595 A Guide To Setting Minimum Prices in your Accounting Firm [The mistake that nearly cost me my accounting firm]

This is one of the most important things that you will do in your accounting firm is set a minimum price. And there are so many wrong ways to do this, ways that nearly ran my accounting firm into the ground. So today we're talking about what's the right way to, to decide on and set and communicate a minimum price in your firm that won't make your client base like— won't make the normal distribution now centered on that minimum, right? That's the last thing that you want is an entire client list that's all paying you the minimum amount of money you might feel feel like you're living that reality right now. Also on today's show, we are recapping the last month's updates in my app recommendation database. These are the app recs that I put out for accounting firms that are used now by over 8,000 accounting firms. In the last month, we've made some cool updates. I'm going to tell you about who's moved in those rankings, also share some cool new apps, and then we're getting into the mailbag. I want to share the story of someone who went all in on local AI in their accounting firm. Wouldn't that be nice if you could just run AI on your own server, sincerely, and then anything becomes possible, right? Wouldn't that be cool? Got questions on what accounting ledger is going to win in the era of AI. What's going to happen to QuickBooks? How much time should it take you to niche down an accounting firm? And how do you get Jason to come and coach your firm? Wouldn't that be nice? Little Jason sitting on your shoulder as you're making those decisions, writing those hard emails. We got a lot of ground to cover. Okay, let's do it. If you're new here, welcome along to the Jason on Firms podcast, where we come and hang out every week to talk about accounting firm maxing, how to run a better firm, whether you own one, whether you work in one. We talk about the ins and outs so that you can confidently navigate whatever the next 5 years will bring to our profession. Right? I'm joking. We kid. Am I joking? Okay, let's talk about minimums. So my backstory, if you don't know, I ran a 40-person firm. It was a firm that I had worked for for about a decade. I bought out several of the legacy partners. Me, I owned it with a partner, a single partner. Uh, when I bought it, we were about 30 people. We grew to just over 40 by the time I left. It was historically a tax firm. I launched a CAS practice. So like a bookkeeping sort of accounting department in a box practice, grew that to about $1.5 million in way too short a time, the CAS part of the business that is. And so that this firm was just laden with all of the traditional sort of legacy trappings that you would expect from an 80-year-old accounting firm that had a very traditional partner model. There'd been over 20 partners that had cycled through this, this firm over those years. Historically, it had been a 4 or 5 partner firm, and you just had all of the headaches that come with that, like not being able to get partners to agree on, on sort of firm-wide decisions. Man, having multiple stakeholders, like Most of the audience of this podcast is in that half million to $3 million range with the— like we got some solo folks and then we've got some folks on the $3 to $10 million range. When you're up into the $1 to $5 million range, one of the biggest things that ails those firms is you have stakeholders with different perspectives on how to run a firm. The best solution— like and subscribe, baby, send them my podcast. I'm kind of joking. I'm kind of not joking. Like the way that we think we should be running our accounting firm as a product product of our context, of the things that we consume. And the more that you can build common context with other people, the more you see the world the same way. Because you'll get really hot on an idea on how something should work because of some experience you've had or people you've talked with or things you've learned. And then you go to some other person and they see it a different way and you're like, how do you not understand? Like you give them like the 20-second explanation, right? And you're like, you're dumb, man. You don't get it. And it's like, no, they just weren't exposed to the same context as you. And in my firm, the whole notion of a minimum fee, it was— that was a tricky one because you had different partners doing different things, basically giving away work to friends and family. You had all the friends and relatives of like past partners. This firm had like continued to roll forward and it was almost like this alumni association of all of the influential people or everyone adjacent to the influential people we'd ever had in our firm. And so we're running this— I mean, I call it low-bono, this low-bono firm where you're doing sort of half price or less work for these people because it's Jim. It's Jim. Who's going to be the one to let Jim go? So this firm had all of those things, not only on the client list, but also on the staff. Like we had staff that had worked there over 40 years. And then old whippersnapper comes in with, you know, his assistant and all these, these new age skinny jeans, avocado toast ideas. And it was weird. Like, people are scared. Like, coming into ownership of a firm and managing people that you didn't hire, it's awkward, man. It's like, you know, when mom starts dating that new boyfriend and the kids meet him for the first time and they're like, what is this, mom? Explain to me exactly what's going on. Like, it's a weird relationship because those aren't your people. They're somebody else's people. And this is often made worse when the ex, the former partner, they're still around. And so like, Who do their loyalties belong to? But we, in the process of buying out these partners, and, and my remaining partner was actually fairly new to the firm in the last couple years and was a more progressive, uh, person about this stuff than the folks that were going out. But we now had to take this giant hot mess, 1,800 clients, and somehow get it to something that was somewhat standardized, because we're going from 5 partners down to 2 partners. The problem at the time was there was literally no middle management layer. So that was a lot, obviously. In that timeframe, I got myself totally out of client work. And so I was the one person in the firm that was just working exclusively on the firm rather than in the firm. And that was especially important as we didn't have that middle management layer, but we had to take this incredibly messy, just hot mess of a client base and somehow get it to something standardized. And so one of the very first questions that came up was, should we just chop everything under X number of dollars, right? How do we get folks that are under that up? And how do we potentially just, you know, let stuff go if we know they're not going to come up? And this is the first mistake that we made in this transition was thinking what was using price increases as a way of decreasing our workload. And so we went through spreadsheet and all this stuff out and As much as I like to love, uh, as much as I like to poke fun at people who, uh, would just sit there and model things all day and, and like become a spreadsheet millionaire without actually having a dollar in the bank account, the, the truth is like to do this responsibly, you gotta be a spreadsheet millionaire before you can be a real millionaire. And this was the secret to getting the whole sort of ownership, um, me and the partner, but also like the other stakeholders who were still involved. The way that we got them all on board on how we were doing this is just by modeling it out and showing, listen, with what we're proposing, even though it's gonna be very emotionally taxing and we're gonna lose a lot of clients, there's no way we go backwards. In fact, almost certainly we're running a business on the other side of this that's making more money and doing way less work. And we were so scared by these price increases that we were making that we were all like, nobody's gonna go for this. So many people are gonna leave. Incoming bloodbath. And this is because We talk about this a lot on the podcast. We were biased by the people who were already complaining about rates. We all have those C and D clients on the client list who, no matter what the bill is that you send them, they will complain. And those folks take up an inordinate amount of headspace. 10 people could have told you they loved you that day. If one person complains about fees and they're like, this feels wrong, this is— you guys charge too much. What are you going to be thinking about when you go to bed? The 10 people that said, great job, bub. Absolutely not. You're going to be stewing about the one person being like, ah, they don't know what they're saying. But then 40% of you is like, am I— is this wrong? Am I running some sort of— some sort of business is taking advantage of people here. And this is like, this is like 10 PM Tony. Anybody remember 10 PM Tony on the podcast? That's a deep cut. That's going back like 300 or 400 episodes. But part of the problem here is you're just, you lose your mind after 8 or 9 PM. I do anyways. Nothing you ever think about in bed is going to be a good idea the next day. I don't know who these people are who like sit up in bed and they're like, oh, I just unlocked the secret, and they write some sort of note down. 9 or 10 o'clock at night, in my head, I'm like, I'm pretty sure that this person that I know might be a murderer. I like it. It's incredible the things that I sometimes reflect on in the morning. But at this point in time, I've shared this before in the firm, something like 70% of the headcount of the firm accounted for 10%, uh, of the revenue. I'll say that again: 70% by headcount of the clients in the firm accounted for 10% of the revenue. It was a huge spectrum in fees of what people paid us per year, from $50 to almost a half