What you'll learn:
- Use your vowels
- Automate
- Extend
- Increase Fees
- Outsource
- Unsubscribe from not ideal clients
- You're worth it!
- Overcome partners' perception that clients will not accept any of the vowels.
- Fill your schedule with the best work first vs figure out how to get all the work done with limited resources
- Practical tools and processes for each vowel that you can really do
Mike Maksymiw (00:11):
All right. Good morning everyone. How's it going?
(00:16)
It's cold. It's the end of a three day conference. A little tired probably. Thank you for coming. Really appreciate it. So I'm going to talk to you about five different ways to kind of create your ideal client base. And as I was driving in the car one day thinking about creating this presentation, I realized that all of them start with vowels and I thought, oh, what a cool mnemonic device to use. And then I get to the conference and somebody here has already talked about each one of these things individually, which is really cool, right? It means I'm kind of on the right path. But you've heard some of this stuff before, but it's still going to be a little bit different because my take on it is still a little bit different than what I've heard so far.
(00:56)
So to get your CPE credit, this is the slide that says what we're going to learn today to make us put it in there. So it's got the vowels in there. We're going to talk about some partner perceptions. The woman speaking in the last session also talked about some of those objections that you'll get. And as we go through this, the visual I would kind of like you to have is imagine your schedule and instead of it being too full and you're trying to figure out how to do it all, imagine it's blank and you get to fill it up with the best projects and that these tools can help you do that, which is just a different mindset of how to run the practice instead of, oh no, we don't have enough people to do everything. How are we going to get it all done?
(01:34)
And you're just looking at all the work you have and not enough resources, but just flip it around and say, these are my resources. What's the best way for me to use them? And these tools are some of the ways that you might be able to use those resources to create that client base that you want. So this is a little bit about me. I'm currently the director of the Ario Firm Alliance. Ario is the 26th largest firm in the country. One of our service lines is an alliance. We're small. CPA firms pay us a membership fee and we provide them resources that small firms typically don't have access to. I'm married to Jen. She's, we've been married together for 18 years. My daughters are on the right there, Sophia on the left in purple. She's going to Merrimack College in the fall.
(02:15)
Her sister Julia's in the orange. She's soccer and track athlete and she's a junior in high school right now. She had a track beat yesterday, so I got to call in and see how she was doing. She ran the mile in like six minutes and 12 seconds or something ridiculous. It's what I ride a kilometer in. Speaking of running a crazy thing my wife and I did. We really love running and we decided to do the Disney dopey challenge and that's where you ride a five K on Thursday, a 10 K on Friday, a half a marathon on Saturday and a marathon on Sunday, and my wife got that awesome picture of the fireworks going off at the castle after I completed that. So we did that in 2020 right before the world shut down. Our family loves traveling around. We have a scratch off map of states that you guys can see.
(02:57)
Our family rule is we have to sleep in the state and do something there to scratch it off. We have 31 altogether and we're going to get three more this summer when we visit Chicago, Milwaukee, and Muskegon, which is where the ferry from Milwaukee to Michigan hits, and the leadership academy is on the bottom corner, bottom there in the middle. Those are some of my best friends in the accounting profession. I'm a leadership academy alum from the AICPA. This is our engaged picture from last year. So there's 40 or 50 of us that go to this, and we were able to wrangle about 25, 30 for that picture. That was really the thing in my career that changed me from wanting to just be a technician to doing something more in leadership and strategy. And that's the group that really helps me try to figure out how to do that. As you've heard for the entire conference, and you already know we have too much work to do and not enough people to do it. The question is, are you doing the work that you really want to do? You can see this gentleman is standing here at a fork in the road and the key point about this slide is that not making a decision is still a decision. If you don't do anything, you're going to continue along the same path with no change. So whatever decision that you decide to make is going to change how you go. But not doing something is one of them.
(04:18)
And because we're going to be talking about a lot of change things, and some people have talked about change management this week as well. I think it's important for us to have an open mindset about these things. We're going to talk about a lot of concepts today and give a lot of examples. The key here is that you don't have to do everything a hundred percent and you don't have to do anything. 0%. You can kind of pick and choose which ones are going to help you the most to create this client base. And that's why I really wanted to put examples in here of friends who have done things, things that I have done in the profession that have actually worked with creating these client bases. Because prior to joining Ario, and I probably should have said this, I was a practitioner at small firms. I went from staff to partner at three to five partner firms throughout my career. Then we merged into a national firm. I didn't like that job, so I quit. But I really loved working with the small firms and that's what I get to do now. So I've done a lot of these things with my clients. I've run the experiments. Not all of them have been successful, but I've learned through each of them.
