362 The WRONG Way To Grow Your Accounting Firm

Over the next few months, you are going to let all sorts of new clients in the door. You're hopefully going to cut a few stinkers. And it's worth pausing to consider, how are these people finding me? Are they finding me because I'm good for them, or am I engaging them because they are good for me? Those are two very different things. A very important distinction. Today we're talking about how to build a client list with intentionality. Because you know what? You have that agency. I talk with a lot of people that still don't believe that they do. But you do. It is up to you who comes on the list, who leaves the list, and to manifest that next great person that you want on the list. But most of us, I think we aren't there yet. We're kind of. We're very grateful for anything that comes our way, but we don't realize how much control we have over this. That's what we're talking about today. Come on in, buddy. Scooch that chair in. Let's do it. I made a very stupid thing on social media last week that I'm gonna play for you here. It's a story, I think. An important story. A parable, perhaps. See if you can figure out where this is headed as I play it for you.

A child came to visit a man who was smiling and standing by a bare patch of earth. Look, he said.

This.

This is my new garden. The child looked at the fresh, empty dirt. I used to work at a nursery, the man explained. I saved enough money and now I have my very own land. The child smiled too. It was exciting to see the possibilities. How will you grow your garden? She asked. The birds will bring the seeds, said the man. I'll just let them come. He spread his arms wide and grinned. And I will care for them all. The child nodded. She liked the idea of helping every plant. The child grew a little older and came back to visit the man. The garden was now full of plants. Look, said the man, pointing proudly. The birds brought all these seeds. There were flowers, tall grasses, and vines everywhere. The child looked closely at the garden. Some plants were big, while others were small. Some of the larger plants were growing over the smaller ones, blocking out the sunlight. They are all growing, said the man. I work very hard to help them all. The man looked tired, but he kept working. Every day. The plants seemed to need more care. The child nodded, but she noticed that some of the small plants were struggling to survive. The child was older now, and she came back to visit the man once again. The garden had grown even fuller. The plants were tangled, thick and messy, with vines wrapping around flowers and grasses. Look, said the man. There are so many plants. He looked very tired, but he smiled anyway. I take care of all of them, he said. The plants needed more and more from him. They had grown taller, crowded and heavy. The man gave them all of his time, all of his care. The child saw the plants fighting each other for space. Some of these plants aren't healthy, she said, looking concerned. They can't all grow here together. But the man shook his head. I'm a good gardener, he insisted. I can help them all. The child was grown now, and she came back to visit the man one last time. The garden was wild and overgrown. The plants were choking each other out. Many were brown, weak, and dying. The man, now older, looked very tired, with deep lines on his face. I must help them all, he said, his voice barely a whisper. The old man gave everything he had left, but the plants still wanted more. The old man sat down, too tired to stand any longer. I have nothing left, he whispered, his eyes filled with sadness. The child looked at the garden. She saw how the plants were hurting each other because they were too crowded. You can't help them all, she said gently. The old man looked at his garden, frowning. He didn't understand. I am a good gardener, he said softly, almost to himself. The child sighed, her heart heavy. Maybe if you move those pots, she said gently, you could find another 20% in capacity to get the better EBITD multiples offered by private equity.

Okay? AI doesn't quite stick the landing on the joke at the end there. Okay? But you get the idea. I used to work for a nursery and now I'm so proud. I have my own plot of land and it's gonna be amazing. I'm not gonna make any of the same mistakes that they made before. It's gonna be great. And you know what I'm gonna do? I'm just gonna let the birds just drop whatever seeds they want on here, and I'm gonna take care of all of them. And it's gonna be great because I am a good gardener. It'll totally work, right? And oftentimes it is other people in your life, or maybe even like generationally, a different generation of accounts. I'm generalizing. That's not the case for a lot of people, but it is like the the child's perspective or the outsider, the non accountant who looks at an accounting firm and is like, really? Really? That's. That's the best they can come up with like, they don't see the issues there. It takes somebody else to come along and be like, well, of course that wasn't going to work, you knucklehead. You can't just say, sit back and let anything and everything come in and just expect that that's going to be the most optimized outcome. But the way that most of us approach client acquisition, that's kind of what we do, right? Like there's no intentionality to it when you're feeling really, really brave or somebody does something exceptionally dumb. Sometimes we're willing to fire a client, but most of the time we are largely sitting back and taking what comes, expecting that the universe will provide. And if you're an accountant, it usually does. But not having this sense of agency to say that like, oh no, like I can actually define the direction of where we're going and that will ultimately be better than just whatever walks in the door. Logically, it makes all the sense in the world, but we don't do this. And it's, it's probably a more a question of we, we just don't know how. Like I, I'm not a marketer, maybe I don't enjoy doing anything besides actually doing the technical work. And so just what are some really practical tips to