384 The Right Number of Apps To Have in an Accounting Firm

Man, I love this question. What is the right number of apps to have in an accounting firm? Is there such a thing? Also because you better believe it's a Q and A Friday. How do you hold your nerve on a new service line when it isn't profitable in the beginning? What do you do with. With old clients if you niche down? What do you do with the ones that aren't a great fit for you that you got to take out back? You can't just old yell at those people, right? And some risks that come with acquiring firms. Come on in, let's talk about it. It's chasing on. This is a great question. It hits on so many things, both directly and indirectly. The context of the comment came up, I think on a video where I was talking about the fact that we're spending more money than ever before on software. Like that's just, that's how it is. Like normal is being. Is being pushed to, to. To sort of new boundaries. And I only see this getting worse with AI technology and the solutions becoming more compelling. We're increasingly like these organizations that are augmented with technology that are handling more and more of what we do. And I mean, I don't like it necessarily. I don't like spending more money on tech, but what we do is becoming more and more tech reliant. And I'd made the point that it's like, yeah, we're spending more than ever before, but. But the calculation to do like it comes down to, is the ROI there. Regardless of how much your total software spend is as a percentage of revenue, you have to look at each tool individually and do the assessment to say is the ROI fundamentally there? So the comment, the question came up, I get that you need several systems, but there's a limit. The firm I work for currently has 14 or 15. It's too large and too unwieldy. I'm curious what your reaction is to the number 14 or 15. To me, if you're only running 14 or 15 apps these days, you're doing pretty good. That's actually not too many. A couple things wrapped up in this. The cost one, which I'm going to circle back to. But first the, the grappling with manual processes. We're actually going to do an episode next week about the struggle with portals and how there's so many different portals. Do I use my PM portal? Do I use my workflow tool portal? I don't want to have to manually move stuff back and forth. Early days cloud, like the promise of cloud was, oh, we can now have all of our, all of our systems in the cloud and they can all nicely talk to each other and shake hands and exchange data from system A to system B. And gang, that just, that just never happened. Native integrations very quickly became big business. And there's reasons why some companies integrate with others and other companies don't. Not all companies are friendly. Many companies have. A really good example of this is PM's right now are not integrating with tax intake tools because tax intake is actually a pretty big threat to the business model of PMs. If you're on a PM that supports tax firms right now, those companies by and large are scrambling to build that tax intake stuff into their product. So they're not excited to run out and build integrations with those tax intake tools. The problem is really good tax intake solutions. The ones I've been recommending, Safe Send, Stanford Tax and Sorban, they're on like V2 or V3 of their tax intake system. They've been working on this for like 3 years now. PMs haven't even shipped this yet. Haven't shipped anything more than boilerplate organizers, which in my mind is not an intake solution. That's basically a digital version of a paper organizer. Actually worse because paper organizers generally have pro forma data, but most of the templated ones you get from your PMs don't. So that is not an intake solution, in my opinion. And to make the leap from there to what the dedicated solutions are doing now that have years into this and are already like several planning steps ahead of the next things that they're pushing out, that's a really challenging thing for a PM to catch up on just from a development standpoint. But if you think about these organizations, PM companies are large, more mature organizations. These tax intake companies, they are lean, they're still small, they can move much, much faster. Now the argument on the PM side is, well, we have much bigger development teams. If that's the case, why have you dropped the ball? Like, why do you, why did you not provide the workflow solution? Right? And I want more than anything for my PM to do everything for me. And if we actually zoom out to like to kind of tie this back to the conversation of how many apps do you need? If we actually zoom out, the PM is doing a lot of things that used to happen in different systems from for most people, it's a primary client portal, time and billing, project management, file management. I get a lot of questions today about like, where do I keep all of my Files I used to use this system or that the right answer for most firms today is your practice management system. And it's not a perfect file management systems in many regards, but that's the right place for it because then you can push files to your client portal. It is a pretty good option right now and for most firms the right place to keep your files. But all of Those things that PMs do now that actually is an example of stuff that they have rolled up to reduce the number of apps that you have to use. A growing number of PMs are now offering like a proposal solution. In my opinion, none