Geraldine Carter’s background in engineering and adventure travel informs her gusto and skill for identifying and solving problems, and her experience in founding her own business led her to realize the challenges many CPAs face as business owners themselves. She talks to John Randolph on part 1 of this two-part episode of CPA Life about those challenges, and her coaching of CPAs on how to simplify their practices, focus on value creation, and get their hours and stress under control. Geraldine provides practical advice on harnessing the benefits of narrowing your focus through specialization or niching, such as higher margins and an easier workload.
Welcome to another episode of CPA Life podcast where we spend time talking to firm leaders and industry insiders who are disrupting an industry that has been run way too long with a “we’ve always done it that way” mindset. And today, we’re going to be spending time talking to Geraldine Carter, who has built a very successful career over the last few years as a business coach, consultant and advisor to firm owners who are looking for ways to get their lives back work smarter, not harder, while doing something that they absolutely love to do. Geraldine, welcome to the show.
Thank you, John. I’m happy to be here.
I’m looking forward to digging into a lot of things. You also host a podcast called Business Strategy for CPAs, and you’ve been running for over 250 episodes. And I love to listen to it because you talk about everything from implementing ChatGPT, to pricing, to firing unrealistic clients—I don’t think there’s a whole lot you haven’t touched that most firm owners kind of roll out of bed and scratch their head about sometimes.
Yeah, so I have been hosting for almost five years now, which is crazy to think. The only thing I stay away from is tech and automation, because those things are so well covered by other people. And I really focus on the high level stuff at the headwaters of your business strategy, who you’re going to work with, what they want to buy from you how to find those people and what to say to them. So that we can really simplify the accounting practice and stop being all things to all people running all over the map with your hair on fire all the time trying to put out the fires of clients, man. So it’s been a really fun journey. And I’m I both love my work, I find it fulfilling. And I’m also grateful for everything that it’s created my life in there, and the change that it has, and the transformations that it has offered. For my CPA clients.
Well, we’re going to talk about a lot of things that you’re pretty passionate about in the industry. And hear your perspective on some of the topics that are impacting today’s accounting and advisory firm owners. So for those that may not be familiar with your background, give us a little bit of a snapshot of how you ended up in this space.
So I was trying to distill this into four discrete pieces, because I’m 47, and I’ve had a long ride. And the main pieces are that I have an engineering degree from Cornell University, because I did not know what I wanted to be when I grew up, and I figured an engineering degree would be a safe thing to have in my back pocket. So that turned out to be really wise. But I knew that I didn’t want to be an engineer, I didn’t know that I wanted to lead bicycle tours in Europe after I graduated. So I went into that. And that turned into a 10 year stint as a guide for a luxury adventure travel company. I went all around the world, I’ve been to all seven continents, more than 50 countries.
It gets hard to count when you get into the principalities and things, you know? And then when I got back to, I moved back to the US after 10 years of not living in the US, and with a friend, I co-founded a company. And because of my engineering background, I immediately fell into the operations and the money role, managing all the finances and everything. And it was during the recession, so not the easiest time to start a business. But we made it through. And by our fifth year, we had more than a million dollars in revenue, and I was about 35. And I thought, what, how is it possible that I’m responsible for this amount of money? And it was quite scary.
So I made all the classic mistakes of you know, the accidental business owner. And I had a bookkeeper who made a mess of things. So then I hired an accountant who knew what she was doing, and she came in I paid her two grand to clean everything up and fix our payroll and all the rest, and a CPA who was like super arm’s length. And our accountant had all the classic symptoms of the accounting space—billed by the hour for way too little working way too much, running around like a crazy person with their hair on fire first in first out, I could never get a hold of her. And I was trying to deal with a million dollars, and trying to figure out, you know, how much we had for payroll and how much we could afford to grow. And could we hire and when could we hire could we not hire and if our numbers did this, could we do that? And if they didn’t do this did we have to cut things? And I spent a lot of late nights inside the spreadsheets, which I enjoy doing because I’m an engineer and I love tinkering and figuring things out, but I also didn’t want to be spending, you know, 8 to 11pm every night working on modeling financial scenarios.
