Warum die meisten Steuerkanzleien klein bleiben

0:00Uh, so I'm Joel. I have a CPA firm based out of Bakersfield, California, but during COVID we went virtual, so now we serve all 50 states. Um, I have a lot of constraints, uh, but I think, you know, my questions would be you know, how do you prioritize what's revenue? Revenue is last year was 2.5, this year's probably going to be about three. Awesome. Uh, margins last year 900,000, this year net was is probably going to be about 1.1.

0:30Um, awesome. I don't know if that's good, but I mean, you're running 30% margins on a I mean, yeah, Southern California. expensive labor. Um, so I mean, I guess my question is uh >> it's a super reliable business. It's a viable business. Like accounting firms get rolled up left and right. There's tons of buyer activity there. Like it's very people don't churn out of their accounts. I mean, it's like it's it's very sticky. There's high LTV. The issue with accounting is most of times um, there's no one in there who knows how to market and sell. Yeah. That's usually the issue with accounting accounting businesses. It's like all word of mouth and no one knows how to like market. Yeah. And then the other issue is is getting good accountants because there's so much demand for decent accountants. And so but like the accounting firms that I know of like all have like anybody who comes here with an accounting firm almost always makes money. They're all doing well.

1:20Yeah. Um, so there's there's big demand. Yeah. For sure. So what's the issue? Um, [clears throat] I guess one would be operations. Um >> [snorts] >> just making sure our clients are satisfied. Like we have a short period of time to do all of our work mostly during tax season, right? So we get clients kind of certain expectations getting your tax returns done and we're at capacity, but then you know, obviously they don't want to pay a premium sometimes, so I think we need to improve our sales process to make sure that we can charge a premium to give them that value that they're expecting.

1:52>> So do you mostly have one time a year customers or Usually we charge quarterly. Okay. Uh, for quarterly tax planning. Uh-huh. Is it more businesses or more individuals? >> Businesses. Oh, great. Okay. Well, that's I mean, even better. Yeah. Okay. Yeah, our I mean, our minimum fee right now is 1950 a quarter. Okay. Uh >> What's your annual stick? Annual stick, what do you mean by that? Uh, what's your revenue churn annually?

2:18>> It's not as good as I like it to be. I probably say we keep maybe 70%. >> Okay. You probably want Yeah, you want to get over 80. I mean, for for accounting firms like you probably can do a little better. Yeah. So I think it has to do with just also making sure the clients see the value because after we give them like certain tax strategies, they're kind of like, "Oh, I kind of learned this. Now I can find a cheaper accountant sometimes." So even though there is that stickiness, you know, they're especially some business owners will be like, "Ah, well, now I kind of saw the value what you guys did last I I I'm not sure I buy that. I think what someone says on the exit versus why they actually cancel aren't necessarily the same thing.

2:53Um, cuz like I already got the value is like literally what everyone says when they want to leave anything and it's just cuz like they just want to leave. Um, because I mean, I what you want is I mean, fundamentally from an accountant you want somebody who will get you to pay as few taxes humanly possible and keep you out of jail. And that's pretty much that's pretty much the that's the task. Yeah. >> [laughter] >> And um, make it as little work for you as humanly possible for that to occur.

3:18Right. And so I mean, just me having been a consumer of many different accounting firms and accountants and employees who were you know, to did that stuff for us. Um I don't I don't buy that like we taught them the the two or three tricks. Yeah. Um Also, I bet you a bunch of your business owners aren't even like close to it. Some of them are bigger and like aren't they're just like, "Yeah, just pay the bill. I don't I don't really care. Just make sure it's right." So I would bet that you probably have bad onboarding.

3:49Okay. [clears throat] >> So basically the expect the basically delta between what they're sold and then what their experience is in the first handful of days and weeks going into it and then the communication cadence between two places, they probably see limited value there. And so I think um, I would give you the same kind of be like if I were to like buy 100% of your business tomorrow, I would audit the sales process to handoff. Like I would bet you there's a massive amount of opportunity there in terms of like how can you take more notes on every customer because the I get pissed off if I feel like I'm talking to somebody they don't know much about my business and I'm paying them $8,000 a year to run my taxes.