(05:19)
So when we talk through these different concepts, you're going to get this negative thought that creeps in your head that goes, that won't work for my client. My firm won't do that. You really can't stop your brain from doing that. It's kind of the way your brain works. It's going to take inputs from your entire career and it's going to say, yeah, and none of our experience have, we've been able to do that. So easy answer is no, can't. What I'm asking you to do is when your brain does that with a stop sign, change it to a yield sign, just pause and say, what if, what's one way it might work? What's one way it might happen? And that can help you get over that initial barrier of, well, my firm will never let me do it. Well, is there one way that they might? Could you do a group of clients? Could you experiment with something? Could one partner try something? There might be a way that it could work. So just keep that in mind and you'll know what that way might be from your firm and how you practice. All right. This is the schedule slide that I was talking about how we want to fill our schedule with the best work that we have. So on the left is kind of where we are right now. All scattered all over the place. Lots of tools, lots of resources, not super organized. Too much work to do, not enough people to do it. What do we do?
(06:34)
What I would like us to do is to have a schedule. The one on the right, and what I like about this picture is that there's actually a green highlighter line across the bottom, and think of it as like I'm drawing a line in the sand. My firm will not work more than 50 hours a week during a busy season. We will not work more than 36 hours outside of busy season. What does that look like for our capacity? We have our hours on all of our projects in our practice management systems, and we can tell about how long things should take. What if we filled up that schedule with the best work? Well, if we do that right now, when we have too much work, we're going to have stuff that is below the line that we don't have capacity for, and that's what these five vowels are going to help you do is if you use automation and extending and increasing your fees and outsourcing and unsubscribing, you'll be able to do some of that with your clients above the line. So then you could fill some of those projects you want, put them back above, and you'll be able to find some resources for those ones that still are below the line.
(07:36)
Who here has implemented any kind of hard caps on hours you want to work or has those parameters? Chris, you do. What do you have at your place?
Audience Member(Chris) (07:45):
We have a maximum year round, six hours a week.
Mike Maksymiw (07:50):
36 hours a week, four days round. So that's the schedule. Doesn't matter if it's March 20th and we got financial statements due at the end of the month. Doesn't matter. Doesn't matter. All right. That's awesome. So an example that it can be done that that's a little bit crazier than I thought someone was going to come up with. I like that. I like being not the craziest one. Anybody else do anything or what would somebody wish that you could do? What parameter do you wish you could have?
(08:27)
A friend of mine in Oregon, she runs her firm on four 10 hour work days, and then they do summer Fridays where the whole office closes, and they also do sabbaticals every five years. Required three months, turns off your email, you can't contact the firm. It's like you're not employed, and they plan for it and it works for them, and they're really successful with keeping their people and getting other folks to go work there who wants that kind of environment? All right, so here's one of those first kind of maybe negative questions you might pop in your head. What if my clients won't accept these changes that we're talking about? What if my managing partner won't accept these changes that we're talking about? The truth of the matter is not all your clients will accept these changes, but remember, as we're filling up this schedule, some of the stuff that we are doing and some of the stuff we might be using these resources for, it's going to tell you which clients belong in which bucket.
(09:24)
If they're a great client and they have stuff that absolutely has to get done before a February 30th deadline, that date doesn't exist, then where it has to fit in your schedule. If it's a mediocre client that's demanding that, maybe that's something that you can outsource. So you think through these things of which clients belong in which bucket for this schedule that you've created. Then at the end of it, you've got your ideal client base. You like the clients that you're working on, you like the hours that you're working to do the work, and it becomes less hours driven. You filled up your schedule with these projects and that's what you're going to do, and you like those. You like coming to work on Monday and getting that stuff done.
(10:07)
All right, so AEIOU and Y. Here we go. These are our vowels. First one is automate. So the way that I defined automate for this purpose is it's when you assign a task to a machine instead of a human. Alright, so this isn't taking a cash practice of trying to automate it soup to nuts. I mean that would be a great thing to do, but if we're starting, what are pieces of things that we can automate? Let's walk before we try to run for some of this. So here are some scenarios where I've seen automation work and I've used it. I was a tax practitioner. I used the scan and auto flow software. All right, so it would come in, you scan the stuff all out of order, doesn't even matter, right? The admin can do it. We taught them how to pull a couple blank pieces of paper out that we didn't need, and I get this nice neat binder of information that's all the source documents have been pre-populated into the tax software.
(11:05)
I'm looking for handwritten schedule E information, handwritten client notes, other weird things that aren't standard tax return documents. The rest is in my tax software, and it's already been looked at once. So the numbers probably right because OCR saw it once and another human did it. So that was the way that we took some of those rote, mundane, boring tasks away from our staff and interns let a machine do it, and then gave our staff and interns higher level tasks. We challenge them and the people are, they're really smart. They can do a lot. We're usually the ones that are holding them back and we say, well, the staff, they don't know how to do that. Well, it's because they've just got out of class. They've never seen a bucket full of receipts from a client or a group of tax documents. Let's show them.
(11:53)
Let's say, Hey, here's how I would review this information from a client. If you sit down with them two times and do that, you're golden. They're going to pick it up. They're really good. So embrace the fact that the staff that we do have, they know a lot more than some people give them credit for it. Let's challenge him. Another one, a guy in my office, Tim, we used CaseWare and he set up our analytical procedures on our reviews where it read the account number and gave you your preliminary and final analytics. It was like that. It was awesome. I remember one time we had a review. It was $6,000 project and we had never been under budget before ever. And I get the financials to review and the time back, there's 4,200 bucks in there. I was like, Tim, what? What'd you do? He's like, oh yeah, I automated all of the review procedures last year.
