Advice and Perspectives for Firm Leaders with Michael Meihaus

Michael Meihaus started Meihaus CPA in 2022. He had many motivations, but a particularly unpleasant experience with a client where his wellbeing was pitted against the client’s dollars was among the major reasons. In part one of this special two part episode of CPA Life, Michael talks to John Randolph about the insights he’s gained in his ten years in accounting—things he knows now that he wishes he knew when he started. They include that imposter syndrome is common, even for senior managers, that firms should invest in interns and staff, that health and wellbeing don’t have to be pipe dreams within the accounting profession, and that as accounting continues to become more global, having an international outlook is of vital importance.

Transcript:

Hey everybody, thank you for joining us today for another episode of CPA Life where we spend time talking about growth and cultur,e and many of the challenges and some of the possible solutions that we are dealing with today in the CPA firm space. And, you know, this industry is currently going through some crazy evolutions and really starting to finally understand that 100 years of doing it one way doesn’t necessarily make it the right way—it doesn’t make it the wrong way. It just makes it the way it’s only been done.

And one of the things that it does call for is for us to sometimes question conventional wisdom, look at things a little bit differently for firm leaders to begin to question and talk out loud, really about some of the things that stereotypically have been swept under the rug in the past, not wanting to be talked about or dealt with.

And today in this episode, we’re gonna be digging into some of those things with Michael Meihaus who is the owner of Meihaus CPA, in Escondido, California. Michael, welcome to the show.

Thank you so much for having me—excited to be here.

So you and I are connected on LinkedIn. And a few weeks back, maybe a couple of months ago, you caught my eye with a post that you created a touched on a lot of the things that we really don’t want to talk about, or touch on, in this industry too much, you know, things that could have, should have, would have kind of things like we talked about a little while ago, the things that I would tell my younger self, and we’re gonna get into that we’re gonna dig into all of those things. But what I want to do first and foremost is I want to get a little bit of insight of, kind of how you have gotten to the point where you are today running your own firm, because if I’m not mistaken, you are right around the one year anniversary of running your own business. Correct?

Exactly. Yeah, it was April 18. I quit on tax season. So it was a glorious ride off into the sunset, which was a lot of fun. Yeah, so worked my last day, I had a very amicable exit from my other firm, but it was fine. It was my last day went to the April 18 party, it was like that had a good time. And then I was on my own. So it was good timing. It felt very story and picturesque.

So one year now of walking a new path dealing with uncharted waters and figuring out what does this look like, right?

Exactly, yeah, it’s, it’s what I expected and not what I expected the same time, it’s so hard to communicate for somebody who hasn’t taken that plunge. Because so often, it’s just a radically different journey than you thought it would be, even though it was familiar, kind of rhymed with what you thought it would be. So that’s been a really enjoyable part of it is just realizing you figure out a lot of it as you go. And you can plan and deal with some things, but you can never perfectly anticipate how it’s gonna go.

Isn’t that the truth. And you also begin to realize that I am responsible for everything. Literally, exactly everything. There is nothing that is going to get done that at this stage a year into it doesn’t have your fingerprints on it.

Yeah, it’s the admin burden too. And I knew that the admin team and the IT team and all the support staff at the firm did a lot of of the work. I think it’s really important you recognize those people, I think you just can’t really appreciate it until you’re doing it yourself. I distinctly remember, the first few weeks, I was setting up Microsoft 365—I had used G Suite before which it seemed a little bit more user friendly, but I think it’s a little bit locked down, which is maybe why that happened. But I was dealing with I think it’s DCOM settings because all of my emails were getting bounced from my lawyers inbox. And so I was I was bidding client work at the time, trying to go back and forth with him on contracts. And it was none of my emails getting through. So it was Friday night, and I was frantically googling and watching YouTube videos on DCOM settings, which if you’ve never dealt with those—great. I hope you never have to. But I did and I had to figure it out. And it’s pretty stressful, but it worked out in the end.

Yeah, it’s all those little nuances that you just, you just don’t think about. I was telling the story a while back to someone that I was talking to about kind of the same scenario. I worked for two large recruiting and staffing firms for the first 15,16 years of my career. And in my last role running half of the country, we had a large real estate group that took care of all of our real estate leases. And when I finally left and got to a point of okay, I’m going from an executive suite to an office, I started narrowing office space down and the guy that ran real estate at that previous company was a good friend of mine. So I called him and said, hey, I’ve got some layouts to kind of send them to you take a look at them and just give me your thoughts. So he said, sure, I’ll look at it. And I sent him to him.

And within about 15 minutes, he called me back. And he said, I have a question. Do you want a kitchen in your office? Yes, of course I do. Well, who doesn’t want to kitchen in their office? Why? He said, because every place you’ve picked, John, it doesn’t have water in it. And you’re gonna have to pay to get water from the bathroom, or wherever it is closest in that building into your suite. And that’s gonna cost you a lot of money.

And, you know, it’s just little things like that, that you don’t think about, when you’re the guy that’s getting—I don’t want to say a finished product. But you know, some of the rough edges smoothed off around it before it sits on your desk.

Absolutely, I can now appreciate what was happening behind the scenes when IT would deliver ready to go laptops for all of our intern class when I was training them. It’s like, until you’ve set up and bought licenses for Adobe got all the relevant, you know, auditing and tax plugins, then you just don’t appreciate one that nothing speaks to each other in the correct way. Everything just breaks nonstop. And you have to spend hours troubleshooting it, but you just don’t appreciate until you do it. Everything that happens has to be done by somebody. And eventually, you’re that somebody.

Absolutely. My first year in this business on my own. I can’t tell you how many times I got a call from a client. And I would literally say to him, hey, right now I’ve got my tech support hat on, can I call you back in a little bit? Because I was dealing with something along those lines. I get it. So tell us a little bit about your background before Michael Meihaus, CPA was in existence?

Yeah, absolutely. So I went to school at San Diego State. So I loved it. You know, once you’re kind of born in California, a lot of us try to stay here as much as possible—some people don’t—but some are trying to stay and I was one of those. So I went to San Diego State, graduated from the accounting program there. I had done an internship with a regional CPA firm here. So that’s always ambiguous what that even means—they were a West Coast centered firm, a top firm of really nice size, but not a massive firm. I think we had about 350 employees, generally across five offices. And I worked in the San Diego office.

