299 The Big Decision Your Firm Needs To Make

Today, the big decision that you probably already know that your firm needs committing to positioning your firm strategically so that you can be a better advisor, get paid better for the work you do and it doesn't have to look like whole hog YOLO cannonballing into some like wild niche approach. All it means is getting just a wee bitty bit bitty bit more specific. Got some good ideas today for how to kind of test the waters and specifically overcome the fears that keep us from doing what we know is the right thing to do. Right. Oftentimes it's not a lack of being convinced yet it is. Haha. But what about all the things that can go wrong and how do I just manage that stuff for myself like so that I can make more clear and fast and kind of direct decision making. So today we're talking about making those big decisions, particularly around positioning. Come on over. Position yourself right in front of me for the next half hour. It's kind of weird. Come on, let's do it. Come on. Foreign. Lessons that I have extracted from Geraldine's Geraldine Carter's recent book down to 40 hours links down in the show notes. In my opinion probably the book of the new book of the year for small accounting firms. Really really good. But specifically around how we position our firm. And I know we talk about this a lot and everybody talks about niching down and all these things. This was just some very practical kind of no nonsense, tactical thinking through how you actually go about doing it in a way that isn't going to turn your firm upside down. Like we're afraid of the risks of it. And the reality is the process of doing it is, is a long process. And along the way there's always going to be opportunities to pivot. And it is not like an overnight boom, super risky thing like it can feel. And maybe some people's approaches are that, but it doesn't need to be. You can actually think of it as getting to something that's like more fun. And if we're de risking anything these days, man, de risk your longevity, de risk your energy management. If you run yourself into the ground. That is arguably the biggest risk to many firms as you just running out of steam. Okay, first lesson here is in many of these cases the problem for for that change management or trying to go from A to B is not actually a lack of information, but a lack of decision, a lack of the ability to just decide and start down a path. You will oftentimes find yourself in situations. It could be A or B or a, B, C or D and you may have all the information there is to be had and you still can't decide. And like that's actually, that's super common. I found myself in that place very frequently and in situations like that, man, go through the exercise writing down pros and cons of each, take it all in and decide like that's all you can do. And there's so much value in just deciding, even if you make the wrong decision. There's so much value in deciding because the longer you don't, the longer it's delaying results. Now a story from the book that I will pull in here that's super relevant from the book. Such was the case with Michael Berry, cpa, who was exploring three niche options. Physicians, high net worth individuals and landscapers. He arrived at the place where more research wasn't going to help. He simply needed to pick. He picked physicians, knowing that whatever he learned about the niching process could be applied to a different niche should he decide that physicians weren't, weren't the one for him. The more he studied physicians, the more he felt the tension of already knowing everything there was to know about landscapers. He'd previously owned a landscaping company and knew that landscapers were sick to death of a thousand dollar patio installs. In making the decision, he realized just how much he knew about landscaping that he had been taking for granted. He took what he had learned about the niching process and mapped it over to the landscaping niche and kept right on going without having to significantly backtrack. It was in making a decision that he found the information that, that he was looking for. That is so powerful, man. There are so many, I mean I've, I brought this up a few times lately, but you roll out of bed 99% of the time, you know, you need to do. And there's so many different forms of procrastination from, from listening to this podcast to reading another book, to registering for another webinar. And there will be times where you have information that clearly says this is the right approach. But just as often you will have cases where there isn't a clear approach. You just gotta decide because in starting down that path, you're still gonna learn. And the longer you wait, the more you're delaying results. Next lesson was some like very specific timelines she offered in the book, which if you are nervous about starting, I think are a great point of reference to plan out. Like if I made this decision today, what does that actually look like a year from now, six months from now, three years from now she talks about these as the phases of niching. I don't know if these are like universally applicable, but it's definitely a good framework to start with. So first up, she says when you're in that deciding phase, say you're, you're, you've got it down to a few different options. She says, don't spend more than a month in this phase. Do you hear that? Not more than a month. There's people listening to this who will be like, oh, I know, I, I've been in that phase for the last 30 years actually. So in that phase one, when you're, when you're making the final decision, don't let it burn more than a month in phase two, you're committing, you try that niche out in your business. This phase should also take a month. And