of them are good enough right now to displace the two best, which are ignition and anchor. And I'm, I'm, I'm particularly opinionated on proposal stuff because that's where the rubber meets the road and the client hits the button to say I will pay you X, which is maybe the most important moment of any client engagement. And if I can squeeze another 10 out of that by having a more optimized experience, that is, that is money worth spending. PM systems, their proposal aspect of PM systems, they'll continue to get better, all these things will get better. But if you look at stuff like tax intake workflows, it's hard to imagine a PM catching up to dedicated tools. It's hard to imagine a PM offering a month end close solution as compelling as a keeper. Right? There are some that kind of sit between that month end closed automation and a traditional pm. I'd say a client hub and to a degree financial sense are probably there. But all in one, while it's what we all want, we know is kind of a fallacy, right? And because of that, anytime you're looking at a new app, the the integration discussion needs to be part of it. But I actually think carries too much weight both in the positive and the negative when making a buying decision. Because oftentimes you look at three different tools and the one tool that has a page that says we integrate with your practice management system, people will like go straight into that tool and say okay, let's go with this one because it integrates with our PM without regard to well, one of the three may be way better than the others. And that's ultimately what we ought to be following. Now in that situation, if it truly is more work to integrate it with your pm, you gotta factor that time loss into that ROI calculation of whether it's worth picking up that app. But keep in mind, manually integrating something is a very low skill task. And this is another argument for why accounting firms should not be a collection of the kind of biggest, most skilled people you can find. For two different small accounting firms you will find one that's like 50% admin non accountant and another that's just like 50 CPAs. It's worth bearing in mind that that manual integration requirement, that is a repeatable human process that I wish didn't exist, but it can be done by a low skill person. And so when you calculate that in with the upside of what that next app will give you, generally like a workflow app or month end close automation, that's eliminating time of your. Your unicorns, your highest skill level people. And that's the most scarce time that you have, the time that we're trying to save. And if the trade off there is, there's a little bit of low skill work to have to manually integrate some things. Oftentimes that's an investment that I'm willing to make. As much as I am an automation geek and all of my content started with like Zapier and Mick and even like custom API connections. Like that's how I got started with all this stuff. Rpa. I was like the only one shouting about the value of rpa. So it is not as if I don't value and get excited about automation. It's that I actually think we have swung too far to where there's a whole bunch of shame around manual processes and the bummer that is having to move something from system A to system B. Many times we will make the wrong tech decision because there isn't quote, a native integration there. And we all know not all integrations are made the same, right? Like how many times have you picked something up and you're like wait a minute, there's an integration here. And it's just, it's like an integration that you don't even end up using. Like your practice management system invoicing with your QuickBooks, Invoicing for your, for your accounting firm, right? Or maybe an integration with your firm accounting file to sync the contacts back and forth. I mean there's so you've seen so many versions of this that are totally broken and not usable. The integration of your tax software with the practice management system from your tax vendor where it's like oh no, it'll totally push those updated contact details into that client's 1040 and all the K1s are associated with. It's like oh my gosh, like I've never actually seen that work reliably in practice. So we all know, not all integrations are made the same, but a lack of integrations is simply something to take into account when you're doing that ROI calculation. And I hit on, I hit on this at the top, but ultimately there is not a broad brushstroke. Here's how many apps you should have. If we look at the workflows of our firm specifically, it is a. If we add this app, what is the net delta of adding this app? What are the upsides and downsides? We have to factor in having to manually integrate things, like some overhead and friction that comes with adding yet another app. We got to factor all that stuff in. But if the ROI is going to pencil out and we are trading machine hours for human hours, then I look at that decision in a vacuum and say, this is how juicy the ROI has to be for us to move forward with that solution. Now, you know that I'm, I'm big on like a lot of tech and I get really excited about new stuff and I'm always talking about adding tech. The inverse of that also has to be true. I also have to be very aggressive about removing tech. So the firm that is most leaning into new tech is also more aggressive than the traditional firm about eliminating tech that you no longer need. So, uh, where is your inventory list of all of the tech that you're paying