avoid this? Like without getting too big brain, like, you know, mba, like optimize this that you're running your firm wrong. Work on the business, not into like without getting into like the real over the top stuff. Like just what are super practical things we need to be thinking about. I've got five notes here. Number one, recognize the trap that growth can be and that it's oftentimes our own. Like that feeling of flattery that, that keep. Keeps pulling us down that path in a way that's not good for us. Flattery is, is a real dangerous thing to not be aware of. I could give you a long list of things that accountants do as a result of, of flattery. Speaking of conferences going on, partner councils with software brands doing anything with intuit. A sick burn. I'm just kidding. There's all sorts of things where somebody asks you to do that thing and you're like, oh, thank you so much. Thanks so much for thinking of me. Absolutely, I'll go and do that. But like if there's a business coach sitting on your shoulder, that's like, buddy, I've seen your email inbox. I see all the other things that you've committed to this week. Why are you doing that now? There's certainly scenarios where that is a good thing for you. Like, if you have something you want to promote, if you're going out to a little lunch and learn and you want to kind of get some clients from that or something like that, for sure, there's scenarios where that's worthwhile. But. But if you're not mindful of what is flattery, then you will absolutely get abused by flattery. And that's exactly what it is, is people like making you feel good about yourself. And I'm, I'm very aware of this because a lot of people want things from me. And so you have to be mindful of, like, why are they, like, coming at you like this? But on like, a more, a more macro level, when, when our identity, our identities are tied to our being business owners, being entrepreneurs. Well, an outsider, how do they gauge the success of your business? How big is it? Like, that's the easiest thing, isn't it? It's for me as a, like, content creator online, my version of that, I have the business version of that. But like, the more visible version of that is followers, subscribers, things that are ultimately vanity metrics that don't actually tie into how deeply do I impact people. I can go out, I can make general content that gets way more traffic. I can make funny stuff that makes way more traffic, that generates way more traffic. But does it ultimately change people's lives? Like, does it impact them? Does it enrich them in any way? And there's still, like, I have to always play this game of, like, resisting the urge to go after those vanity metrics. But still, you go to Thanksgiving dinner and you explain to somebody what you do or something like that, because they still don't understand. Not their fault, because I don't. I mean, we're, we're, we're only one Thanksgiving cycle for me, being able to say, I run an accounting firm and they're like, they're still not interested, but at least then they understand. But I tell them what, what I do now, and they're like, oh, so you get like a, like a million followers or something like that. I'm like, man, you should see the things I talk about. I certainly do not have a million followers. I just talk to, like, small firm owners. And in that moment, wouldn't it be nice if I could tell them why? Yes, yes, I do have a million subscribers. Uh, would you like to see how big and impressive my channel is? But ultimately, like, that's a trap for me. Like, that's, that is growing for the sake of growth, to impress I don't know, somebody. And that's like we just have to be really aware of that, that that is ingrained in us. We are all status seeking creatures and so we have to fight, like fight back against that kind of inherent thing inside of us. This episode is sponsored in part by Live Flow. A lot of folks using the new Live Flow dashboard features for all sorts of st. Among them actual internal dashboards that are connected to your client's ledgers. What? Excuse me. So normally you think about a dashboard being like a client facing thing where they can get some sort of insights, make decisions based on it, but you can also do the same thing for your internal bookkeeping team. Maybe you are monitoring bookkeeping that is kind of led by the client, or maybe you're using it for quality assurance, like a single dashboard to see the status of that company's book. Because Live Flow will keep pulling in live data coming in from the ledger every single day. Or alternatively, you create that dashboard as a snapshot, more like a work paper that is like a view of it at a point in time. I know firms that use Live Flow for managing the month end closes for all of their clients because it's just more efficient than having to click around inside the ledger itself and like generate PDF work papers, all that, right? Interesting use case for dashboards. Learn more about lifelong. Check out the link down in the show notes. This episode is sponsored in part by Team Up Boy. Team up helps you find talented offshore accounts in the Philippines that you can hire directly, adding to your team just like anybody else that you would hire remotely. I was talking with somebody the other day who recently launched a solo firm. They're growing, they kind of want to hire, but the cost of making that first hire feels really burdensome. What do you think? I told them hire offshore whether the cost is burdensome or not. That's where I'd start. In fact, when I drafted my first 20 employees in that podcast episode a couple months ago, first two or three were all offshore. Talking with another firm owner who bought a firm from a partner who's in the process of phasing out along with another one of their biggest producers. And she's like, I got to backfill this, I got to hire all this work somehow the former managing partner and their most senior producer. What do I do? I'm like, you're rebuilding a completely different firm from scratch. But basically, and the way that I would do it, the way that I would keep getting the work done, I would hire onshore people