Steering Your Firm’s Ship: Future Transition with David Hartley

David Hartley joined Anders CPAs + Advisors when they were looking to establish an Advisory practice, demonstrating how even a large firm can “steer its ship” in an active, anticipatory way. David talks to John Randolph on Episode 34 of CPA Life in part 1 of their two part conversation about the strategic planning and growth of the Advisory practice under his watch, and David delves into how to have a forward-thinking approach, remote work experiences, and strategies for managing both remote and in-office work models. He touches on the future of the CPA profession, the importance of continuous learning, the impact of client relationships, and the importance of culling clients that are no longer a good fit for where your firm is today.

Transcript:

Hey, everyone! Welcome to another episode of the CPA Life podcast, where we spent time, a couple of times a month, talking to firm leaders throughout the country who are leading the charge to innovate and bring change to the CPA firm and profession—leaders who are truly committed to ditching the old ways of business and embracing a new mindset, a culture that attracts people, and shows people that you don’t have to sacrifice your life and your family at the altar of your job to build a career in public accounting. So today, we are joined by David Hartley, who is a man who’s been doing a lot of that and more as the Partner in Charge of Advisory for Anders CPAs + Advisors. David, welcome to the show.

Thanks, John. It’s great to be here. I’m very passionate about the topic, so I think we’ll have some fun.

I’m looking forward to it. You know, we touched on this just a minute ago—I’ve got to tell you stereotypically when we talk to firms about industry change, when we talk about outside of the box thinking—things like embracing a remote workforce, ditching billable hours, true work-life balance, those stereotypically are not the things that are being done within most large top 1500 firms. It’s a desire and they want to get there. But they’re still a long way away. Most of the grassroots change that we’re seeing is occurring in smaller to midsize firms because the boat’s a little easier to turn.

Yeah.

But as we talked about, you guys are 400 plus employees and you and the rest of leadership team at Anders, which I think you guys ranked 77th last year, on IPA’s rankings?

Yep!

You guys are showing that change can occur in a big firm. Talk to me a little bit about the path that you’ve taken. I want to dig into, you know, some of the changes that you guys have made, but give us all a little bit of a background, just kind of a thumbnail of how you’ve gotten to where you are at Anders over the course of your career.

Sure. Yeah. John, thanks for the question. So two things I would say. One, is, let me talk about my journey real quick, and then I’ll talk about the Anders journey because, of course, they tie in.

So I actually started in the early 90s, and so I did Big Four for almost a decade. And then I pivoted completely to technology. I left the CPA profession, let my license go, didn’t want to get the CPE, because I was leading technology for a public company.

Okay.

And so I did that for a while. And then when I left that, then I started doing virtual CIO work for middle market companies. And then my next step after that was fully back into sort of the CPA world. So my journey’s been, you know, from sort of starting as a CPA, doing audit, then doing technology, and then coming back to the CPA profession. So now let me tie that into the next part of the story being Anders.

To Anders credit, so I’ve been at the firm for almost five years now. And Anders goes through a great process which if you’re, you know, if you’re a firm owner and you’re listening to this, one of the things I would highly recommend is the firm does very frequent strategic planning exercises. So we’ll get together, we’ll do a one day, two day off-site. We’re constantly sort of talking at that strategic level about what it is that we want to be when we grow up. And to the firm’s credit at their 2018 retreat, they decided, hey, we’ve been talking about Advisory for many years, and we need to get serious about it. However, we don’t have anybody internally with the right skill set and the time to lead the effort and the real push into Advisory. So they said we need to go and recruit somebody and bring somebody in that can help us grow Advisory.

So they came out, talked to me. I said, I have admired the firm from afar for a long time, because it always wins “best places to work,” always gets great accolades. So I was very interested, and it turned out to be a great match. So I’ve been here five years, and we’ve quadrupled the size of the advisory practice in that four or five year period. It’s not without its challenges. But I definitely think it is impressive what the firm has accomplished and sort of the talent that exists within this firm.

So you guys made a big pivot then in 2018, 2019 pursuing the Advisory side of the house.

