Stop Chasing Clients and Start Keeping Them with Brendan Morahan
After a decade in Big Four audit and private equity finance, Brendan Morahan saw two partner-track opportunities collapse in the space of six months. He didn’t set out to start BPM CPA, but he found himself in December 2023 with few good options and a lot of hard-won opinions about how small firms were getting it wrong. Within three years he had built a million-dollar practice by doing almost the opposite of what most firm owners do. In part 1 of this special two part conversation with John Randolph on Episode 93 of CPA Life, Brendan makes a pointed case that the traditional partnership model is losing its pull on the most capable people in public accounting, that the tax manager role is the single most critical and irreplaceable position in any small firm, and that advisory isn’t a service tier you can bolt on. It’s either already in your nature, or it just isn’t.
Important Links:
About the Guest:
Brendan Morahan is the Founder and Managing Partner of BPM CPA. An experienced CPA with unique experience, Brendan has worked in both the public and private sector while rising to the levels of Controller and CFO during his time in the private sector. His 15+ years of experience includes working for one of the Big Four as well as being a Controller/CFO within Private Equity and Start-ups.
A 2009 Siena College graduate with a BBA in Accounting, Brendan earned his CPA license in 2011. He resides in Bergen County, NJ, with his wife Paula and their golden doodle, William.
Transcript:
Hey everybody. Welcome to another episode of the CPA Life Podcast, where we spend time talking to firm leaders who are really helping shape the future of the CPA firm marketplace as we know it today. Today’s guest is someone who is quickly becoming one of the more thought-provoking voices in the accounting profession. Joining us today is Brendan Morahan. Did I pronounce that correctly?
Yes you did, sir.
Good. Brendan is the founder of BPM CPA. I appreciate you taking some time out of your day and talking about all things with your firm and then some of the other business models that you guys have been talking about, starting and getting up off the ground.
Yeah, absolutely. Excited to be here and just chat and stir the pot a little bit.
I think we’ll definitely do that just a little bit. You know, like many firm owners, you took a very traditional path to what’s now a very untraditional or unconventional path. Big four, corporate accounting, then back into public accounting. Now running your own firm for, is it the last three years that you’ve been running BPM?
Yeah.
So give me a little insight into how you evolved to where you are today, going from Big Four associate 15 years ago to firm owner and a respected voice in the public accounting space today.
Yeah, pretty interesting, right? So I worked at PwC, I was in audit, I was on private equity and hedge funds, and I went into private equity, I was controller, CFO, acting CFO, and in that I got burnt out. I didn’t like the line of work, and I saw this small business and accounting space, and I saw people that I knew and I’m like, wait a minute, how’s he going on that exclusive Greece vacation and he’s not licensed? Like, am I missing something here? And I always had people say, “Oh, you do taxes. Why don’t you have your own firm?” So it was just thought-provoking and I started looking at it and I’m like, I know 300 CPAs and none of them do small business tax and accounting, and none of them, I’ve never even thought of having my own small firm. What did they even do? And then I naively said to myself, how hard could it be? I could easily just do this. Like, you know, there’s no way I can’t do this. And then I quickly learned I don’t know taxes, and the small business space is entirely different than Big Four and corporate and all that. It’s a different space entirely, and in some ways a lot more challenging, because it’s a lot more turnaround, it’s a lot more client relationship and business development and processes and there’s a lot going on.
So I did shift and I got a role at a smaller firm, a smaller tax firm, which is where I had to learn taxes. I didn’t know what a Schedule C was. I had 10 years of CPA. I didn’t know what a Schedule C was. I swear. So I had a very good experience, like, you know, and I had a business mindset and I had the controller CFO mindset and all of that. So I went into it evaluating the business itself, the firm itself. And I brought forth ideas and I was like, this doesn’t make sense, this is inefficient, why don’t we do this? We could upsell clients this way, that way. And they wouldn’t listen to me, likely because they thought, like, this guy’s just a beginner. He doesn’t know, even though I was just a CFO. But so that was thought-provoking and I knew my ideas were good. So I went to the next firm. I left after a year and a half and I got bumped up in salary and pay, and I took a huge pay cut, by the way, from where I was.