for? And like, the kind of ground zero source of truth here is like, what are you, what are you getting hit for on your ledger? Like, what are you paying for? You need to have that inventory somewhere and really, like, revisit it on a regular basis to say, here was the ROI of this thing when we first started using it, but we don't need that anymore. You know, maybe, maybe the whole team's running Calendly or something like that, but the built in, I don't know, Microsoft version of that has gotten better. And you thought everybody was going to be using Calendly, but there's only one or two people using it. You know, at the very least, scale back the number of licenses for the people that aren't making use of it or at least have a conversation with them to be like, wouldn't it be useful? X, Y or Z? Like, that was what we originally talked about, but maybe there's another version of that that's, that's cheaper or more accessible or something like that. Or you did that ROI calculation based on all 20 people using it, but now that only two people are using it, maybe it's not worthwhile. Maybe Cali is a bad example Because I think like a good scheduling solution is almost non negotiable these days. But, but if you're going to be aggressive about adding cool stuff, we also got to be aggressive about eliminating things. Can't have one without the other. Otherwise, to the point of this question, it just keeps getting bigger and bigger and more unwieldy. Right now I do think there's a degree of that where I don't think we will ever be using less apps than we are now. Like, I think that's just kind of where things are headed. Unfortunately, if there's an exception to that, a counter argument, maybe it is that AI actually serves as the aggregator. But particularly if AI agents become compelling and able to work across kind of multiple apps, if that truly comes to be, you can throw out the playbook for absolutely everything because then we are paying for apps but not actually using them. It's actually our AI agents that are using them. And that, that kind of breaks the whole current paradigm of like per user pricing. And, and I mean you can kind of throw out everything that we think about tech if, if AI agents truly do become really useful, like they're going to be doing 90% of the inputs in our software that, that we used to do and then we're going to be reviewing the output. And that's like just such a big mental leap that if that does come to pass, who the heck knows what that's going to look like? That's kind of going to be a figure it out a day at a time sort of thing. It's a great question, how many apps should I use? I don't know that you can look at another firm and say, well, they're using 20. Does that mean we should use 20? I honestly, I think it's very firm specific. It's even people specific, it's client specific. And I have to make that, that ROI decision one app at a time. This episode is sponsored in part by Live Flow. I had the opportunity recently to give a talk at a like a Live Flow leadership sort of retreat where they actually pulled together 30 like thought leader accountants sort of folks into a single space for a couple of days. And I watched in amazement as they ran these sessions, getting feedback from folks of everything that they wanted changed about the product, from big things to little tiny things to. Then on the second day I turned up early for my session and they were wrapping up a thing previously where they were outlining literally all of the changes that they had made in the product overnight. According to the things that the accountants had told them the day before. And this gang is the value of of vendors that are actually plugged into our ecosystem and showing up at conferences. Lifelong Series A a couple months back and most of the time that money just gets poured into web ads. But to see them investing it in like creating a space and literally like flying people out and saying tell us everything that you think about our product and how we can make it better. Actual accountants, man, that is really cool. And that is the way to do it. Live Flow if you're not familiar, it's a tool to sync QuickBooks and zero data either to your spreadsheets, Excel or Google Sheets, but also now to these live updating dashboards that are pretty cool. We did a demo of it recently on the YouTube channel. Learn more about Live Flow. Check out the link down in the show notes. This episode is sponsored in part by True Prep. True Prep's like a cool, almost like a chatgpt like experience for tax firms that lets you query your actual client tax data to be like, I don't know, we're doing some tax planning. Show me, show me every 1040 that had over 5000 in tax penalties last year. Like you can literally do that. Returns the whole list. It'll even let you drill into the detail. Does some other cool stuff now too, like basic tax research. Like they've built IRS publications, some background information into the platform. Client asks a quick question, you want it to draft a little memo, like draft response to the client. It's a great starting point. Also they've even got like a very basic kind of built in year over year projection tool now. So let's say your W2 is going to double but your withholdings won't. Like what will that look like year over year? True Prep's even getting into stuff like that. It's the closest thing to like an open ended chat resource for your tax firm. Very cool. Worth checking out. Learn more about True Prep at the link down in the show notes. A quick