In the 2nd and 3rd of our Moving your practice to the Cloud series, in 5 steps, we look at identifying your first clients and migrating them from their existing systems.
Step 2: Identifying your first clients to move
It’s one thing to learn by using your own data as we talked about in Step 1, but another to experience supporting a small business client with their data. There can be various situations that provide the impetus or reason for the switch.
For example, Write-up clients (tax clients) are an easy and profitable opportunity. With Xero, you can follow a pretty simple process to turn what used to take days into something that takes hours:
- With your client, request from their financial institution(s) a file (typically CSV) of the past fiscal year’s transactions
- Easily import the data into Xero and use the Cash Coding feature to quickly code the transactions (we have had a Xero Advisor do 60K transactions in 1 hour!)
- Produce the year-end reports and move the client from a year-end client to year-long consultative engagement (watch this webinar to learn more)
Another opportunity is when considering firing a client (sometimes this is called for in order to maximize your profitability, time and sanity). For example, one Xero Advisor in the US was about to fire five clients, but before doing that, he moved them to Xero. He not only learned to use Xero, but four of those clients became some of his best clients! In this case, he had nothing to lose and lots of knowledge to gain.
The last easy opportunity is with your cost-conscious clients. Cloud solutions are based on subscriptions and typically at a low, monthly rate. You can provide a consistent monthly billing, and break-up the costs over the coming months and year, vs. a one-time hit. This also allows you to try out value-based pricing which will talk about later in Step 5.
When to act
One important thing to consider is the timing to act. Most prefer the end of the fiscal year, to start the new year with a fresh set of books. I recommend starting a month or two prior to that, so you can set up, prep and transition the books to the client before going into the fiscal year turn.
Products such as Xero eliminate the data entry by collecting the transaction information via automated bank feeds. You can have the cloud-based product collecting the information as it flows in while you continue to key in the data into the old system as the fiscal year comes to an end. This allows you to flatten out the spike of work at the end of the year, ensure the new system is up and running smoothly, and provide an opportunity to ease the client into learning the new product.
Another key time that provides an opportunity to act is after a major cleanup or reconciliation – typically at month or quarter end. This ensures you have good data flowing from your old system to your new system and eliminates the legwork to prep the data for migration.
Limiting the variables
Regardless of the above situations or timing, there are certain clients that are easier than others to start with. The goal is to limit the number of variables that you take on during your first client engagements. Cloud-base accounting software, like Xero, can handle a wide range of small businesses, but minimizing the variables allows you to stay focused on learning the ins and outs of the new product and the new paradigm. I recommend the following criteria:
- Firmographics: Younger firms (<2 yr.), tech-savvy and <10 employees
- Usage: Macs, smartphones or tablets
- Industries: Professional services, creative agencies or online companies
- Avoids: Heavy inventory, lots of integrations or heavy transactions volume
Focusing on younger, tech-savvy and smaller sized companies eliminates the complexities around migration, education and departmentalization associated with setting up and using their data in the cloud. Clients using Macs and mobile technology are more aligned and prefer cloud-based solutions to enable their workflow. Professional, creative and online companies are typically are more tech-savvy, more Mac-based and simpler in design. Overall, you want to limit the variables you deal with initially and therefore inventory, integrations, large number of transactions and enablement of departments should be avoided.
Step 3: Setup, convert and learn
Now that you have identified a few clients to move up into the cloud, you are going to address migration and usage with your clients. The key in this step is to gain key insights, understand if migration was successful (and setup for success), and ultimately understand where to go from here. In regards to key insights, you need to ask yourself (post-migration and post-usage):
- What worked? What didn’t? Why?
- What did my clients use the solution? What did they struggle with? What did they value?
- Where is my whitespace (efficiencies)? How can I leverage this further? How do I move to be more consultative and to be the client’s trusted advisor?
In addition, you need to understand if you set your client and yourself up for success. Specifically, did you:
- Onboard correctly?
- Collaborate with your client?
- Train and have you client actively using from the start?
This is also a great time for reflection:
- Were you, in regards to client management, more proactive.
- Did you teach your client to take control of more of their finances (did you teach the client to fish)?
- Did you expand the workflows you were able to assist or that your client was able to participate in?
- What was the outcome and what was the feedback from your clients and your staff?
Step 3 is a critical learning stage in the process. You need to take a step back and evaluate what happened, where you could improve, and how to strategically scale from here. If you don’t take the time to learn and reflect, you will continue to obtain sub-optimal results long-term. The first few clients set the foundation for the future, so don’t take the opportunity lightly. If you have issues or problems, reach out to your peers (or other Xero Partners) or network for assistance.
Next time, we’ll discuss Step 4: Establish clear rules of engagement.