But she was nowhere to be found because she was too busy charging $55 an hour. So when I left that situation, because I kind of burned out and I needed to find a new way and start a family and do all these, I needed to make some changes. So I took some time kind of to myself before starting a family and had some friends and colleagues who would ask me about their numbers. Geraldine, can you help me understand my P&L? My accountant sends it to me every month, I have no idea what that thing says.
So I would try to casually just help people, you know, at business, networking events and things, I’m like, yeah, just bring it to next week’s meeting. And I’ll just kind of walk you through it or whatever. And I would do that. And after doing a bunch of these, I’d be like, where is your accountant? Like, how come your accountant hasn’t explained your P&L to you? You know, and we never even got anywhere near the balance sheet. Because that thing would just freak them out.
And I was like, I kept wondering where their accountant was, and asking them and they would say, oh, you know, I can’t get a hold of her. She doesn’t return my phone calls. They talk over me they talk down to me. I don’t understand what they’re saying. And I was like, what is happening here? And then sort of in the way the universe works, at the same time, two separate main street CPAs reached out to me and said, hey, you know, I’ve heard you’re doing some coaching, and we’re wondering if you might be able to help us. And I really scratched my head—I thought, why is it that CPAs are reaching out to me, thinking that I could help them? Don’t they understand everything about business? They’ve got a roster full of business owners, don’t they learn everything they need to know through osmosis from their clients?
And it turns out that of course, the answer is no, right? CPAs are business owners just like every other business owner. They’re excellent at their craft. But just because you’re excellent at your craft doesn’t make you a good business owner necessarily. It’s an entirely different skill set. And when I saw this, I was immediately taken. And I thought this is such an interesting problem, that these super smart, well educated people who are willing to work really hard, are taking home 70k. What is going on? And they’re working 200 hours a day to do that. I thought, what is—something is broken in here? What is it, and that was when I started down the path of sort of being obsessively curious about accountants and CPAs, and their business model and what’s going on.
And that’s how I got into the journey of working with CPAs, for CPAs, trying to help them get their hours down while flatlining their revenue, right? So that’s how I got on the journey of coaching CPAs helping them go from an 80 hour work week down to a 40 hour work week without a drop in revenue. So it’s been a super fun journey. And like I said at the top, I’m really grateful for all of it.
You know, it’s interesting that you talk about the hours perspective, as we were talking about a little bit before—the other side of this business is a recruiting firm and we work strictly with small to mid-sized CPA firm owners in about six months ago, was probably longer than that because it before the tax season started this past year, we were introduced to a client that was looking to hire a manager, senior manager, that would kind of be the heir apparent for one of the partners who was retiring, it was two partners. One was older, he was probably in his mid 60s, the other was a little bit younger, early 50s. And when I sat down and met with them, the older partner was talking about how he really wanted to reduce his time to part time going into the ’23 tax season.
So logically, maybe I’m too simple—logically, to me, part time to me meant that he was looking to work about a thousand hours. And I said, So you’re looking to reduce your time down to about a thousand hours, 20 hours a week ballpark for the year. He said, “Oh, no, no, no, no, no. Last year, I worked almost 4,000 hours.”
“I’d like to get that down to 2,000 hours.” And this is a partner that’s in his mid 60s that’s still putting forth that type of effort in their business. It was one of those scratch your head moments of, my gosh, if I hope if I get to that point in my career that I’m not having to work that hard to deliver the type of results to my customers I want to deliver, I don’t care what business I’m running.
