CAS expert Kane Polakoff of Top 100 Firm CohnReznick digs deep into the current staff of client advisory services, and how this fast-growing service offering is rapidly evolving.
Transcription:
Dan Hood (00:03):
Welcome to On the Air with Accounting Today. I'm Dan Hood. CAS or client advisory services — or, to some people, client accounting services — whatever definition you give it, it continues its exponential growth across the accounting profession with firms of all sizes launching or expanding their services and their practices in this area. And just as CAS is changing firms, it's also changing itself. It's evolving in many ways and in many different ways at different firms. So it's always a good chance to level set with it to see where CAS is now, where it's going, what's changed about it, and what changes we can expect in the future. And there's few people better positioned to talk about that. Our guest today is Kane Polakoff, his partner and ca leader at CohnReznick. He's been in this field for a long time. Anytime you go to a conference, you see Kane talking about it. He's out there in front pioneering this space. So we're very excited to have him with Kane. Thanks for joining us.
Kane Polakoff (00:57):
Yeah, thanks Dan. I appreciate it. It's always fun to have spend time with you on a podcast. I'm excited about it.
Dan Hood (01:03):
And this is a great topic to be talking about. There's a lot of different places we could start and we're going to cover a lot of different topics. So we're going to jump around. So I'm going to start on one, it's not random, but it's one I think about a lot, which is I mentioned client accounting services and client advisory services. And I think that there is for a lot of firms, and I think for people who think a lot about the assumption is that's where it's headed. It is evolving from what some people call sort of compliance-based or transactional CAS, that client accounting services to more of an advisory focus. Still have the compliance work in it, but the main focus of it will be more advisory and maybe two questions. Is that true? Is that still the case? And if it is, how far are we along? Are we in that evolution in terms of moving from the original concept of it as sort of write up remotely, done through the cloud to this more almost outsourced CFO services sort of thing?
Kane Polakoff (01:59):
Yeah, I think as you said, Dan, probably 10 or even 15 years ago, CAS didn't exist. It was really just writeup work or bookkeeping. I know originally when I was getting involved in CAS at the time, it was all done for compliance. It was really historical doing all the writeup work for the year as an output to use for the tax returns. And that was in most parts what it was. And so there's been a huge, I think a lot of it actually came from when COVID hit. It was just a big expansion from a shift because leveraging cloud-based technology, having to be able to do a hybrid or remote work and really kind of drive to help drive CAS to where it is today. And I think still is the compliance aspect of it, which is always going to be the case. But I know that we look more not only historically, but providing timely and accurate financial statements, which is one of the key outputs that come with that.
(03:02):
But really advising and working with our client CFOs and controllers and even owners to help advise them on what the service will be. So we're looking now forward looking to and projections and meeting with the clients and that's really the extension. We are a client's operations. We are working as an extension of our client's team and that's an expectation. And the tools that are used, the data has to be real time. When I say real time, we have some clients that are looking at information on a daily basis. It could be sales pulling information, could be weekly flash reports, it could be a monthly KPI report that talks about some of the important things for success for their organization. So yeah, that's where I think we're all moving towards now. I mean it would be great to say we're all there. I think as a professional I'll say we're all in different spots.
(03:59):
So when you talk about CAS 2.0 and where we want to go, we talk about a lot of the write of work. I think everybody's doing compliance work, but even in the last two or three years, I think a lot of folks are doing the advisory piece of it. Maybe not to the full effect but in pockets. And then I think another thing that's happening, which we talked about at the last conference stand is larger clients, more complicated clients that have higher expectations, that have multi entities that are looking for more in-depth knowledge and insights to be able to drive execution. And clients are having higher expectations. I think they get a little bit of taste of the sugar of what we can provide from CAS and they want more and which is good because it challenges us. Then we challenge our technology partners and others.
(04:43):
And I think the evolution is really here. I mean, we see some of the statistics on growth. I think with from AICPA 17% top line growth, typical year over year, we grew 60% last year alone. And there's just an enormous amount of opportunities within the space. And since we do share, I mean I am very fortunate to work with a lot of the other CAS practice leaders and collaborate and learn and listen that everybody's kind of seeing the same thing and we're all kind of marching together. And I always like to say we hear about assurance, we hear about tax, but I want it to be assurance tax and CA is kind of my goal in the future. And we're not there yet, but I think we're getting closer.
