388 The Trouble With BIG Clients

Today the trouble, the trouble with big clients, you know, the blue chip triple A, you just unlocked a new level in firm running and now it's super cool and super impressive. But sometimes if those clients are too big that they become actually problematic. And how do you, how do you like decide between the two? Because there are unlocks where it's like, whoa, this is a way better type of work for our firm and we should kind of always be looking for that. But there's also a bad version of that where you take on a way outsized sort of project and it takes over your firm and, and creates some issues. I did one of those and I, and I couldn't decide which of those two things it was. Is this the future of our firm or is it this outlier client that's actually going to create a bunch of headaches? I'll share the story of that. It was like a, like a one and a half million dollar three year deal that I put together when I was 31 or 32 and it was so glorious. I mean it was all the machismo, chest beating, like self satisfaction you could possibly imagine was wrapped up in that. But you can probably see where this is going. It's a trap. It's a trap also. Cause it's Q and A Friday, last Friday before the holiday. Wow. Much cheer. Someone asked me to go deeper on my thoughts on timekeeping, time tracking. That went downhill quickly, didn't it? We're all excited for the holiday. And then I brought up time tracking, non compete agreements and whether you should care if you have one and advice on how to name your accounting firm. Gang. It's going to be a good one. It's going to be a spicy one. Come on in. All right. The story of the biggest client I ever landed and whether it was ultimately a good or a bad thing. Some context. So I bought an 80 year old firm. This all went down before I bought the firm. But I came of age first in an itty bitty firm that had like five people in it and then in a slightly bigger firm that had like 25 or 30 people in it when I joined. And this Firm is an 80 year old firm. It had a whole bunch of partners in the past. When I joined they had five partners and they were good old boys. Good old boys, man. They were everything that you would expect. And there's something, something about a firm like that where you got a bunch of dude partners and it just inevitably starts smelling like a locker room and everybody's trying to impress each other. And man, how you. This is kind of the biggest downside of the traditional partnership model is how do you get all those dudes that are kind of in one way or another trying to outdo each other. How do you get them to agree to like a standard approach to serving clients and doing things the same way when there's so many things wrapped up in, you know, the folks that they enjoy talking with and maybe a niche or an avenue that they want to go down that the other partners are like, I'm not into beekeeping, man. Like, how you ever build a firm in a traditional partner model to truly like get to a. Any sort of level of standardization is beyond me. I mean, I think that's why big firms look so mechanical and why you just end up feeling like a cog in a machine. And you frankly don't want people to think for yourselves, for themselves, because you've got a system and you just need people that you can plug into that system. And for all the crap that big firms get and how lifeless and soul sucking that feels, it's so easy for us on the other side of that to be like, well, that's so dumb. If only they were as smart as me, they would know this and that and do it different. Honestly, there's a big part of me that, that thinks until proven otherwise, I don't know that you can run a big firm any other way. Like, you've got, you know, your Brandon Halls of the world who are going to be like, yeah, we're going to build a hundred million dollar firm and do it a completely different way. Would they haven't yet. And I would argue, you know, nobody really has at, at a crazy scale, at this humongous scale. Run a non partnership model firm. The way that we all kind of hold out and be like, well, this is just a better way of doing it. It's a better way of doing small firms for sure. And that's been proven out a hundred times over. But running a big old meat grinder, humongous firm, I don't know. I mean that that's like the fact that you can't get everybody aligned, like I think kind of means that system kind of becomes mandatory and there's that level of rigidity is seemingly required. But this firm that I came into, five very traditional dudes, all kind of on their own paths, almost more like a resource sharing thing going on in the background where you've got. Everybody's kind of got their favorite staff people that they work with and the ways that they Serve their clients ultimately are pretty, pretty different from person to person and kind of lean into their own strengths and preferences. And so I mean, if you came up in a firm like this, you know exactly the path to victory, the path to success is the one that is defined in that environment. Like there is like, it's amazing the tunnel vision that we have in any role that we're in. You go into an organization and your job is kind of just to figure out like, okay, what's the most successful I can be in this environment. And that is sort of like the level of career ambition that I have. Like that little bubble, that microcosm of the business universe is the only thing you really have a window into. And so the game is defined by everybody else around you in the machine that you have been plugged into. And in that machine, the only way to win is to become a partner. That's it, that's the ceiling. That's as good as it gets. And it's worth, I mean, if you're still in this situation, it's worth considering sooner than later, does that partner look happy? Is that a thing that I want? Because if your job sucks on the path of being a partner, it's still going to suck when you're a partner, it's just going to be harder to leave. But you don't know that when you're in your 20s and you're just putting in your years. And so at this stage, you know, you, you kind of glorify what the people above you glorify. And in my case that was growth, that was winning impressive businesses, impressive clients. And let's be real, when you're in your 20s, like trying to have conversations with successful business owners is practically impossible because there just aren't like, there are not 20 and 30 year old businesses owners out there that are making money hands over fist, that are looking for an accounting firm. Like unfortunately most of the people they're going to be coming in their 50s. And the reality of you as a snot nosed 28 year old, sitting down in a meeting with a 50 year old and being like, well this is, these are all the really smart things that I have to say. And even if you do have really smart things to say, the likelihood that that person on the other side of that's not going to be sitting there just going to, okay, you look like my daughter's boyfriend and you might even be even younger than them. But yeah, let me just sit back and take advice from you. That's just hard. And maybe it shouldn't be. But generationally that's a. That's just a hard thing to do. And so the back door