And then once I started connecting with like-minded partners who had established firms but knew they needed to make changes, then it was off to the races, because I was immediately brought up to the management level with partner track, because they knew I knew bookkeeping and they knew we needed to absorb all the bookkeeping, because all the problems were the client’s books, and the biggest clients are business clients, so why are we not doing the books and the taxes? It makes no sense. They’re paying somebody 25 grand a year to do bookkeeping and it sucks. Then we’re spending $15,000 worth of time and billing $4,000, let’s just charge them $25K and do the whole thing and they save money and they’re thrilled with us and they refer everyone. Like, so we started doing that at the second firm. Started growing and getting clients and started implementing automation and all this. Then I got pulled away for a managing partner role at a bigger firm, blah, blah, blah. So I had a real well-rounded experience and the partner tracks fell through due to reasons or another. One firm sold, the other one, the guy just didn’t want to give up equity.
And I was sitting there in December of 2023, and to be honest, I didn’t want to start my own firm, I was forced into it, because I just had two partner opportunities in six months fall through to no fault of my own. Both would say, like, he’s going to be tremendous, he’ll definitely help us, but for just different reasons. Which, by the way, I understand both. The one guy was getting paid, he was selling his firm and getting paid a lot. You knew me nine months, I don’t expect you to not take your whole life’s work and get paid if you had a great offer. And the other one, he just took over from his father. Now he’s going to add another partner? You know, do your thing, keep it, that’s fine, but I’m going to start my own thing. And I said to that guy, please, let’s work this out where you just keep me contracted through at least tax season and pay me. I don’t have enough clients. Like I’ll do as much as I can for you during that time. So that’s how it started, that’s how it launched. And fast forward to today, I still do contract work at that guy’s firm despite having a million-dollar firm, because it’s just what I believe in and it’s easy work and it’s easy money.
Well, and it’s also still solving a problem for somebody that saw you still as a solution to the problem he was having.
Absolutely. Yes.
And it’s interesting because obviously that led to kind of more of what we’re going to talk about in a little bit. But I think one of the challenges is getting firm leaders to see that, hey, the solution may be sitting right here today, it just may be in a different format than I’m used to. So when you look back over your career in public accounting on the corporate side of things, what would you say are some of the lessons that you learned in those settings that you kind of still rely on every day running your own firm?
I would say the public accounting aspect was great because especially in audit, you got to see how big, and at a Big Four you got to see how businesses operated at the highest level imaginable, right? So like these private equity firms with their internal accounting and the external and their business mindsets that are running, the managing partners of those firms, which by the way, it could be a $2 billion firm and there’s only 25 employees, so you are a part of these meetings. So seeing how these businesses operated, and that’s all you saw, that was the norm. So then when you go into the smaller space and you see how businesses are operated, you go one of two ways: You go either, oh my God, this is a disaster, there’s so much to do and clean up, or you say, this is so easy, okay? I know they can’t afford to buy a full internal team, but let’s just do A, B, and C and we get them, like we save them money and we make their lives 10 times easier. So it was just kind of that basic thing. And you know, certain lessons that were drilled into me, like cash is king. You can’t have accounts receivable, you must get paid. Do whatever it takes to make sure you get paid. People owe you money, you need to get paid. That functions, like that concept. So that rides a lot of the guidance I’ve even given to clients where they have outstanding receivables, and I’m like, would you do yourself a favor? You need to make it as easy as possible for clients to pay you, like get a payment processor so they could pay by credit card, pass along the fee if you need to, whatever it takes, but you can’t be waiting 60 days to get paid, like to run your business and grow. Like, things like this, where they’ve never heard this, and to me it’s just common sense. I can’t tell you how many people probably working on that side of things, still in public accounting or in corporate, who have no idea the value they would add to small businesses and things like that with just what they already know, but they don’t look at it as anything special.
The one piece I was missing when I started, I initially tried to start as a controller CFO firm in 2018, 2019, but everyone I went and talked to, rightfully so, said, “Why do I need a private equity CFO? I need somebody who can do my taxes.” And I didn’t know taxes. So then once I added that to kind of the knowledge base, it became easy, because most people don’t have taxes and bookkeeping and CFO and kind of a personality. So that’s probably why it’s been relatively simple to get clients and keep them.
