brannon poe: the status quo must go

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the disruptors: brannon poe
with liz farr for 卡塔尔世界杯常规比赛时间

• • firm culture is not just a lofty concept but also a key to attracting fantastic talent.
  • delegation is the cornerstone of firm culture.
  • value pricing requires a mindset shift before it can be implemented. switch off the mindset that equates time with money and shift to a focus on what’s valuable to the client. value pricing is not just a model for better profitability but a model for better client service.
  • before growth can happen, several things must happen first. focus on delivering value to the client, be intentional about the clients you serve and the kind of work you’re doing, have good relationships with clients, and you need capacity.
  • accountants need a more entrepreneurial mindset. try setting up a sandbox where you can experiment. try rolling out changes to a subset of your clients before doing it for everyone.
  • accountants should stop accepting the status quo. test your assumptions. for example, does tax season have to be brutal? some firms have proven otherwise.
  • firms need a better foundation of the fundamentals of business. what in accounting is never going to change? businesspeople will always want insights, tax planning advice, and good service. those fundamentals won’t change, but they get forgotten and don’t get practiced.

brannon poe, cpa, founder

brannon poe is the founder of poe group advisors and the creator of accounting practice academy. he began facilitating successful accounting practice transitions in 2003. he pioneered a consulting-based approach to transitioning accounting firms, which has culminated in poe group advisors’ unique process – the seamless succession™.

he started his career in public accounting as an auditor with ernst & young before working for several years in auditing and tax preparation for the regional firm of elliott, davis & company. subsequently, brannon became a shareholder in a privately-held, family-owned business and a founding shareholder in a successful start-up manufacturing company. this breadth of experience — with companies large and small — has provided the foundation for poe group advisors to become the industry service leader.

he is the author of “accountant’s flight plan: best practices for today’s firms” (published by the aicpa and cpa canada), “on your own: how to start your own cpa firm” and multiple blogs. he is also passionate about entrepreneurship and is the president of the charleston chapter of entrepreneurs organization (eo).

brannon has worked with some of the most successful and seasoned cpas in the industry and has been privy to the behind-the-scenes methods that these clients have used to build highly profitable practices along with capable and independent teams.

transcript

[00:00:13] liz farr: welcome to accounting disrupter conversations. i’m your host, liz farr from 卡塔尔世界杯常规比赛时间. my guest today is brannon poe, founder of poe group advisors in the accounting practice academy. how are you today, brannon?

[00:00:31] brannon poe: i’m doing great, liz, i’m so glad to be on.

[00:00:34] liz: well, it’s a privilege to have you here. you’re one of the smartest people i know and what works for accounting because you’ve got really concrete data to back up what you’ve seen. now, we’ve got a lot to cover. let’s get started. now, for years, accounting talent has been scarce and covid made that worse. what are some ideas you have on how to make things better and what have you seen firms do successfully?

[00:01:10] brannon: well, it’s a really appropriate question, because i’m hearing it more and more from our clients and the cpas that we speak with on a regular basis are saying it’s becoming a really big problem and i think that the real solution is not a quick solution, but the real solution is getting the firm culture right. i used to think firm culture, that seems lofty and just very unclear as to what that really means.

i’ve drilled into it more and more this year, especially, especially as we’ve looked at our own culture, and what our company has been able to do is attract really amazing talent during this time and i’m honored and flattered that we’ve been able to do that and it’s caused me to become more introspective on the reasons for it. i think firm culture, really, where the rubber meets the road is how people are engaging with the work and a big part of that is being delegated the right work.

i think that’s one of the key things is, if someone really likes a particular type of work, they’re going to be more engaged and more motivated, they’re going to stay longer. if you’re constantly bogging people down with work that they don’t enjoy, and you have this top-down management approach, and you feel like, well, just suck it up and do the work that i want you to do, that’s not really good for firm culture.

i think the first layer of it is proper delegation and proper delegation has so many other ripple effects in a practice because firm owners often are the biggest bottleneck in their firm. you talk to them, and they feel like, hey, i got a million things coming at me 90 miles an hour, my email, different communications, staff questions, it’s just a tornado for a lot of firm owners and delegation solves that problem too.

for academy, we created a tool for delegation, it’s really simple, i call it the three-bucket tool and if you think about the owner, what is the work that lights you up? what do you really enjoy doing? or maybe even want to do more of? or want to add to your plate? what would you really like to go ahead and delegate? if you had somebody to do the work, what would you delegate right now if you could? then, what would you delegate eventually? maybe you’re good at it, but it doesn’t really energize you in terms of the work.

if you do that for yourself and do that for your whole team, everybody gets more aligned with where their strengths are and also, it helps you determine what your hiring needs are.

believe it or not, all the work that people don’t want to do, somebody out there might really want that work, somebody might be really good at that type of work. there are people that are just taskmasters, they’re really good administrative people, they’re great tax preparers, you just got to get people doing what they’re more aligned with their work.

