Everything you need to know about advisory

The shift in emphasis from compliance work to a stronger focus on high-value advisory services has many firms scratching their heads and wondering, how, exactly, to pull it off. This panel will look at every aspect of the question, from how to identify the right services to offer and how to package them, to thinking through questions like pricing, staffing, marketing, and more.

Transcription:

Danielle Lee (00:11):

All right. Welcome everyone to this today's session, everything you need to know about Advisory. Very expansive. We'll try to touch on as much as we can in the 40 minutes we have. But real quickly before we begin, just some quick housekeeping items. We had some hiccups with the app. We know that, so we made some changes. You only need to scan in once per session, so we've simplified the choice there. You also need to scan in the QR code at the end, but we've also simplified that there's instructions next to the QR code board. So that will tell you more. But just so you know, we've changed that for you all. And now let's launch into today's session. My name is Danielle Lee. I'm managing Editor at Accounting Today we have Randy Crabtree, Partner at Trimer Specialty Tax Professional. We have Jody Grunden, he is partner at and or CPA and advisors and Summit CPA group, Ed Kless, meta consultant at Sage. But I'll let them each introduce themselves and tell you a little bit more about their background starting with you, Ed.

Ed Kless (01:09):

All right. Well I'll first explain me consultant, which is self-titled I gave it to myself. And that is because I work at Sage working with our partner organizations that either, well, I guess they don't resell our software anymore since it's all in the cloud. But we sell through them or recommend our products such as accountants to others. And my job for the last 20 years has been helping the them and many of you in this room make your businesses better. So I'm a consultant to people who do consulting, therefore a Meta Consultant. I also do radio show podcast with Ron Baker called The Soul of Enterprise and the Sage Thought Leadership Podcast for Sage.

Danielle Lee (01:46):

Great. Randy?

Randy Crabtree (01:47):

All right. Oh good. My mic's on. That's nice. I thought he, Jody was going to make him turn it off so he didn't. Thank you very much. No worries. Randy Crabtree. I'm o-founder and partner of Trimer Specialty Tax Professionals. Started that 16 years ago, been a fun ride. I also host a podcast called the Unique c p a title. I don't know what my title is, although last night our marketing team said I'm an evangelist. So I guess that's my title. I'm out talking about tax advisory, I'm talking about burnout, I talk about mental health, I talk about all different kinds of things in the industry and I have a great time doing it. So thrilled to be here. Wonderful.

Jody Grunden (02:31):

This is going to be tough. So I started, well Jody Grunden, I started off with opening up a firm called Summit, c p a group back in 2002, focused primarily on virtual CFO services from 2004 going forward. Created a subscription based billing model that we used from 2000, probably seven all the way to today where we actually bill our clients on a weekly basis. So we zap their account every Monday, which is pretty cool. So we don't invoice clients. And then went fully remote in 2013. So we've been remote for about 10 years and then we focused, started focusing on a vertical in about 2013 and saw our sales and revenue just skyrocket where we actually started doubling our revenue. It was basically every three years we double our revenue to where last year we got it to about $10 million. And then we merged with Anders CPA Advisors out of St. Louis. And now we are their virtual CFO arm fully intact as a unit for Anders. And goal is to go from 10 million to 50 million over the next four years. So pretty high goal.

Danielle Lee (03:36):

Awesome. Great. Just quickly, can we add 10 minutes to the clock? I don't want to get anyone to, we might start sounding like Alvin and the Chipmunks trying to talk too fast and get the time in. So thank you. So the first question I have for you, how do you define advisory services and how are they different from consulting services? Jody, I'll start with you.

Jody Grunden (03:58):

So the way I look at that is a consultant will come in and they are the suitcase from afar that comes in, solves the world's problems within a week or so, and then leaves with their suitcase and bag full money type of thing with the advice and lets you kind of figure it out that that's how I look at how I define a consultant. An advisor on the other hand comes in, sits alongside the owner of a business and helps that owner make decisions throughout. So they now have control through that process. And so the advisor's going to be there for 2, 3, 4, 5 years and in some sort of capacity. So that's the big difference between how I define at least the consultant advisor.

