294 Who Would Be Your First 20 Hires? ft. Chad Davis

Recently I drafted who my first 20.

Hires would be if I were to build an accounting firm from scratch tomorrow.

Today I'm pulling in somebody that's built.

A firm to, I'm pretty sure well over 100 people. What would they do from 0 to 20? Is it going to be different than mine? Almost certainly.

Are there going to be some ideas that we can steal?

I sure hope so.

Otherwise we'll never return to this format. So come on in. Today, Chad Davis is going to draft his first 20 hires.

Three, two, one, sports.

Okay. Welcome, Chad. Hey, Jason, if you haven't met Chad before.

Chad, what's the 32nd elevator pitch of Chad Davis?

Oh, I think isn't the claim to fame just becoming Jason Stats friend a few years ago? I mean, that's, that's the, that's what I look up to every day I wake up, I look in the mirror. I'm just like so happy to be friends with Mr. Stats. But yes, to be honest, like, I, I really don't want to spend two, two or three minutes talking about our friendship, but I think we probably should talk about the 30 seconds. So I have a firm in Canada called Live Ca llp. Jason and I did a podcast called Automation Town. There's three seasons of. That was really fun.

Sure did.

And.

Sure did.

And, and then spending free time. Yes, that's right. And then any free time has been spent playing around with tech and automation and realize we do a monthly session kind of showcasing what everybody's been building in that sort of automation world. So that's kind of where I've been spending my free time over the last couple years. Thank you for the opportunity to draft our first 20 people.

Yeah. So if I recall when we've talked before, you removed yourself from the doing of the work pretty quick. I would say quicker than most accountants probably would. Do you identify as like that entrepreneurial type of mindset, like not the manager, the technician, more entrepreneurial?

No, I think early days, you, you, you kind of have to be, I guess depending on your, in your bank account situation and how quickly you can give it to other people and, and generate more to give to other people. But I, I, I think, yes, I'd like to provide opportunities for other accountants in the space and by having a CPA firm, that opportunity exists for those people. So yes, I'd like that to keep happening. I think that's why Live CA develop the way it did was because it was very pro everyone else and not so pro, just one or two owners.

Okay. So if you were to throw out this monolith that you've built. That might not have been the right idea.

Can we just call out that we're no longer above a hundred? Like, we actually went down back to 60 people. And that is the fun part about this, is that there's ebbs and flows of every firm. And you're not defined by your headcount or the cool tech that you use or how many episodes of Jason and daily you listen to on a. On a weekly basis. But you, you just, you're there and you're. You are who you are in the moment. And there's always like, just seasons of running a firm. So the current season that we're in is one of, of peace and calmness and not trying to chase this shiny thing. And we've actually, like, reduced the number of services that we've been offering to people and have cut out things like CFO services and automation and tech builds, customer training. All that stuff is now gone. And we're just focusing on the things that we really enjoy doing and that people enjoy paying us for.

Okay, so with the context that you built a big firm and then tanked it and stripped out a bunch of other things, if anyone still wants to listen to your advice. What, what, like, how would you approach this. This firm you're about to draft? Is this like, I assume you're solo owner here. When you launched your other one, you had a partner and this. In this draft, you're solo owner. Oh, is this, like, going to be Chad's. Oh, I mean, unless you don't want it to be.

No, no, it can be. It's fine. It's fine. Jason.

Just.

Just excluding the biggest part of my business journey, my business partner. Wouldn't it be fun to say we had a partner and they had these skills? There's other people that might have partners and skills.

No, I think it's unlikely that someone will have a partner with the exact same skills as your hypothetical partner.

That's true. My business partner has the exact opposite skills of me, which is why it worked out. If we had similar skills, it probably wouldn't work out very well. But that's. That's a discussion for another time, probably.

Okay, we're going to dial this up to hard mode for you, and you're going to have to figure it out yourself this time.

Fine.

For this firm, if you were to do this tomorrow, Is this like a fast growth firm? Is this like a lifestyle, I want to go play with my poodle, like sort of firm. What does this look like, I think.

If I had to build it again, knowing what I know now, I would, I would mimic the growth at the same clip that I was sure about the interest in what we were selling. So kind of matching the market's interest in what we're doing to fulfilling that. So in the beginning, we ended up taking out some money as a loan to be able to hire the first four or five people within the first few months. And that was really great because we could say, okay, we needed a cloud accountant or a bookkeeper or a tax person, and they all kind of grew up together. And I think that was our original unfair advantage, was that we, we kind of started with four or five people over six months and that allowed us to just leapfrog and go really fast. But if I didn't want to take out the loan and just use the profits, I think that's more responsible maybe. And I think that's probably what I would do this time is just use the money and reinvest it and just be really sure about what it was I was building. Because we've gone in way different directions over the years. Some have required a large headcount and some just focused on the wrong things. I think that's what I would come at it like 12 years later. I would focus on what's working and just grow not as a lifestyle business where it's just me and another person or a few people that are benefiting, but with the goal that we get up to 20 to 40 to 50 people. Because that's when you really start seeing the economies of scale of things working out well and having coverage, having training materials, giving people opportunities. So I'm glad you picked 20 because I think the first five are, are pretty generic or pretty, pretty similar across most firms. But 20 is an interesting one because it does set yourself up for what those next 10 to 20 people are focusing on.