in oftentimes is to kind of piggyback a relationship that one of the olds has and find a way to kind of maximize that. Right. Like, how do you weasel your way in the door, kind of become a trusted person over time? And. And then you're like, well, now they'll see past my youth. And this was kind of sort of my way in in the beginning is our managing partner had a good number of connections in the dental space. And so we kind of had a bit of a dental niche going and a few of our clients started getting sucked into the whole DSO thing. And so the, the big evil in dental over the last, you know, decade or so has been all of these giant dental groups kind of banding together, you know, for economies of scale. And, you know, all of, all of those things. And it's something that medical did like, you know, 20, 30 years ago. But one thing, that's two big things that are framing it as an imperative why these groups, why these companies should group together. One, for leverage with insurance companies. So dentists in the US like, if you're doing service on dental insurance, and not everybody does anymore, as a result of this, a lot of dental clinics are moving just towards fee for service or just cash or even a subscription model where they're just paid directly by their patients. But that's not most clinics. Most clinics still get paid by insurance. And in that model, you're kind of just stuck taking whatever they're willing to pay you. So you don't really have any control over how much they will pay you for a given procedure. And so this is one of the arguments the groups would make is, well, we all gotta band together so that we have more bargaining leverage. The other one, the good old EBITDA multiple, and this, this whole EBITDA multiple thing exists in practically every industry. In my experience, even an accounting firm parlance, there is so much infatuation with these sort of ghost thresholds, beyond which. Oh, baby. Beyond which you get this big old multiple. And it jumps up and it's, you know, six tuples once you get past this certain threshold. Does that sound realistic to you? I can tell you what happens behind the scenes. And I've seen this both in the dental space. I've seen it also in the accounting space is oftentimes those numbers are floated as like, well, this is what PE's willing to do. But if you actually get down into the bolts, nuts and bolts of that deal. And what actually ends up happening in the end is it is far, far from that and comes with so many strings attached that it makes it really, really hard to make your money back. Like, as in you having to stay around, around your whole team having to stay around, clients having to stay around. There is so much hyperbole in the glorification of M and A that is pumped up by so many people who have money to make in everything that happens in M and A, from the advisors that put the deals together to all the people that pull the strings and 90% of them fall apart, and all those people still get paid. Like, there's so much of this kind of infatuation with something that is in 90% percent of cases, a total hallucination. And that was one thing that we learned going down the dental path is this is happening whether we like it or not. But boy, is it running people into the ground. Most of the owners that go into this ultimately come to regret it because they end up working for a machine and it's not fun. And they have to work back X number of years. And they just do so begrudgingly. All of their teams leave because they hate working for this new mothership. And. And so now you have the doc that's stuck just to get their payout for X number of years and now has to work with some random team that is way, like, inferior to the team that they had before that. Then the mothership comes in and hires. And so you're stuck in this awful situation. Like, level of care goes way down. You're doing the bare minimum. Everybody loses. Like, it just sucks for everyone. This episode is sponsored in part by liflow. It is. It's the time of the year where we make resolutions for what we want to do better in 2025. And one of those resolutions might just be upgrading those client touch points, improving the client experience, because at the end of the day, everything kind of boils down to that and how premium your clients perceive your service to be. And one of the most automated ways to create really valuable touch points that are like, actually connected back to the accounting ledger, but it's live. It's live flow, guys. Gang gals, squad, Live Flow. Originally, their secret sauce was they were a connector for your spreadsheets. They would connect QBO and Xero files to your Google sheets or your Excel. And they still do that very well. But they now also have, like, an online dashboard where through all those same connections, you can create like, super quick and easy, not overwhelming. If you don't want them to be dashboards, it actually feed in live data from the accounting ledger, either on a continuous basis or just a snapshot. So I could like send a roundup to my client over text every single morning. It opens up all sorts of possibilities, but the tool itself isn't a bunch of work. That's what I never liked about reporting systems is you log into that thing and it's just a lot. Customizability is a big thing here. LifeLow always has really nice templates you can swipe, but you can also build it into whatever you want it to be. Because ultimately how clients value our service, it really boils down to those touch points, what we put in front of them and what they get out of it. To learn more about liflow, check out the link down in the show Notes this episode is sponsored in part by TeamUp, who helps you hire talented Filipino accountants directly. Let me just run you through what they did in the last week. I think you'll be impressed. Just kicked off two new recruiterments looking for a senior tax accountant and a staff level accountant, both for firms who are returning to team up for more hires. MO hires, Active projects they've got in the works, man. I got access to the mainframe here. Not really. They send me a weekly report now they've got 23 active projects going. Just over 50% of those are with new firms. The rest are with with firms who are coming back for more hires. And they've got five new hires that are kind of in the early stages. Pre recruiting the positions executive assistant, senior tax account, senior account, senior tax account, and accountant. Four of those five are firms who are coming back to team up to do another hire. And you know what that means? Means they didn't regret it the first time. You know what I mean? I don't know why I said it like that. Learn more about Team Up. Check out the link down in the show notes. I'm not when it comes to like PE stuff around accounting firms. I'm not anti PE as much as I am. I've just seen a lot more harmful versions of it than good versions of it. And I'm still completely open to being convinced otherwise. But I also think there's a whole lot of like baby peepee, a baby PE sort of things happening. Like you look at a like a dark horse or a breakaway advisors where it's more like a shared services model where if I don't want to run the whole firm, the whole team and all that And