Who's Really the BOSS?

There may be errors in spelling, grammar, and accuracy in this machine-generated transcript.

Rachel Dillon: Welcome to Who's Really the Boss podcast. I'm Rachel Dillon, and along with my husband, Marcus Dillon, we share the joys and challenges of leading a $3 million accounting firm together. From team structure to growth strategies, we share our leadership successes and failures so you can avoid the mistakes we have made and grow a valuable accounting firm.

Rachel Dillon: Welcome back [00:00:30] to Who's Really the Boss podcast.

Marcus Dillon: Hey, thanks for having me back.

Rachel Dillon: Let's do before we get into the episode, this is a part two of a two part episode. And so if you haven't listened to part one, be sure to listen to that. I don't know that it matters. Order is going to matter either way. They're both good. Listen to both. Uh, but before we even get into part two, let's give a Dillon Business Advisors firm Update.

Marcus Dillon: Yeah. [00:01:00] So this is, uh, the last week of March is when we're recording this. So we're in the thick of things and, uh, just trying to make sure that we end, um, this busier season. Well, and, you know, obviously rolling into quarter end and going to be issuing Q1 financials in the next couple of weeks as well. And but, you know, you also have, uh, a tax deadline that's right there as well. So team is working towards that. Uh, everyone on [00:01:30] leadership team went on spring break to various locations. Uh, team members also had some some breaks uh, with family that were on spring break. So, uh, it's been a good season so far. Uh, no weekends worked by the team, no overtime. Um, so, yeah, it's just kind of putting one foot in front of the other right now just to make sure we continue to end well.

Rachel Dillon: And on January 31st of 2025, we officially acquired [00:02:00] another accounting firm. Uh, not in our same physical city. Uh, so we acquired now a remote accounting firm, though they have a physical location. And, uh, clients still come into the office. So give a little bit of an update on the Saint Louis office.

Marcus Dillon: Yeah. Um, so that that office, um, is, you know, within the first 60 days of assimilating into DBA. We're running very similar tech stacks, but, [00:02:30] uh, client facing. They use, um, licio for communication. We're going to phase that out, uh, over the next few months, as soon as tax season is done and get everybody into our other primary communication, um, source, which is canopy, uh, for document uploads and sending things, um, to clients and have it kind of all in one platform because of that disconnect. There is, uh, almost like two service teams for tax. Right now you have the Saint Louis and then you have DBA. So [00:03:00] we'll essentially kind of bring those two together after the deadline. We just didn't want to throw that on to clients. Um, during during the right after the the announcement. Right. So that'll be good. And then, uh, we can get whole team involved in serving those clients, not just a limited team involved. And, uh, we have some global talent, uh, with Toa, and we have a couple of team members in the Philippines, [00:03:30] and they right now can't assist with those Saint Louis clients because we do not have 72 sixteens on file for those clients. So getting all of that updated definitely before next year will be necessary to kind of come together and have same level of service and kind of same, um, team serving, serving all clients.

Rachel Dillon: So we made the decision because of timing of the opportunity, we made the decision to make sure that we were [00:04:00] tracking projects and completing returns, um, in one system, but client facing. So client communication is in dual systems. Right now with DBA we're using canopy and with Saint Louis we're using Lisio. And then also introducing some of our service model and some of our team members, more of our team members. We're waiting until after this busier season for us, just because we didn't want to dump [00:04:30] that on our team, or for them to feel like it was dumped onto them, and so trying to create as little disruption as possible internally, but also trying to have really no disruption at all for client facing for this first season. So that's a great update for Dillon Business Advisors. And it's still along the lines of what we're discussing today, because on the last episode, [00:05:00] we talked about the firm owner becoming the bottleneck. And with this acquisition, you've stepped back a little bit into more production, I would say, than you have probably in the past five years. Um, honestly.

Marcus Dillon: And I would say, um, not not really production, but review. Um, right. And so, um, I don't think there's one project that maybe 1 or 2, and those are the ones that where the client comes back with, uh, [00:05:30] so many questions. Right? Like, why wasn't this done the same as last year? And, uh, you learn real quick, like, oh, I'm not the best at production, even though I'm trying to help move, keep the trains moving. So, um, but yeah, review for the most part, um, has, you know, increased this year compared to prior years. Um, yeah. We'll, we'll talk a lot about some of that. And hopefully people can listen to the decisions that will be made in the near future. Uh, you know, and apply [00:06:00] it to their firm and their business. And we're really good at accountability on this side. And others can help hold us accountable as well because, um, because, yeah, you got to you got to begin with the end in mind. And some of the decisions, while they're not easy. Um, you have to make them, um, and move forward.

Rachel Dillon: Yeah. So we identified and you helped us identify really that in most small to medium sized accounting firms, we'll say accounting firms 5 [00:06:30] million and under. A lot of times the bottleneck is the owner that there's not a, um, proper or a more beneficial or advantageous team structure or organization of the firm. And so we talked through that last time. Just some highlights of what we discussed. In case someone wants to listen to this out of order.

