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Edward Chan is a Co-Founder of Wize Mentoring and a Non-Executive Chairman at Chan & Naylor. He started Chan & Naylor from his kitchen table and grew it to 10 offices around Australia with 160 staff and 15,000 clients. He then co-founded Wize Mentoring, which is now in 47 countries, connecting over 125,000 accountants. In this episode, Ed shares his tips on how to grow your business without sacrificing your life. He and Stuart dig into the success of Chan & Naylor, what the process of expanding the company looked like and what you need to do to find yourself.
Join Stuart McLeod as he interviews the world's top accounting leaders to understand their story, how they operate, their goals, mission, and top advice to help you run your accounting firm.
Stuart McLeod 00:00:01.078 [music] Hi, I'm Stuart McLeod, CEO and cofounder of Karbon. Welcome to the Accounting Leaders Podcast, the show where I go behind the scenes with the world's top accounting leaders. Today, I'm joined by Edward Chan, who started Chan & Naylor from his kitchen table and grew it to 10 offices around Australia with 160 staff and 15,000 clients. He then co-founded WIZE Mentoring, which is now in 47 countries connecting over 125,000 accountants. Ed contributes at a board and strategic level to many accounting firms, helping them improve their efficiencies and effectiveness and run better businesses, while also sitting on various steering communities at a higher education level to help shape the education outcomes of accounting students. It is my pleasure to welcome to the Accounting Leaders Podcast, Ed Chan. Good morning, Ed. Welcome to the Accounting Leaders Podcast.
Ed Chan 00:01:02.427 Thank you for having me. Sure. I'm really happy to be here.
Stuart McLeod 00:01:05.808 This is probably, I think, maybe my most famous guest so far, Ed. You're a man of many talents, and extremely well known, particularly in the Australian and now even more globally with your WIZE Mentoring. Right? And it must be very satisfying for you.
Ed Chan 00:01:25.902 Yes. It's a way of giving back. The industry has been very good to me, and I've done very well out of it. And it's very satisfying to spend the rest of my time here on this planet to give back and to help others who can achieve the same. It's not that hard, really. It's just knowing how to do it. We focus a lot on what to do, but not many people show us how to do it. That's the secret.
Stuart McLeod 00:01:51.810 Now you founded WIZE Mentoring with another great friend of mine, Jamie Johns. And I remember meeting Jamie out at Ballarat, right, way back in the pay cycle days. We had to go and beg and borrow and do anything we could to get a customer. So I drove up on a freezing cold morning. It was always freezing cold in Ballarat. So freezing cold morning, went and saw him. And he had plans for world domination and he executed pretty well.
Ed Chan 00:02:23.990 Yes. I remember I got my accounting practice working pretty well, and I was working. And there was about nine offices at the time, I think, around Australia. And Jamie called me up and asked me if I could help him. And quite a few firms had asked me at that point and I said yes. And I guess the difference between Jamie and the rest was that Jamie implemented very, very quickly. And within about a year, I suppose, or even less than that, he pretty much implemented most things, and his business started to change. And today, he's no longer working in it, just like myself. And it pays us both a passive income. And he said to me, "This really works," and, "Why don't we share this with the rest of the community?" But my problem was that I'm not very good with technology and I'm not very good with documenting things, but he's very, very good at it. I talk about bringing complementary skills together when you build a business and not the same skills, and he really complimented me. He can document and he ran the systems. And every week, we'd get together and got everything out of my head and put it down into our WIZE program. And then a third gentleman joined us, which is Brenton Ward, and he provided the marketing in the back office. So it was a great team that we put together. That's so important. I can't stress that enough, bringing complementary skills together rather than same skills.
Stuart McLeod 00:04:03.435 Well, let's sit back a bit, Ed. Let's go right back to the start. Where did you grow up and which college, etc., etc.
Ed Chan 00:04:10.333 Sure. I was born in Papua New Guinea, actually, of all places. Second generation there. Mom and dad were born there as well. Actually, dad was born there. My mum came out to Australia when she was very young, about nine years old. And mom and dad ended up in New Guinea with a business, and I was born there and came down to Sydney for boarding school. So I went to St. Joseph's College, which is called Joeys. So after my high school, I stayed and completed my degree and I never went back. Papua New Guinea got their independence in 1975, and dad said that it was probably safer if I stayed down here. So I did. And then I finished my degree and did the usual thing, went and got a job, got my experience, and then started just doing tax returns for family and friends at home. I remembered mom and dad retired and came down to Sydney, and I was living with them and I was using their kitchen table to prepare tax returns. So it grew from there, just from word of mouth and it just got bigger and bigger. And then I then went out--
Stuart McLeod 00:05:21.299 Do you still have the kitchen table in a Museum somewhere like they do it into it? [laughter]
Ed Chan 00:05:26.592 That's a good idea.
