avoid the mental gymnastics required to switch between customers in different industries and niche your services.
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the disruptors
with liz farr
chris hervochon is building his firm, better way cpa, “in a very specific way, for our tribes.” he explains, “not everyone needs to be our customer, not everybody’s our tribe, not everybody needs to be our employee.” leading with their core values, the process for bringing on new customers and new employees “weeds out the bad or the potentially poor fit customers,” which, in turn, helps with managing their time, the most valuable thing they have.
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his tribe includes marketing agencies, which he started working with by accident. then, one day, he realized that “i like working with these people. they need help. their model fits into what i’m doing. they’re professional services. they work roughly the same way that i do.” so he leaned into his niche.
pricing is another big part of how chris is building his firm, using subscription pricing with three tiers of services. initially, pricing and packages were customized for each customer, but as his firm grew, he found himself “doing mental gymnastics” to remember what was in each package. after a period of trial and error to “match supply with demand,” they’ve “landed somewhere where we have a really good idea of what we’re doing.”
that pricing and the packages are designed to provide what businesses need at particular revenue points. “we know what that type of business is going to need. and we know what our fees were going to be roughly as a percentage of revenue to that business,” which chris says makes their firm more valuable to their customers.
comparing the pricing on their packages to the cost of an internal hire makes the roi for customers easier to grasp. instead of worrying about profitability on a particular client, they look at overall firm margins and profitability. by closely managing capacity, “we can maintain a work-life balance, and we can do great work.”
they also don’t track time. if timesheets are, as ron baker says, an opinion, then chris says, “i want to be running my business less on opinions and more on facts.”
creating a better place to work requires leadership, which, for chris, has three components. first, work on yourself “to be the leader that you would want to work for.” second, build a vision for the future by gathering the dots and connecting the dots by “being out there continuously learning, understanding the landscape that you’re in now, understanding the accounting profession as a whole, understanding the labor market, understanding the economy, understanding your customers, and what’s going on with them, and then connect all those dots.” finally, get buy-in from everyone in your firm through communication, transparency, and listening.
10 more takeaways
- the downsides of niching include competing nationally for customers and being sensitive to downturns that especially impact that industry.
- the upsides of niching include avoiding the mental gymnastics required to switch between customers in different industries and the ability to provide focused advice for a particular industry. content creation is simpler when you only have to tailor your advice to one particular type of customer.
- consider pricing your packages on your website to weed out potential non-fit customers. not everyone needs to be your customer.
- subscription pricing upfront makes it easier for customers to say yes. they don’t need to call or book an appointment to determine the monthly cost.
- a top reason business owners seek out a new firm is responsiveness. create a mechanism within your firm to measure response times and hold people accountable.
- consider responding to customer questions with a video. recording a quick video can be faster than typing out an answer or answering a call. however, sometimes, the best way to have a difficult conversation is by phone.
- take advantage of asynchronous communication and send out a quick video when you deliver a tax return. pre-answer the questions you anticipate your customer will have. this can drastically cut down on the need to book meetings to go over tax returns.
- be cautious about offshoring. offshore team members may be managed by an offshore employment company, and those relationships can be tricky. violating offshore disclosure rules may subject your firm to criminal penalties.
- less can be more. when rolling out a new service, tech stack, or software offering, start with a minimum viable product.
- consider your customers’ communication preferences. adding texting capabilities to email and phone can improve customer experience and response times.
more about chris hervochon
chris hervochon was recognized as 40 under 40 in 2019, 2020, 2021, 2022, and 2023. he is a 2018 graduate of the aicpa leadership academy and the owner of chris hervochon, cpa, cva llc. in his firm, he specializes in providing outsourced accounting, consulting, and tax preparation services to professional service firms, particularly marketing and creative agencies. his outsourced accounting offering is at the forefront of the accounting profession and is not the typical cpa service offering. hervochon leverages automation, proprietary bots (rpa), and data analytics to deliver financial statements and dashboards to clients. the latter is meant to be more easily digestible, future-focused, and allow for strategic decision-making. additionally, hervochon consults with other cpa firms to help them offer dashboarding and business intelligence services to their clients. finally, in 2023, hervochon started a software company, herv.ai, to automate the bookkeeping quality control workflow of accounting firms.
transcript
(transcripts are made available as soon as possible. they are not fully edited for grammar or spelling.)
liz farr
welcome to accounting disruptor conversations. i’m your host liz farr from 卡塔尔世界杯常规比赛时间. in this series, i’m talking to owners of firms who are doing things a little bit differently than our parent’s accountants. my guest today is chris hervochon, founder of better way cpa, and herv.ai, and co host of the beyond your cube podcast. his co-host on that is jason deshayes, who is also just on the disruptors. how are you doing today, chris?
chris hervochon
doing fantastic. how about yourself?
liz farr
i am doing great. it is great to have you. i know it’s been a while since i asked you, but i’m glad that we finally got together.
chris hervochon
likewise, i’m looking forward to this, we’re gonna have a lot of fun. yeah,
liz farr
we are. now first to start off, can you tell the listeners a little bit about your firm, where you’re located, what services what kind of client? how you came to be that kind of stuff? sure.