Marcus Dillon: Yeah. The the owner is definitely from [00:07:00] so many aspects of the business. Um, you're in the way a lot of times. And if you choose to stay, you know, the bottleneck, that's great. You could probably grow in an accounting firm. You can probably grow to 400, 500, maybe even $750,000 in revenue. And, you know, kind of micromanage the whole thing. You know, the valuation on that firm. Good luck. Um, you know, it's going to be, uh, not worth what you think it will be because you've essentially created yourself a job is is what happens. And [00:07:30] instead of having a team, you have helpers that are really just trying to, you know, get you through your day and help you achieve deadlines. And we say that from a place that we were once there. You know, I think whenever we started DBA, we kind of viewed it that way and said, hey, I really have no desire to bring on partners, so how much can I kind of do within my skill set? And then you start looking at team members and you have to hire the right team members. And some people want partnership [00:08:00] and equity and ownership and some people don't. And that's a trade off. And you'll have people that float through your business that, um, you know, want different things for different seasons. But then the next season of life, they may want ownership. And you just have to be okay, you know, evolving. And for us, we've evolved over the years as well. I'd much rather have great leaders that are bought into the vision and maybe kind of even bought into the firm, if you will, [00:08:30] to help drive us forward and help protect, you know, the firm from just being all about one person.

Rachel Dillon: So we've seen huge strides in elevating team members by really setting up setting up the team of three model or the team of three structure within Dillon Business Advisors. Um, what? Having any type of structure does hopefully is helps define [00:09:00] roles and responsibilities. So I think right now, if anyone's thinking, well, we have a structure, we have processes in place and this is how it works. Um, having an ideal or a more beneficial structure if you are reaching capacity limits. And so I would define capacity of if you're working as the owner or your team members are having to work, you know, I mean, we can be real, but if they're having to work more [00:09:30] than 45 hours a week for any amount of weeks, you're at capacity. You need to start thinking about the capacity of your firm and how to increase efficiency. Um, you need to start thinking about that because long term, if they're not the owner, they are not going to do that for you long term. As an owner, you may sacrifice your family time, your friend time, your vacation, your mental and physical health. But your team [00:10:00] members long term, the majority are not going to do that. And it's going to be really hard to attract new team members, um, to that type of working environment.

Marcus Dillon: Yeah, you know, you're spot on. And, you know, it's I've said it before, like, um, as an owner, this is your dream, this is your baby. However you want to think about it, you know, and it wasn't the dream or the the idea of that team member there joining into your dream, potentially only for a season. And [00:10:30] so they're never going to have as much ownership regardless if they have equity, they're never going to have as much ownership in this dream. Uh, potentially. You know, I think the right people could, you know, even eclipse the original founder. We've seen that in other businesses and take something and build upon it and grow it. Um, in the accounting world, you don't see that as much. But, um, you know, to your point, I think there's there's things that are going to happen every year, every busy season. And, you [00:11:00] know, looking back over the 20 something years of tax seasons that I've been involved in since college, uh, there's always something, whether it's natural disaster related, you know, um, a freeze, a hurricane, a tornado, or if it's something team related or family related. You know, somebody gets sick, somebody has a stroke, somebody you know, is dealing with a large illness, either individually or personally.

Marcus Dillon: Um, that disrupts the perfect plan that you had in place. [00:11:30] And so for us, having a structure, a team structure as far as like service delivery and kind of client client service and client care has been very good. And I think, you know, we make hard decisions throughout the year. I think that's the other piece where sometimes people delay hard decisions on the other side of a deadline, and then they get comfortable and they forget about, you know, what that pain really looked like during that season. So they didn't make the hard decision on [00:12:00] the client, the team member, the technology in that moment. And then it just kind of dissipates. That pain goes away, and then you come back and you're like, oh, I should have addressed this last year or even the years prior. And it just kind of builds upon itself and is an even worse situation. So there's never there's never a good time to make hard decisions. And I think by having some structure in place and people to hold you accountable, you will be set up for success [00:12:30] more so than not having the right structure or accountability.

Rachel Dillon: Yeah. And I mentioned we've made huge strides in DBA with the team of three structure. But even just to give a little bit of context with that, um, when before we had team of three structure, you were everyone reported directly to you? Every project came directly through you before it went out to a client, and we had team members working definitely [00:13:00] overtime, definitely working 10 to 12 hour days or more, definitely working six days a week. It wasn't. We never put a mandatory like a minimum required overtime or hours per week billable. We never set that in place, but we always had the expectation that work had to go out within two weeks. It had to be back to the client within two weeks of dropping off or submitting documents. And so to maintain that pace, [00:13:30] that was what was required at the time to where we are now. Um, you can probably talk about specific numbers better than I can, so I'll let you share. Or I can keep going.

Marcus Dillon: Keep going, and then I'll fill in. I'll give color.

Rachel Dillon: Yeah. To where we are now, where we work four days a week in our Fridays are half days. And so we are really looking at for full time team members, 36 hour work weeks all year round. [00:14:00] We evolved to that the first year. It was um, 36 hours a week. We did the half day Fridays as like the off season between tax deadlines. And then we, uh, were able to create the efficiencies needed and the clients and client services needed to where we now can enjoy that 36 hour work week year round.