billion dollars. These were all clients within the same client base. And so me and my partner were like, we gotta somehow start wrangling this. And It feels like a minimum price is the place to start. Now, as I alluded to, the big mistake that we made is thinking all these people were going to leave when we did this big price increase, and then virtually nobody did. Now, myself being enlightened and having talked with literally thousands of accounting firm owners in the last 2 or 3 years, this is the most common thing you universally hear. I doubled prices and nobody left, or only 2 clients left. Folks are chronically shocked by how few people leave. And it is worth considering why is that? Why are we so out of touch with what people will actually pay? Honestly, I think this comes back to the complainers. We're biased by the folks who complain about rates, and it's why all of us— and there's always maniacs that do not think this way— but that's why almost all of us, we believe we are worth less than our clients believe. That's what that ultimately means. If they're saying yes to a price that you didn't believe that they would say yes, to, then they're valuing you more than you believe you're worth in that situation. And I mean, that is like, talk about an own goal. If we can use a sports ball analogy, like that is just you kicking yourself in the shin when you don't even think that you're worth what they think you're worth. So we already had the problem of being overcapacity. And then we said, hey, we're going to ask you to pay us 2 to 4 times as much, many of these clients. And then we had the obligation of, oh crap, they're paying us way more and we still have to somehow get all this work done. So that was a big mistake. The other mistake that we made is we began just telling anyone and everyone who would listen about what our minimum was, and we would use this as some sort of validation. We use it as validation for increasing price on people, as if telling them that our minimum was $700 would make them be like, Oh yeah, well, I paid $150 last year, so you're totally right. I should be happy to pay $700. They don't care what our minimum is. They're annoyed that we're all of a sudden quadrupling their price, right? Like they could care less what our minimum is. But we started wearing this like a badge of honor. Like, listen, we're so important now that we won't even touch what you're doing for $700. At this same time, there is a firm maybe 45 minutes away, and I learned this from from a guy who ran another local firm who's, who's a listener. You know who you are. He tells me at the time this other firm had started letting go any clients who were under $10,000 in fees per year. And he was like picking up a number of these clients, which for a small firm, this client that just gets put out on the curb that pays $7,000 a year, they're like, yeah, we're small potatoes for them. Can we please come and work with you? You're like, $7,000? Deal. Sure. Where did— I'll come to your house, man. Like, what? What can I do for you? You want me to watch your kids? $7,000? Absolutely. So meanwhile, at the same time that we are feeling incredibly self-important setting a minimum at $700, not an hour's drive away, there's a firm that is just like dumping anyone under $10,000, which kind of puts into perspective how we're all working in the same sort of food chain, right? Like there's always, always a bigger fish. But we set this minimum of $700. We do a whole bunch of price increases, but at the end of the day, we still, like, had an unbelievably hard time getting all of the powers that be and all the people that brought in clients to the firm to agree to and respect this minimum. And it boiled down to this statement, which was maybe one of the most important sentences I heard when running an accounting firm. This sentence. To not pick up that little project is like walking by a $100 bill on the sidewalk. And I heard that and I'm like, you're right, because I know we make money on these, but I'm pretty sure these $100 bills are getting in the way of $1,000 bills. And so much of this, like getting to that next step and running your firm and overcoming this scarcity mindset and acknowledging that you're no longer the person that you were when you first launched a firm. You're a different person now, which means that The folks you're most suited to help, it's probably not the same as the people you were helping on day one. So much of becoming that person is being willing to accept that you got to start walking past $100 bills because you're actually worth more than that. Now, the fact that you can do something for money and make quote unquote good money doing it, by the way, your definition of good money, it is based on a past version of yourself, right? And this is a really hard thing for us to overcome. Is none of us want to change, like be that different person, right? Like we— our identities are who were you in high school, who were you 10 years ago, and you scrapped and you worked hard and you did all these things. And had that person seen you saying no to that $100 bill today, like they would have beaten you up behind the playground. Like you're like, that's not me, man. I would never do that. Yet we are like living at odds, like in that really hard transition between, well, I— this just isn't working. Working because I'm not willing to make this hard trade-off. But then on the flip side of that, you're like, ah, don't, don't lose, lose track of your roots, buddy. Don't forget who you was. And it's made worse when you have clients who are still staked in who you was and want you to be that person. But at your core, you're not anymore. You are more capable than you were before. You've learned a bunch. You've learned how to say no. Like you're, you're beginning to get that X-ray vision for, ooh, Yeah, no, I probably shouldn't be touching this and this is what I should probably be doing over here. And so you're starting to see like that new role that you are growing into and how you are changing. Yet you have a big part of your client list who is clamoring for the person that you used to be and you don't want to let them down, but you also don't want to give in to the fact that that's no longer you. And wherever you're at in your journey, right now, whether you are— you just got your first couple of clients right now, or whether you're trying to make that first evolution from I'm not great for those first clients anymore. Like, we all have our own version of this. Even working inside of an accounting firm, like, you have your own version of this. Great managers can see this where it's like you've done all of these things. The thing that's going to get you to the next level, it's actually something else. It's not just doing more of this. And so you almost have to grieve who you were to give yourself permission to be the next person. Now, is that somehow at odds with who you are? Like, this is, this is a hard one, especially as, uh, if your journey in entrepreneurship is at all like mine, where you don't have any other entrepreneurs around you. Like, I'm kind of envious of the folks who like grew up in entrepreneurial households because that is not me. I grew up in a state town. Just about everyone in my family and extended family worked for the state. And I had a— I would just have these moments sometimes where I would be sitting around listening to people. And this was more as I was like coming of age and in college and starting to like getting into the workforce and all that. And I would hear how they would talk about their lives and their lives are just consumed by their employer and the ways that they were hard done by by their employer and the tradeoffs of like not being able to go to little Timmy's violin recital or the soccer game and all that stuff. And their entire life was built on the constraints of their job. And I'm like, you guys don't see the problem here? Like, you don't see any way around this? Like, you're just going to live out the rest of your years letting some stuffy manager, like, decide your fate? And it wasn't until, like, I kind of got the perspective of who was I surrounded with in my life that I could then understand why those people looked at me like I was an alien. So this is a true story. 7 years ago, I'm talking with this gal that runs an accounting firm, and she's very progressive in many ways, and she's kind of just showing me her model for how she does a number of different things. And then it just comes up as an afterthought that, oh yeah, most of my staff is offshore. And I'm like, what did you just say? You're— the people that are doing your work are not even in the country? And she's like, well, some of them are, but a lot of them doing the heavy lifting are offshore. She said these folks are easier to find than onshore hires. They are just as productive, if not more, and they are half to a quarter the cost. And I was like, but America and disclosures and all these things, right? And it wasn't until I saw somebody that I, that I respected for whom this was the norm that I was like, okay, maybe I got to reassess kind of our position on all this stuff. Now, thankfully, these days we have groups that help accounting firms with this, that have done this with loads of firms. Firms. Today's sponsor, TeamUp, they will help you do this for the first time if you've never done it before. TeamUp's actually run by a former bookkeeping firm owner who just had a hard time finding good accounting talent offshore, so they went out, they hired a bunch of recruiters in the Philippines, and they pull in the very best people. By the way, I mean, all the, all the top 100 are investing in the Philippines. Like, there's a tremendous amount of account accounting talent in the Philippines, and so they're pulling in bookkeepers, tax executive assistants, whatever you need. And TeamUp specifically has a direct hiring model, which means all you do is you pay TeamUp one time a recruiting fee to go and find you your next dream