To promote the business to its target of businesses with 2 to 10 employees, The Sorcerer's Accountant will:
The Sorcerer's Accountant will achieve a competitive edge among Chicago bookkeeping services due to its combination of CPA oversight with lower-level, inexpensive labor. Clients will receive the advantage of having a CPA review their books and propose additional advice when appropriate, while not paying much more than they would to hire their own part-time bookkeeper.
This is not an inimitable competitive edge, but the market in Chicago is large enough to allow for the success of Sorcerer's Accountant with this strategy. Large firms ignore the small business market because they are better positioned to serve larger businesses. They are unlikely to imitate this strategy as they will find it difficult to convince small businesses that they can offer services which are affordable to them.
The Sorcerer's Accountant will use the following marketing tactics to reach its target market of very small businesses (2 to 10 employees) with its new bookkeeping services:
The marketing messages will focus on the economics of the decision to use outsourced bookkeepers from The Sorcerer's Accountant and the advantage of CPA oversight with Greenwood's experience and track record.
Marketing also encompasses the search for student bookkeepers. Job listings will be posted at local universities and promote the learning involved in the position and the "leg up" it can give students for accounting positions upon graduation. We will recruit the best student bookkeepers possible. The costs associated with this hiring are only the time of Max Greenwood.
The sales strategy for The Sorcerer's Accountant's new bookkeeping services is to attempt to sell the service predominantly to existing clients, especially at first before marketing pays off with new inquiries. This will require Max Greenwood to inform all existing clients by phone about the idea, once he has determined that they are qualified to use the service. Whenever possible, clients will be approached during regularly scheduled calls and meetings so as to not require a great deal of additional prospecting time.
Greenwood will then ask clients directly for referrals to other businesses and business owners they know who may be right for the bookkeeping services. Greenwood will seek to contact two referrals per day. When and if existing clients and referrals are exhausted, Greenwood will engage in cold calling to likely prospects he has heard about from other businesses.
The result of this initiative of direct selling is expected to be at least five clients within the first couple of months, as many current Sorcerer's Accountant clients appear extremely ready for this service and trusting of Max Greenwood.
Unit prices represent the average project cost for tax services ($750), cost accounting projects ($1,000), and QuickBooks services ($300). Bookkeeping services are set at $30 per hour. Direct unit costs are very low for all of these services as they are primarily labor services. Tax projects incur a 5% cost for printing and travel, cost accounting projects incur 3% cost, primarily for travel. QuickBooks services are generally given remotely and sales of QuickBooks are done directly to the vendor (Greenwood Accounting receives a commission on software sold). Bookkeeping services incur a 50% cost of sales as the bookkeepers are paid at $15 per hour.
Total sales are expected to rise significantly with the success of the bookkeeping services revenue stream. The existing revenue streams are projected to grow at slow rates, as Max Greenwood cannot take on much additional work. They are not projected to grow at all in 2010, as Greenwood will spend additional time on the establishment of the bookkeeping services. Furthermore, these revenues will drop by 20% in the first quarter as additional time is spent by Greenwood on hiring, training and launching this revenue stream.
The sales forecast assumes part-time bookkeepers working 20 hours per week. These will grow from 2 bookkeepers working below capacity at the start of 2010 to 3 by the end of 2010, to 4 in 2011 and 8 by the end of 2012. Revenues will begin in the second month after training in the first month of 2010. This growth rate is made possible by the intention to do everything possible to retain clients and grow with them, as well as to actively seek referrals to other businesses from each client. Two levels of oversight (Greenwood's oversight over the Bookkeeping Manager, and the Bookkeeping Manager's oversight over all bookkeepers) will improve quality assurance and the chances of a high level of client retention and satisfaction.
Direct cost of sales are very low for the business as most costs are fixed. Travel to client sites, printing and paper, and other direct supplies for clients are the only direct costs for services provided directly by Greenwood. The direct labor of student bookkeepers for the bookkeeping services is $15 per hour, or 50%. Wages for non-billable hours (training periods) for new bookkeepers are listed in the Personnel table.
To execute the milestones listed, Max Greenwood will make liberal use of an outside marketing service firm (OF denotes outside firm on the table) which will manage the execution of the marketing activities listed. Greenwood will directly execute the sales activities listed through his work with clients.
$4,000 of these costs will be incurred at the end of 2009 and are included in operating costs on the past performance table.