TaxCoach Briefs:    August 28, 2008

Volume 3, Number 34

Attention All-Stars and Hall of Fame members: Our next conference call will be Tuesday, September 9, at 4PM. Michael Gerber, author of the bestselling E-Myth books, says that building and refining systems is the key to transforming your practice into a business. So we'll be talking systems. Specifically, what systems have you created to market and manage your business? What systems do you wish you had in place? What systems can we help you develop and implement? As with our July and August calls, this one will be "mostly mastermind." So be sure not to miss it!

TaxCoach Briefs archives.

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MARKETING MINUTE (EAL)
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FEEDBACK FROM UNSOLD COLLEAGUE

Last week, new member Bill Constance sent us the following email. We don't ordinarily use the "Marketing Minute" to reply to member questions, but Bill raised so many great points that we couldn't resist the chance to answer him "above the fold."

Dear Ed & Co:

"I signed up July 31st and have been very enthusiastic about TaxCoach and my prospects for ramping up off-season sales big-time.

Then I ran your program past my good CPA friend and got this reaction:

'I don't see this program as being such a big deal seller--just another arrow in the quiver of a well-rounded practice. What I especially don't like is the $69 fixed monthly fee. I'd like that to be based on some minimal activity level, with a standby rate of $10 or so. The program seems cost-effective to individuals and couples making $100-$125K per year, $75K or so from the Sch C business, and I don't see very many such people in my practice. I can't see doing these plans during the season--no time for that--but would want to flag the tax returns for followup during the off-season. Thus I'm wasting good money at least Feb thru Mar for service not used, plus at $828 per year (after the first month) it's pretty steep for the 3-4 plans I anticipate selling in a typical year.'

(His practice is pretty mature and all of his new business is by referral from existing clients, as it has for 20 years or more. He also prefers PC- to web-based software, anyway.)

That was pretty disappointing for me, because I was counting on jump-starting my small and largely small-bore practice, using his clients for marketing fodder in a big initial push, then take my time in the cold marketing arena to upgrade my own practice. I pointed out the year-round functionality, but he was convinced it was a waste....Now I'm not in sympathy with that point of view. This guy has enormous stamina and fills up his appointment schedule at least through Aug--hard time getting in to present this to him. Even though he has great tactical smarts, however, his strategy is flawed, because he's doing too much grunt work himself and undoubtedly pulling down far less per hour than he could using a more entrepreneurial approach."

I want to start with a general comment before addressing specific issues. TaxCoach members generally fall into three groups:

  1. New or newer practices looking to ramp up new clients
  2. Mature practices looking to reinforce their value with existing clients
  3. Mature practices looking to reinvent themselves (mainly by replacing low-fee 1040 clients with higher-fee business clients or adding financial planning services)

Around here, Keith and I call these "the three Rs." Ramp-up, Reinforce, and Reinvent. From what you tell me, you fall into the first category, while your colleague falls into the second. You’ll find that this distinction affects how each of you see the system, and explains a lot about his feedback.

“What I especially don’t like is the $69 fixed monthly fee. I’d like that to be based on some minimal activity level, with a standby rate of $10 or so.”

We’ve had occasional requests for “per-use” pricing. But TaxCoach is more than just a tool for creating tax plans. It's a year-round marketing system, with value that stretches far beyond the plans you prepare. Read the Marketing Guide, and you'll find strategies you can use every day for the rest of your career.

Monthly pricing also lets new users try TaxCoach without the commitment involved in choosing and converting to a new tax-prep system.

“The program seems cost-effective to individuals and couples making $100-125K per year, $75K or so from Schedule C business, and I don’t see very many such people in my practice.”

Tax planning isn’t for everyone. We find three “sweet spots” for marketing tax-planning services:

  1. Small businesses and self-employed professionals (the “Schedule C” market)
  2. real estate investors and landlords (the “Schedule “E” market)
  3. investors managing taxable portfolios (the “Schedule B” market)

As for income levels, income isn’t nearly as important as complexity. I’ve used TaxCoach to show a plumbing contractor netting $40,000/year how to save $3,000 in taxes. Trust me when I say that saving him that $3,000 made me a far bigger hero than if I had saved the same amount for a couple making $125K!

And TaxCoach isn’t as valuable for some tax practices as others. If your business is mainly low-income EIC returns and simple 1040s, you won’t get as much value from the system. (Of course, if you’re looking to reinvent your practice with higher-fee business clients or financial-planning services, you’ll find TaxCoach is a great system for doing it!)

“I can’t see doing these plans during the season—no time for that—but would want to flag returns for following up during the off-season. Thus I’m wasting good money at least Feb thru March for service not used, plus at $828 per year (after the first month) it’s pretty steep for the 3-4 plans I anticipate selling in a typical year.”