Well, I think the tax side of the business, for all business owners, it’s the one thing that everybody has in common. They all have to pay them. You know, I can decide whether or not I need a bookkeeper or I need an accountant, or I need a CFO 10 hours a week. Those things I can sit and argue with myself enough at night, at three in the morning when I’m up doing, you know, my QuickBooks accounting. I can argue with myself enough that that would be a nice to have and not a necessity. But on the tax side of things, I know that, I know I need that guy. So if you could get your foot in the door, just kind of pry it open with that foot, it’s amazing the opportunity that exists there. What were some of the experiences—and I think you touched on some of them already—what would you say some of the experiences were as an employee that eventually pushed you to a place of entrepreneurship?
Sure, I mean, I’ll speak more specifically probably to the smaller firm space or even when I was at Big Four. It’s just, once you know, you almost kind of can take a step back and see the dynamic, it starts not making sense, especially when you work in the small business tax and accounting space. You see these amounts of people who are running successful businesses, who are the clients, right? And these are local people, they’re plumbers, they have this random business you never even thought of, they’re selling blinds, they’re doing fire sprinkler repairs and maintenance, and they’re killing it. They have vacation houses and they’re pouring in money. And you know, some of them work hard, but some of them don’t. And they’re living the life that I look at and I’m like, why am I not doing that? And then secondly, you see that, holy cow, these firms are very profitable. You see what you’re billing out and you see what you could charge, and you see all the inefficiencies and you think to yourself, I would just do it this way, but I can’t, I don’t know how I get the clients, but if I could, I would do it this way and oh my God, I would make so much money and I would work less hours and it would be so great. So I think that, seeing that as an employee, like I’m working, so by the way, like busy season, I’m working all these weekends for what, 12 days PTO? Well, I worked 14 weekends.
You can’t forget the pizza though. The pizza.
To me, it’s just the power dynamic has changed where the information is now out there, the employees can see this. And by the way, no hate to the standard, I’m an average employee, I don’t want to be an entrepreneur, I just want to go in—and I respect these people—when I leave work I’m not checking my email, my phone, nothing. I’m going home and I’m living my life. I’m going for a paycheck and then I’m done. But there’s a lot more people who are bringing that home with them and they’re stressed and they’re answering emails at home and they’re thinking about work when they’re home and on the weekends and with their families. Man, you might as well work for yourself if you’re doing that, and make a lot more money to work a lot less hours. And that has probably never been a reality, but it absolutely is a reality today, if you’re a tax CPA and you know what you’re doing for smaller businesses and personal returns and things like that. It’s never been easier and more lucrative, with more demand and less competition.
Yeah. From a consumer side of the equation, there’s probably not a month—I won’t say a week, but it’s bumping up against that—but there’s not a month that goes by that I don’t talk to somebody that either reaches out to me through professional connections or personal connections: “Hey, I know that you work in the CPA firm space with CPAs. I’m looking for somebody. Can you refer me to somebody?” It’s a constant, whether it’s because the firm they were with went out of business, sold to private equity, merged with another firm, is shedding clients and upgrading their client base, multitude of reasons. But you’re right, the opportunity is significant.
Yeah. And the reason why, like, I thought, my own conclusion is just in the 70s, 80s, 90s, the goal, if you got your CPA, I believe, was to start your own little practice in your town. But then Enron and all that happened, and now corporate accounting blew up. I don’t know this for a fact, but everybody, we were pushed in college, we were never even told of the option to do this. We were all pushed Big Four and the corporate side and the public accounting at the big firms, and everybody I knew did that, nobody did this. So I think it was just a generational gap maybe from around the late 90s up until 2020 where that’s where everybody got pushed, all those people who started their own firms and worked there are now retired. And we all know the shortage, but there’s this huge gap now that needs to be filled.
Yep. You know, I think part of that, Brendan, also is the age-old adage of “follow the money.” What monies are funneling into those accounting programs at the colleges, that’s where they’re going to push people to go into. So before you stepped out and started BPM, the hours, days, weeks before making that step, what would you say your biggest fear was before launching your firm?
Getting clients and having enough money. The only fear. Can I get clients and will I have money? Like, how long is it? I knew if I did it for five years I’d be fine, but how long is it going to take me to make money where I’m not stressed? I’m anxious, I’m going to get married next year or not. I just got a new car. Like these are the thoughts. Now I laugh at it because it’s so minuscule. But yeah, these were the obvious, like what other thought is there? Like, where am I going to get money? How long will it take me to make money? Where am I going to get clients? Those are the questions.