Danielle Lee (04:35):

Randy, how about you?

Randy Crabtree (04:36):

So for consultant, you said they're in and out. Yeah, that's kind of how I would say for, so what I say is, and I compare IT advisor to more and I'm come from the tax standpoint. So I talk about advisor more from the what are you doing for that client. So if you're compliance in tax, you're a reporter, you just report what happened during the year. If you are an advisor, you're going to affect what happens. You are going to reduce the tax, you're going to keep them from owing additional money, whatever it is. And then from a consultant standpoint, what ditto, same thing you're in, you're on a special project, maybe you're an M and A project or something specific. That's how I look at consulting. You're in for something specific, not an ongoing relationship.

Ed Kless (05:23):

I guess. I go to, one of my mentors is a guy by the name of Peter Block, he's, he's written a ton of books on the art and practice of consulting. In fact, his book called Flawless Consulting is about to be released, I think maybe it came out last week in it's fourth edition over the last 30 or 40 years. And he has a very specific definition of consulting. He says a consultant is someone who has influence over an individual group or organization but has no direct authority to make decisions. So has influence over an individual group or organization, but has no direct authority to make decisions. And that's where I'd kind of draw the line at what that's a consultant is. And then Block has this other term that he uses called the subject inline manager. So a manager where you have the ability to make the decisions on behalf of or in place of someone who works for the company.

(06:20)

So it all comes down to me to this decision making ability. And that's the micro decisions all the way on up to macro decisions. A consultant should never make a decision on behalf of a customer. They can give advice. And I look at this way, I use this model, this acronym Ford F O R D. I have Hondas myself. It has nothing to do with the car. So it's it's findings, options, recommendation, decision. So the first three consultants do, they'll come in and find, this is what I found, I can give you some options for it to do about what I found I can give you, and if you want my recommendation, which is the pros and cons, advantages and disadvantages of each of the options that I've come up with you. That's my recommendation. But the deed is always your decision. So your, it's your decision. And I think using that framework, that Ford framework is a great way to decide what level of thinking does the customer that you're interacting with want you to apply. Because if they just want findings and you come in and give them a recommendation, they're going to be mad. And vice versa, if they wanted recommendations and you only come up with findings, they're going to seem lacking. So that conversation upfront is really important to me to decide what level of thinking do you want us to apply.

Danielle Lee (07:30):

Great. That was very helpful to get that definition. And now that we have that, my next question is what is all the fuss? Why are advisory services so important? Why is everyone touting the move to advisory services? Randy, I'll start with you this time.

Randy Crabtree (07:44):

So to me, the fuss is one, your clients want this, your clients are asking for it and not everybody is giving it. And I probably said this statistic a couple times today already. I don't know if anybody was in other sessions, but there's stats out there that shows 79% of your clients want to pay you more for advice, for advisory for, in my case, tax reduction. They want to pay you 35% of the tax reporters, let's say the tax preparers are offering the advisory service. So huge disconnect a bigger part of that in addition, a bigger part in addition. That makes sense. Jody always is here for me, I appreciate that is that so many things are going to become automated and which is huge and a good thing as things become automated that's going to free you up to give your clients their services they want, which is this advisory service which is affecting, in my case tax, it's affecting the bottom line tax. They want that. And now with all the automation, you know are going to free yourself up to do all this high level thinking that you already have ability to do, you're just way too bogged down with meeting deadlines and filing tax returns to do it at this point. And the fuss is we are going to have so much more opportunity if we just all embrace technology and get to the point where advisory is what we lead with. That is our go-to, not the compliance end of things.