Marcus Dillon: Yeah. So by the time listeners, [00:14:30] you know, start to hear this conversation that we're having today, it's probably very close to the deadline or just right after it. And, um, you know, we've we've said before, hopefully you documented those pain points that existed during, um, you know, your busier time of year, even if you don't do tax, even if your business is just kind of this accounting, uh, focused one and but you're, you're kind of with year end and quarter end, you also see some pressure to perform and to serve clients really well. So would [00:15:00] would build upon, you know, those lists. And then how do you go from there? Where where did we start. Right. And some of those things because it's great to talk about where we're at today, but we have to go back to, to what we did. Um, so by identifying those pain points, one, what's keeping you up at night? And if that's keeping whatever's keeping you up at night is likely something where you don't have the right person in charge of that service or that client. Sometimes [00:15:30] it could be the only person in charge is yourself, right? So you may have to make a decision on is that the right client, or do you need to go out and hire somebody to then take over this responsibility that you're thinking about, worrying about? And the reason you're doing that is because you're not confident in yourself, maybe. And so it's going outside of yourself to kind of get this, you know, skill set or person in place. And we were definitely there. Uh, we had some pain, we had some challenges, and we knew we had to make some hard decisions. [00:16:00]

Marcus Dillon: And we developed the plan immediately after tax season. And I think if you look back to, uh, 2016, 2017, where those were critical years kind of in our journey and deciding to exit clients and even exit service lines and putting together a plan for that. And 2017 was that first time that we started exiting non-ideal clients just because, you know, we weren't, uh, healthy [00:16:30] at that time from an organization, and we were working the typical industry hours. Right? 70 to to 80 hours and weekends, and not only ourselves but team members. And we were expecting that of team members, which is not a good expectation. So after documenting those pain points and deciding, hey, what are these? What are the problems we're going to go fix? First, we had to prioritize what was the biggest challenge and go tackle that. Um, so exiting clients, exiting [00:17:00] service lines, technology, pain points, those are some things that we identified. You can't tackle all three of those at one time. You have to prioritize which ones are the most important, which ones will move the needle and which ones won't bankrupt, you know, you, uh, in the process. So you kind of have to have a very systematic approach. And that's what we did. We did that over a years to get to where we're at today. And, you know, we've shared that journey a lot. But I think it is important to kind of recap [00:17:30] and talk through that and how we actually got to where we're at today.

Rachel Dillon: I'm super excited as you're talking through all of that, that like, I can't almost can't wait for you to stop and take a breath so I can say this, but our collective by DBA team is currently putting together, uh, resources on how to make the most of that time directly after the deadline. So what you should be doing, um, how long it should take you? No questions to [00:18:00] ask. Those types of things so collected by DBA is putting that together. So if you're listening today just know that's coming out soon. We're good. We're assuming that a lot of our friends in the accounting industry are pretty tired. And so we're going to take a lot of the hard, hard work, a lot of the brainpower that's needed to come up and the creativity, um, to make the most out of that off season time. We're putting that together and we'll have that available soon. So excited about that. [00:18:30] And so we talked about really how to increase capacity in the firm. One definitely is focus on team, but we ended the previous episode with if you're too tired or you have too much work, you can't even think about reorganizing right now. We said there's some other levers that you can pull to kind of help give yourself some capacity to even think about what team members you need, what the positions [00:19:00] are that fit your firm, how to start shifting people and clients around. So let's talk about some of the other ways that we created capacity to even be able to develop our current team of three structure.

Marcus Dillon: Yeah. And I think it was um, you know, it wasn't accidental how we did this. It was, um, you know, just one foot in front of the other. So I'm really looking forward to seeing that resource [00:19:30] and, um, hopefully easing that journey on people that do need to make make some change. So but definitely making decisions on clients services, service lines is a big shift right now. Uh, you have a a huge opportunity with technology and with global talent, um, to assess that. And we did that. We started bringing in people kind of like we said earlier, helpers almost at first. And that was when the org chart kind of all pointed [00:20:00] back to me and everybody was pointing back to me. So what are those low hanging tasks that you can, you know, easily assess and easily delegate to others? Um, so that was definitely something that we started, uh, right after tax season because like you said, right now in this season of review, I'm not going to be in a season review next season. You know, like next year This time I will not have the same responsibilities. Because what? What that means is [00:20:30] we either don't have the right team in place to do that work long term going forward. So that's not a great plan or we don't have the right clients in place. So if if the clients only can speak to the owner, only can speak to a CPA, you really have to question, you know, are they the right ones to kind of grow and scale with your business? Not saying that you don't ever have a conversation with them, but are are you the only option. Right? And so [00:21:00] sometimes it's not even the client driving that. Sometimes the complexity of the work itself drives those conversations. And so some of the things that we did and some of the, you know, that listeners should also do.