Yeah, so this is classic time equals money thinking that is endemic in the accounting space. Whether they’ve moved from hourly billing to flat rate or something else or not, even the ones who have moved to flat rate billing still think that time is what creates money. And It looks that way because you do work for your client, and you write up the invoice for the deliverables—the tax return, the P&L, the month end close, all of it—you send it to the client and the client sends you money. So it looks like money comes from clients for time spent doing work.
But that’s not where money actually comes from. Money comes from value, and the creation of value for clients. So the trick in this situation for this person, and for other CPAs, who are still working long hours, because they think that that is how you make money, is to focus on value, and learn to see it because it is sort of like if you can remember those—they’re called autostereograms, those dot matrix pictures from the 90s, where it just looks like a bunch of dots on a poster, and you stare into it, and there’s a pirate ship and a shark and a palm tree, but you have to learn how to see it. Once you see it, you never forget how to see it, you can’t unsee it. But until you see it, you’re like, I think you guys are all pulling my leg, there’s no pirate ship in that picture of dots.
And value is the same way you’ve got to learn how to see it. And you have to learn how to see what your clients value. And most often clients value access, they value expertise, they value guidance, they value fast response times—or reasonably quick response times—they value intangible things like that. But as linear thinkers, we tend to get stuck in the concrete. And if we can’t touch it, or feel it or smell it or hold it, it doesn’t exist. And that’s a hindrance to growing your business and actually having time to live the rest of your life if you’re caught up in that kind of thinking. So we need to really—we need for the CPA to understand value and what it is for their specific buyers, learn how to create it for their buyers, learn how to create it repetitively, and learn how to capture it with prices. And when you do that, that is how you get out of working all the time for your clients.
It’s one of those ugly cycles that never stops, it just perpetuates itself, and just continues to feed the beast, so to speak. That’s one of the things that obviously I want to spend a little bit of time talking to you about, and there’s a lot that I want to unpack—where we are today, what’s broken in the industry—but also want to talk about what are some things that you’ve seen that firms are doing right and doing well. But let’s look at, what would you say from your perspective, talking to firm leaders across the country, what would you say are the two to three biggest challenges facing the majority of today’s firm owners?
So it depends on where they are. For the firm owner who is working 60, 70, 80 hours a week, the challenge is usually like we’re just talking about, the mindset that work equals money. And because they have amassed a client roster that is well beyond capacity—and when I talk about client rosters beyond capacity, I’m talking about the 747 that only has 400 seats on it, there’s no known universe in which you pile 900 passengers onto that thing and shoot it into the sky. That is not a good idea for anybody. Yet many CPA firms are operating this way, with far more clients than they have seats for, but they’ve developed relationships with their passengers, and they love them, and they’re like, I can’t get Sally off the plane, she’s got to go to a wedding in Paris, that will be heartbreaking! Like we’ve got to unravel the personal relationship nature from the business and just be objective about it without being cold hearted. We do this in a way that is considerate.
But we have to look at the business and the capacity of the business and say, here’s what we have capacity for. And once we can do that, then we can say, alright, who do we want to bring with us? Because not all of your clients can go with you, if you want to make these changes in your business. And then we look at okay, what are we gonna sell, and how are we going to package and price it? So back to the answer of your question. I think the main challenges are getting real about the capacity that you do not have that you wish you had. And dealing with, like, just moving through that discomfort of letting go of clients who have become friends over time.
I talked to a new client he was referred to us, I want to say it was around this time last year. Small firm, seven people out of Florida, fully remote firm. They’ve only been in business five years. But we were talking about some of the things that they did when they set the firm up to try to set themselves up for success, and one of the things that the owner said that was, to me, a blinding flash of the obvious, and it was one of those head scratchers of man, that sounds like such an easy answer. Because I asked him, I said, tell me what’s different about your firm and why someone would have an interest in going to work for your firm versus the firm down the street. You’re a smaller firm, the tools that you have may not be on par with a larger firm, talk to me about where some value is.