Okay, so pick zero is you assume you're doing some work, you got some cash going, where are you starting? What's your very first hire? Is this just like a staff level accountant? What are you going to go with?

So if it's, if it's me, I'm not a tax cpa, so I would want to serve the tax piece. And, and because that's not a skill set that I have, I would want it to be quite senior. I don't think it could be as senior as possible because those people typically won't move to a dude living in his RV traveling around saying yes, as.

They shouldn't, as they should not.

So I think the first hire would be a senior tax accountant. Just somebody with a few years of experience that can, that can file the returns and know what they're looking for. So that when you answer the question, what do you do? It can be a back office plus tax. To me, that's a, that's an interesting offering.

So this is, this is brave. So a. I can tell you the blocker, a lot of bookkeepers are going to have like coming out, opening their, maybe their bookkeeping shop is what they thought it was going to be. How can you, how do you trust the. I don't know, I guess the technical capability of that thing that you are incapable of reviewing. Right. Like most small firm owners start being the expert in everything. Is this something that, like maybe you are wired differently just from the beginning to be able to do that? Because I think that's probably most people's biggest blocker.

Yeah, I mean the question was posed like through the lens of you are starting. You're the person. So, so for me, I know that I'd want to build a firm that has tax involved. So the review portion of that does carry some risk. So I'd make sure I had some, some really great insurance for that kind of thing. Also, I'd probably find a resource. Now this is the hard part because after 12 years, you know, you have a network of people that you know that you can kind of dial into. If you're just starting out, you don't necessarily have that network. So I would work towards having another person then. This is why the, the second hire is going to surprise you probably. It would be another tax person more. Yes. And you're like, this is exactly the reason where people can like, is there a hang up button on the podcast? Because they probably say like two tax people. Why would you ever do.

Yeah, they hit it a while ago.

They hit it a while ago. I think it's because that's the vision of the firm, which is like books and tax. So if I can keep the other side of the, the technology and the books and getting things ready for those tax people, there's a little bit less of a risk that the tax is going to be incredibly suboptimal or sub. Subpar. Because you have two people working together. They're better at research.

That's a very good point.

They have access to different tax research tools that apparently work. But yeah, eventually you have to have some sort of trust in that process and going. And that's, that's how I would do it. I know it's a really probably out of left field answer, but I think it sets me up for future growth without having to not offer the service. Because in my experience, bookkeeping plus tax tens, at least in Canada to gather the attention of companies with bigger pockets and that's who I would go after.

Yeah, it is for sure a thing in the US as well. Is this a more of a junior level tax person you think, to support the senior you already have?

Yeah, it is. And I think, and I think down the road that's when you start thinking about the tax manager. And if these people that got you from, you know, A to B are equipped to be in that sort of next version of what the firm looks like and who knows, they may want to start something on their own. They may not want to be part of building this up again. It might have been a horrible experience because they have to work for me, who knows.

You alluded to going after bigger fish. What is your the kind of the avatar of the client you're going after then?

Yeah, our avatar hasn't changed very much in a decade. I'd say in the first few years it definitely was changing, but it very quickly morphed into sort of that million dollar plus business that needed a lot more support and could stomach paying a couple thousand bucks a month minimum for some of these services. Over time it's now probably doubled in terms of the minimum and a little bit bigger on the other, on the other side. But we've been able to do it using Xero for the last 10 years and we just recently launched our QuickBooks division this July. So it's totally possible to do it with those two tools.

Most, most folks when they're starting out, they're going to be, they assume they're just going to be bottom feeding, right? Like they're taking all the little projects. I don't know what gave you the confidence or how did you build the network, how did you get into those bigger fish type of clients when sometimes we can assume if we are a little shop that maybe they're not going to be impressed by a little shop.

I think the social capital marketing works really well. Logos are one thing, but also like talking about those, those relationships when you're out speaking to potential clients, if you can show proof that you've helped somebody like them, it is really great. And we were very, very blessed with the opportunity to hit with, not hit with, to work with. Almost like the betterment of Canada called wealthsimple. And that launched us so hard into the Tech space that people like, wait a minute, this company's using this company. Who are they and how can they handle this? And then that relationship lasted years and they hired internally. And we're like, wait a minute. It's actually pretty fun to transition companies that are growing into having an internal finance department. Like, which other accounting firms are focusing on that? And the short answer was like, very few, if not any. And we're like, no, let's be that firm. We don't want them to be clients forever. They can if they want, but our shtick is going to be a full finance team for less than the price of a full time hire. And then during the sales process, it's about transitioning and building out their teams.

Interesting. Okay, so you had kind of an, you had an early anchor client and that ended up getting you opening a bunch of other doors.

Yep. And I think just the, the amount of smaller clients at the same time that were like in that industry, it just was, it was an onslaught. So we had a really great logo page.