chris hervochon
so about my firm, it started as a side hustle almost about 13 years ago. at this point, i’ve been doing it full time for five. so i grew up kind of as a side business, and then eventually got to just be too much to do that full time job. when i went full time, on my own, the intent was to be a solopreneur and have kind of a lifestyle business and for forever, and that didn’t work. so it’s myself. we’ve got three employees and then we’ve got three contractors as well that we work with. so total team of seven, i am located geographically in bluffton, south carolina team is spread out across the us. and our primary focus is cas. so we are a cas practice with a small tax practice as well, about 75% of our revenue is cas. 25% is tax, the vast majority of our clients are marketing and creative agencies. it’s about 50 or 55% of our revenue. and then the rest is everything else from all sorts of trades, the ecom, the software, and pretty much everything in between.
liz farr
fantastic. now, now you’ve said that on your website, you specialize in accounting in virtual cfo services for marketing agencies, creatives, and not for profit. so how did this specialty come up? you said that it’s about 50% of your revenue. now, how did this come about?
chris hervochon
it’s one of those things where when i was preparing to go out on my own, i knew that i wanted to have a niche. and that’s something that i worked on with my business coach and started with a business coach about six or seven months before i went full time on my own. and we knew that i wanted to niche the firm, both horizontally and vertically. i was really struggling with the vertical piece of that. and it’s one of those things where i had experience with with marketing agencies from another firm that i did contract work for, when i went full time on my own, and want to say it was my first. second, customer was a marketing agency. the customer that i brought on after that was a marketing agency. and it was kind of just one of those moments where it’s like, oh, i like working with these people they need help their model fits into what i’m doing. they’re professional services, they work roughly the same way that i do or that i’m trying to work. and so it seemed to make sense. so it really just kind of dug into that started to produce content around that. starting to meet as many people as i could in the agency space. coaches, consultants, agency owners, everybody that’s even tangentially around agencies, just like learn more about how they operate and how they think and what questions and pain points and things like that, that they add. and once you tailor your marketing and tailor your content to that niche, eventually at some point, you’re going to start to get customers in that niche. and that’s basically what happened. so the vast majority of our customers were the folks that came to us were in the agency space. the customers who came to our prospects, really they came to us who weren’t, we would either if they were a really, really good fit, we bring them on, or if there was another reason to bring them on, like friends of the family, that sort of thing. as you can imagine, when you’re first getting started, we bring them on, but anybody who didn’t fit into that bucket. now that’s not met, everybody has to be your tribe, right? so that’s kind of how we’ve been operating for forever.
liz farr
that’s a really interesting way to do it. and i think that’s the way a lot of firm owners kind of discover their niche. they find a couple of clients and they go, oh, i could kind of roll out this thing. same processes and make this more efficient, or the way that these people think really resonates with the way that i want to serve.
chris hervochon
yeah, exactly. that’s exactly what happened to us. i mean, i very distinctly remember the moment i had that revelation. and just leave it from that point, you have to actually lean into it. if that’s the way you want to go, you have to just lean into it. and that’s, that’s what i did. so here we are.
liz farr
yeah. and has that had any other impacts on your firm? yeah. and besides just being able to standardize things and work with a distinct group of people that helped you?
chris hervochon
yes, for sure. but i would, i would say, there’s good and bad that comes with it. so if you are going to, unless you’re somewhere geographically, where there’s a really large concentration of a particular industry, you’re probably having to go outside of your geographic region to go bring on new customers, right. and that’s hard. but you also have to realize that now you’re competing nationally, as opposed to competing locally. and that’s, that’s partly, that’s one of the hard things. now, the easy things are you understand these customers, and if you’re meeting with three customers during the day, and all three of them are agency owners, you know, by the time you get to the third one, you’ve probably already had the same conversation twice already. and the advice and the cover the the advice that you’re providing to the third one, and the conversation that you’re having with the third one is just it’s way easier than having to reframe your brain to go from hvac to marketing agency to restaurant, right, it’s you don’t have to do the mental gymnastics. so that’s part of the good as well. another part of the good is that it makes it very easy to create content, the questions that your customers are going to have are going to be roughly in the same realm, they’re going to be experiencing roughly the same pain points at roughly the same time, you’ve only got to tailor your message to one specific group, probably somewhere in there. so it makes creating blog posts easier makes creating youtube content easier. the folks that you want to reach out to, you know, they’re all going to be kind of tangentially related as far as building a network of people who can refer you work and people you can share ideas with and that sort of thing. so that’s easier. now, for another part that’s hard in this is what we’re actually been what we’ve actually been dealing with for last for 18 months, when a specific industry gets into a recessionary mode, you’re going to feel that a little bit harder than you otherwise would. right. and that’s what we’ve seen with agencies and last for 18 months, they’ve they’ve had a tough time. so that, you know, that’s all in the us as well. so our growth wasn’t necessarily what we wanted it to be in 2023. you know, is what it is. but you know, there’s good and there’s bad for sure, delivery is a lot easier. and marketing is a lot easier. but you know, there’s risk that comes with it. so you just have to understand what you’re getting into before you actually do.