hire. It's, it's as simple as that. But if you haven't done it before, you can have all sorts of questions and blockers and all that, right? Don't just sit with that stuff. Talk with TeamUp because they've helped a load of firms navigate these exact same questions. Learn more about TeamUp. Check out the link down in the show notes. Tax firms are up to their eyeballs. In 1040 work right now, you really are. Everybody is sending you all these documents and you're doing the old hokey pokey of like, what do I need? What do I have? You never sent me number 3, 7, and 9. AI gang can automate honestly all of this at this point. This episode's sponsor, Sorban. They've been at the top of my recommendations for tax workflow since they launched, and they're using AI as effectively as anybody to take the pain out of 1040 work. And as you know, listening to this podcast, It has never been more important than it is right now to make sure that we are making the most of these unbelievably good new AI models. Your clients don't get value from the document gathering process. In fact, it gets away, away from like the stuff that you actually want to be doing, right? It devalues what you do if they see you as this just document sort of admin gatherer. Software has solved for this. It really, really has. To check out how Sorban is now using AI not only to automate 1040 intake, but also automate the input into your tax software and the delivery of the tax return, check out the link down in the show notes. Super cool product. There's kind of this notion in entrepreneurship that I've heard, probably Chris Williamson, the Modern Wisdom Podcast guy, I've probably heard him talk about it more than anybody else. The notion that you have to, like, a lot of people end up sort of divorcing themselves of that initial friend group, the people that can't understand the journey that they're on right now. Because if you run your own business, like, you know, That is a journey. And if you go and you sit around and hang out with a bunch of people that all just have jobs, and then after that you go and you sit around with a bunch of people that run an accounting firm or are self-employed, like the level of connection, the level of understanding of your life and your way of thinking there, it's so much different. And so like you, like I am an alien in my family and it like, it creates friction. There's people who are okay letting you be, you be you, at least in my case. And then there's other people who are like, no, you should be who you were. And to me, I'm like, I don't know that that's a thing that I aspire to be. Like, not that I want to— there's an element of me where I will always be me, but there's also a really big part of me that always wants to grow, right? Like, I got kids now, for goodness sakes, way too many of them. And now the biggest source of existential dread that I have is like, am I the most I can possibly be for them? Right? Like, that's kind of the cycle of life. At least I think that the healthy version of it is, can we pour the best of ourselves into our kids? And it's why our model for parenting, I think, is always just trying to do slightly better than our parents did. Like, that's just what you always compare it to, which makes it especially interesting when you come into a marriage and your partner was parented in a very different way than you were parented. And then you just have totally different models for, for what that ought to look like. But there's such an element of identity to this that is, is similar in some ways to the way that we have to separate the personal and the business of the rela— in the relationship with our clients. Like, I can love a client and not do business with them anymore. Those two things have to be separable. And for a lot of folks, they aren't. Like, it's what makes it such a deeply personal decision to fire a client. It's why you can't. And I had people tell me this before where they're like, what if I'm going to bump into them at my kid's soccer game? That's going to be so awkward. I'm going to see them at the boat ramp. I'm going to see them at the restaurant. And I'm like, if that's the problem, then we've personalized the business relationship. Too much. And so for ourselves, kind of in our identity, I think we have to do this to a degree. Like there is, there is what is you, and then there is what is you, there is what you are capable of within your business that is growing. You can always be you while you and your, your capabilities within your business continue to grow. And in many ways that minimum is like, here's my absolute drop dead like threshold for what I'm worth at this point. Like what I'm willing to do and what I'm not willing to do now. Really big trap here for folks setting minimums is they treat the minimum as not only what all the existing clients' price needs to be increased to, but they also treat it as the number they put on the billboard for starting at. This is what our services start at. And this is a way that productized services lure more people in. Software companies, it's the way that they lure more people in. And I think oftentimes us as service businesses, we can be attracted to the slickness of software marketing and all of that stuff and try to hold ourselves out almost like we are a product, which kind of undermines the upside that we have to provide. But in the case of a professional services business, if you go out and you market what your minimum is, everybody's going to come in the door expecting to pay the minimum. So we just set this minimum threshold, whatever that number is, whether it's $700, whether it's $70 or $10,000. We just set this minimum threshold and then we increased all of our, all of our clients to that minimum and nobody left. And now we're telling all the external people this is the minimum. And so when they come in, most of them think like, yeah, no, my stuff's pretty simple. I'm going to be around about the minimum. And so in my firm, the next problem we had was now we had this enormous concentration of clients who were all paying within $100 at the minimum. And if you think about what the minimum is and what the minimum should be, That's not what you want. Like, you don't want your firm to be trending toward the absolute bare minimum that you're willing to accept for your time and attention. That's not what any of us want, right? We actually want what most people are paying coming in the door to be more aspirational, to be growing year over year. And that's why when we talk about like how to present pricing on a website, like I usually come back to what's the average or what's an A client? What's a great client? Show examples of that great client and what they pay. Which is very different than the absolute minimum that we're willing to continue servicing a legacy client at. So my take on minimums here is that your minimum is actually the threshold at which you're like the minimum threshold where you will continue serving existing clients. The threshold at which clients come in the door, that should look completely different because what we don't want to build a firm for is the minimum, right? And so this comes back to sort of doing this grading of your client list, whether you actually do it explicitly or you kind of just do this mentally. Everybody's got A, B, C, and D clients. And our A clients, you like them, but that's not what makes them A clients. They can be good people, but that's not what makes them good clients. In fact, you can have people who are good people but very bad clients that we shouldn't be working with just because their businesses no longer align. A great A client has a really painful, expensive problem that you're solving for them. So they're happy to cut a big check to you with a big smile on their face. The folks at the other end of the spectrum that complain about fees, we're just not solving very painful or expensive problems for them. So the A clients, the folks at the top of the list, they have a big, expensive problem that we're solving for them. And hopefully they're good people. We like them. Like they're the combination of both of those things. If either of those things are not present, I'd argue they aren't an A client. If you can solve an expensive pain for them, but they're just total jerks, probably want to work with them. If they're really, really good people, but I can't solve an expensive pain for them, that's a hard thing to build a business around. Like, that's where an accounting firm ends up with a client list that is just kind of in no man's land, like low-bono. And man, the people that pay the price for that, it's you. It's, it's your team. They can't be paid enough. You have to work too many hours. You're running this low-bono firm in service of everybody else. And then it is the people in your life who most want to spend time with you that end up paying the price for that. It's your family. It's the fact that you have to be in the office 80 hours a week. Like, those are the people that pay the price for that sacrifice, where my preferred version of running a firm is value maximization. Who can I do the most good for? That actually gives me a much bigger lever to then go out and help people. And it's not helping the people that can only pay $600 instead of $800 for a tax return. It's helping the people that have no money to pay for a tax return. And so bringing clients in at that A client rate. That should be the goal. That's the only way that we are bringing in clients in a way that pulls the firm upward rather than bringing in clients at the minimum, which, by the way, should continue to like perpetually evolve and go up and go up and go up. So for me, and some of this too is like you just may have a different vernacular for this thing that I'm describing. For me, the minimum is what's the minimum level at which I'm going— I'm willing to continue to help somebody. But then the rate at which I bring a client in is aspirational. It is what's, what's going to pull the firm in the direction that