I just want to work with clients. Is there a version of running an accounting firm where I can just do that? Like, that's cool to me. I think surely there's got to be a version of this that's something shy of just like the kind of PE capitalization method where you buy it and then you roll 10 of those up and then it's sell it again. That just feels like a shell game that ultimately robs the youths because there isn't the long term upside that there would otherwise be if somebody owns half your. And I could have done this. When I ran my firm, I had a number of people that offered, and I think this is becoming increasingly the norm is someone would come in and take an ownership percentage in your firm and you'd get that money and you could reinvest it into growth or whatever it was. But if I was running that firm and somebody came in and bought half of it who was not an operator, well, there goes half of the upside of people working for me to potentially take ownership in the firm. And so for that to make sense, I would have to be able to reinvest that in a way that like grew the pie for everyone. But is that something that makes sense for a service business in the same way that it does a software company? Like when a software company raises a pile of money, presumably at that point they've reached product market fit and something like 75% of money that these companies raise go straight back into like Facebook and Google Ads to just kind of pour gasoline on the fire. The notion that you have something that people will pay more for relative to the cost to acquire that person. So if, if it costs me a dollar to acquire a user that will pay me $5, then that's when I take investment and I just pour gasoline on that fire and I run that out as far as I can to generate more $4 that makes sense for a product company. But can the same be said of a service business where for sure, accounting firms are not run in hyper profitable ways. And there's a lot of really smart people at these PE groups that can come in and kind of systematize these things, almost certainly make improvements. But I've, I've. I just haven't seen that create a lot of happy people, both on the firm side and on the staff side. In fact, I've gotten a lot of great staff from firms that rolled up into larger groups and they're like, everything's gonna be the same, it's gonna be great. We've got Access to more resources. And everybody's like, really? This sucks. And like six months later we get half of those people from LinkedIn DMS because they're all leaving en masse. There's obviously lots of wrong ways to do it. I just haven't seen a whole lot of right ways to do it. But this is happening in the dental space in a big way. And we got in with kind of a consulting group that was putting together these roll ups. And the first one that we went into, we were like, this actually makes a ton of sense for us because we're doing like back office managed accounting for dental clinics. And if you're going to pull 10 docs together and roll up their clinics, who the doc, which of the docs are going to raise their hand and be like, ooh, ooh, I want to run the back office. Can I run the accounting ledger and figure out how to do all that stuff across the, you know, 10 different clinics or 20 or 30 different clinics? Nobody wanted to do that. And at the time that everyone's coming into a group for the first time, you're already having to make change a bunch of hard things from bank accounts and kind of insurance provider, like billing and all this stuff. You're already having to do this really annoying administration. The notion of then moving HR and back office and all that stuff to a centralized place. Like anybody could get behind that. They all understood why that would make sense. So we came in and I don't remember what it was. It was, I mean, we came in and we're charging something like, you know, 3% of collections or, or something like that. And we're, we were able to offer this actually like really compelling solution to do this stuff in a way that was so far beyond what any dentist could put together. I mean, imagine a dentist trying to put together a centralized back office for a big old group of a whole bunch of dental clin. Never in a million years. I mean they're normally having like practice managers try to do their bookkeeping, right? So it made a ton of sense for us. We're like, wow, this kind of is like the perfect application of what we do. And so we go through the process of first being like, oh, we're going to advise and help this client of ours go through this thing to eventually me kind of bringing our firm around to like, hey gang, like we're, we're building this kind of managed accounting thing. But this is sort of the perfect thing for it. Like we could take all of this stuff over. And initially the Reaction was like, cool your jets, bub. Like, the firm has never done anything this big or this ambitious before. And then ultimately I was able to kind of convince people of like, no, this actually fits in really well to what we're going to do. We're probably going to have to do some hiring and like, scale up to accommodate this. But eventually was able to kind of bring everybody around, win the owners over and prove out, like, here's our model for we think the right way to run this back office and how we can make it cost effective for you because we know the best practices. And the big upside is you're not going to have to manage it is. It's kind of going to be out of your hands and you can focus more on, on, you know, being chairside and doing actual dentist stuff rather than running the back office. And this whole thing took maybe like 14 months to actually get to kickoff. And a lot of lessons in there of like, holy mama, did we give away a lot of time up front figuring all that out and how to do implementation. And I will say if there was something really helpful that came out of it, it is that, you know, sticker shock to us was an entirely different thing Compared to everybody else that was involved in this deal like this. There's an entire universe out there that we are just blind to, of absurd amounts of money, absurd rates for professional solutions, of a really disappointingly low bar for things that are perceived as really premium solutions. So you had all these kind of hangers on appraisers and all these different people that got involved in the process of this roll up. And every single day there seemed to be a new kind of advising group coming out of the woodworks. And we're like, holy smokes. We thought, we thought this was kind of done. Like now we got to pull them in and oh, we're going to pull in like this preferred lender and all these different ways that people were making money on this roll up that ultimately I think, uh, and the owners would agree who went into it, like, ultimately came out of their pockets. And we could kind of play the good guy here being like, ah, we were here from the beginning. Like, no, that is kind of weird. And, but like, we got your back and so this, this gets going and we're. We're doing monthly financials for like a big group of a whole bunch of like tens of clinics. And the rest of this department that we're running at the time is basically just working for like one