With one caveat—so the interesting thing is Anders as a firm has actually been entrepreneurial for decades. So the firm has a 50-plus year history, and the firm has always been supportive of when an employee has an idea and wants to go pursue something, the firm tries to figure out how to support them. So many years ago—30, 40 years ago—we had a partner that said, I think this Litigation Services thing could be big. So one of our partners that’s retired now, Tom Hilton, you know, he pushed it. He came from tax, went into that area, and then basically became the national leader in litigation services.

Wow.

And so, you know, the firm also in the 80s started doing technology, because we had clients asking us about technology. So we started helping them with computers and all those types of things. So the firm has been entrepreneurial for decades. It was just in 2018, 2019, the firm had these individual Advisory service lines, but it wasn’t really being managed as a practice. It was more individual silos. And so part of the thinking was, hey, if we’re going to get serious about this and we truly believe that this is the future, then we need to get more structure, we need to get more mature, we need to have somebody who can really focus their time and energy on it. Which is one of the unique things—you know, the firm brought me in at a high level. I don’t have direct client serving relationships. My client is the firm. And so what I do where I spend my time is both managing our existing lines of business that we have within the Advisory practice, but then also going out and finding either firms or lateral hires where we’ve identified priorities of additional services we need to add, going out and finding those firms, finding those people to bring them into Anders, so that basically we can have all the services that our clients are asking us for.

So it’s really forward thinking about not only where are we today and how do we get better at what we’re doing, but as Wayne Gretzky would say, where’s the puck going to be? And let’s go there and be there before it gets there.

Yeah. And we definitely see: the things that our clients are asking us for as we come out with more and more services, they’re asking for more and more. So, you know, whether it’s the concepts of cross-selling or cross-servicing, and the thing I think that really helps me is that—so I did, you know, audit and consulting for a while, and then I went on the other side of the desk. And when I led technology for a public company, I realized how hard that is and what a difficult job it is.

So now that I’m back on this side as a service provider, you know, some people are like, oh, they don’t want this from the same provider. When I was a buyer, my goodness, if somebody could bring to me a packaged solution of four or five or six different things that made my life easier, that was a beautiful thing. So when we look at, we know the clients, we we have the relationships, we know them and can provide the best advice, then it makes complete sense that we would provide more holistic services, which obviously results in increased revenue and hopefully happier clients, which then gets us additional clients. So in our eyes, sort of, what we’re doing is really sort of the natural evolution of the CPA profession as we look over the next couple of decades.

You know, it’s interesting you talk about that because for so long prior to COVID, in our recruiting business, one of the things that we constantly heard from small to midsize firms that were really focused in tax compliance, tax advisory type work was that’s who we are, that’s what we do. And they farmed out—if not all—a very large portion of you know, what we refer today as Client Accounting Services. Fast forward past COVID, and that’s now one of the fastest growing areas and largest opportunities from a revenue standpoint for a lot of firms out there, is to build and diversify and create internally that Client Accounting Services business. Is that something that you guys have seen as well, not only at Anders, but also on the consulting side of the business through the Missouri State chapter?

Yeah, so we definitely saw that ourselves. And so part of what we had done—so about a decade ago, we had a partner who’d really focused on building what we called at the time, our outsourced accounting services, or OAS practice. Yep. And so what we did there was a lot of the CAS 1.0 type services, more transactional, bill pay, payroll, you know, kind of those types of things. And part of what we recognized is that that’s great, and gave us a very solid foundation, but we knew the things that clients were asking us for, and where the real value was was those higher level, CAS 2.0, true virtual CFO services.

And so what we did is we made a decision that that’s great that we’ve got this practice, but we really need to add on that virtual CFO piece. So we went out to find the leading virtual CFO firm in the country, which we ended up, we found Summit CPA Group, Jody Grunden, Adam Hale. We met Jody and Adam, we learned what they were doing, we looked at how it could snap in with what we did. And so, basically, two years ago, we merged in the Summit CPA Group team, which was about 50 people, fully remote, spread all around the country. Really focused on delivering true virtual CFO services, a lot of which is focused on cashflow forecasting so that non financial business executives can make better decisions, because they’re armed with somebody who has that financial expertise.