I want it to be pulled in. Now, to be clear, this is going to mean taking in fewer clients. This is going to mean being much more selective. But if we just come back to the profit math that we always come back to, you know, if you're running a 40% margin firm, which is pretty average for a firm, $1 million or $2 million and under, and you have to factor in owner pay there, like your time is valuable. But if you're running a 40% margin firm, got a $100 project, you make $40 on that, right? But if you can take in the next project at, uh, let's see, at $160 instead of $100, that pricing hasn't even 2x'd, but your profit has 2.5x'd. So that's a 250% increase in profit with a, from a 60% increase in price. And so it is so essential that we are not just doing more and more and more and more and more at that, like, just getting by margin level and instead putting much more effort into like, okay, maybe right now I don't get very many of those more premium clients in the door, but are there efforts that I can make that would increase the volume of how I get those people in? Because getting in one of those premium projects is worth 3 or 4 of those existing projects, and it's not that much more work. Like, That is the firm that gives you flexibility, that gives you greater profitability, that puts money in the bank so that you can pay better people to come and work around you. I know a lot of us are stuck on that right now. You feel like you're the only unicorn in the building and you're stuck between, I probably need a higher level, more expensive person than I've ever hired before to really get this stuff off my plate, but I don't have the money for it right now. So what do I do? Like, what's, what's the interim thing? What you do is you get to a spot where it's a more profitable firm so you can afford to hire higher-level people than you've ever had before. And then like that is the flywheel that creates the most value, but also creates an amazing place to work for really smart people. Like when I built my cash practice way too fast, in the process of building it way too fast, we had to hire way too fast. And so some of those standards started to slip because we just needed bodies that could get the work done and out the door. And that sucked. Like that was a mess. A couple of years later, having sort of like recovered from that and cleaned house a little bit, both on the client list and internally, what I was left with was a team of rock stars, like really cool people that I loved working with. They're ambitious people. And that was so much more fun. Like, that was such a fun job for me to show up to every day because I enjoyed those people so much. So my take here is your minimum is, is never something that you're communicating externally. It is only a threshold internally under which you're unwilling to touch a project. That minimum really should have no bearing on the rates at which we're trying to bring people in, which should be aspirational. In fact, the opposite should be true. The rate at which we can bring in our next A client, that ought to dictate the minimum because we want that rate to be aspirational, continue to continue finding harder and more expensive problems to solve. For people, when we can find that next painful problem and somebody will pay us 40% more, shouldn't that then influence our minimum? But I think what most of us do is actually the opposite, is we anchor to this minimum when we're bringing people in the door and we're like, well, as long as they have this much money to pay, then they're qualified to work with us. But the result then is a client list where the normal distribution is just stacked on that minimum. And that's a really hard thing to, to kind of dig our way out from under. That's absolutely where we ended up in my firm, like through that transition. To be clear, it was a vastly better place. And in the end, we were making better money serving fewer clients. But, and this may even be a necessary step for a legacy firm like this where you just have so many chronically underpriced clients, at least you then have so many clients that are paying you slightly more. Like that was a logical next step. But still, then if you look at the client base, we had a huge concentration at the minimum, I would say the improvement was that minimum was, was 3 to 4 times what it was before. But the minimum, minimum should never be the goal, right? Like, you don't want to build the firm for your minimum clients. You want to build the firm that your A clients would love. Like, so many of us will spend years spinning our wheels, not getting the firm any further because we're listening to C and D clients and they're complaining and they have their own vision for how we should run the firm. But we're listening to C and D clients and it's keeping us from building the firm that our A and B clients would love. And like, there's an element here of when you build that really cool thing, it will attract more of the people who are into that really cool thing, right? And so if we are instead accommodating C and D clients, what are we going to do? We're going to attract more C and D clients, which is the last thing that any of us need. Okay, enough of my minimum pricing sob story. Let me give you this last month's updates to our app recommendations. We interrupt this podcast to bring you app recommendation updates. Back to you, Jason. So my app recommendations, if you're not familiar, used by over 8,000 accounting firms, JasonOnFirms.com/apps. My story and like is actually a big reason why I got into what I do now. Uh, internet grifting. I wasted, uh, years going to the wrong practice management system in my accounting firm. You've probably heard me share this story before if you've been around very long, but basically it was an 18-month process to get into a new practice management system. And then 2 months in, so at that point we're over 18 months, we realize we made the wrong pick across 40 people. What do we do now? Do we ride it out and keep being like, no, everybody, this is great. Like, what do you mean? I love this app. Do we change to another new app when everybody's exhausted from change management and all that? Absolute nightmare. And had I had a conversation with any other smart firm owner that had done something similar in the last 5 years, they would have been like, yeah, no, that's not going to work. That is, that is not the move, brother. So like when I started creating content for accountants, I'm like, how can I save somebody that pain? How do I prevent them from doing the same thing? How can you watch a 10-minute YouTube video and that potentially save you a year of your life? And like, that is kind of a through line for so much of our content. Even the story there of like from the first segment of this 2-year process of increasing prices and all of the things that we got wrong. Um, I wanna share my story, but now I have the incredible privilege of talking with other accounting firms and sharing their story as well to hopefully give you a bunch of shortcuts. And a really, really hard thing for all of us is tech selection. Especially in an age of AI where everybody's spinning up these landing pages that are like, finally, your dream assistant for tax pros, your dream assistant for booking, whatever it is. Everybody's making promises and you literally have no way to possibly know what works and what doesn't. So my best advice here is the people that hold the answers are your peers, the folks who have actually used these platforms, not the sales reps. Boy, did I make a lot of bad software decisions based on what sales reps told me that probably should go without saying that sales reps are not going to be the best sources of independent information. But the people with the best information are the ones who have actually used it, the actual firm folks. And so I run a 700-firm private community called Realize where people are literally posting about every app you can imagine every single day, but also sharing their experiences with each other, what works and what doesn't. I did over 70 in-person events last year. Like, I, You see me on this podcast several times a week. I'm in the comments. I talk to a lot of firms. And while I don't run a firm anymore, and so I'm like ignorant to some aspects of running a firm day to day, at least more ignorant than I was when I was actually doing it, right? What I am able to do now is something that I know you don't have the time to do, is to have all these conversations and then share that with folks. What's working? What's not working? Can you just cut through all the crap, Jason, and tell me what to use? That's the idea behind the app recommendations, which is now in my business, our greatest lead magnet. And I think one of the big ways that we help people. It's that time of year. It really is when your tax hosting provider absolutely grinds to a halt because everybody's in there hammering on the tax software at the same time and the hosting servers are like, I need a break right now. There's— gang, there's a better approach. That approaches today's sponsor, Barredo, who will give you your own private cloud. You don't want to share a cloud with whatever other weirdos are hosting their software in your cloud with you, right? No, I don't know what that guy's doing. You want your own cloud that never slows down. And would you believe me if I told you it is cheaper than you would believe to move to Barredo from, say, your Thomson Reuters hosting, Drake hosting, something like that? It is both cheaper. It is faster. What? That's two things. Kind of a no-brainer. They can move you over a weekend, and they can even handle all of your, like, outsourced IT support, like function as your IT department. In fact, the cost to have Verado be your IT department and do all of your hosting is less than the cost of just Thomson Reuters Virtual Office. Buddy, this one is a no-brainer on the list of to-dos to knock out right after April 15th. Buddy, you're going to want to talk to