Ed Kless (09:26):

Yeah, I think that advisory services is an oxymoron. I don't think that they're opposite IT services is stuff that you do. Advice is more based on knowledge transfer. So what I'd like to say is that what most of the customers that want this quote advisory services, what they want is access to or transfer of your knowledge. They don't want services and the stuff that sits down below the compliance stuff, and even to some extent, a lot of the thing that we have previously thought of as services is really what I call the logic work. It's the stuff that bots can do. It's the stuff that even AI is doing even more and more of including by the way, a lot of the stuff that's considered advice. Now, I don't know, I mentioned this in the session that I did earlier. If you haven't seen Hector Garcia's video on chat GPT where he feeds in a quarterly financial statement and says, tell me about, analyze this from a gross profit perspective and compare it to other small business or a small construction companies and chat, GPT comes out and says boom, boom, boom, boom, boom, boom here.

(10:32)

That's pretty cool. And 4,000 characters or less now, right? So now what is wisdom now what is transformations now what is peace of mind to people that Yeah, the numbers are right. No kidding. Got, that's the table stake for being there, but interpret the numbers for me. Help me with some foresight here.

Jody Grunden (10:54):

Yeah, I think a lot of people get confused on how much time I put into something equates to what the client really wants. And with that, that's completely, completely falsehood. And what I mean by that is when we started providing advisory services back in 2007 or 2004, my business partner Adam always led to, Hey, we're going to do your bill paying, we're going to do all these different things and then we're going to also help with some advisory stuff. And so he led with all the stuff that takes time versus all the stuff that the client really want, which was the advice like Ed was saying, right on the flip side, did the opposite. I thought, well the clients want this and they don't really care about that. And we found out that eventually I was right with that. The clients don't care about the rest of the stuff.

(11:43)

They don't care about CAS 1.0 stuff. They really don't. They want you there to be alongside them to really kind of help them make those decisions because we've all experienced that They're kind of on an island by themselves. Things might be going well or things might be going bad and they have nobody out there to talk to because they can't talk to the people on the team. We don't want to talk about bad things in front of our team, but they can talk to the advisor that's in there and get advice, Hey, am I doing this? Am I going the right direction here? What do I need to do to turn the ship around? Do I need to whatever, hire new people, fire new people, increase prices, decrease prices, what? What's going to be the magic bullet? And I think that's where the clients really want this. With AI coming up, I can't wait till really dials everything in. I mean, it's getting there. It's not there yet. When it really dials everything, it's going to make our jobs even that much more easier and that much more informative because now instead of even wasting any time doing the compliance stuff, which has to be done yet, going to actually have more time to focus on what the client really wants. It's that strategic advice that we can get the advice that's going to get them to their end goal. Whether that's selling the company in five years, three years, whether that's merging with another company, whether that's being a lifestyle company for as long as they can do whatever their play is, it's going to help them get there. It's going to help you be that advisor for them.

Randy Crabtree (13:04):

Can I ask a question? So what you said about what Hector had talked about, hasn't Microsoft actually built that into their 365 program too? They have now you can download our financial statement into Excel and it's going, you can ask it to analyze this financial statement and it's going to do a similar thing. Yeah. All right. It's amazing.

Ed Kless (13:24):

All that stuff is, so again, the question that becomes now what? Right? Because look, and this gets to something that I'm extraordinarily passionate about, which is understanding that you have competing business models within the accounting profession that are really, really hard to run under the same roof. So if you have somebody CAS to you, client accounting services, if a stands for accounting, that is a much different business model than client advisory services. Completely different business model. And really you can't be the same. I see these firms that try to be all things to all people and they're literally trying to be McDonald's and Ruth's Chris and a vegan restaurant in the same place and it's not going to work. The people who will go into the McDonald's expecting a Ruth's Chris experience are going to be very unhappy and vice versa. And the vegans aren't going to even show up at all because they're like, you cook meat here. So it's disparate business models. It's trying to be a pharmacist and a brain surgeon. Well, the medicine, but different business models.

Danielle Lee (14:28):

And speaking of AI, taking over some of these tasks and speaking of what you were talking about, knowledge transferring and wisdom, how would you say that advisory services differ from the kind of just general advice that accountants used to give their clients? And how does that differ from being an advisory focused firm? And I'll start with you Ed.