And that’s a very successful service for us. We get a lot of positive feedback from clients. You know, and I think that’s part of the shift of the profession, is a lot of what we’ve done has been more looking in the rearview mirror. And now as we go forward, we’re actually, “Hey, you’ve got this business decision coming up. You need to be thinking about these two or three things.” And by guiding them through that process and almost serving as a financial coach, our clients get value. They make better decisions, they’re more successful.

So, yeah, we were early believers in CAS. We went out and added the Summit CPA Group team. Now we’ve got, our practice is about 70 people. You know, there’s a lot of things that we do because it’s a hybrid team. So we have fully remote employees. We have employees coming to the office every day, and we’ve got everything in between. So, yeah, for us, CAS has been a key part. As firms look at that and go into that business. I think it’s great. The recurring revenue model, you know, there’s a lot of great things about that business. And, you know, I think it’s definitely something that firms need to take a look at.

I want to touch on something, and change the subject just a little bit. You mentioned bringing in Summit. They were 100% virtual. What was the makeup, or even the appetite, for a virtual business model within Anders prior to that merger?

It was there. And like everybody going through the pandemic, kind of everything changed. And services that we previously, we didn’t think there would be client acceptance for us doing things a different way, suddenly, during the pandemic, there wasn’t a choice. And that was the way that we were doing it. Now that’s not a good fit for every client and every situation.

Right.

But in a lot of places, it works really, really well. And, you know, the other thing that we’ve done as part of that business is we’ve gone after specific verticals. So where initially, where Summit CPA Group made a great splash was in the digital agency space. So online marketing, SEO, you know, those types of consulting marketing firms. And so by going after that, as opposed to, you know, you want the digital agency expert anywhere in the country. You don’t care if that person is in your geography or not. You want that expert. And so that niching down, that’s part of what we’ve done. And since Summit’s come, we’ve added three new verticals, and this year, we’re going to add additional new verticals. So that’s one of the strategies for the for the firm as we go from being a mostly midwestern firm to now being able to serve clients anywhere in the country with resources from anywhere in the country.

Nice.

So that’s part of our evolution as well.

So that evolution has also driven some of the remote or embracing of remote mentality.

Yeah. And certainly, so we were already doing it pre-Summit, but certainly when Summit came, that took things to a whole other level. Because suddenly we went from being in a dozen states to then we were in 35+ states. And it just really changed the game, we were in all time zones, you know, kind of all of those things. So the appetite was there, but I think, and John, going back to your earlier point about, you know, with big firms, it’s kind of harder to move because they’re big ships, and it’s hard to do that—I think by bringing Summit in, we were already experimenting with it. But, you know, to the team at Summit’s credit, they taught us a ton about remote work. So whenever I hear now, there’s a lot of stuff in the media about, and executives that are turning their back on remote work, and whenever I hear that part of me in the back of my mind goes, we’re not having those same issues. They must just not know how to do remote work.

It’s different. There are different things that you have to do. We do retreats where we bring the team together every six months—costs us a lot of money, but it keeps the team connected. It’s focused on personal relationships. Other things like, you know, if we’re in the office, and we’ve got remote participants, we don’t all go into a conference room, and then leave that remote person just hanging on the wall. Because that’s a horrible experience for a remote employee.

That’s a great point.

We go back to our offices and everybody logs in. So we’re all at an even playing field in terms of being a participant in that meeting. Now, and there’s other examples of things like that. But if you don’t do those things, it is a horrible experience for your remote employees. And I think what we’re going to see over the next couple of years, I think companies that don’t figure out how to do this, they’re going to lose their remote employees because after a year or two, kind of this is like, I can do so much, someplace that really gets how to do remote work, and that’s where I want to go. And those are the employees that we want to attract, are the people that are really good and really like remote work and do it well. They’re disciplined enough to do it remotely, they don’t have to come into an office, they don’t need somebody looking over their shoulder. They just get the work done. And that’s what we’re experiencing with our remote employees. So for us, it’s working, but certainly hybrid is a much more difficult model than either fully remote, and/or, fully in office.

