an engaged team with a great culture is better than landing at the perfect ratio of payroll to revenue.
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the disruptors 
with liz farr
for 卡塔尔世界杯常规比赛时间
before joe montgomery started his firm, he had an epiphany.
he asked himself, “why would i ever want to own a firm, if that’s what it looks like?”
he saw firm leaders chained to their desks, working long hours and dealing with waves of turnover.
“there’s got to be a different way to do it,” he thought.
after too many 100-hour weeks with a wife and three kids he never saw, he reached his breaking point and exited his family firm to start his own firm and his coaching business, groupup.
more: megan genest tarnow: hire for curiosity rather than compliance | clayton oates: one way to keep clients for life | randy crabtree: follow these three rules to keep employees happy | erik solbakken: yes, you can work less and make more | donny shimamoto: future firm growth requires a mindshift | jennifer wilson: empower young workers to build the firm everyone loves | mike whitmire: re-think your hiring and training practices | hector garcia: success strategies of a quickbooks youtube superstar | blake oliver: why tax work yearns to be free| private equity explodes in u.k. | brannon poe: the status quo must go | accounting nerds, unlock your super powers | disruptor: jason statts shakes up the status quo | think small to think big with matt wilkinson | when financial statements go extinct with corey schmidt | can geraldine carter save accountants from themselves? | re-inventing accounting with tyler anderson
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his focus in his accounting firm and in groupup is finding that sweet spot of the right clients, right services and right prices. the first step is “making sure we have the right people in the right structure with the right motivators behind it. those three components can build an unstoppable team,” montgomery explained. next, he said, “on the client side, we do the right service that’s in our wheelhouse, that we can consistently deliver to the right client…and for the right price, so we have enough money coming in the door.”
with that structure in place, montgomery said, firm owners “can get out of production and lead the firm,” changes that can lead to “you running a firm that gives you more freedom.”
a key to making those changes is to be willing to delegate and empower. “we advise our clients to outsource and grow and scale their business,” montgomery said. but many firm owners fail to practice what they preach. by failing to build out an empowered team, he explained, “we have a bunch of worker bees, and we become extremely busy, too.”
12 more takeaways from joe montgomery
- slow down your hiring process to share your vision upfront.
- the current model of working 50-plus hour weeks at 85-90% productivity just leads to lots of burned-out people. switching to flexible hours and dropping to 70% productivity can be done, but only if you are serving the right client with the right kind of work for the right price.
- more firms are being intentional about defining their ideal client and ideal service and getting a good price for the work. with flat monthly pricing, some firms are getting 200-300% realization. because they are capturing the value on the front end, some are dropping from 1,000 clients to 100 and providing a higher level of service to that smaller group of clients.
- firms are also expanding from a single partner to a leadership team by elevating leaders within their firms. sometimes this means additional revenue, and sometimes it means the owner has a more balanced life.
- if your firm wants to achieve a certain revenue target, build out a sales process and assign someone to own that seat.
- be a business coach to your clients. that starts with slowing down the sales process to three separate meetings so you can uncover the pain points for the client and paint a picture of better ways. provide several options and price according to the value the client perceives, not your costs.
- stop the bleeding at the front. stop bringing in junk clients or clients who are too small or too big. otherwise, you’ll never hit the sweet spot of the right clients, the right services and the right price.
- accountants need to acquire the ability to cut through the noise of the apps and the noise of legislation and guide clients to clarity by serving up the right resources for the clients. be the accountant who cuts through the mess to identify the right tech stack and the right people for the client, and you’ll stand out from the crowd.
- there is an opportunity for accountants to act as business coaches for their clients to connect them with technology and educate them. but to do that, you need to create a whitespace for people to be creative and curious about your clients’ problems.
montgomery - at montgomery’s firm, the average fee is $6,500 per month, and no team member works more than 30 hours per week. that extra 10 hours gives everyone the creativity to solve the client’s bigger problems.
- don’t compare your firm to others. having an engaged and happy team with a great culture is better than landing at that perfect 33% ratio of payroll to revenue.
