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The Easiest Way to Build a Successful Professional, Payroll Practice

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The big two in the payroll business have spent many years convincing accountants that it is easier and more profitable to refer their payroll clients rather than to perform the servic in-house. More than 80% of their marketing dollars are geared toward keeping accountants convinced that there is no profit in processing payroll at the local level, while they build billion dollar revenue streams and make hundreds of millions of dollars. Look at the PayChex annual 10-K and see where they make a 40% net profit year-in and year-out on a billion dollars in revenue.

Meanwhile, your competitor down the street is talking to your client, using their payroll service needs as a door opener. Subtly letting your client know they are a full service accounting practice, making you vulnerable.

The challenge for most practitioners is fitting a small ticket service like payroll into their consulting practice. There’s the possibility of additional overhead of clerical staff, the purchasing, installing and learning new software, while at the same time you are having to spend time with your regular consulting clients.

Today, many forward thinking accountants have discovered a system to implement payroll and other business tools into their existing schedules with little man hours and huge profits.

Providing a payroll service to your clients is going to make them happy. Instead of referring them away to a payroll specific business, you can implement all their needs right in your own office just by changing your business strategies.

Providing a payroll service to your clients is going to make them happy. Click To Tweet

Once your client is set up on the payroll system, computer software takes care of the rest and all you do is sit back and watch your profits soar. You make the sale once; you get paid for years and years each and every month.

You need to refocus your business and change your business strategies. By incorporating smaller business tools into your business, your clients will come to you to serve all of their needs, instead of having them dispersed among competitors.

You don’t want your competitor down the street to become the first full service accounting firm that can handle all of their needs in one place and thusly having your client switch all of his services to ‘the other guy’.

You need to change your business focus and business strategies to focus on your customer’s whole needs.

What other products and services are they requiring?

By implementing a new business strategy and incorporating something as simple as implementing payroll into your practice, your company will net long term income and profits. Your customers will be much happier and will keep all their eggs in your basket, once you can prove that you can be their one-stop full service business.

Business strategies can take years to develop, and cost thousands and tens of thousands of dollars by hiring a strategist. Your customers have the answers already, they may not be verbalizing them, because you haven’t asked the right questions.

Your customers have the answers already, they may not be verbalizing them, because you haven't asked the right questions. Click To Tweet

Firstly, in order to establish a firm and stable business focus, you need to extend your focus beyond your front end and find out what your back end line is doing.

What else does your customer need?

Who better to ask than your customers themselves? By incorporating a structured business strategy, you will have more customers than you ever dreamed of. Simple word of mouth in any industry is often all it takes to make or break a business. Make your company by changing your business focus to your back end, and your customer’s needs.

By utilizing different business strategies that compliment your customers and promote your other services to the clients you already have, your clients will be happier and at their next business luncheon will mention your name as being a full service company.

Other businesses will think; full service? I have four companies doing what this one company is doing. I wonder how much I am being overcharged?

You can incorporate sound business focus into your business strategies just by listening to what your customer wants. Tools are, of course, available to help you implement you new business strategies. Look at implementing simple payroll software to enhance your portfolio with your clients. Change your business focus to a consumer-need driven focus today, and watch your profitability and stability in the market increase steadily, month after month.

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Best to you and yours,

kirks-sig

 

Kirk

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Comments (3)

  • Hi Kirk: My exit plan is included in my outline above. My exit plan is 1) Don’t DO the actual payroll – let someone else that is better at it do it, 2) Collect monthly residuals equal to or greater than what your net would be anyway, 3) Avoid any liability in the process and 4) Create a pension that goes on and on, month after month, whether you work the payroll business or not. I looked back at my first 40 clients I got over 10 years ago now, I still have 36 of them (4 went out of business or retired). So the “monthly pension” this one time sale of 40 payroll clients created for me was over $212,000 of net income to me over the past 10 years. And the payments are still continuing now, even if I stop working. All without ever processing a W-2, running paychecks or ACH deposits or handling one client problem or payroll call in. Pretty clean retirement plan in my eyes! No one has convinced me yet that the “internal payroll department” was worth the risk, time or hassle.

    Reply
  • As you know Kirk – I think anyone that provides and fulfills their own client payrolls are grossly misusing their time and resources. Sign the client, handle their payroll but outsource the fulfillment. Otherwise you or someone else has to be available whenever your clients decide to call in payroll. You are also liable for any underpayment or late payment penalties. Ditch the hassle and earn overrides from someone else that is a payroll service bureau pro. On it’s own or in small numbers payroll is very low margin compared to your other work and you want to be viewed as a consultant or profit engineer, not a payroll provider.

    Think & Grow, Thanks, Mark

    Reply
    • Author

      I have to agree on a couple of levels Mark. But, there is always the situation where a practitioner has to decide on what their objectives are. Are they building an entity with an exit plan, or a lifetime stream of income. If they are capable of continued growth that will achieve the economies of scale that will employ full time dedicated staff, then it might be more profitable to build a firm with an exit plan (selling out and retiring). However, most small independent practitioners are unable to achieve this level of volume, and the stream of income option is probably a better option. the main considerations are what level of volume can the practitioner achieve, and is it important for them to ‘own’ the client.

      Reply

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