I’ve said this a couple of times on the podcast and talked to some clients—1when we talk about the embracing of remote: We had a firm that we’re working with, we’ve worked with for years, in the Dallas area, that coming out of COVID, they were still in the office and they’re not in a highly desirable geographic location—well, I shouldn’t say that—it’s a very highly desirable area to live, but not to commute to.

Okay.

So getting people to go there is not easy. And then you got COVID, and people wanting to work remote and all that. And he and I talked for over a year about going remote. And they’re about an 18 to 20 person firm. And I really applauded him one day when he called and he said, hey—it was after the October 15th deadline—and he said, “Hey, I’ve been giving this whole remote thing a lot of thought. And I’ve come up with the best reason I can give you that I don’t want us to be remote.” And I said, what’s that? He said, “I don’t want us to be remote.”

And I said, okay. And how do you feel about that? He said, “Well, the follow-up to that is, I don’t think that’s a good enough reason, so I need to figure this out.” So and today, you know, if people live in the area and they want to go in the office, they have an office, but they’ve got employees in multiple geographies, you know, throughout the country. But I think you’re right. I think when people talk about the culture issue, when people talk about the challenges of it, I think a lot of it boils down to there’s either a lack of knowledge between what they need to do and what they know, or there’s a lack of desire. One or the other.

Yeah. And the other thing about that, it is hard. You have to be intentional, and you have to have discipline to stick with it. Cause when you start your remote work, hey, we’re going to do this, and then, like, over time, you start to drift back into your old habits, you have to have that discipline of, to have a good remote employee experience, we have to do these things. So if you look back a year later and you’re only doing four of those ten things that you said were really important, and you talk to your remote employees and they give you that feedback, it’s probably not the right setup. And the other thing I think that’s important is, and to your client who made that statement to you—I don’t think there’s a right answer. There’s different answers for everybody.

Right.

I think there’s firms, I think it’s more about making a decision. So if that firm owner would have said, I’ve decided this, and this is why I’ve decided it, and that’s what I’m going to do—if they’ve got a strategy and a vision for how they’re going to—maybe they’re going to use that as a differentiator. Hey, we’re all physically important, this geographic area is where we serve, and that’s going to be a differentiator for us.

Absolutely.

As opposed to other boutique firms or national firms or those types of things. And that could work great for them. And maybe it’s a market that really embraces local, and they really want that, as opposed to others where it’s more about national expertise, and therefore, the remote model works. So as we get into different verticals, the expectations are different.

Like take construction, for example. Construction, real estate—generally, they want somebody there. That industry does not do great, or they don’t really, that doesn’t mesh with the culture in that industry. And I think it’s going to differ for every one. So that’s where you got to know your market, You got to have a plan. What are we doing and why are we doing it? And then you have to be intentional about designing it and then disciplined in the execution.

On the talent branding and the talent development side of things that we work with clients on in our consulting business, one of the things that we see a lot in the marketplace, and see if you can speak to this—we’ll talk to firms that are in a geography that commuting outside of ten miles from your house is a bear. You know, and where we typically see that is where in a community where mass transit is highly reliable—Chicago, Washington D.C., Baltimore area, Philadelphia, New York, New Jersey, but in areas where it’s not something that people lean on like St. Louis, like Dallas, like Houston, It’s nothing for you to get in the car, for me to get in the car and commute or drive 45 minutes to an hour. It’s just something we do. Where in a community like that, if they’re driving fifteen miles, it could be an hour to an hour and a half.

We’ve had a lot of firms that we’ve talked to in their challenges. Hey, we’re fully in office, but we can’t find people because everybody that needs to work for us has to live within ten miles of the office or it’s a 45 minute to an hour commute. And their struggle is do we look at a separate geography, or do we embrace some kind of a hybrid culture?