And he said, well, probably the biggest value that I can bring to the table, John, is that, and his words were, we don’t deal with bull**** clients. And I said, okay, tell me what you mean by that. And he said, well, I spent 14 years with two other public accounting firms, and as I grew in the industry, I started to realize that every client that I fought with, about everything, had one thing in common—whether I fought with them about their tax returns the data, I needed the files, I needed, paying their bills, whatever it was, returning their phone calls—they all had one thing in common, and that was, every single one of them was always behind on their taxes. So when I started my firm, I made a very simple decision: We don’t deal with anyone that is behind on their taxes.
And he said, you know, I may leave money on the table, I may lose some clients that probably could bring some strong dollars to us. But to me, it’s worth not having that headache, and being able to work with clients that value our services, versus the one or two that may pay us a lot, but I’m going to be constantly fighting with them. And that may not be an answer for everybody. But it was at least a revelation of somebody that had an experience—multiple experiences, obviously—to say, this is something we’re not going to deal with. And I think that that’s something that’s hard to do for most people.
You brought up something in there that is worth surfacing. And that is this idea of leaving money on the table. And when you ask the question, what are the two biggest challenges that CPAs face, I think at the core of much of this is mindset. Mindset touches so many things in your business, but leaving money on the table is a requirement. As a business owner, you have to learn how to leave money on the table. If you run around, trying to pick up every single dollar on your table, your business will be totally unfocused, you’ll be all over the place. I think a lot of CPAs, there’s a tendency to think that every dollar is a good dollar, and all dollars are created equal. That’s not the case. What we want for CPAs, or where I help my clients go, is to focus on not just clients who are going to be great, but go in the direction of clients where you love working with them, you can provide a ton of value, and you can get really efficient. The efficiency piece comes when we focus on a niche or an industry where we get super specific about who we work with. If you can’t learn how to leave money on the table, you will suffer. And you will create problems for yourself that you do not need to have.
Absolutely. You know, let’s talk about niching just a little bit, because in any industry, I think sometimes the mindset is, well, if I go too narrow, I’m leaving money on the table or I’m potentially losing good clients. There’s a mindset that’s prevalent across multiple industries—and we’re talking specifically right now about CPA firms—but there’s a mindset that if I put blinders on, what am I potentially not seeing over here? Talk to me about your thoughts on niching and how you talk about that with your clients.
Yeah. So this is a great question, I think really important because it’s so impactful for accountants and CPAs. The challenge for them is it’s not the norm yet to be niche. For physicians, it’s the norm to specialize. They don’t think anything of it, they know they have to do it, because they know they can’t understand and be an expert in the entire human body. But the norm in the accounting space still is to be all things to all people, and to be one of few who goes out and niches feels very scary to them for a variety of reasons, one of them being I don’t want to be the one who sticks their head out and is the dodo who falls flat on their face and gets seen by everybody doing it. But like you say, the threat of leaving money on the table, and I’m going to limit revenue and I’m going to limit opportunities. The value of niching is that you get to simplify your business, you’re not running all over kingdom come of the tax code, you have less to focus on which means that it’s easier to deepen your expertise. With that expertise, you create more value for your clients with less effort or work or time. More value for your clients means higher prices. Higher prices plus a simplified business means that your margins are higher. When your margins are higher, you can afford to cut all those pain in the rear end clients and the ones who are lower margin. And with the time that you start to get back, you plow that time back into your business and find more places to save more time—you train your staff better so they stop pestering you and interrupting you with questions you think they should know the answer to. And you plow that time back into systems optimizing and automating so you get even more time back. And with that extra time back you continue to deepen your expertise, provide more value, lift your prices even more, simplify your business even more.