- if you’re overworked, hire someone to help. that may lower profit for a bit, but you’ll have a better life. use the additional capacity to offer your clients a new level of service.
more about joe montgomery
as a second-generation firm owner, joe montgomery is an entrepreneur at heart and understands the unique challenges of a family firm. he has created new service lines, built a great team and culture during times of 80% turnover, doubled the size of his family firm, and represented it to win local awards and national recognition. he left in 2020 to launch groupup and cohesion accounting, a new virtual, advisory-based practice that boasts an average fee of $5,500 per month and a work-anytime, -anywhere team culture where no one works more than 30 hours per week. through his speaking and networking, joe has helped thousands of accountants move closer to their goals. joe challenges the status quo and is a firm believer in collaboration, leveraging disruptive business models and creating a better way for all in the accounting profession. he believes that accountants are uniquely equipped to radically change small businesses across the globe for the better. montgomery works at a deep level with those looking to flip their firm and get back their life. when not talking with other firm owners, joe loves to backpack and spend time with his wife and three boys at the beach.
transcript
(transcripts are made available as soon as possible. they are not fully edited for grammar or spelling.)
liz farr
welcome to accounting disrupter conversations. i’m your host liz farr from 卡塔尔世界杯常规比赛时间. my guest today is joe montgomery, founder of groupup and cohesion accounting. how are you today? joe?
joe montgomery
i’m good, liz, how about you?
liz farr
i’m doing just great. now there’s a lot that i’m sure you have to say about these questions. so let’s just jump right in.
joe montgomery
sounds great. such good questions. thanks for having me.
liz farr
oh, of course, of course, glad to have a wide variety of voices. now, accounting talent in the us and around the world, for that matter has been tight for years, the pandemic made it worse. what are some of the things that you have seen firms? do that make it a little bit better?
joe montgomery
yeah, that’s a great question. a couple of things that come to mind. i think, number one, i’m seeing firms change their strategy towards recruiting. so i think it used to be we put out the job applications, we contacted some recruiters. and then we interviewed a couple of people, we skimmed resumes, maybe we interviewed twice, we probably tried to do it within a two week timeframe. and then we just picked somebody, and we kind of hoped it worked. and so maybe not incredibly intentional. and we just did a talk actually, with karen rayburn of pf marketing, on actually using smart marketing to build a talent pipeline, and how she has seven steps. so i’m seeing a lot of firms slow their hiring process down, which seems super counterintuitive, given the market being what it is like we have a tendency to kind of freak out and want to make snap decisions on the hire. but really, i’m seeing firms slow down, share their vision more upfront, and try to be a little bit more transparent and clear. just during the interview process, and so they’re, they’re sending videos, a lot of them have culture pages on their website, where they have their values clearly stated. and they’ve got videos of their team members talking about the firm. some actually make candidates send in videos before it’s kind of a first step in the whole kind of hiring process. so i’m seeing different strategies and recruiting. but i think more than that, and this probably is a bigger idea is, you know, we’ve overworked our people. and we’ve hung on for probably far too long of this idea that we can get people in here, working 50 plus hours a week, you know, 85 90% productivity percentage, right, like that’s the holy grail. yeah, but what that looks like is a bunch of burnout people. yeah. and so i’m also seeing a shift more toward certainly flexible hours, but also lowering that percentage to maybe something like 70%. which we can only do if we’re also bringing in good revenue, like to the serving the right client with the right kind of work for the right price. so i’m definitely seeing firms. i don’t want to say slack off, but just maybe make the expectation more reasonable. and then a strong push on vision, culture and leadership. so i just don’t think we can do the whole, hey, come work for me. we’re going to have tax season and you’ll ever see your family. we’re a cool company. we do starbucks on the weekends. but they never share their vision. and they never actually talked about where the firm wants to go and collaborate with the team on on those bigger ideas and bigger goals. and so it doesn’t actually feel like a company. it just kind of feels like sort of a day job. i go show up and i do my work. and i clock out and i go home. and it’s just never ending. we were talking a little bit before liz and you mentioned kind of this dark spiral with no light at the end. i’m seeing firms be so much more intentional about showing their culture and their vision and aligning their team behind it and making it a really exciting process. so those are three things that come to mind. at least, there’s probably a lot.