liz farr
yeah, yeah. and i like your comment about not having to do the mental gymnastics between conversations. that was something that just made me crazy back when i was in public accounting to jump from, well, here’s a plumber. and here’s a roofer. and here’s hvac, and here’s a chiropractor. oh, and here’s, here’s a law firm. and you have to look at the iolta accounts and the trust accounting. and it was really, it was really hard to know that we were providing them any value to be able to give them anything beyond. well, here’s what we think you’re going to owe this next tax season on the 15th. and so these are the estimates that you need to be making. that was really hard. yeah, it was,
chris hervochon
you know, one thing i want to re emphasize there too, is as cpas providing advice to a business owner, like your what you’re providing, regardless of what you’re providing what you’re providing, number one is probably right. and it’s probably also helpful, right at a base level, like cpas know how to run businesses and understand business and understand the numbers and all that. so at a base level, what you’re doing is helpful. but when you have a conversation with a business owner, and especially when you’re delivering bad news, and you can say, you know what, it’s not you it’s happening everywhere else, and here’s how we’re addressing it and here’s how it’s working. and i’ve seen this work in 20 other businesses besides yours, that, that help and that advice and that advisory that you’re providing there. are is way more valuable than it would be otherwise, if you were providing what i would say would be like more generic advice, right? it’s way more valuable. and you can capture way more value pricing and billing and through referrals than you otherwise would when you’re more general, i would say. so i just wanted to travel at that point.
liz farr
yeah. and another point of that, is that you can you really become intimately familiar with the kpis. and the non financial metrics that really matter to that particular industry represent the things that don’t show up in the financials or on the balance sheet. whatever. so. yeah. yeah. now, speaking of pricing, your pricing is right on your website, which is kind of a controversial thing for a lot of accounting firms to do a lot of them kind of worry about that. and you have these packages, that flat rate? you know, i have 1000 questions about that. but, you know, just just first of all, putting them up there must have some kind of impact as a filter on your prospecting. can you talk about that a little bit? yeah,
chris hervochon
for sure. our pricing, i don’t think that anybody listening to this, who goes to our website and looks at the pricing, i don’t think that any of them would say that. it’s low. probably. so that works the same, the same way with with prospects, right? if you go on there, and you look at our packages, and you see our pricing, then if you’re willing to pay that for the advice that we were going to provide, and the service that we’re going to provide, you know, the nuts and bolts, accounting and tax returns and all that stuff, which we bundled together, then, okay, cool. like, let’s now let’s let’s schedule a discovery call. so part of what that does, is it weeds out non fit clients, not not everybody needs to be our customer, not everybody’s tribe, not everybody needs to be our employee, not everybody needs to be our customer, right? like we’re building a firm in a very specific way. for our tribes. that’s just what we’re doing core values, and we’re bringing on customers, we’re bringing on employees the same way. so that weeds out the bad or the potentially poor fit customers, which also protects some of our calendars. and that is the most valuable thing that we have is really our calendar. right. and it’s our time. right? so that’s a good chunk of it. i feel like i missed the second half of the question, but
liz farr
ya know that that’s good. and, you know, how, how did you arrive at those prices? yeah, that’s, that’s something that everybody wants to know is, was it based on? i know, some people base it somewhat on their own internal costs for providing the service? or based on what it might cost the client to hire somebody in house to do that. how did you how did you arrive at those kind of price points? was it trial and error? yeah,
chris hervochon
that’s it. i remember the point that i wanted to make about the last question, so i’ll answer it. i’ll answer that one in a second. the point i wanted to get to the last question was, i am going to date myself, but i’m kind of like an old millennial, right. and i, i’m one of these people that’s got 9 million subscriptions, you’ve got the netflix and all the tv subscriptions. and we subscribe to 9000s software’s and stuff like that. my expectation as a consumer is to see a price on the website when i go to a website at all. i don’t like surprises. i do like subscriptions. i like knowing you know what it’s going to be every single month. and so from my perspective, as a consumer, that’s what i would want to see. and i always feel like if i have to go to a website, especially software, if i have to go to a website that says call for a price, or i have to put something on my calendar to get a price like i hate that and you’re automatically out in my world. so that’s kind of that’s part of that’s the consumer is the consumer in me wanting my potential customers to experience things the way that i want to experience it. now, how do we arrive with a price? a lot of trial and error. trial and error. so to begin with, because i’ve been subscription for forever, and i think i’ve been three tiers. yeah, i’ve been three tiers for forever. the way that i started was that have a discovery call and go back and i’d build out three packages that i thought would fit that particular customer. and the goal would always be to have them land in that middle tier, whatever the middle tier is. and that was fine to a point. until a point where we grew and it’s like, oh, well, that’s a tier two customer, whatever you want to call it. and that’s a tier three customer. and the definitions of a tier two and tier three were completely different across customers. and then, and now you’re doing mental gymnastics to figure out like, well, okay, this tier two, customer gets payroll, but this tier two customer doesn’t. and then how does that work, or this tear to your customer has estimated tax calculations, and this one doesn’t like how, like, you know, so every deadline that comes up, you’re doing mental gymnastics, which is not a good thing. so we standardize the tiers. so we started out too low, that’s fine. bump price up to kind of match supply with demand. that was fine, it