Initially, I started in the tax department, had an awesome partner I was working under there, he’s the one who hired me in. I did tax for most of those for several years. But during the summer, if you’re familiar with the typical CPA business model, you would have these dead times if you’re in the tax department, where usually your tax staff would either be doing some sort of nonprofit audit helping on those, they’d be doing tax extension work or they’d be doing benefit plan on it. So that’s what I got assigned to randomly, it could have been either of the other two.

So I started working on these employee benefit plan audits. And for most people, that just means a 401(k) on most private companies that offer a 401(k) plan and have, say between 100 to 120 employees in the plan, will need to have a CPA firm audit it annually. So that’s what I do. I was helping my firm with those. And I just bounced back and forth tax during the January to April busy season benefit plans during the summer. And then eventually, I was starting to bump up to that manager and senior manager position. And as you advance the expectation of that you do business development and a lot of technical work. And it’s very hard to do business development and technical work in two industries and service lines separately.

So I had a conversation with the partner I was working for I said, hey, I think I should take over these, these benefit plans, it was kind of fortuitous, because almost everyone who I had worked under in that department was either leaving or had been fired at some point that there was no leadership in this department. I ended up taking it over, loved it, was able to turn it around and make it profitable. And from there, I realized that there was a pretty big opportunity in this space.

And you were with them for how long?

I was with that firm for nine years.

And is that the firm that you left before you took the step out to start your firm?

Exactly, yeah. And that’s—it’s a scary thing. I’ve known friends who have jumped jobs every day, say two to four years just because often it’s the easiest way to get salary increases, promotions and new opportunities. Sadly, companies rarely recognize and reward loyalty, is just the sad reality and you work in like you’re saying the recruiting space, you recognize this, often the big bumps come when you leave one job for another. So I really enjoyed the work. And one of the reasons I stayed for a long time was really, I enjoyed the people I worked with, loved the partners I worked under, and the work-life balance was actually very good for a CPA firm. I didn’t ever really work terrible hours, I didn’t feel like it compromised my ability to live the life I wanted to. And so from that perspective, it was really good.

But yeah, there was a challenge trying to get the opportunities I was hoping to get staying there. And so obviously, it was a cold call to a person on LinkedIn that was running the firm, the type of firm I wanted to be running. I reached out, he was incredibly generous, just to kind of took me under his wing in many ways, showed me how his firm operated, how he’d set it up his earnings expenses and was just incredibly kind and then he encouraged me and said, why aren’t you doing this yourself? And I said, I don’t have a good answer for that. So his name’s Sean, I owe a huge debt of gratitude to Sean for helping me through that stage.

And I got off that call, went up to my wife and I said, I think I need to quit my job and she’s like, well, it’s about time. She laughed at me because I would go through these cycles of, oh, I love my job, and I get burnt out after busy season and say, I’m going to quit my job and and I’d say, oh, maybe the job isn’t that bad because it was a slow season, and then we’d start the cycle all over. So she’d watched me do this for, you know, five, six years and kind of had thrown up her hands and said, well just quit your job then. So she was very supportive during the transition, thankfully.

That’s awesome. You need that person behind you that’s propping you up, and telling you, hey, I believe in you, you can do this.

Exactly.

We all need that person in our life at times. Let’s jump into what it is I want to really talk about because like I said, a couple of months back, you threw a post out there into the the ether of what the world wide web is, and got some pretty interesting reaction to it. But basically, the the pretense of it was, hey, I’ve been doing this for 10 years. These are some things that I would tell myself, if I had to do all over again, was that basically the the bottom line of it?

Yeah. What I wish I would have known when I started. I think perspective, unfortunately, only comes with time. So the best we can hope to do is give others perspective we ourselves have gotten, yeah, we can’t go back in time and give it to ourselves.

Absolutely, we can’t. And the only thing that we hope for is that somewhere along the way, that perspective that we’re giving, is heard. And listen, I mentioned to you that I do music and wrote a song a few years ago with a buddy of mine called things I never heard. And it was all of the sayings that my dad said, or our dads said, growing up that, you know, all the things that my dad said that I never heard. And you look back now as an adult, or in this situation, 10 years into a career—don’t you wish that somebody would have sat you down and said, hey, let me help you avoid some of these potholes and twists and turns that inevitably, you’re going to go through?

Absolutely, no, it’s a consideration. Now that I’m in the journey of raising kids. Like I mentioned, I have two young ones. And so thinking about what’s the balance between giving the wisdom but not forcing it on your kids? Because that’ll just make them dig in their heels. So yeah, absolutely. The best you can do is offer the advice and offer support when they’re in a rough spot, because I told you so don’t help anyone learn any better than force lessons do.

No, they really don’t. And we can talk offline about some kids stuff that I can warn you about. We’ve done a lot of things wrong and a few things right. Every now and then my wife and I will get a phone call from one of our kids, we have a great relationship with our daughters. And one of our daughters will call and say something to us. And we’ll hang the phone up and high five each other and go, I guess we did do okay.

Yeah, exactly. The small wins.

Yes, the small wins. So let’s kind of dig into these and some, we’ll probably spend some time on some maybe not, and just kind of talk through them. I think there’s 16 points. And I know that sounds like a lot. But there’s was a lot of rich stuff there. I gotta tell you, I don’t know if it was something you threw together off the cuff, hey, these are things in my head, or if this was something you’d been thinking about.

It was—I distinctly remember writing it, which is what’s so interesting. It was like 1am at night, I couldn’t sleep, and I stream of conscience’d that in about 10 minutes. And I sat back there, because I really like, I enjoy content creation, but I want it to be valuable for people and I looked at that I’m like, I think that’s going to be I think that’s going to be good, or that’s going to resonate. And it did. It went on Twitter several months ago and had a great, a great reaction. And then I agree posted on LinkedIn and have the same thing. So it was exciting to see that it did resonate with people.

So number one, and I’m just going to read these off. “Everyone feels like a fraud. impostor syndrome is real, even as a senior manager leading practice, it would hit me often, and it never goes away. You just learn to deal with it.” Tell me a little bit about that.