liz farr
well, those are all really good things are slowing down on hiring. and being intentional about hiring. i’ve heard a lot of other conversations about that recently, that it doesn’t make any sense to just bring somebody in like they’re a exchangeable widget that you can just plop it into a chair and expect them to happily crank out work for a year or two.
joe montgomery
yeah. yeah.
liz farr
that just doesn’t work. and and the emphasis on culture, you know, what, what would you say are some really are some things that that young accountants are looking for in a firm culture.
joe montgomery
i think that what maybe somebody coming out of college is looking for. and and that’s a whole other thing, because college enrollments down people taking the cpa exam or is down. and so a lot of people don’t want to be in accounting, like maybe we used to. so i think the people who are graduating with accounting degrees, they’re looking for, they’re looking for a company, not a firm. and so when i think of a firm, i think of one person sole owner million bucks and revenue team of eight to 10. and it’s kind of a sweatshop, or maybe it’s actually not, it’s might be pleasant. but it’s not going anywhere, it’s static, it’s not growing, like maybe it’ll have a year where it does 1.2 million, and it drops to 900k. it just kind of sits there. and it might be pleasant, but it’s not going anywhere. what i’m seeing a lot of maybe younger cpas want is a place where they can connect with a vision that deeply resonates with their own values, and where it directly translates to impacting people. so and this is, this may not be different than that firm owner who owns that firm. but i just think that we’re looking for all of those, that vision and that owner who started that firm, and all of the client service that they’re giving all the care that they give, maybe they they stay up thinking about it. but we’re looking for that to be communicated to the whole company, the whole firm. so we can get excited about it and kind of come along and be a part of it.
liz farr
oh, i agree. and that that doesn’t sound anything like any of the firms that i worked at. unfortunately. that’s a story for another day. yeah. now now, along with problems in getting talent in the door. i see a lot of firms making changes in their business model also. because until recently, it was always just the billable hour. and this very rigid hierarchy, or you came in a staff and maybe eventually you’d make it to partner. what are you seeing these days?
joe montgomery
yeah, that’s a that’s such a good question, too. i definitely am seeing a big shift on the client side. so used to be we bring in any client that came in the door, we would charge a lot by the hour, i think we’re getting past that we’re doing flat fee. a lot of us are, but we still might bring in any client that comes in the door. and then there’s a tendency, of course, oh, they need an audit. we only do we don’t do audits, well, let’s learn how to do it, or they need a review. we only do one review, we don’t like it, we actually hate it. but this client needs a review. so we’ll figure it out for them to what we’ll add it in. and so we kind of just expand our service offering way too much. and we do the wrong things, or the wrong services, maybe to the wrong client. and so what i’m seeing firms get more intentional with is really defining your ideal client, and not just their client, but also their service, their ideal service, and then actually getting a good price for it, which i think we like to give stuff away. we’re nice. yeah, but capturing that value. so a lot of the firms that we work with, they’re on a flat monthly fee for all services. and they’re getting, you know, two to 300% realization, which is how they can let their team go to 70% and hold people because they’re actually capturing that value on the front end. and way less clients for sure. but way higher service is another trend i’m seeing. so you’re going from like that 1000 client firm to maybe 100 clients, but we know their faces. and it’s less people to kind of manage and and serve so we can serve them better and command higher prices. so that’s probably on the client side. i think organizational structure like the second part of your question. yeah, i’m definitely seeing a shift. and this is from that maybe one million dollar firm, sole owner with maybe a team of worker bees or whatever you want to call it, to building a leadership team, and actually trying to grow beyond that, and push through the ceiling that we might be stuck out, maybe that’s a revenue goal 2 million or three or something. or maybe it’s just that the owner has a more balanced life, because we’re elevating other leaders, which is then helping retain them because they’re more engaged in the whole process. and so sometimes that looks like equity. it doesn’t always. but definitely elevating some leaders and running the firm together, instead of just one or two partners kind of dictating down. i think it’s a big shift.
liz farr
that is a big shift, you know, and, you know, are you seeing too many? are you seeing many people employ the ceo-type structure?
