Jody Grunden's $10 Million Secret: Weekly Client Meetings

Jody Grunden, the founder of Summit CPA Group, was a trailblazer in establishing one of the first CPA firms specializing in virtual CFO services. They recently achieved an impressive $10 million in revenue. What propelled Jody's success? The key lies in his commitment to regular client meetings. In this enlightening discussion, Jody unveils his strategy of revolutionizing client relationships by transitioning from traditional monthly engagements to weekly touchpoints. Tune in now to unlock the potential of this simple yet transformative shift, enabling you to enhance your advisory services and propel your firm's growth to new heights.

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Chapters

• (00:00) - Welcome To The Earmark Podcast
• (01:24) - What inspired Jody to start his firm, and how did he start doing CFO work and not just compliance?
• (06:10) - Jody wanted to find what his firm could change from the traditional model
• (13:09) - Automatically charging clients for your services
• (20:00) - What do you do for a typical client?
• (32:02) - The importance of having a dynamic forecast
• (35:14) - Where did you learn to do this driver based modeling?
• (37:04) - How do you staff these engagements?
• (42:57) - Only do tax returns for clients you do the books for
• (44:11) - How did you get into doing remote work?
• (51:12) - Jody has always invested in marketing and now content
• (55:02) - What made you choose Anders over other firm merger possibilities?
• (58:12) - Jody's 5 requirements for selling or merging his firm
• (01:06:09) - Wrap up and where people can learn about Summit and find Jody online

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Connect with Our Guest,  Jody Grundon

LinkedIn: https://www.linkedin.com/in/jodygrunden
Website: https://www.summitcpa.net/

Connect with Blake Oliver, CPA

LinkedIn: https://www.linkedin.com/in/blaketoliver
Twitter: https://twitter.com/blaketoliver/

Creators & Guests

Host

Blake Oliver, CPA

Founder and CEO of Earmark CPE

Guest

Jody Grunden, CPA

Hey there, I'm Jody Grunden, a Co-Founder of Summit CPA Group (Summit), which merged with Anders CPAs + Advisors (Anders) in 2022. Now, I serve as a Partner at Anders and Head of Summit Virtual CFO Services.

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Attention: This is a machine-generated transcript. As such, there may be spelling, grammar, and accuracy errors throughout. Thank you for your understanding!

Blake Oliver: [00:00:00] Is your accounting firm ready to deliver a modern client experience? ShareFile enables secure, seamless collaboration and automates document workflows for tax, audit and advisory engagements. It integrates directly into your existing systems and is optimized for accounting firms. Stay tuned to hear more from our sponsor ShareFile later in the episode.

Jody Grunden: [00:00:21] You know, the tax team isn't working a bazillion hours because we don't have a ton of other clients. We just we elected not to pick up those clients. You know, we don't want the individual coming in to do a tax return. We turn those folks away. We don't want the the business that wants us to do their tax return, that doesn't want us to do anything else. We'll turn those folks away as well. And we only want to work with the clients that we are truly engaged with on that regular weekly or monthly basis.

Blake Oliver: [00:00:47] If you'd like to earn CPE credit for listening to this episode, visit earmarkcpe.com. Download the app, take a short quiz, and get your CPE certificate. Continuing education has never been so easy. And now on to the episode. Hello everyone and welcome back to the show. I'm Blake Oliver. I'm thrilled to have Jody Grunden joining me today on the podcast. Jody is an accounting visionary and pioneer who's been disrupting the profession for over 20 years. As the co-founder of summit CPA Group and now head of the virtual CFO Division at Anders CPAs Plus Advisors, Jody has helped introduce groundbreaking innovations including the first virtual CFO model and subscription based billing in the accounting profession. His firm provides strategic financial guidance and advisory services to help businesses maximize profits, improve cash flow, and create long term wealth. Jody is passionate about changing the way clients in the industry think about accounting through value driven relationships and technology. I can't wait to dig into this more with you, Jody, right now.

Jody Grunden: [00:01:56] Yeah, thanks. Thanks for Blake for having me on again. Appreciate it.

Blake Oliver: [00:02:00] Always a pleasure. Let's go back to the beginning. What inspired you? Well, I actually don't really know the origin of summit all that well, and we don't have to go into tons of detail on this, but I'm curious, like, like a lot of firms want to make this jump to advisory to virtual CFO.

Jody Grunden: [00:02:20] Yep.

Blake Oliver: [00:02:21] It's hard to get there because a lot of firms are still doing, you know, 90% compliance. Right? Were was that was that your firm when you started or was did you just go straight into advisory from the beginning? Take me back 20 years.

