2.9 Million Entrepreneurs, One Big CAS Opportunity
Welcome to the CAS Cache, a podcast designed to help accounting firms grow their CAS offerings. This issue is sponsored by Full Stadium Marketing. Ready to help your accounting firm grow by crafting focused plans and executing them to connect with your ideal clients? Learn more at fullstadium.co. That is fullstadium.co.
Speaker 1:Now let's get into this week's insights. When a 100,000,000 money models sold 2.9 copies in a single day, it wasn't just a publishing record. It was proof that millions of entrepreneurs are seeking help in growing their businesses. In the past two issues, I discussed how I'm utilizing a $100,000,000 money models to reevaluate my client advisory service proposals. Now let's talk about how you can use the book to advise your clients.
Speaker 1:We can translate the book's frameworks into actionable financial insights, including gross profit, customer acquisition cost, and lifetime gross profit. Once clients understand those numbers, pricing strategy becomes a financial lever you can actually pull rather than a source of fear. Most small business financials are designed for tax filing, not for informed decision making. They lump revenue and expenses together in ways that hide what's actually profitable. The first step I take in most advisory engagements is to rebuild the chart of accounts to tell a compelling story.
Speaker 1:Here's a quick playbook. Split the revenue by service line, move direct labor into COGS, and track gross profit per service. When owners see gross profit by service, clarity follows fast. One client looked healthy at a 60% blended gross profit margin. Once we separated the lines, one was at 4%, another at 29%, and a small one was at 80%, and the flagship was at 60%.
Speaker 1:Only then we could decide what to fix or drop. Remozy recommends 80% plus gross profit for service businesses in his online training, which is wild to me. I guide clients to achieve a 50% plus target in professional services and a 35% target in trade services. Reaching those levels gives owners the margin to reinvest higher and marketed with confidence. Once gross profit is clean, connect it to acquisition economics.
Speaker 1:This is where advisory moves from accounting to strategy. In Hermozzi's training, he talks about a client needing to have lifetime gross profit to be three times the cost of acquisition. So in an example he gives, a client that earns $9,000 per customer at a 50% margin needs to have a CAC of 1,500. So if you improve the gross profit margin by 60 to 60% from 50, the CAC capacity rises to 1,800 from the original 1,500 with the 50% margin. Once a client sees these relationships, growth stops being a matter of guesswork.
Speaker 1:It becomes a formula. Price is the single most powerful financial lever we can pull, yet most owners are hesitant to pull it. Rather than defaulting to discounts, you can use feature down sells to protect value while serving price sensitive buyers. Here's an example from an IT service provider I work with. Their top selling point is rapid response times to support tickets.
Speaker 1:Instead of cutting prices, they are now considering flipping the conversation. If a prospect box at the premium price, they can offer the legacy rate with a slower turnaround, moving from a four hour response rate to a twenty four hour response rate. That slight shift keeps the premium tier intact and clarifies the value of speed. You can turn this into a repeatable three meeting CAS engagement with a recurring element. Meeting one is about the financials that tell a story.
Speaker 1:Meeting two is to diagnose and set gross profit targets. Meeting three is to design the pricing and acquisition model, and the recurring delivery involves monitoring gross profit by service line and CAC using a tool such as FinDaily, or it could be done in a meeting. Most business owners will read a $100,000,000 money models and nod along. Few will know how to ensure they will be profitable executing it. That's a CAS opportunity.
Speaker 1:When you help clients see which service lines are truly profitable and what they can spend to acquire customers and how they can raise prices strategically. You move from an accountant to a growth partner. Thanks for listening to the CAS Cache. If you wanna dive into more, visit our website at cascache.com. That's cascache.com.