Yeah, it’s something I’ve encountered managing people, myself. And I don’t know what it is. I think it’s probably just a normal human condition. I would be concerned if you never have self doubt, I think there’s a high likelihood you might be a sociopath. So if you have self doubt, that’s a good thing. If you never have ever had a self doubt, I would do some self reflection.

Yeah.

But I just remember that it’s so hard to gauge what is right or what is good because we see people externally. And we create a vision of them from that external observation with very little insight into what’s actually going on. So for example, you might see someone who appears to be running a good firm, or they have a good social media presence, or they have nice things. And it’s so hard to understand the details of the 99% you don’t see. And the common example of this is, you know, people who have really nice possessions but aren’t happy or are stressed out and work and don’t have the lifestyle they’d want. So that’s, you know, kind of a typical example. But it could be as simple as, you know, you look at other practices and think, oh, they’re so organized. They’re so professional. But you don’t understand the chaos that goes on behind the scenes.

Like, I feel like most CPA firms are kind of held together with shoe strings and duct tape as it is they just put on good friends essentially. So that’s where I felt, is you’re always questioning in the back of your mind, how did I get here? Am I really supposed to be a senior manager signing audit reports? Am I really qualified to be doing this thing? And the answer is yes, the more I encounter it. But it’s just so hard to know, because people don’t talk about these things. I never had a partner come up to me and say, I’m actually kind of worried about like, my skills in this area where I feel like I may have made major mistakes on this client. That’s just not something that we talk about. So if the partners aren’t talking about that, above you, you don’t know if it’s okay to feel that way.

Mmm hmm. Yeah, I think that we’ve, we’ve gotten to a point in the world today. And I think social media drives a lot of it, that we see this perfect picture, or what we think is this perfect picture. And we don’t understand and realize or don’t want to accept that, that there’s, there’s all this other chaos, on the fringe that that person or that situation is dealing with, because every single person is dealing with the same challenges, same problems, same issues, same hurts, same doubts, just to some different degree, that they’re fighting through that.

I got a call the other day from a friend of mine accidentally from his wife. And it was a FaceTime call. And I answered it. And she said, I am so sorry, I did not mean to FaceTime you. And this is a buddy of mine that I’ve talked to a lot about what I refer to as the upper hemisphere and lower hemisphere on Zoom calls. What are you wearing kind of thing?

Yeah.

And so this was a FaceTime call. And he said to me, Hey, now that I’ve got you on FaceTime, what are you actually wearing? I was wearing a polo like this. And I just got done working out. So I’m still wearing my workout shorts and a pair of socks.

Yeah, I love it.

And but it just, it’s just those things that we think that the picture is really perfect. And it’s really not.

Not at all. Yeah, not at all. And I don’t know, I think it’s good to have the questioning in your mind. Because that makes you want to go to be better. The problem is one, you won’t put yourself out there or think that you’re not capable of doing things because you feel like that. I had a manager that worked with me, Hannah, for many years before I left, and she was absolutely phenomenal. But she would self criticize. She cared about doing a good job. So she was always questioning like, Am I doing as good of am I doing a good job? And the answer was unequivocally yes. Like she was a phenomenal employee, fantastic manager, just really cared for the employees that she was working with, and did really good technical work. But for her, it was like that question of in that pursuit of being really good there, it left that question of am I good enough? Or could I really lead this practice once I left? And yes, the answer was, yes. You did a great job. But it’s I’d say it’s very common. And that one definitely resonated with people.

I think it’s something that like you said, we don’t we don’t talk about enough, because again, there is that there is that fine line and balance between having the internal confidence to do what it is that you know, you can do, but also still having the innate ability, and the confidence, to question, what are you doing? How are you doing it? And how can we get better? What can we learn from this situation? You know, whether it was a win or a loss, what can we learn from it? And how do we get better? Because we’ve always got to strive to get better and move that goalpost a little farther down the line.

Yeah, absolutely.

So number two, was something that I really, really liked. Because, again, these are things that aren’t just public accounting specific. They are industry agnostic, we’re just talking about public accounting. But when I read this, I think it’s something that we are really good at pointing fingers about what’s broken. Really good at that. But your point was, help fix the bad parts of your experience for others. “A lot of people have some rough experiences—they didn’t get training, invest in the interns and staff. Poor guidance, give clear instruction. Get yelled at during times of stress, be kind, calm and supportive. As a leader, we have the ability to flip that if we want to.”

Yeah, and I think one of the challenges is often when we go through challenging times, it can do one of two things:, it can create empathy for us, for those who might go through it, or it can create resentment and a sense of well, I survived it, so you should probably go through it too. Almost like you have to go through this gauntlet. There are perhaps gauntlets you have to go through. I think maybe parenting and marriage are one of those. I think you have to go through the hard times to really get through those and just recognize. But I don’t think we have to construct roadblocks for our staff and our interns.

The background of that point was when I started, I call myself an intern out of season. I was hired in the summer as a tax intern and under very funny circumstances. So I didn’t go through the normal training. The partner at the time had just lost two of his senior managers one on maternity leave one left for another job. And so he was just trying to keep his head above water. Didn’t have a lot of time to train. So it’d be the type of thing where he’d give me a tax return and say, hey, we’ll be back in three days. Just prepare this and we’ll talk about it then. And so it was very much sink or swim for me.

I distinctly remember too, I was training interns the next year. And I said, Oh, how should I teach them this software? They said, Oh, just give him the reference book we have. And I said, the reference what? And so there was this whole reference book of how to use all the software, that I’ve been just literally struggling my way through googling, watching YouTube videos. So after that, I was like, okay, that’s it, I’m gonna, I’m gonna figure out how to systematize, how to document, how to make sure that people don’t have the experience that I had. So that was my goal. And in the several years I did training interns after that was okay, how do I prevent anyone else from having the experience I went through during my internship?

I think it is one of the things that the the CPA firm industry is struggling with right now is that mindset of, well, I had to do it, you should have to do it as well. I’ve said this in a handful of other conversations with people, we’ve had a saying in our family for years. And that saying is “Not wrong, just different.” Doesn’t mean that what you had to go through was wrong. It’s just different. And it doesn’t make it right, that somebody else should have to climb that same hill, you know, the proverbial uphill to school both ways in the snow kind of thing. We’ve got abilities, as organizations, to kind of put things in place where that doesn’t have to happen.