was still a little bit too low, then we decided, like, look, we want to go up market. and then we went much further up market with much higher prices, actually, our prices were higher than they are now, the tiers are different, the services are different in that whole thing. but if you’re just looking at price higher than it is now. and you know, at that point, we probably we probably went too far in that direction. now, i think we’ve landed somewhere where we, we have a really good idea of what we’re doing now that that’s just the price piece of it. a couple other pieces of it to our we now know pretty well, what size business is going to come to us from a revenue perspective. and we know what that that type of business is going to need. and we know like what our fees were going to be roughly as a percentage of revenue to that business, which does a few things. number one, it makes us stickier, we’re not, we’re not getting a whole lot of pushback from customers. like you’re not paying us 10% of your revenue, like that’s just way too much, that’s too much. so then it’d be profitable, it makes us less sticky, like that whole thing. so that’s part of it is well, i’ve done content historically around, you know, if you have to hire this internally, this is what it’s going to cost. and this is the roi. that’s tricky. i don’t know that it resonates as well as i would like it to, or is probably as well as we would like it to as a profession. and that’s part of the thing is difficult with value based pricing. and with subscriptions and things like that, around accounting is justifying an roi. it’s just, it’s just hard. it’s just hard, especially when you like as accountants, we don’t really have a whole lot of impact on our clients, businesses around their revenue. right? which is really what those customers are coming to us with, like, how are you going to help us scale? 10x, right, and how, like, those sorts of things, and a lot of that we don’t have control over we can help them along the way. but getting them from, i want to go 10 acts and needing help with bringing on revenue, which is not our role really, to here’s what we really can do. and here’s how we can support you like that. it’s hard. it’s just art. so yeah, we’ve always candidly struggled with, how do you quantify that roi to customers? and i don’t know that we’ve ever done that successfully. and i don’t know that it’s a huge focus of ours or will be in the future, to be honest.
liz farr
okay. now, with packages, how do you manage scope? i mean, you know, we’ve all had, the clients are at one end, who are a piece of cake, they don’t have a huge number of transactions, they’ve maybe got a small, small employee base. and then we’ve got the ones at the other end that have 15 entities that are all interrelated, and we’ve got complexities, you know, even if we price each one individually, just because of the nature of what they have going on, it becomes really complicated. yeah. how do you manage that?
chris hervochon
it’s a good question. i think there’s, there’s a couple things there. so one is when a customer wants a particular service that you’re not offering. and so what we would say, or that’s not currently in our tier, or that way, and then what we would say is, hey, you may want to consider moving up to another tier. if that’s something that you want. that that’s a simple conversation, but part of that is setting the expectation too. and we set that expectation on on the front end or wait before onboarding, you know, during this tragic call, because these are the tears this is what we’re recommending. you know, you said that you wanted x, y and z but based on your financials and based on where you are we think that’s overkill, and we think that that will put your profitability in jeopardy, it’s too much, you shouldn’t pay us that much. it’s not good for you. but if you want the services later, and you’ve gotten to a certain point, then yeah, we can bump you up to here and that sort of thing. that’s easy. now, transaction numbers and number of meetings and things like that. number of emails, that sort of stuff we don’t really pay attention to, one thing we do pay attention to is the number of meetings. so at our top tier, you get an unlimited number of meetings, you can book a meeting with us as much as you want. the reality of that is we’ve only had that been issue once with one with one particular client who really abused it, and we love that client go, and that’s okay. but for the most part, that is something that gets under utilized, but you’ve given access to your firm to the customer, and they’ll pay for that, for sure, just that access.
liz farr
i don’t think
chris hervochon
we do a lot of meetings like quarterly 10 a year 12 a year unlimited, i don’t think we’ve in five years, we’ve met with the exception of one customer we’ve ever had anybody hit their limit, i don’t think ever. so another thing on the transaction limit. we don’t track it don’t really care, the real, like, the reality is, the way that we think about it is we’re gonna have some customers who are over or who are high relative to our spectrum, on some things that we do for them, like bookkeeping, or payroll, or whatever. and then we’re gonna have some who are way under and they’re in, they’re basically paying us for, they’re overpaying us. and on the other side, we’ve got some that are under paying us. but overall, what we look at is overall firm margins and profitability. and so long as that is in the realm that we want. and so long as we’re managing capacity, internal capacity, the way that we want, so that we can maintain a work life balance, and so that we can do great work. and so that we can get to clients or get to customers in a timely fashion, then whatever. we don’t, we don’t care. it’s okay, which is also why we don’t track time.
liz farr
that all makes sense, to me this, this is you must have read ron baker’s book times up, where he talks about pricing the portfolio, not necessarily the customer, which is what you do for subscriptions. so it’s not you don’t necessarily have to be profitable on every single customer. but you have to be profitable on the whole thing. the whole portfolio.
chris hervochon
100% yeah,
liz farr
yeah. yeah. yeah. yeah. and and i applaud you for not tracking time, because that was something that honestly just never really made a lot of sense to me when i was in public accounting, because i would see the partners in either writing up or writing down. and so it was kind of irrelevant what it was. and we would get these time budgets on return, there’d be six hours on every single business return. so what did that have to do with anything? i’m, i’m really glad to see that you’re not doing that. yeah, i.