Okay, you're working, you're working your keystroff at this point. You got two tax people. You're doing all the books yourself. What's number three looking like?

Number three and four hiring at the same time would be a bookkeeper and a staff. A bookkeeper slash a staff accountant. I know it's a weird word to use staff. I know it's like a faux pas in a lot of things. So an employee. Yeah. Named a bookkeeper or a staff accountant. Just somebody that could essentially do some bookkeeping but also prep it up for the tax team.

So are both of those like basically the same person? A staff level bookkeeper, accountant, whatever you want to call them?

Yep. I think it has to be okay for me anyway, because at this point in your, in your firm, you really don't know all your procedures. You're still figuring out your tech stack. You're. You're not sure even if you're using a project management system yet. Hopefully you are, but you might not be. So you've got all this other stuff and if we can free up my time, I guess we're talking about me specifically here to start working on some of that stuff. Now that we have some traction and some money coming in, those other two people can start working. And you've got almost like the remnants of a little pause, little team that's starting and you can kind of figure what's working and what's not. Because regardless of how much you want to be role based in the Beginning, it really is important to hit yourself to the right people. Those people in the early days are going to, I won't say make or break, but they'll play a big factor in the success rate. So again, they may not be there the end of the next year, but for those first two years or the first year, a lot of the development happens as that person puts their mark on those roles.

At this point, are you managing all the client relationships? If you now have two staff accounts and two tax folks, are you stepping out of that at all yet?

Yeah. And I think at that point where you're at like four people, you probably have the tax manager, the person that's heading up the tax, starting to lead some of these, because this is where as a firm, you start to create your identity of what does a monthly package look like? Am I doing things, you know, more than once a month? Is it a quarterly package? Like, what do you actually want to sell? And getting feedback from those people around what types of things your clients are asking for and working for. Like, we didn't know when we first started what things, what people wanted to buy or what we could even offer. So leaning into that pretty quickly so that you're not the only person thinking about what to sell and what to offer is. Is a person pretty magical thing.

Do you have trepidation in that transition? Because a lot of people, you're framing it as what do they want and what do they need? But a lot of folks just get stuck on, they want Chad or they want Tina or they want Chuck. Like, I don't know. Any trepidation in that kind of mindset shift?

No. And here's why. Early days, I mean, it is. It is literally feels like life and death. You're looking after every dollar. You're trying to appease every single relationship. And I think if we take this from the lens of, like, what it looks like 10 or 12 years later, and some people have even 20, 30, 40 years later, you recognize that it's really important to build up the core offering and not. And it's less about you delivering on that service. And if someone wants you, you probably did an inadequate job of selling your service. Possibly. Possibly. I know that's a weird statement to say, but it's like you're essentially training and educating people from the minute they come in the door. So if you educate and train them that their team, they're going to get better service from their team, there's a higher chance that they won't want you. And again, customers that have been with you in the very beginning. Chances are you're going to change as you go from 0 people to 5 people to 20 people. And maybe they may not be a fit for what you're looking for anyway. So focusing on that core service offering and education through selling probably has a higher success rate than trying to appease the I want Chuck, Tina people.

Yeah. So say you have somebody like a betterment. Are you sticking your. Are you keeping your fingers in. In a relationship like that longer than the others?

I think you have to. Until you hire that first client service lead, I think. I think you have to if it's that. If it's that big of a client. And this is this. This is. This is your. Your gas money, your. Your diesel fuel. Jason, for traveling across the country, you need to.

Let's keep going through your draft picks because I just googled client service lead. I'm not sure what that is. So what would number five be?

So under number five, I would pick. Okay, so this is. I. We call it like a client service manager. So a client service manager for our firm is a CPA who isn't necessarily a tax expert, but they know tax. They're not a bookkeeping expert, but they know bookkeeping, but they're very good at managing expectations, Delivering financial advice and packages, can speak to every accounting sort of issue and be the main point of contact for a customer. So then I would kind of switch my responsibilities of being that main point at this point over to a client service manager. And the reason why I think at five people you could attract somebody like this is because there's a lot of CPAs who are like, maybe stuck on a trajectory or they know exactly where they're going to be, but the management section of their career, maybe they haven't ticked that box yet. So this is a really great opportunity for somebody to come in and start being a client. Relationship manager. Sorry, client service manager versus, you know, working and doing the majority of the. The tick and bopping work that they might have been doing at another firm. Though we almost had no problem staffing up for these in the early days.

There was a really.

A lot of people that wanted to say, yes, I'm ready to take on a relationship role.

Because you described what that is. And my mind immediately went to. I've never known such a CPA definitely handle relationships, but is bad at all the technical things. But that's really interesting. Were they coming from other firms primarily? Yeah.

First one actually came from industry she was working for, I want to say, like Sears, Roebuck or something like that before it went under. The next one came from a big eight firm, right? Somebody who just kind of maybe knew their trajectory and saw that this was there. Another one, yeah. Came from a smaller firms, like I would say regional firms, not necessarily big four and not necessarily the small five or ten person firm, but like the 25 to 85 person firm.