during this month you're having more conversations with people in this space, whether they're clients or not, to get an understanding of is this, is this something that I'm going to be excited about and super enjoy? She says shares the story of taking a client through the process of trying to decide between farmers and gamers. She was blown away by how much money these young gamers were working and how this seemed to be an exploding industry, but had a bunch of background in farming. She tried the gaming stuff, went down that path, had a whole bunch of those conversations and learned more about like what's it actually going to look like day to day to support these people. Decided that one was not for me actually. Not unlike the last story where he came back to his landscaping expertise and this individual ultimately came back to farming, found some specificity within that space, like within farming. I think it was like 7,500 acre plus farms or something like that, and then went all in on that. So that's your first two months, which is probably surprisingly short, right? Longer term time frame. She says at three months you're continuing to test and learn. And again, if you got to pull the parachute at any of these points or you decide you don't like that, nice work. You, you've learned in two, two to three months time what you've been fearing for the last, who knows how long and you're now in a better position to make the next decision, that's all we're trying to do. Not trying to get to the ultimate answer, just try to get closer to an answer. At the six month window, you're attracting more clients to that niche. You're starting to get some referrals from other folks in that niche. And you're starting to say no to some clients outside that niche. Notice that we didn't turn off the faucet for everything else overnight. At six to nine months, you may still be saying yes to clients who are close to your niche, if they're still gonna be good clients. Nine to 18 months, you're beginning to say no to clients who are not squarely in that niche. At two years now, the vast majority of the clients on your roster, they are within that niche. You may have 20% who are kind of adjacent to it still. And then three to five years, you're now thinking in terms of thought leadership. If you're building an email list, hosting webinars, that sort thing, at three to five years, you ought to be be recognized among sort of the leading thinkers in this space. You'll be asked to present, be a guest on podcast, share your ideas on panels. And this is making your firm now, now one of one. She's got three to five years on this. I'll be totally honest. If you decided to work with gamers tomorrow, there's a podcast you could go on next week where you would impress people. It's good to have some expertise there already. If it's something that you already know about, that's a better place to be coming from than if you know absolutely nothing about it. But does it take you three to five years, I think, to be perceived as an expert? I can. I can speak for myself. I had never really posted on social media five years ago, and now people think that I'm an expert. And that's been, I don't know, three years or something like that. I think there's probably a timeline much shorter than three to five years where you can be perceived as an expert. The only thing to look out for is if you start investing in that way. And that's a great example of something that works while you sleep doing an interview on somebody else's podcast. If you're gonna start investing in planting those seeds, be reasonably sure that that's something that you do that you do want to go after. So there's a window there, you know, less than six months, where you are getting your feet under you, and you're like, am I really gonna enjoy doing this? Is my team gonna enjoy doing this? If so, like, then let's pour the gasoline on it. Get out there, get visible, get perceived as an expert. Today's episode is sponsored in part by liveflow, the company that helps you put a jet, your spreadsheets, connect any old QuickBooks file to your Excel to your Google Sheets. Sync data in one time. Sync it in on an ongoing basis. One thing I really like is when I pull those reports in From QuickBooks to the Excel spreadsheet or Google Sheets, I can move all those individual cells all around and they will continue updating. So if you think about all of the values, all of the things that you can get with a QuickBooks report, pulling all of that into a single place and then having the power to rearrange those things however you want into a a single view for a specific company. Even a single view across a bunch of companies. Like, I don't know, maybe in a single sheet. I wanted every transaction and ask my accountant across all my QuickBooks files or something like that. You have complete flexibility to pull that stuff wherever you need it, rearrange it and it won't break. It'll continue updating. Pretty cool. So start getting crazy with your sheets with Live Flow Link in the Show Notes this episode is brought to you in part by Teamup Helps you find talented accountants in the Philippines Pop Quiz how much do you pay an accountant in the Philippines anyway? Do you know? I'll give you a minute. I'm just gonna tell you. Here's the answer. It depends, but I'll give you some ranges. Monthly salaries for full time accountants in the Philippines for bookkeepers and accountants are going to range from 900 bucks a month to $2,000 a month. Tax accountants generally $1,100 to $2,700 a month. Senior accountants slash managers 1800 to $3,200 a month and executive assistants $800 to $1,800 per month. For context, a three year accountant in Manila not working for an international firm, usually around 400 to $500. My