Yeah. And that’s where, you know, so I’ll give you a couple of examples of things that we’ve been through. And that makes complete sense. You know, and that’s the business reality of, if you can’t find the employees that you need, it almost becomes a necessity to embrace remote work. So at Anders, one of the things that we’ve done, so the St. Louis Metropolitan area continues to grow, which is where our primary office is. And we’re located, our primary office is downtown, right next to Busch Stadium and Downtown St. Louis. But we recognize that there are people in the western suburbs that maybe that’s an hour commute to downtown, that love our vision, love our culture, want to be a part of it, but they don’t want to commute an hour every day to downtown Saint Louis.

So we opened an office 25 miles to the west, that basically our intent with that office is to give our employees another place where they can go to be extremely productive, and for those folks out there rather than an hour long commute, then, you know, it’s a much shorter commute from wherever they are. And I think that’s one of the things as a firm you have to be intentional about. So we’re definitely pursuing and supporters of remote work. But then in addition to that, we also want to create these environments where, like our downtown office, we have a lot of people that live right on the Illinois side of the river, and so our downtown location works really well for that. And we find a lot of those people, you know, some from rural communities, they have great work ethic. And they’re great at doing client service.

So for every firm, it’s like your unique circumstances are going to be a little different, so there is no one size fits all. But I think it’s important that you look at and understand and do a real assessment of where you are today, and then where do you want to be in the future? Are you a firm of twenty people that when you see yourself in five years, you’re still a firm of twenty people, and you’ve got a relatively younger workforce? Well, then that may be okay. As opposed to another firm that wants to double in five years, then you may have to do remote work simply out of necessity, because you can’t find that much talent locally.

So I think in all of those situations, it really just does depend on your unique situation. And I think one of the things that’s going to be a theme going forward, you’ve got to be open and flexible to doing things differently than how you’ve done things in the past. I think with technology coming and even what the pandemic did to us, just in terms of it, it really changed a lot of things. And as we look going forward, you know, I just did a podcast interview where I was on the Young CPA Success Show, and I was talking about, is today a good day to be a young CPA? That was what the host asked me. And I came back and said, well, actually, today is the best day ever to be a young CPA, and tomorrow is going to be even better.

And as part of that, I started comparing where we are today in 2024 back to when I started in the profession in the early 90s, because I don’t think a lot of younger professionals realize how much the profession has advanced in that 30 years. So I started pre-internet, almost really pre-computer, and to look at where we are today is unbelievable. But as part of that, the theme, I think, has changed. Because when I look at the next 10 years, I think that probably the change is going to happen in the next 10 years, is going to be equivalent to what I’ve experienced over the last 30 years. And that’s my concern for smaller firms, is that if they don’t see that coming, and start at least processing that, and starting to make some changes and embrace that as the future, that’s when you might have trouble.

Yep. I completely agree. I don’t think there’s been a better time—working in the space that I work in—I don’t think there’s been a better time in the 36 years that I’ve been doing this, to be a part of the accounting profession and especially the public accounting profession. There are so many things pointing towards people that can adapt and change are going to thrive in this space and in this business over the next decade to two decades. I don’t think that’s going to change at all.

So with respect to the whole remote, hybrid world, if you were going to flip a switch and say, hey, 2024, we’re going to head down this path. You’re at a firm that doesn’t do that, let’s just say. What would you say would be the two or three things as a leader, knowing what you’ve been through that you would say, hey, guys, it’s hyper critical either, we have raised this attitude, we implement this technology, whatever the case may be, these are the two or three things that we have got to do if this is going to work for us in 2024. Whether it’s one day a week at home, or four days a week at home, or completely remote.

Yeah. I think part of it is a lot of the challenge, if you’ve founded the firm, if you’re if you’ve been in a firm for 20 years, a lot of times all you know is that firm. And so I think a very key thing that you need to do, is you’ve got to start looking outside, and I would say a couple things come to mind. If you’re part of an association, you should get active in that association, network with other firms, talk with them about what they’re doing. So at Anders, we’re part of LEA Global, and as a result of that, we have great relationships with other firms.