Dan Hood (05:24):
Right. Well at the growth rates you're talking about, I mean that's one of the things that I think the ICBA and their survey always makes a comparison between growth rates in CAS and growth rates in more traditional areas like tax and audit and CAS growth is twice as much if not much more. So while it isn't yet, there will be soon. There's a lot of things you discuss there to sort of explain one of the many reasons why CAS is super attractive. There's enormous client demand, as you say, as they get used to it, they're like, Hey, you can give us all kinds of great advice. You can be the CFO that we don't have or be the adjunct to our CFO in a lot of ways. Give us this advice that we never had. And you say they get very excited about it.
(06:06):
But the other thing that I think this is interesting is that CAS really is this sort of personalized thing and we're talking about this sort of general profession wide evolution towards more of an advisory focused thing based on the continuing compliance work being done, but also adding that extra layer, that extra sweetness of the advisory work. But I'm sure curious, as you say, you talk to a lot of CAS practices. Is there anybody who says what this compliance work is so important, it's so useful and firms so many clients need it and aren't getting it right here? Do you talk to anybody, whoever says, I think just sticking with the compliance work, sticking with the transactional work is where I'm at. I think this is as far as I need to go with CAS. The demand is certainly there. We know clients need that basic compliance work taken care of. Have you run across anybody who's sort of thinking maybe the way to go is instead of moving towards more advisory, maybe serve more clients with this compliance based focus? I mean,
Kane Polakoff (06:59):
I think there's a lot of conversations because when you think about getting into advisory, and I think we talk about growth and scale and to be afraid to grow double digits as an example. And how do I take my existing team that's focused on compliance work and transform them into where we want to go? So there is an evolution, there's a process you have to go through. I think the compliance work is very important, needs to be continued to be done. But I think that as clients are getting more awareness of what's out there with CAS and what it means and asking for more just as you're working with a client. Client is can you do this? Can you do that? What if I can have this and when I can have that? And when you say, well, I can't do that, I won't do that, then they're going to eventually go to somebody who can.
(07:49):
And I think that's my response when I do talk to some of the practice leaders is that clients have higher expectations for us today and they want to know more. And I think there's still a challenged with their staffing, having the right people in the seats and the right accountants and they're losing people and they have to keep retraining them and they're behind and they're getting pulled into things. This is the executives or CFOs and they don't want to do that. They want to focus on the organization m and a and other things. So I think that is just because of hearing the evolution over the last 10 years and especially the last five years, clients are going to expect that. And if you're doing compliance only for our client today, you don't want to do more, then they're probably not going to be a client of yours in the future. And that would be my response to that.
Dan Hood (08:36):
You're limiting yourself and forcing them, essentially forcing them to go somewhere else for the services that they want. So that makes some sense. I mean you can see why and your example of you've got a bunch of people who are trained in compliance work and you are making this evolution towards more advisory work is a very different kind of work. You can see a lot of firms might say, well, can I just stay here? But as you point out, a lot of clients are going to be like, Nope, I need this. I need more. It's great that you're doing the compliance work, but that's just the beginning. But let's dive into, because I want to talk about some of the challenges that CA firms are facing and I think that that need to train people or to find ways to build a team that doesn't just do the compliance work, but that also brings the advisory chops to it. Maybe we can talk about that and some of the other broader staffing challenges that are going on around CAS.
Kane Polakoff (09:27):
Yeah, so to be an advisor or to be able to think and the expectations of our clients requires a different skillset to an extent is to have the soft skills to be able to multitask, to be able to listen, to be able to problem solve, to be able to respond, to be able to tell a story on the financials. I mean those are just a couple of things as an example that clients would expect if you're getting more to the advisory side and there is a path of training to be able to get some folks that are in compliance and some of 'em will be able to do that. But what we're doing is we're looking at least what we've done is we've kind of built by verticals, and we talked about this before. So we identify individuals that were controllers or CFOs or very strong accountants that have the right soft skills to become part of those verticals.