And then when your expertise is deep enough, then you can split your expertise from the doing of the work. And this is where the clouds part and the sunbeams come in, because you can separate knowing how to do something, knowing how to get a result for your client, to the doing of the work to get the result from your client. When you can splice off your expertise and package it in the form of a video course or an eBook that’s evergreen and lives on the internet, and it sells while you sleep and you wake up to money, you can stop working 40 hours a week, or 80 hours a week, and you can start working 10 hours a week because you’re selling expertise while you sleep. So you can be a generalist, if you want, and work 50 hours a week, I mean have at it. Or you can niche and become an expert and make the same amount of money and work nine hours a week. It’s totally up to the CPA—you get to choose. But that’s the value of niching.
I think there’s the fear of the unknown that people deal with. But I think that there’s significant value in—and give me your thoughts on this—but I think there’s significant value on being able to replicate skill and knowledge twice as fast when you’re not having to, as you said, worry about the tax code as it pertains to a manufacturing company in Pennsylvania, and then a distribution company in Florida, a real estate company in Texas, and a cannabis company in Colorado. If I’m focused strictly on let’s just say cannabis firms, or I’m focused strictly on manufacturing firms, there seems to be logically some value in being able to replicate that knowledge faster, because I’m not being distracted by the other ancillary things.
It’s exactly that. You have to learn and keep track of so much less. What you need to know stays inside so much more narrow lanes. And then when you learn it, you set up the systems, the systems are so much easier to set up. It’s like when you have the manufacturer in Pennsylvania and the cannabis guy over in California and the real estate person in Florida, it’s like trying to drive a wheelbarrow with a bunch of frogs in it that keep popping out. You just don’t get anywhere. When you’re in your narrow lane of what you focus on, it becomes easier to set up your systems and much easier to delegate your work. You stop being the holder of all the expertise. I have a lot of clients who say to me, I’m the one with the most technical expertise, so all the hard stuff always lands on my desk, and they can’t get it off. Another piece of value about niching is that it’s so much easier to systematize—train your staff and delegate and ratchet your hours down.
It’s as an analogous situation to our business in our industry, it’s one of the things that I constantly deal with, with our staff, because, you know, inevitably there’s somebody that reaches out to somebody they know that needs to hire a controller at a manufacturing company and getting an understanding look, we we’ve got a lane that we drive in—that lane that we drive in is locally owned CPA firms. That’s who we deliver for. And the nice thing about it is that the candidates that we talk to are candidates that want to be a part of a CPA firm environment and culture. If we start looking for controllers and financial analysts and AP clerks and payroll managers, that vision starts getting blurred, and then we’re having to recreate the wheel so many other times versus staying in our lane and doing what it is that we do.
And I mentioned this to you a minute ago, I think that any small business that is going to succeed has got to be willing to put that 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, because the reality is, you don’t have the marketing dollars to compete with the larger firms across the street or in the world we live in today, five states over, or a country over. They’ve got more dollars to throw at it from a marketing perspective than you will ever have as a small business owner.
You couldn’t be more on target about this, and I couldn’t agree with you more. There’s as a small business owner, you do not have the same firepower behind you to run a complex business. And you talked about the fear of the unknown. And what I can say is what we know about accountants who niche is that their margins go up. I know this because I talk to my CPAs about their margins and we splice their service lines by monthly accounting that is non niche, monthly accounting that is niche, tax returns. We do margins on all of those things. And the lowest margins are on tax returns and the highest margins are on niche monthly accounting. So we know that it is higher revenue, higher margin. We also know that when we ask CPAs who have gone in the direction of focusing on who they work with and what they do for those people, and/or they have become tightly niched, we know when we ask them, would you ever go back to being a generalist, they say heck no, because they see how much easier it is, they feel the relief, they feel their business float much more easily instead of being tied to the ground and tied to their desk. So we know these things.