programming note so we did like two weeks of those community episodes. There were like a very, very small people, a small number of people that were were bent out of shape. That'd be fair to say we're been out of shape about that very, very small number of people though, which I think I probably expected. A couple people asked like did I get paid to promote these people's communities on my podcast? Gosh no. The only paid stuff we do is sponsorships where music's blaring and you understand that it's a sponsorship. I Run. I run my own community. So if anything, it costs me money to promote other people's communities. I just think right now communities are still under leveraged as a resource in the profession. And I think it is. I. The only reason I'm acknowledging this is because I can see myself and some of those questions and I can see a decade myself. A decade prior I would have said I could just get all that stuff on Twitter, I get all that stuff on LinkedIn. Why do I need a paid space for that? As I've gotten old and made a lot of mistakes and wasted a lot of time on the wrong things, I think I now place a greater premium than I ever did before on shortcuts, on finding the person that can fast track that learning process. We were just talking about tech Stack. You know, like the practice management system is kind of the, the biggest, scariest tech decision in your firm. And, and if you can ask a whole bunch of people who have made the transition you're considering and, and like get out ahead of a potential bad decision, that's something that can genuinely save you years. And in my case it would have saved me hundreds of thousands of dollars of like going down the wrong PM path and wasting 3 years had I had a network that I could trust and kind of pick their brain to get good information from. So I think I place a greater value than I ever have before on being able to get into rooms that will shortcut me. And those are checks, honestly that I'm really happy to cut. Like if I can cut a check to be in a room to be able to pick the brains of folks either ahead of me on the journey or have something about their journey that can aid me. I am very happy to pay for that. And there's a lot of accountants are not either because maybe you haven't felt the pain acutely enough yet of getting that wrong, or I think we can be wired a little differently from a growth standpoint where put a tremendous value in the development of myself. Like the greatest asset I have is me and my capabilities. And that was actually what first led me to doing videos. It's like video is, was already huge, but you could kind of only see it always being just this massive thing. All the social media platforms were moving toward video. Being able to connect with people over video is arguably the greatest hacking knowledge worker could have. It actually for me started with running a couple of webinars during COVID for our clients, which was never a thing that we had ever imagined doing before, but we kind of had to because we had to disseminate all this information faster than ever before. Those webinars went really, really well. And I was like holy smokes, there were 200 people on that webinar. And that just saved us having to have 200 phone calls. That's a very high leverage skill and that's what led me into doing more video and building that skill for myself. So I'm always looking for what are ways that I can improve myself that will always aid me no matter what I do. And that is things like writing video, being a better manager, looking for you know, the higher leverage opportunities and developing the willingness to say no to something or build an asset for someone else that could otherwise be an asset for me. I think that's the main difference in how I do my content compared to other people in the space that you see do content is I don't do anything for anybody else. In fact my name and likeness is not allowed to be used on any other brand's channels because it's the only asset that I have is me is my face. And so I can make a, for example a sponsored video for somebody and they can embed it on their website. But, but what you're watching on their website is my video. It's literally my YouTube video. Like pre roll ads can play on it. If you click through it it goes to my YouTube channel. So I, I, I honestly look for opportunities to invest in what's something that is going to aid me as long as I am not only working but being human. And I've developed like a. I'm perfectly happy to pay to be in those spaces but not everybody is a question from Musicians Tax Advisor UK I'm working through this within my own firm and have culled a large headcount to kind of low fee group. So the low fee folks that you got a whole bunch of them, they've already called that group they said but I'd love if you could address how to make that transition profitable as quickly as possible. Our teething pains in making transitions from mostly tax to way more cast and advisory is that we're setting up the SOPS apps and workflows as we go. Which means at the moment the margins are significantly lower and it's hard to hold my nerve. So yeah, you conceptually know that this is the right thing to do and so you make the pivot to it but it doesn't pencil out immediately. That's completely normal oftentimes maybe tax pros are particularly prone to this. I don't know but we think because we understand t accounts that we know how to run a profitable bookkeeping practice. Like it's almost. We kind of look down on it because at the end