(12:41)
So I just had to basically review them and I added three account numbers into the matrix of where they should go and it all still works. It met all my expectations, so I didn't sit there and sit on it. I gave it to you. I was like, man, can you teach more people how to do that? That's amazing. And I'm still billing the client $6,000. Your timing is irrelevant for my bill. So that one was really good, and in year one, it doesn't take any longer, right? To set up an analytic reading an account number than it does for you to go look at the trial balance and type the AR there and then look at last year's and type the AR in, so you're saving all that room and then 10 to next year, he gave it to our staff accountant to do and explain, Hey Sheila, this is what we're doing.
(13:26)
All right, everything should be set up. But I want to explain to you, so we spent an hour with her explaining how he built the analytics so she's not just rubber stamping a piece of paper. And he explained to her what her job is and then he reviewed it and he said, Mike, do you need to review this? I said, no one way more about gap than I do. I'm a tax guy and you built it all. I think it's probably good to go, but sure, I'll read it for 15 minutes just to so I can have a conversation with the client if they call about it. But the technical work, like Tim elevated his role. Sheila got to do a cooler part of the project. She was really happy, so that worked really well.
(14:05)
Another one that we've got some vendors out here too that do this engagement letter creation. Anybody here doing engagement letters? Bob, you like doing engagement letters, you love it. Is that because you get to put a fee with two because you get to put a fee with two commas in them? That's why you like them? Yeah. So being in the tax department, I would watch our admin team with stacks of organizers and engagement letters that had to go out and anything on the assurance side, we'd wait till February and we had to start the engagement to send out the engagement letter like them so little that we just didn't do them, which is a common practice in accounting firms. If there's an admin task that you don't like, we just don't do it. So there's software now that can create your engagement letters like in bulk.
(14:51)
Someone's in the cpa.com accelerator, a company named Nula. If you put a spreadsheet with client names and addresses and what their fee is, it'll go into your standard engagement letter, pre-populate it all and send out a thousand of them in four minutes, and now we're talking about automating things. The next one's billing. If the engagement fee is in there, Hey, here's how you pay us with your ACH, like it's in the engagement letter, and by the way, we start the engagement after we get paid while we're working. I have to pay my team. You don't work for free, and I'm not going to cover the float on that if we're working on your engagement. So whether it's a retainer upfront, whether it's full fee upfront, we're going to talk a little bit more about some of the billing practices later on the increased fees section, but keep in mind that we don't have to wait until we're deliver the product to get paid a hundred percent in full for what we're doing.
(15:45)
We have resources that we have to pay to get that done. I mean, new, I didn't it. I paid a contractor to redo my kitchen and I had to pay 50% down so that he can go buy the materials. He wasn't going to go lay out $50,000 in materials and hope I paid him a hundred at the end because the kitchen's installed, he can't take it out. So if you look at our people as the materials of what we do, it can make sense and can help some of those partners get over the objections of, well, we've never asked for retainers in the past. The clients will flip out, maybe they'll flip out them, flip out.
Audience Member(Bob) (16:23):
Asking for retainers on the end qualified clients if they're not willing, you know? Got to that's marketplace while you're.
Mike Maksymiw (16:45):
Yeah, I've seen a lot of that on tax Twitter too. The, it's a prequalification just like that. Some of them do it on meetings, like a cold call prospect will want to come in and get an half hour meeting with them. Yep, that's 200 bucks. And then people start flipping out. They're like, I got to pay you $200 to be easy for half an hour, and the fact that you don't want to means I don't want to meet with you. I just made my life easier. Yeah, right.
Audience Member 1 (17:08):
Yeah, did that while you were talking.
Mike Maksymiw (17:12):
Yeah, you added that. You added that to your Calendly, the $200 piece.
Audience Member 1 (17:16):
Someone wants to talk to me today. They said, yeah.
Mike Maksymiw (17:19):
No decimal points, right? Oh, after the right. My question wasn't that important.
Audience Member 1 (17:32):
Amazing.
Mike Maksymiw (17:34):
And there's a lot of other client accounting, service administrative tasks. Tina, what are some of the things that you've automated in your CaaS practice? Sorry, I know I taught you, caught you totally off guard. I happen to know, Tina know she runs a CaaS outsource CFO practice, and I'm trying to talk a little bit so that she can think about one thing she might be automating.
Audience Member(Tina) (17:53):
I mean everything was automated, automated communication, you and we don't always use the software software that something we still tailored to the client services.
Mike Maksymiw (18:37):
There could be like you could have the standard paragraphs reach type of service and I, I've watched Jamie do the thing with Nula where you can hit check boxes on which paragraphs to include any engagement letter. So instead of finding, ah, which engagement letter was that in last time? Oh, it was in Steve's. All right, lemme go copy paste the paragraph and you're going through your mental Rolodex too much using your time. And the thing about having too much work right now is we also don't have enough time to do anything. So the other thing I like to think about all this is it's not just creating the right client base for you. It's creating the time that you have so that you can do the work for the clients that you want. You have the time to do the strategy for your firm. You have the time to have the idea of, Hey, I'm going to charge retainers because that's going to pre-qualify clients. If my schedule's almost full, I'm only taking the ones that are going to fit what I'm going to do next. All right? The next one's extend, and I want to start off by saying this is more than just tax return extensions. A lot of times with extend people say, well, I'm in CAAS or ought to extend. I can't. That doesn't help me at all. I know a couple people who are doing some things under this extend category that are under the assurance and cash piece where it can make some sense depending on your client base and really what their tier structure is on their fees.
