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the disruptors
with liz farr
what would work look like if it reflected your passions? “imagine,” says sean duncan, cpa, “if you worked with the people that you loved working with, talking about the things that you love talking about, and you made a living and helped them?” as duncan says, “that’s just freakin’ awesome!”
more podcasts and videos: caleb jenkins: firm growth requires owners to shift roles | chris hervochon: be the leader you want to work for | ira rosenbloom: don’t merge for the money | adam lean: get out of the accountant’s trap | geraldine carter: charging more is better for your clients |
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duncan was working at a large regional firm back in 2006 when he noticed that many small business clients were asking him for advice, but they couldn’t afford the fees of a large firm. so he started his firm out of “kind of this gut feel” of wanting to help those small business clients. over the years, his firm, smd consulting and accounting, has developed a specialty in working with video game developers, a special passion of duncan’s.
in 2017, duncan made another shift to focus on advisory. that shift started on a sunny spring sunday when his wife texted him a photo of herself and the kids at six flags while he reviewed tax returns. “and i just realized how badly i was failing,” duncan says. “because here i was, not with the kids that i wanted to be with, and i’m not with my wife.” a few months later, duncan was at scaling new heights in orlando in a session on advisory and had an epiphany. “oh my gosh, you know, if we weren’t doing tax returns, we could do so much more of this stuff,” he explains. like a lightning bolt, it hit him: “if we weren’t preparing returns, we could help more people.”
his definition of advisory services isn’t running kpis or using specific software and isn’t even limited to accounting. duncan says, “advisory services are taking any talent or knowledge you have and sharing it with someone else. period.” his chief proactive advisor program teaches other accountants how to tap into their passions to create great places to work. “you’re not limited to what the degree says,” duncan says. “you’re only limited to what you have as a knowledge base and how you can help. and so you can actually build a firm around your passions and match them with people that have those passions.”
leaning into advisory has also made it possible to provide a better work-life balance for duncan and his whole team. with an average client worth more than $20,000 per year versus $800 for a tax-only client, they’re no longer “trying to jam that into a certain time period. you can meet with clients as it fits your employees,” he says. besides having more time and higher profitability, the team is happier and more fulfilled, and the clients are “happier because you’re actually doing what they wish their other cpa would do,” duncan says.
his firm also provides family office services, where they offer wealth management, investment, and legal advice, all under one virtual roof with everyone collaborating to help clients “protect and regrow and retire and hit actual personal goals.” as duncan says, behind every business, “there’s always a person or a family that is using that business or using those financial resources toward a goal. and that’s where we really drive down and help with a focus.”
borrowing a tagline from canopy, duncan reminds listeners that they are responsible for their future happiness. “you get to decide today if you look back, will your future self be proud of who you are today?”
13 key takeaways
- instead of competing with others, don’t be afraid of admitting you don’t know everything. this can lead to problems and mistakes. collaborate with those who can do great work in areas where you’re not an expert so the client wins.
- zoom meetings can allow you to expand your client base beyond the geographic “dead donut,” where people think they’re supposed to drive into your office, but it’s just too far. zoom meetings also save time for busy professional clients who’d rather hop on a call than drive to and from your office.
- hourly billing isn’t just archaic; it’s a terrible business model from a cash flow standpoint. you do the work, bill in arrears, and your client may not pay you for several months.
- hourly billing teaches clients not to contact you. instead, they look to tiktok for answers, which doesn’t work well.
- your business model also determines the kind of relationship you have with a client. you get to decide what that relationship is. with subscription pricing, you can charge a high fee and include everything. or you can charge enough to cover small questions with large projects outside the scope of the subscription. you can also charge a pita fee for clients who will be difficult to work with.
- it’s probable that you have some clients that need to go away. if you fire 80% of them, you may only lose 20% of your revenue.
- if you don’t have time for advisory, start by figuring out why you don’t have time. work your way backward and solve the issues. stop making excuses.
- you are the one person who generates the most revenue and success for your firm. you are the biggest client you will ever have. make an appointment with yourself to work on your business at least once a quarter.
- if you’re not the owner of a firm, you are the owner of your career. decide what you want out of life and start doing it.
- underpromise and overdeliver. tell a client the project will take four weeks, and you’ll be the hero when it’s done in two.
- hire for your core values. you can teach them accounting, but not who they are.
- learn who your people are and their skills, strengths, and interests, and allow that to guide your service offerings. don’t force them to do what they’re terrible at.
- put up guardrails around your business and stop making exceptions and doing the things your firm isn’t great at. stop making the clients the guides to your entire world and how you work. stop giving up your entire world for accounting.
more about sean m. duncan, cpa
sean m. duncan, cpa, is the president of smd consulting & accounting and founder of chief proactive advisors, llc. he built his reputation as a thought leader in the accounting industry by focusing on advising, teaching, and helping clients with proactive strategy and planning.
cpas across the united states possess so much valuable knowledge about business, finances, and taxes, but all too often, they shy away from sharing their wisdom in a timely and actionable manner. over the last 25+ years, sean has accumulated a diverse and unique set of credentials and knowledge that he shares through speaking at conferences and events, in private seminars, one-on-one with clients, and with his very talented team at smd.
a recognized expert on comprehensive financial and business strategy, sean has spoken at accounting events, financial advisor conferences, real estate investor conferences, texas bar association events, medical forums, and many other conferences, webinars, and podcasts. he has contributed to intuit’s accountant blog and frequently contributes to articles in the dallas morning news, insightful accountant, and other publications. sean has also made numerous appearances as a tv, radio, and podcast guest across the united states.
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. and in this series, i’m talking to owners of firms who are doing things a little bit differently than our parents, and our grandparents, accountants. my guest today is sean duncan, the founder of smd consulting and accounting, and creator of the chief proactive advisor program. how are you today, sean?
sean duncan
i’m doing great. how are you?
liz farr
i’m doing great. well, thanks so much for agreeing to do this. and we bumped into each other a couple of times at different conferences, and i’ve always been impressed with what you’re doing and how different you are from a lot of the accountants that i worked with.
sean duncan
i’ve been accused of being different. yes, that’s definitely the case.
liz farr
well, that’s good. we need different people out there. now, can you tell listeners a little bit about your firm, where you’re located, what services you offer? how long you’ve been in existence and how you came to be just a little bit?
sean duncan
a little bit? okay, i’ll try to keep it brief interrupt me as you need to. well, so again, my name is sean duncan, i founded smd consulting and accounting back in 2006. and the premise essentially was it’s in the name. it’s smd consulting, and accounting. i was working in a large regional firm, and clients kept coming in and asking questions of needed advice and proactive help, but they couldn’t afford this large firm. and the whole concept of advisory services really didn’t quite exist the way it does today. and so i started my firm in oh six, under the belief that my gosh, small business owners really need help. they need advice, not just the return and the books. but it was kind of this gut feel there was no articles or conferences that were talking about advisory services. it was really just me listening to so many people keep asking for help. and then they simply couldn’t find it. and oh, my gosh, i was right. so 2006 i start my firm with the dream of golly, one day, i’d like to have a couple of employees. wouldn’t that be neat? to the largest firm in town by 2017. and when i say the largest firm in town, i’m based in the frisco plano area of texas, frisco, texas, it has been the fastest growing city in the united states multiple times over the last several years. the dallas cowboy headquarters is here, the pga headquarters, there’s a universal studios it’s like, bonkers. so to be the large firm in town was a big deal, but threw us off mission, which i’m sure we’ll talk about in a little more detail. the types of services we offer now are varied and very unique. we focus on advice. so we have subscription based or fixed fee based, proactive tax and business strategy, about all the things about businesses, we have a niche, we have a couple of different niches that we focus on. but it’s really being that proactive adviser to the client, instead of telling them what they messed up the previous year, that flowed into additional services. and we’ll again, i’m sure we’ll probably talk about this in more detail, where we also offer wealth management, investment and law advice, because we all know we have to work with lawyers and financial advisors, but i kept sending referrals. and then they would go do something completely screwed up and mess up my whole plan and strategy because they wouldn’t collaborate. so i got frustrated, hold that all together, using the family office model, and really focused on not only how they make the money to optimize, but also how we can help them protect and regrow and retire and hit actual personal goals in addition to it, because conceptually, we help people with businesses in money, not businesses and money. and way too often, we focus so much on oh, i hope this escort, oh, we do taxes or we do an industry what really behind it, there’s always a person or a family that is using that business or using that financial those financial resources toward a goal. and that’s where we really drive down and help with a focus. so yeah, we’re a cpa firm. yeah, tax and books are critical and important in what we do. but really, the differentiator has always been about helping and leading with consulting, before the accounting said that that’s helpful. helpful.