mental framework was usually in India you're going to pay about half as much as in the Philippines. But another big cost factor is whether you're hiring through a bpo, which we recently learned about. BPO handles some of the the logistics of managing and employing that person on the ground in another country, but you're usually going to pay them another 40 to 70% for that service. Team up their approach. Hire folks directly so you eliminate the cost of that BPO and they just help you find cool people. You pay a recruiting fee and no ongoing fees after that. Want to learn more about team up? Check out the link down in the show notes. Last lesson here. And then I want to do a sort of fear management exercise because I think that's probably the biggest blocker for most People lesson number three is a little more, more woo woo. And I think oftentimes the source of our fears. The book talks about how you are not your business, but the fact that your name's on the door can make it fun. Feel that way. Right. It's hard to separate our identity from that of our business. When your business fails, does that mean that you're a failure? It shouldn't. When your business succeeds, does that mean that you are a success? I think we'd like to, like to think that it should, but I think we can point to a lot of examples of people's businesses finding success. But if you look into their life, you see that, oh, there's actually nothing remotely successful about that. In fact, everything in their life paid the price for that quote, unquote, business success. So those two things don't need to be married to each other. She also calls out the notion of, of not charging what you are worth, rather you're charging what the marketplace will pay. And this feels like a little bit of a poke at value Pricing's quote price the relationship. Pricing the relationship feels very personal. And if I'm not running a firm where I want to do all the client work or, I mean, there's a ton of scenarios there where it's like, is it really the relationship or is it what people are willing to pay for the product my business is capable of producing? Right. And maybe that at the end of the day, that is still pricing the relationship. But take care to not like take that, I guess personally. That's to me. And I got way more into this as I removed myself from running from accounting firm running and then ran more traditional businesses that weren't subject to kind of the constraints of a service business. What, what geeked me was the machine of the business. And actually my, my distance from that and to the accounting firm for me was very personal. And I think part of why it was personal was trying to prove things to, to the partners. And you know, I was very young when I was first there and saw these relationships and your, your colleagues where there was a time where you were on an equal level with them and then you bought out the firm and now you're their boss and many of them are very much your senior and you're perpetually kind of trying to prove something and that just, that felt very, very personal in nature. But the better version of running a business that, that I hope I'm now more capable of is to look at a business for what it is. It doesn't mean it shouldn't matter to you. It should. But you are not your business and your business is not you. Now, there are types of businesses where, where like that person's identity and all that, like they're just so intertwined that, that, that is kind of their identity. And I, I think there's a lot of risk with that as well. Like any notion of tying your identity to, I mean, something as silly as a business, the market turns, that business goes in the tank and then what just happened to your identity? Like, you're left with nothing. Right? So remember that you are not your business. Now, we ran through this one other time, this exercise I want to do, it's called fear setting, popularized by Tim Ferriss. It is something that he still does every single month that I think is totally worthwhile. The whole idea is let's put our fears under a microscope to more mindfully look at them and assess them. Not to dismiss them, but to determine what's valid about them and how we could even mitigate them. Because there's so many things in our lives that we just don't do due to this ambiguous fear. Or 10 o' clock Tony in your head where you're laying in bed and your brain is just totally unhinged late at night and you're having all these, these concerns about this or that, and in the morning you don't even remember what they are. Right. But the idea behind this exercise is you are. We are inspecting those fears for what they are. And I think most folks, when they're thinking about better positioning their firm, oftentimes they understand the value of it. And it's actually the fear of what could go sideways that keeps them from doing it. So going to run through this, this exercise, and I'm going to pretend that I am an accounting firm that is considering niching down into, let's say, golf caddies, because that's kind of been the theme of the last couple of few weeks. So first thing we do in this framework is define, list out everything you fear about the idea of taking action. So what are my fears of specializing in golf caddies? Maybe something happens to the industry and that industry kind of goes away, right? Golf caddies can't make very much money anymore or something like that. Maybe I miss out on an opportunity that would have been better had I not gone down the golf caddy path. Maybe there would have been something that would have been even better than that. I'm afraid of letting go of other people that are not golf caddies that I really enjoy working with. And that I have helped and made a meaningful difference for. Like, I