Marcus Dillon: Do you have some projects or do you have some clients that are just so unique to your overall business that they stand out? And, you know, for us it's like we don't do I say don't we have hardly any nonprofit clients? So for us, nonprofit accounting, [00:21:30] tax filings, they're a little bit unique. And we're not the most skilled at those just because we don't have the expertise. So for us, as we kind of filter through even this recent acquisition, nonprofits do not fit long term. So we need to do the responsible thing and get them to their future service provider as soon as we possibly can. And that's on the other side of really finishing the relationship. Well. So making sure any compliance or [00:22:00] any kind of pre engaged services, we're done. But for us, we would be holding back both that nonprofit client and their future relationship that they could potentially build upon navigate good times navigate bad times. So so those are the small things that we're even thinking through right now on, you know, this recent acquisition and it's no different like definitely the acquisition. It's it's the firm we had 7 to 8 years ago. And [00:22:30] seeing some of the things that are happening in the firm and you know, the client that calls gets the attention like, hey, where is where is my project? Where is my return, where's the status? Then all of a sudden that's what gets prioritized, right? Versus having a service team around every single client and assigned to every single client to have a nice rhythm of service and get that out timely. And before any clients looking [00:23:00] for it or any deadline is really a discussion.

Rachel Dillon: We have to share. Like just because you went there, we have to share a story. So this may not be a part of the conversation, but it is a good one. Way back when we were in even not the our office that we have now, but the previous office. We had sometimes client documents in paper, in folders, um, in the office they were [00:23:30] scanned, but they still went through physically through the office with the routing sheet. And we had like a filing system and we had like an index of what all was included, the date it had been logged in, physically written out. We also had that kind of information captured in our practice management, but like two places, right. So we could reconcile what was going on and it would happen more often than not. Somehow a folder would like slide [00:24:00] down in between, um, the folder hangers in the drawer and one would get missed, or somebody would jump a couple off of the and this was first in, first out. So this was not assigned to any one person for preparation. Um, and so maybe they jump a couple down because that tax return went with another family and we needed to pull it.

Rachel Dillon: So then the three in between might, you know, just be sitting there by accident. [00:24:30] And then that person would call and then we're going and like digging through the list and digging through the drawer to try to find how in the world did this happen? But, um, I just asked you that recently because it was happening with the new acquisition, and I'm like, do we does that happen anymore? Um, it really doesn't happen very often at all. By putting that team of three in place, that also helped us group those families together [00:25:00] so that related entities, family members, uh, whatever it might be, all go together, all get served one by by one team so that there's not this one extra tax return that gets forgotten because it's not part of their main business or their main family. Um, yeah, but that was a it just made me think like, no, they're really used to be some fire drills in the office when someone would say, I dropped it off [00:25:30] two weeks ago, I haven't heard from anybody. And I'm like, no one's even touched it. What happened?

Marcus Dillon: Yeah. And so I would assume a lot of firms still do first in, first out and where you try to, um, you try to align who prepared it last year is the person who's grabbing it this year and picking that client back up. That doesn't always happen. Some of the things that we did just, you know, going from there to where we're at today, uh, what we did is we introduced, hey, when you pull that client, when you [00:26:00] pull that folder, now, if you pull it digitally, right, it's on your dashboard. Give that client a call. Make sure now you can do an email. Now you can do a text. But let them know you're starting that project and it gives them an opportunity to say, hey, I'm missing 1 or 2 more documents. Let me send those to you. Go ahead and start preparing it. But just, you know, have a conversation. What that also did was it introduced who was working on the file, you know, during those times to the client. So if they had a question or something, [00:26:30] they knew exactly who to ask for and who to navigate to. Going back to like, you know, the org chart with the owner in the middle. The clients also are reporting to the owner if they don't know who is is serving them. So I think those are the pieces that we did early on, and definitely those, uh, routing sheets.

Marcus Dillon: I mean, we went from, you know, the folders had all the original documents in it, right, that a client would drop off and you scan and put it into a work paper solution [00:27:00] with a routing sheet on top. You kind of go through and sign off and have different dates on that routing sheet. I grew up in that world and that made its way over to DBA. And then, you know, whenever you go paperless, you may not have the client originals in there for most clients, but you still have a routing sheet and a folder because that was the only way that we could figure out how to navigate it. And now it's all digital in our practice management system, right? We have dashboards and we have assignees. Um, and it's typically the same team serving the [00:27:30] clients throughout the year. Now in our model, um, but you just think back like where Amazon is today and where, you know, just how we can find things versus libraries two decades ago and card catalogs and Dewey Decimal system, like, you know, it's just if you apply it to our industry, I think that's kind of the shift that was also being made, hopefully being made. I think some CPAs and accounting firms probably still run off of a Dewey Decimal system for workflow [00:28:00] going through their office.

Rachel Dillon: Okay. So for those and for those who are a little overwhelmed Whelmed underwater. Um, thinking about how can they get some more capacity in their firm? A lot of times we especially and others in the industry talk about identifying ideal clients and ideal services. And when I hear ideal, I'm like, okay, it has to be [00:28:30] perfect or I'm I'm needing to envision or dream. And let me tell you, when I'm tired and overwhelmed and have a lot to do, visioning anything and dreaming about anything is not high on my priority list, nor even am I capable, like do not have even the mental capacity to do those types of things. So what's the kind of reverse engineer of that? If you're not dreaming to [00:29:00] figure out who you should be spending time on and how you should be serving them? What could you do if you're in a place of, like, mental overload? Where could you start first? That might be real easy when you're kind of at that frustration or capacity level.