Verado. To learn more, check out the link down in the show notes. Spring is here. It is spring cleaning season, the perfect time to clean out the dusty corners of your accounting firm and just get rid of the stuff that you don't want to be doing still. And for most of us, one of those cobweb-laden services that is just stuffed into the corner of the garage, it is bill pay. Well, good news, my friends, artificial intelligence is here to help. You might have heard of it, the platform that's crushing it right now, this video's sponsor, MakersHub. Listen, nobody likes bill pay, okay? It sucks. But almost every business has to do it. And oftentimes it's high stakes, it's messy, it, it impacts inventory. You're going after like savings. The details matter. You miss a, you miss a zero or a comma here or there, oh my, oh my, oh my gosh, that's a big deal on bill pay, right? We are getting wildly good new AI models seemingly by the week right now. And honestly, MakerSub are the folks that I trust to like put this work. MakerSub been like arguably making the best use of AI models over the last 3 years to solve a very, very specific problem. The problem of bill pay. Nobody likes it. So if you do this stuff for your clients or you have clients who deal with project tracking, receiving, construction people and manufacturing folk, HVACs, super recommend you check out Maker's Hub, a great example of AI done well. To learn more, check out the link down in the show notes. So what have we updated in there in the past month? I would say the biggest update within those app recommendations is basically 4 categories. There are leaders, which are in most cases the tools that I think absolutely you need to consider in each category. If you're looking at what the best option is for your firm, because there is truly no universal best option, it depends on how you want to work, the type of firm you have. Leaders have to be considered. You got to look at them. You got to do a demo. You got to at least consider them. Beneath that is the category I call contenders. And contenders are apps that are still the best pick in certain situations. So if you have certain preferences in how you want your software to work, if you have specific things about your firm that may impact what tool will work best, that is where contenders come in. Below that, we have apps that we are watching and the watching bucket is kind of just like new stuff, stuff that's maybe not quite there yet. Usually future leaders come from the watching bucket. And so that stuff oftentimes is worth testing. But it's worth keeping an eye on because that's usually where software is headed. And then we have the most important category, the laggards, the ones that you shouldn't touch. And almost everyone has apps on their, in their stack today that I would consider a laggard. Probably the biggest category, the most important category in picking your tech stack is your practice management system. It is the operating system for your accounting firm. It is where more information lives than anywhere else. There are now over 50 practice management systems being marketed to just US accounting firms. Over 50. How do you know what works? You don't. Like, it's so far beyond what any one person could reasonably research. And so in our app recommendations, something like 38 of those are laggards. Like, so those, as far as I'm concerned, those apps in no situation are going to be the best option for a firm. And hopefully that is a service I can do for you where it is eliminating a tremendous amount of work and having to research all that on your own. Now, equally, if I came back and said like, oh, here's 20 leaders in a category, that's not all that helpful, right? So as much as this is a terrible thing to do for my business, we try to always get like shrink the number of leaders as much as we possibly can to simplify the decision-making process for you. And we've done this many times before, literally for active sponsors that work with our brand in the last 30 days this has happened. Brands that are actively sponsoring my content, paying me money to promote them, we remove from our leaders. That happens. Like, we like to get it. People love to give us heat about like, how are you giving app recommendations when you've got sponsors? It's a little thing I like to call integrity. Like, you either have it or you don't. And you try to explain how you do this stuff transparently. The practice management system is down to the smallest number of leaders I've ever had in that category. There's only 4 of them. There is Carbon, there is Canopy, there is Financial Sense, and there is TaxDome. Those are the 4 leaders. Now, it is still worth looking bigger than that. If you're going to a different practice management system, there's still, I think half of the small accounting firms in the United States are still on PracticeCS and are still on Axis Practice. Those are the laggards of the laggards. There is no world where those are the best option for you. Cannot recommend enough that you move on to a better option. As cosigned by thousands of accounting firms that have done the same. I also have— we built actually this whole tool that gives firms a personalized to them recommendation for what practice management system they could use. In fact, I'll drop this down in the show notes if you've never gone through it. It is the Practice Management System Recommender, real catchy name. Basically, it gathers some information about your firm and then we'll give you a single tool that's probably the best option and then two other tools that might be the best option. Over 6,000 accounting firms have gone through that tool now. And part of that process, you tell me, what's the last tool that you changed from? Like, have you changed practice management systems before? If so, what did you move off of? And what would you tell someone considering the same? And so I have this data now for thousands of accounting firms and can see for people that changed, what did they change from and what did they change to? And did they regret it or not? Like we have this data, all this stuff informs the recommendations that we put out there. And then like when we recommend a platform, we reach out at that platform and we say, do you want to sponsor our stuff? Like TaxDome, for example, TaxDome is, is in our leaders. Never done any sponsored stuff with TaxDome. So we ask folks to sponsor my content after we recommend them. They don't get recommended because we sponsor them. So down to just 4 leaders for practice management system in my recommendations. But we got a whole bunch of new apps. Actually, a few things here you may have already heard of, but new things to our app recommendations. I'm going to speedrun you through them. This first chunk, so just a lot of cool, like kind of universally helpful stuff. And then the last chunk is some tax stuff. I'll speedrun through the tax stuff because I know not everybody does tax work. And half of you that listen to this are not in the land of the free, not Americans. First, speedrunning you through kind of the universally helpful stuff. And there'll be links to all these down in the show notes. First up, Scopekeeper. Interesting. Revenue intelligence for modern accounting firms. So I think Scopekeeper, I think it is something that runs on the local machine and sort of tracks— no, I'm confusing this with a different app. Scopekeeper, I believe, monitors your client communications to identify any situations in which clients are asking you questions that are kind of out of scope. If you remember, I interviewed Dan Luthi 3 or 4 months ago around how they do advisory, and we talked about the power of AI meeting transcript tools to identify when conversations get out of scope. I think this is something that we still don't have good enough tech around because it is very hard for us to be like, oh, I'm sorry, this conversation is now wading into a paywall territory. You're not paying for this level of support. Like, that's just such a weird thing to do, right? But if you're running a team, you know what a headache it is to like have people raise their hand when they're like, hey, this might be an increase of scope. We may need to talk about potentially changing the price with the client. To be able to do that in a standardized way, that's very attractive. Like, that is revenue protection. Like, it truly is. So Scopekeeper, interesting. Like, a fully built out, really cool version of that to me extends into the accounting ledger. It extends into AI meeting transcripts, extends into the payroll platform. What if they double their headcount in employees? What if they're doing twice the revenue? All this stuff ought to raise a flag to be like, hey, Let's have a conversation about what we're doing for you because it's probably changed. Next app, AutoAccru, spelled in a way that you'll never guess. If you want to look at it, it's down in the show notes. It is a new month-end close automation platform. I think this is great. I think people still are not talking enough about what Double, formerly known as Keeper, has done for bookkeeping businesses. I've shared this metric before inside of my accounting community, Realize, which I think is pretty much the most progressive firms in the world right now. 80% of bookkeeping firms reported that they use Double. That's unbelievable. There's no other app in our space that has that level of saturation. Double, honestly, right now doesn't have a huge amount of competition and other folks really trying to automate not just the completion of one month-end close, but 100 month-end closes all in one place. That is what AutoAccru looks like they're working on. Grow your firm without growing headcount. Love to see that we have more people working on that. Next up, Socket. They've been around for a little while. It is a proposal platform. They're based in the UK. So if you're in the US, you may not have heard of them before. I would say it's especially an option worth considering if you are