The fear of the unknown seems like a necessary and valuable thought. But all it is, is a thought that prevents forward movement, experimenting, and learning from the experiments that you run. So when we talk about mindset, fear of the unknown is absolutely right in there. And when it comes to marketing dollars, you just cannot compete with the bigger firms who may be able to serve a broader population. The way in, the strategy for getting your name out there when you are a niche is to be hyper-focused, and to put your dollars right on a very narrow audience, so that they see your message, and so that your message lands with them. And when you’re an expert in your niche, you know, what they deal with, you know, the challenges they deal with, you know, how they talk about their problems, you know, what they want instead. So, when a potential buyer in your market sees your message, they think, oh, that CPA understands me exactly. And that’s what makes your phone ring, and you end up with better clients, much better clients, who are pre-qualified and fall nicely in your niche. So there are countless reasons that we love niching. And I also appreciate that it’s really scary. I’ve been there too. I was a generalist, I started out as a generalist. And I know what it’s like to feel like your toes are kind of curled over the edge, and you’re about to take the leap. But it’s the best thing that you can do for your business.
I’ve got a client in the Austin marketplace that is very niched in the medical space. They work with two types of surgeons predominantly in the central Texas market, but they also work some other Texas markets. And he’s been looking to grow his advisory service line. You made a great point—he said, John, I don’t need somebody that can go sell, I can sell, we’ve got another guy in our firm that sells really well, but I need somebody that can look for leveraging value within our customer base. And I said, tell me what you mean. And he said, Well, we’ve done some pretty cool projects for clients over the past two to three years without a dedicated advisory piece to our business. But as we look to grow this advisory piece, I need somebody that can look and see that this client has a very similar footprint to this client that we just worked a project with and brought some value to, let’s set up a lunch and let’s go talk to these guys that maybe we’re doing their tax return, maybe we’re doing their outsourced accounting—let’s go talk to them about the value we’ve been able to provide to a company very similar to theirs that may be a stage or two ahead of them, and it’s only a matter of time before they start encountering the same problem, and let’s get ahead of it, and let’s create some value for this particular client.
And I thought, you know, if more firms thought that way, that workload becomes a lot more easier to manage. And the stress becomes a lot easier to manage, because it’s not reactive. It’s proactive thinking.
Yeah. And I think that this is coming. There are changes afoot in the accounting space for sure. And with more people beginning to niche, with more and more people moving off of hourly billing on to tiered pricing, flat rate pricing, more and more people are understanding value and creating value for their clients. And as business owners, we come up through the ranks doing work for our bosses, and we get paid for it. So it’s understandable that we think when we hang our shingle that if I just do work, but now the work is for me that I’m going to make a lot of money because my boss isn’t taking the cream off the top. But the transition that we need to make mentally when we hang our shingle is that now our number one job is to delight our clients. It’s no longer about us and the work that we’re doing. It’s no longer about keying in the data, it’s no longer about getting the work done, moving the work through the pipeline. Now our number one job as business owner is to delight the client.
So when you think about it that way, and you ask yourself, how can I delight my clients? What are 50 things I could do that might potentially delight my clients? Suddenly you get much more creative about how you can create value for your clients in order to delight them. And I think CPAs sometimes think of themselves as numbers, people. And the word “creative” with accounting doesn’t go well together.
But I think that when, as business owners, we give ourselves latitude to be creative. That is when we create value for our clients. That is when we set ourselves apart. That is when like you were saying at the top, we make a decision to be better. better than anybody around us. And that doesn’t mean that I’m winning and you’re losing.
It just means that I’m going to take my unique genius, and I’m going to look at my clients, and I’m going to find and create solutions that nobody else has done before, because only my brain works the way my brain works. So I think for CPAs, I think there’s movement, change afoot, that CPAs are beginning to see that as business owners, as firm owners, that there is so much value for them to create, we just need to get them their time back, to force it from time being money so that they feel safe, using their time to be creative thinking about value for clients.
I think you’re so right. I want to change the subject just a little bit and get your thoughts on something you touched on when we first started talking, and that is capacity. That’s something that I’ll never understand in the traditional public accounting firm model. Especially in the world that we live in today, we’ve got people in a firm that you know, someone’s out selling it, bringing it in, and then you’ve got people that are generating that work. If you have a staff, the way that I liken it to is, is those people that are doing the work are kind of on a treadmill, and they’re running as fast as they can to crank the work out.