don't want to get rid of those folks necessarily. How about, I don't know that I'm always going to love working with golf caddies. Maybe I love that right now, but what if I don't in a few years? Those are some, those are some super common fears I think folks have around getting more specific. Next, list ways. List ways that you could reduce the likelihood of each of the worst case scenarios from happening. So how can I reduce the likelihood of a worst case scenario? So let's say a worst case scenario of that industry going under. How can I reduce the likelihood of that? That's one that maybe I don't have a ton of control over. How likely is that? In some industries I think this is more likely than other. Like if I went all in on, I don't know, web3 or people bring this up with restaurants and point to like Covid shutting down all the restaurants. Like, to me that's not a reason. I don't know, it doesn't seem exceedingly likely that we have a whole ton of things like that. I don't know, maybe you do, but that's not one I have a ton of control over. So it's worth just acknowledging in this case that fear. I don't have a great way to prevent it, which is fine. Like, the goal of this exercise is not to dismiss all of this stuff because the next step is to repair. Like, how do you repair the damage of worse came to worse in the event of like the golf industry just tanking, then that's when we want to think how do I repair worst case scenario in this case, like golf, seems to be doing the opposite. This episode is sponsored in part by Maker's Hub. AI this, AI that. Listen to me, I'm the captain now. The biggest thing that is going to impact our accounting workflows over the next 12 months, and it's already impacting them now in my opinion, is AI vision models. It is the ability of AI to look at something and understand it and pull stuff off of it, and it is already much better than anything OCR has ever done, even picking up like messy handwriting. But when you combine AI vision models with large language models that can do a bit of reasoning and like fill in the blanks and make a, make a little decision, the combination of those two things means we can pull things off of documents and put them where they need to go in a much more automated way. And the company that is crushing this for accounts Payable right now is Makers Hub. We've done a few demos of their tool on on my main channel, kind of like finally delivering on the promise of automated extraction for invoices. Like people have been telling us that this could be fully automated for a long time. Feels like we just got like a way bigger step closer. Going to be particularly powerful for the hairy accounts payable workflows. We got to pull a bunch of item detail off of some invoices. We did some wild examples in the last demo day video we did with Makers Hub chucking super gnarly, humongous invoices at it. And it lifts like hundreds of lines of item detail like almost instantly the same text impacting our 1040 workflows as well in a really exciting way. But if you sell accounts that payable to your clients or if you're exploring doing this, I think AI has changed how profitably we can do so. To learn more about Makers Hub, check out the link down in the show notes. Today's episode is sponsored in part by Client Hub. When it comes to choosing a pm, it comes down to the four C's capabilities, client experience, clarity and community. I already told you about capabilities and client experience. Today we are talking clarity. How approachable is that system? I tell you what, as these systems have matured, they have turned into monsters, frankly. Some of them, when you look at them now is like, it's just a lot. And there's a certain element of vibes to software. Like, you see a software and you're like, yeah, that's me. I can get into that. Like, when I first saw Notion, I was like, this is my vibe. There's other people when they see Notion, they're like, I hate this Client Hub, man. It's the whole vibe. It's got a vibe. It's pretty clean now. There's usually a linear relationship between our first C capabilities and another C. You don't want complexity. The holy grail is a platform with clarity. Lots of powerful features, but not complicated Client Hub. It has the magic of clarity. Makes everything simple for a firm owner and their team and their clients. Clear layout, powerful features, yet simple to use. Makes it easier to onboard new team members. Spend less time supporting your team's questions. You don't have to run tech support for your clients because they can't figure out what the H is going on. Oh, that's the worst. That is clarity as delivered by Client Hub. Spend more time delivering value, not trying to figure out how your PM works. Okay, learn more about Client Hub. Check out the link down in the show notes. What are my other fears? The notion of missing out on another opportunity. How could I reduce the likelihood of that worst case scenario? Probably not making that move too quick, like not unplugging myself from everything else or firing a bunch of clients overnight and not going all in until this is very obviously a better, more compelling path that I will enjoy more. And not until we're on that like, path that feels inevitable do we actually fully commit. And then the fear of, what if I just don't like this stuff in a few years, how could I reduce the likelihood of that worst case scenario? Maybe it's worth digging into what aspects of it could I see myself liking and not liking one really nice. And in some ways bad thing about getting more specific is the work you do day to day gets more specific so it's easier to build systems. You're not like recreating the wheel every time from scratch. And oftentimes people say I don't want to specialize