010 Happy Growth and How It's Different

Hey, welcome back. Happy Monday. My name is Jason Stats. You're listening to a show about running accounting firms. This is a cold open today we're talking workflow, a little bit of AI sorcery as always and we are going to punch ourselves right in the feels. Couple listener questions. It's going to be an action packed one. Let's do it. Jason Daly. Okay, first order of business. So I was up against Lazanus Ryan Lazanus in the accounting bracket challenge. So Friday I released the the quote unquote Lasannas files. Just a bunch of fake news of me stirring up stuff about Losannas. My favorite part though, I started the thing saying I got a package from him two weeks ago with an odd return address. 415 hollowed out lane volcano and I use mid journ generate an image that looks like a Google street view image of a dumpy house in front of a volcano with like old cars parked in the lawn. I'll pull it up for YouTube people. I'll put it in the link in the show notes too. Just the fact that you can type into a computer these days, Google street view image of a hollowed out volcano and get this glorious like completely believable Google Street View picture of a home in front of a hollowed out volcano. That's just peak 2023. What a time to be alive, right? Other cool stuff that was happening on Twitter. Ashley the CPA. She shared how she's using ChatGPT to think through work papers, but notably to output from ChatGPT something that is Excel friendly. So it will give you whatever the output of what you're working on is in a format that you can then copy paste into Excel. So as we're still like really early days on GPT stuff, interesting to keep in mind with Chat GPT, even though it is like a closed walled off chat experience where it doesn't have access to the Internet or anything else, it can still give you things in a format that you can simply copy paste into a spreadsheet. Another sort of twist on that because that won't do any sort of formatting. Another thing you can do is you can have it write the output and like the form of a single use VBA macro. So you then drop that macro script into Excel and it will generate the whole Excel workbook according to how you wanted it to be based on your chat GPT conversation. Pretty cool stuff. April 27 on the subject of AI, I'm going to run a webinar with carbon on the 27th at one Pacific on AI stuff. That'll be a fun one. It's gonna be a couple people from Carbon, and then David Watson is joining me, who's a technical AI guy. So it will be like, actually good technical AI stuff. I'll put a link to that in the show notes if you want to register, and a little teaser if you're on the East Coast. Looks like I'm gonna be emceeing a conference back east in the fall. I should have some more info on that soon. If you're coming out and hanging out, man, we gotta hang at a conference. So I do virtually all the conferences in June. I'll be at both Engage and Scaling. Try to make it out there. And if you do, please let me know so that we can try to connect. I love doing conferences. Like, it's just the best way to meet people and learn and get inspired. And I've always loved conferences. Okay, but let's get into. Let's get into the squishy stuff. Something that I've been thinking about a lot. I kind of tweeted something kind of sort of about this the other day. I said, the worst part of working for someone else is the feeling of being stuck on someone else's hamster wheel. The worst part of working for yourself is not being able to blame anyone else for the hamster wheel you find yourself on. And so I came out of, like, the end of the year. You know, obviously, I'm no longer running the firm as of the end of the year. And my mentality in that sort of situation is like, okay, think of all the ways that you could screw this up. Like, what are the things that you don't want to get sucked straight back into to, you know, end up in another unhappy place. And so I've just been doing a. A lot of thinking and soul searching on what are the things that I want to do and how can I be really mindful about how I design my life to either avoid or delegate the stuff that I really don't enjoy, but then, like, have this more intentional plan of, like, why am I doing this? Like, what's the goal? Is it to make money? Is it something else? Is it a combination of several things? And one of the most useful things we ever did in my firm before was sit down and decide, here is the amount of money we want to make with the accounting firm. Not here's what we want to grow to, or here's what we want to shrink to, or here's the percentage revenue growth we want to have or anything like that, but simply for the partners involved and the way everybody was kind of planning their life and the way they saw the future, all that really mattered there was the bottom line. And having that agreed upon bottom line for what we were trying to do ended up being a really helpful forcing function to ensure that we weren't doing a lot of unhealthy things like growing for growth's sake or taking on work that actually wasn't going to be very profitable. And having that sort of framework helped us to be more mindful of the fact that, you know, we, we raised prices in a really extreme way because we were kind of pulling the firm out of where it was at with its past ownership. And as we were going through that, you inevitably have, like, this big mixed family of staff that were hired by different people and clients that were brought in from different people, and they all come in with different expectations. But as we were adding new clients and asking more of the staff and, and hiring new team members and all that, the reality was with prices being up, you