You’ve talked to—I’m sure you’ve got friends in the industry, you’ve got counterparts in the industry that, you know, you sit around over a beer, over dinner, and you talk about some of the frustrations that continue to bubble up. What are one or two that you’ve seen repetitively in firms that you’ve been a part of? Or situations, you’ve been a part of, where you said, you know, what, when I step out on my own, these are some things that we’re probably going to do different?

Yeah. For me, it was a two-fold problem. One is that there seems to be no recognition that there is a massive difference in the marginal utility of extra money for a partner, and for a staff. And so what I mean by that briefly, is if you’re a partner making a half of a million dollars, three quarters of a million dollars, making an extra $50,000 literally means nothing. Like, you’ll probably take what, 25 of that home, maybe only 20, depending on your tax situation. And then, at what point, what is that? Like another crazy vacation, oh, I’ll buy a second Tesla, like, what standard of life increases are really going to come from that extra $20,000?

But if you have five staff on your team, and you give them a $10,000 bonus, that’s a massive quality of life impact to them. And so I think over-generosity at the partner level, would have such a disproportionate impact, because partners forget what it’s like to not be making a half or three quarters or a million dollars. Like, money means nothing to you, when you make that sort of money, but you forget that some staff are making in a year what you make in a month, and that’s a part when it well, well, just don’t worry about it. Why are you caring so much about the 5% Raise? It’s like, well, because for me, like with inflation, inflation matters to me. And so that’s the first part is that I think partners don’t realize that, hey, like, if you’re making great money, just give the rest of your staff or don’t take on more work and make it easier for everyone. Like that’s a really simple way to approach it.

It really is.

It is. And it’s hard to do that. Again, I’m in the middle of this myself, but it’s hard to do.

The second part is, why can’t we have just rational incentives for people to share in when growth is big, right? So my old firm had like a bonus at the year end, which is nice, but there just wasn’t a lot of transparency in how it was calculated. So I would love structures that are as simple as look, you need to be doing this amount of revenue for your salary to make sense and for the firm to make money. But we’ll give you 10 or 20% of any revenue you do over that limit, like that’s a really easy number to say. So every time I bring in a $10,000 client, yeah, it’s going to be extra work for my staff. But maybe that would feel a little bit different. If they said, Oh, I’m gonna get a $2,000 check when this is billed. Like that’s a really different incentive structure other than, hey, help me build all these clients, I’m gonna make a bunch of money off of them for seven years, and then maybe seven years, you’ll become partner and you can share in the money too, that just doesn’t seem as compelling as an offer to me.

So those are two things that I was really committed to is that I wouldn’t burn my staff out by bringing on bad clients or extra revenue. And I followed through with this. I think it’s really easy to say that, but I turned down $40,000 of revenue that I knew was going to be really bad, before I even had six figures and revenue under my belt. So I looked at it and I was tempted. I’ll give credit—my wife, I was tempted because it’s scary.

Yes.

I said I’m really feeling bad about it, she’s like, absolutely not. She’s like those clients were awful that you’d worked for before they made you miserable. She’s like, no way are you going to take those clients on. Okay, fine. She again, she was amazing support, but that’s where I put my money where my mouth was as I turned down that money when I really needed it. And I’d hope that I continue to do that for my staff. So that’s why I tell my staff as I turned down $40,000 in my pocket because it was wrong. It would have been bad for me and I’m gonna do the same thing for you.

And little things like that—from a recruiting and talent acquisition and talent retention perspective—little things like that matter. They mean a lot to staff.

I’ve got a client that I work with. He started his firm seven years ago. And we were talking about some of the differences in the way that he has set up his business. And one of the things he said is, he’s on the tax side of things. He said, you know, John, one of the things when I was getting ready to start my business that I sat down, I thought about some things that we’ve done well, in my career, some things I hadn’t done well. And so one of the things I realized is that every client, every client that I fought with, about anything, whether it was hey, I need paperwork, I need you to sign this, I need you to pay your bill, won’t return my phone calls, whatever it was—every client that I fought with, for the entirety of my career, had one common line attaching them. And that was, they were always behind on their taxes. Always. Every client that was behind on their taxes was a client that I fought with along the way for something.

He said, so I made the decision, when I started my firm, we’re not going to deal with clients that are behind on their taxes. We’re just not. He said, I’ve walked away from business, I’ve probably lost a quarter million dollars in business over the last seven years. But there’s enough headache that we’re never going to see coming. I don’t see why I would buy into headache that I know is going to be there. It’s gonna make my life harder. It’s gonna make my staff’s harder.

Yeah, what’s the point of making good money if you can’t say no to things that make your life worse? That’s really how I think about my life now. It’s my goal, in making more money starting this firm, is to reduce parts of my life I dislike. So if clients that make your life miserable, are there, like, buy out of that misery, is essentially what you’re doing. You’re saying I’m willing to pay $20,000 to not be miserable the entire year, which is a pretty good deal. In my perspective, if you have the money to do it. Obviously not everyone’s in that spot. So I recognize that.

But yeah, it’s these decisions that are, I think, simple, in abstract, hard and hard and practical application. Like it was hard to turn down those clients, but I’m very glad I did turn them down.

It is hard saying no, you know, as a trainer in the sales space for years that I was, I would tell our salespeople, the best marketing tool that you have at your disposal is a one word answer, two letters, “no.” “No.” It’s a great marketing tool. You don’t work with everyone out there, you determine who you work with. You knit your business, you get as deep as you can in those relationships. Now, in practicality, though, it’s not easy.

Yeah.

Like you said, it’s, it’s whether you’re starting out or not starting out, saying no. And from our perspective, whenever we start talking to a brand new client, especially in the marketplace that we’re in today, one of the screening questions, I guess, if you will, that we talk to brand new clients about is how much business have you walked away from in the last two to three years? And if the answer is none, we typically don’t work with that firm. Because that tells me a lot about their mindset towards their employees. Because I promise they are working at capacity already.

Yeah, absolutely. And I think you can make it work. If you want to grow that way, you can make it work. I think it’s having that conversation with your team that says, hey, are we all okay with going a little crazy working a little bit longer? And you’ll share in that, in a tangible, documented way? Because I agree, I think there’s times where people might be okay with that say, oh, yeah, I’d like to buy a house next year. Let’s work a little harder. Okay, lower money, safer downpayment. And where if your staff say, nope, just had a new family just got married dealing with a family member or health problem? Like I don’t want to do that. I think it’s having that flexibility, both ways that is so powerful. And that’s what we need, is the flexibility.