(19:55)
So the most common piece of kickback I got from partners when I would talk to them about extending returns during tax season is, well, Mike, I have to do just as much work to do an extension for a client as I do to just finish the tax return. So why don't I just spend 20 more minutes and finish it? I'd say, well Paul, because you do 300 tax returns and 20 minutes times 300 is a long time. I said, also, here's a better one for you. The first time you saw their information was in March.
(20:24)
What if you call up your clients and say, Hey, so we're doing something different with our 10 40 practice. We're really not doing standalone 10 forties anymore. We've got to do some planning for you in the fall so that we know what your tax scenario is going to look like. This way in January, we can file extensions for all of our 10 forties. You don't have to be in a rush to get us your stuff. You know what you're going to owe in April and you could just make the extension payment with your first quarter estimate, which we also did, and then you can just, it's paperwork filing. You can even out the process for a tax season because the IRS only wants your money on April 15th. They don't really care when they get the forms and they would love it if you get a refund and you just forgot to file because three years later, the money's theirs. I was explaining to a new staff once that the real deadline for a tax return if they don't own any money is three years after April 15th and they didn't quite get it and I had to tell them about the statute of limitations and that it's just paperwork. If the iris has their money, they're not writing you a letter and saying, do you want your 500 bucks? No, they just keep it.
(21:26)
So I was talking through this concept with a couple people and they said, yeah, but what do you do with those car clients that have a wild card? The K one might say something super weird because it's got three investments and one might've sold and you're really not involved in management. How do you handle that client? I said, well, remember that schedule that we had when we were filling up? When do we do work? That's one that's got to be early, right? You need that draft K one, which let's be honest, you're probably getting on April 10th, right? Plan for it. If April 15th isn't horrible, the April 10th isn't horrible because you've evened everything out. You're thinking of it as I'm adding on this complicated thing right before the deadline, and that's what I'm trying to avoid except you're adding it onto the old deadline. If we've evened out our workloads throughout the year, April 10th is no different than March 3rd or February 12th or June 16th. It's just a day so you can get that late arriving info for your client, you can plan for it, deliver their extension because maybe you were planning on a $750,000 gain and the lawyers did something magical and it was only a $600,000 gain. You're like, all right, good. You owe less tax. That's going to lower your quarterly estimates too. So yeah, you save 80,000 bucks of cash you need right now that that's a good use of your time on April 10th for a client.
(22:48)
All right, so assurance projects. I was working on one and we finally read the loan covenant and it said that that review wasn't due until April 30th and we were always rushing around to get it done on March 15th, it was a C corp, so we'd get the financials done and we'd get the tax return done, and it was basically a nightmare because a client didn't want to get his stuff. Anybody have those clients last minute that it's around their deadline and now they care? You are that client too. If you give me your stuff on October 10th for the first time, we're going to have a problem. I need to have seen it first.
(23:28)
So I read it and I go to the partner. I was like, we rush around and do this all the time. The clients takes their financial statement, they say one of the banks, they put one in a drawer and it just stays there. The bank doesn't need it till April 30th. Why are we killing ourselves on March 15th? Yeah, we can the trial balance all set and we'll do the financial statement piece after April 15th or schedule it better. You don't always need the financials done with the tax return if it's going to be that much more extra time or maybe you have the opposite problem. We have a group of clients, they're broker dealers, they're due February 28th. That's a terrible time for financial statement to be due. That's that. There's nothing good about that, but if you know it, you can plan for it. You can tell your real estate partnerships, Hey, I need your stuff in on January 6th because your cash basis, it's relatively straightforward. We need those done at the end of January because my February is jam packed with broker dealer audits and you tell your 10 forty like, Hey, you're all getting extended and some of you might get done in March, just paperwork. At that time, we did the planning for the 10 forties. Can you kind of see how it's building up and things are evening out throughout a year without all these giant spikes of horribleness.
(24:44)
I've had the conversation with my firms multiple times about we're really smart people as a profession and yet nobody's tried to figure out how to make busy seasons suck less. I was like, why don't we try and that's kind of the impetus for me coming up with these vowel things while I was driving in the car one day. Oh, another cool one for the CaaS work. I learned this one on one of our tax Twitter feeds that we were poking around on. You can set up your fee tiers for when you deliver the internal financials to the client. If you didn't buy the fifth, you're in the gold tier, you pay X dollars, you want to buy the tents, you're in the silver tier, you pay Y dollars, you don't care. You're going to buy the fifteens in the bronze tier and you pay Z dollars. The clients can pick when they get their stuff based on when they're paying you access to you and how quickly they get information are two things we can charge clients for.