Interesting.

This episode is sponsored in part by Team Up. What if you went out and you hired an offshore person and they took some sensitive information, they did something bad with it, they stole. Oh, worst case scenario, right? How do you manage that? So to start some advice from Team up here. According to Team up, the number one and number two mistakes accountants make. Number one, thinking of your overseas teammates as, quote, offshore staff. Thinking of them as. As something else rather than just an extension of our team that is subject to the same rules and restrictions and controls as anybody else that I hire, whether they're onshore offshore. Mistake number two, making global teams more complicated than they really are. The three things Team up always says. One, it's just people. Two, build relationships of trust over time. And three, what would you do if you hired an Arizona? Wow. Why the heat for Arizona? Not, you know, Florida or something like that? You hire somebody in Arizona, you probably don't stay up all night worrying about them, right? And the same should be true with your team in the Philippines. Hire the right people, get to know them personally and give access to non sensitive info first. Feel like there's more a question of internal controls. Like we are accountants so we don't really rely on trust so much, right? We don't just fling open the keys of the castle for anybody to come get it. That's not an ad copy. That's my take. If somebody in the Philippines is going to steal from me, it's because I put them in that position. Just like if I hired anybody across the country instead.

Focus on the positive.

Don't get too wrapped up in fear and scarcity. Be logical about thinking through those problems and coming up with solutions for them. To protect yourself not only from offshore.

Hires, but the rest of your team as well.

Learn more about TeamUp. Check out the link in the show notes. Thank you to Teamup for sponsoring this episode.

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Okay, so we got a CSM now two staff level accountants, a junior and a senior tax. Is there any. Are you thinking about like pods or any sort of structure at all at this point, or is this just a free for all?

No, no, this is. So now that you have your two tax people and you have your manager who's overseeing the relationship, you've got the two, like bookkeeper slash staff accountants. This is where you kind of have to start to think, okay, what direction are we taking the fir? Right, because at this point, remember, there's nothing for sales, there's really nothing for ops. Not a lot for technology so far that's kind of living on my heels right now. And you probably have to start thinking about this stuff in a little bit more serious way before stuff starts hitting the fan. So this next hire I would pick, okay, we'll call it like a sales admin, but really I think what they're doing is being my right hand person to do all the initial intake for the, for any of the sales work. They're coordinating the proposals and working out the details with me, who will be like the closer. And then they'll be managing the onboarding and the sales component and bit of administration as it relates to setting up that first infrastructure of tech and ops.

Are they doing any of the technical aspects of onboarding or is that going to the staff count and the tax pros?

No, I think it's, it's. This is where it starts to stay with them, where they're going to start doing some of the technical things. Now one of the, one of the things that we did early on as a, I won't say it's a mistake because you all like, you always learn from what you do, but we had those, we called them onboarders, like doing the technical conversions from one system to another and it always raised issues. It's like you're taking non accountants to do accounting work. So you'd probably in this circumstance do all of the admin pieces. And then when it came to the technical, technical things like switching from desktop to online or from one large system to a smaller system or something, you could craft out those procedures and then have the staff accountants who are kind of working underneath the client service manager to start helping develop those procedures, knowing that as the firm gets bigger, that gets broken out and different people are doing that work.

Okay, so we have got two tax folks, two accounting folks, a client service manager and a sales admin closing in.

On 10, 7, 8, 9, 10.

What are we looking at next?

And give me a glimpse into like any sort of structure that's starting to develop to all of that good.

So you can start to see that we're going to have our first team essentially here, which is a client service manager. You've got two people doing the work, right? And they've probably started to switch off where one is more of the staff accountant, the person, the associate kind of working with that manager, prepping up some of the work and then you've got like the bookkeeper. So inevitably the bookkeeper will run out of capacity the quickest as you bring on new customers because now you have the Salesperson here. So going back and, like, fortifying that team a bit with another bookkeeper is my next pick.

Wow, these are. These are big pots. This is all still one squad here. It is one platoon.

It is. And I think there's. Well, there's a. There's a very specific reason for this one is we didn't really find our tech voice for years. It was all kind of over the place. And the operations and the procedures that you develop are very much based on experience. So if you first hire a tech person, you're going to have that resource to kind of work through, but it's going to be pretty expensive. So using that lens of slower growth through profit and then actually being able to stand by your claims when you're talking to potential employees, to say, this actually is a calm place. Right. Here's our financials, here's the growth, here's how we think about hiring. And when you have a supportive mindset to the people around you, I think that goes further than saying, oh, we have a tech person. That's going to make your job easier. Or we have a marketing person or an HR person to help support. At this age, we're under 10 people right now, so we have to think about slower, more, not deterministic, but just very. What's the word? Thoughtful. Growth. I don't know. There's way better words that I can't think of right now, but just something that isn't erratic, which I think a lot of people go through when they're either chasing sales to pay for that person that they've just come in through the door, or they're thinking, maybe I shouldn't have hired that person. And now you have to let somebody go because you won't be able to pay for them for three or four months because you lost a bunch of clients. Yeah.