Stuart McLeod 00:05:29.323 You can charge $3 for a selfie with the table.
Ed Chan 00:05:33.782 Yes. It's funny looking back on it now. Dad used to come out and say, "What are you doing?" And I'd say, "Oh, just trying to get my experience up." So I was doing overtime for the firm I was working with, but I wasn't getting paid for it because I was just trying to get experience as quickly as I could. So I used to do all this extra work just to try and get that experience level so I could come out on my own and begin running my own business, because that's all I wanted to do from a small child, I guess my history, my parents and grandparents, they all had their own business, so that's really what I wanted to do. It didn't really need to be an accounting business. I didn't know what business I wanted to do, but it just needed to have my own business. So I thought getting experience was a fast-track way of getting there. So I did put the hours in to get experience. And then I started getting people asking me to do work. And then I ended up hiring an office. It was getting too big. Mom and dad was getting upset with me.
Stuart McLeod 00:06:36.509 Getting a bit sick of you.
Ed Chan 00:06:37.228 Yes. So I met David Naylor, my business partner in the firm that I worked with. And we got along really well. And as young, enthusiastic, and energetic people, we said we could do this better.
Stuart McLeod 00:06:52.190 Yeah. We know all.
Ed Chan 00:06:55.605 Yes. And then little did we know we were great accountants, but we didn't know how to run a business. And within a few years, I was growing by at least 30% a year on average. And it got to a point where I was working 100 hours a week, and I didn't have a life. I was married by then. I'd work six, seven days a week and didn't have a life. So this business that I'd created that was supposed to give me life was actually taking the life from me. And I got to a crossroads, and I thought, "Well, what do I do? Do I sell it?" Which I was tempted to do. "Or do I sell off the small clients and just look after the big clients? Do I bring in another partner?" But all those things, looking back on it now, were just symptoms and not the problem. And unless I treated the problem and not the symptom, I was going to repeat it. ]
Ed Chan 00:07:50.738 So if I sold it, change what I did and change industries, then if I don't change how I did it, then within a few years, I would have replicated all the problems I had in the first industry in the second industry, and I'd look to sell it again. And you see that with a lot of the clients that we have. They chase the next shiny thing, and they think that the way to do it is to-- it's easier on the other side or there's a better way. But a book that really helped me was Think and Grow Rich by Napoleon Hill. He said that the gold is in your own backyard. Just look for it. But that really helped me focus on what I should be doing. And then a couple of other books that helped a lot was Dr. Stephen Covey's Seven Habits of Highly Effective People. And Michael Gerber's E-Myth was another one that helped a lot. So with these three books, I just changed my whole life. I guess what I did was to just implement the principles that were in there.
Ed Chan 00:08:50.608 And you can have a lot of ideas, but if you don't implement them, then nothing happens. But it's better actually to have less ideas and more implementation than to have more ideas and less implementation. So I just implemented the hell out of those three books and it's completely changed my life. And here I am today, yes.
Stuart McLeod 00:09:09.695 Let's dig into that a bit. So what were the aspects that you-- I mean, we talk about implementation and what we do and how we do it. Give us some examples. Let's get into it and say, "Okay. Well, I was working 100 hours a week. My wife was about to divorce me. I barely knew her because I was at work the whole time." How did you go about-- you read these books, how did we go about changing, and what was the first couple of steps that you took, do you reckon?
Ed Chan 00:09:33.754 Sure. You always hear these terms like work on your business, not in your business. I actually really put in things to do that. But the problem was I was working 100 hours a week. Where do you find the extra time? And what I understood from Dr. Stephen Covey was that very successful people worked. And he broke it down into four quadrants. He broke it down into-- the activities that you do in both business and life fell into these four quadrants. And I'll just cover the first two and ignore the third and the fourth because they're not important. But they fall into categories of important and urgent, and he called that quadrant one. And quadrant two was important but not urgent. And everything that I did, I just put it into those four quadrants and got rid of quadrant three and four, which are irrelevant, and I just focus on quadrant two, which are important but not urgent, things like training your staff.
Ed Chan 00:10:32.920 Because up to that point, my attitude was, if you want to do it right, just got to do it yourself, or if I spend all that, by the time I train that person, I could have just done it myself. Yeah. So my thinking was in quadrant one, which is putting the fire out. And I was just putting fires out, but I never got into quadrant two, which is preventative things. So to put things in place to prevent the next fire from starting. So that was the first thing. Now, how did I do that? I just had to find some time, whether it was on a Sunday or a public holiday, 2 o'clock in the morning. For example, I was worried that when the staff did the work, they would make mistakes. So I prepared a checklist, and I did that 2o'clock in the morning. And I spent two hours putting this checklist together. And then it was easier then to train staff and then they didn't make the same mistakes that they used to. So that was one example of working in quad two, which was important but not urgent.
