Why work 80 hours a week when you can work 40? Why work 40 when you can work 25? Consultant Geraldine Carter explains why it's not the hours you work that matter, but what you and your clients get out of them, and shares strategies from her new book to help build accounting practices that take less of your time but deliver just as much value -- if not more.
Transcription:
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Dan Hood (00:03):
Welcome to On the Air With Accounting Today I'm editor in chief Dan Hood. For many accountants, working long hours is something of a badge of honor, but there's a lot of good reasons to fight that notion from the need to attract scarce talent to simply living a better life. Here to talk about all that as Geraldine Carter, she's a coach and a consultant to overwork cpa. She's the host of the business strategy for CPAs podcast and perhaps most relevantly for today's subject. She's the author of the Just Released Down to 40 Hours, A Roadmap for CPAs to end Overworking without giving up revenue, which is an important consideration. Geraldine, thanks for joining us.
Geraldine Carter (00:33):
Thanks Dan, for having me. I'm so happy to be here.
Dan Hood (00:36):
We're glad to have you. This is a big topic, particularly we're just coming off tax season where people are working somewhere between seven and 8,000 hours a week and often, particularly for older generations of accountant, feeling very proud of that. That's a little badge of honor. What you're talking about in the book is there's a lot of fascinating things, and it's a direction that a lot of firms should probably be thinking about going in, but a lot of what the problem is is undoing or unlearning bad or counterproductive habits that were developed over the past. Where did all those come from?
Geraldine Carter (01:07):
So a lot could be traced back to hourly billing, and if you're assuming bad habits are things like being low priced, perhaps being inefficient, not marketing or hiring to solve for overworking, these things can be often traced back to hourly billing. So for example, if you are a generalist, the less expert you are, the slower your work is, the slower your work is, the more you bill. If you're inefficient, inefficient processes, your processes are stuck in your head or they're incomplete, or each staff person has their own process for the same kind of task. The slower it is, the longer it takes, the more you can bill. So these go back to hourly billing. Certainly you had an incentive to have a giant stack of work on your desk if you wanted steady revenue because you knew you could come in on a given Tuesday and just plow through a bunch of work and then bill for the time that you put in.
(01:51):
So the structure and the culture got set up to be working long hours. That became the norm, and then it became just understood that that was how accountants did things. But what we find is that if we come to understand value and that revenue in fact comes from value and not from work, then we can learn how to price to capture the value that we create for clients, and then we can set about being efficient and then we can make the revenue that we need to make without it having anything to do with the hours and the time that we put in. And once we understand that and start operating our businesses with that in mind, then that's what helps people get off of the overworking treadmill.
Dan Hood (02:30):
Right. Well, I think a lot of people, they look at the cover of your book and say, down to 40 hours from 80 hours or 120 hours or whatever it is, whatever insane number it is who say, how will I make up that revenue? As you said, it's that switch away from the hourly billing, which in the end half that stuff they would be writing off anyways. And when the compliance complained about it and said you couldn't possibly have spent that much time working on me, you've sort of neatly outlined a lot of the strategy of the book, which is a change in mindset and a change in approach from hourly billing to value pricing to niching, to specifically focusing on work that you're expert in. And that means you may be able to do it not just better and more deeply, but much more quickly. So you've outlined a lot of those things, but I want to dive into some of them more specifically, particularly interested in that switch to away from hourly billings. They say a lot of firms look at that and go, whoa, I bill by the hour. How am I going to make up all that revenue? Maybe we can unpack a little bit more about that. Switch to value pricing.
Geraldine Carter (03:28):
So we have to understand first what our clients value. And value is entirely subjective. It's in the eye of the beholder, just like beauty. So you've got to talk to your clients to understand what it is that they value from the services and the work that you're doing for them. Oftentimes, the value for clients lies in the transformation. They typically value one of four things, more money, more time, more clarity and less stress. So if you can impact meaningfully one of those needles, then you can begin to understand what it is, what the work is that you need to do in order to move those needles for them. When it comes to money, people either want more, they've one of two problems, either want more or they have more than enough and they need to know what to do with it. So that one's pretty straightforward.