Marcus Dillon: Yeah, what's always worked best for me is to slow down. And I think the harder whenever you're in this season of life, right, and the season of the business, everything is [00:29:30] telling you to speed up and everything is telling you to run faster. That's where burnout happens. You you likely may trip, fall, hurt yourself, right? You know, if we're applying this to a running analogy, but slow down, you know, get perspective of where things are at, take inventory of what's in and then develop a plan. And so those are the things that any other person would do. But we just don't give ourselves that credit. And that's likely [00:30:00] the advice you would give to a client or anybody else. Right. If somebody you loved and cared came to you and was in this busy season of life. You would tell them to slow down, see what's really important, and start prioritizing what's important. So it's no different in your business. And so when you look back, like when we look back over this 2025 tax season, we're going to see like we still took trips. We went to, you know, every swim meet that was available. We went on spring break I [00:30:30] flew to Saint Louis, not even to go to our office or see our team or any clients there. I made the trip for a strategic relationship and referral partner. Not anything related to work in the moment, right? I just got back. I went to Opening Day, the Astros versus the Mets.

Marcus Dillon: So you can still prioritize like in life, what's important, right. And then yeah, there's the phones ringing. People are emailing. [00:31:00] It'll be there after you finish this. So you still have to determine, okay, these are our most important clients. We need to serve them best because maybe they bring in the most revenue. Maybe they're just the best clients to work with because you enjoy working with them. So when you talk about like ideal, do you enjoy them? Do they bring in enough revenue? Do you love that industry? So like those are the things that you kind of have to prioritize. And then the second part of that [00:31:30] is everybody else, right. So if time allows you also have to set boundaries to make sure you're staying in bounds of what your time is. Then the other things get done. And if you have to call one of those non-ideal clients and say we just can't get it done. Likely it's going to be because of them, right? They weren't responsive. They dropped their stuff off late, whatever that is. But if you say, hey, we just can't get it done this year, [00:32:00] we're going to extend it and work on it right after the extension. They may get mad, they may get leaked, they may leave. And you've just solved your problem. You know, honestly. Uh, but those are the things that you have to do. You have to slow down and create a plan.

Rachel Dillon: That sounds so privileged and idealistic, um, that you're saying to slow down with literally. I know some people cannot slow down. Also, while you were at that baseball [00:32:30] game, I was like, slaving away over here. So, um, we can we can count that, too. But when you're at, like, this is really, I think, practical. Like when you're at a point of frustration, when I'm at a point of frustration, I have very little patience, um, and maybe a little less grace for people. That's not the right thing. That's just reality. Um, and I think at that point, it's easiest to start with what you don't like. Where are your biggest Frustrations. [00:33:00] Who were your biggest frustrations? And just start listing those out right when you're tired and frustrated. It's real easy to point out all of the things that aren't going right. All of the things that you don't like or don't want that will help you arrive at your ideal clients and ideal services. Really quickly, you can start finding areas of why are we serving this type of person? [00:33:30] Maybe it is an individual because of personality or behavior with your team. Um, it may be a whole industry of why are we doing this? So when we look specifically, we can start with clients and who is frustrated. And the big thing there that you touched on earlier was keeping notes. So make sure you are asking your team if they're not keeping notes, like in a spreadsheet or on a notepad. Definitely. [00:34:00] They're keeping mental notes. They will have a few scenarios or people that come to mind that really kept them up at night. Ask the team, um, if you can't come up with a great list on your own, definitely involve the team in that conversation.

Marcus Dillon: Well, I think that's critical. And, um, to to the point even about like, the freedom that we and the rest of the leadership team have had and even like team members throughout this year, it would be, you know, such a [00:34:30] hindsight for us not to recap the season with the team. So highly recommend getting your team together in person virtually. Just to recap how it went quickly on the other side of that deadline. Um, you know, maybe not the next day, but definitely within the week just to talk it out and say like, how did this go? And, you know, just with, you know, I was able to obviously go to a baseball game and did that put undue pressure on anybody else that [00:35:00] that wasn't able to go right that one afternoon. And I think once you get to this place that now dba's at, everybody is able to go forward and kind of work on their own. We don't have this micromanagement like, hey, I need to check with Marcus daily or hourly, uh, you know, like, what do you want me to work on next? That's not healthy either. And so I think one of those where if you can just get out of people's way and they're empowered enough and educated enough to go do what you need them to do and then [00:35:30] report back to you occasionally, um, then, like, that's a great place to be. And then you can have some freedom to go work on the business where it needs to be worked. Go visit with prospects, uh, referral partners, everything like that, that 95% of the industry is not able to do between January and April. And because you're able to do that, you stand out. And that's going to lead to more business, better client relationships, better [00:36:00] conversations overall, and attract better team members.

Rachel Dillon: What were some in business advisors? What were some or who were some clients that created bottlenecks and took more of our team's time than others?