Yeah, how long is the runway before I go start working for, you know, Uber or somebody to make extra money, DoorDash or something. So you step out, you build BPM, you started from the ground, you built your firm, and when I say relatively quickly, I’m not diminishing the hard work that you put into it, but the ramp, comparatively speaking to a lot of traditional firms in the marketplace that, as we talked about a little bit before we started recording, there’s a lot of 15-to-20-year-old firms out there that are struggling to bump a million dollars or more. You’ve done that in three years. So what decisions do you think contributed most to that growth over the last two to three years?
I think number one is having the supplemental contract work. Hands down, most important thing, because there wasn’t the pressure to take on every client and, you know, have to run out and start handshaking people and be like, hey, you know, not that I didn’t do that, I did actually, but there wasn’t the pressure that I needed to land a single client because I knew at least, okay, this is coming in. And because of that, it allowed me to be more selective with who I tried to target. So, you know, my initial phase was I called people in my professional network that I thought could help me and I said this: I just launched my firm, if you know any clients, please send them to me, and I’ll give you 10% of the first year’s fee. But I’m looking for business owners, and I don’t want to take on simple tax returns, like I was very adamant about that and I didn’t. I think I took on three my first year just because I spoke to like a wife who was so stressed. I’m like, all right, I’ll, you know. That’s it though. Like I didn’t take on others. And I got fortunate, I guess, with some of the introductions I got, and then I said to myself, I’m going to absolutely knock it out of the park for these clients because I know they’re going to refer if I do that. So I went above and beyond in every way imaginable. I had the time, by the way, for these first clients, which were, I started getting business clients that were on the package of bookkeeping plus tax returns plus advisory.
I actually have a list of like my growth by month, but I think it was being selective. There’s a lot of rules actually that I follow. Like I don’t take family and friends except for like my parents. I learned a lot while working at other small firms. So I learned that 90% of all the issues, all the frustrations and problems that the other smaller firms had came from what I call, there are like four things. It was doing payroll themselves, it was doing sales tax, it was doing cheap, low-fee client work, and it was doing family and friends. That was the cause, those four things were the cause of 90% of all the issues and problems. So I said to myself, I’m not doing any of those. So I don’t do it. I partnered with ADP: here, you’re going to use ADP. And any question I get, talk to ADP. Like, you know, because I don’t want to deal with payroll. It’s a nightmare. Sales tax, same thing, unless we’re filing zeros. Friends and family, I only do my parents. I will give free advice. Call me, I’ll give you all the free advice you need, but the second I take a dollar from you, you now, at least what I saw at other firms, think you’re a client in the sense that you could call every day and every week and take advantage, and that’s what was happening that I saw. And then they start hating their family members and close friends, and I don’t want that. So these things, and just not taking cheaper clients. So I got to learn by seeing, I don’t want to call it failures, but by seeing the issues in other firms and just avoiding that.
I think if you spend enough time, I’m the youngest child of four, and I always joke about how I learned a lot about what not to do by watching my three siblings. You know, okay, that works, okay, that doesn’t work, okay, don’t do this, do that. You know, like I talked to a firm owner a couple of years ago, and one of the things that he said was, he was probably 10, 15 years in the business before he stepped out on his own. And one of the comments he made in his history was, you know, John, every problem client that we ever had, the one thing that I noticed that people had in common was they were always behind on their taxes. Always. So the people I was chasing for data, the people I was begging to pay their bills, all of them were always behind on their taxes. So when I started my firm, one of my simple rules is we don’t take people that are behind on their taxes. I may leave money on the table, but I saw in my past the problems that that caused, so we don’t do that. So I think that there are things like that that you learn, that you bring forward into who you are today that are important to you, and you just stick to them.
Yeah. I’ll say quickly too, if you do tax, I’ll stick to tax. If you do taxes, you could be successful running a bunch of different, like everybody that I know who’s successful, who’s started a firm within the last five years, none of us have the same design, setup, and firm. Some are more successful than others, but everyone is successful. Like people I know who are at least three years into this, I don’t think anybody makes less than 250 grand a year, you know. And the best do 7–800 grand a year net. So some do personal tax, they do the easy, simple 1040s. Some do no advisory, some don’t do bookkeeping. Some do it all. Some do CFO. All of them could be, you could be successful doing any of them, but I think as long as you have taxes in there, because taxes is the anchor.
