414 The 4 Ingredients To Scalable Output

Sometimes, sometimes you just gotta get back to basics, you know, get perspective, remember what it's all about, not try to big brain our business's problems too much. So we're actually doing a little, little mini series this week. Three episodes about what are really the three pillars of any business. One, lead volume, two, lead quality and three, fulfillment. Getting the stuff done. And this is like very common business advice. Sometimes lead quality is reframed as like your close rate. We're going more the lead quality path for reasons that we'll talk about. But how does this like common wisdom overlay itself onto an accounting firm where most often we're actually pretty imbalanced here, as you may imagine, like balance too heavily on the fulfillment focus. So this week we're talking about all three things. How to do them better and the symptoms of imbalances, what your firm may be lacking if you're not leaning into one or the other enough. But today we're starting with fulfillment. So come on in, let's talk about it. Okay, the old three legged stool. You know how people love to use the old three legged stool analogy? Like they've got a, they've got some sort of point to make that relies on three things. And they're like, it's like a three legged stool. And you're like, oh yeah, no, because the legs on a three legged stool have to be just right. So your point is correct. Isn't it funny how that works? Stool dynamics have nothing to do with whatever point you're trying to make. What a clip that, what an audio bite that just was. Okay, today we're talking about fulfillment. Like this. This is the easy one, the one that probably comes most naturally for most of us accountants. Let's just jump right into it. Four ingredients to nail this, to squeeze everything that you can out of your firm. And this is, this is an area where actually some parts of this we can really geek on. They come naturally to us. Other parts of fulfillment actually don't. More the. The human side, but we love to, we love to nerd on workflow. And, and that's just so much more fun than some of the more emotionally taxing things that we have to do in our day. Right? Let's cruise through these, the four ingredients. Number one, process. Process. The, the opposite of process is over reliance on expertise. The opposite of process is hiring expensive people and sitting back and just seeing if they do it right or not. And this is the way that I would say most accounting firms still run. And people will make the argument, well, there isn't any other way because you can't plan for every eventuality. So if the people can't do the work, it just means the people aren't good enough. And I, I mean, I probably spent most of my career in that camp before ultimately coming around to. For sure, there's not a 100% procedural way to do the type of work that we do. But the goal always needs to be how do we systematize as much as we can of it. If we can systematize 10% of it, then it takes 10% of that work off of the plate of that super big brain person. It means every time you do that 10%, it's done the same way. Right? Now if I could tell you that you could get 10% of the time back from your most scarce people, you'd be like, absolutely, I would happily do that. Right? And so like, there's constantly these sort of two opposing forces of, of one, the nature of the work is really, really hard to systematize. But on the other end of the spectrum, we have to be pushing back against that to be innovating in, in like our, our creativity when finding ways to systematize. And it means boiling things down to more simplified frameworks, documenting how to do that stuff, and then actually holding the team accountable and saying, no, you need to do it this way. I can tell you, in my experience, transitioning a traditional firm to this is, is exceptionally hard because everybody has their own way of doing things and that, that is the natural order of things until you create a way much like how client engagements kind of all take on a life of their own and you end up doing all these different tasks for different people. If you're not intentional about having a service library that defines what we're willing to do for people. Similarly, the way that people will get any given task done, it's going to be wildly different until you have a system. And a funny thing happens as soon as that system exists is things trend back towards that. Rather than kind of living their own lives and going on separate paths, this is now the easy route. Unfortunately, it doesn't mean that everybody will overnight switch and be like, okay, I'm plugging into the to the easy route for a number of reasons. One, they may just think that their way is better, but I think the bigger thing, number two is muscle memory is, is having to untrain the way that maybe they've done that thing for decades. And I don't want to make that sound easy because it's not. And a whole lot of what we do using ledger software, using tax software, like there's a lot of muscle memory there. But until you have a system for how to do specific parts of a process, nobody's going to do it the same way. And if you don't have that system, you'll find as soon as you try to change technology or standardize something, it just doesn't work because people are doing things differently. So the same solution will work great for some people but awful for other folks because it may disrupt the way that they do that task. And until you're doing more of that in common, those sort of group decisions are just so, so painful. Just very, a couple of very tangible examples. Let's say you're a bookkeeping firm. How do all the work papers. No, no, no. How do we get all of the, you know, the bank statements or