We try things. Sometimes it works, sometimes it doesn’t. We share that with other firms. Other firms, we ask questions. “Hey, we’re thinking about changing our PTO policy. Have you done this? Have you done that?” and getting feedback from them. And that just makes us better, because we’re tapping into that collective wisdom of everybody that, you know, is in our network and our association. So I think that part is key, tapping into your association. If you’re not part of one, consider joining one.

I think the other part is really just education, in terms of you’ve got to get out and go to some conferences. So, you know, like, when I think about the Digital CPA Conference back in December, that AICPA and CPA.com put on, so many thought leaders, I walked away—I think I’m pretty progressive—I went to that conference and I hear what some other firms are doing and other leaders? And I’m ashamed of where I’m at. And so, but that’s the kind of thing that you’ve got to see other people that are really pushing the envelope.

So that was great, but that’s like a one time thing. You know, you go to a conference, you come back, you’re in your day to day, you lose it. The other thing I’d recommend in addition to conferences is you’ve got to get on LinkedIn, and you’ve got to get connected with some of these accounting influencers—really, you know, I don’t like that term, but that’s really the closest thing. I think there are a lot of people out there that are using AI in public accounting, AI in FP&A, and they’re sharing it freely. They’re creating documents. Just last week, I downloaded a 161 page guide from Adam who’s in the UK, and he’s creating some amazing content of how you can use AI as part of the FP&A process.

Wow.

And there are so many people out there. Jason Staats is another one. He’s got Jason_CPA, on YouTube—just spend a day watching all of Jason’s videos, and you will learn so much. It is, you know, and that’s probably a thing where you can’t take it all in, because it’s so much. So break it down, put it on your calendar—30 minutes today, I’m going to block, and I’m going to go, and I’m going to follow these guys and I’m going to pull up some information about what they’re working on, and really start thinking about it. ’Cause if you devote mind space to it, that’s where the creativity is going to come. The challenge to that is, in the profession, we’re so busy, nobody can look any further than I just got to get all this stuff done because I’ve got so much client work in front of me. And that’s where it has to be a priority. Even if you’re busy today, you’ve got to be preparing for what’s next. You’ve got to break away, you’ve got to take some time, and you’ve really got to be thinking about it. If that’s where we’re headed, then we’ve got to start taking some steps to get there, and the time to start that is today.

You know, it’s interesting you bring up Jason’s information. I’m not an accountant. I work with accountants. I run a business. But I spend probably two to three days a week, half an hour to 45 minutes on his YouTube channel looking at things that some are just business common sense knowledge things that it doesn’t matter if you run a landscape company or CPA firm, it’s an “aha” moment where you go, you know what? That’s a nugget. I can use that.

Or even if you run a CPA firm, it’s things that are applicable to the industry that may not be debits and credits minded, from my standpoint, but it’s things that you gain knowledge of, that can eventually make your firm a better firm and run it better. So I agree with you. There’s a lot of content out there from a lot of people that are putting things out there and sharing the hard work and the sweat that they’ve already put into something. No need to go and reinvent the wheel.

Exactly. They’re going to put it out there, they’re going to give you access to it. And the great thing about it, the vast majority of it is free. And so, you know, if you’re on LinkedIn for your business, because it’s a very effective tool for you to establish your brand, that’s great. But then there’s also the learning component of it, which you can get access to tons of great thought leadership for free. That’s a great combination.

One of the things that I want to touch on a little bit, David, is you talked about being busy as a firm owner, especially right now—busy. You’ve got more client work than you can shake a stick at. I had a firm owner that I talked to a couple of weeks ago, and one of the questions they asked was, we hear a lot of talk in the marketplace about firms calling clients, you know, is now a good time for me to be looking at my client base and determining, you know, what’s good, what’s bad, because I haven’t done that in a while. What are your thoughts on that?

A hundred percent, that needs to be a priority. If you’re a firm and you haven’t called clients in a while, I think that’s part of the great awakening in the CPA world over the last three or four years, which is, if we serve fewer clients that are better clients, that are a good fit for us—every firm evolves over time, and what’s a good fit for you at one point in time may not be a good fit a couple years later. So if you’re not going back and reviewing your client base, and looking at different factors, both in terms of financially, are they meeting the metrics? Number two, do they listen to us? Do they actually take our advice? That’s huge. And three that I think is huge is how do they treat our people? And if you have clients that do not respect your people, given how scarce resources are today, you’ve got to deal with those clients.