Well, I think the transparency that goes along with that that you’re talking about, is also what makes that work. Again, I’ve got another client that’s here in the Dallas area and two years ago, going into tax season, we were looking for a couple of senior level associates on their tax team, and he called me mid-February and said, hey, pump the brakes, put those on the back burner, we’re not going to do it. And he’s got a small team, 10, 11 people and I said, okay, tell me, tell me what you’re looking at doing. He said, Well, I sat down to talk to my staff. And he’s got a pretty tenured staff. And he said, You know, I talked to them and said, look, anybody we bring in, I don’t care if they’re got they’ve got three years, or 13 or 20 years experience, anyone we bring in right now there’s going to be training, hand holding, mentoring, understanding the quality of work coming off their desk, or we can all pick up a little bit more workload, bite the bullet a little bit more between now and April 15, but know that the work coming off someone’s desk, you know the quality of it, because you’ve worked with these people for a little while. So you guys tell me what you want to do. And he said, they all said, don’t hire anybody. We’ll make it work with who we are.

Now, fast forward then, after April 15 last year, he calls me and says we’re we’re needing to hire somebody. I asked them how they fared. He said we fared well, he said, but it also helped, John, that I sat down after the 15th I figured out from a call standpoint, if I had to hire two other seniors, what would I have paid those two seniors from January through April 15. I then took that amount. I divided it by the eight people on my staff, and I gave each of them a bonus the week after tax season.

I mean, that’s such a logical move. I mean, that’s so easy to just justify. Massive respect to that firm owner, because, again, they made a decision that saved the owner money. And I think a typical CPA firm would be like, great partner bonus time. Whereas that owner said, no, they saved me a ton of money. I’m in the same position I would have been, but my staff are going to be absolutely stoked on this bonus, which I just love that approach. Absolutely awesome approach.

Well, I think you hit a homerun with your comment a minute ago about how, you know, somebody’s making a quarter million half million, three quarters of a million, another $20,000 and other $10,000. It’s determining where we vacation this year? Or do we go on a second or third vacation? Or do I buy, you know, another Airbnb? That’s what that is. But a $5,000, $7,000, $10,000 bonus to someone making $75, $85, $100,000? That could determine do I get to buy another car this year? Or do I have to drive my my car with 250,000 miles on it for another year? Can I potentially now buy a house versus continuing to rent? Can I move to a nicer apartment than the one I’m living in now? Those are drastic life changes that you can make by sacrificing just a little bit.

Yeah, I guarantee you those firm owners that think that way, are not going to have challenges finding and retaining qualified staff. I mean, everyone’s panicking about the staffing crisis in the CPA industry, but nobody wants to change the way we think about it, which is I bet the firms doing that don’t have any problem finding people because they’re they’ll talk to their friends and say, hey, I worked for my this firm. And this is what the owner did for us, we have an opening, you want to come check it out. And I guarantee you people are interested in firms like that

Absolutely. Kind of segues nicely into point number three was, “Look carefully at the partners above you. Do you envy them? Their physical and mental health, their family lives, their work-life balance, their priorities? If not go somewhere else.” How long did that one take you to realize?

It’s based in so many principles, which is, is helpful, because it’s like, looking at someone does not what they say. But I realized it because I think there was a good contrast at my firm, there were partners that I really respected, that had—were dedicated to their family. Yes, there were times when things got out of balance, but they always seem to go back in balance. It’s hard in life over a whole career to never have a time where the pendulum swings too, or swung too far, one way, right. But they cared deeply. And I saw partners who were good people, but in the way they allowed their clients to treat them or the way they structured their life. They literally were just constantly stressed, never seemed happy, always overwhelmed. And I thought, if you’re a business owner, and you have a say in your life, you’re doing this to yourself. So maybe you want this or maybe you don’t know how to do something different, but I don’t want that is what I realized.

And I remember, even one of the partners who was great with the family, really involved excellent physical shape, all of that. But I remember he’d taken on new responsibilities, like it’s just another 600 hours of admin work this year. And it’s just been crazy. It’s digging into family time. And that’s when I had that realization of, well, why can’t you control that? And I think that’s the fundamental challenge of being in a larger organization, where you’re maybe one of 30 or 50 partners, is you’re less a business owner, and much more a highly comped owner with equity upside is the way I’d say it. Because often, if you’re a brand new partner, even if you’re equity, you don’t have major say in the decision making and most likely will not have major say in the decision making for 5, 10, 15 years. So because of that you’re more of an employee still, which is, I think, a tough pill to swallow. But you don’t have the control you would hope to have over your life, I think.

it definitely is. It is not the picture that everybody believes it to be. It kind of goes back to the previous point of imposter syndrome. But more to the point of you know, is that really a way that I want to run my life? And I think that the way that you phrase that is perfect. You know, if you look at those people, do you envy them? Or do you feel sorry for him? And is that a path, and is that a direction that you want to take in your life? I think that’s a very introspective way to look at it.

You know, I don’t I don’t know at what point in your career. And I say your career generically. I don’t know what point in your career that someone looks at that and starts to have those types of discussions with themselves.

Yeah, I remember mine. And I can also give you the hottest take, I think I have on this subject. And so it makes for a great soundbite. And I’m writing a post for LinkedIn. But I want to do it well, because it’s a bit of a barnburner. But the reason the profession is suffering is not because of the 150. I think that’s a barrier. It’s not because of any of the things you talk about. It’s because our profession is objectively killing its participants. If you’ve got a group of medical professionals and mental health professionals in a room and described our industry: hey, often stress for, you know, 60 to 80 hours a week for the majority of the year, limited time for social pursuits, physical activity, and family time. A constant stream of cortisol spikes. Limited healthy eating, a heavy reliance on alcohol. Like that objectively, by every medical standard is a unsustainable way of completely killing your body. And nobody’s talking about these things.