all the documentation that we need, like the pre accounting process. How do we all of that stuff. If you don't have a process for that, which, I mean, one of the biggest hacks in a bookkeeping firm is to have an explicit pre accounting process. Go back and check that episode out. If you haven't, it's the probably best workflow hack I can give you. But if you don't have an agreed upon way for how all that stuff gets gathered, then it's just left up to the accountants to go out and like grab this, grab that and log into this, and log into that and then find out that the login is broken. It's 13th of the month, we got to get that out on the 15th. But then they also gather it in slightly different ways. As opposed to having a system for here's what we do, here's what we actually pull on the first of every single month. Here's the naming convention for bank statements, here's the naming convention for canceled checks. Once you have that system, it can be deskilled and an admin can jump in there like right after the month end close. You're taking that work off of your more experienced people and it actually gets done on a timely basis. Similarly, on the tax side, some firms rely on their like tax managers to go back and forth with clients to gather information. Other folks put the admins in charge of that, usually the admins and a combination of software following up with clients. The firms that are leaning more into the admin side, that project doesn't touch the professional staff until you've got everything that you think you need. And yes, there's the whole like, well, an admin is never going to know a hundred percent of what you think you need, you at least know what you needed last year. And an admin can get you that far. And that's a whole lot better than the whole stoppy starry like client gets you half of the information and you just pick it up and put it down a bunch of times. Right. Like, we all know how wasteful that can be. Instead, having a process for how you build the document request list. First off, the DRL based on pro forma information. A process for how you follow up with clients at what frequency, how does it get escalated and then what happens when you have everything in. Once there is a process for that, honestly, anybody can do it. Is there sometimes, like reading between the lines, that's necessary on certain things for sure. Your admins will actually pick that up pretty quick. Is it as good as your most senior tax people doing all the requesting? Probably not from a technical standpoint, but those people oftentimes aren't the most congenial folks on your team. So like actually having somebody that's great with clients that can do that, I'd argue that's probably like an upgrade on the client experience. So those are like two very tangible examples of how creating a process for something deskills it and makes your workflow easier. Because it's all getting done the same way. 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. Cause 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 Ignition, we won more business with impressive online proposals. No more hustling, hustle and PDFs and Word docs. We automatically pull pictures. 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 why over 7,000 of the smartest businesses run on ignition@ignitionapp.com. i'll put a link in the show Notes. Okay, this podcast today is brought to you in part by the fine folks at Team up who help you find uber talented accountants in the Philippines. I got a little report that I get from the squad at Team up of what they've been up to the last few weeks. And the greatest litmus test of is this thing actually working? Are people actually using it? Is. Is just that are other accounting firms, are they doing it? But also are they coming back and doing it over and over again like I did. I made my first hire in the Philippines, kind of being like, is this a thing? And man, we. We came back so fast, ended up making three more hires in rapid succession. Team up right now. Whoa, let me look at this. Are you kidding me? They've got 27 active projects right now. About half of them are with returning firms for everything from bookkeepers to senior accountants to tax accounts. Senior tax accountants, executive assistants, gang. It's happening. And the reason why people keep coming back is because it works. Because the first one works and they're like, oh, okay. This is actually a way to get a whole bunch of work done because it's so much easier to find accounting town in the Philippines right now than it is to find it onshore. Bunch of firms I know personally work with Team Up. Team Up's approaches is to connect you directly with accountants. There's not a middleman taking a bunch of money out of that duffel bag of cash you send each each month. That. That's not how it works. But you know what I mean, there's no. No nobody else taking fees out of that. The money goes straight to the person you're working with. Basically just recruiters. They're finding you really good, really good accounts to use. That's it. To learn more about Team up, check out the link down in the show notes. Second ingredient here. Nail in the tech stack and tech can be. Both can be overwhelming. But let me tell you, gang, it has never been easier than it is today to nail your tech stack because we have such greater transparency in how we run our firms, and there's just such an abundance of other firm owners out there who are willing to hop on a call with you, willing to answer a question, willing to discuss what is good and bad about a platform. I mean, platforms like my Own did not exist five years ago where you had people like cutting through this information. Accounting firm communities like they existed five years ago, but in my opinion in like