Marcus Dillon: Yeah. Um, that we can talk about, you know, some of the things that we're seeing with, uh, this acquisition. So where you've got clients that take a [00:36:30] DIY approach, maybe they handle their invoicing, their their QuickBooks. Right? They take point on all of that and they've got a person in house, but that person in house needs help when it comes to like special projects. Let's take like sales tax. And they just don't quite fully. They aren't on their own. Right. And they won't employ an avalara or somebody to help them through that process, and they see you as their problem solver [00:37:00] whenever they need it. That's not a healthy relationship, right? So I think you can get them into a model that you can both agree to, like, hey, on a monthly basis, we're going to check in on you on the 12th kind of review your sales tax by the 15th and then it can get filed. Like having that shift over to a fire drill of like, hey, I need your help immediately and doing this. So that's just an example. Um, and you know, where somebody takes point [00:37:30] on maybe too much of the relationship and you don't. So for us, it was you know, Qbo is the platform, right? So that's what we support. And for our CAS clients, like we're the quarterback when it comes to qbo like some clients may enter in some stuff, but we're helping do like really the reconciliation.

Marcus Dillon: We feel really good about the numbers. We're producing financials. We're speaking into those financials. And then the business owner and the CFOs are talking through opportunities that exist. Whenever [00:38:00] you have maybe not that whole game plan. Or if we didn't have that whole game plan right now, and there was like a piece that we were relying on somebody outside of DBA, it would break the model, so to speak. Right? And so I think having the confidence in your team and yourself to be able to fully serve a client goes a long way. But in those early days, even now, with what we're seeing on some of the hard decisions we have, we may have to make on some [00:38:30] of these clients in the near future through this acquisition. It's it's people that, you know, they're this break and fix model. You know, they're this is broken. I need you to fix it. And I'm going to wait here and watch you while you fix this for me. That is not what we do. If that is your model, charge a premium, right? Like just whatever the number is that you need to justify, charge it. And I think it's okay, but it [00:39:00] also comes with a high stress, right? So you just have to make it worth your while.

Rachel Dillon: Yeah, absolutely. I think another place where we overlook, um, we value people first. It is one of our core values. But I think another place that we overlook is that we have taken on potentially annual only projects. I'm just going to go with tax returns that don't necessarily need [00:39:30] the expertise of our team to complete that tax return. They do need good service and care. They do need the compliance piece filed, but it doesn't necessarily need to be us. Our heartstrings then also go to it's a little lady. It only takes this much time. I'm not going to charge her our minimum. Or, you know, even higher than that. Um, and so now we [00:40:00] probably have a conversation with this person. They may even come into a physical office to bring it on the front end. We have a conversation, probably because there's a question about a forgotten account, that they didn't submit a document. And then we have a conversation of how to get that to us electronically. Right. Because she's not going to make the second trip into the office. So, uh, Deidra on our team is probably talking her through how to scan something and send it. And [00:40:30] then on the back end, we meet with them to show the two year comparison. Right. Like at at minimum, like a two year comparison. That is a lot of touch points for a return that is probably discounted. And we may have a bunch of those.

Marcus Dillon: Yeah.

Rachel Dillon: There are also people similar to that who aren't the little old lady, but who think they want a professional CPA because they think that there's a magic trick [00:41:00] for tax savings for them, when really they may just need to adjust their withholding. And they again, want to have all of these complicated meetings and interactions. And they're at your base level tax return price. So I'm I'm pointing these out as places that end up taking a lot of time with no ROI. And really for that person, they could be served [00:41:30] just as well by someone else who has the capacity to take them on.

Marcus Dillon: Yeah, I think it goes to a confidence in who you are. You know, individually, uh, how God wired you. But then also the business that you're a steward of. Right? And so I think those are the two things that at DBA like, we feel, you know, called to serve others. And we are so fortunate to be in the place that we're at. But we also know that we're wired in a certain way. We embrace technology, and that's [00:42:00] how we're going to serve others. Right. And and love people. Um, there are other people with other models, and they need business, just like we need business. And so if you can refer them on their ideal client and you focus on your ideal client, hey, it's a great life, right? So, um, but even something, you know, as simple as how you deliver the results of that tax return, something that we've done on this Saint Louis acquisition, that client base, the previous [00:42:30] owner, the previous CPA, would call and go over the results of the return for every single return. That is not our model. And so you may get a little bit more Interaction this first season, right? Um, but because of the nature of the time of year, the the pressure that comes along with just the list of projects that you have to get out the door, I quickly pivoted to, like, we're just going to deliver [00:43:00] voiceover commentary like we do for all of our TVA clients. I'm going to do that this first year. Next year. It won't be my voice, but I figure, hey, they're getting the owner, they're getting my voice this year.

Marcus Dillon: Hopefully that kind of smooths over anything. If they leave after that, they leave. But so we started to live in voiceover commentary. The amount of those clients who use who were needing a meeting every year with the owner has gone down drastically, and I mean like 85 to 90% [00:43:30] drastically. And all that happens is they listen to that. I'm able to see based on statistics, who listened to to the video. Some people do, some people don't. And they send back their 8879. They pay the invoice and we go down the road. And that's what scale is. And so that's how you can take something that maybe requires time. Maybe you think that that's necessary. Now can I go have a conversation with them in June or July, August, November [00:44:00] whenever there's more availability? Sure. But do we need to spend an hour delivering results? No. And so I think that's where we've made a small change and seen big improvement and haven't had, you know, essentially kickback up until this point. Now all those people may leave and not come back, and that's fine. But um, but yeah, like, those are some small tweaks. And so I would say that in this time you can experiment as well. And [00:44:30] desperation leads to great ideas about experimentation and things like that. So if you've got something, if you were wanting to try it, try it with a small subset. Try it with a client that you wish wasn't your client anyway, and see if it changes and go from there. And then if if they leave on the other side, you're all the better for it.

