Art of Accounting: A desire to do new things
To get ideas for developing your firm, I believe you need a desire to offer to do new things for clients. That makes you look for ideas, and looking is what yields the results.
I actually know the date when my desire started. In 1955, when I was 13, I started a mail order first-day cover service for United Nations stamps. This is where I purchased every new stamp issued by the United Nations and put them on special envelopes I purchased with pictures complementing the stamp’s purpose.
Those envelopes are called cachets in stamp lingo. The way I did business was to advertise in the stamp newspapers and customers would send me a deposit. On the day a new stamp was issued I would go to the United Nations building to buy the stamps. That night I would put them on the envelopes and return the next day to have them postmarked with a special “first day of issue” cancellation. Because I had a large quantity I was given a grace period to put the stamps on and bring them back to be postmarked. At some point my volume grew so much that I needed to spend almost every night for a week pasting the stamps on the envelopes.
I was in high school and had a pretty good business. One reason was that my prices were fairly low. When the postage rates increased to 4 cents from 3 cents in mid-1958, I decided to increase my price by a nickel (so I was now going to charge 40 cents, up from 35 cents) to not only recover this extra postage cost but also my other expenses that had gone up in the three years since I started.
What happened was that I lost about half of my customers because of this. Now, I know I was providing great service because my customers always renewed by sending additional deposits when their balances got low and they also referred friends to me. I also never got complaints and my delivery service was as good as or better than the other people selling these first-day covers. Also, every larger firm charged more than me and none of the smaller services charged less, but many charged the same as me.
Losing so many customers was upsetting, but it provided a valuable lesson I was able to use in my practice and that has helped me become very successful. The lesson was that I was providing a commodity service and, because I was a low-price provider, my business grew. The good service was expected so it did not present a competitive edge. My 16-year-old brain found it hard to process this sophisticated concept, but I did end up understanding that the basis of my business was the price and there was no product or service differentiation.
I had some stamp dealer friends who were much older than me, and my discussions with them led to developing my own product line of cachet envelopes and ancillary products that collectors of first-day covers would want. By having my own product and promoting it as a quality offering, I was able to charge a little more than the other dealers handing the commodity products. That first cachet was for the Dec. 10, 1958 United Nations Human Rights Day stamp issue. This is the 60th anniversary year of my first new product venture. I actually went into partnership with another dealer since the undertaking at that time was a little more than I could do myself. We advertised the new product and sold the cachets at the November 1958 National Stamp Show in New York City at the booth my partner, Thomas E. Gift (“Tommy”), had. It sold very well and we had the beginning of our own trademarked product line.
In January Tommy called me and told me to mail envelopes that would be carried on the first commercial jet flight ever, from New York to Los Angeles, and he told me to mail them at the post office in the United Nations building using U.N. stamps. I didn’t know what he was talking about, but did what he said. I also remember that day well because I was going to my first ever Broadway show, My Fair Lady, and I told my mother I had to go to the U.N. building beforehand and would meet her and my brother at the theater.
The next month there was a special U.N. Security Council meeting, a visiting foreign dignitary and some other events that Tommy told me to mail covers for. We ended up with more and more “new” products to sell. They were all premium priced and we sent them to our deposit customers who loved everything we sent them.
I could go on and on, but the point here is that we developed additional products to sell our existing customers. While they were premium priced, they weren’t significantly higher than the basic product that they collected and we grew a good business.
Now, 60 or so years later, this evolved into my accounting practice, and I am still offering clients additional services beyond the basic services they need or must have.
Throughout my career I have looked for new services that my clients needed. I kept coming up with more and more new services. I even wrote books published by the AICPA (out of print) and CPA Trendlines (currently being sold) providing details on over 40 services that can be introduced to tax clients.
My “secret” is to keep alert to opportunities to provide additional services to clients. My other “secret” is to offer to perform services that my clients needed notwithstanding the effort I would have to expend to learn how to do it. And a third “secret” is to seek help from people that knew how to perform these services. Yet a fourth “secret” was a willingness to try and learn new things.
This started when I was in high school, but it can start at any time regardless of where you are right now. Fact: You have clients. Fact: They need more services than you are providing them. Fact: It is easier to sell additional services that your present clients need than to make a sale to an entirely new client. Fact: Once you have performed a service a few times, you will become good at it. Conclusion: Why not promote these services to obtain new clients? And that’s how I did it.
Early on I recognized that I operated a business and that it was much easier to grow by offering existing clients additional services than to look for new clients. I never stop looking for new clients, but more so, I never stop looking for the opportunity to offer an additional service to an existing client.
Edward Mendlowitz, CPA, is partner at WithumSmith+Brown, PC, CPAs. He is on the Accounting Today Top 100 Influential People List. He is the author of 24 books, including “How to Review Tax Returns,” co-written with Andrew D. Mendlowitz, and “Managing Your Tax Season, Third Edition.” Ed also writes a twice-a-week blog addressing issues that clients have at www.partners-network.com along with the Pay-Less-Tax Man blog for Bottom Line. Ed is an adjunct professor in the MBA program at Fairleigh Dickinson University teaching end user applications of financial statements. Art of Accounting is a continuing series where Ed shares autobiographical experiences with tips that he hopes can be adopted by his colleagues. Ed welcomes practice management questions and can be reached at (732) 964-9329 or firstname.lastname@example.org.