Ed Kless (14:46):

Again, I really think advisory services oxymoron, we can't the so because one is knowledge, one is service, those are two different service. This hotel is a service business. The airline that you flew on here is a service business. McDonald's is a service business. You don't go to McDonald's for great food. You go there for the fast service. And in the service model, all of the wonderful people who work for this hotel, the AV folks in the back, they, they're in the service business as well. They have to go to the place to provide the service. You have to go, you have the airline people, the pilot's got to go to fly the planes. They have to show up the baggage handlers with knowledge work. Knowledge work is the one place where the individual owns the, it's your own means of production because it's called your brain. And the way to distinguish between service and knowledge work is that service workers have to bring their coffee to the office. Knowledge workers can bring their office to the coffee.

Randy Crabtree (15:46):

Blowing my mind, man.

Ed Kless (15:50):

You can bring your office to the coffee, i.e. work at Starbucks if you want. And that does not really affect the quality of what it is that you do because what you're providing is access to a transfer of knowledge, right? And that know that knowledge work, that's the advice piece. And services is services. You have to do the compliance stuff. I'm not saying that you don't, right? But that's the stuff that is going to be bots. And, I've said this before at other places, if your job can be replaced entirely by a bot, your job sucks. It's boring. I mean, if it's a repetitive set of tasks that just happen over and over again, I'm like, that is terrible.

Randy Crabtree (16:32):

With AI though, that bot is becoming super intelligent. That's right. At some point. So that's right. We're all going to be replaced.

Ed Kless (16:40):

Sorry, we're not.

Danielle Lee (16:42):

Jody, how would you say being advisory focus differs from the classic advice that we're used to accounting to give and how does the coffee access fit into that? Whether you are brought to the coffee

Jody Grunden (16:51):

Well, I don't know how to follow that one.

Randy Crabtree (17:03):

You want me to go?

Jody Grunden (17:04):

Yeah. Why don't you go, let me think on this one here.

Danielle Lee (17:06):

I'll open it up to you.

Randy Crabtree (17:09):

So my mind is still blown, but I'm going to try to recover. And so in general, I think obviously the difference between advisory and advice that we're already giving, it's a fine line. But to me, I think what we do as a profession is too often give away our advice and don't realize that it's advisory work. We think it's just what we do. We're going to do a tax return and we're going to tell them to whatever, put money on your IRA this year and we just save them $3,000 or whatever. I guess that might be a little high, but a couple thousand dollars. And it was like, okay, that's just what I do. I'm sharing my knowledge. We're good to go. I'm not going to get paid for this. And that's where I think the fine line is. Okay, we give advice, but that's also advisory.

(17:53)

That's how I look at it. We devalue what we give way too often because we have all this knowledge. I was in a presentation yesterday where one of the speakers asked the audience, who in here would say on a scale of one to 10 that you're an eight, nine, or a 10 on knowledge level knowledge, about 10% of the hands came up. And then I went up later, I said, you're all wrong. The you're in here right now. Your knowledge level is through the wharf, and what you just did is you undervalued yourself and now you're just going to start giving away this knowledge. You think this knowledge is not worth anything. I think that's where we have to change our mindset and go to what we are saying is advisory. It's not just simple advice because that client doesn't know what you just told them or they would've saved up your 401 K, they would've saved the $5,000 in taxes that you just saved them. So just change the way we're thinking, change the reality of everything I'm telling them is really advisory, even though I think it's advice and I think that's something that they already know, and therefore I'm going to give it to my rant. You're up.

Jody Grunden (19:04):

You guys are killing me. I'm going to take it at a different angle. So typically an accountant's going to look backward, historical information. They're going to take that information and then give advice with the way that technology's going. I think that historical information's going to be more readily available to where they can actually take that and take that and go forward with that advice. And so what I mean by that is just by using a dynamic forecast, for instance, a client can meet with them, Hey, here's what we had in the plan or the budget or whatever for the last three months. Here's how life hit us this month and here's how that impacts going forward. So they can actually see the numbers going forward. They can see what their net income is necessarily because fairly simple, but what their balance sheet shows them is cash, how much cash do we have in November, December, January, February, and so forth.