Jody Grunden: [00:02:35] Yeah, 20 years ago. That's seems like it was just yesterday. So I'm pretty pretty clear vision here. The you know, when, when I, uh, I worked at a couple large mid-sized accounting firms, CRO and Bkd, both of which it was just one of those deals. I just there was a lot of things I didn't like about it. I didn't like the long hours. I actually physically got sick before busy season, you know, it was just just thinking about it, you know, type of thing. And, and it just wasn't conducive of family life, especially if I was going to be coaching my kids in hockey and different sports and be, you know, be part of their life during that dreaded tax season. And so I jumped out quickly and moved, moved out of the public accounting, said it's not for me, and went to the corporate world, worked for a $250 million manufacturing company, and it was one of those things that was great, exciting at first, new thing, big company, all the whistles and the bells and whistles and everything. And then about a year and a half into it, it got really boring. You know, I mastered everything, I've learned, everything I fine tuned, everything I made, everything I made, took a 45, 50 hour a week job and turned into 2020 five hours by automating a lot of the stuff that the person was doing prior to me. And and now I'm like, well, now what do I do? And it got real boring.

Jody Grunden: [00:03:46] And so I thought, well, this isn't really long term either. And so I thought, well, I made the wrong decision. Accounting isn't for me. What do I do? And I got an opportunity to run a firm with a small regional firm. And I thought, well, let me give it a shot. And so I left the the corporate world, love public world and kind of went back into the small accounting world and thought, well, let's try that. Learned pretty quickly that I am unemployable and decided, you know, hey, this isn't for me. I left that and started my own firm. And then with the idea of starting my own firm, I wanted to do things a lot differently. You know, things that I had learned in public accounting I didn't want to repeat. I didn't want to do what was in the corporate world. You know, the way that we made fun of the accountants when they came in, we, you know, we joked around how the suits are coming in, who's going to take them out for lunch and all that kind of stuff. You know, it was like, well, I didn't want to be that either. And so I jumped right in and fortunately I had no money, so I bootstrapped it completely. I hired Adam right out of college at the other firm, and he came along with me eventually. And so he was my first my first employee.

Jody Grunden: [00:04:45] I had no money. I had no money in savings. It was truly a complete bootstrapped to live on credit cards, believe it or not, and rang up a huge bill on credit cards as I was trying to really get this off the ground and, you know, tell you it was it was a lot of stress. My, my kids, you know, two brand new little kids. My wife just quit her job and started, you know, she was a lawyer. She started her own law practice the same time she worked for a big law firm. And it was one of those things that is probably the wrong time to start. But it was the right time because we had no life preserver, you know, we had nothing we could fall back on. It was we were going to make this work. And so in starting and starting out, you know, I'm like, well, we have to do the traditional tax stuff. And I went and got tax clients, actually, the manufacturing company that I worked for, they wanted me to be their tax client. So, you know, it was a $30,000 tax gig at the time. And I was like, wow, this is great. I was able to get some seed money, pay. Adam, my business partner, as we're going through, read a lot of books. E-myth was my the big book. That really got me thinking. That must read. If you haven't read it and you're an entrepreneur, an entrepreneur mindset, mindset.

Jody Grunden: [00:05:51] And so I started off, you know, I thought, you know, hey, how can we do things differently? But what happened is I jumped into the same old traditional stuff. I did, the tax returns, I did write up work, you know, and it was like, I can't do this anymore. And about two years into it, I'm like, I got to make make the change. And the first change I thought is, I can't be the bank. You know, that was the big thing. I can't afford to be the bank. And so how am I going to change things so that I can't be the bank? And I thought, what if I just simply zap their bank account? You know, it's like something crazy. The money. Yeah. Take take the money. So I don't have to argue about the money after the fact, you know, or look at this bill and justify my bill every time. And so I thought, how can I do that? And I thought, well, the only way I could do that is if the price was set, you know, it couldn't be an hourly bill thing where it changed all the time. It had to be a set price. And so I thought, well, how can I do that? And so I thought, well, let's take this, you know, $10,000 tax return and let's just divide it up into 12 equal payments. You know, that's how I started off.

Jody Grunden: [00:06:47] And I thought, well, let's meet with the client monthly. They know what the payment is. I meet with them monthly. The tax return can't be that big a deal after I've met with them all that time. And I thought, well, this is a great deal. So that's how I started. So I started, hey, let's, let's do this monthly thing. And so I build, you know, but I still didn't zap their account yet. I, I did the invoicing thing and I thought, well, meeting with the monthly meeting, you know, going through a monthly cadence, going over the historical financials. Great. Well, it really didn't. It did a lot of things. The one thing it did do, it allowed me to do the tax return very quickly at the end of the year, because I had already fixed everything throughout the year, wasn't a mess, but it didn't really give me the satisfaction, really, of working with the client because I was only talking with historical stuff and you can only talk about that enough. And the client still was hit and miss, and whether they came to the meetings and that sort of thing. And so I thought, well, how can I turn this around to where the client really values it? And so I started then talking about, hey, let's, let's look at cash flow, let's talk about cash flow going forward. You know, so we created this 13 week actually I didn't create it.