Rachel Dillon: Well, let's talk about you mentioned a way to kind of help, maybe eliminate some meetings that aren't actually necessary. Still, [00:45:00] give the client the information, especially related to tax, giving the client the information they want to know, but potentially freeing up some time for your team and that client from having to have. They can listen to that commentary when they get home from work right before they go to bed on Sunday afternoon, when your team hopefully is not available for phone calls. And so let's talk about how what do we do with those non-ideal clients? We'll call them non-ideal. [00:45:30] That list we made of we really aren't the best anymore, or don't need to be the best place for these types of industries or these types of people to get their, let's say, tax returns done. What could what could we do now we have a list. We do not recommend that. The owner just holds that list and prays for the best for next year, that the situation resolves itself. So what's a practical way to [00:46:00] help create capacity where there's a lot of time and effort going into that type of a group?

Marcus Dillon: Yeah. So I mean, that's the owner's list. That's the team members that have also contributed to that list. And you've got like this master list, let's say coming out of tax season of of clients that were painful, more painful than they should have been. Right. Not ideal. And you've got decisions to make. So the first thing that I would do that I have done is analyze the overall relationship of each one of those names, like how much [00:46:30] revenue are they bringing in, who are they connected to on the on the client list? On the team because somebody may be on that list that's, you know, the nephew of your largest client. And are you willing to have that conversation with that nephew and potentially jeopardize the client? And depending on the situation, you may have to make a judgment call. Um, but analyze it. And then once you feel good about, hey, these these clients, you know, they're not ideal. They're not connected. We can [00:47:00] make decisions on them. You have to exit them. It just comes down to exit is key. You may not have to exit them all at one time. You can do that over stages and years. But you do have to exit, especially if a team member contributed to that list in that name. The the next thing is, okay, you've made a decision to exit.

Marcus Dillon: Is it valuable to anybody else in business. Right. And so you start looking there as like a second or third option to say, are there others who [00:47:30] these are actually their ideal clients, right. Are there other businesses who would serve them better and potentially pay value for that. And so we've done that a few times. Right. And, you know, it's it's setting the client up or the future X client up to have a better provider because it's exactly what they look for. Um, if they just want an annual tax return at such point and that's fine, that's exactly what that other person does. So they should serve them happily. Um, it also helps that other service provider grow their business. Right. [00:48:00] And so there may be value there. And you may be able to do a referral kind of retention agreement. There may be enough value and enough block to actually monetize it all at once. Um, but those are the things that it creates capacity. It takes pressure off your team. It takes tasks off of the whole team. And, um, it, it goes around. Right. It like, helps the CPA down the street or the tax preparer down the street. And it helps continues to help your community.

Rachel Dillon: Yeah. And [00:48:30] I would say Do not give them away. Do not fire them. Which maybe was like a trend or, um, a habit in the past for CPA firms that no longer wanted to work with a client. There may be somebody because of lack of values or, um, disrespectful behavior that that needs to happen with. But accounting firms now are valuable. Account accounting clients now [00:49:00] have value. And so please do not just send them a letter and say you can't come here. We don't care where you go. You just can't come here. Definitely identify a buyer for that or an at least an interested party. And so if it is something where you want to, um, you want to give because it's a personal relationship or someone you know, or, you [00:49:30] know, this is like an act out of your faith beliefs that you want to share this with someone else, by all means. But you can locate a an actual buyer because those clients are good for someone who has zero clients or five clients, or just wants to try this on the side of their W2 job and see if they even like it or want to do it. Or maybe, like you mentioned, another firm who wants to grow and they're paying for ads [00:50:00] and they're paying for different things online to try to get, um, more leads in their funnel. They'd be happy to give you something for these clients. You don't have to two times the value of them or anything like that. But something is better than nothing, because right now, the accounting industry has finally become, uh, sexy to so many people. The boring business is now what people want to, uh, invest in or spend their time in.

Marcus Dillon: Yeah. [00:50:30] And I think you mentioned like, you know, accounting clients, accounting firms are now worth, you know, more. They were always worth more. It's just now more people realize the true value of accountants and the firms that serve, you know, individuals and businesses. And so, um, it's a great thing. And even what we're seeing, like you mentioned, Truex, um, you know, we're starting to see some firms trade at 2 to 3, depending on the firm. And that's gross [00:51:00] on top of sales. Right. And that's driven because it's a very profitable firm with EBITDA and process and team in place. If you're selling a block of clients that's not worth two x, you know it is worth one or a fraction of one and into it. Turbotax will even buy those clients. Um, you know, there is now a way that you can refer your individual clients. It's a more complicated process than it then it probably needs to be. And it's all digital. So most [00:51:30] of these little old ladies aren't going to assimilate very well, but I think they'll pay you 25 to $0.50 on the dollar for what you charge in the past, because they'll just put it through, you know, their engine and have TurboTax live kind of do it. So, um, all that to say, like there is value there and you can go get value for, um, you know, those, those that revenue, um, when you think about it that way.