Audience Member(Chris) (25:40):
Can you repeat that.
Mike Maksymiw (25:42):
Access to you and when clients get their stuff is something that clients can pay us for.
(25:50)
You were talking about seven $50 for a meeting with you that could be built into a tier structure of, hey, if you want to be a basic 10 40 with this planning, you can only email me and I'll get back to you in two days. That's in that tier structure. You want to be able to call me on the phone that's in this other structure. You want to be able to have in-person meetings. That's in this one. It's not saying you don't want to talk to your clients, it's letting the clients choose how they want to interact with you. The best clients are the ones that want to sit down three, four times a year. They've got some complicated things. You could do more strategic planning with them and the compliance just it gets done because you're constantly involved with them. But not every client does that. But the more of those clients you have, if that's your bag, go get more of those. They're going to pay you $200 for a half hour meeting for an intro call and they're going to get something out of it. All right, favor one, increased fees. We're still talking about money. All the dollar sign came up green.
(26:52)
All right? This gets at really at the heart of the why you are worth it, which is the why in my vowel creation here. It's not increasing fees because we can, we've been told this whole conference, we can increase fees. There's a supply and demand problem. Basic economics says that we can increase fees almost as much as we want. Bob, I think you were saying that there's no fee, ceiling.
Audience Member(Bob) (27:20):
Right? See it.
Mike Maksymiw (27:22):
Imagine that this concept of no fee ceiling. Take your client that yells at you about their bill all the time and imagine doubling their fee and then saying, well, I can't go anywhere else.
Audience Member(Bob) (27:33):
Well actually, Mike you, so you're going, this client can't afford more than this, so I'm not going to charge more than this. Or you charge a client more than they can afford. It's probably not client forward, and when people do their pricing, they're kind of screwing it up percent, but given your decline 50%,
Mike Maksymiw (28:13):
I think you took some of my talking points, but that's good. It's good when the audience thinking the same thing. And I, I've heard Bob say this, Doug too a few times. We were talking about engagement letters earlier too, and putting your fee in there and putting, this is how you can ACHB, your money in there so you get paid upfront. If you take a couple pieces of each of these vows away that fit with your practice, you might be able to create a lot more capacity than you think that you have to get more of your ideal clients done and to go attract more of them. And that's really the point of this so that we can go work on the clients we want to and get done the things that we want to get done and work to live instead of trying to fit our lives into work. All right, so we were talking with one of our alliance firms that decided they were going to do a fee increase across the board on their individual tax clients. They were going to try to weeded out. That's how they're going to try to weeded out some clients. All right, I'm going to give everybody a 20% tax increase, 25% tax increase across the board and we're going to see who box.
(29:24)
Wild. Guess how many boxed two?
(29:30)
Who thinks it was more than two? I know percentages, so I don't really know the real number. It was 5% of the clients either called and then stayed or just opted out. So I said, all right, lemme do some quick math here. You raised fees 25% across the board, you lost 5% of your clients. That nets out to an 18% fee increase. And when they did this fee increase, they looked at the 5% clients that did leave and how much time they took up. Of course it was the bottom ones took up 17% of their time during busy season for 7% of the revenue. They created 17% capacity and they have an 18% fee increase before they even fill that capacity. They've already won.
Audience Member 1 (30:20):
And you feel better about working because they'll pain in the ass line are the ones that complain and suck at your time.
Mike Maksymiw (30:28):
You read my unsubscribe slide.
Audience Member 1 (30:33):
But so true, and I did this some years ago. I went to results account boot and I took my keys up dramatically, gave everybody plenty about it and they were the ones that the emotional dying.
Mike Maksymiw (30:58):
Yeah.
(31:01)
Yeah. I've got to tell a story about that when we get there. And to Bob and Doug's point about tiering, how you raise fees. Yeah, the best clients that are paying you $80,000 a year, you're probably not bumping them up 25% on day one because they're probably already sitting in that ideal client bucket for you where you're really advisory and strategic with them. They understand the compliance just gets done and it's not really the crux of the relationship. You don't need to raise them a ton. You could raise them enough. You guys get a 10% fee increase. Why? Because we gave our staff a 7% fee increase benefit prices went up and staff for our materials, we need to take care of them. Without them, we can't service you. So they're our cost of materials. They're really smart, they get the work done, we need them this, so I make more money. I need to pay my staff.
(31:55)
And your smart client's going to get that. They go, yeah, we just have 10% fee raises to our staff this year too. Inflation was 6% and they performed great. So yeah, it totally makes sense. I'm on board, Mike, let's go. The client that argues with you over $50 increases on their bill, I pay it and go away, man. Here's your disengagement letter. It's it's not worth it. You're not that phone call for that $50 isn't worth the time you're going to spend on it. If you can get a client to pay you 200 bucks for a half an hour meeting to become an ideal client, and then if you're at a larger place like Ario did a blanket 15% minimum fee increase on clients and at a larger organization like that, it's a lot harder to make sure that the billers are actually doing it.