And so if I sit back and said, hey, we’re literally killing our staff, like, it’s on a longer timeframe, which makes it easier to ignore, but we’re literally killing our participants in our profession. And we are at the same time questioning why people would not want to participate in that profession. And so as until we grapple with that, and admit that we don’t have to do those things to make money in this profession, we’re going to have the same issues, I think.

Yep. It’s a repetitive, ongoing cycle, because nobody wants to talk about the things that are hard to talk about, because the answer is simply, we’ve always done it that way. Yeah, just because we’ve always done it that way. Doesn’t make it the right way. We used to always eat vegetables that were basically bathed in Roundup. We’ve kind of learned our lessons now. Nobody wants to do that. And if they have the ability not to do it, they don’t do it. They go to a farmers market, they buy things that are fresh. Just because we did it that way doesn’t make it the right way. It’s just makes it the way that we’ve always done it. We’ve got to figure out a better way.

And the hard part is, it’s going to take partner saying I went through all of this, I survived the dysfunctional system, I’m now on the top of it, and I’m going to prevent the next generation from going through that that’s the hardest part is you have to say, yikes, I didn’t have to do this to myself, I did it. Okay, I’m gonna make sure nobody ever has to go through this. It’s the same thing of breaking generational cycles. And like family dynamics, I think that’s all it is, you have to be okay that your life was harder than the people coming after you and be excited that they to have an easier go of it.

Yep. And again, segues nicely into point number four that you made, which was changing a firm is hard. Most public accounting firms work a particular way, the partners have been doing it for decades, and it’s making them a lot of money. They usually have little incentive to change. And if you want to change, you often need to do it yourself or leave. That’s a mouthful.

Yeah. And I think it’s a good humility check as well. Because if I’m so convinced something will work, I believe in it deeply, I should be willing to take the risk. Because in a firm structure, I could have a great idea, want them to invest resources, and if it flops, I’m not paying the bill. It’s the partners. So I recognize the hesitancy to be innovative when you’re already doing really, really well. So because of that, I realized, well, if I really believe in this, if I see the opportunity, I need to go execute on it.

Yeah, and it can happen. Change can happen. But that change is probably not going to occur at a big four firm and trickle its way down. It’s just not. It’s a whole lot easier to turn a two to 10 person boat than it is to turn, you know, a cruise ship with 3,000, 4,000, 8,000, 300,000 people on it.

Exactly.

It’s going to be up to, you know, small- to mid-size firm owners to recognize there’s some things that have to change here. And I’m still making a good living. In fact, it can be argued I may not be making as much money, but I’m making a better living, because I’m able to not have the stress in my life that I was having before.

Yeah, absolutely. Absolutely.

Those cortisol spikes aren’t as bad as they used to be. Yeah, you know, it’s a little bit more of a level road versus the drastic valleys and mountain tops.

100%. And you have a sense of agency that’s hard to replace other than doing your own thing. So for example, when dealing with frustrating clients, it’s actually easier now because the other one, all the money’s hitting my bank account, nice little bonus, or two, I can hold hard lines or boundaries with them.

So what actually pushed me to start my own firm was we had a client that has essentially ignored us for months and months and months, and were very messy. And then three days before the deadline, I said, I told the partner, hey, we don’t have anything from them, let’s just tell them they’re going to be late. Like this seems pretty reasonable. For me, I’ve been trying for six months, client pushes back hard. And unfortunately, as often happens, it’s a big client. Overall, the relationship is important. So I ended up working 40 hours in three days—the day before my sister in law’s wedding, I was traveling, there’s a bunch of things planned for the family. And this was to service a client that I hadn’t brought in, I’ve been told I needed to service, had not responded well, and then I was on the hook for working a week’s worth of work in three days.

I got sick during this process, because I was literally working nonstop. And I just sat there and thought, what an absolutely, unbelievably short sighted view of things. And that was, it was for a small fee, under $10,000. I know the client was big. But this is the way I’ll put it that nobody wants to say is what happens when you do those sorts of things is you say that the well being of our staff or the dignity of our staff, or the care of our staff has a dollar amount on it, meaning we are willing to grind staff into the ground for a certain amount of money. And if that’s your firm’s mantra, say stated or unstated, then you’re going to have problems long term. Because what that meant is I won’t stand up to a client as long as they pay me X number of dollars. And I realized I never want to run a firm like that.

That’s a great way to put it. It’s a sad way to put it, but it is the reality of things that the old adage of, okay, we’ve determined what you are now, we’re just haggling over price. You know, there gets to be a point where you have to make the decision: Do we have a line in the sand that we are not willing to cross, that isn’t about money?

Yeah, exactly.

And when it comes to people, I’ve said this again, two or three times on another podcast, one of the very first podcasts that I did was an interview with a guy by the name of Tim Petrie, who is the managing partner with a firm in Ohio by the name of HD Davis. And Tim and I were talking about the concept of at the partner level, when is enough enough? And his comment to a certain degree was I came to the realization early on in my career, John, that enough is enough, when it starts to affect the lives of the people that work for me.

Yep, I love that.

And I think that’s a very simple way to look at things and approach things. We’ve got another client that we work with in the Austin area, and kind of their line in the sand is they do all of their budgeting of growth and capacity of 2,200 hours—period. The end, nobody in the firm is gonna work more than 2,200 hours. That’s it. That is top level capacity for everybody. And then there’s degrees in there for what’s going on in individual people’s lives.

Sure.

But her mindset is, if if we can’t hit the numbers that we want to hit as a firm with that, as you know, our our number of hours that we’re willing to put people through, then very simply as, us as leaders, we need to go hire more people. Yeah, it sounds simple. We aren’t going to grow till we hire more people. Now if we start looking at numbers, and we can deliver on these numbers by working less than 2,200 hours, now we can look at possibly let’s go out and get some more business while we’re also looking for more people. But we’re going to line those things up. And if one starts to fall out of kilter, i.e., people aren’t coming in as fast as business is, then we’re going to shut the business development side off. Because we’re not going to work on people. We’re going to say no to business. We’re going to keep our people sane.

Which is a tough thing to do. Because your next point number five, “You will have dark days. deadlines, stress, long hours. Don’t forget, none of this is worth sacrificing your health and well being over. We’re not saving lives here.” You probably should have added we’re not saving lives here other than maybe your own.

