A CPA who isnt afraid to stand alone builds a solo practice in New York City.
Marketing Close to Home
Anita Dennis is a Journal contributing editor.
C an a CPA build a profitable practice by promoting a specialty in low-level services, such as bookkeeping? The common wisdom says absolutely not, but a New York City sole practitioner has used these services as a stepping stone to more complicated assignments from clients to whom she otherwise might not have had access. She also has turned herself into a marketing expertfocusing in particular on opportunities with small business ownersand built niches among women-owned businesses and media and entertainment clients.
UP THE LADDER
Ginger Broderick came to New York in 1981 from a small town in Illinois. After growing up in a family of business owners, she was determined to have her own company, so she obtained an accounting degree and got a job with a CPA firm that served small businesses, the market in which she planned to specialize. During a year-and-a-half stint at her first firm, she methodically interviewed more experienced staff on their career histories and satisfaction and how they had achieved their positions. I wanted to get feedback on the different paths they had taken and what they did and didnt like about them, she says. She concluded that tax and business planning seemed to be the most appealing and lucrative specialties. At the same time, however, she realized that the firm could not offer her the training in technology she would need to succeed: In the mid-1980s, the 200-person firm had three computers. So, she interviewed at 28 firms to find a practice in which she would spend the next five years learning about tax and computersand laying the foundation for her own business. Finally, in 1992, she was offered a 3-month full-time project that was to begin in September and decided to use it as the platform to launch her own practice. If it didnt work out, I always had the chance to hop back into a CPA firm for tax season, she remembers. The 3-month assignment turned into a 10-month project because once Broderick took the accounting responsibilities off the shoulders of the sales department, the client found the salespeople could do the work they were hired to do. The company experienced tremendous growth and, in turn, required even more help in planning and development for its accounting, tax and management functions. Thus, a new accounting firm was born.
THE RULE OF SECONDS
One of Brodericks first tasks was to network and expand her business as much as possible. She follows what she calls the rule of seconds, taking what might be considered second-choice assignments because of the potential advantages they offer. For example, she has found that people dont change accountants very easily, so she promotes bookkeeping services either for those without computers or for start-ups that need someone to initiate their computerization. At the beginning of these engagements, I make sure I have a very strong presence with that business owner in the first six months. In many cases, within a year Broderick gets the client for accounting or tax work, too. In one example, a payroll outsourcing company referred Broderick to a client that owned 80 pieces of real estate in New York and that was having payroll problems. The clients owner warned her up front that he already had a CPAbut one who wasnt interested in payroll issues and who had told the owner a bookkeeper could do the work. Some of the problems, such as working bank accounts that had liens on them, would have been too technical for a bookkeeper, but Broderick was able to solve them. She became an office hero, someone who sorted out the day-to-day confusion as well as the long-term problems. Their accountant was really throwing away work, she says. Maybe it isnt as attractive to do that kind of assignment, but it certainly is a foot in the door.
Within a few weeks, management realized how much I cared about the well-being of their company, according to Broderick. By the end of two months, management saw that she had the expertise that was needed to supervise their accountsand awarded Broderick the full account.
In another situation, an attorney who was starting his own firm had an accountant lined up for tax work but was anxious to find a competent bookkeeper. Broderick signed on for the job and as part of the service set out to help educate the client about how to run his business. Over time this strengthened their professional bond and increased the volume of services Brodericks firm performs for him. I used to feel I was over-qualified for bookkeeping, but now I can say it generates almost 40% of my incomeand the cash comes in faster than for my professional accounts. Even when it doesnt lead to other work, the bookkeeping assignments stabilize her cash flow because she is usually paid reliably with the payroll or monthly.
Broderick has promoted this rule-of-seconds strategy with clients, including a jewelry designer who hates to do jewelry repair work. The designer has found that accepting repair work for potential design clients enables her to promote her other skills and have a better chance at getting choice assignments.
DOING WELL BY DOING GOOD
Broderick understands that marketing is important to small firms, so she takes this responsibility very seriously. One of her approaches is to volunteer as a business counselor with groups such as American Womans Economic Development Corporation (AWED), an organization that helps women entrepreneurs with counseling and education on running a small business. I didnt seek out women-owned business clients; I just wanted to stay in business by finding opportunities to meet potential clients, she says. But through her work with AWED, where, among other things, she counsels members on pricing their own services or evaluating other professionals, Broderick has gained a reputation with the citys thriving community of women business ownersand established a valuable referral network.
The clients she has gained include two CNBC producers who were planning to launch a firm specializing in public relations and media training. After Broderick counseled them on a volunteer basis, the women asked her to perform write-up and corporate tax work for their new company and do their personal tax returns as well.
Brodericks early experience before coming to New York had included working in a bank, where she saw many financial problems women faced, such as failure to establish their own credit histories or save for retirement, so she finds great satisfaction in aiding clients. Broderick believes another reason for her success with this niche is that women who have faced restrictions or discrimination in their professional or personal lives might prefer to work with other women professionals. Now that they have the freedom that comes with running their own businesses, they dont want to work with someone who might tell them what to do or underestimate them, she says. Respect for the client is the key, she advises. She promotes partnership and strives to educate clients to help them understand and make their own financial decisions. This approach has helped some clients take businesses from $300,000 in sales to $3 million, because theyre in a position to understand the numbers.