Ed Chan 00:11:34.844 And another one was educating the clients. So rather than just wait for the work to come in and then react to the client's complaints, or? Most complaints are just miscommunication between two parties. So we started a program of educating the clients. So every time we receive their work in, we would send out an acknowledgment letter explaining how we work here. And eventually, they started working the way we liked to do it, rather than us reacting to the way they like to do it. So we started to manage their expectations rather than letting them manage us. And often used as an example, if you let your clients manage you, they'll drag you into their nightmare. [crosstalk].
Stuart McLeod 00:12:21.106 [laughter] You're perfectly happy in your own nightmare, let alone--
Ed Chan 00:12:25.377 Exactly. I had a big enough nightmare myself, let alone adding to it. And then I realized that the amount of traffic that comes through an accounting business is what kills it. And you've got to be able to manage that traffic. And the traffic is broken into two parts. It's broken into communication traffic, like emails, phone calls, meetings, those kind of things, and production traffic, actually getting the work done. And then I also realized that everybody's skills are different. So the person who likes and who are very good at communication, they're a people person. And there are others who are not people persons, and they're more production people. They don't like to talk to people. They just like to sit down and do the work.
Ed Chan 00:13:12.865 And often, I hear firms say-- they get frustrated because their staff won't do this or won't do that, or they won't phone the client to talk to them, they'd send an email, and they won't ask for sales because you're putting the person in the wrong position. So it's a bit like playing a game of soccer or football. Everybody's got a position. And the fastest person should go on the wing, and the person who's got the best reflexes should be the goalie. Now, if you play those two people out of position, not only aren't you going to get the result, which is winning the game, but you're going to have those people leave because they're not happy because they're not in their flow, so to speak. So we identified that and made sure that the senior client managers are the ones that like people, that like to talk, that like to communicate. And they were the ones that liaise-- they were the front people, if you like, that liaise with all the clients. And then the production people don't talk to their clients. They just sit there and they just do production. And what happened was when you play people in their flow, they're much happier, they're much more productive, they stayed longer, and you get the synergy of one plus one is five.
Ed Chan 00:14:27.788 So the productivity out of that team was far, far greater than the sum of its parts. So that was an important revelation. And that started to work. And that's how you scaled, because I hit a ceiling, but I couldn't grow it any further because there wasn't enough hours in a day, because I was trying to do everything myself, and it just doesn't work. So that was just some of the things that I did to scale the business.
Stuart McLeod 00:14:54.890 What year did you open your first Chan Naylor office then?
Ed Chan 00:14:58.379 That's a good question. I suppose I joined up with David officially around June, July, 1990. I was out of control by the time I was 1994, about three or four years into it. Then I spent a year reengineering the whole place. And then I went from working 100 hours down to 20 hours a week. I then got asked by the Institute of Chartered Accountants to do some speeches or to talk to their members about what I've done. So I did that as a bit of fun. And then I had quite a few people come up afterwards and say, I'd like to do that too." The first one was-- we started in Parramatta in Sydney here. And then we started a second practice in Pymble, and that was around 2003, 2004. So that was the first office, and then it sort of grew from there.
Stuart McLeod 00:15:55.204 And did you sort of franchise the model or no? It was all under-- I mean, I know it was all under the Chan & Naylor name, but did they become partners of their own book, or how did you sort of set it up? What was the model?
Ed Chan 00:16:08.147 Well, there were several ways that we could have done it, but I've always believed that partnerships don't work. The reason why partnerships don't work-- and I'm not talking about the legal structure. I'm more talking about the management structure. And perhaps if I explain that first and then I'll explain what we did, the reason why the traditional partnerships don't work, in my view, is that once someone becomes a partner, they want to get involved with everything. So all of a sudden, like a snap of your finger, a person who was good at a particular thing, who becomes a partner, is now suddenly good at everything, and he wants to be involved with everything when often he or she is not. Take, for example, marketing. All right. So not everybody is a marketer. Let's talk about being a business person. Not everybody's a business person. And some of us are accountants, and we should stay in our flow. But when they become partners, they become business marketing experts and everything, and they want a say everything. And it doesn't work because you're trying to be a generalist and you become good at-- you want to stick your nose into things that you're not very good at, and that creates lots of problems. So what I believed in was to run it as a corporation. And a corporation separates out your occupation or your skill set from the ownership. So you're a shareholder, but you get paid a dividend based on the profits of the business, but then you fill a role in the organization that's suitable to your skill set.
Stuart McLeod 00:17:44.187 Just imagine just like a normal business runs.
Ed Chan 00:17:46.188 Just like a normal business, yes.
Stuart McLeod 00:17:48.749 So many of our accountants have confused the way normal businesses run for centuries and call it a partnership.
Ed Chan 00:17:55.250 Exactly.