liz farr
and, you know, even even when i was in public accounting, i knew that all of those things that you do, were really important. there were so many times when a client would come back and go, oh, by the way, my business attorney restructured everything, and now we’ve got this new structure and we look at it and go today understand the tax consequences of any of this, because usually it was really a huge due to mass, and sometimes it meant spending weeks and weeks just trying to get like business names updated, or things like that things that, that the attorneys just kind of said, oh, well, this will just happen on its own. so i think that that’s great.
sean duncan
it’s funny, you mentioned that literally what time is it? so about an hour ago, i was just having a meeting with a guy that’s now a new client, the attorney recommended something that’s easy for the attorney. that’s, that’s makes it good for them. but they didn’t quite understand not just the tax implications, but the commingling and paperwork and operational considerations. so this, one sliver of it, there’s a lot more complex than need be, was the series llc. well, the client thought, oh, this will be easy. i just have one document and all these children entities will the problem being the administrative costs of having 10 different children’s under children entities under the series, and his plans to commingle and move money back and forth, and the separate bank accounts and all the administration to it, it’s great and easy for the attorney. but the practical operation of this along with the wyoming entity that people get to find ideas on tiktok. and all the other cute stuff, the attorney had this neat little idea, but it was actually going to increase the administrative cost to the client that far outweigh doing a more traditional model. and so the it’s one of those perfect moments, it wasn’t they weren’t using our attorneys, and they were coming in with an idea. and we at least slapped the brakes on it to say, let’s pause and analyze what helps you with your goals. not just some cute thing that the attorney slapped together. so it’s really ironic that your example, one hour ago, i was having this exact conversation.
liz farr
yeah, yeah, i saw that over and over and over. and, you know, i was at a firm that marketed itself as a holistic provider of accounting services. but yet, we didn’t monitor who, who were clients wealth advisor was more if they had an attorney, or if they had a state plans, or any of those things. and i thought at the very least, that should be something on the intake form on the onboarding form, and sort of a yearly check in with them to see did any of that change?
sean duncan
you go set up entities without telling you that never happened, liz, come on.
liz farr
well, well, maybe maybe not, not with you.
sean duncan
but you know, everybody, the again, it’s one of it’s one of the challenges you try to be as that’s why we do proactive. so we’re they’re intimately involved in recurring conversations. so they’re more likely to share with us about what they’re about to do or what they just did, as opposed to telling you the next year what was done. i mean, i’ve had clients sell their businesses before we set this model up, sell their businesses in the preceding year. and then 689 months later, they inform us without consulting with us about the structure, which of course is you know, has tax implications. and it’s, it’s frustrating to be in those moments, which is why we created it the subscription based model so that we can be part of their daily lives as as much as reasonable, right? but move into that space. yeah.
liz farr
now back in 2017, you made a drastic change at your firm, you fired all your tax prep clients and switch totally to advisory. now, can you talk a little bit about that change? how did that come about?
sean duncan
so it was an evolution. we always lead with the advice. and so as we were getting busier and bigger and more successful, we started noticing just resourcing issues, right? i mean, we all run across this, if you’re in the tax prep world, you know, from january 15 to april 15, your hair’s on fire. and again, from august 15 to october 15, it’s going to happen again. so that’s five months of the year, less, you’d like to have a vacation to recover, recover. so there’s another two to four weeks, so let’s just call it six months of the year is tax season. well, your clients have needs in between that. so what i did around 2014 or 15, when we were really really rockin and rollin, we started seeing the pain of taking away the resources, the people that were doing good advice to go do tax prep. we built departments, which is the traditional thing that people will do. here’s the consulting department, here’s the tax department. but when you have a team that has core values of helping each other out and a team approach, when you see the tax department losing their mind working 6070 8090 hours a week, any good human being or at least somebody that fits our culture is going to go help. so no matter how many times and how much staffing i did and how we partition, we ended up everybody ran over to hell. because we’re there to help each other, and everybody polls 70 hour weeks, it was just a never ending cycle of success. so after trying multiple different iterations of it round 2017, i have no shame in admitting that i was fed up. i was fed up with the exhaustion of taxis and fed up with losing amazing, talented people that wouldn’t want to work the lifestyle, and we were not working the hours of other firms. i mean, i would talk to people that were working 100 110 120 hours a week, right at the crunch time, and it’s just disgusting. there was a signature, there’s multiple moments, but there’s one that i always reference. there was this beautiful afternoon, two in the afternoon, and i’m pounding out tax returns, and i’m to it’s 7075 degrees outside, which happens i think twice a year in texas, i’ve got my corner office, it’s gorgeous day, and i’m making money because i’m reviewing returns, and i’m preparing returns, and this is awesome. and then my phone buzzes, and it’s a text from my wife. and it’s a picture of her and the kids at six flags. because see, it was sunday into not a weekday at two. and the whole point of my having this business was to be a better husband and father, and help other people with their lives. and i just realized how badly i was failing. because here i was, with the kids that i wanted to be with and i’m not with my wife was wonderful and gracious about it. so then i pause for a moment and took another deep breath. and a few months goes by. and i’m at scaling new heights in orlando and to disney world here 2017. and i’m sitting in a class, and somebody’s teaching some more accounting consulting concepts, and i’m taking notes and i turned to my office manager and said, oh my gosh, you know, if we weren’t doing tax returns, we could do so much more of this stuff. and that’s honestly what it hit me. and there’s this this lightning bolt of wait a second. if we weren’t preparing returns, we can help more people. and so we took the next few days. and i told everybody that was my all of my office that was attending. everything you listen to for the next couple days, pretend we don’t do taxes, how does that change your perspective? we came back and i’m not exaggerating, within 45 days, maybe 30, we sent out all the letters terminating all the tax prep agreements. if we were in the middle of doing your return, we will of course, honor our agreement and finish it. but we were essentially giving everybody notice that next january, we’re done. we’re out. we’re focusing on the proactive advice and structurally that, you know, that’s crazy. who does that as a cpa firm? we all knew that there were plenty of talented preparers out there. i mean, think think about how many people you know, there are amazing accountants that do taxes. there are not enough of us that do advice. and so i thought, i’m just going to refer that work. and so that’s what we did. we referred all the work out wherever possible, we’d fire clients, we would help them find transitions wherever possible. and there’s a lot of stories about the mixed results on how that work, because i didn’t do it perfectly. i should have sold the book i should have, i could have made money on it, right? but our focus was so much about how do we help our clients and our team that but i was also just stressed out. if i did something radical, if i didn’t do something radical, i was gonna lose my mind. so i had to do something. and that was the thing we did is we focused on what we were great at. and then, of course, advisory services didn’t exist as a concept then either. we had to create it, we had to create a model for proactive advice throughout the year. and we screwed it up and tweaked it and overpriced and under priced and just did all the things to where today. it’s a core element of what we do. it’s consistent. it’s recurring, i teach it, and it just goes from there. so it was a major year, a crucible year where we were doing a pivot, and we had tried all the traditional ways of departments and divisions and and just said, heck with it, i’m done. no more hourly billing, no more tax prep, we’re going to let other people do that we’re going to stay with what we’re great at.