very sort of archaic ways and these kind of associations now, I mean, any of you can go out and join an online accounting community in five minutes where you will end up meeting a bunch of other firm owners. You can steal ideas from them, you talk to them about their tech stack and you'll get to a decision on tech so much faster than ever before. For sure there is overwhelm when it comes to tech and just there being too many tools to choose from. But there's also like better information available than has ever been out there before. So the whole like existential perpetual dread over, am I not on the right setup, gang? There's enough people out there that can give you answers these days to where you don't need to have that dread anymore. And at the bleeding edge of what's the absolute, very most perfect thing for me, it ends up being subjective and there is some stuff that's kind of on the fringe and it may change when this thing updates or that thing updates, but if you're 90% of the way there, that's good enough, that's fine. Put it out of your mind, like just get to work, do the best you can with what you have. And getting 90% of the way there has never been easier because we have people. I mean literally post a comment on this YouTube video and people will come in and help you out. But tech, obviously very important in the, in the bigger question of what volume of work are we getting out the door, how are we handling fulfillment and are we doing that efficiently? But I put it behind process because we can often get like lured into the notion that tech will solve my process problems. A manual process still beats no process at all. We all hate manual processes. And there's a tremendous amount of shame that comes from them wrongly in my opinion because oftentimes like, and I've, I mean I've done this myself. You can be so allergic to having a manual process that as a result you don't have any process at all and the thing just doesn't happen. It is cooler to have a human doing, doing a dumb manual, like menial thing than it is for that thing to just not get done. And let's not pretend that those things don't exist. People love to swoop in and be like, well, this could have been automated with this and RPA and that and that. If you have an engineer, anything can Be automated. There is nothing in the world that cannot be automated. But you got to pick your battles and you got to start with a system. So first ingredient process, second ingredient tech stack, third ingredient, deskilling, wherever possible. We talked about this in process a bit and we actually did a podcast just on deskilling. I know maybe six or nine months ago that I think is a really good one. And we went through a bunch of examples kind of of what we just talked about, where you can take a pretty high level technical professional task and by systematizing it, bring it down to the level of either a junior or an admin. And there are examples of this all over the place where the same two firms externally selling the same thing will involve wildly different levels of technical expertise. So like if you're a tax firm, for example, and the notion of admins gathering information for you is unthinkable and it's really easy for your mind to jump to. Well, that will never work for my clients. I can point you to so many 5 million plus firms that are boutique, that are white glove people, pay them a tremendous amount of money and the admins are handling the intake like it is a paradigm shift for sure. But you can get there. But it will only ever be as good as the systems that you can develop. And once you start deskilling that work, it changes your hiring practice and it makes the work you do more staffable because you're not as reliant upon really scarce talent. Which brings me to the fourth ingredient that most of us are lacking. A scalable hiring pipeline. And you may think this only applies to like if you want to grow like crazy. But it also applies to folks that don't want to grow at all. Because if you're one person away from being totally hosed, how are you going to find that replacement? One person leaves, two people leave. If you are like going to really, really be hurting, then you don't have a scalable hiring pipeline. You don't, like, you don't have a plan for that. And where this is really painful for most firms is because of this overreliance on the most senior, like technically capable people. It's not to say that you don't need them, it's just to say that there is, there's a spectrum and how systematized our firms are. And the less systematized you are, the more reliant you're going to be on those people that are really, really hard to find. We grew our firm From, I think 20 people, sorry, 28 people or so to about 40 people without adding any top level, like senior technical folks, maybe about, maybe one. But those other 12 hires, they were admins and they were largely junior level people who quickly kind of grew up like through the ranks. And this wasn't just a product of taking a legacy firm where you just had a bunch of people, smart people, capable people, but people that were left to do things however they wanted to do them. This was the product creating systems and processes to get folks doing more of that work in common. Not a hundred percent of it. And I mean, I, I'd be lying if I told you that it, that it went great the whole time and everybody was super happy about it. Reality is it's, it is hard to do thing something a different way after doing it one way for, you know, decades in many cases. But the more you can lean into that, the more you can lean into staffing your team with folks who are, who are just easier to find. And I, I don't want to like understate what a difference this can make. Take a single tax return. If you