Archive for the ‘On My Mind’ Category

Wednesday, October 20th, 2021

Don’t Give Up

“‘Oh well’, said Miss Marble, ‘it’s just perseverance, isn’t it, that leads to things.'” — Agatha Christie

The Agatha Christie crime sleuth, Miss Jane Marple, consistently solves murder cases by demonstrating perseverance.

The many issues that need attention inside a busy, growing accounting firm must be attacked in the same way. Simply persevere!

Firm Administrators/Practice Managers, now that October 15th has passed, are facing a formidable list of things to do.

One administrator shared a list of things that need to be addressed before year-end:

  • We need to become truly and wholly paperless.
  • We need to hire a Tax Manager!
  • We need to hire an additional administrative professional.
  • Our website needs to be updated!
  • We must upgrade our phone system.
  • We are adding a new server (we are not in the cloud yet!).

Plus, just the daily occurrences that need attention from any firm administrator.

Many of you are facing similar challenges as the year draws to a close. It won’t be easy but keep in mind Miss Marple’s quote, above. Perseverance pays off!

  • Success comes from curiosity, concentration, perseverance, and self-criticism.
  • Albert Einstein

Tuesday, October 12th, 2021

The Bonus Dilemma

“Whenever there is a hard job to be done I assign it to a lazy man; he is sure to find an easy way of doing It.” – – Walter Chrysler

You have heard me say it often: I’ve been around a while.

One thing that I have lived through during my 30+ years in CPA firm management is the bonus plan saga. It is like a nightmare that keeps repeating itself (like in the movie Groundhog Day):

  • As a firm grows, it begins to hire more people.
  • At first, there is no bonus plan. People get paid for their over-all performance.
  • Then, a partner has a great idea, “Let’s put in a bonus plan! It will inspire our people to do better.”
  • And then, the ones who don’t get a bonus become jealous.
  • And then, CPA firm leaders feel guilty because they are not being fair to everyone.
  • The ones who do get the bonus usually are the top performers, however, some others may get a bonus because they are creative, intelligent people who can figure out how to “work” any bonus system ever designed for a CPA firm.
  • Eventually, (and it doesn’t take too long) the plan begins to demotivate people.
  • Then, the bright idea becomes: “Let’s do away with our bonus plan and build it back into their salaries.  We’ll reward top performers with larger compensation increases.” Thus, everyone gets an unexpected raise.
  • Several years later, “Let’s put in a bonus plan!” – – – same thing all over again, eventually it is dropped again because it really doesn’t work very well and it creates a huge amount of administrative work in tracking, measuring and analyzing.

I’ve actually been through this saga about 4 times during my career.

I have very mixed emotions about bonus/incentive plans relating to basic job performance.  However, I am very much in favor of incentives for special efforts like bringing in a great new client or recruiting a top-notch, experienced CPA to the firm.

Many partners and managers resort to incentives because they think they’re smart enough to create the perfect carrot. Doesn’t usually work that way in CPA firms.

Here’s what often happens inside the firm.  If you provide incentives for billable time you will get lots of billable time. Also, every client engagement will be over budget. You want them to get billable hours, yet you want them to perform the engagement more efficiently in less time than last year. It sends mixed messages.  We don’t live in a single-variable world – especially inside a CPA firm.

Much of the challenge with developing a highly productive team does not depend on incentives.  It relates back to having skilled, effective managers.  Winning firms have managers (and partners) who continually communicate, coach, and train the younger people in the firm so that everyone understands their role and the importance of quality, timely client service.  That is what will earn them a bigger paycheck.

While some bonus plans can demotivate your people, good managers do not. Good managers motivate.  Embrace the challenging activity of continually interacting and communicating with your team members.

  • You know what Gordie Howe got for a signing bonus? A team jacket!
  • Ed Lauter

Tuesday, September 21st, 2021

Labor & Value

“Until you value yourself, you won’t value your time. Until you value your time, you will not do anything with it.” – M. Scott Peck

Periodically, I repost a blog by Seth Godin. I do this when I think that it has special meaning to the CPA profession. I have observed that many CPAs still bill according to the amount of labor (time) that is involved in a client engagement. You should always consider how much value the client receives. Here’s Godin’s post:

Labor and Value

Adam Smith and David Ricardo argued that all value comes from labor, and the value of something is in the amount of labor it took to produce it.

But Henry George understood that this is backward. The value of something lies in how much labor we’re willing to exchange for it.

Too often, we’re tempted to price things based on what they cost us to make. It’s more useful to price things based on what they’re worth to those that might want to buy them.

  • If you don't know your own value, somebody will tell you your value, and it'll be less than you're worth.
  • Bernard Hopkins

Friday, September 17th, 2021

Flashback Friday – Subscription Pricing

“Price is what you pay. Value is what you get.” – Warren Buffett

This week’s flashback post is a recent one. I think it is definitely worth reading again. It describes Ron Baker’s subscription pricing model.

Now that 9/15 has passed, I hope you have a real weekend – enjoy!

  • Pricing is actually pretty simple...Customers will not pay literally a penny more than the true value of the product.
  • Ron Johnson

Friday, September 3rd, 2021

Check-Ins – Flashback Friday

“If you aim at nothing, you will hit it every time.” –Zig Ziglar

Now that you don’t actually see many of your employees every day, it is more important than ever to have frequent check-ins to find how they are doing and how they are progressing on their goals.

Read more in this Friday flashback post.