liz farr
that’s fantastic. and, and, you know, i wish that more accounting firm owners would do something like that, because there’s so much there’s so much need for our advice, you know, not every person is going to want need or be able to afford it, of course. but for the ones who are desperate for it. i think we owe it to the business community to be able to provide that to the ones who want and need it.
sean duncan
absolutely. and there’s there’s just not enough of us. i mean that, you know, i know that people bemoan going to every conference and hearing oh my gosh, they’re gonna talk about advisory. there’s a reason and we’re not you know, we can talk about the risks to the industry. then the short staffing and the automation and all the pressures that push you there too. but there just aren’t enough of us. it’s part of why i start teaching is because i can’t land everybody in the united states. i try, but i can’t, i can’t help them all.
liz farr
that’s right. that’s right. and i’m so glad that you do that. now, you know, what are some of the benefits of making that change? how does it impact your family, your team firm clients?
sean duncan
i have tons and tons of stories. so let me just shoot from the hip here. first and foremost, and i’ll say this, i say a lot, particularly when i’m speaking, i take every spring break is a vacation. now just take a moment if you’re in a tax prep world, and how much that’s that is deemed a sin in our industry, how dare you be gone in march? look, dude, my wife and my kids are much more important than this. and for sure, when you’re not buried in the tax season, march is just another month, man, it’s just another opportunity to continue and you can schedule everything differently. so i always take that vacation, i take a ton of vacations. i’m an aggressive traveler, if my family takes less than five, just five weeks of vacation a year i’m furious. so we’re aggressive travelers, because that’s part of the experience we want. but i have more free time with my family. profitability continues to rise. you know, the average client right now was worth over $20,000 to us in a year. whereas when you’re just grinding tax returns, the average client is worth 800. so you can do it easy math there, how this system works. and we’re going up, that 20 is higher than it was 12 months ago, which is higher than it was 12 months ago, we keep moving upstream. and we’re not gouging people, the value is there when you well, i charge of 40,000 this year for all the stuff that we did, but i saved you 190 it’s an easier conversation that goes with that relationship, it’s got to have value other than me, so you have better profitability, i will tell your employees are happier. we have a terrible industry of tradition of if you’re not working 80 hours, you’re lazy. that doesn’t make sense as a human being. and i promise you if you’re if you’re bemoaning the younger generation and how they are, they don’t want to work. oh, they do want to work, they just want to do something with meaning with balance and with value. so i’m sorry, you’re gonna have to hire people that don’t believe in 90 hour work weeks and sweatshop labor, we have to make a pivot. so if you want to continue as a going concern and adjustment somewhere. and so you’re creating this fluidity of work life balance, it’s now it’s also not trying to jam that into a certain time period. you can meet with clients as it fits your employees. so it’s time it’s profitability, it’s general fulfillment, and your clients tend to be more fulfilled, they’re happier because you’re actually doing what they wish their other cpa would do. and that’s how we get most of our leads. they come in frustrated as like, oh, i’ve been paying this. and they didn’t even realize they weren’t even given me advice. the accountant will respond to that as saying, well, you didn’t engage me to give you advice. the client doesn’t know that. we have to guide them. it was not part of how we were taught. so it’s a whole bunch of things that it’s truly about what type of a life do you want, as a professional, you can build that much more easily through an advisory based model. now, i know there’s a lot of fear of making change. but that allows you the flexibility and fluidity and profitability and the ability to attract a different talent than you could and then you then you can with the traditional model.
liz farr
absolutely, yeah. and i love that you take you take spring break off every year. i love that. and i remember all the times when i was the tax accountant. oh, it’s spring break. well, sorry, kids. yeah,
sean duncan
you just have to think about if you’re apologizing to your family. that’s a sign you shouldn’t have to apologize as a routine. that that’s that’s a problem with what we’ve accepted. sorry, i didn’t mean to cut you off. but that’s, that’s
liz farr
okay. yeah. and, you know, just just keeping the clients happier, you know, giving them what they actually want and need. i love it. now, you’ve taken this process that you use for your firm. and you’ve created the chief proactive advisor program, which you refer to a couple of times. right. um, can you give us like a 10,000 foot overview of that program?
sean duncan
sure. so chief proactive advisor, cpa, that’s not an accident. i did that to be nerdy, so we refer to as like cpa squared. it’s about that exponentially helping your client differently and helping yourself at the same way. so the chief product advisor program is largely focused on how you make the transition. how do you go about deciding what you’re going to do, who you’re going to help, what type of services you’re going to offer, how you price it, it’s an entire curriculum built around, making the shift. what’s different about what i’ve created, and this is not patting myself on the back, this is actually one of those moments when i realized i was doing it differently. if you attend a conference, and somebody can say attend our class on advisory services you’re going to walk in, and then they might say, here’s the software you use, and you do kpis, and you want to talk about kpis with your client. some clients don’t give a darn, they don’t care, i don’t care, i’m not going to sit there and review every month 50 kpis with you. and by the way, i don’t do client work anymore. i have employees that do that, to the point to where i’m just the owner. so there’s a different transition. but some clients don’t care, and they’re not interested. but we’re trying to shove this accounting nerd stuff down their throat, because that’s what we know. and i can talk about the aicpa definition of advisory services and why it’s wrong. but it’s largely built to that you can go into another session, and they’re teaching you how to be a business coach, the best way to do it is just ask really good questions and make them answer themselves. and that’s not wrong, either. but it’s also not the only way to do it. and so when i started attending all these courses, they were telling you, this is exactly what you have to do. but this exact conflicted with that exact which conflicted with that exact. and what i’ve realized in coaching clients, in my own personal transitions, every single one of us has a different skill set, has a different desire, and has a different way we can give advice, because the advisory services is not limited to accounting. so for example, i used i use this when i was at a session somebody was asking me about as well. it’s about running metrics. and we asked this question, what is advisory services, advisory services is taking any talent or knowledge you have, and sharing it with someone else. period. and the example i now start to use because it happened this past year, it’s really funny. so behind me, there’s a couple of cartoony pictures over here. these are actually pictures of my family and i at disney world, we’re big disney nerds. so i was meeting with a client. and again, i remember i told you, i don’t do client meetings. so the way this happened was, the client reaches out, sean, we need to meet a guy sit down and plan with you said, well, that’s great. let’s talk to one of my consultants. no, i have to meet with you. but i, i don’t do client meetings anymore. i have a team for that. because i’m a crazy person running all over. he’s no, i have to meet with you. i said, look, if you need to meet with me, here’s what happens. i don’t prepare. it’s 750 bucks, you get one hour, if you want to do it. great. i’ll come in unprepared. and he signed. now i don’t know about you. and you want to raise their hand for $750 an hour and not have to prepare. i’ll show up. so he shows up. and the first thing he does, he walks in and he