Jody Grunden: [00:07:48] The $250 manufacturing company I worked with had this really elaborate spreadsheet that they used to determine cash. I thought, well, if I can mimic something like that and give that to a small firm, that'd be great. And so I did that and the firm's like, wow, this is great. You know, things I thought were common sense. You know, they're, you know, the small business owners were like, well, this is great. This is like rocket science, you know? And I'm like, wow, this is wow. Okay. And so I started then charging additional for it. And we met with the client on a monthly basis at the time. And we went through this 13 week cash flow every month. We met with them inflows, outflows, and they could really kind of help them guide their business. And what happened was the business owners were like, you know what? This is great, Jody. You know, and Adam, because we were both doing it and I go, I go, but we'd like to meet with you more often. Is that possible? I'm like, absolutely, let's meet weekly. And so we started we jumped from a monthly meet and then we jumped to a weekly meet. At the same time, I thought, I can't be invoicing these clients all the time because I'm going through cash and, you know, and a lot of times they're a distressed business. And here I'm on the on the I'm on the cash flow street.

Jody Grunden: [00:08:49] Right. I'm one of the, I'm one of the expenses there. And so I thought how can I get rid of that. So I thought, well, let's just simply ach their account. Now we've got this flat fee, let's ach their account and and we'll go forward with that. Believe it or not, clients did not push back at all. They actually love the idea. They did not have to cut us a check. They didn't have to bill it. They just loved it. It was like and to our surprise, we thought, well, most clients aren't going to like this. They're going to push back all this kind of stuff. No one did. And it was amazing. And so after that, we're like, you know what? We're going to make this part of our deal. We're not even going to give clients the option going forward. And from there on, we never gave them the option. Here's how we do it. We ach their account at that time was monthly on a monthly basis for the predetermined dollar amount. And no pushback. I'd say probably in 20 years, maybe 2 or 3 clients asked about it and they and we said, no, this is how we do it. And that was that was the conversation and which is which is kind of kind of funny because that was a big fear of ours. We wouldn't pick clients up. And, you know, with that, you know, so and.

Blake Oliver: [00:09:50] That's the big resistance I hear when I tell people, hey, ACH, your clients on the first of the month, every month, the common objection is, oh, my clients won't do that. I will not be able to do that because they won't let me or it will turn away people. But you're saying you got no pushback?

Jody Grunden: [00:10:05] No. No pushback at all. Even for the clients that we had, I would say we got we had about 50 of them convert right away. No, no issues. All the other 50 were like, no, I like the old way we're doing it. And so we kept them on with that. As long as they're making their payments and eventually guess what? They did the ACH eventually to to where we have nobody and I'd say probably what, four years into the deal, nobody cutting us a check. We didn't have to go to the bank. We didn't have to go to the mailbox anymore. We didn't have to wait and worry about not having a cash flow problem. You know, as a small business owner, because we got our payments all the time and make cash flow a ton easier. You know, fast forward to we grew it to a $10 million firm before we merged. Think about that $10 million firm with. Zero accounts payable or accounts receivable. Kind of actually we had negative accounts receivable because we got our money before we actually perform the service, which is pretty, pretty unreal.

Blake Oliver: [00:10:58] No more credit card debt for you after that.

Jody Grunden: [00:11:01] Oh, yeah. It took me out of the credit card debt super quick. Yeah, it was one of those things I had to figure things out. And and that's kind of how life rolled with me throughout the whole process. You know, something would pop in and and instead of just accepting it, I'm like, well, how can we make this better? How can we figure this out? What? You know, what's out there a tool, a process, you know, people, whatever that might be, that can that we can actually figure this out and change it. You know, just because it's been done that way forever doesn't mean it's going to be going know that's how it's going to be going forward. And that's kind of how we did with our model. You know, we we went from a monthly model. We moved it to a weekly model to where we're actually meeting with clients on a weekly basis. And, and then then we're like, why are we actually doing a monthly for meeting with them weekly without let's just ACH and weekly. And with that, again, no pushback. Clients loved it. The nice thing about it, which we kind of didn't even think about, was, you know, when clients, when clients leave, there was no, hey, you owe me two months back or there was, you know, or you had to leave it in in the month because that's when we it was nothing like that.