And the big issue with this exercise is we're assuming everybody works out. And whenever. Whenever you do go through something like this, you're going to have overachievers and underachievers and overachievers that you need to challenge with new stuff. And somebody that says that job over there actually looks more fun. Could I do some of that? But we're kind of just glossing over all that.

It is. And that just to go back. That's why hiring two of the bookkeeper and staff account at the same time, super important. That's why the senior tax person and the regular tax person were the first two hires, because inevitably one of them won't work out, whether they don't want it to work out or you don't want it to work out. So having a standstill is really tough. And I think we've all been to that place where we don't want to be in a standstill.

Okay, so two ply approach on hiring. Who you got for 8, 9, 10.

So this isn't all written down. There's no notes here. So this is just kind of thinking off the top of the head. This is where I'd spend some money on. Okay, so we've already said that we would hire another bookkeeper or two. Right. So now we're up.

Yeah. Seven was a staff account. You got three. Do you want another one?

Yeah, at this point, I'd like to have two bookkeepers, two staff accountants, and a client lead. So that's five. The two tax people is seven, and then the sales admin is eight. So now that you have this team, the next phase of growth is really interesting. This is why hindsight's kind of interesting, because we broke out our bookkeeping from payroll and bill pay, but for the first few hires, they kind of have to do everything. So here's the weird part. Payroll has been one of the stickiest services that we've offered. People are very happy about it. And it's because there's not a lot of firms that will take the complicated payroll work. They'll send it to a payroll specialist. And again, payroll in Canada is very different than payroll in the US So this might be out of context a bit, but the same level of responsibilities there. There's letters, there's penalties. You have to do things by a certain deadline. There's annual requirements, there's a lot of unnecess, you know, oversight and overreach into data that people just don't need, but they we have to do anyway. So, like I. This is where I would break out payroll and I'd start to lean into a service that I know will help in the next phase of growth because we can offer a specialized payroll service without limiting ourselves. So the next. The next two are payroll. Someone to manage it.

Wow.

Someone to manage it and someone to do the work. Well, they're both going to be doing the work, but someone with more experience and another one to actually, like, go through the majority of the work. That also frees up time from the bookkeeper. So you've just created a massive amount of capacity that from people that were doing payroll that might not have been their specialty. And now you can take on a couple more clients to help pay for Those two new payroll people. And you're starting, you're like you're starting with your most profitable and sticky service that you're starting to break out.

Will you do just payroll for people or do you have to take their accounting and tax work to.

This is where hindsight is coming. I would do just payroll. As long as you are getting paid for the other elements that are required with payroll. Like there's inevitably going to be tax and accounting questions that go through the manager. There's going to be some admin around paperwork and filings and access to things. So that's why having different components as part of the price is important. So you're not just saying it's just the payroll people that you know you're working with and paying for.

And are you taking that because it's worthwhile to just take just that or because you think they'll convert to more?

I've learned that capacity is like, when you have it, it's okay to take work like this and then as you're nearing capacity then you can start to be more specific about how you want to use your remaining pieces of capacity hours. So whether that's only clients that you think will turn into more or it's adding more capacity, Like I know this is like the exercise is the first 20 hires, but I mean if you've built an 11 person firm just with this structure and it works and it's delivering a really great profit and there's not a lot of risk, that could be great and you don't need to get bigger. So this is why I'm a little hesitant now to add people just for the sake of adding people. Because the overarching business model is really what you're trying to build and protect.

What is, what does 10 to 20 look like if we're in kind of that weird limbo bridge, like get to the next thing.

Cool. So right at this level I would, I would. Is this part of the rules? Because I wouldn't hire an HR dedicated resource at this point, but I would have a nice hris and I would have hired an HR outsourcing company.

Outsource? Yeah, outsource. Like fractional stuff. That's all. We treat that as a hire.

Yep. Now all of the hires to date that we've talked about have all been onshore and not offshore. One of the kind of tenants that we've grown our firm on is that we would not offshore any of the work. And that's a decision we've made. It's not the Right or wrong decision, it's just the decision that we've made. So outsourcing the HR piece is to level up really quickly with experts. They'll already have documentation, they'll see our holes, they'll help with hiring and eventually they'll help help place the right person in that role. With you and I, we, we've done this at our firm and outsourced to a really great organization and they helped us find our person who has led us all the way through. So highly, highly recommend that starting with, starting with a pro versus starting with like a full time hire that may or may not work out.

And they're eventually they're going to be helping you with like recruiting as well.

Absolutely. Yep.

Okay.

Okay. Here's where we get into setting the stage. Because at this point you'll know if you want to grow or not. And if things are working and people are paying and you've got a sales kind of little engine with you and the other person pushing this thing through. With those assumptions in place, the next hire I would have is someone who is almost not part of an accounting background, but they're incredibly detail oriented and organized and they have a high tenet of accountability to lead the operations of the firm at this stage. So call it an operations manager.

What does that mean? So to me, why do operations need to be led?