sees the pic these pictures that you’ve been to disney world been about 15 times. he’s like, oh my gosh, we’re going in like three months. and i am so stressed out. it’s killing me. i don’t i don’t even know what to do or where to go. we spent the next 30 minutes talking about disney. oh no. if you go to this park, go left. here’s what you want to do. you know you want to do this ride first how old your kids okay. and we spent 30 minutes just talking disney. then he gets into the real reason he called he reached out. we sit down talking about some organizational structures and some deductions. and we ended up at the end of it saved him about $30,000 to $40,000. so that current year’s tax return if he does these things are recommended. he stands up and he goes, shawn, i cannot thank you enough. this. this was one of the best meetings i’ve had all year. you have saved my life with this disney stuff. i cannot thank you enough for all the disney advice. my wife is going to be thrilled. what did he thanked me for? and what did he not thanked me for? he thanked me for disney offered 30. now i’m sure he appreciates the 30,000 and it’s not lost on him. but clients want help. if you have a skill and you’re amazing at knitting, they might pay you for advice on knitting. i know that sounds insane. i run a bookkeeping practice. hold on. you’re not limited to what the degree says. you’re only limited to what you have as a knowledge base and how you can help. and so you can actually build a firm around your passions and match them with people that have those passions. and that’s the chief proactive advisor program. it’s what are those things that you can advise on? how do you monetize that and then how you built the business plan because way too often we go with well, engineers have a lot of money. i think i’ll help them. do it. i don’t want to help engineers. lawyers have a lot of money too. i don’t want to help them either. i get to choose who my clients are. so imagine and i know it’s a long answer. on my arm, i have a video game tattoo right here. one of our special niches are software developers with the hyper specialty to video game developers. so imagine you’re a business owner that creates video games, because they’re all over. and you come in and you talk to me. and we, we immediately have rapport talking about video games. that’s fun for them. and fun for me, by the way, i have several employees who play video games. so immediately we have this rapport with a segment of an of an industry that is just fun to be around. we like each other. we like the topic. but if you said, hey, sean, i want you to spend a whole bunch of time talking to lawyers. we don’t like it. we don’t work with them. we don’t want to work with them. it doesn’t mean that they’re bad people, it just means that we don’t jibe. imagine if you worked with the people that you loved working with talking about the things that you love talking about and you make a living and help them. come on, dude, that’s just frickin awesome. that was the that’s the program, how do we get to there and then timing, you know, you can’t just fire everybody and be nuts like me, you can transition. so it’s, the whole program is built around that it starts with a master class, and then i have a whole bunch of other things behind it. i as you can tell, i get a little excited. so i’ll pause there and breathe. yeah. yeah,
liz farr
no, i love that 10,000 foot view. and i also saw on your website that one of the first steps is identifying your passion. and i think that that is just way too often overlooked. you know, it’s like our passion as cpas well, that’s something you, you hide, or you you suppressed or you you don’t you certainly don’t bring it into the office. right?
sean duncan
i mean, who would bring like nerdy stuff into the office and hang it on their wall? that would be crazy. oh, wait.
liz farr
well, we already knew that you were a little bit different. so yeah, that’s okay. now, you know, i want to kind of take a look at one of your specialties or more, you talked earlier about your family office services. what exactly does that mean for your clients.
sean duncan
so traditionally, if you were google google family office, family office is a concept for the ultra wealthy, where if you have $1,000,000,000 and 92, companies, you’re going to wake up and just call your team that your team, your financial advisor, your lawyer and your accountant, or accountants plural or whatever, working in collaboration on your specific goals. it’s the collaborative model. now, the traditional family office also will help with nannies and paying bills, that’s not what we’re doing. we’re not dealing with that. so normally, the barrier says you have to have $50 million in assets or higher, to even qualify to go work at these families with these family offices, heaven forbid, you only make a quarter million to 3 million bucks a year and have $5 million of assets. don’t you also still need a lawyer and an accountant and a financial advisor collaborating. and that’s the point. and so part of my frustration, led to us creating a new business model, where we pull those individuals and those organizations together. now i personally, i’m a cpa, i’m securities licensed, and i’m insurance licensed, but i’m not a lawyer. so in order to offer legal advice of which i can’t give, there has to be a law firm or actually multiples. we’ve built an affiliate relationship where we have we act as the tip of the spear, almost like a general contractor, right? we bring in the plumber, we bring in the electrician, but we know our team and our crew and their specialties and their weaknesses and their strengths. that’s what we do, because we know not every lawyer can do employment law. not every lawyer can do family law. not every accountant can do real estate tax returns. and so we’ve done this where we have tax prep firms, all these different organizations, some we do internally, some we subcontract. but we bring those skills together to where we have the tax, the law and the wealth management, virtually happening under one roof. so it’s it’s been an interesting ride to build this out, because it’s, it’s finding those partners and an unintended consequence, which has worked beautifully for me is with all the speaking that i do through chief raka advisor and when i speak through smd as well, i get to meet other superstar professionals. and so then i’m meeting an accountant with this amazing niche or specialty that i didn’t realize i needed, and i send them work. and they know i’m not stealing their client because i don’t do that. we’re not worried about competing anymore. and that’s something that needs to change in our industry because we’re so afraid of admitting we don’t know something i i don’t know nonprofit, i don’t know international, i don’t know law. i know some but i’m not a lawyer. let’s just let those people be great that will do great work we’re great out and the client wins. but this fear of not knowing something causes so many problems and mistakes. i’ve pulled that all together to solve those various different needs.
liz farr
i love it. you know, there are so many people i worked with who could have really, really benefited from something like that, from having everything under one roof and everybody working together in sync towards one goal. and the goal is to provide services to help the clients achieve their goals.
sean duncan
we actually refer to it as our unfair competitive advantage. because we also get efficiencies. if you think about it, every time your client wants the lawyer, the financial advisor in the accountant to meet, they often have to schedule the appointment, and then the meters running in their building and the clients freaked out, you spend the first first 30 to 45 minutes catching everybody up, then you actually have the substantive meeting. we don’t have to do the catching up time, we don’t even have to schedule the darn meetings, we’re already constantly collaborating. so we get all this efficiency built into it, to where we’re bringing ideas to the client that’s already had discussions behind the scenes, and providing those offers options. so it actually creates a unique efficiency. and yes, you get referrals still, because the law firm is still a separate law firm. but then they see what you’re doing that’s unique that they’re not getting from any other cpa, and then the referral wave starts to happen.
liz farr
how does this work? do? do you know, when you’re working with a client, and you see that they they could benefit from some restructuring to reach out to the law firm yourself? or how? how does all of that work? you know, the logistics of it?