(19:49)

And with that, now they can kind of sit back and they can come up with a plan and give advice or advise the client, here's the plan that we need to take. And they can do that together with the client versus simply coming back after the fact and give recommendations. We're talking about, they're in the cockpit with the pilot there showing them, Hey, here's the direction we need to take this plane and here's how we're going to get there. And I think that's the biggest change that we're going to see is not just simply, Hey, you need to put them on your 401 K plan or you need to do your IRA or all that kind of stuff. How can we get from point A to point B and hit the goals that you want to hit in a timely manner that you want to hit them in?

Ed Kless (20:28):

Lemme just get this in so we can get it over with it and stop billing by the hour.

Jody Grunden (20:31):

Yeah, a hundred percent agree. Yeah, we haven't billed by the hour since 2003 or 2004. Everything's been.

Ed Kless (20:40):

Well, go on and stop doing your time sheets. Even if you're doing your time sheets.

Jody Grunden (20:44):

We still do time sheets. Forget that.

Ed Kless (20:46):

You got to kill the time that keeps you old, keeps you in the old mindset, keeps you in the old mountain that it's about time. It's not.

Randy Crabtree (20:53):

And this is obvious and everybody knows this, but if you're selling hours, how do you make more money in your head? You work more, you work more. You're going to get burnt out. You're going to work weekends, you're going to work evenings. And so I agree completely change that mindset. Start valuing yourself the way you are.

Ed Kless (21:10):

I did come up with this though. There is a way that you can just do an increase, and this would be to redefine the hour the way that CPE has, right? Because CPA is a 50 minute hour. So if you just say from now on hours of 50 minutes, so it's a 17% increase. There you go.

Randy Crabtree (21:25):

That's a good start. That's

Danielle Lee (21:27):

That's something to take home today.

Randy Crabtree (21:29):

That's math too.

Danielle Lee (21:30):

Very good advice. Speaking of advice, how should firms be changing how they give this advice? We've already touched on this a little bit, Randy, you mentioned changing the mindset as a good starting point, undervaluing their services. So I'll start with you if there's something we haven't already discussed about how firms should be changing the way they give advice under the advisory services model.

Randy Crabtree (21:49):

Well, again, what I said is probably the way I would answer that is just that whole mindset change. I am a terrible person to ask this. I don't do anything. I just go out and talk. And so how do I change that from a mindset standpoint? It's just, yeah, I'll rant all day and you already heard my word rant. Stop undervaluing exactly what Ed said as well. Stop selling hours. I know subscription pricing. Is that, are we still talking value pricing as well?

Ed Kless (22:23):

No. Well context, but I think subscription is the better model going forward.

Randy Crabtree (22:28):

All right, and so I'm going to do a Jody and I'm my short answer and maybe I'll pass and come back to me after I hear this. Great advice they give

Danielle Lee (22:36):

Perfect to jump in either of you.

Jody Grunden (22:38):

Great advice. I think it comes back to the forecasting side. If you're not doing forecasting for clients, you're really doing it a disservice. You really need to hop in and help them guide that ship. And so forecasting's really the biggest way that we can strategize as CPAs as an advisor, because now we're looking forward and we're not looking backward because clients really don't care what happened in the past. They really don't. They know what happened. They had a great month, they had a shitty month, one of the two or a combination of both. What they want to know is, hey, going forward, how can they really, really improve that and how can they make that change?

Randy Crabtree (23:13):

Wait, are we allowed to swear?

Jody Grunden (23:15):

No.

Ed Kless (23:18):

I would say that the entree into giving better advice is for you personally to replace giving advice with being curious. So be extraordinarily curious about those that you are serving at least certainly early on in the relationship or early on in a particular year that will lead you to better advice, but increase your ability to ask new and better questions. One of the things that you can right now use chat GPT for is if you have a particular industry group that you're focused on, go ask chat GPT, what are the top five issues facing this industry? And give me five questions out and how I would ask this to their boom. It will spit that out for you, right? So that would be great things to use. Get better at asking questions, get better at inquiry, replace advice with curiosity.