(10:18):
And they know the nomenclature that they know how to speak restaurant or not-for-profit or real estate or a government contracting or whatever that may be. And when you have a core of leaders that you bring in and you find them from industry, that's where we find a lot of them and you bring 'em in, you give them the support, you give them the tools. One of some of the differences if they do come from industry is the multitasking though too. Sometimes you have to handle three or four clients at once depending on the size of what that is. But I think training has been a big thing in an aspect for the CAS practices in general is trying to build the technology training, the technical training on accounting and the soft skills and we need to still do more for that. So there is an evolution. It's very rare you can bring somebody right in and they can just go ahead and make an impact right away. We do find some of those. Those are the diamond and the rough, but that is the
Dan Hood (11:09):
Unicorns
Kane Polakoff (11:10):
A big focus that we have. And then the global capacity. So we have our global capacity, we have about 1200 people in our Chennai India operation that have been there for about 15 years. And these are chart of accountants, these are individuals that also have experiences and that helps to really become and doing the nuts and bolts and kind of creating, doing the engine and getting all the information done so that the team in the US has more time to focus on the advisory with the technology of course, and to get to that point. So yeah, it does take time and does take an investment. And I think in school, one of the awarenesses we're trying to build nationwide is there are alternatives. Hey, I'm an accountant. I want to either go in tax or assurance, that's all. When I go to job fairs, I know my daughter just graduated college and she's going to go into advisory on starting next Monday.
(12:00):
And I think by building that grassroots to make CAS sexy, Hey, you get to learn about all this new technology. You get to talk to CFOs and controllers and owners and you do a lot of problem solving and figuring out about how these businesses work and help share the numbers and storytelling. We're trying to get them excited. We had a huge amount of people that have applied to our internships. We had over hundreds of people that applied and we have interns now and now they're going, wow, this is great. I want to get into it. So we want to build that awareness and I think by educating the colleges, the professors, the chancellors and others, that'll allow us, just like when you look at techno, they have hundreds and thousands of people that join interns or new every year for CAS. It's harder to find that. And because of the growth we have, we're going to have to build that same kind of capability there too.
Dan Hood (12:49):
Right, right. Well yeah, I mean that's an interesting individualized pipeline problem. The profession as a whole has a pipeline problem, but CAS specifically has its own interesting little pipeline problem. It sounds like in part because you're looking for that set of soft skills that don't naturally tend to come into the profession, but also you're looking, I mean it seems like the teams that you're building, and maybe you can tell us a little bit more of that to make sure I'm not getting this wrong, but it sounds like the teams you're building have a lot of specialized players. You have some compliance focused people where their skillset is there. And sure if you can train on the other stuff, that's great. But it sounds for a vertical approach, having someone who's been in the industry like a former CFO, a former head of some kind of finance department is going to be a huge plus and they're going to be able to speak more to that advisory sort of approach. So it sounds like you're building very specialized teams of different skill sets. So as opposed to an audit team would be mostly auditors and a tax team would be mostly tax people where it sounds like the CAS teams are a little bit more varied in terms of the skill sets that everyone's bringing.
Kane Polakoff (13:52):
And I think the other thing too from a horizontal, we have a software solutions team and they're focused on technology innovation optimization, and the skill sets of them are technology enabled. They love technology. Some of 'em love their program and they do in a lot of cases do have an accounting background, but none of 'em have to. And so that is another skillset because it is so important that the technology and how you put the tech stack together. How do you have a source of truth? How do you automate, how do you do? The change management aspect is done by a software solutions team and we have project managers that are able to manage the implementations that you have a mix of implementing new software and technology. You have to help do a transition of people and set up and then you have to have processes of automation. So you have different skill sets within the CA practice. It's not only doing the accounting but helps to support the organization to be successful as well.
Dan Hood (14:44):
Right. Very cool. Alright, well that's staffing everywhere and it's figuring out the staffing issues and solving those is an issue all across the profession. So I'm not surprised that we will bring its own challenges to building the CAS practice. Are there other major challenges you see CAS firms, CAS practices facing at the moment?