(04:10):
And then with time, most often they want to get their time back. So how can you help them get their time back with what you do? And when it comes to stress, they want to make sure that they can meet payroll, they're going to be able to pay their bills, and they're not up at night wondering where that money's going to come from if that invoice payment is going to come in on time, et cetera. And when it comes to clarity, I don't need to tell your listeners that the vast majority of business owners don't understand their financials and they're trying to run their businesses and make quality business decisions without understanding what their financials are telling them. So if you can design your packages so that they make a meaningful difference on one or more of those metrics, now suddenly we're talking about we're thinking about value for the client, and then we design the packages, we reverse engineer the packages so that it helps the client get what it is that they want and what they value.
(04:57):
And then when it comes to pricing, we just use the pricing tools that make the most sense in the scenario to capture the value. And I want listeners to understand that we need to understand what pricing tools to use in what situations, because if you don't, it's sort of like trying to open a can of beans and reaching for the channel locks. That's not going to work. Or if you want to loosen a bolt reaching for the can opener not going to work, but it's not the tool's fault. You've got to know which tool to use in which situation. So once you understand value and what your client's value and which pricing tools to use, that's how you take care of the revenue side of things,
Dan Hood (05:34):
Right? No one goes to an accountant and says, I need to get six hours of an accountant's time. That's what I'm buying, right? They're buying a result or a piece of advice or a piece of information or a, as you say, clarity or time back. They're not buying the, I don't need to have an accountant on a treadmill in the corner of my office and say, yep, I got an hour out of them. That was great.
Geraldine Carter (05:52):
And I definitely don't want to buy a four pound bag of operational KPIs.
Dan Hood (05:59):
I mean, we could dive deeply into what clients do and don't understand. First you would've to spend the time, actually, you could probably bill for the time to explain what a KPI is to them. But after that, then you get into just providing them and the value of that. But now it's interesting you talked about the packaging or packaging of services, and I wanted that, I'm going to use that as a wedge to go into the service aspect of things. And there's a bunch of different aspects of how firms should be thinking about the services. They offer a couple of different aspects to that to be able to move, as we say, to move this down to 40 hours, it probably, we might take a moment here and say, it's not really about the hours, it's about what you can do with your life or your practice in that extra time, right? It's about, as you say, it's about freeing up time. Clients want time, accountants want time because there's all kinds of other things they can do with that. It's not just about the simple reduction in hours, it's the value you get from that reduction in hours.
Geraldine Carter (06:53):
So for the clients who are in my mastermind programs, I have one that takes them down to 40 hours where we deal with marketing and we deal with pricing and packaging and we get out of the chaos of running of the firm and then they go down to 25 hours where we tend to focus more on systems and staff and really pushing on value. What it is for my clients is really around, like you say, there are other things that I want to do with my life. It's not just necessarily that I want to go to Bora Bora, it's that I have young, it might be that I have young children or I have aging parents, or I might have a kid with special needs. There are all kinds of reasons, but you also don't need a justification to want to work 25 hours. And part of the challenge that we deal with when the CPA goes from 40 hours down to 25, that doesn't exist when we're going down to 40 hours is now the CPA feels like something feels wrong because they're so accustomed to working so many hours.
(07:52):
A 40 hour week is culturally normal, but a 25 hour week is culturally not normal. And so all the gremlins start spinning up about something's gone wrong. This is a fluke. When is the other shoe going to drop? Clients are think you're clients are going to think that you're screwing off. They're going to think that you're not giving them value. You should be working more, and they start to feel guilty. So there becomes a mindset shift that needs to change going down to 25 hours just because it is so against the grain in the accounting space. But all of this is, okay, we can solve all of these problems. None of this is rocket science. I went to school with the rocket scientist. This is not that. But it is challenging, right? Because we do have to change how we think about what we're doing, and we have to recognize that we've stepped onto a different game board from when we were a W2 employee, the moment we hung our shingle, we chose to be a business owner, and now the game is different, and if we don't learn the rules of the game, we're really going to suffer and struggle.