[00:05:05] liz: i agree with you completely and that was probably a big part of what chased me out of public accounting, that i was a tax person but i kept getting pulled into these audits, which i didn’t like, i didn’t understand audit, i didn’t have really the background to know quite what it was i was doing except, well, here’s last year’s work papers and just update the numbers. i think that right-sizing the work for each person really makes a big difference.

[00:05:53] brannon: yes, and a lot of people want to be challenged, and you don’t even know what type of things they want to be challenged by if you don’t ask them. i think you got to have a more collaborative culture where you’re open to trying to shift workaround, and you might not always be able to do it but i think employees just knowing that you’re open, and you’re trying to align them properly with the type of work they can do, i think that’s probably puts you ahead of most cpa firms.

[00:06:30] liz: absolutely. another thing that i think will help is changing the business model. now, for a long time, the business model for accounting firms hadn’t really changed. it was all based on the billable hour and this rigid, org chart firm hierarchy, but we’re seeing more firms move away from the old styles. what are some of the things that you’re seeing in the firms that you work with?

[00:07:09] brannon: well, a lot of the people that come into accounting practice academy, a fair number are already doing value pricing, and a fair number are working remotely with team members, which is another thing back to your first question about staff, i think having a remote workforce would be a big help too, but back to the value pricing, a lot of our clients do move into value pricing as they go through academy.

the thing i think is the biggest, it requires a big mindset shift and that has to be done first, you can’t implement something new until you’re totally sold on it yourself. so many cpas equate time with money and you’ve got to mentally switch that off and you’ve got to realize it’s not about the time, it’s about what’s valuable to the client. the cool thing about value pricing, is it makes you focus on what’s valuable to the client and the more you go down that implementation and the more you’ve go into that adoption of it, the more you’ll see the practice focus on that client value, and guess what happens? you start delivering more value.

i think it’s not only a model for more profitability, it’s a model for way better client service. what we’re seeing is, a lot of people switch to value pricing, they go to different pricing options for clients, what level of service do you want, do you want– i think it’s really cool, some of the people have been creative with tax work, they’re saying, okay, if we’re going to do individual 1040 returns, maybe we have a different price point like if they want to come into the office and meet and talk, that’s a different price point than just putting everything in the portal and they file in the return, which makes sense, right?

[00:09:41] liz: it does.

[00:09:43] brannon: the 1040, i don’t think that’s where the real value happens but that’s just one example. i think the real value is with the business clients.

[00:09:54] liz: absolutely. for most 1040 clients, there’s only a few limited things that you can really do to move the needle of tax liability? i really like what you said about focusing on what is valuable to the client because i think that’s where a lot of the price resistance that we perceive comes from. that we’re afraid to ask for our true value because we don’t think, or we know that the clients don’t value what we’re providing.

[00:10:39] brannon: oftentimes, the client is right. you’re not providing something that’s really valuable and you’re holding back. a lot of accountants have more knowledge and insight than they realize. they’re just not set up to properly deliver and articulate that value.

[00:11:02] liz: no. they tend to be just this tunnel vision of got to get the tax return out, got to get the books tied out for this month, got to get the audit report out. that’s really all they see instead of saying, “hey, these things change and your tax return, your business. what’s going on, is there something we can help you with?” there’s so much insight knowledge that we’re just not sharing.

[00:11:40] brannon: it’s really a waste if you think about it.

[00:11:44] liz: it really is sad. now, what about growth? a lot of firms talk about growing and scaling. what are some of the best strategies? are there different strategies for solo practices versus multipartner practice? what have you seen that works?

[00:12:07] brannon: i think growth really isn’t that different depending on firm size. the fundamentals are the same. what we see in academy is if you focus on delivering value to the client, if you’re more intentional about the clients that you serve and the type of work that you’re doing, and you can have good relationships with clients and you’ve got capacity. there’s a lot of things that have to happen before growth happens. most people or a lot of firms, i should say, don’t even have capacity to think about growth realistically, unless they want to go from 70 hours to 90 hours a week.

what we find works is actually you start by creating that capacity. there’s a pruning and an analysis that needs to happen so that you can grow with a more focused effort. once you’re focused on what you want, and you really identify what you’re good at as a firm, then through referrals and cross-selling from existing clients, you usually have more growth than you can say grace over.

i don’t know that we don’t promote some outside marketing. not that marketing’s not important, because marketing is important for referrals and cross-selling. i tell people, they say, marketing’ is not important. i’m like, “well.” you look at their website and you can tell they think marketing’s not important. the website is actually a really important marketing piece because if you get a client referral, what’s the first thing that person is probably going to do? they’re going to look at your website?