4:21>> Right. Immediately I'd be like, "Oh, yeah. [ __ ] you." Like I know you can't be looking at me like I can just do back of napkin brain math of like if you barely know who I am, you definitely don't know how to save me money on my taxes. Right. [snorts] >> And we do have an onboarding process, but there might be a disconnect between the sales Well, we already know there's a disconnect cuz you already said there was. Uh, so this is me this is me trying to help. So I would go really deep on the onboarding process, which is like how can I really tighten this up both in terms of the personalization of the communication and how can I speed up the number of times you communicate with them because you want frequent communication as long as like it's pushed. So it's not me asking for you [ __ ] you know, cuz then I [ __ ] hate you, right? Like

5:03>> [laughter] >> if you ask me for stuff. But if it's like, "Hey, uh, just letting you know we ran this today. This thing is moving forward. Everything's good. Nothing from you. Just keeping you in the loop." And then two days later, "Hey, we also ran this thing. Um, XYZ's done and it's moving forward to the next step." I'd be like, "Oh [ __ ] they're doing stuff." And so like I tell this to everybody, but no one does it and so this is me telling you and hopefully you will do it. But like if you do 100 things, you want to let them know every time you're doing one of those things on their behalf and they're like, "Dude, these guys are working for me all the time.

5:30Like this guy works his ass off." And then someone else is like, "Well, they're doing it for 8,000. I'll do it for six." And then you're like, "I don't know. These guys work their asses off for me. Like I'm sure I'm safe." Like no one actually knows. It's kind of like when the guy comes to your your house like especially the nicer the neighborhood you live in, you know this. Like he's like, "I think I could do the lighting for 10 grand." I'm like, "Dude, you think I got this house because I let people rip me off?" I was like, "Give me the real price." And then it's like "All right, I can do it for four." You're like, "Great." You know, or whatever.

5:59>> [laughter] >> And so the thing is is like no one really knows. They just they just gut call on the fact that like my communication with this company's been crappy. The expectations are poor. And so if this is my external experience, I'll bet you they're not crossing their T's and dotting their I's on my taxes. That would be my guess. Right. And so I think if you get all of the other stuff tight, they will just guess that your internal stuff is tight, which I hope it is. Um, and I'll bet you that'll keep the stick. Okay. Honestly. And of course accountants don't know how to deal with customers, so I'll bet you probably need to train them again on that communication cadence. So it's basically way more personalized, way more frequent uh, communication and then probably very tight training on how to have touchpoint calls with the customers. Right.

6:42Yeah, makes sense. Or clients. Whatever. For sure. That'd be like the number one thing I would do. I wouldn't even do anything else. >> I mean, do you think it's scalable too because I mean, my biggest >> Yes, accounting firms are scalable. EY, KPMG, like yes, they're scalable. Price Yeah, PwC. Those are publicly traded accounting firms. Yes, they're scalable. What do you think about like one of the things you mentioned I think yes yesterday is like, you know the size of the brain, the biggest brain is as big as you know, so I I'm starting to now hire people that are smarter than me in other areas. Like but when it comes to accounting I'm still like the smartest person in the room.

7:18>> Yeah. There's smarter accountants. I don't say this as a slight. I just say like look at the guys at KPMG. Like there's some smart dudes. Yeah, I mean, I kind of want to hire like cuz I'm more of a CEO than I am a tax nerd. Yeah. >> So I'd rather hire like Yeah, go get a tax nerd. Yeah, so you go recruit somebody from one of those companies who's like, "I need somebody who worked at Enron who wasn't a bad guy." You know what I mean? And figure out like who can do like the real the crazy stuff who knows the tax like who reads tax law for fun. Yeah.

7:46>> Like that's who you need. Cuz there are dudes who do who are like all curled up on I like I know a buddy of mine who literally goes to the pool with the tax law. His kids are in the pool and he's reading it. And I'm like, "What is wrong with you?" He's like, "I just love this stuff." And I was like "I'm glad someone does." You know? Like and he's like, "Look at this hole." He's like, "Oh, I'm going to crush this one." And he's like he's like, "This is legal." He's like he just like loves it's like for him it's like treasure hunting.

8:11So like you need somebody who's like that. And if that's not you, then you should have somebody who is that way. Yeah. For sure. >> So yes, I agree and I think you should do that. Okay. I would say step one though, fix all the outside stuff. Step two, go get that guy. Okay. Cuz that stuff will make you more money today with what you already have Right. than do the other thing. Right. So if you've hit a revenue ceiling or your entire business relies on you to grow, then I'd love to invite you out to our headquarters here in Vegas to learn how we scale. It's a my team spends two days with you to identify the thing that's holding your business back. And so if that sounds interesting, click book a call and if you're a fit, we'd love to potentially see you out here in Vegas.