joe montgomery
definitely. yeah, for sure. and we have a very set defined leadership chart. so there’s usually a visionary kind of role, and then a salesperson, more of an operations, and then an administrative finance, and somebody’s probably in the middle who’s holding it all together. so maybe up to four to five, sometimes i see to see titles used like the c suite. other times, it’s just sales manager, operations manager. but for sure.
liz farr
yeah, and i’m hearing so much more about having somebody take over the operations seat. yeah, that’s something that i didn’t experience when i was in public accounting. you know, sometimes it was our it guy, sometimes it was kind of by committee. but we really didn’t have too much in the way of standardized ways that things were done. it was just kind of, by vote, almost like what the general consensus might be or kind of a group decision.
joe montgomery
well, kind of like many paths, and you would hope to get to the correct outcome. you know, the last firm i was at, we didn’t, there wasn’t really even a protocol that i was aware of, for onboarding a new client. so, you know, once i got all the way through an onboarding, conversation, and i looked down at my paper, and i realized, oh, i didn’t bother to get their phone number, their email address? yeah. oh. yeah, i think that’s, i think it’s less about necessary, necessarily people hierarchy that i’m seeing, but it’s definitely about segmenting those key roles, like you said, like onboarding, we can’t let onboarding slip. that’s really important. that’s the clients first experience. so there should be somebody in charge of onboarding. now, maybe it’s not a dedicated person, full-time person. maybe it’s one of your lead accountants who has to take it, you know, as a kind of hybrid role. but you should know who that person is in your office and your firm. who’s owning that seat for sure. yeah.
liz farr
yeah, yeah. no. and, you know, i think that there probably was a process, but it wasn’t really communicated to me.
joe montgomery
so, so maybe there was, and some people knew about it. but the whole firm didn’t know about it. yeah, yep. and i think that’s a big shift to is we’re moving from these little silos of knowledge. and we all have our little lane that we play in to know let’s look at how the team interfaces together and works together to serve the client and where the moving pieces interact. and yeah, let’s let’s document our processes and share it even with front desk support team. because because otherwise, part of our part of our company is operating without the other part knowing what we’re doing. and it’s just, that can definitely lead to chaos for sure.
liz farr
yeah, yeah. yeah. and now what about growth? a lot of firms say that their goal is growth, but different it’s even really need to grow? hmm.
joe montgomery
no, i don’t think they do. i think that’s a very personal decision. it probably, it probably depends on the owner, but also the leadership team and those that might be buying the firm behind them or just the key leaders. if you have a bunch of key leaders who want to grow, it’s probably smart to try because they’ll probably get disengaged and leave if you don’t. but if you’re if you’re kind of running a good shop, and your team is happy, and you’ve got people who are loyal and you’ve been there for a while, your clients happy, you’re not working a lot. you’re able to run your firm and two or three days a week. and that’s it. then i don’t think you have to grow. no, i think it’s kind of a personal decision for sure.
liz farr
and what about strategies for growing? now, you mentioned earlier, maybe one strategy was to provide more services to the existing client base so that instead of just doing a tax return for 1000 clients, you’re doing many more things for a fewer clients? what about what about things like that? what kind? what are some ideas you have in that arena?