chris hervochon
so we’ve got customers to track time, i tried to track time in my firm for like, maybe a week. and it wasn’t going well. it’s just being one time, like, why why are we even why are we even doing this? i mean, does anybody actually do it? well, and if you might do well, like it’s accurate, it’s 100. you know, i don’t know, whatever, greater than 95% accurate across the entire firm. our customers don’t do it. well, i what i hear is a lot of other firms will do well, so if you don’t do well, like robert ron baker says it’s an opinion now. so if it’s an opinion then what are we doing, i want to be running my business, less on opinions and more on facts.
liz farr
personally, yeah. yeah. you know, i mean, i, you know, when i was out in the field, i remember getting calls from the firm bookkeeper. and she would ask, oh, you haven’t entered your time for the week? what did you do this last week? and i just be like, i have no idea. i guess, you know, all my time, but maybe one hour of admin time was devoted to this client that i’m doing the audit for, i guess. okay, and what particular activities did you do when you’re out here? you know, this is, this is nonsense.
chris hervochon
and i, you know, one of the things i think that gets overlooked a little bit, especially if you’re billing for your time, is that it puts you at odds with your customer. yes. the incentives are misaligned. yeah. and it’s not good for anybody. yeah.
liz farr
yeah, because the clients ultimately want us to do it correctly. and they want us to do it to do a good job. they don’t care how much time it takes. they just don’t care. they and they don’t have any conception of what it takes to do the work. so what? why would it matter? now, besides accounting services, you are also a software entrepreneur with your company herve.ai. can you tell us a little bit about this?
chris hervochon
yeah, i try, i’m trying to be a software entrepreneur, it’s been a lot of fun. so i’ve been at that in earnest for probably about a year and a half. so we’re heard that ai came from was i created a whole bunch of quality control bots in integra mat, which is now make. so basically, all of our customers are on quickbooks online, it would go in and look at all these various data points in quickbooks online and flag if there is a problem, and it would flag it in our workflow tool. okay, fine. fair enough. well, that got to a point where once you bring on more customers, it was just unmanageable. and it was also super expensive to run. so i said, well, i might as well turn this into the actual software platform. so i hired a developer. and it was like, oh, well, you know what, we could probably sell this. and so now we’ve got the company, and a product and scott are about ai. and basically what it does is it is meant to be a quality control automation tool. and the way that it does that is through alerts, as opposed to yet another portal that you have to go log into. so the whole concept is there, we’ve all got app fatigue, we’ve all got portal fatigue, like how many how many different portals that we have to log into to run a firm? it’s a problem. i know it’s a problem in our firm. and so once you get that setup done, we remove that. and basically, it’s now an alert system that puts alerts into for us, that’s carbon, that’s our workflow automation tool. and also those email as well. and soon, we’re gonna have a zapier integration, which is super, super exciting. so it can go into all sorts of other practice management tools that you might be using. so we’re building it for maximum flexibility, and we’re also building it. so it’s an alert system, not somewhere else that you need to go log into on a regular basis. and it’s been a lot of fun learning a lot of lessons along the way. for sure. it’s much different than running an accounting firm.
liz farr
i bet. now, what kinds of alerts does it send? is it like, you know, miss coding, or what kinds of things does it alert to? sure.
chris hervochon
so my favorite, so there’s, i think it’s 26 or 27, different quality control checks. and it’s everything from as basic to quickbooks hasn’t been closed and a quickbooks has been closed for a prior period. that means it’s open, that means a prior period adjustments can be made. and you know, like that whole thing, right. so that’s on those simple and on the more complex, and it’s things that are going to help to facilitate advisory. so my favorite quality control flows are those that loop over the balance sheet in the p&l, and it’ll tell you, the activity in this particular p&l account, or the activity in this bigger balance sheet account was unusual. and it was unusual to this magnitude this month. and then you can take that information, and then slip that into your advisory conversation. and then one of my other favorites too, is it’ll tell you for a particular vendor if the classification was inconsistent for this month. so let’s just say that google has gone with software for the last, whatever, 10 months, this month, it got miscoded to office expenses, it’ll flag it for you. and they’ll flag it on the transaction level. so like those sorts of things are super helpful, you know, over the longer term, as we’re using it internally in the firm, but we want to see is more of those things drop off. so we want to see less errors over time. and then it’s also going to give us insight into who were the problem clients? who are the clients that have the most volume. you know, where where do we have team members who are struggling with certain things as far as doing the bookkeeping, in the accounting, you know, where our views affected? where are they not affected? like, the stuff that we have, and also informed advisory. so the things that we can do with that information is it’s gonna be it’s really exciting, but it’s gonna be almost limitless.
liz farr
you know, this, this reminds me of conversations that i’ve had with al anderson who is trying to move audit into the future. i’ve done a lot of work with him. and he talks about in the future. the auditors will put a bot on the clients oft where that will send alerts to the auditor and to the cfo when something goes out of whack. and this sounds exactly like that kind of thing. so, yeah, so so i think you could probably, you might even market this to auditors,
chris hervochon
that is a really good idea that i thought of this
liz farr
could be something to help them move into more of an advisory role, where if they are getting alerts in real time, then they can address the problems when they occur, and not at the end of the year.