a carbon firm. Next up, Works. They've been around for a while. This one was actually put together by Matthew Patrick, who we've interviewed on the podcast before. If you want to get out of doing payroll for your clients, but you can't trust selling that stuff to ADP or Paychex or something like that, worth checking out Works. That's what they do, and they partner with accounting firms as well. Translucent. This has been around for a while as well, but especially as Intuit's really now pushing their enterprise suite, which is like, oh, you can now roll up a whole bunch of QuickBooks files into this sort of enterprise reporting layer. Translucent, it's been doing this for a couple of few years and it works across more than just QuickBooks. So whatever platform that accounting ledger is in, Translucent is like a layer atop that that lets you aggregate all those different companies in a single place. If you need to do like consolidated reporting, eliminating entries, that sort of thing. Next up, Automation Town, because I'm always happy to shill for Chad Davis. Automation Town now has over 350 members. I remember when we had Chad on the podcast and he was just launching this. It's a community for the AI champion in your firm, and every firm needs an AI champion. This community is still way too cheap, but it is for the AI big nerds, people doing really, really cool stuff in there. Some tax apps. I'll speedrun you through these real quick. There's 7 of them. First up, Luminary. It is a platform for estate planning. Very interesting. Hazel. This one, if you do tax planning, this one's worth looking at. In fact, I want to learn more about it. It is a new tax planning platform. I can't remember who made it. It is— they have an existing financial planning product, but this is a new, just from the ground up tax planning platform that looks very interesting. Hazel. Next up, TaxFigure. It's another AI tax research platform. Honestly, every time I see a new tax research platform, I don't know what to say. I don't recommend it right now. BlueJay is absolutely the leader in this category. BlueJay is kind of popping off in my private community right now. So many people that like swear by it. TaxFigure, though, another AI tax research platform. Marble is also another AI tax research platform. Filed. So Filed has been around for a bit. They were previously called Magnetic. They have super drilled down into, we want to be the thing that can push data into your tax software. And this is big. Like, if they can nail this, and AI agents should actually help here. Historically, the only way we've really kind of sort of been able to do this is with RPA, robotic process automation. But in an age of AI, this should continue to get better. And it's important because we need ways to integrate with our tax software, right? And so Filed, They're working on that problem specifically. They're also building integrations with a lot of the tools that you like— Carbon, FinancialSense, Canopy, Trusts— so that any systems that have that data, you can then use Filed to push that data into your tax software. Excited to see where they develop. I wouldn't say it's solving as core of a workflow problem as like tax intake tools still, but it is like very, very important infrastructure for getting to a more end-to-end automated return process. I think they're also working on like a bit of quality assurance and stuff like that. So I think they're doing good stuff. Uh, there's definitely saying all the right things too, like they get the problem. So I'm excited to see how Filed develops. Up next, Accrual. This is an interesting one. I don't know anything about the company. It's still very early days for them, but what they are building is specifically a 1040 suite that handles intake but is also Um, kind of like, uh, SurePreps, like SPbinder, like all of your workpapers in one place and doing like automated extraction from those workpapers, like kind of a more complete 1040 workflow solution intake, but also really, really deep on workpaper prep. Uh, right now I mean, it's just a landing page with a bunch of images that look really good. And so I don't know where it's actually at, but love to see more people working on this problem. Just exciting how many new companies we have working on tax tech. Last, SegStream. This is not a new one, but it is a platform for doing cost segregation studies largely in-house. SegStream, if you do a bunch of cost segs, worth taking a look at. Our app recommendations are driven on your recommendations and the new stuff that you see in the wild and the stuff that you try that you have a good experience with. So any cool apps you've seen in the wild, stuff you're absolutely loving, please pop that stuff in the comments. Shoot me an email about it, shoot me a DM. We crowdsource all of this. So anything that you have to say is valuable. It can save somebody else's bacon if they're going down the wrong path. Like honestly, even negative stuff, that's helpful. Maybe you don't want to leave that in a comment. Maybe that's worth sending me a DM or email, but all that stuff is gold. So if you got any of that, send it my way. And with that, it's mail time. Remember Blue's Clues? Was that Blue's Clues? Here comes the mail. It never fails. It makes me want to wag my tail. Well, when it comes to I want to, well, mail, I have no idea what that's from. And it's a little terrifying that I said that because what if it was from something super embarrassing? I don't know. Let's mailbag. Mailbag. Mailbag. This segment is called Mailbag. These questions have been rounded up from email, from social media, from podcast comments. Accountants from my telephone. You can literally text me or call me. The number is 1-516-980-4968. Would you believe me if I told you over 1,000 accountants have reached out to me over the phone with messages like, this real? You there? Is this actually Jason? You up? Also, do it, man. You do. If you're driving right now, pull over. Put my number in your phone just so you got it. ICE, in case of emergency. Actually, don't do that. I don't want to get a call if someone just found you in a gutter. There's probably somebody better in your life for that than me. But put that number in. Give it a call just to hear my voicemail message. You'll love it. 1-516-980-4968. First question. You know Craig's Design and Landscaping isn't real, right? The internet's an incredible place. We very often use Craig's Design and Landscaping Services as like a demo sort of thing. It's the demo file in QuickBooks Online. Has been there a long time. I'm just personally, I'm really into the lore of Craig's Design and Landscaping because anyone that has QuickBooks Online, you have access to this demo company. What— tell me more about Craig. What's going on? Why are his— why is his bookkeeping so bad? Who's doing his bookkeeping? And this always comes up in content. And this commenter thought that I actually thought it was a real company. I wish more software tools had demo files like this. I mean, I wish the Craig's Design and Landscaping file was also much, much better than it is. It's basically like 2 months of data and it's always just getting scooched forward into whatever the last 2 months were. But there's all sorts of weird stuff in it, like negative current liability balance, like big old entries to opening balance equity. I'm like, this is— this ought to be like the most perfect bookkeeping file we've ever seen because it's the company that everyone in QuickBooks Online has access to. Why are there so many glaring issues here? But no, I know that Craig's Design and Landscaping isn't real. We've actually riffed on segment ideas for the podcast that are like, what's going on with Craig? Or This Week in Craig's Design and Landscaping. Problem is that's Intuit's thing and they own that. And so I probably shouldn't do that. If you are building an accounting team, you know just what a headache it is to get all of your team doing month-end closes. The same way, right? There's that stage where you're all in the same room and you can kind of like keep in sync because it's such a small team. But beyond a certain threshold, you're like, oh my gosh, everybody's choosing their own adventure. These engagements are taking on lives of their own. And it is what makes the latest feature drops from this episode's sponsor, Financial Sense, ever so important. So they are historically a practice management system for accounting firms— that is Financial Sense— but they're shipping a bunch of month-end close automation features inside of Financial Sense. So it has actually a deep integration into the accounting ledger, and it is pulling all the transactions into the platform to review, like, were there any weird outlier transactions? Like, it actually goes through, like, remember what it was, like 6 to 10 different categories of things that could be wrong, and it's identifying those transactions for you in an automated way. And if there's an issue, you can fix it right from within Financial Sense, and it will push that fix back to the accounting ledger. They also do the same with uncategorized transactions. So if you're doing the Amazon purchase hokey pokey with a client and you're like, hey, what is this? Can you give me a receipt? You can manage all of that from inside Financial Sense as well, giving you sort of like a single place that is everything that you need to run your bookkeeping practice. Some really cool stuff that they've been shipping, and I've got a special discount code that you can use. If you are a firm with 2 or more users, use the code JASON10 to get 10% off the annual team or scale plan. Worth checking out. I think you'll like it. To learn more, check out the link. So this last fall, we did a tour of 13 cities, hosted workshops for over 1,000 accounting firms, and I bumped into a lady at one of these events and she said, this week I have 4 new hires starting from this podcast sponsor, Cloud Accountant Staffing. To be clear, she didn't say in the context of that conversation, this episode's sponsor. She just said Cloud Accountant Staffing. 