joe montgomery
i think the first step was is probably to if you know, you want to grow, and you’ve picked like a revenue range or whatnot. maybe you’ve set this big target and five years, we want to be a $5 million firm, or something like that, i think we have to assign somebody in the firm. to own that seat. we got to stop this whole, oh, who can meet this new client? well, i’m not available. so let’s let this senior bookkeeper who’s done two sales meetings this year, you know, greet this new $10 million construction client that’s looking for high level advisory services. i think we have to stop that. and i think we have to assign somebody to it. definitely building out a sales process is something we help a lot of our firms with. because what i find most firms do, and i struggled with this, too, i’ve sold over $3 million of arr in accounting firms. and i used to struggle with like the quick close, where the client would walk in the door. and because you’re you know, i’m the cpa and one of the partners sure i could get them to pay me something. and we have a new client. the question is, is it the right thing? and is it the right price. and getting that price up takes a process, we got to uncover the pain, we got to paint a picture of a better way. and then we have the solution with the client, show them a couple of options. without a price like no price has been shown. and this is a three step meeting, or three separate meetings. and then once we kind of know the scope, and you know, they’re basically want to buy it no matter what it costs at this point, then we peg our number. but it’s all based on the value they perceive of the service, not what our cost is, or whatnot. so definitely implementing a strong sales process. even if you’re a solo firm, and it’s just you kind of running the firm. i like to stop the bleeding at the front end. because if we just keep bringing in junk clients, we love our clients. but if we bring in clients for less value or clients we shouldn’t be serving because they should be at h&r block or turbotax. or they’re way too big. they should be at a bigger firm. then we’ll never have that sweet spot of clients that we probably all want. so that might be a couple of ways. the other thing i’m seeing a lot of firms do is just connect with other businesses that serve our same audience. and so financial planners, bankers, even attorneys, had one attorney, and for whatever reason, they really liked us. and they were an intellectual property attorney. and they would send us almost one client a week. wow, good clients to like high-paying clients. so we made sure we took that person out to lunch and dinner a lot and kept our relationship good. so assigning somebody to own the seat and building a sales process over time. it’s not going to happen overnight. and maybe through some strategic partnerships or referral partnerships.
liz farr
those are all really helpful and very concrete ideas. and i hope that listeners will take at least one of those ideas and run with it. i certainly didn’t see much of that in the firms that i worked at. oh, no, no, no. no, we took on a few clients that we maybe shouldn’t have. i mean, the benefit for me was that years later, they became topics of columns that i wrote for accounting web every october for a couple of years. accounting horror stories. and, you know, many of them were clients that we shouldn’t have taken on that. were you know, it wasn’t some of them weren’t that the problem wasn’t that we weren’t the one best suited to them. the problem was that they were just a terrible client. they were a little too chaotic.
joe montgomery
was the wrong client not a good fit? yeah. yeah. yeah.
liz farr
yeah. now, it used to be that we had to be really good with the 10-key to be successful as a cpa. i’ve talked to auditors who tell me about having 10 key races. and today, automation does a lot of that. so what are the skills that accountants need to be successful today? and in the future?
joe montgomery
yeah, that’s a good question. it probably depends on the role. i would say a little bit, you know, in the firm, but i would say what the firm needs to acquire. and probably there’s, you know, different people are doing different things, but the firm needs to acquire the ability. and this goes all the way to leadership, but also maybe to bookkeepers and front desk, it needs to acquire the ability to cut through the noise of all the apps out there, and to cut through the noise of all the legislation, and to guide and walk our clients through and get them to clarity and not overwhelm them to death and serve up the tools for the client. so i don’t care if bookkeepers here and if there’s, you know, filipino bookkeeper team over here, and there’s 50 different accounting apps that do this one thing. that’s okay. my job becomes, what set of these resources is best for my client? even if it’s not me. now, i think it’s better if the firm can acquire the ability to offer those resources kind of internally or through a partnership or something. but i see, i think gone are the days where it was like, oh, yeah, we have a payroll software, that’s, you know, we just use this one thing for our clients. and it’s just really expensive, rigid software, maybe. but the client really should be on like a gusto, diy gusto. and maybe they’re fine to manage their own payroll, because it’s one person. maybe you need to have a partnership with gusto. and you offer that up. the clients are out there searching for this stuff anyway, and they’re seeing it pop up all the ads. if you’re the accountant, that kind of signals, i cut through that mess. and i can help you identify your tech stack, or your people team. then i think i think you’ll stand apart a little bit for sure. so i think it’s more of, you know, our client is looking for business guidance. now more than ever. and so some of its tactical or technical with apps, but i think a lot of it is you know, they’re getting from maybe a financial planner, wealth building stuff. and that’s very much about their family, and maybe they get some business advice for that too. but if they have a business coach, sure, you know, they could get a business coach, but that’s really expensive. and that usually doesn’t last but a year or two. so i think there’s an opportunity for our accountants to become kind of many business coaches, where we’re partnering with our client and connecting the people with the technology, and we’re educators and we’re coaches, more so than we’ve been in the past.