To me it means that you're finally taking that step into a little bit more of a mature hood. You're going to be able to, I won't say crystallize, but you're going to be able to set up and do a lot of work in a project management system. You're going to take the learnings of the last eight to 15 months of, of what the firm is good and bad at and where the holes are. They're going to be great at interviewing and just finding issues. They're going to look at how communication handle is handled. They're going to look at the sales process. They're just going to kind of be that person that asks the questions from a unifying perspective. And again, this person may not be with you in this role for more than a year or two because they're essentially taking you from nothing beans to semi organized and then that's only going to get better and better. But having a non accountant come in who has no bias to how public firms work or any other firms work is great. Now if they were an ops person at another firm, there's a risk that they put in the exact same thing that has worked but it works for them. Maybe they were super high growth and well funded and didn't care about like the profit piece. So I think just making sure that you have alignment on where you're taking the company and what type of business model you're running and then having them put as much effort into the right things so that you can grow sustainably. I think they would pick things around like really great communication and a nice package that people can, you know, refer to their friends and say, look what I get every month. It's very helpful. You know, all those.

And that's a full time hire, not a fractional.

No, I'd go full, I'd go full time because the amount of questions that they're going to have to ask and learn about on how things work, it's, it's a lot of time.

If I've never hired somebody like that, like, where do you even look for that sort of person?

Don't know. I think, I think if you're very clear that this is a, I really want someone who's detail organized and accountable and they, they see things through to the end and they ask the hard questions. That's, that's what I'm hiring off of. Not necessarily their experience or that kind of stuff. I actually don't know how much I'd pay for them because I wouldn't know where the revenue is in the business. But it, I wouldn't overpay just to set up the right amount of structure because the structure is always going to change. But I would pay enough where they would be motivated to make all these changes and at the bare minimum, they've got a great resume for what they've did the last year or two for a step up job or they become one with the job and just want to keep leveling up here for the next couple years.

Yeah, interesting.

Normally when people say interesting, they're like, you're an idiot. Here's what I think.

No, that's why I said interesting. Yeah, no, most people have never made a hire like that. In fact, it's like overcoming kind of the small business owner limitations. It is. Well, why can't that be a thing I would do? Like, like in that case, why would you not do that job? Chad, what jobs are you doing instead of that? Because I think most people will say like, oh, this is where I can really contribute.

For me personally, it's been in the closer position. It's like, I would like to make sure that the people that are coming into the organization have very clear expectations that they know that if they're coming in, they have their answers. They have the confidence salespeople can absolutely do this. But I've just found that founder led closing has a huge upside for small companies and small firms. Now there's other firms that have grown with full sales teams and done incredibly well. So there's no right or wrong way. But I think at this stage, if you're building a slow growth kind of right type of clients thing and there's no extra money going towards, I won't say inflated sales targets and commissions and things. I'd rather keep that money and do that work and then put the money into supporting the people that have invested in you in the early days so that they have opportunities down the road.

This episode is sponsored in part by Live Flow. Boy, if you've been around this podcast, you know we have run a lot.

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Out a link in the show Show Notes this episode is sponsored in part by Stanford Tax. And I'm sorry if I sound upset.

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All right, we're on higher. That was 12. No, that was. Yep, that was 12. We're on higher 13 now. How you getting us to 20?

So you're either promoting that first staff accountant and replacing them to run the second team, or you're hiring a person that is at the same level or so as the existing client service manager because you need to start that second, that second one up. Because there's too much risk in only having one person as a client lead at this Point you're big enough, you got 10 or 12 or 13 people. Hopefully that's between one and two and a half million bucks in revenue. Somewhere you. You need more leads.

Okay, so is that. Is that person, like spinning out part of the other team or are they just doing double duty on that one team?

I don't know. But I think after. After this long, I would say there is a really good opportunity for you to take somebody that's been with you for two years and bring them into leading their own team. And then you hire a couple. So they're. If that person was. Let's choose promotion. So we promote that person over. Which means now there's only one kind of associate staff accountant role in the first team. The second team's missing somebody, and they're also missing some bookkeepers. So I'd fill those out, and I would not do the shuffle that you're really tempted to do, because there is just something inherent about working with the same people and not switching teams all the time. If you can avoid it and if you've got a nice pipeline, cool. But maybe that person takes a few of the relationships they were leading anyway or that they were doing. Call it five or ten relationships, maybe five. That way they can get started, and then the bookkeepers can train the new bookkeepers. The new associate that comes on board after this to be able to work with that person can be mentored by the person that actually worked with them. And then you can start. You've already created room. You've gotten rid of essentially five from that first team. So you can put a new client into the new team, the next new client in the other one, the next one, you can just kind of flip flop back and forth for a little bit, and then eventually you can start filling up that second team. Okay.

And you're making some tax hires in the second team too, I imagine.

No. So this is why I hired the first two tax people, because they're essentially doing tax for everybody on a high level.

Okay.