Yeah, great distinction. There’s only one person that’s going to walk away battered, bruised, and in trouble from this profession. It’s most likely you. And I noticed this myself, I gained a significant amount of weight and my use of alcohol wasn’t healthy. I think that’s one of the things we actually don’t talk about a lot, even in the United States, is the scientific definitions of binge drinking are very clear: having more than three 5% beers in a single sitting is binge drinking and is scientifically shown to increase risk factors for everything. And this is not said from a non judgmental part because I have definitely sat down many times in my life and had three beers, right?

Yeah.

Like, yeah, and if you’re talking about having pints that are IPAs, maybe one of those beers hits your three year limit. But it’s really good, I think to just clearly say oh, like objectively my drinking is unhealthy. Objectively, and like and this is all for me, Michael Meihaus, right? Like, I’m not pointing fingers at anyone else. My drinking was unhealthy. My lack of exercise was unhealthy. And so I was saying, what, why? Why is it that I’m doing this? You know why? Why am I letting myself be stressed and also not taking care of my body? So yeah, exactly, as you said, the one person, we’re not saving is ourselves.

We have a way of being extremely self-deprecating. And that’s probably where a lot of that impostor syndrome that we talked about at the very beginning starts to come into play as well. The more hours that you’re grinding, the salve that you’re putting on is food that isn’t good for you, alcohol, the imposter syndrome tends to kick in more, which all begins to then start to create more stress, create more chaos internally.

Yeah.

Somebody needs to step in there, and for lack of a better way to put it, be the person that is the voice of reason, whether it’s a partner, a managing partner, leader, that says, hey, this isn’t worth it. Absolutely not worth it. Not worth it to our firm, not worth it to you, we’re going to do the things that we need to do to make sure that we take care of you. And through that process, we’ll get our clients taken care of.

Absolutely.

So the next one, flip the script here a little bit, and it’s a positive spin on this, “The people are incredible.” And I have to agree with you on that. “For every goofy stereotype of an accountant there is there are hundreds of amazing people that break that mold. A lot of them are here on Twitter, find your people.”

Yep, that was my one typo in there, too. Because I reposted this to LinkedIn. So they’re there. You’re on LinkedIn, too. If you’re listening to this, you’re all on LinkedIn as well. Not exclusively Twitter.

I’m assuming you were able to create some pretty strong cohorts and groups that that still to this day are people that you lean on?

Yeah, absolutely. That was one of the challenges that I was most worried about leaving to work on my own. Because I work out of a built out home office, I’m not in like even a full office space. And I work by myself, but I found the community initially on Twitter. It’s a you know, #TaxTwitter is kind of how you start finding the people, but a lot of amazing, innovative people. And what I loved about it is, I had done some, like, innovative things at my firm, but I felt like I was a big fish in a small pond. And then I stepped into Tax Twitter, and I loved it because I realized how big the ocean wasn’t how small of a fish I was. So there were people doing incredible things with automation, AI, firm structure, innovative ways to think about hiring and business structure. And it was such a refreshing world to just be a part of and say, oh my gosh, I’m just like, right here, and there are people ten levels ahead of me not they’re not being braggarts or being rude about it, they’re just sharing their knowledge and helping other people get there.

So met a ton of amazing people there, was so grateful for it, it really helped transition, that period of loneliness, I think it’s very common when you’re a sole proprietor starting out a firm, getting used to not being in an office any longer having those built in meetings that you’d have at your old firm.

Yeah, I think that, you know, there’s so much that goes into understanding, it’s a much bigger world, than even the world that you came from where there were other people, or, like you said, if you’re a sole practitioner, there are people that have you walked these paths, you know, forged these directions that you’re looking to go.

I mean, we’re talking about the tax world, but I’m a big DIY person—if I can figure out a way to fix it myself around my house, I’m gonna do it. Part of it is I don’t want to spend the money on it the other day, I can hear my dad, you know, my dad chirping in the back of my head, “You’re gonna pay somebody to do that?!” Because my dad was one of those guys that, you know, grease was just a part of his life, he was a mechanic and he would always find a way to fix things. So, you know, I kind of, my logical mindset that I go through when I start to try to work on something or figure something out, is I literally say in my mind, you are not the first person that’s ever dealt with this. Someone’s made a YouTube video about this. And you could take that and expand that to Tax Twitter, or the different groups that are on LinkedIn, or Going Concern or any other place where like minded people gather, and are there to share ideas with.

Absolutely, yeah, no, that’s so true. And I mean, it’s everything I love too—I built the wall you see behind me, I’ve got jobs, the bathrooms down to the studs, I love it all. It’s fun, and then you just realize that you’re capable. So then it’s like, okay, well, if I can build, if I can put a bathtub in, I can maybe learn how to do some AI automation or, you know, integrate GPT-4 into my business or something along those lines.

Yep, yep. It’s just a matter of digging into it and find it and then also finding somebody that that person doesn’t have to be light years ahead of you. If they’re just one step ahead of you, you’ll never know. But they can bring you along and help you gather that knowledge, which again, kind of touches on You know, the last point that I want to discuss as we kind of wrap up today’s episode, “The industry is global” was your other point. “Accounting is way bigger than the U.S. Have an open mind take opportunities to work with international teams. Bonus points, if you can travel there. A blended global workforce is where the professionals are going. Stay on top of that trend.” Tell me what drove your thoughts down that path?

Yeah, I got to I was a part of building out a team in India and got to travel there many times with my old firm, it was absolutely amazing. And if you follow any of the discussions on Twitter or LinkedIn, people are very opinionated about whether or not we should be using foreign workforces. And a lot of it stems I think, from a complete ignorance, almost laughable ignorance, of the fact that you can pay someone a different wage in another country, and it might be a phenomenal wage for them. So a lot of times, there’s these discussions about, I can’t believe you’re paying somebody $10 or $15 an hour in India, or $7 or $8 an hour in, in Thailand, or the Philippines or “you’re running sweatshops.”

And it’s so ignorant, because people don’t ask first, well, what is a good wage in those places, right, so nobody bats an eye, that a tech entrepreneur might get paid something different in New York or San Francisco versus Des Moines, Iowa, just because we recognize okay, yeah, there’s a significant cost of living difference there.