Stuart McLeod 00:17:56.996 Ironically.
Ed Chan 00:17:57.846 And I guess the model that a lot of accountants have embraced in the spirit of finding, mining, and grinding, if you're a finder, you'll get invited in to be a partner. But if you're a miner or a grinder, it's not as likely that you'd get invited in. So they created a business model that relied on what I call butterfly catchers or hunters. And the problem with that model, of course, is when the butterfly catcher leaves, then that's the end of your growth. And I didn't think that was very good because being people-dependent rather than systems-dependent was problematic. I believed in creating a garden that attracts butterflies. And the garden, you own; you don't own the people. So it's always based on systems-based. And the business has to be managed from bottom-up and not from top-down.
Ed Chan 00:18:54.755 And because partnerships are managed from top-down, so there's a limitation as to how large you can grow that if you're managing it from top-down. But management from bottom-up, it's highly scalable. It's much better. So things like timesheets are very important because you've got to be able to measure. You can only manage what you can measure. So you need to measure productivity and so forth. Now, if you're running a little practice, you probably don't need timesheets because you're across everything and you got the finger on the pulse and you know the person sitting next to you is productive or not productive. But when you get up to 160 staff, like I had right across Australia, then you can't rely on you being there. So you need to have a system that allows you to have your finger on the pulse, so to speak, because the larger you get, the further you are away from the pulse of your organization, not only the clients, but also your staff.
Ed Chan 00:19:57.167 I had met most of the staff because they're right around Australia, and yet I needed to be able to know whether they're happy or unhappy or if there's a problem and so forth. So we ran surveys and net promoter scores for both clients and staff. So at any point in time, I knew the health of my business, which is basically your people, your clients, your numbers, those kind of things. And unless you knew those numbers, you weren't in control. Now, control is a funny thing. I'd rather be in control without being controlling, is the saying that I use. And the numbers allows me to be in control without being controlling.
Stuart McLeod 00:20:44.786 It's the levers or it's the indicators of the business, right? Like as you said, where are your employees up to? How happy the customers? How sad are the customers? Are they likely to leave? Are you profitable? Are you not profitable? Are you still a big believer in timesheets?
Ed Chan 00:21:00.702 Yes, 100%. For two reasons. One, based on a system of management from bottom-up, not from top-down, then they manage themselves. So the timesheets allows me to know whether they're productive, because that's a very good indicator whether they're productive or not. And it also allows me to measure whether we're being inefficient and writing time off. And it helps me identify where the problem is, if there is a problem, so that we can go in and fix it. Without timesheets, you don't know if there's a problem. If there's leakage in the organization, you don't know where it's leaking. And then it becomes input rather than output. If you manage your business based on input, it's very problematic. You should manage your business based on output, because input are things like, I work really hard, but what's the definition of working really hard? Well, I'm working seven days a week. Rather you work less and be more productive.
Ed Chan 00:22:01.189 So I'd rather you-- so it's a bit like the salesman who says, "I work really hard. I work seven days a week, but I haven't sold anything." For a salesman, their selling is actually the output. And that's what you should be measured on, not on input, not on how many hours you put in, but on the sales that he or she has actually made. So for an accounting firm, it should be measured on output, your productivity, what you put down in your timesheets, not the effort that you put in. So it's a very important tool if you want to grow your business. Now, obviously, if you don't want to grow your business and you just want a job, you can just keep an eye on everybody and you'll be on top of everything because you're there every day. But I didn't want to be a prisoner of my business because that's what tends to happen, is you become a prisoner and you have to be there to watch over everything. Whereas, I wanted to have more choices in my life. And in order to have more choices in my life, I had to build systems so that the business ran by itself. And then that gave me a lot of choice. I can still choose to work in it if I wanted to, or I can choose to not work in it like I chose to. And then I decided to build other offices. But it gave me a lot of choices, and that was the main point of doing it.
Stuart McLeod 00:23:18.295 What's perhaps the biggest couple of lessons that you've learned - top one or two lessons - over the years?
Ed Chan 00:23:24.496 Yeah. It's all to do with people.
Stuart McLeod 00:23:26.104 That's the lesson. It's all about people, surprisingly.
Ed Chan 00:23:29.579 Yes. It's no surprise, I think, that it's all about people. We all grew up, if you like, Stuart, out of university, into a job. We grew up as grinders, or we were taught to be grinders. Then we're put to being a manager, a minder, and nobody taught us how to do that. And a minding job and a grinding job are two different jobs altogether. And just because you succeeded as a grinder, you may not necessarily succeed as a minder. And the biggest lesson is to help those who want to become a manager to progress to being a manager. And if I can do that, then I can scale and leverage, because it is in the managing of people that will determine your success in terms of growth and scalability. So that's a big one. The other one, again, it's around people and to make sure that the client managers that we're appointing have really good people skills. And unfortunately, or fortunately, depending on which way you look at it, most people who did an accounting degree are more grinders than they are finders. So probably around 80, 20. So 80% are more grinders than they are minders. Otherwise they would have taken up their marketing degree or something, but they chose an accounting degree. So the finders out there or the minders are very hard to find. There's not many of them. So the ability to recognize which ones they are and to nurture them and to lead, I think that's the final bit. If you don't lead, you can have the best people in the world and you can have the best systems in the world, but it'll go pear-shaped if you don't lead. So you need to lead as well. So that's the final point, I guess, is managing people and leadership, it's important.