of the day, is it hard to do bookkeeping work? I would argue it's not hard to get to a correct balance sheet and profit loss if you know what you're doing. But to do it in the software in a way that is like sustainable and profitable long term, that's actually a skill that you don't just roll out of bed with. And if you extend that to running a team that does that, getting other people to do that to your level, your expectation of how good it needs to be, that's something that you have to learn and you got to figure out on the fly because it's a completely different tool set, a completely different type of person that you hire to do that work and a different set of requirements from the clients and their expectations of getting that information monthly. And what do they actually do with that information once they have it? A tax return is an outcome where largely all the client cares about is like, what do I need to do to settle up, do I need to pay in, am I going to get a refund? And how do we pay less tax next year? What I loved about CAS or bookkeeping practice is there are insights in our deliverables that can genuinely be unlocked. Like it kind of drive the profit levers of the business itself if we can take the time and make the space to have those conversations with clients. So it is a totally different thing. I can tell you. In my experience, we had about a. At the time that I opened up our kind of managed accounting arm, we had 1600 clients in the tax firm. And those were all tax clients and like 6 to 700 businesses. We launched that cast firm. It grew really fast because it was like shooting fish in a barrel, pulling people over, pulling clients over from the tax business who would have us do their accounting. And we let like way too much in the door. And it was, it was kind of all across the board, scattered shot, different stuff. Whatever people would come in with, we would kind of do for them, which is obviously very hard to do profitly. So in the very beginning, as we're getting this off the ground and figuring out the tech and hiring too fast and making some of the wrong hires, margins were either nothing to like 10%. And this was the first maybe 18 months where we were going through this really like rapid growth phase, kind of just trying to get that work done and keep people Happy with the plan to figure out the systems on the way like as we're rolling it out and it ultimately become more profitable down the road. That kind of worked in the end. By the time I was actually, it was the fourth year of renewals when I left the firm, when I sold back to my partner, we were going through the fourth round of kind of year end renewals and at that point margins were going to come in around 40 to 45% on that part of the business. But it took all those years to get there and it ended up being pretty juicy, as juicy, if not more juicy than our tax work. I think we're actually on a trajectory for that work to get more profitable than our tax work. But it took time to get there. That's completely normal. You're, you're running an entirely new business. Like on the one hand give yourself some grace to figure that out over the course of a few years. But on the other hand, if you're thinking about jumping into that plan accordingly, maybe you'll get it right better than, in a way better than I did when I first came out because I definitely did all the things wrong when I started. I mean there was, they could literally bring any accounting ledger to us that they wanted. There was no standardization, no industry specialization of any kind. People think I'm super smart. I'm really not. Now I just have the luxury of stealing really good ideas from a lot of people. And I didn't have that before and it has certainly like changed the way I would run a firm. But yeah, like if you're doing something completely new, don't plan on that being super profitable out of the gate. Give yourself some space for sure. Leverage the shortcuts that you get from content like mine and other people because I definitely didn't have that at my disposal unfortunately. Boy, had I, I mean stuff like Keeper wasn't around back then. Like cloud practice management systems were just kind of starting to get good then. So the environment today is very different than it was before. We also didn't, I mean to bring this back to online communities, we also didn't have spaces where I could go and be part of a membership group with a bunch of other people that already do it really well and really profitably. Where I could just go ask them what are you doing for X, Y and Z? And they've, they have probably done years of due diligence and jumping around to different tools and all that to get to what they're on. Who am I to try to big brain that and be like, no, no, no, no, I have a better idea. So we have membership groups like that now, obviously I run one, but there's a bunch that we've talked about on the pod where you can get those answers in a much more accessible way than ever before. And that ought to, honestly for me, that probably would have shortcut that like four year learning process to a, you know, a two year learning process to get to a much more sustainable place. This episode is sponsored in part by Cloud Accountant Staffing, who will help you find wicked smart accountants in the Philippines. As you know, this is what I did in my firm. My last four hires were Filipino accountants and they were absolute rock stars. How can cloud accountant staffing help you? Well, they can help you with all the questions