Dan Hood (08:50):
I want to dive into a lot of that because a lot of really interesting stuff there, but I'm going to save that for a minute because a couple of other areas, I sent this off in this rabbit hole and I want to go further into it, but before we do, let's quick go over the packaging and service offerings and how accountants should be thinking about that if they want to make this switch to 40 hours and then hopefully to 25 hours. So how do they need to think about their offering? You've touched on a little bit, you mentioned expertise and getting more expert in the services you offered, and then you also mentioned packaging, and I think that's going to play in there, but I'll let you dive into that.
Geraldine Carter (09:21):
Sure. So the simplest way to think about this is to first think about one buyer or one client at a time. If you try and figure out a service offering for your entire portfolio, it will be almost impossible. So we focus on one client that you really enjoy working with and you think, okay, what is this person really struggling with? What is it that they need? What are they asking me for that I haven't been able to provide them because I've been too busy? What could I provide them that I know I need to provide them if I only had more time? So once you think through those questions, and you can think about beginning to design your package, but you have to know the answer to three questions, who is it for? What does it do and what is it? So for example, I just helped a client with this.
(10:10):
She was redesigning her annual tax packages and we needed to separate out is this just a tax return? Is this a tax return with planning and strategy? Is this a basic or mid-level experience or is this a white glove experience? We have to define what this is, and then we need to know who it's for. Is it for the W2? Is it for the business owner with a mid six figure business? Or is it for a high net worth individual? Who is this for? It can't be for everybody. You won't be able to design an effective service offering, and then you need to know what it does if it's just a tax return, does it simply make sure that the essentials are covered? If it's planning and strategy, does it set you up to save? Or if it's a white glove tax experience, is it knowing that you have somebody reviewing your whole holistic picture for your family and looking out for you and your family's needs?
(11:01):
So we need to know what it does. And once we know all those things, then we can set about designing tiered packages in this case so that you can split apart each offering by what it does, what it is, and who it's for, and then assign prices. And in this case, just to dip into the pricing for a second, the prices of these three packages ranged by a factor of five. So the most expensive one was five times more than the least expensive one. So when you do it this way, it makes it so much easier for your buyer to look at your options and to clearly see, oh, this one is definitely not for me, and oh, this one sounds more like what I need.
Dan Hood (11:41):
And I love that. One of the things I love about the tiers and the packages is that there's a whole psychology of pricing and how people pick what they're going to do and giving them those options and have a sense of, oh no, I don't want just bare bones, but I don't need white glove or I'm somewhere in between. And that all that psychology is fascinating to me. But obviously it starts with, as you say, defining the service, who it's for, what it's going to be. And that also, I assume this ties into a much broader discussion that's gone on across the profession of deciding who you want to work with, who's fun to work with, who you enjoy working with, what kind of practice do you want to have? Do I want to work with a lot of entrepreneurs or I want to work with large, well-established businesses, whatever the case may be.
(12:20):
That all goes back to that as you say, understanding who it's for, what it is and what you want to do. And then that gives you some freedom to think about it and to pick and choose your clients as you like. This is awesome. I want to dive into, we talked about the broader psychology of moving to a 25, and then I assume at some point we will not work at all. We'll just move to zero hours, that's the next book, but I want to move into that. But before we do, we're going to take a quick break.