So that’s one of the interesting things to see is that people make flash judgments about these things before they even ask questions about well, do they have an excellent quality of life? Are they given fair wages? Do they have fair working conditions and benefits? Because if the answer to all of those things is yes, then the only reason you don’t want to hire them is because they’re in a different country. There are considerations legally, and from disclosure of perspectives. But I think there’s a weird opinionated take on foreign workforces, that just is completely apart from the times.

The second part is like, they’re wonderful people. And that’s why I put that part of encouraging to go meet with him is, it’s often easy to think of people that are only a name on a screen or an occasional Zoom call as a resource. But when you go and travel, and you have meals with those people, and you train those people in person, and they take you around their city and show you their favorite restaurants and the sites they want to show you—it was such an experience.

I love to connect with people over food because I think it transcends cultures. And if you might feel uncomfortable, or not know where to start. That’s a great place. So I literally just asked each of the staff I said, can you give me some background on like your hometown, your region or your specific ethnic group? Like what are some of the classic foods are the specialty foods, they got together and said, You know what, we’re gonna make you a lunch. And we’ll each bring a special dish that like either our family made or is like from our particular region in India. It was one of the coolest lunches I’ve ever had, it was so much fun, they were so excited to share and explain each dish and how it was made.

That’s cool.

It was just, one, I was touched that they all took the time to do that. And two, it was just so much fun to sit there and experience it and interact with them as human people and see a part of their life. So it was just such a blessing. And it’s amazing to get outside of like a typical, prototypical Western experience of the world. You know what I mean? Like, you travel the U.S. or you travel to Europe, it’s it’s traditionally Western, which isn’t a problem. It’s just not different. It’s not a different experience. And that’s what I love so much about the people in India is they think different, they work different. And they were just an incredible group of people that I miss very dearly, and really enjoyed my time spending with them.

Well, maybe as you grow your firm, there’ll be opportunities to partner in some way, shape, form or fashion with either some of the same people that you partner with in the past or create new relationships, because you’re right—

That’s 100% the hope.

—The workforce is becoming more global, more expansive. We have been able to even though we even though we do some contract, per diem type work in our business for clients. There’s been times where just again, from a capacity standpoint, we didn’t have the ability to wrap our hands around something immediately for a client. We’ve got two or three firms that are offshore firms in India that we’ve partnered with, not directly, but we just refer people to and they’ve been able to help out probably four or five of our clients over the last three years when their backs were to the wall and they absolutely needed help.

So it’s, you’re right, there’s something that is something that people are going to have to get their hand and their heads around to, to continue to move forward.

Michael, I’ve enjoyed talking about so far, just the first seven points. There’s, I think there’s another eight that we’re going to cover in part two. But I want to ask one question that has nothing to do with any of this. And that is a fortuitous piece of cheesecake story—

That’s right.

—That was the right circumstance that got you into this business or where you are today. Tell me about that.

Yeah, absolutely. So I would call myself one of the student population that missed recruiting and I don’t know why that was. I came from a community college, but I just didn’t understand that the recruiting cycles were like a year in advance. Maybe I was like procrastinating or self sabotaging. Who knows? But I didn’t go through any of the traditional cycles. I did get a scholarship award for academic achievement though when I went to that dinner, San Diego State put on a really nice dinner, it was well run, they had rotating for each of the courses, appetizer meal and dessert, you’d rotate from your table to another table and sit next to a professional. And so you got to meet a bunch of different professionals throughout the whole night, I thought it was a great event format, that professionals got to stay at their seats, which was even nicer, you know, you don’t have to jump around.

So it’s kind of like speed dating!

Exactly. It’s speed dating, and it worked great, and got an opportunity to meet a bunch of people, really well run. I was grateful for that. So I was eating cheesecake next to the partner that ultimately hired me, his name was Dan. And he and I were chatting, and then they said, oh, please come up to receive your scholarship. And I was like, oh, I’m so sorry. I have to go up and grab my certificate, I’ll come back. He’s like, Oh, so you must get pretty good grades. I was like, yeah. And he said, You must be pretty smart. And I was like, I guess like, what’s the answer to that? And then he said, you want a job? Literally, how it happened. I was like, okay, question mark? And so he said give me your number, and I’ll call you. I didn’t think anything of it.

I worked as a waiter at a restaurant at that time, and so I just didn’t even think about it wasn’t sure what was gonna happen. And I think a week later said, Hey, Mike, it’s Dan, can you come in this week for an interview? And I was like, Oh, he was serious about this. And so I ended up going in for an interview, started as an intern, and then got a full time offer. And that’s where I worked for, for nine years. And Dan was an amazing boss to work for, really grateful, had great leadership principles and applications, and I think understood how to manage people well. So I feel very blessed to have been hired onto his team and mean it. But it was literally that piece of cheesecake, and that dinner that got me into this industry, I don’t know where I would have been other than that.

You know, it’s funny how you talk about cheesecake, that situation, you talk about the eating meals with the people in India. One of my mantras I’ve said for years is that friendships are made over breaking bread. There’s a lot of things that can happen when you break bread with people, when you spend time with people, when you hang around with people, and there’s meals involved. I just think that that’s something that COVID hit and we’ve lost some of that. And I think we need to get back to some of that. And that’s that’s a whole other topic of discussion.

But I love the way that you touch on so many different pieces of the business and some of the things that people need to seriously consider as they look at moving forward in their careers, or stepping out and starting their own firms.

If you like what you’ve heard here today, and you’ve enjoyed the information from Michael that he shared with us, leave a comment below. You can connect with Michael on LinkedIn as well. Spell your last name Michael, so people get it right. It’s Michael, M-I-C-H-A-E-L, right?

Yep. And then M-E-I-H-A-U-S. And I’m on Twitter, LinkedIn, and I love interacting with people. Shoot me a DM, comment on a post.

So connect with him on LinkedIn, connect with him on Twitter, leave a comment below or better yet, hit the subscribe button so that you will be notified when we drop part two of our discussion with Michael Meihaus. And it’ll be available in the next week or so. Until next time. Have a great day.

We hope you enjoyed today’s episode. Be sure to subscribe on your favorite podcasting app, leave a five star rating and visit our website for links and show notes at CPALifePodcast.com. We’ll see you next time on CPA Life.

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Meihaus CPA

Advice and Perspectives for Firm Leaders with Michael Meihaus

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