know, 20 to 40% on average for those new clients, for every one of those projects we brought in, they were generating as much as two or three of the legacy projects from the past. So we were trading much, much less profitable work that we could never realistically increase to where we wanted our new rates to be for this new work at much better rates. And I always talk about kind of the arithmetic misnomer. The whole double your prices and go home by noon thing actually is inaccurate because increasing your price goes straight to the bottom line. So, for example, if you're running like a 50% margin, a 20% increase in price is actually going to increase your bottom line much more than 20%, like something closer to 40% or. I can't remember how it works out. But inevitably, when we're thinking through increasing prices, we're going, okay, how many people can we afford to lose? And so you think, well, if I went out and doubled prices tomorrow, I could lose half my clients. And if that were, that's actually not the case, you could actually afford to lose closer to two thirds of your clients, depending on what your profit margin is when you increase prices that much, because that price increase goes straight to the bottom line. But I digress. So we set that profit goal, and anytime we brought in a really profitable client, it kind of gave us permission to cut a couple of those lower profit projects while still maintaining the same bottom line within the firm. And like a half or a third as much of the work and I think unless you have, unless you have a plan for what enough looks like or what exactly it is you're trying to do, then you are perpetually pulled in this direction of growth and greater ambition and constantly doing all of these new things that doesn't always necessarily take you in a place that you want to go. And I think the way that most people that start their own firms experience this is they start that side hustle and they're just gonna be tickled to be able to replace the money they made at their last job and on day one, that's the goal. I just need to pay the bills the same way I was able to pay the bills before, but oftentimes really quick. A few years down the road, you find yourself making three or four times the amount of money that you were making before, and you're totally burnt out and you're now thinking, can I really do this, like, for the rest of my working career? And usually at that point it's, it's not feeling good. That's usually a no. But most of us never at any point, like, stop to consider what's enough. You just kind of keep turning up for work every day and things just sort of happen. Rather than like being intentional about what the design of that firm is and what type of work you want to bring in and how much work you want to bring in. Obviously the idea of pulling in higher paying clients and dumping two projects for every one you pick up, that's great. But ultimately, what's the goal? Like, is there a bottom line you want to get to? Like, absent a very practical goal like that, that's not the top line, but the bottom line. I think you end up just doing things for the sake of doing them, growth for the sake of growth, hiring for the sake of hiring. Outwardly, it looks impressive. I've talked about how oftentimes you do all that stuff to prove a point to somebody that ultimately doesn't care. Then when that day comes and you do prove that point, it's like, what's on the other side of that? And who are all the people that you disappointed along the way trying to prove that point? I think people consistently, when they go out on their own, would be blown away at how much money they're able to make doing their own thing and how quickly it all happens. And in those first few years, it just blows your mind how much you're able to increase your prices and how much people are willing to pay and how somehow every time you raise your prices, fewer people get mad. About it than you expect. And you find yourself in this place that you could not have even comprehended 24 months earlier. But you keep going. Like, you just keep going because that's just what you do. And for most of us, there's never a point where you stop and you say, I'm going to build the best lifestyle I can around X. Because it hurts. It hurts to close the door on X +1. Like the notion of, of putting a cap on, on what you can do, like, oh, that's. It's a really hard thing to do, right? But I would argue for most people these days, what you're doing today doesn't feel sustainable, especially in the early days. You're just hustling to make it happen, which is great. You're building something from scratch, but you're doing whatever it takes to make that business a success. You're not thinking about, how do I turn this into something that I can do for the next 10 years, for the next 20 years? So I don't. For me, the only solution I know to that is to just make the decision of what's enough. At what point do I need to be content? Because it's a lot easier for you to say, I'm going to be content at that number now than for you to get there and say, okay, I'm going to stop. It's really hard for us to stop. It's so painful for us to go backwards, right? Like, that's terrifying. You go out and you make 4x what you made and in your job before you went out on your own. But then you go backwards 10% and it's like, what is this life? How am I ever going to get by? So in my firm running journey, the most enjoyable time I ever had was when we had an idea of what that collective firm profit needed to be. And we just found a better way to get to the bottom line. There was a stage there where I worked my butt off, growing and growing and growing in this, you know, really cool, impressive and