrating for a professional practice. If several of
your "normal" clients cut back on their service from you, your income
will be affected. The real question is what can you do to help protect
your business and your client relationships?
Be Genuinely Empathetic. Your clients are interested in themselves and their business, not in you. You need to get their attention, and in order to do this, you need to know their pains, pleasures, and fears. These are the emotions that make people buy, not "needs" or "wants". Pain, pleasure, and fear are strong, passionate forces that supersede any economic climate. Ask questions in a way that will extract these feelings, enabling you to be truly empathetic. Relationships are what are important, not the price, and relationships are long-term. When you help your clients build their businesses, they will help you build yours.
Be a source of positive information. You might be the only positive person the client meets with this week. When the economy weakens and business slows down, the "commiseraters" begin to work overtime, and misery loves the company. Imagine a room full of gloomy doomsayers, sitting around a conference table talking about the latest negative economic news, and feeling worse for the experience. Compare that to the consultant who throws their client a lifeline of hope and optimism. Who would you rather work with?
Be watchful for situations that represent opportunity for you. Pay special attention to the following elements that put a client account "in play".
- Change in control, such as a change in ownership of the client's business
- Change in current provider performance
- Loss of favor in a provider
- Change in decision maker
- Change in cost/value to client
These are fairly universal, but occur more frequently in a down economy. While these types of activities may mean more opportunity for your business, they also underline the importance of keeping current clients satisfied and feeling they are receiving value from you.
Help your client recognize when it's smart to spend money. Too often, software and business consultants succumb to the pressures of a tough economy and actively look for ways to help clients "get by" with what they have. This may seem like a way to conserve capital, but the result is often that the client spends more in services, repairs, and lost productivity than the initial investment would have been. Just as it made sense to buy a new economy car to save on gas bills, it often makes sense to invest in software and services in order to obtain better and more predictable results for the cost.
original publication date: Friday July 24, 2009