chris hervochon
i love that. that’s a great idea. appreciate that. that’s something i’ve definitely not thought of.
liz farr
yeah, but that, i hear that from a lot of auditors who were trying to do that, but they don’t really know quite how to do that. and, and you’ve got a tool that they can use, at least at least for the ones that are doing qbo.
chris hervochon
yeah, for sure.
liz farr
yeah. so that’s cool. now, now, every firm does different things as they grow, you know? and you do you do things differently at your firm than a lot of other firms? what are some things you do at your firm that you wish other firm owners would also do?
chris hervochon
i would say that probably the top reason that business owners come to us asking for help is because the firm that they’re currently at is not responsive, or not as responsive as they want them to be. and so i would say thing that probably is going to move more firms further faster, would be to really emphasize response rates and response times and client experience. for sure, the response the response rates are a problem. i think, i really think you need to have a mechanism inside of your firm, to measure that and to hold people accountable for it. because that’s, that’s the number one thing that i see. prospects coming to us with, by far.
liz farr
yeah, i can believe it. because, you know, at a traditional firm, it’s really easy to just get completely overwhelmed at particular times of the year. when you see that email in your inbox, and you go, oh, no, oh, my god, no, no, i this is this is not going to be a five minute answer. this is going to be a 20 minute explanation. and i don’t have time for that, because i have to get this done. so let me put that off, and then it just gets buried.
chris hervochon
yeah, so put that aside, right. it’s the response rates. and it’s, it’s how it’s how quickly we respond to clients. put that aside for a second, take that another step. as an executive, so video, asynchronous communication, as an example, one of the things that we did in our firm, probably three or four years ago, every tax return that i deliver, i deliver with a video, the video with a video walkthrough, it’s no more than five minutes. although i slipped a little, and i got up to six on a couple, but whatever. send it with a loom video, and pre answer the questions that a customer is likely going to have now doing the loom video and walking through that over five or six minutes. if i were to type that out into an email that my customer brought, by the way, probably is not going to read would probably take 30 minutes to an hour. but the loom video, a six minute loom video takes me six minutes to do. ryan, we’ve gotten to the point where i’ll get you know, we file 100 returns ish. but like i said, we’ve got a small tax practice, we’ve got to the point where i’ll get maybe one or two maybe tax return review meetings that get booked with me after we deliver the return. so customers say you know what? video is great, but i’ve got other questions or whatever. and they’ll book a meeting. so that saves a tremendous amount of time. so take that another step further. you get that email and it’s like, you know why if i have to type up a response to this to this email and then wordsmith it, and the whole, the whole nine, right and it’s gonna take me 30 minutes to an hour like every time you see an email that shows up in your inbox from a customer like there goes a half hour of your life that you hadn’t planned for that you hadn’t anticipated that you didn’t expect it gotta do it, right. so maybe turn that into a video, like, send a loop, like, send a loom video or you know, have canned responses or things like that to faqs, but do whatever you can to make the communication back to the customer, faster, easier, more effective. and the thing that i have stressed super, super hard is pre answer the questions. so if i send this response to this customer, what are the questions that are going to come back and brainstorm those and answer those before they come back, because now you’ve just cut out like one to two back and forth, or you’ve cut out a meeting or whatever. but those are some of the, like the tactical things that you can do to improve your response rate, it doesn’t necessarily mean you got to be watching your inbox like a hawk, they’re responding as soon as things come in, it might just mean that you need a better tool, or better communication period, in order to cut down the time that it takes to respond to customers, when to cut down the number of follow ups to
liz farr
i love the idea of video. and that is something that came about after i left public accounting. and i wish we’d had a tool like that. because that would have been just super, super helpful to you know, and to walk through a lot of the back and forth with people as they were asking questions.
chris hervochon
i’ll take i’ll take it another step further to because there’s somebody out here listening to this, who’s gonna be like, you know, what, i don’t want to be on camera. and, you know, i’m at home in my sweats doing a tax return, and i’m not camera ready. and it’s 10 o’clock at night or whatever. okay, fine. but you don’t necessarily need to even put yourself on camera, just having your voice, right, having your voice in a strange air and walking through something that’s, that’s just as good because now the customer can hear the inflection in your tone. you don’t have to be as perfect as you would in the written word. you know, you can convey things more accurately and less precisely at the same time, if that makes sense.
liz farr
that does perfectly. yes. and you know, and i like the idea of not having to be on camera. sometimes it’s just the walkthrough that somebody needs
chris hervochon
100% and then that’s really all but not not mission critical.
liz farr
yeah, that’s true. now, as you’ve moved through your firm, and over the last 13 years, there must be some things that you stop doing, that were the most impactful. what are some of the things that you stop doing? really good question. we already mentioned one, you quit tracking time right away.
chris hervochon
yeah, we quit. we quit tracking time. we were doing taylor for like taylor three tier proposals. you know, we’ve standardized those. we quit offshoring, which is, everybody else has gone the other way? yeah. those are the big things that we quit, i would say, we’ve put a lot of things. we we, you know, one of the one of the things that i’ve always stressed is running this firm is we’re going to iterate very quickly. partially because it’s fun, but partially because we just always want to be improving what we do and how we do it. and when we stop iterating that’s when i’m just gonna, i’m gonna go do something else. so we stopped doing stuff all the time, but there’s probably the big three things that have been impactful that that come to the top of my mind. yeah.