Jody Grunden: [00:12:02] When they went to leave, they just let us know and then it's boom, it's off the next week, which is the nice thing about it, it doesn't happen very often. We get, you know, 10% churn a year. And a lot of that churn is due to the clients actually selling their business and moving on type of thing. But, you know, the other thing was, is that when we had scope changes, you know, so we had, you know, build in our model that if we had scope changes, the CFO can just make that change right away. And it's effective the very next week. So it's not waiting till the end of the month or making adjustments. It was just so much easier to administer that it was great for our team because it saved our team a ton of time, and it also saved the clients, you know, a ton of anguish. Guess if you want to call it or postponement because they weren't sure how we were going to bill, you know, I didn't want billing to be an issue with anything. And I took that issue completely out of the ballpark.

Blake Oliver: [00:12:51] There's so many things that I love about how you set this up, and I just want to highlight those for our listeners, because I think it's so important. And I have never met another CPA firm that does it this way. And I feel like it was quite key to your success in many ways. Got you to 10 million, got you acquired, merged into Anders like very successful. And I don't know why more people don't do this. And what I love about it is that you aligned the ACH pull with the deliverable. So if you met with them monthly, you were billing a monthly, and if you met with them weekly, you're charging them. You're not billing, you're just you're just pulling weekly.

Speaker3: [00:13:38] Yeah, yeah.

Blake Oliver: [00:13:39] And it gave you this connection with your clients. I mean, imagine that meeting weekly made a huge difference for you in terms of, yeah, having better relationships with your clients, getting more work from them. Yeah. I saw on your website that you have hundreds of clients, and to get to 10 million with hundreds of clients means that you must be having big engagements with those clients.

Jody Grunden: [00:14:03] Yeah, yeah, yeah, it's kind of kind of funny because right now we have about 220 clients, and we'll do about $13 million in revenue this year. And so our average clients, roughly, I'd say an average new client, we pick up between 80 and $90,000 a year engagement. And so if you 80 to $90,000 a year. Yeah.

Blake Oliver: [00:14:23] And you're billing a weekly.

Jody Grunden: [00:14:24] Yeah. We bill them weekly. We build all of our clients weekly. And we close about 40% of our, of our opportunities. And so it's not like, you know, it's not like people we're getting one out of ten and that are willing to go this route. We're getting 40% or more, you know, and if we lowered our price or did something like that, we could probably get a lot more. But the idea is that we want to work with a smaller number of clients and be able to give them a better service and better experience, because there's only so many great quality people out there that that you can be a great consultant, a good accountant and so forth. And we want to make sure that we're capitalizing on that.

Blake Oliver: [00:14:58] Yeah. It mean it makes me want to build this. I want to copy you, Jody, because I'm thinking to myself, there's. You've got hundreds of clients, and you've built this $10 million or more practice. And we know there's something like 40,000 mid-market sized businesses in this country. There's a there's at least tens of thousands of businesses that could utilize this type of service that could need it. And it's probably all of those that they're looking at. The the other option is hire somebody in-house. And so when you come in at 80 to 90 a year, you're very competitive with the cost of hiring somebody and then all the benefits. And then what if they leave?

Jody Grunden: [00:15:42] Yeah. Yeah. We even scaled it too. So we scaled it so that if you're a smaller company, let's say a $2 million company, you're going to pay on average lower because it scales up based on revenue size. So if you're a $100 million company, you're going to pay more. And so, you know, our average client we find is about a $5 million company somewhere in that ballpark. And we pick them up as low as 2 million and as high as I think 70 million is our biggest client. Now, I'd say the average is between that. Five and ten is what a typical client ends up being. And it scales really well because they not only get a CFO, but in a lot of cases they may spend a little bit more in the engagement. Maybe they get an accounting department with them or a tax person if they want us to do their tax stuff. So we can add all these different services and different opportunities for the client, and it's just a fraction of what they would typically pay an in-house person. And again, you're rolling the dice on an in-house person. So it's you know, not with nowadays it's really hard to find somebody that's super, super great, understands the industry, understands you know, accounting and can deliver, you know, a service level performance.

Blake Oliver: [00:16:44] And will stay longer than a year or two.

Jody Grunden: [00:16:46] Yeah I'll stay longer. That's exactly right. Yeah for sure.

Blake Oliver: [00:16:49] Yeah. When I was, when I was in the outsourced accounting team at Armanino, a good number of our clients would come to us desperate because their comptroller or accounting manager had given notice and we would have two weeks to go in there, usually only a week by the time we signed the engagement letter, to go in there and download their knowledge and try to either do it ourselves or transmit it to somebody else, it was always a huge I mean, you can see the fear on the CFOs face when that happened and. Yeah. And often there wouldn't be. It would be some VP or the owner who was responsible for it because they weren't big enough at, you know, 5 to 10 million to to have that role necessarily. Yeah.