liz farr
i think your answer there really makes it clear that we’ve got to get away from this 80% utilization goal because there is no way that you can learn about all the different apps and about the different resources plus stay on top of relevant legislation and industry trends. there’s no way you can do that. if you’re working as hard as you can all the time, you just can’t do that,
joe montgomery
oh, it will be impossible. we’ve got to create the whitespace. i think we’ve got to create the space for people to be creative, to be curious about our clients problems, which normally we just get annoyed by and complain about. because we’re too busy. yeah. so we can start to almost act like a tech company. we’re constantly iterating we’re constantly developing constantly trying to solve clients problems. and i think our fees have to be a lot higher. kind of coupled with that to help cover but i think you’re right. yeah.
liz farr
yeah, because you just can’t do that, you know, i, back when i was in public accounting, it just felt greedy sometimes, too, for me to spend 20 minutes in the morning reading accounting today, or the thomson reuters news headlines. it just felt greedy to do that. when really, that was some of the most important work that i could be doing.
joe montgomery
yeah, did you have to log on your timesheet? you know, 20 minutes, publications or something like that?
liz farr
no, we just have this big catch-all category of admin. yeah, whatever. you know, that was the rounding error. and i know i was here for eight hours. what else did i do?
joe montgomery
yeah. yeah, that’s, um, we could talk about that a lot, i’m sure just the shift from inputs to outputs.
liz farr
yeah. and it was, in so many ways irrelevant. the number of hours that i logged on a particular client was often irrelevant. if it was an audit, that was for a fixed fee up front, so what did it matter? if it was a tax return, the partner would look at the hours i’d put in and look at last year’s bill, and kind of get something that put the two together.
joe montgomery
yeah, just kind of pulling it out of the air. we, we do things different in our firm, we don’t track any time. i think a bigger firm probably should. but i know there’s a lot of people that say don’t, we don’t, we’re small right now. but our average fee is about 6500 a month. and nobody in our team works more than 30 hours a week. so we care very little about when we’re working. i have no idea when my team is working. we’ve got some moms that get up at 5am and put in a couple hours. they spend their whole day with their kids, and then they work from nine to 11. sometimes, or they flip flop. i don’t care as long as the results done and the clients happy. and we found that that extra 10 hours or more gives us the creativity to actually solve the client’s bigger problems, instead of just being so distracted by you know, keying in data and so burnout all the time.
liz farr
yeah, absolutely. yeah, know, and i would say that i’ve talked to other firm owners who do track time, but they do that more as a way to improve efficiency. to identify bottlenecks, and to make sure that the prices that are being charged to the clients are appropriate.
joe montgomery
it makes sense. yeah, and i actually do support tracking time. we probably will at our firm, we just right now we’re small and we will likely start soon.
liz farr
okay. now, we’ve talked about things that accountants should do. what are some things that accountants should stop doing immediately?
joe montgomery
so many things no, that’s a good one. don’t stop doing immediately. i think i think just measuring those inputs is one. so if you don’t have kind of a scorecard of seven to 10 metrics that determine the health of your firm, and these are leading indicators. that’s definitely maybe a better approach than just looking at hours. because i remember we’d always get into these binds and tax season. this is probably six or seven years ago, where the hours were okay, people were working actually a lot. but yet, we weren’t tracking our tax turnaround time. and we had this big buildup of tax returns, we had, like 200 returns as a small firm, about a week before the deadline. and so we had to completely change our process. it happened because we weren’t actually monitoring that data, we were just looking at our hours. and so actually, the thing we wanted to accomplish, getting the returns done quickly was missed, even though we were working at an hour. so definitely a shift from the inputs to the outputs. but i would also go back to, it’s not so much of focus, i don’t think on the productivity percentage, necessarily, i think we need to stop focusing on that. start focusing. i’m not saying we should just forget about it, it’s probably still good to track. but we should start focusing instead, on making sure we have the right people in the right structure with the right motivators behind it. so let’s build let’s actually build an unstoppable team with those three components. and then let’s make sure on the client side, we we do the right service that’s in our wheelhouse, that we can consistently deliver to the right client, who’s not a bad client, like you were saying earlier. and for the right price, so we have enough money coming in the door. and we have a team that’s highly engaged in the right structure so we can get out of production, and lead the firm. and i think by focusing on those things, instead of just hours input, productivity percentage, you know, some of those more traditional numbers, not that they’re wrong, they’re good to have might actually lead to you running a firm that gives you more freedom than the other way around.