4 people starting at the same— can you imagine? I wouldn't wish that on my worst enemy. But you know what? Cloud Accountant Staffing makes it possible. Uh, back in my firm, we hired both onshore folks and offshore folks, try to get the best of both worlds, because there's problems to just doing one or the other. Cloud Accountant Staffing, they're gonna help hold your hand through this stuff. It's actually founded by a former accounting firm owner. And so all the questions around what about security, what about IT, what about do I have to disclose this to my clients, they can help walk you through all that stuff. And one of the coolest new things I've seen in staffing recently, they launched a portal where you can see all of the candidates they've already pre-vetted. And even from that portal, you can book an interview. You literally just have to give them your email address and you get access to the portal. You can see the tax talent, the accounting talent, the executive assistants, all these folks they've sourced. They've done like some personality assessments for them, and you can book an interview with these candidates directly from that portal. Super cool. If you're building out the squad for 2026, it's worth giving it a serious thought. That's Cloud Accountant. Staffing. Learn more at the link down in the show notes. Okay, next question. Any ways you see firms actually successfully using AI assistants, um, in a client-facing way, basically? So like getting clients to use AI assistants. It's kind of the scariest use case because you, you kind of don't trust it, right? Um, you're worried it's going to say something that you wouldn't say, and then the client holds you to account for it. I will say I've talked with an accounting firm marketing company that is really pushing these right now with their clients, with their, their accounting firm clients using this on their website, like as kind of an interesting way to get potential leads to engage with it. Maybe the coolest version of this that I've seen in the wild is Michael King, who's like the Jason Staats of fractional CFO firms on LinkedIn. His name's Michael King. His main link that he pushes people to on LinkedIn is an AI assistant, a Michael King AI assistant. And I've talked a bit about this before on the pod, so I can speed run through this. But, you know, tool like Delphi, Delphi is probably the best tool for the job here. D-E-L-P-H-I comes with a bunch of cool features now where it will notify you if somebody asks the assistant a question that it can't answer. So like these assistants only pull from things you've actually said. Like if somebody asks something and you haven't addressed that directly before, it won't just answer it confidently in the way that a large language model will. That's kind kind of what makes these things cool is it's only parroting things that you've already said. So cool features, it will notify you if it can't answer a question someone asks. And so it kind of gives you the heads up like, hey, people are asking about this, maybe you want to provide some more context so it can answer those questions in the future. It can plug calls to action automatically. So let's say I have this assistant and people start asking it about apps. My bot could be like, hey, Just so you know, here's Jason's most up-to-date app recommendations. Keep an eye on this stuff. Or if you do cost segregation studies and someone starts asking about real estate questions, it can be like, hey, here's a free guide that we put together about how cost segregation studies work. And it hands off to something else where it's got to capture their email or something like that. That's really cool. I mean, I can go as far as it'll even like sell products, but like most of us aren't in the business of selling products. You can charge for access to these bots. I don't really see that working, at least not yet. And you can also set up custom alerts if a conversation strays into something that you want to know about. So it will continue talking about it, but it'll give you a heads up on the backend like, hey, just so you know, they kind of brought up cost segregation or something that you do, and it may be worth reaching out to them directly. So these tools are pretty cool. I would say what gives me more comfort using them is that they don't come up with their own stuff. They only parrot the things that you've already said. I would say the blocker for most of us in practice is that you actually don't have a body of context for it to draw from, right? Like, I have an AI system because I have 600 episodes of a podcast and you're like, cool, Jason, I don't have 600 episodes of a podcast because I have a job. So like, what does that look like for you? That body of knowledge? It could be blog posts. Meeting transcripts would be great. The trouble is meeting transcripts have, you know, in practice have sensitive client stuff in them. So that, that's going to be the blocker for most firms is if you don't have that body of context right now, it's something you would have to build to make a really cool bot. A question from Quinn Collins. What a great name. Question for you on niching down. Where I always get stuck is how does one even nail down a specific client segment one would want to target? Seems that there needs to be some broad attempt to scour the field first before drilling down into a specific niche. Is that right? Okay, what are we looking for when we talk about niching down a firm? By the way, I don't really like labeling a firm a niche firm or not. It makes it sound too binary, like you're either niched or you're not niched. Specialization is the term I prefer, and it is a spectrum from not specialized at all to super specialized. And you can always be more specialized. The more specialized you are, the more rare and painful problems you're solving, and presumably the more people will pay. For those solutions. So what we're looking for, the reason why it's worth doing is we're trying to find more rare. So rare so that the person can't go to the accounting firm across the street and get the same thing. As soon as they feel like they can get the same thing somewhere else, then you lose all your pricing power. So we're looking for rare problems that only you solve and expensive problems. If I can do this thing for you for $1,000, it will save you $10,000. That's the sort of thing that we're looking for. Most problems are not rare. Most of us are doing the same things that other accounting firms are doing, and most problems are not really all that expensive. You know, you, um, doing this input immediately yields this other type of savings. Oftentimes we do in what we do save people money, but we just don't have the language of being able to communicate that. Like, when you have better financials, you'll understand which projects make money and which don't. Like, But if we say, well, we do bookkeeping, then we're not communicating what we do through the lens of how it will make them more money. So as we're specializing, we're looking for rarer, more expensive problems. Yes. What's paralyzing about this is it's like, well, there's so many problems out there in the world and so many industries and all that. And most firms will like luck into an expensive problem. And that's how they find it. Because the deeper you are into an industry, the more you find it like going into dentistry. Great. What's really interesting is going one step further and working with labs, equipment providers, equipment manufacturers. Like, what is— like, there's levels to all of this stuff. And right now we can only see the surface. And over time, the juicier stuff presents itself the deeper that we go. I would say the goal is simply to just start. And if you can give yourself permission to not get it right on the first try, because you almost certainly won't, then you'll find it is easier to just start. And so one place to start is like, look at all my clients today. Who are my A clients? Why are they A clients? Usually it is you stumbled into some sort of really big problem that you're solving for them that you may not have even realized was a problem or you were solving for them. They're just very happy to pay you a lot of money and you may not even understand why until you have a deeper conversation with them. So sometimes you could start with your A clients and keep drilling further into that. Sometimes if you're totally out of ideas, you can follow an interest. Like, what is something that you're into that you would love to learn more about? You having done that work before should not be a prerequisite to you beginning to pursue that for your firm. And we have this internal monologue that's like, we're not an expert in this. You have no business doing it. Yet the alternative is to run a generalist firm where your first beekeeping client comes in. You know nothing about beekeeping. You'll be like, well, I can figure it out. How is that any different than the person who is passionate about beekeeping but has never done a beekeeping client going out and saying, I want to learn how to do this stuff the best that I possibly can, and I'm just going to focus on that. Like, that's a totally valid thing to do. So don't think just because you don't have any of those clients today that that's not something that you can get into. Worth keeping in mind, are you building a firm around yourself or are you building a firm a client list that can be served by the firm. If you're building a firm around yourself and a client list that can be served by you with the support of a few team members, then following an interest of yours, that's a great place to start. If you're ultimately trying to build a client list that the firm can serve collectively, not just you, then your personal interests are going to be less relevant. That being said, the specificity of the problems that you're solving can also help you to attract better talent to your firm. The same way that a firm can be really, really good for a specific type of business, it can also be really, really good for a certain type of employee. So if you go all in on beekeeping, accountants who are into beekeeping would sure love to come to work with you. And this is the hardest aspect of specializing is it's so overwhelming. I could do literally anything, right? Where do I begin? The goal is to just begin and to not get it right on the first time, but to begin to build the skill of specializing a business like this is a muscle you haven't exercised before. That should be the goal because you probably won't build a specialization once in your life, in your accounting firm journey. Just focus on building the skill and the results hopefully will follow. 