sean duncan
there’s a lot to it, because we are dealing with multiple licenses, right? so if you just take a step back at its core, there’s accounting involved and all the cpa nerd stuff. there’s the wealth management, and all that sec and regulations that go with it. there’s insurance because we do life and disability and annuities in certain places as part of that. that’s different licensing rules, and then law, there’s the bar. so we have to be aware of all these different provisions and rules that go with it. that’s the starting point, you got to know how it works. so for example, most of the time, i already know what needs to be done on a reorganization on entity reorganization. i’ve 50 years old, i’ve been doing this for since i was 20. my gosh, get my years, right. 1823 24 years old, i’ve often been in the accounting industry, i’ve learned a thing or two by accident somewhere along the way. what happens is i get to know these law firms so well, and how they work and what their specialties are that actually i go ahead and price it for them. i know what a partnership agreement with three partners will cost and i know what an asset assignment will cost. and i know what do i know their prices? if i’m unsure, i do exactly what you said, i reach out and reach out and say, okay, here’s the scope of the work, here’s what i need to do, what am i missing? how much would you charge? here’s what i’m thinking. and we already build the quote, without having to have more detailed conversations with a client because i would have already done all of my factfinding if we need more information we can. so here’s a nuance though, i don’t want to send an accounting agreement, and a law agreement for the one entity reorganization. yet we know there’s accounting work that has to be done with it. so what i’ll do, the lawyer will send the bill lawyers can subcontract to us. i cannot subcontract to a lawyer. so inside that they send one agreement that has a disclosure smd is going to be providing these services for you as a relationship to this, you know, changing the set of the books because we’re splitting it to a you know, an equity change, or we’re doing some asset reassignment, whatever we’re doing. there’s accounting provisions in it, they subcontract the work to me and i build the lawyer, by the way, they also get attorney privilege. flip that around course, if i’m holding it a wealth management agreement, i have to have a separate registered investment advisory firm i am i am a licensed professional. so i have an ria, i can get commissions from those securities arrangements, that has nothing to do with smd. because that’s how those rules have to work. and i have very specific compliance. but knowing how all that works, that’s what we do. i quarterback that arrangement and solve it to make it as efficient as we can for the client. so sometimes they’ll get a bill from the law firm and from smd and from the securities company. that’s just what it is. and we tell them upfront, but we try to make it as easy as we possibly can. because that’s all just based on the compliance rules. we can’t change those rules. i’m not going to break the law, just to make a buck, we’ve got to follow the rules properly.
liz farr
wow. well, hearing you talk about all the complexities involved in this makes me understand why you don’t do client work anymore. you just don’t have time.
sean duncan
and what is funny as i’ve had other cpa firms say they want to offer the services. but this is daunting to them, and which is understandable. so why i resisted, i resisted it for a better part of 15 years, because it just sounded like a pain. i’ve had circumstances where the cpa say, look, you just take that they want to do the advisory business advisory, but they don’t want to do the wealth management, but they want to know they can collaborate with somebody is not going to steal it. we’ve we’ve come in, and then the wealth management arm for another cpa firm. we’ve been the consulting firm, for the cpa firm, we’ve had people subcontract the work to us, because quite frankly, i don’t care about taking credit. if cpa if i’m going to charge $2,000 a month for this package, if you cpa, want to charge 2500 and have us do the work, why it still wins. congratulations, you just made money off of us doing work. there’s nothing wrong with that, because you can’t. it’s finding ways to work together as an organization. but it yes, there are complexities and we’ve had people just say, i’m not interested in that. can you handle only this person? portion? sure. and you can find those kinds of partners all over town. it’s not just us. it’s just we’re unique that we’ve sort of solved that. and there’s not very many firms like us, there are some, but they’re not very many of them just because it is buried with some complexities.
liz farr
yeah. now do you work mostly with clients in the frisco area or across the country?
sean duncan
we are national. we do have some international clients, but we only advise them on us base rules because we we know what we know. and we know we don’t know. but we’re national actually, we do more meetings on zoom now than anything. it is so funny is there’s a we call it the dead donut. now i’m in frisco texas, plano, texas, technically, and if anybody knows the geography of where dallas is, and fort worth is, if someone’s in fort worth, they go out you’re too far man can’t drive out there. you’re that’s just too much of a haul. but it’s really funny, as my clients in portland and california and nevada and florida, they don’t seem to think i’m too far. there’s a donut, that people still think they’re supposed to drive into my office that we’re too far. but once you get out the door outside of the donut, we’re not they don’t even expect to come in. so we got tons of houston clients because they have no thought of coming up here. you know, florida and boston and new york, those people have no expectation of coming in town. and it makes it easier. so inside of the donut, what’s funny is those folks realize they just don’t want to drive over here, we have a lot of medical clients, the surgeon does not want to scrub out, drive over here, meet drive back. they just want to hop on zoom. and they just saved themselves in a time where they could be more profitable. and that creates an efficiency for them. so yeah, we’re national, we have certain things that we focus on that we do or don’t know, if i don’t know the information, then i’ll tell you, but generally, we help everybody across the us. yeah. so
liz farr
you mentioned earlier that you do things on a subscription basis, which is something that’s kind of new, but kind of not know, i mean, jody grunden has been doing this for 15 years. now, how did you come to do subscription based offerings?
sean duncan
it’s evolution. but back in 2017, is when i made the hard decision. it’s happening period. and even if i get it wrong, i’m going to do it this way. because hourly billing is archaic and ridiculous. the single biggest thing, not is not your paperwork and your billing. it’s not even which by the way is a big deal. you’re often billing in arrears. you do the work, and then you get billed later. and how many of us have had clients take three, six to six months, like oh, okay, i know you finish the return in march, but i’m gonna go ahead and just file it in october and pay you then that’s a terrible business model from a cash flow standpoint. but the bigger reason i’m against hourly billing, it trains your clients not to contact you. the client experience is, oh, i got a question for liz. and they’re getting ready to type it in. they go, oh, this is going to charge me 50 bucks for this. nevermind, i’m going to tick tock and i’ll figure it out. and we know that doesn’t go well. the client is being trained not to call you and this happens with lawyers because you’re invoicing them. we just charge a subscription fee. now occasionally they’ll ask a question that they’re asking for a project and we’ll quote project you know, hey, can you do a cost segregation on our building? sure. here’s the fee. so there’s services that are outside the scope of the subscription. right? and, and there’s a lot of folks that actually disagree a lot of folks say, charge them a ton. and then everything’s part of his subscription, that’s fine, too. this is your choice on how you want to price it. but we wanted to have a relationship where they’re not afraid to ping us for should i buy my car in my company? kit? is this person, an employee or a contractor? should i lease versus should i buy? those things? are those questions that they don’t ask? because you’re teaching them not to ask it? and maybe you don’t want to answer the questions. cool. that’s your business, you get to you get to decide what you want. we wanted a communication loop. and that’s where we build a subscription model.
liz farr
that’s, that’s great. and i love the insight that, that with hourly billing, we’re training our clients to not reach out to us. on my very, very first day in public accounting, somebody told me, i don’t know what we do, we sell our time, that is what we sell as accountants. and to some extent, that was kind of true. but really what we’re selling is our expertise. and that’s not necessarily connected to the time that it takes to do something.
sean duncan
right. in fact, if you get better at it, or use technology to be more efficient, you actually are punished for becoming faster, the better you get in your craft, you become less valuable. so that doesn’t make sense. should i be slow? in that, that doesn’t make any sense. and that’s, that’s where we’re out of whack. and what’s funny, though, and actually will give a cautionary tale. the aicpa and the general public, everyone blame the aicpa, the general public still is married to this hourly rate stuff, we’ve spent so many decades tying our time, to our worth, that we have to break the client of that habit. and i’ll give you a bad example, where we actually just lost a client. so we have a client that we were charging about 1000 bucks a month, for a certain cadence, we have different packages, but the certain cadence of recurring consulting, we know that we’ve saved them about 50 to $60,000. in taxes we can quantify at a point at last year, this happened this year, this happened, this is what we saved, we help them with a whole host of other things. like for example, this taxpayer has cancer, we found a vendor that could get them health insurance. you tell me that didn’t cause a little bit of work, right? we help them transition a company from california to texas, we helped with all this cool stuff that has value that really brings value. they loved it and raved about it. but fired us. they fired us because i just can’t. i can’t understand how you’re charging me when i just get four meetings a year how how’s $1,000 $3,000 in meetings? it’s not about the meeting. it’s about all these other things we’re doing. and look, even if we did you just got four years of service plus paid for with the one thing we did with these tax returns these tax deductions. and they fired us like i just can’t get my head wrapped around this. i’m gonna go ahead and just go if i need you, i’ll call you. but if you need us, then you’re gonna sign back up again. well, i’ll just pay you hourly. no, you won’t. and granted, i did just say i can come in unprepared for 750 bucks. that’s not what’s going to they’re not going to sign up for that. on a recurring basis. if i start charging you 750 bucks. remember, it was 1000 a month? what do you think we can discuss value all you want, and we can try to train our clients, there will be some horses that will die of dehydration as you’ve drugged them to the water. focus on the ones that you fit on. but i also will say that there will be pushback from clients, they’ll be pushback from cpas that’s where the chief productive advisor program is about what do you want it to be? build that not everybody is going to be on the journey with you. you let those other people go well, you find those people that get it. and that’s that’s what becomes fulfilling about it.