Yeah. I think one of the things that I’ve said for years in business, especially in small business, is you’ve got to be willing to put a stake in the ground and say, this is who we are, this is what we do, we do it as good or better than anybody else. It could be a geography niche, it could be a vertical in regards to industry. It could be the types of business you do or don’t do. Like you said, there’s no silver bullet in this space. You’ve got to find what works for you and lean into it. You know, one of the things that you’ve talked about pretty heavily through your LinkedIn communication is client retention instead of chasing growth. Tell me what that means to you and why that’s something that you’re so passionate about.
I would see at other firms, they do this too, where it’s like you have this great client, like your best clients, take your top 10% of clients and maybe the top 1–2%, you are giving them that hands-on. But the 3% through 10%, which make up probably 40% of your revenue, you are kind of, you know, you’re prioritizing the ones just ahead of them, but then you’re chasing new clients coming in, and also they would do basic 1040 personal returns and they were spending all this time on these basic 1040s that amounted to a fraction of what just these six clients, just knock those out of the park. To me it wasn’t hard. It’s like, what are you doing? And then some would leave and it’s like, do you know how many of those little 1040s you have to get to make up that $46,000 a year? To me it just didn’t make sense. Do you know how much admin time that is? How much onboarding time? How many conversations that is? It doesn’t make any sense to me. So that was one of the things I learned. Like, I hadn’t talked, I did this yesterday, I hadn’t talked to one of my largest clients in like six weeks. I had a vacation and a conference. And I was like, we need to catch up, man. And then I was like, we need to actually set up every two weeks. Let’s just keep in touch, so we keep talking, because I would just want to make sure the relationship is warm. I don’t look at going four months without talking to a client as a good thing. That to me is me not doing a good job.
But I’ve also set up my firm where I’m not doing a lot of the work, and I’m doing things the opposite of what I think some gurus are saying to do. But I believe in, yes, I want to own all the client relationships and I want to be the high-level advisor and strategist, but I don’t want to do the work, because I know I could delegate that. It’s a lot easier to retain the clients who are going to be referring new clients and who are going to grow as clients than it is to lose that client, have a bad experience, have them potentially say bad things about you, and then have to go replace them. It’s just common sense for me. Maybe that’s what I’m getting at.
Yep. I think that leans into something that you mentioned recently that caught my attention, was a comment about advisory services. You said, I’ll see if I can get this close, you said advisory isn’t something you package and sell, it’s who you are. Tell me what you meant by that.
Well, I mean, I think I have issues with all of the thought leaders, not all the thought leaders, right, but a lot of the thought leaders who are not actually doing this space but who are advising this space, and I see firms rebranding that are 40, 50 years old. Like we’re now doing advisory and CFO and all this stuff. Man, I know that firm—no, they’re not. Like, they can’t do that, so why are they trying to act like they know how to advise when in reality, to me, advisory is just talking and building the relationship, right? Advising. So somebody calls me and they’re like, the kid had this, that’s even advisory, like, I’m at least listening to you on your kid problem, da da da. Oh, but yeah, you’ve got a job here and could you contribute to a Roth IRA, blah, blah, blah. Well, like, everything turns into, in my opinion, advisory, just through conversation with the base of knowledge I have. So that’s all it is. It’s authentic, it’s conversations. I just include advisory on all my monthly package people, because I’m encouraging literally just conversations. Text me, call me, let’s talk.
There are questions everybody has and you know they want to ask them, but they don’t have the access to ask them when the client relationship is they just prepare a tax return for you. And when you try to ask them a question, what happens? He doesn’t get back to me for a few weeks. Well, that’s because they’re not really equipped. I think I was, like I said, born to do this because I love talking, and I’m so interested in this stuff and I get the most out of it when somebody asks me something super unique. You probably get it, but the stuff that clients come up with or say, or their situations, just a new thing every week, which I find interesting and I can’t wait to go look into or talk to people about. So I actually love doing it because I’m passionate about it and I find it interesting. I don’t think you could just one day not like that and not have that be a part of you, and then say, “I’m going to charge this amount of money to do that.” To me, it doesn’t make sense. Something’s missing there.
Yeah. I think that it comes into a situation where you’re trying to manufacture a product line or a revenue stream versus just letting it happen organically and creating those conversations that just come out of constant contact.