3 more. How do I get you to coach my accounting firm? I won't. Here's, here's my take on coaching. I think what people need are 3 things. Maybe not all 3, but here's the order of operations for me. People need access first to good thought leadership, relevant thought leadership from people who have done something similar to what they have done. You got to always keep in mind, 90% of the education in our industry is put out by software companies, and a lot of it is very good, but it is hardly unbiased, right? I wish there were more people that did what I do, and I wish there were more Jason copycats because we need more people in the industry that can speak from a place of personal experience. So first, you need access to good thought leadership. That solves a lot of problems. For example, app selection. You are vastly better off using my app recommendations than you are hiring a coach tomorrow and having them pick your apps for you because I have access to more people than a coach. Second thing that you need access to is peers, people like you who can share what they've done, what worked and what didn't work. That is also vastly more valuable than a coach. It's why my core business is still my private community. I want to be a lighthouse to pull in like-minded people, but then give you a place where you can post a single question that could change your life. I'm about to sink the next 18 months into this thing. Is this a good idea or not? And then 12 people hop in and comment and they're like, here's what we did. Here's what's good about it. Here's what's bad about it. That will change your life. You'll never go back to making decisions the same way once you have experienced that. So first, access to good thought leadership. Second, access to peers. Notice both those things are before a coach. Third is you may still need a coach. Honestly, not for ideas as much as for accountability, because where most of us run out of steam is on execution, not on ideas, right? You didn't get out of bed this morning needing another idea. You needed to do what you know needs doing. I'm sorry, that was too personal. Chill, Jason. I'm just, I'm On the elliptical. Give me a break. Can I share this story from Brad Nelson? This is from Twitter. I ordered a $10,000 Mac Studio to test local AI models for my firm, and I sent it back. The tech wasn't bad. It just wasn't ready for what I needed to do. I'm interested in local for one main reason: data security and privacy. Actually keeping client information on our machines instead of sending it out to AI labs. I spent a weekend running it through journal entries, tax diagnostics, real accounting scenarios. I had to prompt the same question 6 to 8 times before I got a usable answer. It felt like a second job. The people saying AI will replace accountants in 12 months have not actually tried to use it for accounting. I'm not against it. I've been testing it constantly. Being honest about where the technology actually is helps more than pretending it is further along than it is. When local inference gets sharp enough to run smoothly on firm hardware, I'll be there. Brad, bless your heart. Thank you for doing this. Taking one for the team, brother. Local AI, very exciting, getting better by the month, is still bad. B-A-D, bad. AI has always had a hard time with accounting things, just down to even what is a debit and a credit. But at the same time that Brad is having this experience, there are a lot of people having transformational experiences with Claude Cowork, right? We've never had something that felt more intelligent. I've shared my thoughts on this a bit before. I don't believe there's ever going to be a day where we will be using local AI. Really, I don't. I actually think it's not too dissimilar from moving from desktop to cloud. There is just vastly more horsepower available in the cloud than there is in the desktop. But the counterargument is always, but the local models are getting better. And once the local models are quote unquote good enough, then we can run them securely locally. To me, that's not the solution. Running secure stuff in the cloud is the solution. The rest of our business runs in the cloud these days, right? To say that there will be a day that local AI is good enough to me is to say that one day there will be an employee that is only kind of sort of smart, but smart enough, and I will want to work with them, not the smarter employee. Like there will always be a better model. Cloud will always be ahead of local. I think you will always want the more intelligent option. Right now, there's just certain situations where it isn't secure to use that option. So I think the solution personally is more secure cloud-based options. I mean, Claude, Anthropic, 80% of its business is enterprise. We have the government using it. We have the Defense Department using it. There are ways that accounting firms will be able to do all this stuff in the cloud. I don't think that local will be the option. Brad, I am cut from the exact same cloth as you, though. I've got a Mac Mini right over there that's got OpenClaw on it. I just think it just seems unlikely that's going to end up being the solution to me. Last question. Can you break down where you think each of the major ledger players go in this AI shift? QuickBooks Zero, FreshBooks, Intacct, NetSuite, and industry vertical ledgers. That last one, I think, I mean, companies beyond $1 million in revenue, the majority of like industry small businesses are actually on maybe beyond $5 million in revenue. Are actually on these accounting ledgers we've never heard of. They're not on QuickBooks, they're not on Intact or NetSuite. Like they're on these weird proprietary things that are so old school. We don't talk about that enough. Like just how much of businesses still run on these weird like mainframe things. But where do each of these things go? It's not good for Xero, that's for sure. It's not good for FreshBooks. FreshBooks, I think they've officially killed their accountant-facing stuff. FreshBooks I, I did see no scenario where it makes sense for an accounting firm to use FreshBooks at this point. Xero— they are definitely the second fiddle in the United States. The rest of the world, they are the first fiddle, but they are second fiddle in the United States. Xero has replaced almost all of its executive team with, uh, Americans, uh, Silicon Valley folk, which is really interesting because they're doing well in the rest of the world. They're not doing well in the U.S. So does that potentially jeopardize or alienate the rest of world where they're doing well, where they have a great business. But when I look at these incumbent players, I think AI inevitably shrinks the market share that they will get because we will be looking at new AI-first ledger platforms or even— this is a hot take— ledgerless solutions like AI just doing that thing for you. And so you can imagine like a very simple bookkeeping file. Let's say you got 25 transactions in a year. Right now, if you could do this securely, you would just chuck the bank statements into Cloud Cowork and say, put together a balance sheet and a P&L for me. Like, it's good enough. It is more than good enough for that, right? Or you would give it an Excel template and be like, hey, do this basic ledger thing in my Excel template. AI is already there, and that is going to eat into like the very simple ledger applications where in the past we would have put it on QuickBooks or put it on Xero. So I don't see AI helping any of these companies. I see it pouring gasoline on like Digits and Kick and like some of the more new age AI platforms. I see AI and agents displacing what a lot of the jobs that we use ledgers for. Paul Graham has this quote, you've already seen the future, you just dismissed it as a toy. And ChatGPT as an accounting ledger, that sounds like a toy, right? Or Cloud Cowork as an accounting ledger. Sounds like a toy, but you know, the most basic of accounting files right now, and it would take 2 minutes and it would save you having to pay for another monthly subscription, right? Like we, we know that it can do that. It'll continue to get better. And so like in the future, this is very hard to get our heads around, but in the future, how far up the complexity scale can that go? I mean, the notion of trusting an AI agent that just doesn't have an interface and only gives me basic reports to, to be an entire accounting file. That's hard to imagine, but we're already to the place where in the most basic of examples, that's possible. Kind of wild, right? Weird to think about. But you know what? Us weirdos are going to be here talking about that every week if that reality comes to be. Appreciate you coming in and hanging. Any thoughts, any questions, any stuff we should include in the mailbag? Pop that stuff down in the comments. And I am ever so excited to see you at my live events, which we announced in the last podcast. Go to JasonOnFirms.com/workshops. We're coming to 20 cities. In the land of the free, the, the, the United of the States, coming to those cities in May and June. I want to see you there. But all of you, I look forward to seeing on the next installment of the Jason Staats Podcast. Until then, take care.