(12:48):
Alright, and we're back talking with Geraldine Carter, an advisor to CPAs and most recently the author of Down to 40 Hours, A roadmap for CPAs to end overworking without giving up revenue. We talked about some of your specific strategies that firms need to embrace in terms of pricing and packaging their services and thinking differently about their service offerings, moving to value pricing and all that sort of thing. So there are all these tactics and people can read about them in greater detail in the book. But I'm curious is how much of this, because we got into this, started to get into it, but I want to get more into it. The broader mindset and cultural shifts that seem to be part and parcel of this. One of which you described this sort of, there's this sort of Calvinist notion of your working less than 40 hours a week, you're somehow slacking off, and that's not just in accounting.
(13:32):
I think that's really, that has become a norm for the whole country. What's fascinating to me is about when you actually look back into history, we used to have a six day week. We used to have working on Saturdays totally normal, and if you took a Saturday off, you were a desperate slacker. Now we've got it down to 40 hours. You're working on getting it down to 25. As I said, I'm looking to get it down to zero. I'm with you on that goal. I assume we can all agree zero hours is great, but there is that sort of mindset. How do you encourage people to make that mindset shift? And particularly in firms, you look at employees who aren't in the leadership levels may also feel like, I can't work less than 40 hours. The boss will think I'm slacking off. How do you inculcate that in people? How do you get people to accept that?
Geraldine Carter (14:15):
It's a little bit like learning to ride a bike. There's only so much you can learn from a book. You've got to feel what it feels like. You have to go out to clients and have conversations about prices that almost take your breath away and watch them say, yeah, no problem. Great, when can we get started? And that feeling will make you feel wobbly and you'll go, no way. I can't believe that they just said yes to that price. How is that possible? But you've got to have that conversation and feel a little bit palm sweaty going into it and watch them say yes in order to know that just like your bike, the faster you go, the more stable it becomes that when your prices higher, the more stable your business becomes. It takes a little bit of time to get used to the feeling.
(14:56):
Just like riding your bike at speed when you're a beginner feels super scary and you wouldn't recommend it. So we just take this piece by piece, step by step. I don't encourage my clients to rush through this process because too much at once paralyzes them. So we take it step by step. We move the prices up progressively so that we can get out of the chaos, disengage some clients. And then what I see across clients who make the most progress is that the less they work, the more they get their hours down, the more revenue they start to make because they have more free time in their day to actually think about their business problems. They have more free time to think about how to create value for clients. They have more time in their day to just be quiet and to let their brain rest, which if you're doing a lot of high level thinking, your brain needs time to just chill out.
(15:47):
And if you push it all the time cranking out work, your brain doesn't have time or energy to think about higher level business problems that are going to create value, that are going to create efficiencies, that are going to be the things that your business needs in order for you to get your hours down. But like I say, back to the bike analogy, you got to get used to the feeling right? And you got to learn how to bring it up to speed and get used to it being safe and okay to increase your prices, have your clients say yes to them, get used to doing less work, recognizing that the sun still rises and the sky doesn't fall and it's all okay. That takes, I see that for my clients, take 6, 12, 18 months for them to get used to the experience of going down 40 hours down to 25 hours, down to 15 hours, down to five hours, which is the client that I have who's gone the farthest.
Dan Hood (16:39):
Wow. Wow, that's amazing part of it. I mean, some of that's got to be account. This is true for everything that goes on in accounting. Every change that happens in accounting, they need to see some other accountants who've done it to see it, which makes sense, right? You want to make sure someone else has proven the concept. I think as more people, more of your clients show up working five hours, five hours a week, that encourage people to be more comfortable. But certainly until they see that on a widespread basis, it's going to take some time. And I'm glad you mentioned the free time to think about your work or to do higher level work in your business because I think there's a lot of people, I wouldn't be surprised if there's a lot of accountants who are like, well, I don't really want to get more free time away from work.