Randy Crabtree (24:10):

And I'm, is it my turn? Yeah. All right. Awesome. I told them, I told you they would jog my memory here and what I wanted to, these guys are awesome. Yeah, so this is how I look at this and this is something that changed my life. I'm able to give advice now because I do a niche service. And so from that standpoint, changing the way, and you do niche and you're meta niching.

(24:39)

So for me, I was a generalist for, I started a generalist accounting firm in the 1999, 1991. I merged that in 2006 for that 15 years I was a generalist. I was trying to help everybody. I was trying to do everything. I was helping the construction company, I was helping the Burger King, I was helping the doctor's office, and honestly, I could not be an expert in every one of those areas. So when you're looking at advisory in general, in 2007, I started Trier. We're niche service. We're not a niche industry, we're niche service, specialty tax. You can tell I get passionate about this one and getting your practice into, and this is what Jody's done from pretty much day one. He has two things. He's got a niche service and a niche industry that he works with. You become the expert. It is so much easier to give advice advisory when you can concentrate on this small segment of a client base.

(25:41)

So what I would suggest, if anybody, I mean you're all probably been in your practices for a while and if you have any issues with clients, I'm sure nobody has any issues with clients. You love all your clients, but if you have a specific client that you love more than the others, and I'm sure you, you've got the C and D clients, just start making that your, you're passionate about that industry. Start making that your niche, your next client you're going to go do. You're going to try to get that restaurant client, you love the restaurant industry, or you're going to get the craft brewery crying. You love the craft brewery industry to be the person that's giving the niche, giving the niche given the advice. The advice is so much easier when you love what you're doing, whether it's an industry or a service offering. I have no idea if this is your question, but this is another rant to mine.

Ed Kless (26:33):

Absolutely.

Randy Crabtree (26:33):

I'm almost done. And so just make a change. You get rid of the D client, replace them with the industry you love, get rid of the next C client, replace them with an industry and clients are out there right now for your taking. And especially if you're niche, you start sharing that knowledge on social media. You do webinars, you get on podcasts, you can talk to these guys or me about getting on a podcast. You do anything, talk at conferences, and if you can show that passion for that niche, that's how advice becomes so much easier to do.

Jody Grunden (27:09):

Yeah, I think Ed hit it on the nose with the question, asking questions, being curious. Huge core value of mine personally. Ask questions. Ask questions, ask questions. It's amazing when you ask questions with a client, they usually answer. They have the answer, they you're just drawing it out for them, right? You're not giving them that advice.

Ed Kless (27:24):

Yeah. So while we're on the subject, I'll just throw up this, there's two questions that I've been using in recently that have been really effective for me, so I might as well just share them, get them out now. Nice. One is ask them what are the decisions that you need to make in the next three to six months? What are the decisions that you or your organization needs to make in the next three to six months? What I find is that the response to that question three out of four times is something that an accountant can help with. Sometimes it's not, but sometimes it very much is. The other question that I really like is, especially if you are serving a niche group, is to ask them when you get together with your peers, so they're getting together with their peers, what are the things that you guys are most likely to disagree on? I really love that question because that gets to whatever. What is the heartache of their industry, of their niche that they're talking about, that they're disagreement from within their area of expertise? So it's a fantastic question.

Jody Grunden (28:31):

That's super interesting and that's something I'll definitely take back. I like that what Randy had mentioned with niche niches, that was the secret sauce to where our growth came from processes. Obviously you have to have processes in place in order to scale. But with an industry niches, we first of all did the virtual CFO niche from 2004 going forward. And like I'd mentioned before, it was steady growth. It was averaging picking up four to five clients a year and we're like, oh, this is great, but not what we were hoping for. We thought, Hey, this is a great idea, the CFO thing. And it wasn't really until we actually started going into a vertical. So we weren't doing all things for the vertical. We were doing virtual CFO services for the creative agency industry, for web design, web development, SEO.