So if you haven’t done that, I would say it’s a high priority. Now granted you don’t want to ditch clients, but if you don’t do it today, you need to start planning so that you can send them a letter in the fall and say, hey, I’m not going to do your audit. I’m not going to do your tax next year, and here’s some other firms that might be a fit for you, some other providers establish some relationships, so you have soft landings with those clients. But still, that is a huge one. Because you can dramatically improve your margins, because a lot of times you start segmenting your client base, the clients that complain the most, that take up the most time, and are the biggest pains for you, are the ones you’re not making any money on anyway.

But you have to step back. You’ve got to step back and actually look at the forest, not at an individual tree, and step back and look at that, map out all your clients, use those criteria, and then take a good hard look at it, say, you know, if we got rid of these ten clients, oh my god, the firm would be more profitable, our people would be happier, and you need to cut the cord with those ten clients. And in today’s environment, given how much people are coming to CPAs for help, and there is culling of clients going on, there’s a lot of great work out there. You don’t have to keep crappy clients. But you have to have the discipline to actually do the analysis and deal with the situation.

It’s something that we see constantly with the firms that we talked to. And I think it’s safe to say that if you run a firm that’s 5, 10, 15—even a firm that’s 30 years old—there are probably clients on your books that you said yes to in year 2, 3, or 4, when you absolutely needed money, that are probably still on your books today and have no business being a client today.

Yep. I completely agree. And unless you have a long-term agreement with them, then, depending on what your engagement letter says, you’re not obligated to serve that client. Obviously, we want to do the right thing.

Right.

But at the end of the day, if you’re a CPA firm and you’re running a business, and you want your your clients and your employees to have the best experience—if you don’t identify the ones that don’t fit with who you are today, and where you’re going, and deal with those, then you’ll have all these issues and you won’t really know why until you actually take the step of where you do that culling.

It’s a harsh example, a drastic example, but when we started our business years ago, and this was the vertical that we were in. We had a client call us about six to eight months into the process of building the business, and they were having a formal, happy hour, CPE training thing for a bunch of their clients and they wanted to know, do you have some people that can come and just be hosts and hostesses? Sit them down, make sure they don’t have questions that they need answered, get them information they need. And my rationale was, “It is a CPA firm. I mean, it’s kind of in our vertical. No, it’s not accountants and it’s a temp job, but we can do that.” I would be out of my mind if I even thought about saying yes to something like that with that client today based on where a business is six years later.

Yeah. Maturity, I’m a big believer in maturity and that businesses go through cycles. And if you’re not recognizing that in your own business, you’re probably missing a thing or two about where you are, and really what your next steps need to be. Because I think that’s critical. If you’re not looking ahead, and you’re not thinking about types of things: What are the things that I’m doing now that for my firm to get to the next level, we need to stop doing? If you’re not going through that analysis periodically, and then actually taking those things and stopping doing those things, you’re just going to keep on doing the things that you’re doing into perpetuity. That may or may not work. I don’t know that that’s a great strategy. I’d much rather decide where we want to be, and be intentional about the steps that we need to take to get there, as opposed to just, you know, hoping that sort of the audit and tax horse that we’ve ridden for a 100 years, that that’s going to, you know, continue.

Yep.

Now, that being said, those businesses are doing really well right now. There’s a lot of tax work, a lot of audit work that’s out there, not a lot of people coming in. We can talk about the pipeline stuff if you want. But that is the, you know, you’ve got to look at those realities. You’ve got to grapple with them. Every business, every firm is at a different stage of maturity. You need to look at which stage you’re in today, where do you want to be, and how are you going to get there.

We hope you enjoyed part 1 of John Randolph’s conversation with David Hartley of Anders. Tune in April 10th for part 2. Be sure to leave a five star rating on your favorite podcasting app, and check out CPALifePodcast.com for links and show notes. We’ll see you next time on CPA Life.

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