Kane Polakoff (15:04):
I think capacity planning is a tough one, is trying to determine when do staff, do I hire people now? Do I wait, do I get the business come now? Do I have, because I think typically if you look at a public accounting firm, they typically don't like to have a buffer capacity. Here are all these hundreds of people that are sitting there idle, waiting for work to come. And I think in a lot of the opportunities, we have some clients that call us on Friday and they want to start on Monday. What happens if you have a huge organization that's going to take, let's say 20 people, they call you up and say, Hey, we need to be up and running in four weeks. So I think when you think of the scale and how you project out, forecasting is really becoming a skill. And in our form too, we do like a 12 week forecasting and we look at our pipeline, we look at our existing capacity, and then as the pipeline changes, we reflect and project out how we're going to staff from a global perspective, which is the US as well.
(16:03):
But I think a lot of organizations because of the growth, have not enough capacity, which causes pressures on existing clients, which causes issues and then it causes bad implementations. So that's a really big challenge that I'm seeing. And then also that CAS practices are using too much technology. They have, Hey, I'm going to put this on, I'm going to put this on, I'm going to put all this together because it's all great. But then you find out you have too much and it doesn't work as you expect. Sometimes simplicity is important. So enjoying from a tech stack, what is the general ledger system? Maybe you have an a p automation tool, you have a closed management tool and everything is within the ecosystem that talks to each other. And then you want to make sure that your teams are utilizing the tools as they were designed to be used.
(16:48):
And instead of here, let's bring this in. Oh, this is the new shining toy, let's put this one in. And then before you know it, it's hard to cross train the redundancy, single point of failures. So you want to build a tech stack. I do it by vertical and you train the team all on that. So that gives you a buffer capacity that you can, if somebody goes on vacation for two weeks, alright, I can't do any work for two weeks, the client wouldn't accept that. So you have to make sure you have the tools and everything in place and everybody's trained on those tools that you can bring people in or help support if somebody goes on maternity leave for three months as an example or six months as well.
Dan Hood (17:24):
I love that. This is one of those things you talk about, this is not a normal, the idea of having buffer capacity is not a normal idea
Kane Polakoff (17:31):
For
Dan Hood (17:31):
The accounting profession. It is very much a no, no, no, no, no. We'll wait till we have too much work and then we'll try to hire some people, which is leads to has led to among other things or contributed to the burnout problems, all that sort of stuff. And CAS, as you say, is unique in the speed with which clients expect things solved. Someone comes to you with a tax, adds a new tax return. You've probably got until the deadlines where you have some time to figure it out. You may have months to figure it out, but if they need, as you say, if they need you to be up and running Monday, you got to have the capacity ready. And hopefully it's changing some of the profession's attitudes around hiring or thinking about capacity because it's an
Kane Polakoff (18:08):
Important way and that's the key, right? Right. We are operations. If a client is going to buy a huge company and they're going to combine them, then we need to come and support them if we're already doing the accounting for them too. And that is the tricky, I mean, having a buffer capacity is my recommendation. And we do that and it'll save us. Because if you're running so lean and so tight and with a growth of 15, 20%, the end result is not good. I'll just say that
Dan Hood (18:37):
For anybody. Right? For staff. Yeah. That's my point for clients. Yeah, absolutely. Absolutely. You had talked a little bit about shiny objects, which naturally made me think of artificial intelligence. I want to dive into a little bit of that where you see AI maybe impacting CAS in a second, but first we're going to take a quick break. Alright, and we're back. We're talking with Kane Polakoff of CohnReznick, a CAS expert from way back. We've talking about the challenges, some of the opportunities. I wanted to talk a little bit about, we mentioned shiny objects and AI as everybody's favorite shiny objects these days. Do you have thoughts about how artificial intelligence is going to impact CAS? A lot of people talk about how it's going to affect the profession as a whole, but do you have thoughts about it, its role or its impact specifically in CAS?