I HOPE you will enjoy this 3-day holiday weekend although I know that probably isn’t the case for many of you with the September due date just around the corner.

  • Never quit. It is the easiest cop-out in the world. Set a goal and don’t quit until you attain it. When you do attain it, set another goal, and don’t quit until you reach it. Never quit.
  • Bear Bryant

Thursday, August 26th, 2021

“THE” Exam

“Students are struggling to afford that fifth year of school.” – Daniel Hood 

There are a lot of discussions recently about the difficulty of passing the CPA Exam and requiring five years of education (the 150-hour rule) to become a CPA. These are the reasons college accounting majors are giving for not going into public accounting.

Accounting Today editor-in-chief, Dan Hood puts this dilemma in question form to all of you out there. He asks, “Is it too hard to become a CPA?” He notes that CPA profession leaders/consultants say that the number of students in accounting dropped from 2% in 1990 to 1% in 2000. The 90s is when the 150-hour rule became prominent in many states. The Exam itself is widely known to be very grueling. What could be the answer?

Read the article and give him your personal feedback.

In my personal opinion (and please note, I am not a CPA but have worked with them for over 40 years), the extra year of education is a waste of money and effort. I have never been able to see how that extra year made incoming recruits any better prepared than those that came before them. The CPA Exam should be on the “grueling” side. Clients rely on CPAs for their amazing expertise and advice. If they want to remain “the most trusted advisor” they not only have to prove their current knowledge, they have to commit to LIFE LONG learning to add to that knowledge.

  • The CPA profession is facing serious staffing challenges and long-term threats around its ability to attract future professionals.
  • Daniel Hood

Thursday, August 19th, 2021

You Are Already A Consultant

“Every great move forward in your life begins with a leap of faith, a step into the unknown.” – Brian Tracy

All the talk these days is about CPAs becoming consultants to their clients and not just compliance service providers.

There are even various training programs to help CPAs make the large leap (I say that sarcastically!).

It is not a “leap” for you. You are already performing consulting services and have done it for years. Partners and managers in public accounting firms have been advising, coaching, and consulting with clients as part of their normal activities.

I see the problem being how you code your time. You record time to Tax when it is actually consulting. Why do CPAs do this when most firms already have service codes specifically for Consulting.

There are two reasons. One, they just code it to tax out of habit, and without thinking that they are really not doing tax work, they are performing “Advisory Services.” Some firms have codes titled, MAS – Management Accounting Services that many partners rarely use. Two, they do not use the MAS codes because they have a higher billing rate associated with those codes and they do not want to charge their clients more for that type of work.

The challenge facing CPA firm leaders is teaching younger accountants and involving them in consulting/advisory services earlier in their careers.

  • It always feels too soon to leap. But you have to. Because that's the moment between you and remarkable.
  • Seth Godin

Tuesday, August 17th, 2021

SALY

“Tomorrow is the first blank page of a 365-page book. Write a good one.” – Brady Paisley

This term has been used by CPA firms for decades. SALY – Same As Last Year.

Do you remember when a new team member was assigned a routine individual tax return and the partner or manager would send the client’s file with a note simply stating SALY? Everyone knew what that meant. You just had to follow what notes were in the file and draft this year’s return similarly to last year’s return. Simple.

SALY became a way to train new recruits and I’m sure it was very boring for those newbies.

The point of this is that you can no longer sidestep your responsibility for training by simply indicating SALY. The workforce has evolved and young people are more curious and demanding.

Besides that, you are still working through a pandemic. It seems it just won’t go away. You are also constantly dealing with new technology. Going forward nothing will ever be the “same as last year” again.

  • We are not the same persons this year as last; nor are those we love. It is a happy chance if we, changing, continue to love a changed person.
  • W. Somerset Maugham

Friday, August 13th, 2021

Do It Right The First Time

“Fast is fine, but accuracy is everything.” – Wyatt Earp

It’s Friday and time for an informative flashback.

When I first joined a CPA firm, I was amazed by the number of review steps and proofing that happened inside a firm. I soon learned the “ropes”.

Are your reviewers overworked? Maybe if staff were better trained there wouldn’t be the need for so many review steps! Click here to learn more from this flashback post.

Have a great weekend!

  • Accuracy builds credibility.
  • Jim Rohn

Tuesday, August 10th, 2021

Four Pillars

“The tower of success stands on the pillars of vision, action, patience, and the character to withstand criticisms.” – Amit Ray

Something that Allan Koltin said in his recent interview with Russell Shapiro is so important for all of you leading, managing, and growing accounting firms.

He talked about the four things a professional service firm needs to replenish every 10 years. He calls them the Four Pillars:

  1. Leadership – Someone who can run the business, manage the firm and provide critical feedback to the partners. This is one of the most difficult because accountants didn’t become accountants so they could become CEOs.
  2. Rainmaking – In this business you either grow or die a slow death. In most firms, founders were able to bring in business but they could only bring it in if they had people to do the work. So, they hired technicians. When those founders retired, technicians were left to do rainmaking and that is a challenging transition. Firms need a growth engine that continues to run.
  3. Technical – This is tax and audit and most can handle this one without difficulty.
  4. Client relationships – It is a people business. Your clients must not only like you and trust you, you must be their most trusted advisor. You are the person they think of first for help making any business decision.

How about your firm? Are you repopulating these four pillars every decade? Have you done it even once? Maybe you are doing one or two, but not all four. Something to think about, discuss and then take action.

  • Opportunities don't happen, you create them.
  • Chris Grosser