Yeah. And then what I disagree with too, it’s like, oh, you get to have like three advisory meetings a year. Well, some years they might need one, and what if there’s one year where they need eight, because there’s a lot going on? Like, are we really going to be like with a pen and pad, almost like, oh, you had your three meetings this year, but he’s about to sell the company, and he could refer you, and this could turn into, like it, that to me doesn’t really add up. So what I say to clients, and I haven’t been burned by it yet, is, within reason, right? You’re not calling me on Christmas. Like, within reason. You know if you’re being reasonable or not. And if you’re not, I’m going to tell you. Like, look, I just had it yesterday. Just so we know, this is beyond scope. Let’s talk about this. This is something entirely different. You’re selling your company, you need projections for 20 partners. That’s obviously not part of our normal stuff. So let’s, let’s get on, let’s just talk about it. Not a big deal, let’s just talk.
Yep. Where do we go from here with it? And I think those big things that come out of just general conversations may end up being one-off revenue opportunities for you. But you’re never going to get those unless you create that situation to have an open dialogue where, again, as a consumer, I’m not concerned that if I pick the phone up and call Brendan, he’s going to flip a switch on a clock and I’m going to get an invoice for the 15 minutes that he spent talking to me.
Or you’re going to use one of your precious three meetings on this question? Like, come on. And most of the questions are five minutes, ten minutes, or it’s a text and a quick answer. That’s the other thing too, it’s just not that big of a deal. And I actually think a lot of the clients don’t want these formal, like, here’s our agenda for this meeting in May. Okay, like let’s go through your agenda in May. I just don’t see the value in it.
I completely agree with you. Through all of the growth and the way that you’ve built your firm, probably the thing that has caught my attention the most, and I want to spend some time talking about, is the conversation that you’ve been creating around a question I think that a lot of experienced accountants are quietly asking themselves, and that question is, is there another path? A path between traditional employment and traditional firm ownership, a path that allows a talented person to build something of their own while still creating value for an established firm. So I want to dig into that because I think you’re hitting on something that I know is a source of conversation we’ve had recently with a lot of people on both the talent side of things as well as the firm ownership side of things. So let’s shift gears just a little bit. You’ve written extensively about the shortage of senior tax talent on LinkedIn. So from your perspective, what do you think the real problem is?
To me it’s pretty simple. I think it’s a broken, I don’t know if you want to call it a system, but I think, I’ve used the term, the power dynamic has shifted. The world has changed. It’s a different world today. There’s a talent shortage. There’s so much I can say about this, so I want to make sure I don’t ramble, because I have so much confidence in this whole thing. But there are firms that exist that have too many clients and too much demand, and the most important, critical position is the tax manager. The reviewer, the senior tax manager. Why is that position so important? It’s because one, it’s the only one that really needs human judgment still, and it keeps the partners out of the review and out of the work. Otherwise the partners are working 60, 80 hours during tax season. What’s the point of having your own company if that’s what you’re doing? So the tax manager is the most important position. It can’t go offshore. It can’t get automated. So the other things can. That’s the most important position. And it just so happens those are the exact people who could go out and start their own firm. So those are the exact people who are having these thoughts in their head. It’s just like, well, I know how important I am here. But it’s really odd because the owners don’t really seem to think that, because otherwise they’d give me partner or they’d pay me a little bit more than what they’re paying me. Like if I left, what would they do?
And the funny thing is I think the owners haven’t realized that they can’t just quickly get another candidate to fill that role, because now we have access to everywhere in the country and every CPA firm in the country who needs talent, it’s not just local. So previously, there were only a handful of CPA firms in town and there were more accountants than there were CPA firms, so you could get a candidate for whatever price you wanted to pay them. Now the market’s changing where the tax manager, or these people who can start their own firm, they can kind of dictate. I saw a tax manager listing at $350,000 a year last year. So, you know, there are some people I still talk to who are like, oh, a tax manager, you know, 120 a year? We disagree on what a tax manager is then. So I think that’s a little bit of context, maybe a little too much. Now you have these people, I think, who are seeing this and they’re seeing people like myself post and other people post being like, dude, I’m at a million dollars in three years. I make four to five times what I used to make and I work half the hours I used to work. And it’s like, wait, what? And then we keep posting, myself and other people, where it’s like, you don’t believe me? Okay. Like I’ll keep posting evidence and evidence and evidence, and it’s really because they’ve thought it themselves. When I did it, I did not have the evidence, so I didn’t see somebody like me posting. I wasn’t on LinkedIn at that time. So I was just all in my head thinking this is true. So I feel like a lot of people, when they see what I post about, they’re just like, that is a hundred percent me, I need to do this, how do I do this? I need to go this route.