Kane Polakoff (19:24):
Yeah, I mean I think going to be a big impact, but I think we want to make sure it's a positive impact. So I think we're still at the very beginning of the journey in ai, just like CAS was 10 years ago. And I think the nice thing about it, and let me maybe take a step back for a second. So there has been a lot of firms that have made a big investment in AI and they're trying to create a lot of that on their own and a lot of 'em have failed. I'll just say that. And I think it's because we're all still trying to figure it out. My approach would be there's a lot of companies out there now that are making the investment in building the agents and the bots and everything you're talking about as well as a lot of the technology partners that we have within our CAS community are also enabling ai.
(20:11):
So I take a more simplistic approach that I don't want to boil the ocean with ai. I want to identify key simple tasks that are low hanging fruit that we can do, whether that's enhancing AP automation or even enhancing an inbox for receiving invoices or other things from client request to how do we do a narrative from a financial statement to create kind of a narrative for that. So those are just three examples of how are simple use cases and there are tools out there that do that today. So I think everybody say, I'm going to create ai, I'm going to go on the beach and I'm going to drink it. I'm going to have my water and just relax. So I don't think that's going to be the situation. You're still going to want to have people. I say there's three things that are important in CAS.
(21:00):
One is people, two is culture, and three is people. And you have to have all that. Now, technology enablement, AI is also very important, but you need to have the controls, the review and all that in the process. So for example, if you're going to go through straight through processing for accounts payable, you can put AI into that process of how that's going to work, but you're still going to want to have somebody validate some of the information based on certain tolerances to ensure that the results are what you want to have. The last thing you want to have is a system doing something is making the wrong decisions. Now you can refine that and you can improve that over time, but you're still going to want to have the staff and the people doing that. Now what that's going to allow our people to do and is when you look at 20 years ago, you have a bunch of data entry operators keying in information and we all know about that.
(21:48):
But now that all that information is going to be taken through leveraging technology, automation and AI where then you're allowing your staff to step up, do more reviews, do more thinking, and have time then to advise with your clients. So I see AI as an enabler for us. It's not going to replace people. I think it's going to only help us just like how we write emails now with ai, you just press a button, but yet you're still going to want to look at what's been written and make sure that the proper contact and everything's in place. So yeah, so I think we're still getting there. The great news is everybody's talking about it, everybody's excited about it, but we don't want to overcomplicate it either.
Dan Hood (22:26):
Right, right. Yeah, it's going to be interesting to see how it plays out and probably very different I think than a lot of early players. As you say, a lot of people jumped in fast putting some money into it and may not find that it delivered the results that they hoped. But there will eventually be, I think tremendous results from it. It's just a matter of you say sort of figuring it out, going, taking the time with it. You had talked about people, culture and people as the three most important elements. We talked a little bit about people, and I want to talk a little bit about culture because we talk about a lot of times in the CAS conversation, we've talked a little bit about it or mentioned it, the notion that the average firm has a tax department or maybe a bookkeeping accounting department and maybe a task or assurance group, an audit group.
(23:12):
And those have tend to have pretty strong cultures. And CAS is sort of this brash newcomer that's coming in and it's growing. I think a lot of firms. And I was curious if you see or you have a sense of how practices are developing within firms in terms of their relationships with the broader firm, with the other departments, that sort of thing. Are they developing their own cultures? Are they trying to adopt to the culture of the, I mean this goes into the whole question of whether firms have cultures at all or whether they just have what's been developed for them. But I mean certainly I know I'm sure Cohen Resnick has an idea of what he wants its to be. And is your CAS practice fitting into it? Do you see at other firms? Is the CAS practice developing its own culture or falling in line with the general firm culture?
Kane Polakoff (23:54):
So I think there's an ingredient of the firm culture that's part of CAS. However, when you think of assurance and tax, you have the busy seasons. You bring in the lunches, you bring in the dinners, you work the weekends, you have that type of camaraderie, which is different for CAS because CAS is pretty consistent. I mean, you've got month end, you got quarter end, you got year end, you got your January is your busiest month where you, you're stretching. And so you do need to bring in and build your own culture. And I think that's very important to the work-life balance and expectation that I have for my team is I don't want them working 80 hours a week or a hundred hours a week for three months of the year or four months of the year. I want them to work 40 to 45 hours.