op docs or people with three or Four clinics or less, five clinics or less. And so you got this one project now where the fees are tremendous. It's almost, almost 10% of the fees of the firm in an 1800 client firm. But just doing those numbers, you can see, like, oh, like something's got to give there. Like, that's a, that's an interesting, interesting move to make, I think. I mean, a lot of the motivations for how this got pushed through ultimately were personal ones. They were. Where were people at in their journey that led to like, this actually happening? For me, it was at a time where I was hungrier than I had ever been. I was, I was rearing children for the first time. And there's something, you know, from an evolutionary standpoint that makes you want to go to work more. Not just because there's a screaming baby at home, but because you're like, well, this, this child's going to need that, the top private school education. I don't know, it's like you're making money at that point, like, why do you go kill yourself? Why do you go, why do you do anything you can to be away from this child now? All stemming from the notion of like, oh, now I must provide for this child that like, eats nothing and is generally pretty cheap to raise except for diapers, goodness sakes. But it came at this time where I was like, no, this is my chance. I'm going to, you know, kind of show my, my, my machismo and do something that nobody else here is capable of doing. And so we get into this engagement. Ultimately it ended up running, I don't know, four or five years. And it, I still don't know that it was the wrong decision to get into it because it was definitely a kind of turning point for the firm where that could have been the direction that we went in because these roll ups were happening everywhere. And they all have the same problem of, well, who's going to kind of centralize the back office? And it's like, man, I mean, just on paper, the whole idea of it. Doesn't that just sound perfect for a accounting firm that's kind of purpose built to do that step to come in. You could even go further and do like medical billing and you can make really good money doing that sort of thing. We actually at one point were sniffing around like some groups that like just do medical billing. Would it make, it makes sense to acquire something like that, roll it into our services and I kind of try to get an understanding of the margins for them. That's one Situation where when medical billing is done really bad, there's a ton of money to be made just by doing it right. And that's really impacting the dollars that hit the bank account. And so there's an opportunity there to be able to charge really well because there's genuinely more money available by doing it right. 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 can have a lot of them. 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. So 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 you 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@ignitionapp.com put a link in the show notes. Ultimately, I think what we learned doing that was what made it a bad, not a great option for our firm going forward was just from a cultural standpoint. We couldn't get excited about what it fundamentally was like. At the end of the day, we were on the side of the dentists who were going through some really hard things, didn't have any bargaining leverage with the insurance companies and all those problems existed. But the perceived solution sucked at the end of the day. Like none of these owners ultimately went on to be happy that they did that. I think every single one of them regretted it by the day that it had launched. But there was no going back at that point. And this is like, I'm talking about a very specific client situation. I think there's examples of this in a lot of different domains. But ultimately what made it not the right path for us was just that what it was fundamentally based on wasn't something that we were like that excited about or thought was that cool. I wish it was a cool thing. Like, I wish it was something where it was like, yeah, this is a fundamentally better version of running this type of business. And so it was like it could feel like a little more of a crusade that you have good news to share to be like, yeah, we're convicted. This is a fundamentally better thing and we think that everybody in this industry should do this thing and we are going to help facilitate that. That's what you want it to be. And I wish it were that because boy, were we kind of the perfect solution for that sort of thing. And you have all these conferences that are about these dental group roll ups and there were a couple of big like top 50 firms that were kind of getting into this space, but in a laughable way compared to the level that we were doing it. Like the, I mean the really novel things that we were doing around automation and the routing of receipts and bills and invoice and all These different things for this group, it was really freaking cool. And we absolutely ate it for like the first 12 months and the first couple months of that engagement because everything, I mean, it's the first time we're doing all of this stuff. And so it was as wildly inefficient as you would imagine. But longer term, it ended up being a very profitable thing. And the second time you would have onboarded a group like that, it would have been completely different. You would have known how to price it. You would have known how all the other advisors in that process were pricing what they were doing. And we, you know, on that deal, we kind of look like the shucks, good old boys, almost out of our depths because of how gun shy we were coming into that relative to all the other advisors. So the second time you come in, you don't make that mistake again. And you're starting to position yourself to say, like, hey, we're the experts at this. Like, if you want this done really, really well, we're the ones to do it for you. And compared to the normal fees you can command for doing accounting work, it was really, really good money. It was. Now, were there like challenges in being able to run something that outsized alongside like a very high volume tax business? There absolutely were in this case. Honestly, this project kind of took on a life of its own and it was almost its own business because none of the systems that you devise, like, devise for a engagement like this are going to hold up and be comparable to really any of the other engagements that you run. Like, it's just too different. But at the end of the day, like, we still turned it into a very profitable project. And there was a version of that firm where you pick up 10 or 20 of these groups and that's a, you know, probably a $15 million practice that's running like 60% margins. Like, there's a version of that firm that's really, really cool. But where it ultimately died, I think was just a lack of alignment with. Is this something that we can really like, feel good about, which is unfortunate. And there was still, I mean, nobody else, it seemed like nobody else in those deals was losing sleep. So maybe that's our bad for not getting out of our own way. But I do think at the end of the day you have to have like, I