that you're too embarrassed to ask if you've never done it before. And you're gonna have a lot of them. And, and that's totally normal. The people who crap on offshore hiring online are the people who haven't done it. There's a reason that these businesses are a thing and that they're growing really, really fast. The world is getting smaller and there's a ton of really smart accountants in the Philippines. I know because I did it myself. Now, what's the difference with cloud accountant staffing? Different sort of staffing groups have different approaches. We basically work with two different groups in my content that will help you find sponsors in the Philippines. They have slightly different approaches to how they help facilitate the ongoing relationship with those hires. Two different flavors, one more direct, one more hands on. I actually recommend that you talk with both. If that's something you want to explore. Having a conversation with these groups, man, it is free. You're going to learn a bunch. I recommend doing that no matter what. To learn more about cloud accountant staffing, check out the link down in the show notes. This episode is sponsored in part by Ignition. Come, come, come, come, come. Here's the thing. Here's the thing about client billing. You can't bill for the time you spend billing. You can't, you can't. It is pure waste. And we're bad at billing because it's, it's icky. You let things slide. You don't get paid. You waste time. Waste time chasing people for money. That's not what I did. I would just, I didn't want to waste time chasing them and so I would just, I just eat it. Don't do that. This is where Ignition comes in. The leading revenue generation platform for accounts and professional services. When I was running My firm, Ignition, wiped out our ar, it's true, and significantly reduced the time spent billing clients saving our partners over a thousand hours in the first year because they didn't have to bill all that stuff manually. Man with the condition. We won more business with impressive online proposals. No more hustling, hustle and PDFs and Word docs. We automatically pulled payment up front or at the end of a job when it was done. No more dialing for dollars. We transitioned our firm to more recurring revenue and better managed scope creep. No more leaving money on the table. Ignition is making thousands of firms more money and genuinely made us more profitable. Check out over 7,000 of the smartest businesses run on ignition@ignition app.com but link in the show notes. Okay, we got an audio question here.

Hey Jason, so I get it and I was unsure about niching down. How do I let go of my other clients after I assured my path in a niche or do I let them go? I don't know that it's kind of confusing because I don't know if niching down means letting go of your other customers or just keep them until they want. What does that mean? Thank you.

Yeah, do you, do you hang on to them or not? I think oftentimes usually the right answer is to refine. It's not just to add more and more and more. That can be a trap. There's. Honestly, there's a lot of thought leaders in our profession that say that as well. Why let anybody go? Why not help everyone? And it's like, well, the reality is the more you, the more you sort of go broader on the type of folks that you help, the harder it is to build an organization that's suited to help a very specific type of person. Something that came up at a talk I was giving recently was like, how do you remind people of, of how painful the problems you solve for them are? Like when they come in and they're in a big hot mess and you fix everything. But then you're five years down the road and they're like, I'm still paying for this. Like, and they don't remember the pains. You know, one of the ways that we do that is by continuing to assert our dominance and prove to them that we are the best solution for them. And if they can't go out there and look at the market and clearly see that you are the best solution for that type of person, then why would they not leave? Because honestly, you may not be the best solution for that person. In this example here, like the in my mind, the way to prove on an ongoing basis that I am the expert for them is for people to be able to continue consuming that expertise. Maybe my firm has a podcast about beekeepers or taxidermists or whatever it is. Maybe they see me doing thought leadership at the conferences they're looking at. That sort of thing drives home that I'm still the best for you, but there isn't a version of that that works from a general standpoint. And so I have if I have a different subset of clients before than my new niche clients now, the ways in which we invest in the firm to be even better for our best clients are oftentimes going to be at odds with that old crop of clients. And I've said this before, you can't let the fears and the, the, you can't let trying to placate C and D clients get in the way of doing what's right for your A and B clients. Like, those are the people you really want to build for. Now, if you truly get to the point of where you're going to cut these non niche clients loose, it has to be because you see in the niche it is fundamentally more profitable is bringing enough profit to the business. It's on sort of a trajectory where it will get you to where you don't need those other clients. It's not a yolo, throw out the kitchen sink, we're committing and we're rolling the dice sort of thing. Like if Anisha is truly good enough, it should be