(24:41):
I want them to be in a situation where they do have a work-life balance. I do want them to have career pathing. Now, I think career pathing is a little bit different in CAS than the other two because if you have growth of 15, 20 or 60%, that leaves opportunity for staff as they come in to grow quicker. So you have that aspect too. But I want to make sure that for me it's all about the people. It's about what they do and how we support them. My job is to give them the tools and everything and the guidance and support to be successful. And culture for me is it is probably the one most important thing that I do. And if my team is not happy, I try to find reasons how to solve those issues. And we're not perfect. Nobody's perfect, but I've been in some terrible cultures in my past and I learned what not to do.
(25:31):
And I do think that public accounting does get bad rap on culture in a lot of cases, team of management consulting or investment banking to name another two. And I want people to come to my team, which they do. They can take vacation, we give them a week off in July, we give 'em a week off in November, they take vacation. We had a gentleman that took three months off and went to Africa on a mission. I had other people that have taken two weeks of vacation and we're trying to build it. So it's a team approach. So it's not a single point of failure so that if somebody needs to go on a two week vacation, I don't want them bringing their laptop and doing work for those two weeks. I want somebody else to be able to step in and take on that work.
(26:11):
And that's why having a buffer capacity and building that in allows me to stretch but stretch in a way that everybody benefits. It's not just everybody's working crazy hours. I don't want to do that because then our attrition's going to go up. And that's part of, I guess the excitement of CAS is it gives everybody the ability to work a better work-life balance and everybody puts their time in, but I'm not expecting 'em to work the first two years, a hundred hours a week and that I want them to jump in and do their job. They need to be trained and to be efficient to do that. And there's expectations on what you need to do and how you need to do that. But I want them to feel like they're part of a family and that they're being supported.
Dan Hood (26:50):
Gotcha. Excellent. Well, one of the nice things for CAS practices is that they're all of them, or I shouldn't say all of them, the overwhelming majority of them are relatively young so that they don't learned a lot of bad habits. They haven't had a chance for bad habits to get cemented in place. And they've come around at a time when the profession as a whole is much more alive to the notion of strong work-life balance and less burnout and that sort of thing. So you have a chance with a clean slate startup and build a group and not have partners who've been there for 50 years and are terrible to their staff
Kane Polakoff (27:22):
And blah, blah, blah. And we've had quite a bit of folks that have transferred from, and they're outstanding performers from assurance and tax and they're doing great and because they want that work-life balance. And there's some that I'm sure for that from CAS that may want to switch. So I'm not saying tax and audit is bad, I'm just saying it's different and can say it depends what people want. You can say it if you want. You can
Dan Hood (27:45):
Go ahead and say it if
Kane Polakoff (27:45):
You want. You can say it. Dan,
Dan Hood (27:47):
You heard it from me. Kane OV said the tax and assurance are bad. No, I'm kidding. Well, Ken, we love tax and assurance, but it's definitely, I mean it's certainly true. There's plenty of great tax insurance departments in firms across the country, but it's certainly true that most of them have been around for a long time. So they have a culture that has been in place for a long time. It's more difficult to change and upgrade those cultures than it is something you're just starting and you get to build it to having learned from everybody else's mistakes, put it that way, or from where the profession is now compared to where it was 20 years ago. So it's a great opportunity for CAS practices and it sounds like you're taking the right approach. Let me just ask you one quick last question, and I realize this is a huge question, so we could spend two or three hours on it. But as you look at CAS practices going forward, like I said, there are a lot of firms that are just starting their CAS practices or whose CAS practices are relatively young. What do you think are some of the most important elements they need to get right now to scale and grow? I mean, I assume some of these will change over time, but for the moment, what should the hot button issues, Hey, you want to make sure you get this right if you, you're looking to grow right now.