(17:18):
I don't want to spend time with my family. I don't like my family. They're not that great, but no kid. But the point being that free time, it doesn't just have to go to climbing mountains or windsurfing or spending time with your family or going back, giving back to the community. You can put it into more work if you want it. If you want to grow a crazy big firm, you can put it into great big expansion plans or whatever the case may be. The point being that you have now the time to do that. If you if can cut out some of the other clutter that'll free you up to do whatever you choose to do with the time. But it is got to be uncomfortable for a lot of people to switch into. Are there sort of broader changes to the firm that need to be made for these for, I mean, we haven't really talked about what size a firm, I assume this kind of thing can work for almost any size firm, but is that fair?
Geraldine Carter (18:04):
So the people that I work with tend to be in the mid six figures because those are the folks who are single owners. They can make the decisions, they can implement the decisions, and they can see gains rather quickly. The concepts apply no matter how large your firm is, the business principles or the business principles, it just takes longer to implement and push the changes all the way through. But for folks who are listening who own the larger firms, all of this is possible. Just know that it probably takes a little bit longer or when you, so to speak, rip off the bandaid, you're going to rip off a little bit more here with it. So it just depends on how fast you want to move. There's no right or wrong answer about this. Back to the mindset piece. We were having a conversation recently in mastermind and one person was asking another where the secret sauce was because she was down to 20 hours-ish.
(18:53):
And the person answering said, I did this, I did this, I did this. They did the fundamentals well, but the secret sauce is belief. Believing that you can do it is a required ingredient. If you don't believe you can do it, you will not do it. So we have to get our heads around believing it's possible in order to make it possible. And for us, data loving and evidence loving people, we tend to want evidence before we can believe it's possible. But that's not how that works. You need to have belief that it's possible in order to go create the evidence that you've done it. That's the only way that works. So we need to get our heads around, this is where I'm going, even if I don't know exactly how I'm going to get there right now and keep taking the steps. And that's how you will get there.
Dan Hood (19:40):
You got to give yourself permission to do it. You got to give yourself permission to work fewer hours to make this work. And that's got to be difficult. As you say, it's a 12 to 18 month process. So, sorry, go ahead.
Geraldine Carter (19:51):
Yeah, so I was talking with a different CPA recently who said it felt so uncomfortable. She's down to 15 hours now. And she said, I was so scared because I was going against the grain of my industry and I didn't see anybody who looked like me doing it. And it felt very unsafe. She knew she wanted to work 15 hours a week. She knew that it was possible, but for her as an accountant who just wants to fit in and do the right thing and look around and everybody else is doing it this other way, for her it felt like she was going off on her own and she was just going to get a beer can thrown at her head. So we have to get comfortable with the idea that there aren't, it's not the majority right now who are going down to 15 hours, but that doesn't make it unsafe. In fact, it's more safe because you set up a better business that is a more stable, that has more recurring regular revenue. It is a better business in the end to get down to 15 hours with high revenue and high margins because you're more shielded from the forces of being a generalist and not having deep expertise in a certain area and being underpriced. So you're better off building the business that goes down to 15 hours. That is a stronger business,
Dan Hood (21:03):
Right? Well, and even if something does go wrong, you've got more time to fix it. You've got 25 hours in the week. Yeah, I can fix this problem now. Whereas if something goes wrong in your practice now and you're working eight hours a week, you have no time to fix it. You don't have the spare capacity to step up and go, how do I solve this problem?
Geraldine Carter (21:22):
This is the death spiral that so many accountants are on. They're working 60, 80 hours a week, they're already exhausted. And then when something goes sideways, they have no energy or attention or bandwidth to deal with it.
Dan Hood (21:34):
And it seems like, and stop me if I'm wrong, but one of the key hurdles, it's not just the hours giving yourself permission to work fewer than the sort of standard mandated 40 hours a week, but it's also a sense of what's your value, right? What value do you bring? And it's not the amount of time you spend, it's not that you spent an hour on the treadmill for them. It's that you knew something and you bring your expertise and your expertise can be deployed in 10 seconds. That doesn't get deployed in hour long intervals or in a six minute intervals. You, you know a thing or you, if you need to go research it, you have the expertise of how to research it. It's your professional expertise that you're selling, not your time or shouldn't be your time.