to be client facing. But I'd start making offshore hires now because I can find them quick and they're really stinking good. That was my experience anyways for the last five hires I made in my firm were offshore. Obvious cost benefits. But you know what, they're capable of doing just about anything that anybody in your firm can do. I'd encourage you to learn more, ask the embarrassing questions, get on a call with Team up, get just learned because it's increasingly becoming the norm. I'm hearing from people almost every, honestly, almost every week now that are like, you convinced me I'm doing it. I'm excited about it. And the only two offshore like placement groups we work with on this podcast super, super vetted, talked with a lot of people that were blown away by the good experience they had. So if you're thinking about it, check out Team up link down in the show notes. Second, don't happily take every referral you're offered. This is another form of flattery and you genuinely appreciate when somebody refers somebody to you. Like, that's great. And it can be a hard or an uncomfortable thing to say no to. But as I've shared before, I think if you take any and every referral that can actually pull your client list down over time, at the very least it's more of the same. Which most of us. Nope, none of us. I will say none of us. We don't want more of the same. We want more of better. Like, your firm has to be evolving because when a firm gets bigger, it gets slower, it gets more costly. Like, things just get harder. I'm not a believer, by and large of quote unquote economies of scale when it comes to most of the work that we do. So most of us don't want more. We want better. And referrals are more like unfiltered referrals. Now what I do want is referrals from my best clients. I want referrals from my A's and B's for sure. But ultimately, what defines the future for my firm are my eight my clients and my S tier clients that I haven't even found yet. The ones that are even better. Those are the future of my firm. But it's the C and D clients that hold us back. And in my experience, it's the C and D clients that give me the highest volume of referrals. And as long as I'm taking that, I'm. I'm committing my firm's attention span to something that is not taking me forward. Tip number three, have a plan to cultivate. Like you are the curator of your client list. It is your job to, to make sure that the very best people for your firm are on that list. And that's not possible without removing people and without getting real explicit and having a clear vision for what exactly makes a like a client. Like what are the attributes of them? Is it an industry? Is it the way that they work? Is it demographics? It's your job to create that vision. And you'll find when you go through the work of doing that, even though it's hard and, and feels like it's going to exclude a lot of people, once you have that vision, you actually have something to say then. Like when you go to social media, when you write copy for your landing page, you actually have something that resonates for the first time rather than feeling really vanilla. Number four, don't be afraid to do the necessary weeding. Talked about that a bit, but I think most of us, because we are quote, good people or have the servants mindset, we are too slow to let clients go who are ultimately holding back the firm. And there's some financial fears here. There is like the scarcity mindset where we're perpetually surprised at how much new stuff we bring in oftentimes, but we don't really have time to like go after it or, or optimize for what the best new client could be because we're too busy like solving the pains and the problems of the legacy clients. And it's not until like just like getting out of bed every morning, making the list of the things that you're going to do that day, you're going to complete that list 10% of the time. Like especially the, in my experience, the bigger the team you have and the more of a client headcount you have, there will always be things that come up and you just never in a day get done what you want to get done, right? The same thing plays out over the arc of an entire year. You have to reduce to the point where you're pretty sure you're going to be spinning in your chair and having nothing to do in order to get everything done. Like the logic of how much you would have to remove from your daily calendar to get everything done is the same as that year long arc. Like you have to remove clients down to the level where you're not sure what you're going to do because serendipity and new introductions and new clients, you don't know what those are yet. So like you have to create space for that down the road and like, there's a part of us that's like, well, I, like, what am I, what am I even going to do? Like, if I don't have anything to do that's just, that's lost time, that's lost money. I, I implore you. Have you ever pushed it that far in the past, ever in your life? If you're actually balancing that, optimizing it perfectly, then half of the time you'll have too much to do. Half of the time you won't have enough to do. Right. What's that, what's that balance look like for you today? Is it 50? 50? I would hazard a guess that it's probably not. I can tell you personally, for me, it is. It's. It's not a good ratio. Last number five, figure out how to actually measure who's best and, and who isn't. So on that client list, like, why, why do people value you so much more than some of the other clients you have? We've talked about this quite a bit. Like, what is it that makes one client incredibly happy to pay you top dollar and then another client begrudgingly pay you a discounted fee? Right? Like, have some conversations, dig into what makes them really value you decide whether that makes them ultimately, you know, A or B clients and have a framework for, here's how we fire people every year. Here's how much space we create for the new clients we haven't met yet that we know will probably come, like, actually get tactical about how that curation happens. Most firms are just 100% fixated on fulfillment, the doing of the