Stuart McLeod 00:25:26.744 And so we got to the second office, and that must have gone well, in sort of early 2000s. Did you sort of just duplicate that model into other offices? And I think you ended up with 10 in total. Yeah. What was that sort of process? Sort of it's fine. Okay. We got one office, now we got a second. 10, like three children, is more than three times out as one. Right? So I assume it's the same kind of--
Ed Chan 00:25:56.442 Yes. That's right. Yes. The interstate ones were very hard. But again, it all comes down to the same thing. It's all people. If you had the right-- sorry, I didn't answer your earlier question was which model it was. So we ended up running it as a joint venture partnership model. It's a corporation, but they were the CEO of their organization, if you like. They got paid a wage, and they also were shareholders, including myself. I was also a shareholder. And my contribution, I guess, was the marketing and the brand. So we used our brand and our marketing, in the spirit of creating a garden that attracts butterflies, so that the people that we hired were more minders and grinders or the joint venture partners were more minders. They didn't have to be a butterfly catcher or a finder. They just needed to manage their team, because it's very hard to find all the skills in the one person: the mining, the grinding, and the finding. It's very difficult to find that.
Ed Chan 00:27:02.146 So the people that joined us were more minders than they were finders, and we were able to create a garden that attracted the butterfly using the marketing and the brand of Chan & Naylor to do that. So we were generating quite a lot of leads for all the offices around Australia. And then they implemented the deep and narrow teams that I'd set up. And in the main, it worked pretty well. But looking back on it, I guess the biggest challenge was-- again, it was the people. And if you get the wrong joint venture partner in place, they might be culturally misaligned because they had to be a little bit what I call not entrepreneurial, but more intrapreneurial. They want to work for themselves, but they want to work in the team rather than being totally entrepreneurial, which means that they are happy just to be on their own and to do things their own way. If someone was very entrepreneurial, they wouldn't work in a group like ours, nor would they work in a franchise.
Stuart McLeod 00:28:07.378 What was the biggest success and what was the greatest catastrophe? You don't have to name names, of course.
Ed Chan 00:28:12.558 Yes. Well, obviously it's a matching of minds and a matching of skills. And when it doesn't work, we had to part companies, and we parted companies amicably with all of them. There's not one that we parted companies with that wasn't amicable.
Stuart McLeod 00:28:29.028 And were those failures mostly financial or just disagreements on path forward?
Ed Chan 00:28:34.837 Yes. It's just that, without naming anybody, they were more accountants than they were business people.
Stuart McLeod 00:28:41.684 Yes. They should just be happy being an employee and go and do that.
Ed Chan 00:28:44.827 Correct. All working for themselves, not working in a group and being part of a group and having shareholders in their business. Some people don't like working as a corporation. They just prefer to be a sole trader and to work for themselves. That's fine. We had no issues with that. Sometimes it took a little bit longer to find that out. But the people that were left were fitted in.
Stuart McLeod 00:29:08.828 Even though your modesty is appreciated and you suggested that perhaps you're not the most technologically adept man in the world, but what do you think over those-- what are we? 30 odd years of accounting? What was the greatest technological change or adaptation that you saw in that time?
Ed Chan 00:29:30.358 Oh, look, it's just changed so much. And if I can explain it in numbers, that might-- with technology, it's just changed the accounting world so much. Now I'll go back. You'll know how old I am when I tell you this. We used to do accounts on spreadsheets. Okay. So I used to--
Stuart McLeod 00:29:50.201 Oh, I thought you're going to say the T-ledger in your book.
Ed Chan 00:29:52.674 [laughter] Not far from that. So--
Stuart McLeod 00:29:58.256 You would have been [inaudible] one, two, three men, wouldn't you?
Ed Chan 00:30:01.258 No. Even before that, it was just a big spreadsheet on your desk. Yeah. You'd have opening balances on one side, and you put your bank transactions through on the next column. And then you'd have your closing balance, so your trial balance. And then you deduce from there a P&L in the balance sheet, and then your tax returns. At that point, we needed around 15 accountants per million dollars in fees. So I'll just use numbers so that it makes sense. And then desktop accounting came in, like MYOB, and that moved it down to about nine accountants per million in fees. And in the meantime, a lot of the secretaries-- we used to have one secretary or typist or whatever you want to call it, for two to three accountants. So we would do all the work, they would type up all the financials and the tax returns. We used to need one per two to three accountants. And of course, they actually disappeared with Word and all the software that came through. And we have one secretary now that does everything for three and a half million dollars in fees.