liz farr
those are all really good ideas. and i especially like the idea of getting out of just tracking productivity. yeah, because that’s, that’s a pretty meaningless metric. really.
joe montgomery
it can be an sc it’s easy to game. so i would also say, because it was, what what should it count stop doing is trying to do everything yourself. we advise our clients to outsource and grow and scale their business. but yet, so many of us are stuck, you know, top top dog are the sole leader. and we do fail to bring in those leaders and to build out a team and to delegate well and empower. and instead we just for lack of better words, we have a bunch of worker bees, and we become extremely busy too. so maybe that’s like a desire to hold on to things or control. i think it’s different per person. so i think we have to change that mindset a little bit.
liz farr
yeah, i, i hear you in the need to delegate more. no, one firm i was at tend to have a lot of turnover at staff and supervisory level, especially over on the tech side. but why what was stable were the partners. and that meant that partners and managers were keying in data into tax returns. they were still heavily involved in production, which is not the way it should be.
joe montgomery
yeah, because this is what this was the epiphany i had at some point. why would i ever want to own a firm? if that’s what it looks like, if i’m going to be chained to a desk, dealing with waves of turnover? why would why would i want like there’s got to be a different way to do it.
liz farr
yeah, now there there is. and now, speaking of seeking different ways, what is it that keeps accountants from doing these things that change to change? i had to do it this way.
joe montgomery
we’ve always done it this way. my buddies in this other group say i should do it this way. and they’re going to ribbed me if they don’t. so we have all our accounting groups, right. and peer pressure, i think, is what i mean by that. i was talking to a firm owner just this morning. and she was kind of explaining her payroll ratio to me to revenue. and she didn’t feel like it was too high, necessarily. she likes having her team engaged and giving some bonuses from time to time. but she’s getting a lot of pressure from another group of firms who say it needs to be exactly 33%. so she actually has a super happy team and a great culture. but yes, she’s being pressured and feeling that. so pressure from other groups, and then definitely that i had to go through this and do this and deal with this. so you know, this is normal. and you’ve got to learn the ropes too. and this is the only this is a real way to learn the ropes. so maybe maybe past trauma, that’s just carrying on? i don’t know.
liz farr
yeah, i paid my dues. so you should, too.
joe montgomery
that’s it. that’s it. yeah.
liz farr
yeah. and how do i break out of that? i mean, you know, your, your coaching firms in how to do that, you know, how do we get them to break out of that mentality?
joe montgomery
we have to want more for ourself. and i think we have to realize we’re worth more. as for owners, we have families, we have friends, we have hobbies, if you don’t feel like you have family or friends that you’d rather be spending your time with. but yet, like traditional accounting for consumed so much of our life, if not run properly. and so i feel like there’s a breaking point where a firm owner gets to. and i, just to be blunt, i see a lot of broken family relationships. not and i’m not talking just if you are in business, in a family firm with a family member, i’m talking like back home, because our firms are structured a certain way. and so oftentimes in our coaching, like we get into that it’s, you know, things at home or not, and this was a little bit my story, just to be candid. too many 100 hour weeks. wife and three kids, i don’t think that’s good. no, that doesn’t work. so usually a breaking point where they make the decision, i can’t keep doing this. like, i deserve more, i want more. some people need help. and accountability. i think a lot of us do. when i was going through a major transition in my firm, actually exiting my family firm and starting my new firm and group up. i definitely had a lot of counselors, advisors, people i talked to, and sought advice from and who kind of held me accountable. my first hire going out on my own was a business coach, a non-producing business coach. and she was fantastic, exactly what i needed. because i didn’t believe i could change. and it was super lonely. being in that space, so i think i think accountability can be super helpful sometimes. but it starts with that it’s time to change i’ve had enough.