This comment reveals a limited view of TaxCoach as a tool for preparing written tax plans, and not a year-round planning and marketing system. I agree you that you won’t do many full-blown plans during “the season.” But you can use the system to prepare Summary Reports to attach to clients’ 1040 to tee up off-season engagements. Those clients will be far likelier to follow up with you after they see the sorts of ideas you'll have waiting for them. You’ll also find TaxCoach helps generate the referrals that are the lifeblood of any practice – even one as mature as your colleague’s.

As for the $828 annual investment, well, in reality it’s a steal. My own marketing advisors laugh at me for not charging $99/month. (And don’t forget our annual membership, which gives you 12 months for the price of 10. Email support@taxcoachsoftware.com if you're interested.)

Those are easy goals to achieve, when you use TaxCoach to market proactive tax-planning.

But why stop there? What return do you want for your $828 investment? We have one member in San Diego who has billed over $50,000 in planning fees since beginning with TaxCoach. Would that be enough? We have another in suburban Maryland who billed $15,000 in fees from just three clients – then generated $72,000 more in commissions from implementing their plans. Would that justify $828? We have a third member outside Detroit who generated 65 tax-prep clients from a single presentation using our real estate investor seminar kit. How much will those clients be worth to his practice? And we have a fourth member in Florida who used TaxCoach as the centerpiece of her marketing to generate over 270 new clients from October 2007 through April 2008.

In the end, it all comes down to how you use the system. You say your colleague's practice is pretty mature, that all his new business is by referral from existing clients, and he’s enjoyed his current circumstances for 20 years or more. I think a lot of our TaxCoach members would envy him. But TaxCoach will still be another arrow in the quiver of his well-rounded practice. He'll find tools to reinforce his value to his clients and "build a fence" around them, whether he sells plans for a fee or not.

You'll get the same value from TaxCoach's planning tools. And you'll get even even more value using TaxCoach's business development system to jump-start your practice.

Here's one final thought. I have no idea how long it took your colleague to grow his practice. But TaxCoach can get you there years faster, and help implement the entrepreneurial approach you need to maximize your hourly income.

So, welcome aboard! We look forward to helping you put TaxCoach to work to accomplish your goals!

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MEMBER EVENT (EAL)
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"POWER USER" ROUNDTABLES

Keith and I are pleased to announce that we'll be hosting a series of six "PowerUser" Roundtables across the country this October.

PowerUser Roundtables are full-day meetings in small-group settings dedicated to exploring TaxCoach's unique combination of tax-planning and business development tools. No outside speakers. No outside sales pitches. Just Keith and I, walking you step-by-step through using TaxCoach from start to finish.

We've chosen locations to make day trips practical for as many of you as possible:

Yea, yeah, yeah, space is limited, right? In this case, it sure is! That's because a roundtable is limited to the people who fit around the table. This isn't a day of lectures, it's a close-in, interactive working session.

If you're serious about putting TaxCoach to work, then click here for complete details!

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MEMBER EVENT (EAL)
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TAKE ME OUT TO THE BALL GAME

Thursday, September 4, Keith and I are leaving the office early for our last "Take Me Out to the Ball game" event of the season. We'll watch our beleagured Reds take on the Pittsburgh Pirates at Great American Ball Park here in Cincinnati. It's a Business Day Special, with the first pitch at 12:35 PM. And you're invited to join us!

Today the Reds are 57 and 76 on the season, 26 games out of first place, with sole possession of the NL Central cellar. But we're just one game behind the Pirates -- so we can at least look forward to an evenly-matched game and a beautiful late-summer day.

We're expecting another out-of-town member to join us -- in this case, from Detroit. So why don't you join us too! Call Catherine at 513/321-2820 or support@taxcoachsoftware.com by Friday, August 29, to guarantee a seat. We'll look forward to seeing you at the ball game!

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WE'VE MOVED! (EAL)
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Earlier this week, Keith, Catherine, and I packed up our stuff and moved to new offices. We're enjoying the bigger space (with a classic Cincinnati-style Rookwood fireplace), better air-conditioning, and quieter location away from the busy intersection where we spent the last two years. As is his wont, Keith spent what seemed like weeks preparing for the move, so that the movers, who arrived at the old door Wednesday at 7:30AM, had us fully unloaded and were out the new door at 9:10AM that same morning. (Hey, that was a grueling 100 minutes -- KAV!)

Our new address is:

TaxCoach Software, LLC
2619 Erie Avenue Suite 2D
Cincinnati, OH 45208

(Our phone, fax, and email all remain the same.)

Make a note of our new address. We look forward to continuing to serve as your tax-planning and business-development partner!

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We're happy to answer your questions on TaxCoach content, features, or marketing. While we give first priority to our All-Star and Hall of Fame members, we work to answer all questions. For best response, email support@taxcoachsoftware.com. If we can't answer immediately, or we think the answer will be useful to all of our members, we'll publish it (anonymously) here in the 'Member Q & A' section of TaxCoach Briefs.

Regards,

Ed Lyon
Keith VandeStadt
www.taxcoachsoftware.com
(513) 321-2820

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