Ed Chan 00:31:04.233 And then the accountants then-- so once MYOB came in, then it dropped down to about nine accountants per million in fees. And then when cloud accounting came in, like Xero and so forth, that dropped it down to about four to five, about four accountants per million in fees. And it will continue to drop as artificial intelligence gets adopted more and more. This is already in. So you'll just automatically feed items into their correct categories. And then you would just need one accountant to check it to make sure that it's all correct because you can't completely depend on technology. So the numbers will fall from there, from four per million in fees down even further. But the profitability has always been the same. So when we used to have 15 accountants per million in fees, our [inaudible] were still around 25% to 35% after partner salaries. And today, that's what they're sitting at as well.
Ed Chan 00:32:05.822 So surprisingly, the technology has made it more efficient, reduced the costs, and made it a lot more scalable in terms of people. That's going to continue on. And I don't know where it will end, but you won't always need an account. Whenever a country needs to have taxes, you'll always need a tax accountant because one thing is for sure, taxes always change. And I'm a big proponent of compliance, tax compliance in particular. And there's a huge need for that because tax is so complicated and the average person out there needs someone like us to help them interpret the law and to hold their hands through the maze. And every time there's a change, whether it's a JobKeeper change, whether it's a superannuation change. There's changing all the time. They'll need accountants.
Ed Chan 00:33:01.979 So for those who feel that we were told in the '90s that compliance was dying and we should be doing something else, well, that's not true. I mean, when I was at university trying to choose my career path, they were telling me then that-- computers were just coming in at that point, and they were saying to me, "Don't do accounting because you won't have a job. The computers would do all the work and there won't be a single paper on your desk," they said. And 40 years later, I'm still waiting for that to happen. And, of course, computers created a whole new industry and whole new jobs. So it's evolving constantly, and it's an evolution. And we should embrace it and go with it and take the benefits that are there and change with it. We need to change. We need to constantly change. And if you don't change, it's a bit like the typist who refuse to use Word but wanted to stick to her typewriter. All right. So you'll do yourself out of a job if you do that.
Ed Chan 00:34:03.817 And there's less and less grinding required in our industry. So for those accountants who just wanted to continue to do the grinding, well, it's not going to be there. So you have to be more of a manager, a minding and finding, and develop those skills because we're in the people business and people buy from people. And the back office can get things done. But the most valuable people are the people with the relationships. And if you're looking at your own career, you need to understand that that's the future, and you need to develop that side of your career.
Stuart McLeod 00:34:38.404 Well, let's keep going there. We've sort of explored a little bit about what you think that the future holds, is going to continue to sort of-- the computers are going to take away more of the grinding and perhaps a little bit of compliance, but do more of the work that used to be done by accountants. And I assume you're of the school that accountants need to move up the value chain and provide value back into their clients. I think in our journey, what we see most often is accountants just love going on, being on that journey with their clients and helping them and adding value and creating value themselves as well. Right?
Ed Chan 00:35:16.274 Yes. That's right. And the question really is, in that value proposition, you either have to be a generalist or you have to be a specialist. The literature is all there. The studies are all-- the most successful firms are ones that specialize. So you need to, in a sense, specialize in particular areas and try to not generalize. And that's a message that's loud and clear. We, Chan & Naylor, specialize in property, and Jamie John specialize in hospitality. So there's a lot of specialties out there. Pick something that you're passionate about and that you know a lot about, and become an expert in a particular vertical market because that gets you the most traction coming back the other way.
Stuart McLeod 00:36:01.572 Yeah. And it also helps in the office. You don't have to contact switch as much. You can patent much easier. You can benchmark. Client network effects improve. And, yeah, it's--
Ed Chan 00:36:15.041 Yeah. And the training is so much easier for your staff because it's-- if you're a generalist, the amount of tax changes, it's just impossible to keep up with on your own, let alone trying to get 160 people keeping up to date with it as well. So that's a really big challenge. So there are lots of reasons to specialize.
Stuart McLeod 00:36:37.971 When also now that the increase in numbers-- the amount of software out there that your clients use just exponentially increases, and so if you're a generalist, the impact is far greater. Right?
Ed Chan 00:36:50.762 Yes. Absolutely. There's just so much. Even MYOB on its own, there're so many versions of it. Some of the--
Stuart McLeod 00:36:59.759 Do they still send faxes at the end of the year?
Ed Chan 00:37:02.163 [laughter]. Yeah. That's right. They send their floppy disks in, so.