Jody Grunden: [00:17:30] Yeah, exactly. And we've got it set up where we have an onboarding team that actually goes in and handles handles that. So their job is to go in, get all that historical knowledge that we can possibly grasp from the exiting person, or if that person's not there, you know, we can grab from whatever, whatever source we can and really build everything within a 6 to 12 month period or 6 to 12 week period to really get that client going, you know, from a forecast KPI, making sure the financials are all in order and, you know, really kind of getting the cadence and all the all the bells and whistles that we offer as a service, they've got a short period of time to do it. And you're right. You know, a lot of times it is a it's like an oh heck moment, you know, you know here we are. What do we do now?

Speaker3: [00:18:13] Yeah.

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Blake Oliver: [00:20:03] So, I want to dig into what exactly you do for your typical client on a weekly basis.

Jody Grunden: [00:20:04] Sure.

Blake Oliver: [00:20:05] You mentioned the 13 week cash flow as the first thing you started doing. That was you were billing monthly. You were meeting monthly, but you started doing a 13 week cash flow, and that's what inspired you. It sounds like that's what inspired the weekly meetings to go over that. So do you do the 13 week cash flow for all your clients?

Jody Grunden: [00:20:27] Great question. So I can give you some ballparks here. So we out of out of the 220 clients that we work with, 80% of them were actually providing what we call a CFO level service or controller level service. With that 50%, it's closer to 55%. We do the 13 week cash flow, so we actually meet with them. We during that 13 week cash flow, we're actually either it depends upon who's who's doing the accounting, if they're doing the accounting, paying the bills and so forth. We're meeting with that accountant. It's usually a senior level accountant on our sides meeting with their person. We're going over, hey, here's what's expected to come in. Here's the bills we recommend paying. Here's what your look is. Sometimes if it's a business owner, it's in that meeting. Depends really on the size of the company. Right. And so about I'd say 50%, 55%. We do that for you know, with about with our client base, 80% of our clients, we actually do their tax stuff for them. Usually starts out at about 60% when we close the engagement. And then within about a few months we're like, hey, why don't you just do our taxes too? You know, that's kind of how it ends up. So about 80% is what we typically end up with our our tax return. We'll pay bills for about 30% of our clients. So not not not as significant. We don't do a whole lot of invoicing.

Jody Grunden: [00:21:41] Or are we. It's about 10% of our clients and I'd say 10%. We do a payroll management. So we let the gussow's of the world take care of the the payroll itself, the processing, and we'll handle the payroll management for about 10%. And so and then we reconcile or oversee the reconciliation, you know, the bank accounts and so forth for just about all of our clients. And so that's an important process. Internal controls, whether we're doing or they're doing, we want to look over to make sure everything looks and feels feels good. And I'd say the majority of our clients, we close the books at the end of the month. And so we'll make the month end journal entries, close the books, make sure everything's tied in, and then from there, 80% of our clients fall in that bucket where we're actually providing a forecasting, you know, a forecast for them. So we'll do a not only a 13 week, which is a separate meeting all by itself, but we have, you know, in that separate meeting, I don't include that in the weekly touch meetings. So that's that's a meeting that's held 30 minutes. You know, that cash flow meeting 30 minutes, usually with a bookkeeper or accountant, they're answering accounting questions, that sort of thing. And that's on a weekly basis. Right. And so then in addition to that, our CFO will meet with the the leadership team, usually part of a leadership meeting.

Jody Grunden: [00:22:51] And they they'll meet and they'll go through the forecast and the forecast super dynamic. And the forecast usually is based upon what the owners and results are. So we always look at the end and then back into it. Right. And so if they want to exit in three years we're looking hey what's the value that we need to build it to in three years. And we'll back into okay, here's what we need in order to get to that that exit point or, you know, whatever that might be. And so we take a lot of pride, I guess, making sure that we are basically the stewardship of their of their forecast, because that's the main reason why people come to us. It's not because of the accounting. There's a ton of firms out there that can do accounting. They come to us because they want that person to be able to sit alongside them and kind of really help them and help them drive the financial side of the ship, which is which is one of the most important things in order to make everything all the bells and whistles to work. So the forecasting is super important. It was super, super, super important when it came to COVID, you know, when we had the the Covid issue for over a year, you know, we met with clients at no additional cost. We said, you know, hey, we'll meet with you as often as you want, you know? So we were meeting many times, 2 or 3 times a week, going through modeling and different scenarios with, with clients.

