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Controlling Scope Creep as an Outsourced Accountant Tax, Bookkeeping and Payroll Firm

Controlling Scope Creep in the Outsourced Accountant Business Model

If you're looking to start a tax preparation business, bookkeeping business or accounting firm, I would love to help you build the most profitable accounting firm you can.  Below, I'm going to cover how my "outsourced accountant" business model is the best model to build a profitable and meaningful practice, but I'm specifically going to talk about what do you do when customers want you to expand your scope of work.

The best business model for a tax professional, bookkeeper, CPA or payroll specialist is to run my "Outsourced Accountant Model. Head to this Youtube playlist to learn about it. https://www.youtube.com/playlist?list=PLWpqIjHvU1uG8c-DjkkpsSEuEf_82WOWv

In this outsourced accountant model, you're going to be helping businesses with a full-service, high-value Tax, Bookkeeping, Payroll, and Tax Reduction Service. and perform those services for a monthly retainer fanring between $400/month to $2500/Month.

Scope Creep

What is scope creep? That's when your customer come to love you so much, they start to ask you to do things for them that isn't specifically in your defined contract or scope of work.

You will be providing bookkeeping, payroll, tax planning, tax returns, and financial coaching.

But business customers often have additional needs that sprout up, and you need to think through whether or not that's a good idea.

Examples of Scope Creep

The things I usually hear businesses wanting help with is:

  • invoicing
  • Processing new employee & 1099 contractor paperwork
  • accounts payable
  • accounts receivable
  • construction job costing without proper construction accounting software
  • Audit work

Scalability vs. Creating Loyalty and Delivering Value

Whether you're one CPA, Bookkeeper or Accountant trying to scale to a dozen businesses so you can be a successful sing person operator, or you're looking to become the most successful accounting firm in the region or country, there will be a tension between creating consistency in your clients and doing work that's outside of the typical scope of work.

This tension is really strong, I already talk about how in order to build a successful and profitable outsourced accounting firm, you have to STOP focusing on tax returns, and you need to only take on clients that want you as their outsourced accountant.

If you don't prune your clientele down to your monthly retainer, value-focused model, you'll be too busy doing "good" work, to take on the "great" work.

This is primarily because onboarding clients takes more effort and cost than you'll admit, and you can't afford to have tax season spiral into a mostrosity.

So kick the tax-return-only clients to the curb by pruning them.

But should you help your client with these other issues like invoicing, accounts payable, or audit work?

People are glib and frank with their advice "DONT GIVE SERVICES AWAY". But that's just shortsighted!  If you have a client on retainer for $6,000 to $20,000 a year, why in the HECK would you disrupt that relationship over a 5 or 10 hour additional project?

Watch this video to hear the answer or READ The transcript of the video below.

Outsourced Accountant Model Value Props:

  • Mitigate and Reduce their Taxes
  • Save them Time by Providing Services
  • Keep them Compliant by doing things correctly.

Two Foundations as an Outsourced Accountant:

  • Maximize their Profits
  • Handle all the Screwing Around

Basically, they don't want to pay more than their "fair share" in taxes, and they need someone to take the "monkey off their shoulder" for taxes, payroll, bookkeeping, and other financial operations.

This leads to a much more meaningful relationship between the accountant and their clients, and it's much more profitable.

Video Transcript:

The Caller's Scope Creep Question:

I had a CPA call me that's doing the Outsourced Accountant model, and he just landed a massive client for him. The CPA only has 6 clients on the outsourced accountant model, all the others are paying $500/month, but this client is a larger operation and is paying $1500/month.

A couple months after the client signed up with him, the customer came to him and asked if he could help him by calling the list of unpaid invoices.

Basically, this customer , a commercial landscaping company, had a number of large invoices that had gone unpaid, and the business owner was too busy, disorganized, and un-disciplined to call and get paid.