from a business standpoint. Plainly. Obviously the reason that most people don't get there is they don't commit any sort of marketing efforts or intentionality to ask for referrals from clients that you already have within this domain. Or go and do a couple podcasts or we heard from someone who like posted a comment on Reddit in like a gunsmith subreddit or something like that and ended up having like six consulting calls with it was like machinists and gunsmiths. Like if you have a willingness to put yourself out there a little bit with a little bit more intention rather than just sitting back and seeing whatever the universe brings to you as if that's going to be the best thing for you, it won't be with a bit of intention going out and attracting those more specific types of people. If it is a niche worth going after, the business decision ought to become really clear, like from a profitability standpoint. And then it's not a scary thing to let those people go beyond. Like besides the human element of that, that it hurts. And these are, these are people that have needs. I think what we have to come to grips with is being realistic about the fact that if you're no longer excited about that type of client, you're not going to do a good job of serving them. You just aren't. Like if they're at the end of the client list and many of these clients were your AAA clients at one point, but if they're now at the end of the client list and they're not what you're excited about, then stop fooling yourself into thinking that you're the best person for them because there's another firm out there for whom they would be their AAA clients. And you are standing in the way of those clients going to that other firm. Now, the easiest way to do this is to have a network of other firms who you can send that work to. When you know someone, this may be a little earlier in the journey and that is a great fit firm for them. That is the very best way to do this is a friendly handoff to somebody that you trust because those people genuinely will take better care of those clients if they are a clients for that person. Don't confuse those clients with stinkers which just need to be fired. Don't sell or hand off stinker clients to somebody else. These are clients who would otherwise be great clients. They're just not aligned with the direction that you're taking your business. So the best thing you can do if you have those relationships. I sound like a broken record, but a ton of this happens in membership communities where you meet a ton of other firms and you can even put a post out and say, like, I've got a bunch of clients like this that I need to find a new home for. A few people comment and they're like, oh yeah, we serve this sort of thing. And you can talk with a few of them and get an idea of their service offerings to ensure that what you do for them will map to what this other firm does. Is a great way of, of finding a home for those clients. Because having a home for those clients you'll find makes it much like emotionally easier for you to move them on. And if I had had a great home for some of the clients I parted ways with, I would have probably done it years earlier and it would have given me more bandwidth to accelerate my path in the direction that I actually wanted to take it. So in short, yes, you should get rid of them. When the business, like you can see very clearly that it is a no brainer to get rid of them, but the ways in which you do it. In a perfect world, you're not just firing them, but even if that's the only option that you have, resist the urge to try to be the hero for everybody. These people are grownups. They can find other providers. But the best case scenario there is to have folks in your network you can send that stuff to. And then once you do, you'll actually find your firm gets much more judicious about who should we move along because they are no longer a great fit and that is a benefit for your attention and accelerating you down a path that's better for you. Thank you for the question for the voice memo. Last one on the subject of firm acquisitions, Tim Krause I've been a partner in the accounting space for nearly two years. Before that I spent three years flipping land. We're not at the seven figure mark yet, but we're just over halfway there. While we've achieved some organic growth, I found that I really enjoy acquisitions, drawing from my real estate experience. So far. You enjoy acquisitions? Red flag, Tim. So far we've completed two small tuck ins and are currently working on another deal, 100% seller financed, that will push us over the seven figure mark. What do you see as the risks of being heavily focused on acquisitions? Just as an FYI, I don't personally guarantee the debt risks with acquisitions. I don't know all the, all the normal stuff that you see from tech stack misalignment like buying a legacy firm and it being way more work than you thought to transition things. If you're already doing this, you know those, those issues having an owner that's doing all the work within a firm that's the biggest thing with, with small roll ups is, is if most of us are staffing blocked, then pulling in say a $500,000 firm where really the partner is doing 300 grand of the work, then you just made your staff bottleneck even worse. Right. Because you got to take that work on. Patrick Dichter talks about this as a speed thing that anyone can go out and build a firm organically right now, but it is probably faster to do so via acquisition. Just make sure