exciting way. But it wasn't fun at all. And we had to hire so fast we weren't making the right hires. That was the least fun time in my firm running journey. And honestly, the last couple of years were spent reducing, so reducing the number of projects that we were running, maintaining largely the same profitability, largely the same top line, maybe a little less top line. But what I was getting to do was work with the clients that I enjoyed the most, work with the clients that most valued what we did. And, and this is probably the biggest thing for me. Work with the staff who I most enjoyed slowing things down and reeling some stuff back in and not needing so much of a, like, team that you're cobbling together on the fly. The result was we had still the core of the team that we really enjoyed working with. You had a bunch of people that respected each other, that were kind of the highest performers of all the folks that we had pulled in through this whole journey. And the result was really fun. And that didn't happen until we stopped and like, didn't even necessarily shrink. But by the standard of what we had been doing, it felt like we were standing on the brakes. When in reality we had just defined a more meaningful metric of what we were trying to do. And then the game, instead of the game being growth, which in accounting is honestly really easy right now, like, it's not hard to go out and dazzle people and close deals and all of that. Instead, the game that we found ourselves playing was what's the most efficient and most enjoyable way to get to X? And sometimes that's doing fewer projects, sometimes that's being really excited about a new thing and getting to take on a few of those projects in lieu of some other stuff, because some other stuff's gotta go to make room for it. Those were my most enjoyable firm running years when I feel like I felt like I had figured that out. And that's a really hard human thing to do to like, you know, what is, what is, what is your cap as a person? You know, like the idea of just picking a number and saying, no, this is as far as I'm ever going to go. But I don't know that there's like happiness on the other side of that. Like just growth for growth's sake, at least for most people. I don't know that without those boundaries, it's really gonna be a fun ride. For me coming into the new year, I'm just like spinning my head on like, okay, what are all the ways I can screw this up? Obviously I get a whole bunch of time back no longer running the firm. Something I thought about for years. And we finally get there and my personality is just like, okay, like, how am I gonna screw this up? And so for me, coming into this year, it's a question of what do I need to make what's the most enjoyable way to get there. But also I'm coming into this year with like some anti goals. And so the one thing that maybe that profit framework sort of misses is oftentimes even when you're just trying to get to that profit number, you may find that there's ways of getting there that you just really don't enjoy that aren't sustainable for you. And for me, I think that's. Those things are kind of cyclical. There's. There's times when I get burnt out on that specific thing. And coming out of running a firm, it was just having to run a team. Like, my big anti goal coming into this year was if I go out and do more stuff and end up with a team of 10 by the end of the year, I'm going to be kicking myself because my biggest stressor is it's hard. My biggest stressor is like ensuring I'm taking care of those people that I put my, kind of put myself in a position to be responsible for. But I also love working with other people. So it's a really hard thing for me to balance. But I knew coming out of a firm, what I least enjoyed about it was just kind of being the bottom of the funnel of 40 people where any given day something's going to go sideways. And that was the aspect of it that I just, I enjoyed the least. And I knew I didn't want to get myself sucked back into it. So my, my big anti goal for the year was just not gonna hire. I may have some contract people that run support for me on various things, but I am like not gonna go whole hog on building a team. And I don't think those anti goals are always the same thing necessarily. Like, for me, they change. There's times when I'm really energized to do one thing and other times where like, I'm. I'm done with that and I don't want to touch it anymore. And, and sometimes you don't know what those things are until you wade into them a little bit. But as you're planning what that, I guess, firm story looks like for you, especially if you got a partner too, and it's something that you need to be aligned on. And maybe even now, if you're a tax person, as you're kind of in like the most existential part of your year, think bigger picture. Like, what does the family need? Because most of the time we couldn't believe where we've. Like if you told yourself five years ago where you'd be today, you'd be like, no way, man. But where you are today in many ways, sometimes doesn't feel like enough. And that's human nature, I think. But that's something that you Kind of got to like take control of and have a plan for. Like, if you don't acknowledge that at all, I think you end up in an unhealthy place. I'll be getting some questions and so I think we'll knock out like one or two questions with each episode. I like this one. I want to get other people's feedback to let me know what you think of the question. Chuck it in the comments, wherever you're engaging with this show. Hi, Jason. I have a new firm in Austin, Texas, Just me doing tax and bookkeeping. I watched your video from 6 months ago from 0con about why portals suck. To