Kane Polakoff (28:52):
Well, yeah. So ultimately you need to have a business plan and strategy. And I'll talk about a couple of the ingredients of that. One is you need to have dedicated people. And I still see today that some of these new CAS practices who I've talked to that are sharing resources, they're sharing of tax or they're sharing of assurance. So what happens in August or September or January, February or March, they get pulled away and you can never be successful or who is your CAS leader. And I think that it's fine if you want to bring somebody from tax or assurance, but you do want to find the right leader that understands the business, that has the vision, that can drive and that can provide and articulate and also have clout within their organization. I mean, having a conversation with a CEO of an owner of a firm and saying, Hey, I want a buffer capacity.
(29:44):
They'll probably look at you and laugh. So I mean, I think it's being able to articulate it and explain why you want that. And also determining how do you want to go to market? Do you want to handle small accounts? Do you want to handle big accounts? Do you want to go after one vertical or two verticals or three verticals? But if you're an organization, let's just say you're really good at non-for-profit in tax and assurance, then why don't you start CAS a not-for-profit as an example. And then also on the tech stack, you can look at six, seven, or 10 different general ledger systems, 10 20 different AP automation tools and 10 20 close management tools. But identify one or two, but identify the ones that fit the vertical that you want to go after and maybe start with one tech stack first and get them trained on that and then go from there. Now, I am a firm believer that it's not, they will come and you will build it, is that you will build it and they will come as we know from Field of Dreams, which I think the anniversary of that was just a couple of days ago.
Dan Hood (30:41):
I think you're right, yes.
Kane Polakoff (30:43):
And so I think that identifying a core team of strong accountants that are multitasking, that can think, that can drive, that can advise upfront. You want to overachieve over deliver initially, then you build a good reputation. What happens if you start and you don't deliver, you get a bad reputation and it's hard to come back from that. So those are just a few things. I can go on for hours about that, but I've learned, I made many mistakes in my career. But don't try to grow too fast, start slow, kind of refine what you have, feel comfortable with that is, and then grow more because the business will come, but the business will not come if you're not delivering well. So those would be some of the things Dan, I would have for that.
Dan Hood (31:28):
That's all excellent stuff. And some of it, not a small amount of it is true for any new practice area or business that a firm might be able to stop. I think this is one of those things where a lot of those things, like I was hearing, well, firms made that mistake with wealth management or firms made that mistake with forensic accounting. Or one of the biggest, I think is having that champion having treating it as a business that you're getting into. You're not just doing it when you're not doing tax and assurance work. It's not a part-time kind of thing. You got to be prepared to treat it like its own full business.
Kane Polakoff (32:01):
Yeah. Well, the biggest mistake people, I mean firms make is, oh, we want you to be $5 million. We want you to be $20 million, we want you to be $30 million, but there's no business plan,
Dan Hood (32:10):
Right? Well,
Kane Polakoff (32:12):
Yes, right. Hey, you got to be at 60% gross margin. I am just using this as a thing. But you need to have a business plan. You need to have all the key, you need to have a sponsor. You need to have key support within your organization that they understand what the investment will be. There will be investment initially.
Dan Hood (32:31):
What is that? Are you
Kane Polakoff (32:31):
Talking too? If you can't just, Hey, I'm going to be up and running, no investment, we're great. That's not going to happen. So there will be investment in time, energy, people cost, and you want to make sure all your sponsors and your firm understands what that is. And of course you can measure that as you go through that process and be proactive with them. But it does take time and it is not easy, not just, it takes a lot of work to get a CAS practice up and also to continue to move it forward.
Dan Hood (32:59):
Right? And we're not helping things by talking about, wow, it's phenomenal growth rates. It's amazing. You'll make billions of dollars in your first year sign up with this package called the one 800. But because the success that's available to CAS practice, this is true, but we shouldn't, you're quite right. We shouldn't diminish the amount of work that involved. It is a full fledged, huge service with a lot of moving parts that you need to get right before you can expect to reap all those rewards. So excellent points and a lot of great advice. Kane Polakoff, thank you so much for joining us.
Kane Polakoff (33:30):
Yeah, thank you for your time, Dan.
Dan Hood (33:32):
Cheers. Thank you all for listening. This episode of On the Air is produced by Accounting Today with audio production by Adnan Khan. Ready to review us on your favorite podcast platform and see the rest of our content on accounting today.com. Thanks again to our guest and thank you for listening.