don't know, it comes back to we're very bad at selling what we do. Right. And I think oftentimes an underlying issue there is, we may not yet have a, like a fundamental convict Conviction of why we are good for people. Like, if you don't believe that you're the best option for somebody, don't expect anybody else to. And this is one of the values of getting more specialized is it's much easier for me to say I'm the best tax pro for beekeepers than it is for me to say I'm the best tax pro with a straight face. Like, you probably can't say that. And even if you did say that, probably people probably wouldn't believe you because they're like, really? There's a whole lot of people out there. But. But if you can say confidently, I'm the very best at this for beekeepers, then it totally changes your mindset around sales to be something more along the lines of like, well, I almost have an obligation to put this in front of people because I can truly help them. And I don't think that you can run an accounting firm and sleep at night. Like, unless you have some level of that. Yeah. Like if you're doing something that doesn't align with that, I just can't imagine how you can go through your days just like running a firm that's making money in a way that is, I don't know, hurting people or creating more problems than it's solving. That was kind of what it felt like with this path that we went down. But it certainly opened my eyes to who. There are little opportunities like this, like little bubbles here and there where you can build, like be a very good for a very specific application and something that's happening and that just become a really cool little like 10 to million dollar, 10 to 20 million dollars thing that you run with, you know, 35 people and be perceived as like the best of the best at that thing. Like, that's always kind of been my, my dream sort of spot to find myself in a firm. And I think part of that is like my. I just, I have a very high bar for everything. And so the thing that I would have the most pride of, most pride in is that that thing where we, we. We truly were the very best at this specific thing, like, that's very appealing to me, me. But in that case didn't work out, was a fun experience. Learned a ton about myself, asserted my dominance in a way that probably wasn't healthy. It's one of those things where you, when you speak to the youths, you're like, don't work so hard in your 20s. Don't do this, don't do that, don't make a bunch of money because you're not going to be as happy on the other side of it as you think you will. There's so many of those lessons where I think you kind of just have to learn it for yourself before you actually believe anybody. There's a lot of folks know on the other side of, of all of those things who are like, they're going to have wisdom and for sure tell you things to kind of avoid. But some of those things are like, I think there's. There's a part of you that has to prove to yourself that you can do that thing before you're willing to acknowledge you're right. That's not important. Like, I can. I can tell you that's how I'm wired at least. Maybe I'm too much of an. Of an achiever, but if you tell me that thing isn't worthwhile, it's really hard for me to not chase that thing down just so that I can see for myself. Right. Uh, that's probably. That's. Let's save that one for therapy. Did you forget this is a Q and A Friday? I sure did. Three questions I got from folks. They're all pretty juicy. Um, I. I've kind of alluded to my take on time tracking in a. In a couple places recently. Question from Painter CM Hey, Jason, could you elaborate more on why you feel time tracking isn't an issue? I feel a lot of firm owners are against it because they had such bad experiences with it in the past when they were employed. I've personally come around to it this week because I felt like my only employee was taking way longer than normal on projects. Decided to implement it and see how it goes. But I'm doing it in a very loose style to start. I think timesheets for many of us, probably most of us in the profession were a stick like a mean, like a bad stick at. At the very kind of formative years in our profession, it timesheets were. Were a scary thing and a tool used for getting more out of a sort of cog in a machine, actually, like we talked about earlier, but also as a tool to oftentimes make you feel lesser than. What's a nice way to put this? Many of us who went out to run our own firms, many of us could have been the partner types at the bigger firms, but many of us couldn't. Many of us actually didn't crack it or weren't willing to do what it took to crack it and be those partners, those partners, those folks that won that game. Many of them don't listen to do this podcast. And so a lot of folks that go into firm running, not all of them, but many of them, I'll say it for myself, we lost that game. This may not be the case for you, and this probably doesn't matter at the end of the day, but we lost that game. I lost that game. I wasn't very good at just the doing of the stuff. The only way I could win was by outside of the box doing something very different. I could not win just by doing the work. And that definitely pours gasoline on our hatred of timesheets. If timesheets were in some way are demise, rightly or wrongly, and that, that one might feel too personal, that one feels so personal that it might be hard to agree with. But I can tell you, for just about everybody, timesheets were the scariest part of their job. But my take on timesheets is every version of, you know, of explaining why we don't need timesheets pulls in all of these other proxies. And so, you know, the, the legacy firm runner who's like, what do you mean you don't run accounting firm on timesheets? What is there? Well, the counterargument is you pull in kind of all these, all these other things that serve as kind of a more collective proxy of the better things to measure. But I, at the end of the day, will not get around to time in some form or another, not still being a very valuable one of those proxies. Should it be the only proxy? It shouldn't because there's a lot of problems with that, with that game. And so, you know, we've been talking, talking a bit of production pay. No matter how you pay your folks, it's always a game. If the game is to work from nine to five, great. You're going to have people that do the bare minimum just to kind of meet the bar still, maybe they'll take multiple jobs because they find that they could beat that minute. They can reach that minimum bar and, and get paid from multiple people at the same time because all that's required for them is to like, look like they have a pulse from nine to five. That's a game. Now the more big four approach of like billable hours and stuff like that, that's, that's a different type of game. There is no version of employing people that is not a game. But some games are better than others. And the framework that I want to employ people under, I, I don't want to be devoid of Time because particularly as we run distributed teams and things are not as clear as whose car was in the parking lot until 10pm which again is another pretty awful proxy of is somebody working or is somebody getting stuff