Illustration: Sorbetto/iStock Illustration: Sorbetto/iStock

Christie Henderson knows what it’s like work for a mega accounting firm. Before taking over as managing partner at Henderson Partners LLP in 2005, the chartered accountant had spent about five years with Ernst & Young.

Indeed, most of Henderson’s 26 staff are, as she puts it, “large firm refugees” like herself, who want to offer their clients the kind of service they felt their previous employers couldn’t.

But a couple of years into her tenure, Henderson Partners was unintentionally headed for a big-firm future, with top-line growth of close to 20% per year. “It was too much, too fast for what we wanted to do,” says the firm’s namesake, noting that the original mandate was to provide personalized and collaborative services for entrepreneurial businesses. “When you have growth like that, you can’t do it. We couldn’t deliver the service we’re known for,” says Henderson, who ranked No. 83 on the 2016 W100 Ranking of Canada’s Top Female Entrepreneurs. “It started feeling like we were letting people down—that feels awful.”

The solution was to reduce revenue growth to about 10% annually by trimming the client list, starting with those that didn’t share the firm’s values and could be served just as well by someone else. Henderson also cut clients that were generating busy work for the firm—files that required extra hands and longer hours, but yielded little additional payoff. “These aren’t bad clients, but they were just not the best fit,” says Henderson. That meant losing a large chunk of the audit practice, a space which Henderson describes as a race to the bottom for the lowest fees available. “These clients didn’t care about getting great service.”

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Henderson’s plan was to free up time and resources for the firm’s ideal clients: small- and medium-sized companies that need financial guidance in a number of areas, but don’t have the means to hire experts to do the job in-house. “For a busy entrepreneur, sometimes those high-growth businesses don’t have the internal resources to help make sure they’re structuring themselves properly so they don’t get into trouble later,” says Henderson. “We can kind of wrap our arms around them and take care of all the pieces that would otherwise fall.”

But despite Henderson’s efforts to downsize, the company would not stop growing—it kept stretching to deliver the quality service the team prided themselves on. So in 2015 Henderson made her biggest cut yet, dropping 400 of the firm’s clients—15% of its total customer count, worth a collective six percent of revenue. (There were no layoffs—Henderson Partners retained all its staff, it simply no longer needed to bring in temps for the busy season).

The results were shocking, even to Henderson and her partners. A year after the aggressive edit, the firm’s bottom line jumped 30%. “We finally had the right number of people to look after the right number of clients,” says Henderson. “We retained the clients we loved looking after and [who] were more profitable, and we were able to get additional work that had higher profit margins attached to it because we weren’t as overwhelmed.”

While paring down her client list meant better service for those she retained, Henderson says the process of letting clients go was not easy. “It’s one of the most difficult things I’ve done,” she says. “Some of those clients had been with us a long time and helped us get [to where we were].” To make the transition as easy as possible, Henderson vetted other accounting firms who were willing to take on her clients. “I think some of them would have rather stay with us, but they appreciated that we found them a soft and reputable place to land, and that they had options.”

The important thing, says Henderson, was explaining to her clients why she needed to let them go, and reassuring them that they would be in good hands elsewhere. “It was out of a commitment to provide excellent service, and we couldn’t do that with as many clients as we had,” she says. “People are generally understanding of that.”


What do you think of this strategy? Have you ever had to let go of a client? Let us know by commenting below.

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