(29:18)

It could have been dentistry, it could have been whatever. And we did that because as Randy had mentioned, I was passionate in marketing, I loved marketing. If I wasn't an accountant, I'd be in marketing. Just loved it. And it was something that I really related really well with. And once we did that, man, about nine months into it, and it takes about nine months, I would say nine months to a year, to heavily market towards a niche, then we started seeing the giant spike. It was literally for those hockey fans, it was a hockey stick type deal. We're picking up no clients, no clients, no clients. And all of a sudden it was 11 clients in one month. I thought, oh, and then it was seven the next month. Oh no, whatever. And with that, then I had to figure out how are we going to actually support that with the team?

(29:58)

And that's where fortunately I was, we recognized in Forbes and we actually had people that we could bring on, but it was the niche thing that was really the driving force of everything. The narrower you get, the more clients you're going to get. And it's pretty amazing. We tell I this to everybody is that there's so many times that through a sales call, they talk about how great their tax accountant is, how they helped them through this great thing, how they're awesome. And boy, they charge a lot of money, $15,000 to their tax return and meet with them. And oh, by the way, I know you're more expensive, you're going to be $89,000, but my industry, you get me. So that's why I'm going with you. And it's like everybody in this room, I tell us all the time, everybody in this room could have done what I did. The difference is that that's what I do. And that's what you need to do. You need to move towards that advisory side and really be that trusted advisor for them to be able to guide them through that.

Randy Crabtree (30:58):

And if you indulge me for a second, I want to tell the story too, because I can't stress enough the niche and the passion and what that means to your business and your clients. Eventually, when we look at back, and I said, I started my accounting firm in 91. From 91 to 2006, I built a nice accounting firm, but it was 500 grand. It was just a few of us. It was not a it, but I didn't have the passion for it. It was like I dreaded tax season and there was just things, I was just going through the motions and looking back, it was like that was so terrible that I allowed that to happen starting merrit. So 15 years, we five, 600, maybe it was 600,000. I blocked out those years right now. So that was the number. Then we started Trim Merritt in 2007, and we did that what you said, we had to let people know what we were doing.

(31:51)

We had to show that we were experts. We had to, and it took us, I think longer to get those relationships going because our clients for the most part are the tax preparers and tax preparers are they not going to believe you immediately that you have integrity and trustworthy and knowledge. And so it took a while to do that. But when you show that passion shows through and you just love this niche hockey stick. First seven years, we went to, let's say two and a half million dollars. And then in the last, what is it, six years, we build 30 million last year because everybody that works with us is just passionate about what we're doing and that shows through and we're able to share our knowledge and we're able to show the value of what the, I know it's subscription now, but the value of what we do, and it's just has gone through the roof. So I cannot stress enough how important, one being passionate for who you're serving, and two, pick a niche that you're passionate about.

Danielle Lee (32:57):

Great. Well, this has been really insightful. I want to open it up to the audience now. I know we're getting near the end of our time, so I want to make sure we address any questions that we have in the audience.

Randy Crabtree (33:10):

Got to be somebody.

Danielle Lee (33:11):

Yeah, sometimes I can't see with the glare.

Randy Crabtree (33:13):

Were we that bad up here that there was or we were that good that you got so much knowledge already?

Danielle Lee (33:18):

Otherwise I have a ton more of my own, but just one, over there.

Audience Member 1 (33:20):

How do you handle the onboarding process?