because I enjoy that freewheeling, doing something different each time. So like, I enjoy that aspect of my work. So if I'm afraid of getting burnt out on this stuff, maybe it's because it becomes repetitive. But thinking about myself, what do I enjoy and what do I not enjoy? I enjoy meeting really interesting people. I enjoy having those conversations. And so the main way that I could probably prevent that burnout is to just be more mindful of what aspects of that do I burn out on and which ones, like, would I not? Is it the doing of the work? Is it managing the client relationships? Because if it is, like, maybe I remove myself from client work and think more meta about the firm as a whole. But drilling into what those sources of burnout would be and which aspects of doing that work I would most get annoyed about. And then getting out ahead of that, that's probably the best way to mitigate it. And then third, repair list the ways you could repair the damage of worse came to worse. So let's say the whole golf industry goes under. How do I bounce back from that? I think in all likelihood, along the way I probably made a bunch of relationships that if they're not doing golf, are then going to go do something else or something adjacent to golf. I mean, the notion of it all just disappearing overnight seems very unlikely, but even if it did, I still have those relationships. I could probably follow those relationships if I, if I mean, whatever they're going to do, they're still going to need help. If I got totally burnt out on, on working with caddies. How do I mitigate that these days in accounting firmdom? I mean, I could sell a practice. I could remove myself from doing the client work and just run the team that's doing the work. I feel like once you've built the firm, like that's a reasonably solid asset where it's not going to be wasted effort to have built that. And I'll put a link to this worksheet down in the show notes. The start here is define all of those fears and then think through how you could prevent them and then think through how you could repair if the worst case scenario did happen. And like already you're just thinking more tactically about what those explicit fears are. The next section. Consider the potential benefits of taking action. Give yourself space to be more open and consider what might go right if you do take action. Write down all the positive benefits of even an attempt and this is a big one or partial success of taking such an action. So big benefits. We're looking for a more turnkey firm, more profitability, being a better advisor because I talk about the same sort of thing every single day, or at least a more specific kind of thing. Benefits of a partial success. I know more about what to do and what not to do when I'm specializing. I know about more about myself, about what I like about it and what I don't like about it. I get to hang out with golf caddies because that's the thing that I love. That's what led me to. It was a passion. And now I get to spend my time with those folks. And now I have a bunch of relationships in that space as well that will open all sorts of doors for me to do who knows what. That's a pretty easy one. But I, in the midst of all the fear I think we do, it's hard to have a scale of what are the benefits, what are the fears like. It is hard to judge those things fairly from inside our own brain. And then last, consider the consequences of inaction of not doing anything over the six month, one year and three year timeline. This is where it gets real for me. Because it probably comes down to time and attention. It comes down to if I stay on this path, I'm working my buns off who's going to pay the price for that? I will. But who else is also going to pay the price for that? So oftentimes we find ourselves in a. In a situation that maybe, maybe isn't sustainable or certainly isn't optimized. Where in 40 hours, you could probably getting. Be getting a lot more done than you are now. Or you could be working 70 hours instead of 80 hours. It's easy to shoot holes in the plan and not acknowledge that today's plan, the status quo, just. Just isn't working sometimes. And then other times it is working. And this is probably the most common pushback I see for this positioning is. What do you mean? I can run a firm just fine like this. And the goal with positioning is just to run a better firm, a more profitable, a more calm firm where you have more leverage, people pay you better. It is not that it cannot be done without positioning. It's that if you do start thinking a bit down that path, it's probably just a slightly better evolution of what you got. And if you end up liking that path and it makes sense, maybe for sure. There's a day where you go whole hog into that and you're super, super specialized. And I tell you what, the most specialized firms I talk to, like, it is so cool to pick their brains and, like, see their passion for the little, like, the domain that they've carved out. It is kind of the source of my conviction for all this stuff of why I think that's really awesome. Give that some thought. We can all probably serve to be a little better positioned, but also consider why, why we're not doing that. Is it that we're not convinced yet, or is it that we're actually just kind of scared and we haven't unpacked those fears? Link to Geraldine's book and link to the worksheet down in the show notes. Thanks for coming hanging today. And if this led you to a change or more seriously considering something, man, drop that in the comments. Helpful for other people to see what folks are struggling with. Like, what is that blocker? If you're feeling it, somebody else is too. Drop that thing in the comments and you may help somebody. See you in the next one.