be clear, I didn't say Portals totally sucked, but pretty much everybody I talked to said they hated Portals. Is there a reason to not use Google Drive as a portal substitute? Early on we got sweet dash, but I hate it. Whoops. Google Drive as a portal. So I think over your firm journey, the portal means different things. And even right now, like a quote unquote quote, portal means different things to different people. Which, by the way, I would just, I would love it if our industry just started calling it a website. There's almost like this. You're almost like tipping your hand to this level of old timey ness just by calling it a portal when it's like everywhere else that's just a website. But Google Drive for a portal. In that video, what I talked about is the aspects of portal that I do really like. Two big ones. One, enabling self service for clients. Now, not all clients are gonna do it. There's gonna be a lot of clients that don't like the idea of logging into something. But I do think that most clients, if they have an easy way to get something themselves, will sooner get it themselves than ask. Now that's not the case with 100% of clients. And this is one of those cases where much like people complaining about pricing, the people who will just have you get it for them take up a disproportionately large amount of our headspace. I think we think of those people, but we forget about probably the 80 to 90% of people that are like, yeah, no, totally, I can log in and grab it just like I do every other service. So Google Drive, feel free to disagree with me. I think generally works all right for like document self service. Like for clients being able to hop in and grab tax returns, stuff like that. Depending on how you set it up, having to do Google authentication to get to that stuff is a real pain. Putting that stuff at public links depends who you ask. Some people don't like public links. The level of security of public links is actually like really high. Like it takes something like 20 years to guess the URL of a YouTube video. Right now the main issue with public links is if somebody gets access to that link and a text message or an email or something like that, anybody can access it. They're never going to guess the public link. It's just the fact that they could get access to it. So access with Google Drive is a little tougher because in a perfect world you don't have it living in a public link. I don't think Google Drive does like temporary file delivery things, but when you're just starting out, honestly, you gotta keep things simple. And I do know a lot of solo practice runners that swear by Google Drive and are doing all their work papers there and all that. I will say a slightly more robust version of that is probably sharefile where clients can log into it. It's got like local file sync and like ephemeral file delivery via email where they can hop in and download it. ShareFile is stupid expensive in my opinion. Maybe not for solo folks, but running a team, it got wildly expensive. The one thing this misses though, which is not necessarily a day one thing that you gotta master straight out of the gate, but right now I think the biggest untapped value of portals is the ability to stage requests and have automatic follow ups go out. And so when I went through the whole process of picking out a new practice management system for the firm last year, that's why we landed on Canopy, I really liked the client facing experience of Canopy. The app was really good. It was not embarrassing. But what I want to do is go out ahead of tax season and build out bespoke request lists of everything that I need for every client, stage that stuff in their portal. Clients can then submit that stuff against those request items one by one, and they're going to get automated reminders until they provide that stuff. Same thing with monthly accounting clients. I want to set up recurring requests so that on the first of the month, everything I need, those requests go out and the client's supposed to get to work. Because if you don't have that, the project of sending out requests, sending out follow ups, figuring out what they've provided and what they haven't provided, and then doing the poking, which gets increasingly uncomfortable, will turn into like a third of your job. Like it becomes a massive project as opposed to more intentionally building out those request lists, which takes time. Like that's a time consuming thing, especially from the tax standpoint. Our tax software doesn't give us like a clean list of what you need, but I would say that would be the biggest thing you're missing if you're rolling Google Drive as a portal is the ability to stage client requests. There are other dedicated tools that will handle some aspect of requests content. Snare is one I talk about a lot of. That's a great just like standalone request system. Uncat does some of that. So if you're not ready to go all in on like a proper cloud practice management system yet, maybe consider augmenting it with a tool that will just handle the requests because that stuff will save you a bunch of time. What do y' all think? Is that a good answer or is the answer just to bite the bullet on like a proper practice management system that'll do all that stuff for you? They've gotten like shockingly cost effective. Like you can get into a cloud practice management system now for under $30 a month per user. Which if you think about everything that an entry level practice management system does, that's kind of a shocking value. Like that's very good. That's it for today. Questions of your own. Stuff you want to talk about topics, drop them in the comments. Tweet me, LinkedIn me. Let's go crush this week gang. Bye.