3 Tension the CPA Felt:

1 - The CPA Promised quite a bit when selling the outsourced accountant model

2 - They felt like it would add a ton of value, and the customer would get a great deal of relief

3 - It would consume the CPA's time and effort

In sales pitches we can always get a little liberal with our scope of work promises, but once the client is on retainer, and is enjoying the benefits, we can start to get more rigid with our scope of work.

Specific Ways to Win When Experiencing Scope Creep:

Define the Scope of Work

The first job you have, is to define your scope of work with your client.  I don't think you should be rigid, but you certainly should create expectations so you can succeed in the engagement and the relationship.  If they don't know what you should be doing, or what you're goals are for the client, then it's really hard to prove you've been worth it.  Not only that, but the customer will get frustrated that you're not doing everything they're paying for.

Create Up-Front Projects for Out of Scope Things

With your scope defined, create projects, for up-front costs, so that you can help tackle their additional pain points.  Place a defined end to the project so that it doesn't morph into the regular scope. I would explain to the customer that in order to be great at your core focus, you'll have to make this a separate project.

Consider Just Doing it!

WHOA! That's right, I think that you should certainly just consider the grand scope of things.

Client acquisition and onboarding for you is costly.

PROJECTS USUALLY will go away over time.  Not all the requests customers make are temporary, but many of them are. You suffering through a year of calling on accounts receivable for them might be worth it so you can earn their business for the next 35 years.

 In light of what you're trying to build as a business owner, does it make sense to sacrifice the giant revenue because you have additional scope? I think that too often accountants start playing the comparison game with their other customers "you take way more time than my other clients", rather than thinking "You're paying a high retainer to me, I want this to last a lifetime".

Losing customers is a pain.

Build Additional Scope to your Firm

Another thing is that there are customers all over the place that will want these services, and maybe you need to capitalize on them. Create it as an additional service and start to get customers for it.

Consider Your Company Goals

If you're going to be a smaller firm, with higher paying clients, you might not mind having additional scope.  But if you're really trying to grow to a larger quantity of customers, then you might need to be more rigid in how you apply scope of rowrk.

Ask yourself:

In Light of the Scope Creep's Chance of Lasting a long time, will this help me build the type of firm I want to over the next 10 years.

Bottom Line: 

You should appreciate the high revenue, remember you want crazy-loyal customers, but also weigh your long term company goals as well.

Perhaps you can start including the

Transcript Continued:


This person's a landscaper, the company is, and the landscaper wants his help to get people to pay. So they want proactive calling on accounts payable and they want him to do... Like basically it be his accounts payable clerk, right? Help so that people will pay their bills quicker and improve that. And the question he posed is that's not being an outsourced accountant. That's not necessarily a scalable thing, but this person's going to be paying a hefty... A good monthly fee for me to be their outsourced accountant. You know, I kind of want to do it, but should I do it or not?

But while you're doing that one stop shop, here are the things that pop up. It's usually around accounts payable or it could be around, like... It could be a business. Like we had a customer who's a... He's a franchise owner, right? But this franchise, he has to process lots of employees, right? So he had lots of minimum wage employees that have lots of messing around and every time an employee came in you've got all your paperwork you need to do. And they wanted help for that. That was one thing can you help me with all of this messing around.


Another one could be as if you're paying 20 to 30 different subcontractors every year, 50 to 100 subcontractors. You know, having the subcontractor contact you as the accountant to get their 1099 paperwork and to get their dub whatever it is, they're there 1099 paperwork. That can be something that would grow the scope, big time, and you'd have scope creep and you've got to be careful that because like I said, there's two stages in the beginning you kind of say yes to everything, but eventually you have to grow so that you're only doing the things that are scalable.


This goes along the same lines of what software do I use? While the answer for software is whatever's most scalable for your business. Intuit has some really great solutions. Intuit QuickBooks Online with Intuit payroll and then using the tax products that they use, whether it's Lacerte or whatever it is, there's about three or four different ones to do the actual tax return. That's pretty compelling because operationally you only have to learn one system, but then when you come to your scope of work of what does each client have, you also need to think about the end in mind. So there you have this tension. I want to build a firm, maybe not giant, but you know, if I say yes to all of these extra weird things with these clients down the road, I'm going to have kind of a nightmare.