liz farr
now, i’m curious, you know, why did you stop offshoring when everybody else is trying to do that so that they can work the margin?
chris hervochon
yeah, good question. so what we have found is that regardless of how good the employee is, so the person who’s actually doing the work for you, unless your direct hire, and that’s a risk that i never been interested in taking, i don’t want to become an expert in local labor laws, literally anywhere, not even in the us, like form that out too, but most definitely not in a foreign country. so now you’re now you’re our contact is with some sort of an employment company. and those relationships are hard. at least in our experience, they’ve been hard and we’ve used a couple of different companies. um, billing hasn’t been super great communication hasn’t been super great. they’re actually managing your team member. and you’re not entirely sure how they’re managing your team member. so it’s not, it’s not like you’re the only one managing them. that’s not how this works. there’s somebody else on at that company who’s also managing them to some, at least some extent. so that’s difficult in the part that’s really, really difficult is managing the 7360s. so managing the optimal offshore disclosures. and there’s a lot of competition for the offshore talent, especially coming from big four, especially on the tax side, the partners that we’ve worked with, so the companies that we’ve worked with overseas, they’ve had a lot of turnover, too. and so when they have turnover, that means that you have turnover. and when you have turnover, that now means that you have to go to your entire client base and tell them, hey, we’ve had turnover, we need to sign you, we need you to sign a new awkward disclosures. and that’s a pain point for our customers. frankly, for a small firm like ours, it’s almost unmanageable, it would take me like a full time admin just to manage that. right, and to communicate and manage expectations, maybe not the whole time it happened. it’s just too much. it’s really difficult. and what we really need as a small firm, our client facing employees, we need them to interface with the customer and do it well. and do it on the customers timezone. so, for all of those reasons, yeah. like, and, you know, the talent overseas is great, for sure. and, you know, that’s, that’s not the problem that we had the problem that we had was with having that middleman, so to speak, and then also just managing off course, voters and obviously did a really, really gnarly i, i ay would coffin firm owners who are looking to get into offshoring to really do it right from the offshore disclosure perspective, because those penalties are criminal. and just having a line in your engagement letter that says that we are going to opt for that is not sufficient. and i think that there’s a lot of firm owners out there who think that it is and good luck.
liz farr
yeah, well, that those are all really good reasons to get off of the offshoring bandwagon. i didn’t realize that it was so complicated. yeah.
chris hervochon
well, i mean, lessons learned, right. but i mean, we went in whole hog. and i was, i was definitely a proponent of it. in our i don’t want to say that our experience was bad. but in that, like, it’s not, it’s not all gravy, right? it’s not just all margin. it’s that’s it’s just not, there’s there’s a lot of other things to think about there.
liz farr
that’s right. now, now, we’ve all made mistakes. as we run firms, as we run businesses. what would you say is the most valuable mistake you made? and i’m, say using valuable in terms of the learning?
chris hervochon
yeah, i wouldn’t say that i’ve made any mistakes. i would say that i’ve created a whole bunch of learning opportunities for myself and the people that work in the firm.
liz farr
okay. so so what was what was the most valuable learning experience?
chris hervochon
there’s, i mean, there’s a lot in there every day, honestly. i would say the ones that have recently come to mind are sometimes less is more. so i would say that we everything that we’ve ever really rolled out for the first time we’ve probably overbuilt. like we’ve ever built services we’ve ever built. software, tech stacks, we’ve over built for sure. sometimes less is more. so think of it as the mvp, the minimum viable product, that kind of approach. that’s definitely one. and one, one lesson that i recently learned, not necessarily the hard way, but it was it there was a difficult conversation that preceded it is that sometimes maybe the old fashioned way is the best way. and in that particular case, it was like picking up the phone
liz farr
yeah, i can believe that. yeah.
chris hervochon
i had a customer that was surprised by the tax deadline. and i was surprised that they were surprised and i very diligently catalog the amount of times that we followed up with them, and how we followed up with them, and it’s like 21 times. and i was complaining to my wife, who just very simply said, yeah, but did you pick up the phone? and it wasn’t like, i was immediately defeated. and that’s fine. but what it led to was a conversation about like, hey, would it be helpful if i called you? and what that person said was no, actually, it would be super helpful if you texted me. and so now we’ve got a firm wide capability for texting customers, and for them to opt into that, that we didn’t have before. and it has gone a long way to us getting things back from customers, quicker than what we had seen before. and it’s improve the customer experience. so like, text messages, like picking up the phone actually calling customers like, you know, probably everybody else except me. but like, that was a that was a lesson that i learned. for sure.
liz farr
i love that, you know, just talking to somebody or reaching out to them to try and work through something. yeah, yeah. yeah. this
chris hervochon
zoom link is like, no, yeah. but did you actually just pick up the phone? like, you know,
liz farr
yeah, you know? yeah. because that, that, for some people, you know, setting up a zoom on the fly might feel a little bit intrusive. but if you can do something asynchronously with a text, then that’s really useful. for sure. yeah. and now it sounds like you’re not actually giving out your own cell phone numbers and the firm to customers?
