Renowned Israeli chef Yotam Ottolenghi once said, “One man’s trash is another man’s treasure.”
I thought about that quote recently because conventional wisdom says the only way for CPAs to improve their margins, grow their practices and have some semblance of a life is to serve fewer clients and to charge them more. In other words, let your bottom tier clients go and provide higher-value/higher-priced services to your A-list clients.
But Ben Sutton has taken the opposite approach. The co-founder of Salt Lake City-based Mazuma USA has been able to build a thriving practice serving everyone else’s B-, C- and D-list clients. Over the past 12 years, Sutton has quietly built a $7 million firm by serving over 6,000 “micro-businesses” that most accounting firms won’t touch because they’re considered too small. The bulk of Mazuma’s clients have annual revenue in the $100,000 to $500,000 range.
Mazuma, whose name is derived from the Yiddish word for “money” or “cash,” offers core monthly bookkeeping services, reconciliations, basic financials and tax returns for a flat fee of $180 per month. Sutton found it possible to offer bookkeeping services at a low cost, as long as the scope of services and client customization is carefully limited.
When working with Mazuma, business owners simply upload their bank and credit card statements, receipts and invoices each month to the Mazuma portal. Mazuma does all the work, and the owner receives a clean and accurate monthly income statement (P&L), ledger and balance sheet.
Since the clients’ books are being managed all year by Mazuma, preparing year-end taxes is simple. And since Mazuma accountants are familiar with every one of their clients’ expenses and deductions, they have a leg up on providing the best return and tax advice.
At countless industry conferences, webinars, and yes, even podcasts, there’s a constant push for CPAs to choose a “niche” and to excel in it. And what we think of when we say “niche” is usually a specific industry or occupation. But what if we could expand our definition of niche to include businesses of a particular size and then put a laser focus on understanding what they need and don’t need — from their accounting firm. That’s what Sutton’s firm did. But there are many other ways to approach this strategy.
If that’s too challenging at first, go back and review your client list. Which ones do you genuinely enjoy working with regardless of how much they’re paying you? Which ones bring a feeling of dread with every phone call?
Identify what makes your favorite clients a pleasure to work with. Is it their wit, their passion for fly-fishing, or the way they treat their employees (and your team)? Try to pinpoint those qualities and seek out more clients just like your favorite one, regardless of their industry, location or revenue size. Chances are, your favorite clients are also your happiest ones, and they’ll likely be more than happy to refer you.
Now, for the trickier part: letting go of clients that cause you distress, even if they bring in high annual billings or have prestigious brand names for your client roster. You know who I mean. They wait till the last minute to deliver the documents you need and then complain about why it’s taking so long to get their returns done. They cancel calls and meetings with you last minute and treat you and your staff poorly. Sound familiar? Do everyone a favor and find them a new home.
Ultimately, dedicating most of your time to clients who are a pleasure to work with and who treat you and your team with respect can work wonders for your team’s morale and productivity. Burnout and frustration will decrease, retention will rise, and you’ll have more energy to provide your best work for clients. In the end, this will lead to higher fees and an increase in referrals.
Mazuma’s Sutton has always been passionate about helping hard-working small business owners succeed. They all need affordable accounting help, but he became frustrated that his former high-priced accounting firm considered these businesses too small to help them. Are there ways that you can turn your own passion into a client niche?
“Early in my career, I noticed there was a lot of back and forth between the client and their accountant/bookkeeper,” related Sutton on my podcast recently. “We were constantly cleaning up the books so the tax return could be prepared. Most small business owners don’t know accounting. So why in the world are we letting them touch anything in the books? Wouldn’t it be easier if we (accountants) did all the work — data entry, reconciliation, financial statement preparation — and then let the client review our work and provide comments and changes,” Sutton recounted.
Mazuma doesn’t let clients change or modify data in their books. They don’t provide A/R or A/P accounting services. “We are strictly providing reconciliation, financial statement preparation and tax return preparation,” noted Sutton. “That’s a lot less work than if we were tracking inventory, A/R or A/P.”
Not being a slave to time tracking
Sutton said he had to abandon the time-tracking concept and change his focus from providing “accounting services” to making data entry and data management more efficient. “It’s really all about moving data from the client’s bank into the accounting system, getting it classified and the financial statements are there.” Sutton told me. He said he never believed that it took an accounting degree to reconcile a bank account, so instead his team taught high school graduates how to reconcile a bank account properly and to do their best at understanding classification and understanding a transaction that a business was doing.
“It’s not rocket science,” said Sutton. “As a profession, we don’t do enough of this fundamental teaching. We have kids coming out of college with accounting degrees who can reconcile a bank account properly or understand classification.”To ensure quality, Mazuma has teams headed by a tax professional (sometimes a CPA) paired up with an experienced bookkeeper and they act as the mom and dad of the team. “Then we have a few bookkeepers working under the mom and the dad, so there’s always supervision. The new employees who are learning accounting can always ask the mom and dad questions,” said Sutton.
While the bulk of Mazuma’s staff is based at their Salt Lake City headquarters they outsource some work to the Philippines– primarily data entry, customer support and software development. In addition to running lean and mean on the staffing side, Mazuma leverages technology.
Technology stack
Mazuma clients log into a portal to view their financial statements online and to upload their bank statements. They use a powerful data platform to facilitate bank connections to its software. That’s crucial when working with thousands of client banks.
Mazuma also developed its own general ledger software that feeds into its accounting software because QuickBooks couldn’t meet its speed and data transparency needs. Here’s an important lesson for all-size accounting firms: tailor your technology to provide a client experience that’s commensurate with the price point they’re willing to pay.
In Mazuma’s case they stripped out all the unnecessary cost and complexity by building their own general ledger that’s designed just to get those books done and tax return done. That way they can offer clients insights into their business without making them look at their balance sheet or P&L, which they don’t care about.
With 6,000 clients and a very small staff, efficiency, scalability and consistency are key. To ensure quality, Sutton says his firm tries very hard to ensure its people are not working excessive hours like they do at many other accounting firms.
By aggressively minimizing burnout, their staff has the patience and energy to serve their clients well and respond very promptly to their questions without feeling overwhelmed during busy season.
Delivering excellent customer service at a competitive price point keeps clients — and staff — coming back year after year at Mazuma. If you want to build a successful accounting firm, you don’t have to follow the same advice and same path — often the opportunity is greatest going the other direction from everyone else.
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