Jody Grunden: [00:24:03] Hey, what if we lose this client? This client is delaying significantly. How is that going to impact cash? You know, because our forecast isn't dialed into just the revenue and expense side. It's out into the cash side. That's the most important part of it. You know, what is the cash position look like in December? You know, we're three months away. How many people out here know? You know what we know. Our clients know. You know they know what's going to be in January, February and March. And it's not based on our forecast is never based on a percentage like, meaning, hey, we're going to increase sales miraculously by 10%. Never, never. It's never done that way. It's always based on, hey, we need to if it's a service based, we need to have X amount of people. They need to be utilized X amount. Their average bill rate needs to be x amount. And then we scaled out based on their capacity. Then we look at their pipeline which is a separate meeting. And we look at their pipeline and determine hey do we have the capacity, you know, do we have the contract capacity to be able to service this great model we just put together? Because we can put the best model in the world up here.

Jody Grunden: [00:25:00] But if we don't have the sales pipeline to back it up, well, it's no good. And so that pipeline is always we're always looking at the next three months out. We're adjusting the forecast based on those three months up or down. So it could be that, hey, we're going to we're going to increase. You know, we're going to have three solid months on our forecast. Then we get to our pipeline meeting and it's like, ooh, scale it back down. So maybe we're not as solid as we thought. You know so our our bank bank account is not going to be as high as we thought. Or it could be the opposite. It could be like, man, we're going to blow these next three months away. Then it's like, okay, so now we got a decision to make. Do we hire people? We hire contractors. How do we fill that? Do we stretch our people just to get it done? So those are the kind of decision making things that we bring up. We don't make the decision. We never make the decision. We're always the ones kind of informing, hey, here's the decision you need to make. And so then they'll say, yeah, let's hire three people. What does that look like in the model now? And so we'll put three people in there and it's like, oh now, now, now we've got sales capacity even more you know, or capacity in our forecast. More.

Jody Grunden: [00:25:58] Do we have the sales to back it up. We do. And then we continue on. It's kind of a rinse and repeat thing. So clients just love the forecasting. And they come to the forecasting and they they want to see exactly where we're at. And so we'll either do that with our clients on a weekly basis or if it's a monthly client, we'll do it once a month with the client. But for the most part, clients, you know, they're going to be touching that forecast on a weekly basis. I mentioned the pipeline, which is another meeting that we meet with, and we're going through capacity. We're basically looking at what they have under contract on their sales. We're looking at, you know, when what's their pipeline look at what's the percentage of close opportunities. What does it truly look like in order for. And I'm talking service based of course. Was it truly look like in order to manage that. And then then the other one we look at is the revenue recognition. So as we get as we close the month out, we're making sure that all the invoice, you know, when we it's kind of funny. People think that, you know, cash is the best or accrual is the best or whatever it is. We strongly believe in accrual and accrual accounting. And the reason being is because all of our KPIs match revenue. So we want to make sure it matches identical.

Jody Grunden: [00:27:06] Otherwise it's going to throw things off. And so revenue Rec is super important. So if they're invoicing once a month or whatever we don't care. We want to make sure again it's tied in perfectly. And so we dive deep into that revenue rec with the client making sure you know, hey here's how we're doing it. If we've got a job that's spread over, you know, a year, we're breaking it up based on contract capacity. We're breaking up all these, you know, percentage of completion, whatever it is, we're breaking it up so that we know exactly when that when the when the when the time is put in there. And so that's a key key function to it. And so the clients really get a good understanding of that importance there. And so revenue rec a huge important one. We do the financial statements. We do the pipeline. And then from there on it's just simply ad hoc meetings. Again we're part of that leadership team meeting. And that's how we present it to a client. So and that's one of the big questions we ask all of our prospects. You know, hey how often you meet. You know they don't meet very often at all. That's kind of a red flag to us. It's like, well, we have to meet weekly. Or if they get the monthly contract, we have to meet at least twice a month. And and if they can't do that, then they're probably not a good client.

Jody Grunden: [00:28:11] So there's there's some situations there. But I would say 90% of the people we talk to. Yeah, they're meeting weekly with a leadership team meeting of some sort. And so we're like, well, we want to be part of that meeting, not to take the meeting over, but just to kind of be the financial ears in that meeting and be able to, you know, be part of the the strategy. And that's the the big part of that weekly meeting is that our weekly cadence is that we are part of the thinking of the company. So we're not being reactive. Like a lot of accounts, we're hearing things for the first time after they've done it. You know, we are in that discussion, you know, hey, you know, let's hire a bizdev person. And then all of a sudden, you know, you're looking at, you know, next month, you're like, hey, who's this person? You know, I didn't know you can't afford that person. It's more no, no, at that point you're making that call. Then it's like, hey, let's look at the forecast. Let's make that decision. Yeah, great. We can, we can, we can eat into our cash reserve a little bit and grab it. Here's what we expect that that person is going to generate additional revenue for us. So we can make that. We can make those, you know, financial recommendations, you know, just be that sounding board on the finance side.