Rachel Dillon: So last idea, we'll discuss, um, on [00:52:00] creating some additional capacity so that you can be creative and think about your firm as a business. Think about your firm as in an ideal scenario, what your ideal days even look like, what your team member's days look like, working on things you want to work on, and spending time with people you want to spend time with. Um, again, this comes from a place of firms who are at capacity or over. This is probably not advice. Brand new people starting [00:52:30] out with only a handful of clients. You probably don't want to start selling off your clients if you're trying to build something. So this is definitely advice for maybe established firms that are trying to find more time in their day. But just as we looked at clients, we can also look at whole service lines. So service lines that are stealing resources from other places, or it just may be service lines that you're not comfortable with or [00:53:00] that you don't like doing anymore. Maybe at one time you liked it, it was fine. Um, but now you've found a different client makeup and client service that you'd rather grow and invest in versus continuing to pour in time and resources into this other service line. We also need to pay attention to that. So what services do we need to evaluate to continue on in the business? [00:53:30]

Marcus Dillon: Yeah. And for us it was um, you know, some of the easy ones were the audit and review practice that we exited in 2020, um, because of team member transitions, but then also all the increased requirements and peer review, we didn't want to have to go through that. We didn't see it as something we wanted to grow, and it made up such a small percentage of our total revenue. And that's something that you should look at when you're evaluating service lines or clients. [00:54:00] Um, you know, our audit practice, it made up like 5% of, of Dba's revenue at that time. So it was an easy decision. And then you start looking at, okay, what other things and is it supporting a certain software. Right. So if you've got clients maybe on something like Sage and you're not an expert in that or QuickBooks desktop and you just don't want to deal with those type of files anymore. You could also kind of evaluate that as a way to, you know, exit those clients if if they're not taking you up on a better way of [00:54:30] doing business. I think it would be, uh, it would be harsh not to offer those existing clients a way to do business with you, the way that you want to do business with you.

Marcus Dillon: So I think that's something else to evaluate. If you've got a business client that you know is just struggling throughout the year and you provide services that could help them out. Step one is always trying to to kind of cross-sell, upsell or help that client in ways that you're not currently. And [00:55:00] then if those clients tell, you know, if that whole service line needs to go, then that's when you make that hard decision. So um, but yeah, there's there's value. Don't discount it. Um, you know, the revenue and people being hungry to start businesses is a great thing. And that could be a way that you could supplement cash flow during that season of transition. You know, maybe you're trying to support team members so you don't reduce headcount. Um, as you do make that change. But yeah, those are all the things that we've done personally, [00:55:30] um, throughout the years. And we've seen others do. And on the other side of it, you'll thank yourself for making the hard decisions that got you to that point.

Rachel Dillon: I would say the best part, because we treated just like clients, where we put together a block of clients, found, um, another firm who could serve them as well as us or better based on how they wanted to be served. Then what we what that allowed [00:56:00] is that allowed for us to build back clients but have some cash flow to do that. So that helped us when we started making the hard decisions of having some cash flow as a runway to build up more of the ideal clients and replace that kind of recurring revenue.

Marcus Dillon: Yeah, the cash flow and the capacity building both that and also kind of applying that to team and [00:56:30] that's where I would end today is like the team also needs to obviously be brought into this, the team, you may have somebody on your team that loves to serve a certain service line or type of client. Maybe you can build around that and maybe it's still a profitable, great revenue source, but you're just not involved and it's not stressing you out because you have the right team in place to serve those clients. Right. And so that's how you would think about it from a business. But but yeah, bringing the team in the [00:57:00] team that got you to this place may not be the team that goes with you, that future chapter. So that's just something to always keep in mind as well. Um, the cash flow will kind of help allow for that, but also just additional capacity on the other side of these hard decisions, will will help the team just as much as it will you?

Rachel Dillon: Yeah, absolutely. So we already mentioned it before, but there will be a resource and collective by [00:57:30] DBA to help kind of guide the immediate time after the regular April 15th filing tax deadline. And so be on the lookout for that. We'll likely discuss that in an upcoming episode as well. Just some ways to maximize that time and really help to grow and refine your accounting firm during that non tax season time.

Marcus Dillon: Yeah no it's great. Well yeah. And [00:58:00] I would just encourage if you need accountability check out collective. If you need to be in a room full of people that are doing really cool things. Um, you know I just met with my mastermind group yesterday as well, and all of us were going through and, um, you know, kind of learning from one another what each firm is, is kind of walking through during this time of year. And it was great. It was fruitful. I would never miss those calls, um, even if they're 2 or 3 weeks before a deadline. So, um, [00:58:30] but yeah, that's that's what is going on over here. So, uh, I would love to have you. And thanks so much for developing that resource and sharing that with others. That'll be exciting.

Rachel Dillon: Yeah, this has been a great conversation. Thanks for leading it and I'll see you on the next.

Marcus Dillon: Thanks so much.

Rachel Dillon: Thanks for listening to this episode. If you enjoyed the conversation and want to learn more, be sure to visit collective CPA. You can schedule a meeting directly with [00:59:00] me, Rachel by clicking on the Contact Us page. Be sure to subscribe, like, and share so you don't miss any future episodes. We look forward to connecting with you soon!