Stuart McLeod 00:37:06.230 Oh, do they? Good. They must have run out by now. Where do you put them?
Ed Chan 00:37:11.058 Yes. So you're faced with all of these things. And if you're faced with a client who brings in a shoe box of receipts, then you've got to be able to manage that expectation and that relationship. And the people side of it is so important. And we were not taught that side of things when we went to uni. We were just taught how to do the work. And managing people's expectations and managing clients and managing staff, we weren't taught how to do that. We just fumbled our way through it, like I did, and made a lot of mistakes. I'll give you an example. When I was younger, I changed jobs quite a bit. And back then, we used to find a job and you stay there for a very long time. But I was really unhappy, so I moved from job to job thinking there was something wrong with the job, and I was changing. And then I got to a point where I thought there was something wrong with me. But the lack of leadership-- and I obviously won't mention any names, but I'm not a grinder. I'm more of a minder, finder.
Ed Chan 00:38:15.411 Now, if my boss back then, when I came out of uni, understood the grinding, minding, and finding concept and understood the deep and narrow teams and you need to separate out your traffic to different people and play them in their flow, he would have said to me, "Ed, look, I know you're unhappy at the moment because you're doing the grinding work and you're not really a grinder. You're more of a manager. But you got to do the hard yakka. You got to do your apprenticeship. You got to get through that so that you can sell the sizzle. Because in order to sell the sizzle, you need to know how to make the sausage, but you got to do the hard work to know how to make the sausage." And then I would have understood and I wouldn't have changed. I would have just stayed where I was and then just persevered, because as soon as I got enough experience and I became a manager, then I was really happy and I stayed a long time.
Ed Chan 00:39:03.862 And if I had the mentorship and the leadership, then he would have kept my services and put me into a client manager role where I just got in-- I'm mind to find kind of a person. My portfolio grew by at least 30% a year every year just from word of mouth because I had that ability to communicate with the clients and they used to refer lots and lots of people to me. And I had new clients coming to me, saying to me, "My friend said you're such an amazing accountant that I just had to come over and see what the fuss was all about. There's nothing wrong with my accountant, but I just had to come over and see what the fuss was all about." And I was getting feedback like that. And so I knew the way I was doing it was the right way. But when I was grinding, I was just in the wrong seat, and that's why I was unhappy.
Stuart McLeod 00:39:54.359 No. That makes sense. So let's change gears a little bit. You've got all this time on your hands, Ed. You built this amazing business. It pays you a passive income. What do you spend in a hopefully, touch wood, post-COVID world? What interests you? What are the fascinations of Ed Chan?
Ed Chan 00:40:13.078 Yes. Well, together with Jamie and Brenton, we started WIZE Mentoring. So it's now in 47 countries and there's one-hundred-and-twenty-odd-thousand accountants that's communicating with us in different levels, and that's going to continue to grow. So I spend my time in quad two, which is training, training and coaching people in our team. And I guess I got to a stage where I actually sold out from the other nine offices now. So they're no longer at Chan & Naylor. We've only got one office left, which is in Pymble. That only happened recently, a few months ago. So I decided to take it a little bit easier, do a bit more, focus on my health, doing a lot of bike riding. Just come back from a two-week bike tour where we rode 560 km on a push bike. So just focusing more on my health and just basically enjoying life. My wife and I planning to go overseas a lot more and just to simplify things. Part of the reason was if something happened to me, then we had nine officers out there, which my wife didn't know anything about, so.
Stuart McLeod 00:41:28.446 Yeah. She didn't want to be managing 150 staff all in one day. [laughter]
Ed Chan 00:41:32.606 That's right.
Stuart McLeod 00:41:35.664 It's an interesting all-hands, isn't it?
Ed Chan 00:41:37.490 Yes. So just simplifying life a little bit, focusing on health. I've got a book in my head. I've written several books already. I've got another book in my head that I'd like to do and, yeah, I'm pretty busy, Stuart. It's good. It's very good.
Stuart McLeod 00:41:53.628 And where was your bike to? Where was that?
Ed Chan 00:41:55.407 Oh, that was down south-- well, Northern Victoria, actually, around Beechworth and that area, Bright. There's a lovely, beautiful bike-riding area. So we just did some tools around there with a group of people. So it was lovely.
Stuart McLeod 00:42:12.213 Starting to return to a bit of normality, yeah, to get out and about.
Ed Chan 00:42:16.717 Yep.
Stuart McLeod 00:42:17.626 I've never done one of the bike and wine tours, but I always sort of fantasize as I get into my later years. I reckon that's a pretty good way to spend a couple of weeks is you ride from winery to winery and do all of that, I reckon in Italy or something like that, looks all right.
Ed Chan 00:42:36.308 Yes. Well, that's exactly what we did down where we were. So it was just from winery to winery. You have lunch and then you've got an accommodation for the night, and then you ride off to the next winery the next morning for lunch. Yeah.