done. But it is, you know, if they're on the other side of the country or the other side of the world, that's even harder to keep connected with them. And there's, you know, have a one on one every week. Yes, there's lots of ways to kind of keep in touch with team members. But in the formula of like how are things going? Let's stop pretending that time doesn't matter, because it does. But what we have to be really careful of when we design the game that we ask our teams to play for us is is there incentive for them to fudge and cheat that that time Proxy? I mean you can always, I think you can always assume that people are going to try to game the system and we've all heard a million examples of that and how you, you know, track time and move time between clients to keep on your budget and we all know what that looks like. But when the literal only thing that you can't buy back in your lifetime, that is like the most precious resource we all have when that is time. And we're going to pretend that that's not a thing. I think it's worth considering like man, like who hurt you earlier on in your professional career to where we would go to the extreme to pretend that time is not even a thing. Maybe that's, maybe that's too extreme of a take. But that's kind of where I come down on it now. My team and I have a really hard time delineating between like I just, maybe I just have a healthier relationship with it versus maybe I'm totally missing something. I actually left it up to my team in the end of the day and I'm like, here's the arguments for the arguments against my team unanimously decided. We want everybody in the team to track time because we want to be more in tune with like, how's it going? Like, do you need help? Like, we want to know that and there's other ways to know that. But in the collection of things that we want to know, time ought to be one of them. I do think that there are certain things that within an echo chamber like get heightened to a level that's can be kind of ridiculous. And this is definitely one of those things where it started more as like a rallying cry against big firms and the evils of that stuff and eventually kind of just became a badge of being like a, I don't know, a cool firm or something like that. A lot of, I mean, I know a lot of cool firms that don't track time where team members can get run into the ground. And it's not to say that tracking time would be the ultimate solution to that, but it's not a bad proxy. It's not a bad thing to know. This episode is sponsored in part by Carbon, the practice management system. Funny story about Carbon. So we did our 2025 practice management system recommendation. There's like 40 some practice management systems out there. And we pared it down to a list of, was it 7? Some much shorter list where I'm like, these are the only practice management systems that I recommend. And doing that was a big undertaking because we looked at basically six different sizes of firms and for each of those different sizes, firms have different service mixes. So if you did tax, only if you did bookkeeping, only if you did tax and bookkeeping combined. And for all those different scenarios, we gave a top recommendation and two secondary recommendations for the practice management systems that are best suited for those types of firms. Now only two platforms got five top recommendations. One of them was Keeper, which honestly is not even a practice management system. It's like month end close automation. The second was Carbon. Carbon is really good, man. It's like it's one of the only tools out there that raises to the level of if you are considering tech change in your firm honestly, practice management system or otherwise, you have to see what Carbon does and understand what it does. Because if you go down the list of really, really smart, like thought leader accounting firms right now, Chad Davis, great example comes on the pot. A lot, a lot, too much. A lot of really smart firms are running on Carbon. And sometimes honestly, like, that's what I need. That's all I need to see. Do I really need to like out big brain these other firms that I look up to or do I just say, okay, they've done a whole bunch of due diligence. I still got to do a bit, understand what works for me. But there's, there's something to that. Learn more about Carbon, check out the link down in the show Notes. This episode is sponsored in part by Maker's Help. If you're thinking about getting into some new, more profitable services in 2025, one that I cannot recommend enough is advising your clients on their kind of short term cash flow outlook. Oftentimes it's a prerequisite to be able to do more long term planning, which we want to jump into. And then we realize, oh, they're not going to make payroll on Tuesday. So that's kind of what they're focused on. That was the story of like my evolution. We tried to do long term planning, that didn't work. Then we started doing short term planning and then we're like, I kind of got to have a better understanding of your AP setup. So then we started doing bill pay and that kind of created the loop and opened up a huge advisory opportunity. And AP right now, funny enough, is being like completely reinvented by AI. It truly is because we can actually do much, much more automated extraction than we've ever been able to do before. Makers Hub, they're pushing it farther than anybody else that I've seen today. We did a demo day on them a while back about how AI is kind of revamping ap. I think it's now the most watched accounts payable related video on YouTube anywhere because it's like really compelling. It's really impressive if it's something you're looking at for 2025. Take a look at Makers Hub. They recently rolled out a bunch of stuff around purchase orders too. Really impressive tech link down in the show notes in my firm, people ultimately like the expectation was here are the projects that need to get done, not here, the hours that you need to work, but where time became really useful is this was kind of like the first alert system to be able to say like, hey, they need more help with this or that or this project that's very similar to this other project. Like why, why are we coming in? Why is it requiring so many more inputs than this other project? That's something that we want to understand and it's something that gets more important the bigger your firm gets because you kind of start zooming out. And oftentimes the same level of attention and care doesn't go into those projects that they do when you only have, you know, 30 of those projects. You know, there's, there are probably people who are capable of running firms without tracking time due to a more intense awareness of various other factors. You know, tracking time is not the same for everyone too. Like tracking time down to the 10th of the hour. That level of granularity I think is, is kind of absurd. But if a POD on your is responsible for 10 clients at an, at kind of a macro level in that pie chart of which of those projects are taking up, which of those 10 projects are taking up the most time within that pod if you have one that's taking up half of the time and it's a tenth of the fees. The reason why my team wanted to track time was like, how