(32:42)
So how do you make sure when you all decide we're going to go home, we're going to do a fee increase, alright, how do you make sure it actually happens? Because sitting in the partner room or the manager room and you decide that that sounds great in the room, but then you do the work and you get the bill and you're like, I don't know, you get that? Are they going to pay? Can I really charge that much? And you start to get hesitant about it. So any fee increase that wasn't 15% higher than the year before got kicked out to the managing partner and that managing partner had to approve the knot hitting the 15% fee increase, which was usually a phone call with the manager and saying, you didn't do 15% higher and you did a really good reason why not, and the client won't pay it is not a good enough reason because there's anecdotal evidence across the twitterverse that clients will pay bills when you send them bills they don't know where else to get it done.
(33:33)
Remember that there's too much work and not enough people thing. The clients have figured that out too. Anybody bid on their town like Plainville talks Facebook group, and on April 6th somebody goes, oh no, my tax accountant wants to charge me a hundred dollars more this year. Who do you guys know? Yeah, that's ideal client. We're not trying to find them. All right. Just hit the laugh emoji on that person and call it a day because on your April 10th, your world's wonderful because you've right sized your client base, you're not really worried about it. And that begged the question for me back to our managing partner, back to my story, if it's your client John, he goes, oh, then it goes to Kim. She has to approve mine if they're under 15%. So there is still a check and a balance system for the managing partner as well. And it worked really well. Each of our offices around the country worked fewer hours in the year before and all of our revenues were over the growth targets for the office. And in the accounting today, the last top 100, our total annual growth percentage was 89%, which you can do through acquisition too, but getting 89% requires the organic growth and that one. So there was a lot of, I could go find data to figure out that if you do this, it can work. Pretty broad spectrum.
(34:53)
Alright, outsource. I've been told by some of my outsourcing friends that this is not a word that they really like because they like staff augmentation or Chris, what do you guys call it at auto club onshore. So to me, outsourcing is when somebody who's not an employee does something for you. That's kind of the blanket of how I fit the vowel in here. So there's no disrespect meant to the organizations that provide all of these different solutions, but that's really how I want us to look at this. If something is on either side of your line, how much of it do you really need one of your employees doing? All right, so in the tax world, the biggest one was can we offshore our tax returns to someone else doing them in another country? And the partners would say, the clients will never let their information leave the United States.
(35:45)
That's just an absolute non-starter. Similar to Bob's comment about the accountants putting the ceiling on themselves. We were telling ourselves no before we asked our clients, alright, so let's think back to that schedule that we were trying to fill up with work. So we send out a letter to all of our clients in December after we're doing the tax planning with them. We say, all right, we are going to use some onshore and some offshore resource to help us augment our staff to get everything done this year, including in your packet is a 72 16. This means that your information might leave the United States, but it'll be in a secure environment. We've vetted out and checked the vendor that we're going to use sign this form to so that we can do that. I'm not telling you we're definitely doing that. We haven't figured out exactly what's going where, but we need everybody to sign this form. Alternatively, if you want, you could opt for a 25% fee increase if you want us to definitely do your work, because then we have to plan and schedule our internal resources accordingly. If you give us the option, we may still do it, I don't know. And then let the clients choose.
Audience Member(Bob) (36:45):
Is it sufficient request.
Mike Maksymiw (36:51):
For everything except a 10 40, a 10 40 or I think a 10 41 they have to sign the 72 16 that says it's okay. I believe for business tax and CaaS work and assurance work, you just have to tell the client you're doing it. And a lot of people put that in there. Engagement letter, which can be one of the paragraphs that you click off that you want to add into it when you're automating your engagement letters. If anybody is a tax expert that definitely knows the answer, feel free to chime in. I've been out of the compliance for a couple years. Bob.
Audience Member(Bob) (37:26):
Only anything else letter that you may use. The resources of a third party. That's it. You can decide if you tell party.
Mike Maksymiw (37:46):
And a great resource to find language to put in your engagement letter is probably from your liability insurance carrier. If you use their language and something goes awry, they'll defend you. And if you don't, it gives them a reason not to, which usually means that you have to pay more than your deductible. If something goes super bad, which I've had to happen not to, I mean the super bad, not that they wouldn't cover it, 2 million errors suck. All right, so reality, when we're filling up our schedule, you're right, some clients are going to opt in and some are going to opt out. You get to decide are you going to fit in that schedule of when I'm doing my work? And the other part about this outsourcing is this one's not about saving money. Maybe 12 years ago when we could have offshore stuff to save a few bucks and increase our profit margins. That's why we were doing it. There was more people, there was a little bit less work. That's a different environment. Now, this is capacity.
(38:47)
Don't look at it as we're going to get a cheaper resource to go get the work done. This is a resource I could pay when I need it to get the work done. Kind of hiring a temp worker or seasonal worker during busy season. They just might be sitting at another accounting office in Indiana, or they might be sitting in the Philippines. That's what it is. They're just a remote worker for you. It's not necessarily a cost saver. The point of this session, these vowels is to create the capacity not to save a couple of bucks. So as you're looking through your margins on what you should outsource, keep that in mind. It's very easy to say, well, we're making 30% of this client, how can, we're only making 20%. Now the other option was making 0% because we don't have the people to get it done. So take the 20%, reinvest it into the company or do something with it, but you're still making 20% on the client. You're not losing money.