Blake Oliver: [00:29:13] That is something I didn't anticipate you saying that you you don't just have a separate financial meeting every month to go over the forecast. You're actually in the leadership meetings with everybody else in that company as the CFO there every week. And that's ideal, right? That it's every week you're in that meeting. So you're not hearing about stuff after the fact. You're actually in the discussion when they're talking about hiring or when they're talking about making a business model change or.

Jody Grunden: [00:29:44] Yeah. And so when we say strategy, that's what we mean. You know, we're part of that decision making. We're not going to come with the magic bullet every meeting that that'll never happen. You know we we help them form their. Your decisions. And that's the the strategy part versus more of a reactive part, which we do offer that service as well, where it's meeting with you twice a month. But again, it's we're hearing things second nature and the client's paying less money for it. We're meeting with them less. It's more of a traditional type of approach to accounting with the forecasting twist to it.

Speaker3: [00:30:17] Got it.

Blake Oliver: [00:30:18] Either way, you are maintaining a forecast. And that forecast is. Driver based. So it's not just percentage increases. You're actually linking up hiring to salaries expense.

Speaker3: [00:30:33] If they're if they're.

Jody Grunden: [00:30:34] Repairing cars how many cars are going through a month. What's the average car repair. How many people do we have servicing those cars. All that stuff is there. And the reason why we do it that way is because an owner cannot control a percentage increase. Nobody on this call knows how to control a percentage increase. The way you control a percentage increase is you have you break it down to something. They can control the non-financial drivers. And for a repair shop it would be cars. If it was if I was doing it for a baseball, you know, just something very simple. Maybe a baseball academy, it would be, well, how many people are coming through? How much, how much is their membership? When do their when does their membership hit? Because you can't just divide their membership equally over 12 months. It all hits in August that that revenue has got to come in in August. You know you know or how many times they use the tunnels, you know, the batting tunnels or softball batting tunnels or whatever, you know, when does that typically happen? Well, it doesn't happen these three months. It happens these nine, you know. And so you got to really be strategic on when you're putting things in there, when the revenue is truly going to hit and then matching up those expenses accordingly. And that's the key to a dynamic forecast. Because you know what what happens with a dynamic forecast. What happens with the static forecast. And everybody's used to that. Right. You make them in November December. You compare yourself to them all year round. And if you're not hitting it, you're disappointed every single month because you can't hit it. And more.

Speaker3: [00:31:57] Often than not.

Blake Oliver: [00:31:58] It totally diverges from reality very quickly.

Speaker3: [00:32:01] Yeah.

Jody Grunden: [00:32:01] Well, the first month, right. Our forecast, which is kind of weird because when we joined with Anders, that was the that was the biggest thing that they had a hard time grasping was because they did the static budget, you know, hey, here's where it's at. Why are you not there? Why are you there? And it's like, we are our very first week. Our budgets completely screwed where they're going to really excel or we're not going to excel, because again, we are a subscription based. So if we pick clients up in January, if we pick, let's say we figured, hey, we're going to pick up 50 clients for the year. That's that's we're targeting, you know, and we kind of spread it out equally throughout the year because we don't know when we're going to pick these clients up. Right. And we just happen to pick up 50 in January. It looks like we are going to like blow the year away. And we don't have to pick up another client right the rest of the year. And because we've got 12 months of 50in there, that's a lot different than having 12 months of three clients, 11 months of three clients, ten months of three clients and so forth. And the same goes the opposite. If we picked up zero clients from January through November and then picked up 50in December, well, we picked up 50 high five, we got our 50 target. But guess what? Our our year is shot because we've got 11 months with no revenue. And then we've got one month with only 1/12 of an annual client. And so it's a it's a, you know, it's a different it's a, it's a different concept that, that we've got that we have to undertake as a CPA firm. But we understand that we to make sure that we apply that to our clients in the same manner.

Blake Oliver: [00:33:29] Where did you learn to do this driver based modeling? Was that in your industry job? You said it was like a 250 million.

Jody Grunden: [00:33:37] $250 million manufacturing company. No, it wasn't, it was just it just came naturally. It was like, you know, because when when we started doing the forecasting with them, you know, it was like, well, you know, we had to talk their turn because we had to we had to, we had to come up with something that they could have control over. And that's when we that's when we started it. It was like, you know, it just kind of came naturally from the very beginning, you know, to be honest with that. I might have read it in a book. I have no idea where it truly came from. But we did that from from day one. It was, first of all, it was it was tangible products because we had, you know, repair shops, we had baseball, we had all these smaller companies when we first started. And then then once it once we actually started dealing with our self, we realized how an accounting firm works. Everybody understands that hopefully on this call. And then from there you can apply that really to any service based industry, you know, and that's that that was the key there.