compare the normal approach where somebody will pick up and put down a tax return say four times from the beginning to the end, and the first two or the first three times are because they're doing information back and forth with the client, that information gathering, I mean, that can, I mean it ranges a huge spectrum depending on the type of return. But that can be 20% of the time it takes to prepare the return. It could be over 50% of the time. Simply by delegating that information gathering time to the admin, you're freeing up up to half of the time of that professional to work on other projects and to like, focus more of their efforts on actually meaningful work. Like if you have senior folks that are doing administrative stuff, they, they are not growing as long as they're doing that administrative stuff. And so it's holding them back as well. So it really, really makes a difference in the volume of senior folks that you need. In my case, we were able to grow a bunch without having to pile more on those senior folks. This episode is sponsored in part by Cloud Accountant staffing. Do you ever wonder why offshore staffing agencies sponsor so much of my content? Because I'll be honest, it's not cheap. Like, let me just do some like, mental math here for you. Most of the brands, like software companies sponsoring my content these days, like they're pretty kind of the bigger platforms because, like, it's not the cheapest thing anymore. And so how can these little offshore staffing groups afford to advertise and advertise on my platforms for years. I'll tell you how, because it's working. Not like the ads converting. I mean the ads are converting, but firms are are going to these groups and they're having fantastic luck and they're going back again and again and again. Fat Accountant Staffing Story they were an accounting firm that started hiring accountants in the Philippines, had fantastic luck with it, and then like just started doing it for some other firms. And it is one of the fastest growing trends in running small accounting firms right now is the world is getting smaller. You know how hard it is to find like really talented onshore accountants. For me, the last four hires that I made in my firm were all in the Philippines. If you want to work with a group that feels like an accounting firm that's going to help you find people because that was truly cloud accountant staffing's origin story. It's worth checking them out. Linked Cas down in the show Notes Today's episode is sponsored in part by Canopy, the practice management system Canopy. They're one of the earliest like really solid cloud PMs that the accounting space got and they continue to somehow be like very progressive and kind of at the leading edge of cool new stuff. Unlike a lot of very early cloud tools where they just kind of end up looking long in the teeth, man. Canopy has one of the, if not the most complete feature sets in the biz and everything that they've got in their practice management system. Just super polished, super professional. Something you can proudly put in front of your clients and your clients not have to be like, like give you some grace because they just expect that the tools that you use will suck. Oh my gosh, how long has that been a problem in the accounting industry where they're like yeah, it's cute. Wow, look at that portal. I'm just impressed my accountant has a portal. It's like no, like we should have really good tech that is professional and works as well as any other apps that that person uses. That's been my experience with Canopy. Just polished from end to end. One of the most comprehensive systems out there. To learn more about Canopy, check out the link down in the show notes. Couple parting thoughts here for Fulfillment Symptoms of over reliance on the fulfillment leg of the stool. So the the old three legged stool Fulfillment Lead volume and lead quality Symptoms of over reliance or putting too much effort into fulfillment. You have a overserved clientele with low turnover and a stagnation in the fees that you can Command relative to inputs, be that, you know, hours or, or whatever collection of metrics you want to use. If all you're focusing on is fulfillment, then nobody ever leaves. But the business doesn't really change, doesn't develop as much as it can. We talk about this on the podcast a lot. The very best clients for you to serve in the world are not just going to stumble into your lap. Like, the world is way too big for that to be the case. If nobody knows that you exist, if you're hiding under a rock, then you've got the people you've got, and that's kind of it. Now, symptoms of underutilization or symptoms of not doing fulfillment good enough, high turnover clients are unhappy, potentially damaging word of mouth. They talk to each other and find out that you're not delivering on what you promise. And no talent pipeline. And we don't have a plan for how to get that stuff done and how to, like, fill those seats in a more scalable way. Obviously, I talk about offshore staffing a ton. That was something that we did. We also sort of like nailed that admin hiring process, which requires going through a really high volume of people, in my experience. But those were really helpful stop gaps. Not to totally solve the talent pipeline problem because it is hard, but when I came into that firm, it was, you know, 25 people and two admins that answered the phone. And by the time I Left, upwards of 30, 40% of the staff was either really green junior people or admins. Now doing fulfillment right? Sounds like nobody reasonable is leaving. Like, no reasonable clients are bailing on you and you can see a path to doing more if you want to, as in turning out a higher volume of work, not doing it right. Sounds like