Geraldine Carter (22:10):
Exactly. And we especially love expertise that's delivered in digital format at scale for zero extra effort because now you can, if you say package up your expertise into digital products and you put it on the internet, you can either deliver it to your clients and fold it into your service offerings for no extra cost. And that's a lot of extra value for your clients to understand whatever it is they need to learn or you can package that expertise and you separate the knowing how to do something from the doing of something and package that up, sell it, and now you are generating revenue with zero extra hours and very little marginal cost. So this is the place, this is like the holy grail of business is when you make money without having to do any work at all. This is the zero hours that you're talking about.
Dan Hood (23:05):
That's the goal. That's a beautiful thing. Well then obviously we get to the point where you get money before you even do anything at all, and that's the negative hours, but that's unproven yet we're going to see how that works out later. But I'm curious because you talk about digital products, and that brings me to a question I wanted to ask, which is a lot of the digitization that would allow you to get closure to zero hours, right? Didn't exist for a long time or the tools were there, but maybe they weren't as easily accessible to accountants as they are now. But generally speaking, is this move to down to 40 and then down to 25 and then hopefully down to 15, is this a thing that could have happened before and we just didn't get there because the models weren't there? Or is there something new about this moment or these last few years that have allowed this to happen?
Geraldine Carter (23:51):
Well, I think that when California flipped on the internet for the world 20 years ago, that changed the entire game. And we had the early adopters who were able to rise up and get out of their zip code. And then when Covid hit that forced, even the kickers and the screamers onto the cloud, the principles of business haven't changed, but the playing field is entirely different than it was 20 years ago. And these opportunities to create value at scale and deliver them to anybody around the world simply didn't exist in 1985. So yes, there couldn't be a better time to be a CPA. The demand far exceeds the supply and product. Your knowledge, your expertise can be sold around the world. Now, you don't want to sell it to everybody because you need to have a marketplace so that your marketing message sticks and doesn't fall on deaf ears and just look like static. But if you can figure out who your expertise is for and make sure that the value reaches your buyers, suddenly it is a different game that was not available to us when we were young and growing up. So for business owners, the people who I work with who are on the older side, getting your head around the ability to do this takes a little longer than the people that I work with who are more like 35 and they're like, oh yeah, yeah, of course it's obvious.
Dan Hood (25:11):
Gotcha. Alright, well, so the time is now. Everything's aligned, everything's in place for it. The book is down to 40 hours, A roadmap for CPAs to end overworking without giving up revenue. Where can they find it? The usual Amazon and everything else. Where else can they find it?
Geraldine Carter (25:25):
They can find it at Amazon, just go search down to 40 hours, or they can pick it up at my website, geraldine carter.com/book.
Dan Hood (25:32):
Awesome. Excellent. So I encourage you all to go out and do that. We touched on just the very tip of the iceberg of all the things that go on in the book and the strategies and tactics there. But Geraldine, before we go, any final thoughts or maybe a final thought for people thinking about doing this, considering this, something to help them get over their fear or a first step?
Geraldine Carter (25:52):
So things that are worth doing are often difficult and a slightly painful. You will not get it right the first time, but in practice you will get it right and in getting it right, it is so worth it because it's the whole reason that you went into business in the first place. The freedom to do what you want, when you want, for the revenue that you want. So take the hard steps, you absolutely can do it, and it is worth it when you get there.
Dan Hood (26:19):
Awesome. Alright, Geraldine Carter, thanks so much for joining us.
Geraldine Carter (26:22):
Thanks, Dan. It's been great to be with you.
Dan Hood (26:24):
And thank you all for listening. This episode of On the Air was produced by Accounting Today with audio production by Win. We Jean Marie Raider, 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.