Right. So two people should be able to handle two, call it pods of tax work. Should be depending. Not all people will buy tax from you. Some will, some won't. So I think at this point, I mean, we've said we would hire a couple more. So where are we at now? Like 16, 17 people somewhere in there. This is where you would hire like a junior tax preparer. Because remember, the other two are pretty senior. Ish. They weren't tax manager level, but they were taxes. So the reason I would do junior is because the tax managers that kind of exist in the market en masse, I think are used to managing larger teams. And if you first initially hired somebody to be able to create the team and put their stamp on it, you, you just, you won't have the exposure that these large tax managers will have when they have a team of, you know, 10 tax people below them. So if you're at a point now where you're at 20 people and you're doing, I don't know, 3 or 4 million bucks in revenue or 3 million or something, you probably can put a couple like an extra 20 or $40,000 towards a really great tax hire. So it reduces the overall risk of any tax mistakes, but also gives those two tax people that have been doing the majority of the work someone to level up their skills with. That's a weird word, but like, and you might lose a person because they didn't get the promotion, but you're setting that structure and that's okay, right? The structure is really what you're after after those first 15 people or so.

So you've got these tax folks on the side. Are clients just interacting with the csm. CSM or they're. Is it the CSM and the tax person? What's that look like?

Yeah, I think you bring the tax person in on tax related meeting stuff and maybe they're there for maybe like a year, a mid year check in for estimates and that kind of work. But it's all into what you sell, right? We didn't spend a lot of time talking about what is the firm selling, what are the services you're doing. But assume that it's back office work, payroll bookkeeping, AP tax and controllership work. Nothing cfo, nothing techy with automations, nothing obscure like tax credits or something like this that are like a big, a big thing to work on or cross border stuff. Just, just very vanilla, straightforward stuff.

Is the accountant getting pulled in on these meetings too or is the CSM stepping in more for them than they would the tax folks?

I think including them on the meetings is valuable because really they're there to learn, right? They want to, they want to, they want to see, they want to, they want, they want to do the summary emails with AI just as much as everybody else does. So yeah, I would include them because they will eventually be the ones that might lead this, this client down the road. You never know. Just like you're breaking off into different, different teams. How that breaks off is different for every customer or for every type of firm that is, that's building this out. But it's not to say pods are the right answer either. Like for the first 20 employees, I think they're a fantastic way that people, because you only have a couple for reference, we ended up up cutting our pods at about the 70, 80% mark. And then we went to center sort of shared services where there's a manager and then two associates and then they get to use all of the other services that are being sold. So I know that's way down the road, but in the beginning I think pods would be great. I'd probably do it until there's three or four really great running pods. And then you figure out how that affects your business model and future growth and replaceability and education and training and where people will insert themselves into your firm. Right. Will they always come in as bookkeepers and work their way up? Will they be CPA students and start there and work their way up? Like, I, I found that having insertion points sort of for different positions has been a lot easier than trying to hire the really high level person.

We talk about offshore quite a bit on the podcast. First comment's going to be, why not Offshore?

So for, for me personally, I've seen offshoring work beautifully for a lot of people. We had a pretty bad situation with it when we tried it, so we're a little bit scarred. But I would say that we're on the other side of all of that sort of stuff now. And I can see the calmness in everybody's eyes when you can explicitly say, no, we're not building a firm that is built around outsourcing. Now is that the reason you should or shouldn't do it? I don't know. It's your company, right? Like, this is the kind of stuff that you're thinking through. And as much as we had good intentions with outsourcing and having the onshore team review slash, do more higher level work, we couldn't pull it off. Just didn't work that well. So I think in another world and another offshore, another, another way of approaching this, it could be very different to. But I think just the fact that a lot of people went through this and like, we're really here for them and the stability of this in this like, world where there's so much things changing, I'm okay. And I'm actually kind of, I'm excited to say that we're not outsourcing. And it's right on the front of our website. It's like, hey, we're 100% Canadian and we're not outsourcing. And the amount of people that have gone through our sales process that have said, you know what, it was really refreshing. Like, I knew exactly where you stood. There was no, like, are you or aren't you? And you're the only firm that we've talked to out of all, like, the online firms that has had a stance like this. So, yeah, so we're good. So it's like, again, there's nothing that's right or wrong. It's just what it is. And who knows what it looks like in five years. But I think you have to lean into what's working. And I just, I love, I love having a slow growth, calm company that knows what they're doing and we've got a path. And honestly, if it was outsourcing, it was working well, I'd still feel as good. But we're right now, that was the decision we made.

I mean, it's a great example too, of where having, having something to say and having a stance is like, better than just wallowing and not having one.

Yep.

Especially if you're putting that on your landing page. Like, you're going to attract the folks for whom they're like, oh, cool. Like, I appreciate this. Like, this aligns with how I run my business too.

Yeah. And look, there's, there's no doubt that outsourcing works really well for a lot of accounting firms. And it should. Right. There's just, it's ripe for it. There's not much more to say other than, like, I think we'll be also able to, to lean into tech advances really well. Like, we're positioned really well. And I think people that are, like, the outsource a lot. They'll also probably be positioned pretty well if they've got a pretty good operational, like, point of contact. And like, that's how they think. I think the ones that might be a little bit hard is if they think that just by hiring an outsourcer it's going to fix all the problems. Like that. You've probably done tons of episodes on pros and cons of outsourcing and how people do it. And it's, it's. Yeah, it takes a lot of work, but if you do it right.