liz farr
yeah, yeah. you know, instead of quarreling about the nickels and dimes and the hours and you know that bill and did that really did that phone call really take 15 minutes or…
sean duncan
you spend an hour discussing an invoice for 30 minutes. where’s that fun, you know, discuss the subscription fee. and by the way, you are completely allowed to add a peta fee you know, the peta fee is yeah, okay, then you don’t look it up. yes, pain in the ass. if you get that vibe from a client on the on the early on, you can choose to not take them on because some clients are a pain in the rear and that’s just what they aren’t. you never want them around, or some are just going to be high maintenance, but they’re not bad people. you can decide what that’s going to be you can build in mentally the time that it would take to service this client we’ve run a lot of models, and there’s we still have like an equivalent hourly rate factor. okay, what would it be if we were charging hourly for these clients? and we want to make sure that that’s continuously growing, because it is still a good metric. but nobody’s tracking time. i mean, imagine how it would feel that you didn’t have to track any of your time ever again. oh, that’s so cool.
liz farr
yeah. oh, that’s, i love it. yeah. i used to just hate it. hate it, hate it.
sean duncan
and you blast so much times typing in your time? just didn’t make any sense.
liz farr
yeah, yeah. or, you know, the times when i would be out of the office and would forget to log in and enter my time and then get a call from the firm bookkeeper? no, i need your time for last week, or you won’t get paid. and like, i don’t know what it was 40 hours on this audit for this client? sure. i don’t know what i was doing. i don’t know how to break it out. any more than that, but yeah, it’s just crazy. now, your firm does a few different things. what are some things that your firm does that you wish other firms would also do?
sean duncan
hmm, that’s a great question.
liz farr
we touched on it. we touched on a few you know, stop billing by the hour. get rid of your tax only clients. subscriptions, what are some other things?
sean duncan
you know, i i think it starts with one of the first things that jumps to mind is start figuring out how you’re going to give advice. it’s so easy to make the cop out excuse, look, it’s tax season, i’m already working 90 hours, i have no more time for it. hold on. why don’t you have time? why don’t you have the time to go help your clients? and by the way, charge a premium for that? whether it’s subscription based fixed fee project, like shoot charge a premium hourly rate? why don’t you have the time? it’s probable, not possible, probable, you have some crappy clients that need to go away? if, and we’ve all seen the math, the 8020 rule, right? go fire 80% of your clients and you might only lose 20% of your revenue. that’s very probable that that could happen. you know, who needs to get fired? you don’t have to fire him with malice. you don’t have to be mean, have a plan? how can i help the clients that are my high value clients better by giving advice? and work? what am i going to do with these ones that are getting in the way? it could also be efficiencies? it could be just you’re doing things manually? yes, cpa still today fill out forms by hand? i can’t believe it. but i’ve still seen it. it doesn’t make any sense to find an embrace technology. so starting with why can’t i and then work your way backwards to a certain degree of stop making excuses and just solve it. now, there’s a secret sauce. and this is one of my little trademarked ideas. yeah, literally trademarked. it’s called the work on the business day. so here’s the concept. if you get a call from your biggest client, your single highest revenue client, you lose them, it hurts you, right? that client. if that client calls and says, on monday of next week, i need you to clear your calendar, we’ve got to sit down and plan for eight hours on some strategies i have for the next three years. what would you do, you would cancel your appointments, you wouldn’t take phone calls, you wouldn’t take emails, you’re gonna lock it in and focus on this highest revenue client, the the one individual that generates the most revenue for you and your firm. that’s what we do to help our clients who is the one individual that generates the most revenue and success for your firm. that’s a you. you need to make an appointment with yourself and do a work on the business day. and what doesn’t work on the business day. it’s this all those things that you say you’re supposed to make time for, you know, i need to look into ai and i gosh, i need to look into that certification. i shouldn’t listen to what whatever, like i want to take the chief proactive advisor program. but you never know when you’re going to make time. that’s the time at least once a quarter, you clear an entire day, and you meet with yourself. and you figure out the solutions because we’re all very, very smart and can figure out solutions we just often don’t make the time. make the time with the single most important client you have. and that’s you. because if you don’t guess what, you’re gonna go through a career 40 years later, you’re going to put in a lot of hours and i’m going to tell you what, the only people that know that you work till 2am are your kids that’s not a fair trade off, man. so, figure it out, make the time and do it quarterly be the owner of your business. and if you’re not a business owner, be the owner of your career, decide what you want out of life, start doing it. it’s not immediate, i’m 50 years old, and i’m still figuring out all the crazy stuff that i want to do. it is a never ending journey. but at least if you have a moment to own it and control it, you can start accomplishing things that otherwise you’re gonna look up and realize, oh, man, i, i sure filled out a lot of forms, but at least things are reconciled. that’s, i don’t think it’s what any of us wanted out of our lives is to reconcile really well, we wanted to make an impact. so there’s a couple of things. so i kind of shot from the hip there. i didn’t have a canned answer. i don’t i’m not a canned answer guy. but those are the things that come to mind immediately.
liz farr
well, i love i love the idea of working on your, your business. i know a lot of writers who do something like that they’ll take one day a week, and just focus on their business. i know another writer, who is she has a solo, practice a solo writing business, but once a quarter, she will go camping somewhere, somewhere that has wi fi. but she will spend that time and on a personal retreat, just focusing on her writing business and what she has accomplished and what she’s going to do for the next quarter. so yeah, yeah. and i’m trying to work that in myself haven’t quite gotten there. but i’m, i am realizing that yeah, if i don’t do that, one of the ways that i really add value to the people i work with is gathering ideas from different places, just reading books and articles from different things. and if i don’t take the time to do that, then i’m not reinvesting in myself. i’m not making myself more valuable.
sean duncan
and we don’t want it to be this thing where it invades on your personal time, because that’s the natural inclination. here’s my work time. but if i want to do it, i guess i have to do saturday. no, no, no, that breaks the whole thing. we there’s a lot of studies that show when you have less time you find a way to get stuff done anyways. so just make the appointment like truly right today, go on your calendar, and every three months book an all day appointment, you can pick the day, is it monday better, friday better. and when it comes time that that day starts to come around, and you’re getting ready to fill it with an appointment. let’s use the example of that client again, if you’re in a meeting with that giant client, and somebody calls up as i need you to do my tax return, and i need to meet you on monday, your answer will be, ooh, i’ve got a client appointment, could we do it tuesday, stop giving it and giving up on yourself to please the clients, they actually they do respect that you have a calendar. and if you can’t help them, you can’t help them. but if that big client would need your help, you would still forsake the smaller one. because that’s what we have to do is a value proposition. you are the biggest client you will ever have. how do we fix that, and just put it on the calendar right now. and just make it you know, put it out for the next two years. and you’ve just cleared opportunities for yourself to move forward on all those things. and by the way, when you’re thinking about these things that like i need to do that, oh, shoot, i don’t have time you make a you just write it off on a list to deal with on that day. it’s like waking up in the middle of the night and writing something down. so you can go back to sleep, you now know that you are going to look at it. and you have to worry and try to memorize it doesn’t stress you out. you push it off, but you push it off to the day that it will get attention. and you know you’ve committed it will get attention. and that just creates a flow as your your firm grow or your career will grow.