they were compensated and rewarded was tied close enough to, is our pod getting enough work done that they wanted to be able to root that out. They wanted to see the scope conversation that needs to happen with that client to understand why there's so much time being sunk into that project. And I think that collective accountability, like, was a. A great sign that, you know, their incentives were right, that their incentives were aligned with, with my incentives, because it would actually be them that would lead that conversation and not myself. But you have to be careful for that not to become the evil that you wanted to avoid. Right. I would love it if I could exclusively employ people based on their productive output. At the end of the day, that is all that matters. That even that, even. That's probably a little too much of a generalization. But the time of it all, what goes into it, that's a really valuable thing to have when it comes to helping people. Even folks at different stages of life where they're like, I want to. I want to take on a bunch of work right now, and then you've got other people that are like, I'm actually kind of cool. Slowing down. When you have two people at your teams capable of, like, wildly different levels of output, that's information as. As a manager that, like, you want to get your head around to understand where the people are at on your team, to understand who needs help and who can give help, you know, to. To solve specific staff issues. Here it was framed as, an employee is taking way longer than expected on projects. If there's a wrong way to frame that with your team, it is, I don't know, it's framed as kind of a lack of trust. Like, that's, that's. I think it's better to come back to the example we went through earlier where it's like, if you've got 10 projects and all 10 projects are priced the same, wouldn't it be useful to know which of those 10 is requiring the most inputs and which is requiring the least? We probably want to do more of that work that requires the least, maybe less of that work that requires the most, but also understand why that ought to inform the direction of the firm and the direction of development for that person. And then if you look at person B and they have 10 projects, do the inputs skew similar to the first person or do they skew different? Are there Ways that those people can help each other. That's all just helpful information to have. But when aggregated too much, it's almost like the more disconnected management is in that situation, the more those numbers kind of become evil because. Because then like the numbers themselves kind of become the enemy as opposed to frankly an opportunity. And if my team is incentivized to be as productive as they can in the time that they have, they're going to be the first ones to raise their hand to be like, why is this one taking so much longer for us than it is taking for this other pod that has a very similar client? Like, I want them to go and have that conversation and them to be able to see that. I've, I've had lots of conversations with small firms that have like a very healthy relationship with time tracking across their team. I think it's a management thing more so than it is a time thing. Also, if there's something that I can instill in people who work for me, it is you don't want to like project your worldview on other people. But I also don't want people like killing themselves for my sake. And that can happen sometimes where they're like, oh, the boss is really gonna want this done. It's like, no man stuff's gonna happen sometimes. And I really wanna know like if you're sacrificing, you know, missing something of a kid's or something like that. Time is, time is important. Time is incredibly important. Time's not always a great proxy for output for sure, but time is like literally all that we have. And I actually think if you stress the importance of that to your team, like they can understand why having that information within reason not to like an insane level of detail. Having that information ought to be like a very important way that you can sort of protect them of the evils of like slipping into overwork and getting in over their head. Whether it's their fault, whether it's your fault, like doesn't matter in a healthy environment. I think that's actually something that, that people don't mind having. That was my experience anyway. Comment from Amar600 hi Jason, can you cover up conflict of interest in one of your videos? I work for top 10 accounting firm and planning to start a side gig. Can you cover consequences if they find out someone is running side gig without taking their clients? I don't know about conflict of interest necessarily. Conflict of interest, like that's probably more concerning than a non compete. Like if you have a client that genuinely like is related to some other client. Like that's probably something that's harder for me to talk to. The thing that I'm happy to talk and talk into, which maybe I shouldn't be, but is non compete. Just the fact there's so many people out there whose lives are on hold due to non competes that are completely undefensable. There are non competes where it's like okay, you sold a firm and you know there's some part of that deal where you can't then go poach the staff or work in the same market or something like that, that all that'll totally make sense. But if you are working for some gi mongous accounting firm where you have signed some generic non compete that's keeping you from picking up a juicy side project when you know that you want to be walking down a path towards running your own firm or you left that firm and there was a, there was a, you know, 12 month non compete or something like that. Like I mean I can't give you legal advice obviously, but we think that people care so much more than they do. I mean that's like 12 months of your life. How many 12 months of your life are you going to have? What is that worth to burn for some company that just absolutely doesn't give a about you to put your life on hold for something like that? Where the level of thought that went into you signing that document was some HR person literally just had to tick a box. I really don't like the idea of someone having that much control over my life. Maybe it means you shouldn't have signed it to begin with, but you're in the situation that you're in. Uh, you know, you sign agreements and ultimately will many times in your life decide to break an agreement knowing the potential risks of doing so. Like when it comes to business, I mean there's oftentimes going to be a cost to breaking agreements. But most of those agreements are not like the spit in the hand like good old boy, like being a person of your word sort of thing. Like please don't mistake signing something with a big four firm who just couldn't give a crap about you as that it's not they're self interested. It's okay for you to be self interested. It's probably worth talking with somebody about this to be like am I actually, is this actually risky? Too often this actually can be, I think an excuse to doing something harder or scarier. But ultimately if it is taking you down a path towards something that's better for you like, I can tell you like that sort