Computer software engineer Tom Joseph thought he had it made when he launched Bookminders, his automated accounting and bookkeeping service. Not only had he developed unique bookkeeping software applications and solutions, he had created a work force of highly educated accounting professionals who had chosen to work at home.
That home-based angle became a public relations hit which he rode from home-based business publication to home-based business organization and beyond, all the way to a coveted feature in the Wall Street Journal.
The attention proved invaluable in getting his business beyond the start-up mode. It gave him free publicity and brought him a host of small business clients. Anyone who wanted to write about home-based business or the fast emerging ""virtual"" company knew to call Joseph.
But there was one small problem he hadn't considered. All of that seemingly great publicity created an image of Bookminders that was, in the end, dead wrong.
As Joseph relates in this interview with SBN, the virtual company, home-based image led the marketplace to associate Bookminders with the smallest of the small, not only in size and structure, but in capabilities, which resulted in small monthly retainers-and poor retention.
But his story doesn't end there. This interview is about his realization that it was time to reinvent his company, turning the focus away from how he does business (using a home-based work force) and toward what he really does (provide outsourced, technology-driven accounting solutions for larger companies with complex accounting problems). In the end, he may have lost the media angle, but he gained a whole new level of business.
How did you get started as sort of a virtual company, with employees working out of their homes?
It really was something I stumbled on to when trying to help my father and uncle out with their small business, to get rid of their office administrator/office bookkeeper. I thought I could just set up a computer system that they could run for their painting and wallpaper business. And I found out that, once we had the system set up, they didn't have the resources to run the system themselves.
My sister agreed to work on the system. She would work from her home and pick the work up. It got down to where she could do what a full-time bookkeeper could do in just a few days. It's very similar to what I would then set up eight years later.
That was the business, but how did you decide on your marketing concept at the time?
I think being an engineer, I didn't really have much of a clue from a marketing standpoint. We got it started and tried marketing it to CPA firms. That was probably one of the first glitches we ran into. When you tell a CPA firm you're doing a bookkeeping service, they traditionally look at that as a monthly after-the-fact activity. I think we naturally were being referred by them to smaller businesses that could not afford a bookkeeper.
As we had more time in the marketplace, we found that there was a market-and this is what we eventually moved our business to-for businesses that needed to hire part- to full-time bookkeepers or in-house accounting staff but couldn't always find people because they didn't have the right skills, or they were having problems with turnover, or their systems were so sophisticated that they have a hard time managing that type of technology.
Obviously, when you came out with the business, you latched onto a good thing in marketing it. You got in the Wall Street Journal and you got a lot of other coverage. What was good about it at the time?
The good part about it was that it certainly made a lot of people aware. The Wall Street Journal article led to a lot of other articles that we were able to use to promote the business-having people working from their homes to provide bookkeeping services. The downside was it was difficult for the people who were first, primarily the accounting market, envisioning us doing something other than this real small business write-up type service. It led to a lot of referrals that weren't necessarily a good fit for us. They were too small.
Why do you suppose they put the two together in their minds-bookkeeping out of the home and a small business clientele?
I think it's because of the tradition of the market. I think they saw that as work they didn't want to do and it was hard for them to visualize exactly how we'd be able to satisfy the requirements of a company that typically would hire somebody on a full- or part-time basis.
Where did it take you, this whole image?
The good news is that a lot of companies that read the articles could visualize what we could do for them and how we could solve their problems. So we got a lot of validators that helped us solidify these clients that had more complexities. At the time, our clients spent typically $200 to $400 with us per month. Since that time, the average has doubled. But that's taking into consideration not only the impact of the PR, but us doing a lot of marketing work to directly promote this image of us being this virtual accounting department and the fact that we're actually a function of an in-house department and not just for businesses that are too small to afford one.
At what point did you realize that maybe your home-based marketing message wasn't good for your image?
We became a victim of our own PR, meaning that people put limitations on what they thought a home-based work force could do. I probably did a lot to support that when you go in and start talking about the home-based worker.
Now, when I go out, I pretty much focus on what their requirements are, how we're going to process it, and sometimes we forget to tell them that our people work out of their homes. It's really a moot point now. It's not an issue. The customer, all they care about is getting the work done, having a process and how they get the information.
We found that clients that were spending under $300 a month, when they had a hiccup, they'd drop the service.
What did that mean to you?
It means we were investing money in clients, to get them on line, that we weren't retaining. There was an issue of retention and the ability of these types of clients to pay. Clients that are larger, they need to have this service done regardless. It's not like they have the option that, if they stop using our service, they'll be able to do it themselves.
What did you do to change your image?
One of the things we did was started putting out a publication that promotes the concept of outsourcing and what we called our virtual accounting department. But even our literature on the virtual accounting department really doesn't talk about the home-based worker aspect of it all. It just talks about how we can network our solutions into our clients' and that they can have internal systems which can integrate into our system.
You buried the notion of the home-based aspect of your business?
Yes. It sort of made a nice story and gave people something to talk about, but I think it limited us. Now when I talk about having a home-based work force, I have to point out the fact that it allows us to hire much more qualified people available from an employment standpoint.
The other thing that happened is that things in the marketplace were changing, with the Internet becoming so prevalent with electronic banking capabilities, so we made a shift to using QuickBooks software, which really has become the industry standard. We found that we've positioned ourselves to take advantage of different things that are out there. Our service is now being able to address the needs of our larger clients. We now are an automated accounting service.
We went from a slogan of ""We mind the books while you mind the store,"" which sounded small. We now say, ""We provide automated accounting services.""
Where do you stand today, thanks to your transition?
We have larger, more sophisticated clients. I think the accounting firms that recognize what we can do-the feedback we 're getting is that they're going to do a lot better job for their clients working with us. We've had feedback from several auditors who say their audits are taking a lot less time now.
It also leads to more and better referrals and our client retention is up. We're being a lot more selective about the clients we bring in. We don't encourage the smallest clients to come on board. I think I originally defined our market as clients who could spend between $100 and $500 a month.
Do you regret taking your original marketing track?
No. I think this is still difficult to get people to pay attention to the market that we serve. I think it's very interesting some of the solutions that we've been able to do and actually going into a company and re-engineering a job and taking a job that may have taken a full-time person and turning it into a part-time job using technology or taking advantage of what a payroll service can do or what a bank can do. To me, that's the interesting part about what we're doing. It's really re-engineering the way the accounting function really works within an organization. It's really a technology solution.
What did you learn in the process about image?
I think it's much more appealing for people to write about somebody who has a home-based work force than somebody who's re-engineering the way work gets done.
Understanding that, what would you tell other business owners who have to be willing to adapt and change, but who do have to have some angle? You found an angle-the question is whether that angle works for or against you.
That angle took us to a certain level, but it led to a certain market perception about what we could or couldn't do. We needed at that point to make other marketing efforts to take advantage of what we got with that initial surge of public relations and sell what we really do, which is automated accounting services. But I don't regret it. We just needed to focus on what we do and not on how we do it. SBN"