[00:14:16] liz: of course.

[00:14:18] brannon: then in terms of cross-selling, a lot of clients aren’t even aware of what offerings that you have. you use that marketing communication mainly for your existing client base. that’s how you grow success. that’s how you grow profitably.

[00:14:38] liz: i like the point of growth isn’t just about bringing more clients in the door, but providing more and deeper services to your existing clients. i like the emphasis on capacity because you’re right. you can only grow if you have the capacity to do some extra work. otherwise, it’s just nuts.

[00:15:12] brannon: i see so many firms just try to grow, grow, grow. especially with cloud firms, actually. i really see this a lot with cloud firms, is they’re growing so fast that they get overwhelmed by it. then they overwhelm their team. then people start getting– they start leaving. you can lose staff if you try to work people too hard, back to firm culture, you can’t ask too much of teams today. you just can’t or they’ll go somewhere where there’s better work-life balance. it’s a delicate thing. you’ve got to balance the capacity with the growth.

[00:15:53] liz: i think we keep circling back to firm culture as being key. you can’t just bring on people who won’t be suitable. you can’t bring on clients who aren’t a good fit. it all has to work together. now in the past, probably back when you were practicing as an accountant, you needed to carry all the fast buregs in your head. you had to be really good with a 10 key, but technology has really taken away a lot of that. what skills should account have to be successful today and in the future?

[00:16:42] brannon: i think they need to be more entrepreneurial. i think you need a more entrepreneurial mindset and approach, which is a little scary for a lot of accountants because that’s a little bit more of a risk-tolerant approach. it’s a little less perfectionistic approach. if you’re going to change, change can be messy. change is going to happen rapidly in this industry. i think we’re already in the midst of a pretty big transition in this industry. i don’t think that’s going to stop anytime soon. the firms that can adapt and can change, are going to be successful. the firms that don’t, are going to slowly feel the pitch.

[00:17:52] liz: i agree with you completely. that entrepreneurial mindset is something that really is going to be hard for a lot of accountants because a lot of us liked accounting because it was predictable. you had the answer, it was in a box. you knew it, it was certain. when you have an entrepreneurial mindset, you’re just trying things. it’s experimental and accountants are not so comfortable with experimentation. how do we get them over that hump of being willing to try new things?

[00:18:46] brannon: what we’ve learned is you have to take the risk and put it in a box. you have to try to say, okay, we’re going to go play in this little sandbox over here and we’re going to try some new things. we’re going to take some chances in this little box. then you get confidence in that box. then you go to a little bit different, little more, bigger box and so forth.

[00:19:14] liz: it’s iterating, trying something new. you iterate and then grow. then instead of trying to roll a big change out of the whole firm, you maybe try it with one or two clients or just a tiny corner of your practice.

[00:19:38] brannon: i think people do that with moving to the cloud. one of the most successful cloud transformations i’ve heard of was a firm in atlanta. i did a podcast on it. they did one segment of the business. they had one small portion of the team spearhead the effort and that’s how it worked. the first time they tried to implement a transformation to the cloud they failed. they abandoned the effort but then they came back and they did it in this way and it worked and then they can expand it to the firm.

[00:20:17] liz: that’s really cool. that gives me hope for the future that you can have training wheels as you try out new things. it doesn’t have to be all at once, but still, you got to start trying new things. speaking of new things, this is the opposite of trying new things. what should accountants stop doing immediately?

[00:20:53] brannon: i think they should stop accepting the status quo.

[laughter]

[00:20:59] liz: i love it.

[00:21:01] brannon: i think a lot of people just have these assumptions and these assumptions have just been true for so long that they think those assumptions can’t be tested or changed. a good example is that, the assumption that tax season has to be brutal. it has to be this heavy, heavy number of hours. this is insane. like, “i’m going to give up my life until april.” it doesn’t have to be that way. i’ve seen firms do it a different way. i think just challenging your assumptions. there’s just so much inertia. that would be, “stop.” stop just accepting as inevitable that you have to work a lot of hours.

[00:22:00] liz: i think you’re right. i don’t think there’s really anything beyond the deadlines that say it has to be that way. one of the partners that i worked with for a long time started practicing in the ’60s. he said back then what they did with a lot of their business clients was have them shift to different fiscal year ends. that way, they could spread a lot of the business tax work out over the year, but if you have an s-corp, you can’t really do that.

you don’t have that flexibility… while s-corps are great for the clients and their businesses, it’s maybe not so great for tax. i agree. i have heard of firms that have figured out how to schedule their workload so that it’s not all coming due in this three months, or two months or one-month burst that ends in april. i think there are ways around it. you just have to plan and be willing to try different things.