In theory, as a leader, your job should be to slow that treadmill down every now and then to let those people breathe, catch their breath, to be able to continue to perform at the level that they were performing at before. But instead, in the current model that we have today, where a partner, or a manager, or a senior manager has a business development quota, they’re standing on the side of that treadmill, not slowing it down, they’re making it go faster, because they’re dumping more work on that person that’s already putting forth 50, 60, 70 hours, and so it never is ending. As a firm owner, as a leader, how can someone better manage the capacity that is in their firm and understand what they’re doing to their staff?
So there’s two questions in one there, and I think the first one is around if that person has a quota, I would question where the incentives are. Because if that person is getting paid per sale, per new client, or has a financial incentive to bring in more business, they’re going to bring in as much business as they can. And they don’t care about what happens downstream.
So we need to look at financial incentives inside our business and how we’re paying our employees, and how you are paying them what that incentivizes them to do. One of my favorite quotes is Upton Sinclair’s “Man cannot see that which his salary depends on his not seeing.” So for firm owners, you’ve got to look throughout, at how you’re paying your people and how that might be creating adverse incentives that are not good for your business.
And the second piece, as the firm owner, is the buck stops with you. So if you want tired and worn out staff who end up quitting, that you’re going to have to replace and train, then you know, keep throwing money at your sales guy, and you’ll end up with that result. But if you want staff who are happy, and productive, and calm, and not stressed out, and don’t bark at each other, and don’t sabotage each other, or don’t get territorial, if you want staff that work together, then it’s your job to figure out how to create staff that work together, and it’s your job to figure out how to manage the pipeline and their workload, so that they’re not always running six minute miles on the treadmill, and they can’t keep up.
It’s the business owner’s responsibility to know how much capacity the firm has. And it’s the business owners responsibility to make sure that that operates appropriately. And I would even argue that running your staff at, or right above, or well above, or right under, 100% capacity is not a great idea. Because if you only think of your staff as being billable and churning out work, you’re missing an opportunity to allow them time and bandwidth. They know where the inefficiencies are in the processes, but if you always have them working, you’re just constantly running inefficient processes. So I would argue that you’re better off having some cushion where they’re running at a little bit or a good bit less than capacity so that they can use that time to generate more efficiencies.
We’ve got a client that we work with that all in, expected administrative time, three weeks PTO, vacations, holidays, everything, they run their business on a 2,200 hour metric. Nobody in the firm works more than 2,200 hours per year and that’s all-in—their utilization is significantly less than that. And their mindset is kind of similar to what you’re talking about. When I was talking to the firm owner two years ago when we started working together, one of the things she talked about is, we’re not perfect. We’ve got things in our firm that are broken. And she said, you know, we’ve gotten to the point as a firm with 30 plus employees, I don’t see everything that’s broken, I can’t. So if I don’t create space for my people to be able to work on those things, and communicate about those things that aren’t effective, that aren’t efficient, then all we’re doing is we’re continuing to drive the car down the road, and eventually the engine is going to blow. And I thought that was a great way to look at it, to give your people space to understand that they’ve got to have some breathing room, not only for their mental health and sanity, but also to help your business run more effective and efficient.
In my first business, we had six employees. I never managed anything about their time. I never had them full up to the brim, never! I told them what outcomes I wanted, I said, here’s the end result, I want it to look like this, make it look like this. What questions do you have? And they would go get started. And they would wherever they got stuck, I’d say spend 15 minutes figuring it out. If you can’t, then go to your compatriots see if you can figure it out together, and then if not, come to me. But I want it to look like this. And if you’re done at three, then go home. I don’t care how long you work. In fact, I would rather that you not be here until five, because your brain doesn’t work as well when it’s tired. We know this, the brain science tells us this.
