No accounting firm can work with just anyone. Picking the right clients can often make a difference between failure and success.

Even the biggest accounting firms out there don’t just accept everyone who knocks on their door. No matter how capable they might be, they’re not willing to work with clients who are not a good fit.

I believe this is an important lesson that all accountants need to learn. Why keep clients whose values aren’t in alignment with yours?

Money? Think again.

Finding the right clients can do wonders for your profitability, more so than having any number of the wrong clients. There’s no need to accept work that you don’t want to do. This can make you offer subpar services, which isn’t good for your reputation. In the long run, this might do much more harm than good.

But how do you know which client is the right one?

Well, there are a few criteria that you need to take into account. Let’s find out what they are.

1. Prioritise Existing Businesses over Startups

The entrepreneurial spirit has taken the world by a storm. Every day, hundreds of new companies crop up. Securing these clients before the competition must be a great move, right?

Not exactly.

You see, as much as some startups may become huge one day, most of them don’t even make it past a few years. In the long run, it doesn’t make much sense to work with them.

Don’t get me wrong – some of your startup clients might turn into the most important ones for your business. But it doesn’t make sense statistically. You might only be able to work with them for a limited amount of time before they close up shop. They might leave certain bills unpaid at that point.

An accounting company should focus on the bigger picture. Stable businesses that have been around for a while fit much better than startups. You’re far more likely to form long-term relationships, and the work you put into building that relationship won’t go to waste should the client ends up shutting the door.

You can rely on their business, so try to land as many existing businesses as you can.

Look for Ambitious Owners That Want to Grow

2. Look for Ambitious Owners That Want to Grow

Your clients are the main component in your business’s scalability. You can’t grow if your clients aren’t willing to. This is why you should always seek ambitious owners who are hungry for success.

Many accountants overlook this, but it’s among the most important criteria to take into account for so many reasons.

First of all, clients who lack ambition suffer from risk aversion. This alone can affect your business relationship. They’re not willing to make big changes, but instead, they seek incremental growth out of fear.

With risk-averse clients, you can go from an accountant to a caregiver in no time. They might need you to hand them by the hand while they make any business move, which can be quite frustrating. With time, you’ll realise that the money they’re paying isn’t worth the effort you have to put into them.

Yes, this might sound a bit harsh, but it’s just how it works. You don’t want to drag your clients behind you. Instead, you need to build relationships based on mutual support and synergy from which both of you can grow.

So, if you see that a potential client has very little aspirations, it might be a good idea to stop pursuing them. They can easily lose what little ambition they have, and like people say, there are bigger fish to fry.

3. Aim for an 80% Gross Profit Minimum

The work you’re doing for a client is hugely important. Moreover, you put a ton of effort into your accountancy services, which can cost a lot of time, energy, and money.

For this reason, you’ll want to make sure that every one of your clients is worth all of the above. How can you do it?

By not settling for less than 80% gross profit in your services. If you can’t charge above that level (before subtracting overhead and labour costs), it might be a good idea to end the relationship. The reason is quite simple, which we’ve mentioned before.

You can put the same amount of work and resources into another client and make more in return. The opportunity cost of holding onto clients who fall below this level is just too high. You have to look out for yourself if you want to grow.

4. You Enjoy Working with the Owners

How fulfilling is the work you’re doing for your clients? I want you to really think about this, as it’s crucial to finding the right clients. No amount of money is worth it if you have to dread the work you’re doing. The accumulated stress alone outweighs any profits. So, why not put a stop to this from the jump?

Some clients have a way of making your work a living hell. Whether it’s because they’re too needy, don’t know what they want, or any other reason, they might make it impossible to work with them. Obviously, you’ll want to cut all ties as soon as possible.

When you first start working with a client, there’s really no way of knowing whether you’ll enjoy it in most cases. Luckily, you can influence this by building a healthy relationship from the get-go. Trust and transparency are paramount, so use them as a foundation. But if you realise that you don’t enjoy working with a client, despite all your efforts, there’s no reason to keep doing it.

5. They Play by Your Rules

A company’s main focus should be the needs of their clients. Those in the accounting included. In fact, one of the main complaints that clients have about their accounting firms is subpar service. This means that many accountants need to step up their game.

However, this doesn’t mean that you need to carry out your clients’ every whim. You have to remember that you’re in charge and not let any clients take that power away from you.

The best way to accomplish this is by establishing some ground rules at the beginning of the relationship. The client has to adhere to your workflow, pay you on time, and do other things that ensure your business runs smoothly.

Unfortunately, not all clients will be able to do this. Chances are you’ll stumble upon more than a few that will throw out your playbook.

Over time, this can put a strain on your everyday operations and suffocate your growth. Don’t hesitate to say ‘no’ to these clients and look for those who are willing to respect your rules.

Focus on a Niche market

6. Focus on a Niche market

Everybody excels at something. So, what’s your company’s strongest suit? This is one of the first questions that you need to ask yourself before you start looking for clients. If you try to be a jack of all trades, you’ll get lost in the crowd.

Instead, you should always play to your biggest strengths. You need to identify your area of expertise and provide exceptional services to select industries. Here are some of the reasons why this is important:

  • Scalability – Choosing a niche lets you maintain a laser focus on what you do best. You’ll get even better with time and you’ll be able to grow much faster than if you try to do it all.
  • High-quality work – Your work reflects your knowledge and experience. The clearer your focus, the more you can learn. And this is best achieved by focusing on your niche sectors. This translates to exceptional quality that will set you apart from your competition.
  • Better advisory – Staying up-to-date with everything that’s going on in every industry is a near impossibility. This isn’t where you should direct your energy. By focusing on select few industries, you can acquire knowledge that will make you an outstanding advisor. Clients will notice this and flock to you.
  • Marketing – Once you know exactly who you’re targeting your marketing becomes easier. You can become a subject matter expert and be known in your niche as the ‘go to firm’ for that industry. You can target your market very effectively and quickly. 

The Takeaway

Finding the right client is not an easy task. As you can see, there are quite a number of things that factor into the decision to work or not work with someone. If you haven’t been picky in the past, now is as good a time as any to start.

If you’re looking to scale up, you have to start by laying a stable foundation made up of a great client base. Of course, what you’ve seen here are only some of the desirable traits that your clients should have. You can add as many criteria as appropriate based on your goals and experience.

Once you have them in place, it’s important that you stick to them and make as few exceptions as possible. This might be the only way to ensure that you’ll love what you’re doing and become a top expert in your field. The end result is your business hitting one new height after another.