chris hervochon
no. so the way that we do that is we have we sent out a long email to everybody. one of the things that we like to do is faq format emails. so that’s pretty answering the questions that we think you’re gonna come in. and basically what we said was, hey, we’ve got we’re trying to improve our communications, would you like to opt in for us to text you, here’s when we’ll text you, here’s why we’ll text you, we’re not going to text you all the time. and here’s when we would do it. and we had, you know, probably around a dozen, customers opt into it. and if they give you their phone number, you and their service provider, then you can turn that into an email address. so when you’re texting them, we’re actually sending it from an email. so now it’s still lives in our workflow. it’s still it still lives in our practice management system. so we’re not we haven’t done anything that’s outside of our standard operating procedures, obviously, it’s simply just choosing a different a different email address to send it to and realizing that it goes to that person. so that’s what we did. it’s fairly simple to do. i wish we had done it four years ago, but we didn’t. so and that’s okay. but you know, it’s listening to customers, what what what do you need? how can we meet you where you are, so that we can work better collaboratively? you don’t have to we facilitate that. and let’s do what we can within reason to make that happen. and that’s simply what it was in, you know, we also have the rule now, if we’ve sent however many emails and however many text messages, and we still don’t have what we need to pick up the phone and call them. and if you don’t get them, that’s cool, too. but at least they’re seeing your name on the caller id. and you can leave them a voicemail. and at least they know that they took the time to pick up the phone. right and picking up the phone is almost like a handwritten note of yesteryear. they took the time to do it. and it’s, you know, if we can’t get you on zoom, if we can’t get you an email, we can’t get you on tax if we can’t get you on the phone, like we’ve done all weekend. right. so let’s just make sure we’ve done all we can.
liz farr
yeah, yeah, sometimes that’s all you can do.
chris hervochon
yeah, especially when you’re charging the fees that that we’re charging and want to charge. right. that’s, that’s kind of the expectation. but you’ve done all that you can do.
liz farr
that’s right. now, what advice do you have as a firm owner, or other firm owners and leaders within firms who want to create a better working environment, a better service experience a better firm overall?
chris hervochon
i think that gets down to leadership. the way that i define leadership is three different things. number one, and this could probably be an entire other podcast episode. and i by no means i’m perfect at it, but it’s fix yourself. and what does that mean? it means that you need to be the leader that you would want to work for. right. so whatever that looks like for you do that first. the second thing is building a vision for the future. and the way that i refer to that, as is, number one, gather the dots. and then number two, connect the dots. what that looks like is just being out there continuously learning, understanding the landscape that you’re in now understanding the accounting profession as a whole, understanding the labor market, understanding the economy, understanding your customers, and what’s going on with them, and then connect all those dots. and so you’ve got to do the hard work of just thinking, to connect those dots and how do all of these things tie together? and how are they going to impact the business that i’m trying to run. so once you’ve got that vision of what the future is going to look like, now you got to get buy in. and you got to get buy in from everybody in your firm. and, you know, the way to do that is through communication. and it’s through transparency. and it’s through asking a lot of questions. and it’s through listening. it’s not necessarily through taking your vision of the future and shoving it down everybody’s throat, you need to get them to bind to what your vision of the future is, and then soldier forth. right. but that, to me, that’s what leadership looks like.
liz farr
it’s a very different approach than what i experienced in some of the firms i worked in, where leadership was the name on the on the building, or on the sign by the door. and that’s about as much effort as went into leadership. so i applaud you for that.
chris hervochon
i appreciate that. i think we just need to operate differently than we have, you know, if we operate the same way as we have, we’re just gonna get the same results, right, and the expectations of the younger generation and the expectations of frankly, the kids who are in middle school now who were trying to get from middle school, to a bachelor’s in accounting, those expectations are very, very different than what my generation and the generation before me experienced. and so, you know, we got to be doing something a little bit differently. for sure.
liz farr
yeah, yeah. and i also like your, your pillar of connecting the dots, connecting the dots and connecting them. i heard almost the exact words from somebody else at a copywriting conference, i went to purchases from from one of the top copywriters in australia, she said that what she does to make herself very valuable was to collect the dots to be aware of what was going on. and then to connect the dots for her clients. so that they could they could get something better from her from the way that she wrote for them.
chris hervochon
that’s amazing. i love it.
liz farr
yeah. so you know, it’s a small world sometimes. sometimes. parts of my world overlap and collide. yeah, i believe. yeah. well, this has been a great conversation for us. and i want to thank you so much for taking the time to talk to me. it’s been great. yeah. now if listeners want to connect with you, where is the best way to find you?
chris hervochon
the best way is better way cpa.com. contact information is on there. and you can find me, you can find me on twitter, too. it’s at chris barber shop. i’m pretty active on twitter as far as social media goes, and herb.ai is the website or the software that we’re building. but i’m out there, you can find me.
liz farr
yeah, i found you. and and you can sometimes even find him in person at different conferences.
chris hervochon
that’s for sure. you can definitely find me and engage for sure. i try to expand my conference rotation a little bit next year. so i’m out there and you know, if you’re going to a conference and you want to meet up, shoot me a note and i’m happy to grab coffee or beer or whatever with with whoever.