that you got a good why for like why is it worthwhile to grow that quickly? I mean there's a huge opportunity for folks who enjoy and do acquisitions well. Like obviously there's a ton of firms where you've got aging partners. You just got to be really careful to ensure that they are the type of firms that you want to pick up. If there's one downside to acquisitions in general, that is the big upside of organic growth. It's actually what we were just talking about on the previous question. In fact, man, Blair Enns just released his latest book. Oh, what's it called? Blair Enns was one of the authors of the the Win Without Pitching Manifesto. It's like four big questions or something like that. We can link it in the show notes the Four Conversations. The four Conversations A new model for selling expertise. It's really good, but one of the things they talk about in that book is being mindful of the context in which clients come to you. Like, have they. Have they already. They refer to it as, quote, the flip. And the flip happens when the lead or the potential client sees you as the expert and is willing to get out of the way of your expertise rather than seeing you as a vendor. They may come to you with a specific job to be done and just be like, I want you to just do this and honestly, I just want to find a cheap way to get this done. But when the flip happens, they realize that you know so much that they don't, that you have a better understanding of what they actually need than they do. And that is when they will get out of your way and kind of yield to your expertise. The very best way for somebody to come into your firm in a perfect world, it's somebody that has listened to you talk for a thousand hours about X, Y and Z and they truly believe that you are one of one. Now, most of us, we don't have the marketing muscle for that to be a reality, but there's a whole lot of versions of that shy of, you know, being a one of one celebrity in a specific domain. But just know that the more of a relationship they have and the more of more trust they have in your expertise and the more they see you as one of one, the more they're going to be willing and happy to pay for that expertise and be happy to be on the client list. Acquisitions are no context client additions that like, they're not coming in impressed by you at all. And so that's more akin to like they're coming to you as a vendor just to get a specific job done. Doesn't mean you can't run that type of firm profitably. But the like, perfect in theory, perfect way to bring in the most profitable client imaginable, that is organically somebody that is already a firm believer that you are the experts in a domain you look At a firm like, you know, Brandon hall, where they do a lot of content around real estate, and the people that come in are all coming from the really good content that they do and the resources that they give out or a strong referral from someone who's already on the client list, who can also point them to, like, look at all this thought leadership that they do. That's somebody coming in already thinking that you're the best in the game at this specific thing. And with acquisitions, I think you lose that maybe there's a little bit of value there because the previous owner is saying, like, oh, no, this is a really good firm that you want to come work for. But I think people these days, they can see through that. It's like, no, you got bought out. I like, I know the line that you're giving me right now, like, iris just buy indexed software company, buys another software company, they go, no, everything's going to be the same. In fact, it's going to be even better. You're going to love us. And everybody's like, no, no, no. The ownership group, they just, they took their payday and that's it. And the team's going to get gutted. Maybe this will be the first time that that wasn't the case. Sure, maybe. But let's just play the probability game. That's probably not the case. I'd say that's the biggest downside of acquisitions. There are a lot of upsides to acquisitions, though. In fact, maybe that's a more salient point to take away is rather than dwelling like, there's traps for sure that you got to avoid acquisitions, but let's instead focus on what the biggest upsides of acquisitions are. That is the speed at which you can grow if that's important to you. But also what I don't think we talk about enough is the arbitrage opportunity of being able to buy a tax firm and then sell that same client, both tax and bookkeeping, or tax and wealth management, where the lifetime value of that customer to you is much, much more than it was to the previous owner. So you can buy it at what is basically a discount and then add a bunch more profitable work on top of it to make the ROI on that acquisition for you. Like the acquisition cost of an organic customer is still unbelievably good for you if you can sell them a whole bunch of different services. But that's one thing I don't think we talk about enough with acquisitions and is an argument for doing more, even though it's really hard to do tax and bookkeeping? Well, tax and wealth management? Well, all three? Well, it's a tough thing to nail, but if you can buy at like source firms that are just doing one of those things, the economics of that are pretty juicy. Gang, thanks for coming and hanging today. You got questions, pop them in the comments. It's my these are my favorite days of the week, doing the Q&As. I really enjoy it. And thanks for coming and hanging too. Loo.