work. But when there's a project out there that will pay twice as much and let you cut three legacy projects, when you got clients on a list that, like, are no fun to work with, but there's other clients out there that would be a blast to work with. Somebody has to be thinking about those things. Like, 100% of the attention span can't just go into fulfillment. And it's your vision for how you curate this client list and what makes an A and B client that gets everybody on board with what exactly that looks like. It leads to them raising their hand when they see behaviors that are not representative of an A or B client, sometimes it'll cause them to check you. When you get excited about a thing that's like, are our A and B client's going to be excited about that or is that just solving a pain that, like, our nagging C and D clients bring up? Because if that's the case. Why are we investing time and attention in that? If those C and D clients are on probably a 36 month journey to another firm, like, they're probably not going to be on the client list long term. So is that decision or that initiative actually like going to be in the best interest of the folks that we want to move forward with? This stuff just doesn't happen by default. Like what wanders in the door. It is never going to be optimized. Like, it requires curation. Acquire some intentionality of what rooms are you getting in front of to talk about what you do? Like, what are the things that you're saying on social media? Are they specific enough to where your A and B clients would actually get excited about those things? The, the really like, fortunate spot that we're in as accountants is this is that there's an abundance of work to be done out there. So most of us, like, there's an initial phase when you're building a firm from scratch where it's, it's like a little stressful and you don't quite have enough yet. But most of us get through that really quick. And then the entire rest of your career is about curation. Like, we feel like oftentimes we feel so much gratitude that we don't feel entitled to do that curation. But ultimately it is going to help you serve clients better. Like, you will help people more if you're willing to do that curation. And you can do it the right way by building a network of other accounting pros that you can send those folks to who are no longer a great fit for you. Like, it doesn't mean a big dramatic breakup where you leave them flapping in the breeze. You literally, like, let's not get, let's like, let's be realistic about we are not the best in the world at what we do. Like, that's oftentimes we look at our own firms as being perfect in every single way. So that if we send somebody somewhere else, it's always going to be downgrade. Let's be realistic here. That's not the case. If that client is not the apple of your eye and the thing that you're really excited about doing, then you're not the best for them and you're literally doing them a disservice by dragging them along and begrudgingly serving them longer, as opposed to like building out a network of other firms that you can work with and send work to for whom they will be the apple of that firm's Eye and they'll get great help. Maybe you're, like, recovering from that. Like, I just can't believe I can make a living doing this accounting stuff. I frankly can't believe how much money I'm making right now. And so, like, I don't feel entitled to be that selective about the clients that I work with. Like, they're such great people. I can't believe they pay me this much money to do their accounting work. Like, if you're still grappling with getting over that, like, it is, like, macro level. Let's zoom out. Life in general, what a gig. Not a bad deal, right? Like, and for me, the holidays are actually always a reminder of this. Where I. I do Thanksgiving, I do Christmas, I do all that stuff with a whole bunch of people that all go work for a machine. And I'm the only person in that group that has, like, total autonomy to do what I want to do and, like, have a massively greater level of agency over what the next 10 years of my life looks like. And so we should be incredibly thankful. Like, it is such a cool thing to be an entrepreneur, and most people just are not wired to. To. To work that way. And so I guess it's about finding a way to live in harmony with that gratitude while simultaneously, like, being willing to, like, look the universe in the eye and say, like, hey, thanks. Thanks for all the fish. But I just. I see something over here that's even better. So let's push in that direction, because I think, like, manifesting your future, like, I think that's a very real thing, manifestation. But being willing to. To do so and not feel like that's a prideful thing, not feeling like that's not being appreciative of the people that you have right now, like, living in the conflict of, like, being able to navigate that. I think that's probably something that a lot of us struggle with. But I can tell you what resonates with me is more the barbell approach of, like, doing what's best for my firm and finding the people who I can help the most by being visible by talking about what I do, by being willing to cut the people that I'm no longer great for, so I can be even better for the people that I'm best for. Like, that is the path to helping the most people. And so all the. The personal blockers that we have, you got to find a way to shed all that stuff, because that is the path forward. That's creating a better place to work for other people that's giving you more, more freedom financially with your time and all that stuff. It's creating more bandwidth to even help people that really need help, like community service type contexts. So whatever blockers we have, whether it's the social anxieties of firing clients or not being able to marry that with, like, the gratitude you feel for what's gotten you this far, like, we got to work through that stuff so that we can find something even better on the other side of it. How's that? That that ended in a pretty rah rah place. You can do it. Thanks for coming and hanging today. I'll see you in the next one.