Riches in Niches: Cliche, but true

As Colorado currently sits mired in a couple feet of snow, I suddenly have the time to make new rhymes. What I should be doing is moving out of my house today, but the snow and forecast 90 mph wind gusts put the kibosh on the moving truck showing up.
This is, of course, my annual move out from an owner occupant financed house for the purposes of converting it to a rental property. This is how I’ve purchased more than half my rental properties, and will continue doing so. This is a niched form of real estate investing.
This reminds me that I haven’t reminded you about niches in a while. It’s one of those things that is worthy of frequent repetition.
In short, if you haven’t hitched your wagon to a specific niche target market, you’re doing it wrong.
The tax and accounting practices that will survive the up and coming AI apocalypse will not be the firms that do nothing but provide the same ol’ compliance services to anybody and everybody. You can ignore this all that you want, despite me and everybody else in the tax/accounting/financial media warning you about it for years. If you’re close to retirement, you can safely ignore it. If you’re far from retirement, however, then ignoring it is, quite bluntly, stupid.
If you want to be in business 20 years from now, you have to niche. It’s simply not optional anymore.
You need to niche the services you provide, and you need to niche down to whom you provide those services.
Pick your niches, then dominate them.
The reason I was successful in tax resolution is because I niched. That’s the hands down, #1 factor. I didn’t offer any other services — none. And I focused almost entirely on two easily identifiable niche target markets, and focused all my marketing on them and only them.
That’s all there was to it, and you have to do the same.
Seriously, if you have no intention or desire of ever focusing your practice in this manner, then I can’t help you — I don’t know how, and neither does anybody else. If you hired McKinsey to consult for
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Referrals are the single best source of new tax resolution clients

I don’t think I need to try convincing you that referrals are the best way to grow your practice.

It’s the way that many tax firms do grow, and that way we want them to grow.

But, I also know that you’re smart enough to recognize the fact that if you want referrals, you must be proactive about it. If you’re passive about this, it’s just not going to happen.

Furthermore, as a professional in the financial services industry, you also recognize the fact that for some services, getting referrals can be difficult.

Such as IRS Collections representation.

People generally don’t tell their friends and colleagues about their financial problems. Thus, it can be incredibly difficult to obtain client referrals from existing tax resolution clients. Not impossible — it does happen — but they are rare compared to tax prep, tax planning, financial planning, and other client referrals.

But referrals from other tax pros? That’s much more common.

Over the weekend, I was reminded that I’ve already presented some pretty good training (if I do say so myself) on the subject. If you haven’t watched my webinar on the top 3 marketing strategies working in 2019 for tax resolution, then you really should.

Watch it here.

After that, I’m sure you’ll want to get more referrals from other tax professionals. To help you with that, I’ve assembled a toolkit to help you do just that. This toolkit contains:

  • Audio recordings from two Diamond member calls — nearly 4 hours of training — covering the step-by-step details for getting referrals from other tax professionals, from how to contact them, what to say during those meetings, and what NOT to do.
  • A sample referral arrangement proposal letter.
  • A sample endorsed mailing proposal letter.
  • Complete second course on networking with other tax pros by teaching CE/CPE, including materials for producing your own continuing education events and a 3-hour tax resolution PowerPoint that you can utilize in your own presentations (you can cut this down to 50-minutes by just doing the first block – perfect for local tax org lunch ‘n’ learns).

To get access to this toolkit, pick it up here.

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Determining How Much to Pay in Tax Resolution Referral Fees

Today, we’re going to address the next most common question that I get whenever I start talking about this process of obtaining tax resolution referrals from other tax professionals.

I am fully aware that the issue of referral fees can be a contentious one. I anticipate no less than two dozen replies to this email slamming me for suggesting that we pay referral fees.

But I’ll say it loud and proud: If you’re able, I encourage you to pay referral fees.

While I would like to say that we live in a world where we could all do each other professional favors, and they will boomerang back in kind, the reality is that it’s very difficult to do. Many times, referrals are not returned in kind, nor are all they all able to be.

Think about it this way. One tax resolution referral to you is worth thousands of dollars. If you are a resolution-only practitioner, it’s impractical for you to try referring back to every one of your tax professional referral partners an equal revenue volume of tax prep work — you’re simply not going to have the volume.

So instead of quid pro quo (hmm, maybe I should avoid that phrase these days)…. So instead of trading favors, it’s easier to simply trade dollars. Money is, after all, a medium of exchange and a method of keeping score. Thus, we might as well use it.

To paraphrase a popular saying, “Money talks, favors walk.”

With that said, the next obvious question is: What is a reasonable referral fee to pay?

As a marketing person, I view this from a very practical standpoint. Let me explain.

If I engage in a direct mail campaign, telemarketing follow up, a pay per click ad campaign online, buy advertising in a niche trade journal, etc., my objective is to get back 3x what I invested in the marketing campaign. That’s gross receipts, and please note this applies to IRS Collections cases only, not tax prep, bookkeeping or other services.

In other words, I’m willing to invest $1,000 in order to get back $3,000. That math works for me, and it should work for you, too. If that math doesn’t work for you, then you need to reevaluate your expectations about ROI on marketing expenditure through traditional media (this is part of the beauty of referrals, public speaking, etc. — much lower cost of client Continue reading