Stuart McLeod 00:42:51.848 Depending on your hangover. A couple of years ago, pre-COVID, we did do a tour in the French Alps, and that was a hard week. There was no wine that week. Each day, we'd sort of pick a different tour groups, they had it all planned out. It's all very professional. You get sagged and everything. But it was amazing riding up some of those thin French roads with-- the tour goes up and the names are still written on the road. And you can just imagine the-- well, you need to imagine the crowd so close to you because otherwise, you can't get up those steep hills. It's crazy what they do. It's amazing.
Ed Chan 00:43:38.061 Yes. Now I'm planning to do a lot more of it around the world, not just in Australia. But, yeah, looking forward to all that. Yes.
Stuart McLeod 00:43:46.989 There's plenty of hills here in the Lake Tahoe region. Ed, bring your mountain bike and we'll get you out and about.
Ed Chan 00:43:52.800 [laughter] I'll hold you to that.
Stuart McLeod 00:43:54.904 Yeah. No. It's fine. It's super fun just up and down the-- the ski hills in summer are often turning to mountain biking as a great-- well, it's not a great money spinner, but it's at least keeping some revenue ticking over and multiuse their facilities and everything. And what's next for WIZE Mentoring? Is Jamie chomping at the bit to grow that into 150 countries? Has he got an Uzbekistan or something in mind to go and open an office?
Ed Chan 00:44:26.440 We're developing more products for it. So we've developed WIZE Talent, which helps accounting firm recruit. And there's a process we go through because we've got to identify grinders, minders, and finders. The test that a grinder does is different to the test that a minder does. And so we recruit specific for the deep and narrow team, the ideal team structure that we set up for each accounting firm. They were talking about another product the other day, and they're going to develop that. So it's going to be very, very busy just adding more value to the existing membership and adding more products. And it's all to do with developing tools to help the accounting firms run their business with a lot more efficiency. So it's working smarter, not harder.
Stuart McLeod 00:45:16.929 Yeah. Peace of mind. Right? It's less stress, more efficiency, more effective, helping clients on that journey.
Ed Chan 00:45:24.344 Yes. So whether it's just over 200 pieces of technology tools, that kind of stuff in the WIZE vault already from a capacity planner, how do you know when to hire the next person to policies to-- the WIZE hub is a software that you put all your videos, your training videos and all that, to be an area where everybody can come to to get rather than in being in all sorts of different areas. From that to leadership training programs we're developing. So, yeah, it's very, very busy.
Stuart McLeod 00:46:07.079 Well, Ed Chan, Congratulations on all your success over your career. And you should be just so proud of your effect and input and just the way that Chan & Naylor was successful, but also now with WIZE Mentoring being able to influence the industry in such positive ways and being so humble about it, as well as being so intelligent and brilliant at it. You should be so proud. And I'm sure you are. And I'm sure that the bike tours won't know what hit them when Ed Chan puts his mind to something. Right?
Ed Chan 00:46:40.230 No. Yes. No. You're very kind. But it wasn't just me. It was the team. And I've got to give credit to the team. It's the team that does everything. And yes, it does need leadership, but at the end of the day, the whole team needs to be working in their flow, working together, and you'll get that synergy that you need. And that's the same message to everyone that's out there. Build these complimentary teams; don't build same teams. So I hear people say, "Oh, I wish I could find someone just like me." And no, you need to find someone that complements you. And the most efficient teams are in five. Even the elite military forces are set up in teams of five because that's the most efficient. So thank you for your kind words, Stuart, but I just need to give credit to the rest of the people that are in WIZE and Chan & Naylor, that built Chan & Naylor and WIZE. But thank you for your kind words.
Stuart McLeod 00:47:37.331 Of course, Ed. Thank you for your time. I know you're a very, very busy, man. I'm sure you're got a [inaudible] on or get outside on the bike later on today.
Ed Chan 00:47:48.006 Yes. I got another meeting on. So it's all working on the business, not in the business. Yeah. So it's all good fun. [music] Thank you for having me, Stuart. It's been fantastic.
Stuart McLeod 00:47:59.389 Ed Chan, an absolute pleasure. Thank you so much for your time.
Ed Chan 00:48:02.774 Thank you very much.
Stuart McLeod 00:48:09.975 Thanks for listening to this episode. If you found this discussion interesting, fun, you'll find lots more to help you run a successful accounting firm and Karbon magazine. There are more than 1,000 free resources there, including guides, articles, templates, webinars, and more. Just head to karbonhq.com/resources. I'd also love it if you could leave us a five-star review wherever you listen to this podcast. Let us know you like this session. We'll be able to keep bringing you more guests for you to learn from and get inspired by. Thanks for joining and see you on the next episode of the Accounting Leaders Podcast.