If I've got 50 clients paying me $2,500 bucks a month or $1,500 a month or $800 a month and I have to remember what each one is and they all have this different scope, some of them I have to call their clients and that's not my best skill. What do I do? Well, here's what I would say is remember that you want to optimize for efficiency and the way you do that is you do need to declare what your core service includes. Define that, well, write that out. I think you can say yes to additional scope of work in order to get that client. But what you need to do is you need to appropriately paint and label that extra scope. And then here was my advice to him, a couple of things. One, you make sure that you denote, "Hey, here's your core service as a separate service we're going to do this."


And we have three ways we can do this. Either one that's part of it ongoing, but I'm going to have to raise the rates because it's an additional thing. So with that pricing, you know it's just part of how you price things. Two when you paint that separately, you can make it a project and put a start date and an end date.


You know, as much as I liked the outsourced accountant model, anything outside of your normal scope of work is really handy to make a project that you're going to tackle. So in this case it was, yes, I'm going to call the accounts receivable cause he's got all these old invoices, these businesses that are screwing them over. I will help you, me and my staff will help your, I will help you call on these guys. I'm going to do it for six months and here's... I'll call him 15 times and here's what that looks like. And by the time we're done, we're done.


Because this is something that you need to address your system, Mr. Landscaper, you need to have an assistant of some sort. You need to have somebody that does this for you. I can help, but over the long haul, I'm not going to be a great solution for you. That's another way to do it. You could have it be a onetime start and stop project or you could make it an ongoing project. Both of those are good options, but the most important thing is, is spray paint it and color it and identify it as outside of the normal scope of work. And then the second thing would be, I would say put a start and an end on it and then I would say put a separate fee on it. Another thing, so it could be accounts payable, it could be that they have this processing of a diff additional customers or additional 1099ers or they have lots of turnover in their employees.


Another thing could be is you've got just a complexity around anything really right, that they're going to want your help with. Backup bookkeeping. Another classic, I got a year and a half of ugly books. You've got to go back into the books. I would say spray paint that is additional. Doing backup bookkeeping. Put a project to it to put a price to it, an end date to it so that you can succeed and label it as success. Otherwise, that's really what's going to happen is you want to make sure that even in this outsourced accountant model, sure you can get a higher billing as a one stop shop. I would encourage you to be generous with how you add value and solve problems for people, but remember that it's also about setting a good expectation and following through on that expectation.

So when it comes to additional scope creep. I think be generous, I think... Remember and here it'd be my last thing. Remember that for the most part you're making a good sale. You know there's a lot of companies out there that will take a lot lower fee to do a lot more work and sometimes we can get so caught up in the, "Oh I got to charge for everything and it's not free. My time's worth a ton of money. Look at what my time's worth." Yes. But also sometimes it is good to remember that dog on it. You can shoulder a little extra and put in a little extra work so that this client goes well. Because here's the dirty truth. If you do the right thing and if you set the good expectation, you make them like you and you add a ton of value and you communicate how you're saving the money.


People don't leave accountants. They really don't. In fact, I think what we saw was that most people had been with the same accountant, or like 70% of them been at the same accountant, their entire business existence. So remember that you might shoulder and have more work on the front end, but that will pay off in the end, and I think that's worth it in this business model. Good luck with everything.