And I think a lot of them are just realizing, why am I going to work 50, 60, 70 hours a week for a paycheck and I’m still struggling at the end of the day after mortgage and bills and stuff? I’m not, maybe I’m saving a little bit, but if I go on a vacation, and God forbid the heater blows or the car needs to get replaced, that money’s gone. So it’s like, well, why not just downsize? Do Uber Eats and have a ton of free time at that rate. It’s the same quality, the quality of life sucks all the—I could go on and on, but I think they’re all kind of questioning now and realizing, those who are at least good enough and know that they could handle clients from start to finish, from conversations and this and that, I think every one of them knows that they could go do it on their own. They just don’t know how. They don’t have the confidence, they’re risk-averse, those types of things.
Yeah. I think that, you know, anytime that on the recruiting side of our business, anytime that I talk to a candidate and I describe our stereotypical client avatar, the firms that we typically work with. So we don’t work with any large top-100 firms. All of our firms are small to mid-size CPA firm owners. And what I always tell candidates is kind of the common theme in the owners that we work with: they are people that spent enough 11 o’clock, midnight, one o’clock in the morning at the bar across the street from the office, sitting around with their buddies, talking about, there has got to be a better way. And the only difference is these guys decided, you know what, I’m not going to go find the better way at another place, I’m going to go build a better way. And that’s kind of a common theme, but I think that’s a wiring that you’ve got to have, willing to take that step out and take that risk. And that’s kind of what you’ve been talking about, because one of the things that you’ve also talked a lot about is you’ve made the argument that the traditional partnership model is no longer the obvious end goal for a lot of high performers. You’ve seen that firsthand in your career, but along with that, tell me why that’s kind of a thesis that you’ve leaned into a lot over the last year.
Yeah. It’s just, okay, I had two partner routes and both fell through. And then you look at private equity buying a lot of firms, and I can’t imagine those people that were there for 15 years and one year away from partner and then they sell out, and now you don’t get that, and you worked so hard for that. And at the end of the day, if we’re talking money, there are two types here, right? There’s the type that’s just like, “I don’t want to sacrifice my family time, I value more free time, so I’m not going to do all those hours and what it takes to become that partner.” That’s one type, right, where they’re just like, “I’m not going to do that.” But there’s the other type who is going to do that. And I would say to them, there is very little guarantee anymore that they’re even going to let you in at that point. I’ve been misled many times. Agreements don’t mean anything, until it’s like the formal, signed, in-hand and you’re on the company docs and everything. An agreement doesn’t mean anything. And the money also, right? Like, so when I compare now what I would have made at a partner at some of these firms, I make way more, and it would have been a slow grind and I would have been working 60 hours a week to build, because I would be trying to show “You did not make a mistake, you made the right choice making me partner.” So it’s not like I would be able to take a step back. I would be working more if I ever got it, and I wouldn’t, when I think of the money that I make now, I make way more having a hundred percent of my own. And I think it’s just the first time, because of remote work and you don’t need a physical office and you can be in contact with clients all over the country and world, that you don’t need them, like you no longer need them. You could do it yourself and you could just connect with people like me who have started their own firms or do contract work to just alleviate any of the risk. If the risk used to be like, on a scale of one to ten, like a seven, I feel like it’s down to a one or a two at this point. I think it’s far riskier to stay at a firm as an employee. Like you could, if they automate or use AI or they just get rid of you anyway. So you’re really, in my opinion, if you’re capable, your strongest bet, the best thing you can do for your family, is to have your own thing.
Yep. I completely agree. And I think from a talent standpoint, there has been a dynamic shift. I think that one of the things also that we’ve touched on a little bit, and we talked a little bit about this before we started recording, but I think that today’s younger professionals want something fundamentally different than previous generations.
Thanks for listening to part one of John Randolph’s conversation with Brendan Morahan of BPM CPA. Part two will air July 15th. Be sure to subscribe and leave a five-star rating on your favorite podcasting app, and check out CPALifePodcast.com for show notes and more. We’ll see you next time on CPA Life.