liz farr
that is such an amazing advice in and i would encourage people to do it not just once a quarter, once a month, once a week. good for you. good for you. now sometimes it’s the things that we stopped doing that make the most impact. do you have any examples of things that your firm’s stopped doing that made a big impact now? now we’ve already talked about the biggie which is stop doing tax returns. but what are some other things that you as a firm stop doing?
sean duncan
well, we did talk about stop billing hourly. we we set certain ground rules. we won’t help any other accounting software besides quickbooks online. that’s what we do. we used to say, oh, we can help you with your xero, we can help you with your shop software. and that just created disruption and inefficiency. and so we’re qbo shop. now if i hire an employee, that’s a superstar with a zero, we can offer it. but we stopped doing the stuff that we weren’t great at. and that was the exception, stop making exceptions. uh, let somebody else that it’s not the exception for do that, because you’ll attract more of your own exception. so that’s one stop over promising oh, my gosh, you know, it’s going to take a couple of weeks, tell them it’ll take four, then you get to come in in two weeks and be a hero. but if you fall behind, you don’t have to apologize. under promise over deliver, set yourself up for success stop making the client the guide to your entire world where they have to decide if you’re going to work till 10pm. so create those guardrails, it is hard. and unfortunately, you probably trained your clients to go ahead and call you on the weekend. so let’s do that one. stop answering emails and calls on the evenings and weekends. there are no already there are no accounting emergencies. there’s none. even when the irs shows up, they still work eight to five, actually, some of them worked nine to two. so there are no accounting or emergencies, period. it’s important. it’s critical what we do. but handling the bookkeeping journal entry at 11pm. at night could could that wait till nine, it could wait till honestly, it could wait to two weeks from now. set those expectations, let them know you’ve got it under control. have an auto reply, but stop giving up your entire world for accounting. nobody’s life is saved. now if you were a heart surgeon, and somebody was having a heart attack, and maybe you know how to help that person, stop, do that on the weekend. yeah, do that. whatever. if you see somebody with a bad journal entry, and you’re at a soccer game, focused on your kid, just let the journal entry be. it’s okay. that stuff is a big deal. i have all kinds of other pet peeves. but i think creating the parameters. this is why i focus so much on passion and strength. start with what you want, and you build from there. but we’re people pleasers. we’d like people to be happy. that’s our nature. it’s just we do it so often at our own expense, which is why cpe i love you know this and i remember when i ran across the stat cpas are top five suicide and divorce rate most years. that’s an unacceptable trade off. but i’m not good. i’m not finding that that’s a fair trade off for what we do. what we do is important. just understand that when you are 70 years old, 80 years old, 90 year old 140 like i’m going to be are you going to be proud of what you did? you get to decide today if you look back or your future self be proud of who you are today. and i’m stealing that from canopy by the way, i’m stealing their tagline. so i’m going to give them credit, they came up with what your future self be proud of you. i love that thought. would you be proud of what your choices you’re making? or do you need to make a change?
liz farr
that’s, that’s a really good way to look at it. and i love that those ideas all of them. now, along with stopping doing things, sometimes it’s mistakes that we make that we learn from. so so can you share with us a valuable mistake that you made valuable in terms of what you learned?
sean duncan
dude, i have made so many stinking mistakes. and i will tell you if you’re not making mistakes, you’re not even trying. i mean, the fear of mistake holds us all back from opportunities. i could truly go on hours and hours. let’s just pull one out of the hat underpricing. when we’re pricing our services, again, we’re tied to this hourly rate thing. if you bill $80 an hour and it takes you 15 minutes to do that thing was the thing worth $20 probably one probably had some greater value, otherwise you wouldn’t have done it, the client could have done it themselves. so underpricing also happens in subscription model. oh, i wouldn’t pay that much for it. stop and think about what not what you would pay for because you know how to do the thing. that surgeon does not know how to do this thing. what’s this thing work? let me give you an example. so a client wants we’re going to change their single member llc to an s corp. now, you know, in order to start the process, and i’m using the term very, very clearly, to start the process, you fill out the form 2553 and you fire that bad boy off. what’s that ticket? 15 minutes. most cpas charge 15 minutes. now, to be an s corp. don’t you need to determine and manage reasonable calm? yeah, yeah, i guess i do. if you’re a multi owner entity, do you need to make sure that the equity stays in balance for the ownership percentage otherwise you legal? yeah. okay, i gotta mess with the books a little bit. okay. if you were formerly a c corp versus and now you’ve converted to an s corp because i know i gave the llc example. don’t you need to track the equity differently for the seat? yeah, okay. yeah, i do need to do that. and don’t, don’t we need to set up payroll, because you might not have had it. so who’s gonna go contact adp or whomever just set the payroll up? oh, okay, i got to do that. and here’s the piece of resistance. we know, the irs is 18 to 36 months behind on most of its paperwork, right? most s corp elections will take two years to run through the cycle. if you don’t believe me, you’ve not been paying attention. and i’m sorry. this is what’s really happening. so now, let’s put this in the real terms. you make an s corp election. let’s just pretend you did it on january one. by the next march, you file that s corp return. the irs has not processed your election. you file it. what’s happening. the irs has automated system will send you a letter that says we don’t know that you’re an escort we believe you’ve done this wrong. now, i know. we all know clients love irs letters. and they’re always completely calm when the letter shows up. and so therefore, they just go golly, liz, it seems like i got an irs letter. i’m sure this is a fun thing. they scream at you. right? they did it wrong. you did it wrong, who i trusted you and they cry and they yell. and they do the same thing. when the s corp acceptance letter comes up, i paid you not to get these letters. well, this is saying yes, this is what we wanted to have happen. so what you do is you tell them ahead of time. irs is 18 to 24 months behind there, they’re going to send letters, you’re going to get a letter, there’s nothing wrong, set the tone right away by it at no additional charge. we’ll handle that for you. this might be a two year three year process, because that’s how and i’m not making this up. because i have all kinds of examples. that’s just how long it’s going to take. nothing is wrong. this is the process. are you okay with that? great. i charge $2,500 to do an s corp election. and this s corp election will save you $9,000 a year if you don’t grow from here on out, what do you think that’s worth it? $2,500 to save nine this year and nine every year hereafter? well, yeah, and you’re going to handle all of it for me, you bet. now, i just told you i charge $2,500 for an s, her s corp election. because i have to file the forms, i have to set up the payroll, i have to work with the bookkeeper or internally have changed the books, i have to calculate and monitor reasonable compensation. and i know i’m going to be dealing with letters, i know it. there’s value there. so you couldn’t charge $50 or 2500. we undercharge because we know it’s no big deal. the client doesn’t. and you have to manage that and focus on the value. and if they say no, that’s ridiculous, somebody down the street will do. great, let them let them do it for 50 bucks, my time is worth too much. because i still know that i’m going to have to answer those letters and do all those tasks. charge the value. and if you’re not sure the value, guess. okay, so my single biggest mistake was i was under charging and starting to think well shoot for this s corp. i’ll do it for $400. that’s that’s a good deal because it was more than i was charging. but then things started to happen. so stop under charging. and in fact, if you’re unsure what to charge, charge twice what you ever what you were about to, if they say no, you offer them a 20% discount. we can do math. and they love 20% discounts. but guess what, you still made more. it’s amazing. and if they push back or they fight it, i’ll give i’ll actually i’ll give you a true example today. today, talk to a client gave him a quote, i gave him a quote higher than what i thought he was going to do. and i’m not trying to be mean, i know that we’re going to bring value far beyond what we’re going to do. he’s like, oh, that’s just a little bit too much. it’s like, well, tell you what, i’ll give you a discount of $100 a month. it’s $1,200 a month engagement. i’ll give you a discount for $100 a month. we still have the setup charge, but i really want to help you out. i was going to charge him 1000 that was the original quote i had come up with but i moved him to 1200 because i saw a couple other things i can do to bring value. it’s only a couple 100 bucks. we sent the agreement. he signed this $14,000 engagement because we had a setup charge in 11 minutes. by the way we get the credit card wow, i gave him a discount. now again, it’s part of the psychology of price anchoring. and that’s a whole different topic for a different day. but i was gonna charge 1000. and then i saw some more value that we could get into it that was worth so much more. so i went ahead and just added a couple 100 bucks more, and i overshot my mark a touch for his price sensitivity. but i came back and i still made more than i was about to charge as of 9am this morning. hey, look, it’s only 1200 bucks is more i made but i made 1200 bucks more this year. and most of my clients stick around for three to six years. we hope for longer, but the model is still relatively new. so we’re still seeing that the sensitivity on longevity but three years at 14k not a bad day.