And we know that when people work long hours, they make mistakes. And when you make mistakes, it’s twice as long to figure it out and correct it because you have all the mopping up to do and then you’ve got to do it again. We know that when people work long hours, it’s inefficient and wasteful. And yet there’s a culture that supports a 40 hour workweek. And there’s an accounting industry that worships at the altar of working long hours as if it’s some kind of competition where we get medals around our necks at the end of our lives for how many hours we put in. I think this is insanity.
We wear it like a badge of honor.
It’s total insanity. It’s not the work that creates the money. It’s the value that creates the money. And I think as accountants, although this may be in other industries, too, there’s so much fear of not having enough revenue, that there’s a tendency to live in the space of scarcity. Not enough time, not enough money. And when we live in the space of scarcity, our brains are not as creative, they’re not as effective. They don’t think of interesting solutions. They don’t allow for new ways of doing things. And what we perpetuate, when we start from a place of scarcity is ongoing scarcity.
Now, I’m not advocating for rainbows and bunnies and being like, I’m just going to think abundant thoughts all day, and that somehow it’s going to magically appear. No, you have to put the work in. The more the CPA, the more the business owner can get out of both time scarcity and money scarcity, and start getting into sufficiency—I have enough, there’s enough for me to go around, we have enough to make it work. I have enough staff, I have exactly the right staff to make it work—and get the brain to settle down so that it can focus on creating enough, it will be more effective. And what it will create is enough and more than enough. And that is how you get to abundance. You don’t just flip a switch of believing in scarcity and somehow create abundance. If you think about scarcity all the time, you just perpetuate more scarcity.
So this has come up a couple of times with leaving money on the table, and this whole fear about leaving money on the table is something that perpetuates never having enough money. This is so detrimental because the money people, the accountants and the CPAs, are the ones leading the business owners. But here we have the accountants and the CPAs, who are leading the business owners who are themselves caught up in money scarcity and time scarcity. And the messaging out in the ethers is to encourage accountants and CPAs to be advisors. And I’m going holy smokes. I want the accountants and CPAs to be advisors, but we need to get them out of money scarcity, time scarcity, and the time is what creates money before we shoot them off to being advisors for business owners. That was a little, a little edgy!
That’s okay, because I think that we’re both passionate about this—some similar reasons, some different reasons. But it’s something that people have got to get their heads around. Because like you said, it’s not something that you can flip a switch and it’s going to change overnight. But it is something that has to be addressed. It is something that has to be looked into because the current model that’s in place in most CPA firms isn’t working. There’s a lot of different reasons why it’s not working. But one of the biggest reasons it’s not working from a mindset standpoint of the staff, is the generation that’s currently In the workforce, generations that are currently in the workforce, they are not going to buy into what the guy that’s running the firm did to build his career. They’re not going to put in 60, 70, 80 hours a week. They’ll do it for a little while, but they’re going to move on and find a place that they don’t have to sell their soul at the altar of their job.
We hope you enjoyed part one of John’s conversation with Geraldine Carter. We’ll pick back up with part two, which will air on the 30th of August. To make sure you don’t miss it, 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.
Geraldine Carter coaches CPAs and accounting firm owners to help them get down to a 40-hour workweek without giving up revenue. Geraldine hit upon her calling after encountering CPA after CPA who had the enviable skill of storing a Google’s worth of tax code in their brain and an incredible knack for puzzling through complex tax solutions, yet no time to offer more valuable services to their clients.
Having earned a Bachelor’s in Civil & Environmental Engineering from Cornell in 1998, Geraldine applied her problem-solving acumen to finding a solution to this problem. She stresses specialization and niching, value creation, and shifting your firm and marketing focus to problem solving, rather than just delivering rote reports.
Geraldine hosts the Business Strategy for CPAs podcast, boasting over 250 episodes, and which is ranked in the top 2.5% of podcasts by Listen Notes.