We've got a podcast coming up, guys, FeedbackWrench. We're going to be telling stories about this. Outsourced accounting, bookkeeping. We're going to tell stories of business owners. We want to inspire entrepreneurship. We want to help people wrestle through the problems of business ownership and what that looks like. So stay tuned. We already got a couple episodes recorded and good luck. Good luck.
Hey, what's going on everybody Rob Satrom and FeedbackWrench. This is a video about if you're trying to build this outsourced accountant model that I always talk about, check out my other videos about this. We're going to be coming up with a new curriculum, but if you're trying to start your own bookkeeping, tax and accounting firm, go reference my other videos and look to this new curriculum I'm going to create. I'm going to keep it low cost, but hopefully I can make some money doing this because boy, we're having a ton of conversations, consulting. I've had a lot of business out of this, but here was a question that came up. This customer, this CPA, he is building his own firm and he landed a couple of clients in this outsourced accounting model, but now he's got a prospect that's asking him to go out and actually call upon old contracts.

This person's a landscaper, the company is, and the landscaper wants his help to get people to pay. So they want proactive calling on accounts payable and they want him to do... Like basically it be his accounts payable clerk, right? Help so that people will pay their bills quicker and improve that. And the question he posed is that's not being an outsourced accountant. That's not necessarily a scalable thing, but this person's going to be paying a hefty... A good monthly fee for me to be their outsourced accountant. You know, I kind of want to do it, but should I do it or not?


So we had this conversation about how do you control scope creep? So scope creep is what I would call it. And that's where the scope of work creeps larger and larger. Now, first of all, I want to remind you that when you become an outsourced accountant, the idea is that you're creating a one stop shop for your taxes, your bookkeeping, your accounting, and kind of the CFO coaching and tax mitigation.


So it's your tax return, it's your tax planning and wealth coaching. And basically what you're doing is serving as this outsource CFO or outsourced accountant to help them be wise with their money. Just take all the monkeys off of their back. That's the two value props, maximize their wealth, get all the monkeys off their back. Just handle it all for them. Save them time and money by doing it for them.


And when you're doing that, that means there's going to be additional things they want to do. Now, it's very important. There's two phases in this business. One is you just got to get as many people to give you money as you possibly can, right? When you first start out in this model, I advocate for at the end of five years, you should not be doing just tax returns.


And I think that a business based on doing just bookkeeping or doing just payroll or doing just tax returns is folly. I don't think you should do it. But in the beginning, in order to get reps and to get Google reviews, you need to say yes to a lot of things. So as you first started going, say yes to lots of things, knowing that you eventually have to say no so you can do the great thing. The great thing is the one stop shop. The bad thing that will take your business is doing lots of tax returns over and over and over. So you might say yes to a tax return here and then tell them, "Hey, you know what? I no longer do just tax returns. I have to do this full thing. Would you like to do it? Nope. Okay, bye."

But while you're doing that one stop shop, here are the things that pop up. It's usually around accounts payable or it could be around, like... It could be a business. Like we had a customer who's a... He's a franchise owner, right? But this franchise, he has to process lots of employees, right? So he had lots of minimum wage employees that have lots of messing around and every time an employee came in you've got all your paperwork you need to do. And they wanted help for that. That was one thing can you help me with all of this messing around.


Another one could be as if you're paying 20 to 30 different subcontractors every year, 50 to 100 subcontractors. You know, having the subcontractor contact you as the accountant to get their 1099 paperwork and to get their dub whatever it is, they're there 1099 paperwork. That can be something that would grow the scope, big time, and you'd have scope creep and you've got to be careful that because like I said, there's two stages in the beginning you kind of say yes to everything, but eventually you have to grow so that you're only doing the things that are scalable.


This goes along the same lines of what software do I use? While the answer for software is whatever's most scalable for your business. Intuit has some really great solutions. Intuit QuickBooks Online with Intuit payroll and then using the tax products that they use, whether it's Lacerte or whatever it is, there's about three or four different ones to do the actual tax return. That's pretty compelling because operationally you only have to learn one system, but then when you come to your scope of work of what does each client have, you also need to think about the end in mind. So there you have this tension. I want to build a firm, maybe not giant, but you know, if I say yes to all of these extra weird things with these clients down the road, I'm going to have kind of a nightmare.

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