Jody Grunden (33:46):

Yeah, Great question. So the question is how do I handle the onboarding process? So because usually front loaded with a lot of extra time and effort put into that. So what we do is our subscription base is a weekly bill, so maybe it's 1500 a week or whatever. The dollar amount is a week, let's say $1,500 a week. So $1,500 a week for the first eight weeks of the engagement is what we call our onboarding time. So we double the fee during that timeframe. So what it is is $3,000 a week for the first eight weeks. Week nine, it drops down to 1500 and then it stays at 1500. So what it does, it allows us to be able to compensate for all the extra effort and all the extra resources that we put into it. Now with resources, I mean we actually put extra bodies. We have a project manager, we have another CFO that's involved. We have more individuals that are actually involved in that onboarding process so that it gets up and going in a quick manner. So that's how we do the subscription base. So it's front loaded in the first eight weeks and then week nine, no matter if it takes us 12 weeks to onboard them or six, it's just spread over eight weeks and then it goes after that. Does that answer that question?

Danielle Lee (34:53):

Do we have any others from the top?

Ed Kless (34:54):

I'll just say I disagree with that, but we don't have time to debate it.

Danielle Lee (35:01):

Yes.

Audience Member 2 (35:01):

(Inaudible)

Ed Kless (35:23):

Yeah. And it is a complete business model change and we'll have the three minutes we have left. I do can do 90 on this. So just I'll try to give this the Reader's Digest extremely condensed version of the answer. And that is to say it is a change to the business model. It is not taking whatever your annual price is and dividing it by 12. That is, that's not subscription. Not subscription. So subscription is covering up with what I like to call an offering, which amounts to a set of coverage of things that the customer is covered for that is broad and across. So for example, in if it's tax, I would imagine that all of your customers who are on a subscription are covered. If they're audited, there's no additional, we're not going to put an additional price on this. Nope. Because we're we're going to start to sell is not insurance with an I, but ensurance with an E, we are ensuring an outcome.

(36:18)

And the outcome in this case is peace of mind. So what we're selling across is peace of mind and there is a transition period known as Swallowing the fish. By the way, there's a name for it. When you're switching models, when you're cost to serve, go up, this is what you're experiencing, your cost to serve go up and your revenue goes down. And then over the course of time they switch and it looks like a little fish. That's why it's called swallowing the fish. So that's the really short answer. It's a lot more detailed than that. It's more complicated. It's more complicated.

Danielle Lee (36:48):

It looks like we have one back there.

Audience Member 3 (36:49):

(Inaudible)

Ed Kless (37:03):

So there's actually three transition models that you can do, and again is there's this 30 minutes worth of conversation. But the three transition models are the one that I like best. And you're not going to like the answer, but this is the best way to do it. Start another firm or start another practice that competes with yourself, I'm serious. And then steal and steal the customers away from the old firm into the new firm. That is the fastest way to move to subscription is to start a whole another company that competes with your old firm, same ownership, but a completely different offering and move people over to it.

Danielle Lee (37:43):

Randy and Jody, do you have anything as revolutionary as that to advice?

Randy Crabtree (37:47):

What I'm going to do is I'm going to call out Kristen Keats. She recently did the conversion like this. So sorry, I'm going to ask people to come to see you at the happy hour to ask you how you did this, because you've lived it over the last year, right? Yeah. And she's done it.

Danielle Lee (38:01):

Raise your hand, Kristen.

Kristen Keats (38:02):

Kind of it's It's a process.

Ed Kless (38:07):

Yeah. And this is also very unpopular in a room of accountants. There's no checklist. Sorry. There's no checklist.

Randy Crabtree (38:24):

Although you could ask chat GPT for a checklist and it might give you one.

Ed Kless (38:28):

It would not be a good one.

Danielle Lee (38:31):

Ed does not win in that one. Any other questions? We're getting the final minute, but just want to make sure we get to everyone. Otherwise, I'm sure you can find all our great panelists during the cocktail hour. And I want to let you know that right after this we have wind down sessions and they are going to be directly after this in the harbor foyer. That's first come. First serve seating. There's five tables. I just want to tell you the topics real quick. Avalara sponsoring, launching a new service lines using tech. There's a building and advisory practice, M and A and succession planning, recruiting and retention strategies, and managing your it. So that'll be directly after this. But first, I want to thank you all for a great presentation. Thanks for a great panel. Lots of great insights. So thank you so much. Thank you all for joining us.