[00:23:34] brannon: yes, planning is the key.

[00:23:38] liz: accountants are terrible at planning. they’re just not very good. we don’t carve out the time to do that and so all of a sudden, it’s like, “well, this thing is due tomorrow.” i guess we better plan.

[00:24:00] brannon: i would even go as far as to say the billable hours, in some way responsible for the lack of planning. because people equate time as money. time’s not money. time is not money.

[00:24:13] liz: it is not.

[00:24:14] brannon: if you slow down and plan, you’d be amazed at how much more money you can make.

[00:24:21] liz: that’s right because you have the opportunity to take a bigger picture to look at the things that you’re seeing and get creative ideas on how you can really help your clients do better instead of just, “well, here’s one tax return done. let me start on the next one. here’s that one.” just an assembly line. just stopping to think a little bit really makes a difference. now, we’ve talked a lot about the need for accountants to change but what do you think are the blocks to change? we hear a lot about accountants needing to change, but they’re so happy with the status quo. why?

[00:25:14] brannon: that’s a great question. why are they happy with the status quo? i don’t know the answer to that question but in terms of why people don’t change, i think inertia might be the biggest one. like you say, it’s just they’re content with the status quo. i think perfectionism is a part of it, because it’s risky to switch things up, as we’ve mentioned. things can get a little messy and that’s uncomfortable if you’re a perfectionist.

i think it goes back to that entrepreneurial mindset that i think is needed, but i think the biggest obstacle to change it’s pretty simple. it’s just lack of action. either they don’t want to. either, you don’t believe it’s possible. to make a change you have to first believe it’s possible that a better outcome is possible. then you have to start taking action. it’s not that hard, conceptually. it’s just that action. they say the heaviest lift at the gym is opening the front door to go into the gym. it’s that.

[00:26:48] liz: it’s just taking the first step. i think even just admitting that maybe there’s a better way to do things. we get so caught up in the way that things have always worked that it’s really hard to let go of that sometimes. accountants will either change or they won’t, something else will take over. now, cas is big now. that’s become a big thing, client accounting services, client advisory services, whatever you want to call. what do you think will be the next big thing?

[00:27:47] brannon: well, i’m going to put out some wishful thinking or what i think should be the next big thing. i’d like to see a revolution going back to some fundamental business practices in the cpa industry. we sell a lot of cloud firms. there is a hot market for cloud accounting services and it’s a great business. what i have learned is that even in growing cloud firms, a lot of times people have to go back to the basics in order to grow.

i think basic business practices sometimes the technology is the new shiny thing but you can’t really grow on a foundation that’s not solid. what i mean is basic management practices, firm culture, and that’s applicable to traditional or cloud firms. it doesn’t matter how the service is being delivered. a question that jeff bezos posed, the founder of amazon posed was, “what’s not going to change?”

which is also a great question to ask. what in accounting is not ever going to change? business people are going to want insight from their cpas, they’re going to want tax planning advice from their cpas. they’re going to want good service, be that virtual service or in-person service. those things are not going to change. back to basics, what does the client want? what is going to benefit the client the most? figure out the answers to those questions for your firm. those fundamentals, they don’t change but they get forgotten. they don’t get practiced.

[00:30:06] liz: no, i think you’re right. it’s not the shiny new thing. it’s not the technology. technology is disrupting the field, but technology by itself is not the solution to bringing accounting into the future. we’ve got to be the humans.

[00:30:36] brannon: i think technology can do so much and it’s going to be able to do more and more. i’m a big adopter of technology and i use technology. we’re a cloud firm and we’re not a cpa firm, but we’re a virtual. we serve our clients virtually. i’m a big believer in the tools, but if you don’t know how to use the tools, they’re not very good.

[00:31:03] liz: no. i’ve talked to lots of other people who say that before you can even get the tools, you’ve got to get the people right, you’ve got to get the processes right, you’ve got to have systems and then you can bring in the tools to overlay on that and to get the work done. you can’t just bring in a new workflow management tool and think that that’s going to solve everything when it’s not going to provide the information that your firm needs. it’s not really going to help you.

[00:31:45] brannon: if your pricing model is not right. it’s really hard to scale without that being right. they really do go hand in hand but you got to get the fundamentals right.

[00:31:58] liz: i think we could talk for a long time about pricing and how accountants tend to undervalue what they can deliver. there’s too much reticence in asking for what we really are worth.

[00:32:24] brannon: yes. it might be one of the biggest obstacles to prosperity in owning a firm.