liz farr
i think that has to do a lot with self-esteem and feeling that you deserve more. you know, we tend to carry our suffering like a badge of honor.
joe montgomery
yeah. oh, yes. oh, yes. i think more on a practical level, though, once we get there in our heads. we have to enlist the help of our team. and we have to start to delegate well and build those leaders up and kind of raise your own and say, i don’t know if i can keep doing this. let’s change the structure. maybe that’s we pay you more, whatever it looks like, but enlisting that help internally from your own team. and maybe that’s a trusted right-hand person, maybe you already have a partner too. but figuring it out together, for sure.
liz farr
and i agree with working it out together, because none of us really are truly alone. you think you’re alone? there are so many networks that you can join with other firm owners. there are coaching and accountability groups like yours. there are there’s even tax twitter, which is this kind of informal community of people who throw ideas out and help each other and are friendly. you’re never really alone.
joe montgomery
that’s right. so many good groups. yeah, i love that you’re never alone.
liz farr
now, these days, cas client accounting services, client advisory services, client accounting and advisory services, what? whatever you want to call it, however, your firm defines it. that’s a big thing these days. but what do you think will be the next big thing?
joe montgomery
i think the next big thing. i mean, there’s a lot of firms that have a lot of room to, to grow even within client advisory services. and i think we have offshoring and outsourcing. and i think we’re fumbling through that. we’re all learning together. i think some firms are figuring it out. but it’s a little awkward right now. i think that’s gonna get better, we’re going to learn that better. but i think the bigger thing probably is stepping into that true role of a coach for your clients, and starting your kickoff sessions, instead of you know, alright, let me have your bank logins, let me have your prior your tax return, and you know, all those things that we need. what is ultimate success look like in your business? if you were on a desert island with no access to your business for three months, and five numbers written in the sand, every day that told you exactly how your business was doing? do you know what they would be? let’s build those numbers. let’s track them weekly. let’s adjust our levers based on the client’s goal. and let’s have a regular cadence of meetings where we do advise, and this could be monthly or quarterly. and so we’re doing accounting, we’re doing bookkeeping, and payroll and tax and advisory, whatever that means. but we’re kind of this semi business coach who’s kind of walking alongside the client, we’re aware of the goals. and we’re aware of where they are. and if they’re off track or on track. and then we’re giving them 123 actions every single month or quarter, that are going to help take them in that direction. and i think it’s going to be less to about you know, we’re the consultant word, the expert, here’s what you need to do, mr. mrs. client, but it’s let’s leverage the client’s knowledge to and let’s brainstorm together what the clients could do to get back on track toward their goals. so i don’t necessarily have a concise term for that other than maybe a mini business coach, maybe. yeah. but that’s what i see.
liz farr
yeah. yeah, i think that, you know, so many people i’ve spoken with now, accountants have so much knowledge from working with so many businesses and so many clients, that if we just took the time to sit back and assimilate them, think about the patterns we’re seeing how much more help we could be to our clients than just oh, let me get this information did in data out tax return out? the numbers in tax return out, you know, we’re out even really thinking about it. and, you know, we have to give our team members and leadership, the bandwidth to really think about those things. that’s right. yeah,
joe montgomery
that’s what traditionally don’t have time.
liz farr
no, yeah. no, we just don’t know, what are what are some things that you can think of that would give people more time? you know, besides getting your pricing aligned correctly getting rid of the bad clients? what are some things that you can think of that would help us get our time back?
joe montgomery
yeah. if your take if you’re removing, dropping clients or raising prices, then i think that leaves, you cut your profit on purpose to over staff for that creativity and space. and then you use that space, maybe not to just raise prices, arbitrarily, but to offer kind of that newer level service where you are thinking about your clients and meeting with them maybe a little more regularly. so i don’t mean to be blunt, but if you’re overworked, working 14 hours a day, maybe you should hire someone. really, that whitespace might be as simple as that, lower the profit a bit and be okay with it and have an easier life.
liz farr
that is a wise idea, and maybe an idea that a lot of listeners should take to heart. and i hope they do. so i think that’s a good place to end our conversation. joe, i want to thank you so much for talking to me