we're not sure how to get this all done and clients are unhappy. And I think we've, most of us have probably experienced this in our career where you are like headed into a period of time and you're like, something's got to give here because there's no way to get all this stuff out the door. But you kind of just keep barreling ahead anyways. Or you try to overcome it with like, sheer force of will and just absurd numbers of hours. And then you get around to the same time next year and you're like, wait a minute, are we about to do this again? That can be a really sad spot to find yourself. Now. Fulfillment more than the other legs of the stool. Why do we cling to this one so much? I would say fulfillment gets immensely bigger percentage of our Attention than any sort of lead optimization because it's so emotionally tied to us and to our identities. Nothing hurts more than somebody thinking you stink at what you do. I think we also fixate on just the fulfillment side of our business so much because it's, it's an extension of what we did when we worked for someone else. So when you work for somebody else, scan the only thing that you're tasked with, it's just doing the technical stuff, right? And then you go out on your own and you're telling me all of a sudden, this is a third of my job. That's a really hard habit to break. Especially when you're just trying to put like food on the table. And getting work done is the shortest path to like, here's this file on my desk and I know it is worth this much money. It's easy to go to that first, right? And at the end of the day, like, if you went to school to do accounting, then you went to school to do accounting, like, not, not to sell accounting. And this is why folks that enter firm running more from the entrepreneurial end of the spectrum, maybe they were outsiders before or came to it later on after they had some other business experience, it seems easier for them to escape that, that fixation on fulfillment. But on the flip side, it's easier for more traditional accountants to point their finger at those folks and be like, you're doing bad work or you're not focusing on the right things or something like that. Because they may be, you know, very sales focused or something like that. This is a really hard one for a lot of us to overcome. Getting past this fixation on fulfillment, on just the doing of the work that we already have, when what's going to impact your success more than anything else is who you have is the clients that are on that roster. And it means that we need to invest in those other channels until people know that we exist and we learn what it is that we can even do for people as we see more of the world and what those people's needs are. It means we're not yet in an optimized place, or at least we're missing out on some opportunities by like living under that rock and just churning away on the projects that we got until the end of time. But again, it's hard. That's like, that's the natural state for most of us. And when you hear something like someone who's not even an accountant running an accounting firm or there's lots of examples of these people and we've interviewed some on the podcast. They come into the profession and they may have a CPA or something like that, but they don't do any of the technical work. And they hire the people to do the technical review of the work that goes out the door. They don't sign off on it themselves. I mean, there's a whole, like whole big group of small, like small firm owners who look at that, the notion of somebody else hiring a person to do the technical review and send the work out, they look at that as being almost wrong, like unthinkable, irresponsible. The notion that something's gonna go out of your firm and you didn't bless it. But beyond like ADB firm running that, I mean, that's the norm, right? Like, that's how it always works. The partner signing or the manager signing or something like that. And for me, it wasn't until like my day to day wasn't just in the technical stuff. It wasn't until then, and I was really working on the business that I could even like have the luxury of that perspective. I guess our minds are consumed by the stuff that we do each day. So if I'm preparing tax returns all day long, I can tell you I'm not thinking about where that next lead's gonna come from. And it's really hard to ever escape that. But the next two days we're talking about lead volume, how, how to ensure that as many people as possible know that you exist. And this is hard for us because. Feels slimy. We're not very salesy usually, but this is, this is strictly about being helpful, not about shilling. It's about being helpful to people in the world and that, that ultimately coming back around and helping your business. And then after that, lead quality, how to find the people who will pay you the most for the stuff that you already do. And we go over the math so often on this podcast. You're on a 50% margin firm. If that next client you bring in will pay you 50% more than what your current clients do, then you just doubled your profitability. Means you can drop two projects for, for that one new project you just took on. That's, that's not any more work. And like, that is the North Star. That is why we can't disregard the other legs of the stool. Because trading two projects for one project, I mean that solves all the problems. That solves the staffing problems, the capacity problems, the getting home in time for dinner problems. That's why each of those things require their own attention. So tomorrow we'll get into lead volume in a way that is not marketing, in a way that's. That's hopefully something that's as comfortable as possible for people who. Who this is not a natural thing for. I'll see you there.