(39:44)
The other thing that I like about the outsourcing is what we can outsource. We talked earlier about our staff being really smart. They're capable of doing a lot of things. What are they not like doing the same thing over and over and over again. They don't need to do 10,000, 10 forties. They probably need to do 25. If you're in, I'm in New England and we get a bunch of different states, small area, maybe you need to do 50 so you can see some more states. But after that, it's just a different person's name and putting different numbers on the same form. It's not challenging. It's not different for them. And they get bored because they want to go do something fun and exciting and learn more. So let's challenge them more. So let's outsource some of the rote work. There's a reason why in really good accounting practices, nobody sits in the back room entering check stubs into QuickBooks Desktop anymore.
(40:37)
That's a terrible use of a staffer. Intern's time, they're they're better than that. They can do more things. So think of those tasks that when we were growing up and we got stuck doing them. Imagine you could be the last person at your firm stuck doing that super crummy task, all right? And be the last one and say, this is what I'm going to do. This stinks. I'm going to stop it. I want to be the last one that did it as opposed to the, well, it stunk for me. It should stink for you. That's terrible. We can tell better stories than that. Alright, so there's lots of resources that can help you with nearly every part of your practice. I know that Chris does only audits onshore in the US for other accounting firms. Tax file is here. They only do onshore individual and business tax prep in the us Paros here that will find you a remote worker in the US that will fit your needs.
(41:33)
There's other resources where you can find remote workers in the Philippines, in South Africa, in India, and depending on where you live and work, some of those foreign locations are better than others because time zone differences. If you're in California and somebody else is working in the Philippines, you're never awake at the same time. Maybe South Africa is better for you if you're on the East coast. Maybe you want South Africa because six of your hours might overlap. So those are some of the things, and I've talked to a lot of the different companies and the quality is super. The folks have worked at top 12 firms, they've got lots of experience. They've got the equivalent of a CPA in the country. Chartered Public Accountant or Chartered Accountant is commonly what it's referred to. A little bit different all over the world, but that's pretty much what it is. And another one that we've taken big advantage of is virtual assistants.
(42:32)
Yes, it's cold. I'm moving around to keep the blood flow. I'm glad everybody's still awake, but yeah, it is chilly. I got the hair standing up. It's goose bumpy. Yeah, the virtual assistants, there's folks at Ario. Their EA is a virtual assistant sitting, I don't even know where because I'll reach out to a couple of the partners and say, Hey, one of our firms needs a resource to do X. And I get an email back going like, Hey Sammy, can you get Mike on my calendar so we can talk about this potential opportunity? And I, I'll get an email at three in the morning from Sammy and with a calendar invite, like, alright, she's in a different time zone and the the calendar appointment I get was in a time where me and Tim would both be working at the same time. It wasn't four 3:00 AM.
(43:17)
So if you think about anything in your firm, anything that you're doing, you can probably outsource it. And the point of me saying that is look at the skills that you have inside of your firm, who's really good at what and then what do they enjoy doing As you're lining up this ideal client, assign the tasks to people in those orders and then see what's left of the tasks and say, all right, well, we can go find a resource to go do those things. Nobody likes doing it or nobody's good at it, or we don't know how to do it, or it's the only time we have to do it for that one client, so it's not worth our time to do it just once. I mean, even in the alliance with Ario, we go find our firms other resources constantly, whether they're inside Ario or not. We've referred firms to firms. One of our firms in Connecticut does credit unions nearly exclusively, and we don't. Someone in Colorado needed a credit union expert. Here you go, talk to Alex. She knows what she's doing.
(44:15)
Both firms were thrilled. One got a project, one got the help for the client. They needed, they only did one credit union. It was related to a larger entity. Of course, that's how we get these one-offs, right? We have one of our really big clients. It starts a nonprofit and we don't do nonprofits, but we tell them we'll try to figure it out and then we end up with one and then another client does it. So we have two. You got to keep up on all the rules through two pieces of work that doesn't fit in that ideal client base. It's okay to let multiple firms service one client. I think that's where we're going to go. I think the smaller firms are going to niche down and really have one thing that they're good at all, right? Unsubscribe. This is what we were talking about earlier at this table, who they are.
(44:56)
Vetter called them out too. They're the ones that when you see their name come up on the email or on your phone directory and you go, Ugh, they don't know I'm here. It can go to voicemail. No, that's going to be worse. All right? You pick up the phone, Hey, how's it going? And it's totally fake. Yeah, I've had those clients. Luckily I don't anymore that, so that's the worst of the unsubscribed clients, but it's also the most fun one to talk about because we've all got the story. We've all worked with him. I had one client, he fired me from his account twice because the first time the partner said no, and then the second time the partner was like, he takes me out to lunch. He's like, so Rob doesn't want you to run stuff anymore. I was like, oh, that's awesome. He was like, no, no, you got fired from his account and it's his second time.