of thing absolutely would not stop me. It wouldn't. That's something everybody's kind of got to decide for yourself. But just keep in mind, bear perspective of like this administrative procedure. Oftentimes we put this inordinate amount of weight into oftentimes the document itself. Like there's just like they genuinely could not actually do that. But we also have this spotlight effect that tells us, oh boy, they're. I'm sure when once I leave they're really keeping an eye on me or even when I'm still there. I'm sure they're really keeping a close eye on all this. It's like 99% of the time like nobody gives a hoot. And if we, I really think we fixate on that stuff too much, like that's just kind of a bummer way to go through life. I'm, you know that I'm very against anything that that like jeopardizes my sense of agency and the notion that I have ultimately control over what I'm doing and the future for myself. I really don't like stuff like that. And this is one of those things that is very blown out of proportion non competes the defensibility of them. And even if they are defensible, what's the cost to breach that relative to the upside of control doing what you want to do, actually having your own hands on the steering wheel rather than letting some big freaking company like dictate how you're going to spend your days. Like man, that's, that's. I can't do that. Okay, last one. A bit of naming advice. I shouldn't say the name of the firm itself. Basically they proposed a name that's like very specific to an industry niche question said, I do quite a bit of tax advisory work in the real estate in real estate development and management and that name maybe works for that, but I'm concerned it will either confuse or turn off prospects in other areas. I may just use my own name like their, their name name, but they don't like, like how it sounds phonetically. Here's what I'd say. You don't have to agree with this. Here'd be my take. The very worst name that you can use on a business is your own name because literally the only person in the universe that it attracts is your mother. That is the one name that's guaranteed to not attract anybody. I can see the argument for how a niche specific name will actually push other people away. But if you're going to go with a niche name then like at that point, hopefully you're running a niche firm where it's actually helpful to you that it pushes other people away. Like we've talked about this before, the notion of attracting a thousand leads a week to your accounting firm website, like, that's not something to beat your chest over. It just means that you're actually not targeting anybody in particular. And that is going to be one heck of a firm to run when you're serving like anybody and everybody. If you're not quite willing to commit to a name that is niche specific, commit to landing pages that are niche specific. So do something more generic. I still wouldn't do your own name, but stand up landing pages that's like forward slash, you know this niche and speak to all the ways that you're awesome for people in that niche. Now this could even redirect from another URL that is like, you know, niche tax pro.com or niche accounting pro com, whatever. Maybe it redirects then to that forward slash landing page that you made. I also know a growing number of accounting firms that have firms set up under various different names that are all serviced by a single operating company. And you got to pay a little bit of attention to the rules, at least in the US in any given state, around like restrictions of holding yourself out as an accounting firm if you don't have CPAs. That's a restriction in just a few states. But even in those states, people are working around that by, you know, the, the client just signing a contract saying that like, well, you, you've engaged this, this company, but like all of the work is done by this other company. It's no different than if you were gonna subcontract work to a third party. You're just subcontracting work to yourself all sorts of ways around this. But all that is to say, I've seen a growing number of firms have multiple different named firms that are specific to niches that are ultimately operated behind the scenes, like from a single group. I think the best name, just like the best social media post, just like the best book title, is the one that stops somebody in their tracks and says, oh, there's somebody that does this for people like me. Awesome. Because you immediately become the best choice for them. Whether that's right or wrong, whether you're actually the best of that stuff for them or not. That is worth leaning into because the more specific the people you serve, the easier it is to systematize that work. And if it's the type of person that has really valuable pains that you can solve for that. We talked about an example of that at the beginning of the episode, how we stumbled into this very valuable pain for dentists who are rolling up groups of clinics. That was a very unique, very rare, very valuable pain that we found just by stumbling into it. And we're like, oh, we're kind of perfect for this. And then when we do 10 more of those things, we have this expertise where we can hold ourselves out as being like the DSO accountants or, you know, something very specific like that. And there's so much value in that. Like, that is how you run a super profitable firm. But if you're not far enough down that niche journey to have the confidence of committing to a name like that, a step back from that is a landing page with a more generic name, like, probably still not your name, because if you ever sold the firm, like, then you got to rip that band aid off and change it. But at the very least, like, stand up landing pages that are very specific to that type of client gang. Thanks for coming and hanging. I think we'll do a couple episodes next week on the holiday week. You got any questions? Keep them coming. Q and A Fridays are always the best day of the week. I know a lot of you look forward to that podcast episode because we cover a lot of. A lot of different stuff, but stuff that's like, real, like real problems that you're working through. I don't do any consulting with accounting firms at all. The only version of consulting that I do is answering questions like this in a way that everybody can benefit from something I actually recommend doing in your firm. Like, obviously you got to, you know, get permission and get questions from clients in the context where you're like, hey, I'm going to use this for my office hours or content or something like that. But if you're going to put the time into, like, putting a thoughtful answer out there, why only send it to one person? Like, the way the world works these days, you put this stuff out into the world and people find it. Like, that's why I swore off of doing one on one work or any sort of private consulting to just say, like, somebody's got a question, throw it my way. If I think it's relevant to other people, we'll put it into the podcast and then a bunch of people find it and learn from it, you know, along the way. So keep those questions coming because they not only help you, they help other people as well. And thanks for coming and hanging this week.