liz farr
that is that is something that most accounting firms should take to the bank.
sean duncan
yes, there are opportunities, how many tax returns do you have to do for that step one client that i get to help in a more meaningful way?
liz farr
oh, i don’t even want to think about that pile. the instant you said that i was visualizing, you know, my inbox the way it used to be. you know, i, one of my last years in public accounting, i was working with a firm that was still doing things in paper. now, i was shifting them to all paperless. but for that transition, you know, i get these file folders that were like this.
sean duncan
yeah, we had the buckets, right, we had the big ol buckets of files and stuff. and actually, i still have in my storage unit buckets. because we all we all did it. we all have paper we have to transition. and i don’t know if it falls into a mistake or a don’t or where you know the categories. none of this happens overnight. this is the problem we have is we were impatient and we want it done. it has to happen in phases, i started this journey in a serious way in 2006. because that’s when i started the firm. these evolutionary moments happened and an added on, we keep moving forward. but you can’t implement everything at one shot. and i said this, i was speaking at our right works event last december. and i said all right. if i told you, you need to upgrade your tax software, we’ve got to change your crm, we’re gonna go ahead and set up a new project, manage software, and we’re gonna add in a new foia, voip phone system. those all sound reasonable, we’re going to do it in 30 days, you probably didn’t have a stroke, it’s impossible to do all that project management, you’ve got to pick the 800 pound monster before the 600. and we know that voip system might be really big deal. but my practice management system is much bigger deal than my phone. or is it you get to decide which ones first and then you just write all this and fold this in. another thing is, i forget talking about mistakes. i forget that not everybody embraces change. i know shocking, right? everybody should just love change. i had employees that were used to a certain way, just like i had clients that were used to a certain way. and so as we started shaking things up, i would do everything i can tell them what what bring them involved and tell them why we’re doing it and the value proposition. and we did have a couple of employees like look, i just signed up to sit here and fill out books. i don’t, i don’t want to do any of this advice stuff. i don’t want to be involved in it. i like my technology, i only do quickbooks desktop. great. that doesn’t mean they’re a bad person, they just to get to find something somewhere else. you have to work with the people, they’re going to be part of your journey. so understanding that you want people that want to embrace change and understand that we’re doing something more and better. and it may not be the current partner group, that’s fine. they can keep doing the traditional your new partner group can be the ones that take the charge and those are the ones taken over the firm anyways. so change is very, very hard.
liz farr
it is it is but you know to quote oh, who is the writer of from good to great. the first thing you do is get the right people on the bus and then get the people on the bus in the right seats on the bus.
sean duncan
in fact, actually right behind me so i have all the diplomas and this little sign right here anyway, hey video if you’re on video. that’s our core values. we have clearly defined for values we hire to that first. if you are a talented person that fits who we are. we can find a place for you. i would rather have somebody that’s amazing. that wants to be amazing because i can teach you the account. the resume of some of the worst hires i’ve made have had the best resumes. had a jd cpa ea yes, you have both the cpa and ea if not the out salute worst employee i’ve ever had possibly the closest to it. the resume shined, she was not our core values, and then we really learned we need to hire to who we are. because now we’ll have a synergy in the office and it’s that culture is, is really empowering.
liz farr
absolutely. now, what other advice do you have for firm owners who want to create better firms?
sean duncan
oh, wow. mmm hmm. firm owners want you know, what? do truly understand what you and your team are good at. jettison all the tradition of the way it’s supposed to be, we have to steal it happens. this is the way i went through the trenches. this, it’s almost like hazing. like, you look, i had to work 100 hours a week. so you have to as well. learn who they are as people and learn what their skills and strengths are and then learn their interests. allow that to guide a little bit of what your services are. now you may be we only help dentists and that’s fine. and they have to get in or get out. we have i have an employee of mine that is is an expert in crypto, all things accounting for crypto, he’s just amazing. i’m an idiot when it comes to all of that. if he weren’t here, smd wouldn’t help people with crypto. it’s that simple. but he loves it, he thrives on it. he’s he goes and takes care attends conferences on his free time because he loves it so much when you’re when you’re focusing as much as you can, because we still run a business and some things you have to do. when your employees are so engaged and thrilled, they will accomplish more, they will not just work more, i’m not really worried about making work more, they will do more, bring more and be excited. and that excitement and that passion flows through into the relationship with a client. and it just creates opportunity. so i would say pause for a moment. and just take an inventory of the skills and the past talents and passions your team has. and would that in any way shift specialties. and then of course, understanding what they’re terrible at and stop trying to force them to do it. if there’s things that we just aren’t good at, i just find other cpas that are great at that and let them do it. and those have been some of the most powerful partners i’ve had. because they also acknowledge they’re not great at things and they send stuff back. and it’s it’s a symbiotic relationship. so i, again, firing from the cuff here because that was a great question. i may have to think on that one some more. but i would, i would take an inventory of where the strengths are and see what that does to your business model.
liz farr
well, i think that’s the perfect way to end our conversation. you’ve been incredibly generous with your ideas, your intellectual capital, i want to thank you so much for sharing all of this with the listeners and the viewers. now, if listeners want to connect with you, where is the best place to find you,
sean duncan
i am on facebook and linkedin. so you can find me individually or through the businesses and there are smd as well as the chief proactive advisors. if you want to email info at smd accounting.com. that’s an easy way to find us. and our website is smd accounting.com. i know it should be smd consulting and accounting or consulting, somebody already bought that years ago and they want $30,000 for it. and i’m still an accountant and can’t spend $30,000 on a website. just what it is. but email, check the website out. and you can check us out on facebook and linkedin. and those are two, two other sources. that’s the easiest way you can direct message me and take it from there.
liz farr
well, thank you so much. it’s been great to have you on this show. and and i look forward to seeing you at a conference sometime this year.
sean duncan
heck, yes, i’m looking forward to as well thank you for the opportunity. i hope it’s helpful. i look forward to people giving feedback. i do like teaching and coaching this stuff. it’s there’s just not enough of us around and i want to that’s my way of teaching accountants how to fish. i’m not gonna worry about trying to land every client in the world. let me teach you how to do it. that’s my pay it forward. if i help one accountant, i actually just helped 300 400 households because i get to help all their clients through them. so don’t be shy. if you see me at a conference. yes, i’m the tall caffeinated guy. that’s me. i talk fast. sorry, guys.