(45:46)
This isn't a good thing. I was like, no, he's a horrible human being. I hate working for him. He doesn't respect our time, our knowledge, me anything. It's just brutal. Nothing good comes out of this relationship except the $30,000 you get paid. He's like, yeah, but isn't that worth it? I was like, you could put two commas on that check and it's not worth it. There's enough nice people in this world that we can make money on. I don't need to work with giant A-holes. And the part was just like, I don't know. Sometimes you have to, I was like, you can then not going to, I got better things to do with my time. That's not how I'm spending it. I'm not coming to work to be miserable.
(46:21)
So that, I'm sure we all have one of those stories or a couple of them, hopefully not too many, and they get fewer and further between as we move forward creating this ideal client base. Now, the other clients I would subscribe from are the ones that don't fit in this area that you really want to be in. We talked about the one-off non-profit that you picked up because your good client had it or that one credit union that we were talking about. The other one is as you're trying to create capacity, look at what that firm did where they lined up the revenue from their 10 40 and the amount of hours that it took them to do each of them. And as they crept up and they stopped at 2%, 3%, 4%, and 5% of their overall firm's revenue, they started to watch the hours climb faster than that percentage. And they had the hours as a percentage of their total hours too. So if they're getting rid of 2% of revenue, it's three and a 5% of the hours not far enough. They got the 5% of revenue and they were at 12% of the hours they spent, they went up to 7% and it jumped all the way to 18% of the hours.
(47:25)
Now this is, so they draw a line and they're like, all right, so we can create 18 capacity. We could raise our fees 15%, we lose 7% of revenue raise fees, 25% lose 7% of revenue. And overall we make 18% more without doing anything. But then they say, but Mike, that's 410 forties. We've known these people for a long time. We can't just kick them to the curb. What do we do? It's like, all right, who's in your network? Anybody start a firm that anybody specializing in these small, this kind of client, realistically, how many of them really belong on TurboTax or HR Block? That could be a solution. They may not like it, but that's a solution they could use. They're like, no, it's not really what we want to do for all of what else you got. It's like, okay, here's an idea.
(48:15)
Go on the State Board of Accountancy website and filter it for firms that have received the license in the last three years. Call them. You want 50 clients. You don't have to pay me for them. I want to go to home for them. I want to steward them over and you can call me with questions. You have to make sure their relationship can keep working because it's important to me when I walk by Debbie in the grocery store that she still says hi and means it. Yeah, I'd love 50 clients. I'm trying to start my practice. That'd be a great way to build some three, four years of revenue that I can count on so I can do the things I want to do because not at full capacity yet. They're trying to build their client base, but need to feed themselves and pay the mortgage and rent. So they did that. They grabbed a couple of their admin staff and they said, all right, let's go do that filter and give us some names. And they poked around their websites a little bit too to make sure that they were real people and had real businesses and knew what they were doing. Looked on LinkedIn and they called a couple of the firms and they were able to unload a handful of the clients.
(49:13)
All right. The why behind this is you're worth it. It's the why the letter. It's the why the word. It's what we do is hard. What we do is fun and what we do our clients really value. So let's try to find the value that our clients see in what we do and make sure that we see it too. It's not just work to us. You're delivering a lot of value to these clients. They value your relationship, your expertise. Alan Colton's slide during the first keynote, what do you wish your accountant would help you with? None of it was compliance. All of it was the super cool projects. Let's go create some capacity in our universe and go do those super cool projects. It's going to keep staff longer because they like working under really cool stuff. They like not knowing what the answer is.
(49:57)
They like the process of trying to figure it out, and they're really good at using the technology and the tools to go try to figure it out. All right? And it's going to be really cool when you can go to a university and say, this is how we run our business. This is our niche that we're in. This is how we do it. And here's Steve, who we hired two years ago from this school. I'll let him tell you about it because I'm supposed to tell you what it's like, right? Steve? Really will. And I know you're going to go on Glassdoor. I know you're going to go on fishbowl and you're going to go do your research. You're going to find out that what Steve says is true, and we're a great small firm to start your career at, and you're going to win kids who want to work no more than 36 hours four days a week because they'll make enough money to pay their bills and go surfing in San Diego or go kayaking in Colorado or go mount or go hike the Appalachian Trail.
(50:45)
And this is why, because the success for each person looks different, right? You get to define that. So when you start doing these things to build that ideal client base and fill your schedule up the way you want to get to do whatever these pictures are for you. All right, and we're at time. There's some books here that I really like as well. Oh, here's the recap slide that we have to do. CPA credit, that one, okay. CPA credit. Now the book one for people that want to maybe take pictures. I love the Big Leap by Gay Hendricks. Totally revolutionary for me in the last three, four years on the mindset, like a zone of genius versus zone of excellence like, and Shawn Achor, the Happiness Advantage, his TED Talk on YouTube. It's 10, 12 years old now, still awesome. He talks about the tiny little red, weird dot that we should all try to be and move an average up to that instead of trying to move that one down to the average. All right, I'm here for questions. Bob and I are talking in seven minutes somewhere. I think the other room I Think the one that you know, heat's working in so we could all go warm up. I might put on a long sleeve shirt or something. But thank you all very much. Appreciate the interaction. It was fantastic.