Broderick advises CPAs interested in volunteering to find an organization that you really like, where you feel you can give but also get back. She also has volunteered for four committees of the New York State Society of CPAs (NYSSCPA); she believes that a link to a professional association is particularly rewarding for sole practitioners because of the resources these organizations can offer. And she has chosen her assignments carefully; for example, she is on the cooperation with financial media committee in order to gain media experience and press clippings.
NEVER BE AFRAID TO STAND ALONE
Brodericks great aunt was the inspiration for another plank of her marketing plan. She told me, Never be afraid to stand alone, Broderick remembers, meaning dont avoid situations in which you dont know anyone, and try to remain approachable even among strangers. To follow this advice, which she passes on to her clients, Broderick studies local business newspapers for listings of networking opportunities, such as gatherings of professional groups or presentations on financial topics. At one such event she met the chief executive officer of a local television station, who recommended Broderick to an Emmy awardwinning news anchor at Channel 9, a local station in New York. She now does the anchors personal taxes and the writeup work for her corporation. In addition, she meets with her quarterly to plan business opportunities, such as speaking engagements, outside of her anchor duties.
In another case, Broderick gained a string of clients all because she was more approachable than another accountant, who wouldnt help a makeup artist with tax troubles. Once Broderick solved this womans tax problems, the artist recommended Broderick to a colleague who had won an Oscar for his work on the movie Dick Tracy. This client now works regularly with Al Pacino and Robert DeNiro and is doing the makeup for a film that will be the actor Johnny Depps directorial debut. This foothold in the entertainment world led to yet another client who has just sold a screenplay.
Possibly her most unusual client relationship is with a couture hat designer whom she met through her work with AWED. The woman, for whom Broderick does personal taxes and bookkeeping, took over a more experienced designers business and now makes hats that sell for $300 to $1,000. Since the business under the new designer is still growing, Broderick accumulates hours of servicethen swaps them for their cash value in hats (she records the transaction in journal entries). Besides being chic, the hats have taken on a marketing function. Hats really set you apart, she says. They give you a distinctive appearance in a networking situation.
And although Broderick believes its important to be able to network in a room full of strangers, she also strongly advocates obtaining a mentorsomeone a younger practitioner can turn to for help. She met hers while attending a one-day tax seminar when she was a member of the NYSSCPA state and local income tax committee. During the presentation, she sat next to a sole practitioner named Sam Boodman. By the end of the day, he had helped me solve a complicated tax problem, Broderick says. Boodman told Broderick she reminded him of himself when he first launched his own firm and, within a few months, he referred an important new client to her. He maintains a supervisory role in Brodericks business development and advises her on difficult client tax issues.
LEARNING FROM YOUR MISTAKES
Broderick says that almost every owner of a small professional practice commits at least a couple of mistakes when his or her firm is new. The first is economic dependency on too few clients that generate 80% of the companys income. I did this myself and I warn my clients that everybody loses a client at some point. For example, one business she works with had eight clients that made up 60% to 70% of its billings. When it lost one because of a change in regime at the client, it took the company two years to recover from the loss. She urges all small business owners to get more small clients instead of a few large ones; for Broderick, her bookkeeping services help achieve this goal.
Another stumbling block Broderick sees in small firms and companies is the owners inability to delegate. The business owner needs to be out selling and marketing. He or she shouldnt be doing the production work. The owner must be willing to spend the money to let trainees fumble, because thats how they learn. She realized she was making this mistake last tax season when she got carpal tunnel syndrome, a hand condition that is the result of repetitive motions, such as typing. This tax season, she plans to hire an experienced tax professional to prepare individual and corporate tax returns for her. And, because she is a member of the NYSSCPA advancement of women in the accounting profession committee, she will hire a female accounting student to perform general accounting duties. Offering this opportunity to a student helps her gain valuable public accounting experience to list on her rsum when looking for a full-time position upon graduation, Broderick explains. She also has hired an administrator she met while teaching a CPA exam review course.
And every company could use more creative approaches to getting new business. Broderick points to a CPA friend whose marketing skills she greatly admires. Not only is he a regular guest on a weekly news television show but he also gets to the guest waiting room early so he can introduce himself to other guestswhom he sees as potential clients. You have to use all your opportunities, Broderick concludes.
Firm ProfileName: Ginger Broderick, CPA.
Year opened: 1992.
Location: New York City.
Total personnel: Three.
Number of partners: One.
Number of CPAs: One.
Areas of concentration: Business management and tax planning.
Gross fees: Variable
Percentage of fees in: Accounting: 40%.
Consulting and personal financial planning: 25%.
Speaking engagements: 5%
Size of clients: Individuals and closely held corporations.
Types of clients: Media and entertainment; professional service firms.
Advertising and marketing programs: Referrals and constant networking.
Best thing I did in the last five years: Obtain a mentor.
Worst thing I did in the last five years: Economic dependency on one client.
How the practice will change in the near future: (1) Expanded use of financial and tax software products; (2) Development of staff to enable further delegation of responsibilities.
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American Womans Economic Development Corporation offers business counseling, training and peer group support to women running their own businesses. It is located in New York City but offers telephone counseling to women anywhere in the United States. The address is 71 Vanderbilt Avenue, 3rd floor, New York, New York 10169. Telephone: 212-692-9100; outside New York City: 800-222-2933. Fax: 212-692-9296.