Yeah.

Lots, lots, lots of upside.

Okay. Any, I don't know, any glaring omissions in this squad that you've built? Final, final thoughts?

Well, yeah, like, we didn't really talk about, like, the tech piece, marketing and sales, like, what a second version of the ops person looks like tech specialists. And that kind of thing, I'd kind of group those all into. Okay. If we're at around 20 people right now, we have to decide like, where is our best and most effective use of our, of our money right now? To 1, 1, protect the calm lives of the people that have signed up to be in a kind of calm workplace. And two, what are we leaving on the table? So I love the idea of having a tech specialist because we've always had them since day one. That was one of our first hires and it really helped us solidify ourselves as like, oh yeah, we can do those formulas for you. We can make this process easier because right now essentially that's me and the ops person up to 20 people. That tech person. Like right now we have a few people, we call it the Strategic projects and operations department. And their entire day of their week and their months and their quarters are about moving rocks in eos along from a technology perspective and also identifying things that could really benefit from opening up a lot of capacity. So things like payroll, benefit reconciliation sheets, planning sheets, pricing sheets, just like all the stuff that you, you don't want to spend a lot of time on and that should be done by a computer. Introducing that would be great. Now I would love for them to be introduced at like the seven or ten person mark. But like that is a true cost and you typically won't see the savings from their work at that level versus the increased revenue from adding someone who's billable per se.

Okay, let me, let me check one question at you and then we can wrap. I. So I, when I bought my firm, it was about 35 people and it was accountants all the way down. And I suspect there's a lot of people listening who are like, you're talking about a lot of non accountant folks and peripheral stuff where, especially in the traditional billable hour model, like the, that stuff just gets, gets thrown by the wayside. I think if, if you're in my shoes, if you're my coach five or six years ago and I'm sitting on like a 40 person firm and everyone's accountants. What's that first? Like non accountant, non technical. Maybe not non technical, but what's that first? I don't know, non traditional person that you'd pull in?

I think it's the operations person. It's the one that goes around and talks to everybody and tries to find the commonality between all the roles and the opportunities and risks. What do you think?

I'll be honest, I never, I never.

Hired one of those folks and said, go figure this out. Because I was perpetually a know it all in that regard. It was more like I have very clear thoughts on what I think we need to be doing. And when I hired the person like that, it was more like to implement, it was more like to execute on sort of the plan that had already been created. It wasn't to sit down and have conversations that are going to look very different than the conversations you have with your boss to like suss out what's the right way to get through that.

Our most powerful people are the ones that are not the owners. And those, those ops types of people have looked very. There's been different types of roles over the years, but info gathering and looking at it from a fresh set of eyes has always helped. And honestly, if, if the owners are doing all of that, could you imagine what they could also be thinking about with that free time other than this? And like, who cares? Honestly, who cares if you get it wrong the first time? Like everybody's operations and stack and the way you do things, it evolves probably every in cycles of every 12 to 16 months. So just start like that just feels like the right move.

Agreed. Okay, Chad, we touched earlier on, on Automation Town.

Oh, the old pod, you're bringing it.

Back, Bringing it back from the grave, I heard.

Well, yes, thank you for, thank you for letting me use the AutomationTown name. Starting August 6th of 2024, Automation Town is being revived as an automation and AI community for every accountant. So think networking, tech support, video libraries of how to connect a bunch of your accounting tools together, seeing what other people are building. And it's really fun because I asked eight people who have service system or service companies to accountants in the automation world and they're like, absolutely, I'd love to be involved in the launch event. So for the first eight weeks starting from August 6th one a week, you'll have, you know, all the players in the automation world in Canada and the U.S. i guess, who will be speaking about what they're building for accountants. It'll all be recorded and registration will open probably in the next 24 hours or so for it. So I'm super excited about it.

Is this for like the dedicated automation hire in your office or just like whoever in your office is like geeking on this stuff and wants to steal ideas from other people?

The second I think it's all about geeking. Like we all have our different sources of inspiration and sometimes, sometimes it's hard to get the details off of social media. So. So this is that little heavier lift where you can come in. And I think the pricing's pretty fun. Like, I'm trying to keep it low so the first 50 people, it's like 25 bucks a month forever. And then like it'll just be a little bit higher for the rest. But I'd like this to be a place where people have a little bit of skin in the game. It's not a free Facebook community, but it's there. It's there so that when they do show up, there's some expectation of like, hey, you can. You can put up your tech support question and interact with people and see how they would work. That's what I'm kind of excited about. Boom.

I'll put a link to that down in the show notes Launch events happening within a week of this podcast going out. Excited to see how that develops.

Chat.

Thank you for coming and doing this today.

Big hugs. Thanks, Jason.

Big hugs. Catch you in the next one.