Jody Grunden: [00:34:29] Because when we picked up our first true virtual CFO company, which was out of Rhode Island, here we were located in Fort Wayne, Indiana. And Rhode Island is like a pretty, pretty good distance to be able to commute back and forth for a weekly phone call or a weekly meeting. It was it was kind of nice to be able to really kind of experiment on that. And they were a creative agency at that point. They had 60 people. They were fully remote, didn't have an office, and it was like, well, this is great. Now we can figure out how to make this work. And we applied the principles that we understood already in the accounting to apply them in the same manner that we would for them. And so it was just one of those things that it just made sense. It was like, I don't wasn't sure why people would do it any other way. And that's just the way we did it. And then to find out that it's probably not the norm. It wasn't the norm at the time and we benefited from it, I guess.

Speaker3: [00:35:19] Let's talk about.

Blake Oliver: [00:35:20] Staffing, how you staff these engagements. Now, I know you said you have on the small end maybe a client that does 2 million on the high end. A client that does 70. But it seems like most of them fall into that 5 to $10 million revenue range. So let's say you've got one of those clients and they're doing the weekly CFO virtual CFO services. So you know, you're in there monthly or you're in there weekly leadership team meeting. Do you have one person doing everything or do you have like a group of people that serve that client? How does it.

Speaker3: [00:35:56] Work? Yeah, we.

Jody Grunden: [00:35:58] We from a long time we went the team approach. And the reason why we went the team approach, it kind of stemmed out of the fact that, hey, I had to get out of doing the CFO stuff because I was Adam and I were the CFOs. We were we were it, you know, we were the owners of the company. You know, we were the CFO. How do we get us out? And so we had other people attend the meetings with us and with that and kind of learn how we talk to people because it's a different skill set. It's not every accountant is made is made to be a CFO, be a consultant. And it was a different skill set. And and so we had people a lot of redundancy built into our model to begin with. And it wasn't super profitable, but it was a learning, a learning curve we actually had to had to do. And with that, it just became that it was just so easy that I could give something to the person that was in the call and say, hey, can you create this model for me? And it allowed me to do other things. It allowed me to to be more of a consultant and allow that person to do the data crunching and the day to day stuff. And now I knew I needed to know how to do that, of course, but it allowed me to get away and again, do other things. And so we thought, you know, this model is working really well. Let's let's go ahead and just kind of make it more of a team approach.

Jody Grunden: [00:37:05] And so eventually we added a team to it. So it was it was more of a CFO, a head of the engagement that the person is meeting with the client on a weekly, monthly basis. Depending upon the engagement. And it's pretty split, it's probably split 50% of the clients we that person will work with on a monthly, monthly deal. So maybe 1 or 2 times a month and then 50% they'll work with weekly. So it's kind of a split deal. They'll do about $2 million. So I'd say about 1.4 million is is where we want that CFO to actually be able to manage effectively, which, you know, depending upon how many clients and the size. And so that's going to vary per, per engagement. And then under that then we have what we call a senior level advisor. And the senior level advisor is the person that's actually putting the forecast together, crunching the numbers. They're on the engagement with the CFO on most of their calls. They're making sure that the financials are uploaded into the into our Reach reporting dashboarding feature so that the clients can actually utilize dashboarding. And and they're they're kind of the the go between. So if a client can't get a hold of the CFO for some reason, they're going to call that senior level advisor is kind of the backup person. And so then from there, if the client has us do accounting, then we've got an actual accounting team that does that where we have somebody that's that's doing the payables and receivables, somebody is doing the that's, that's doing the payroll.

Jody Grunden: [00:38:23] If they want to do payroll, whatever, a la carte feature they want us to do, we've got a department that does that. So we could have three different folks there. And then we we have some folks over in India. We have some folks in Mexico, Philippines that help us do some of the the other functions that we have. And then our tax team, which is completely separate from the accounting team, they'll do the taxes at the end of the year for, for our team. And and so they only do taxes for the, you know, the basically the ones that we actually do CFO or comptroller services for. And so it's limited on who they do. But the nice part about that is, is that those tax folks, they meet with our clients on a quarterly basis to go over a soft tax planner with them, to go over hard tax planner towards the end of the year. And so the way that we got it structured is that, you know, our our accounting team is not interrupted with a busy season because they're not part of it. You know, the tax team isn't working a bazillion hours because we don't have a ton of other clients. We we elected not to pick up those clients. You know, we don't want the individual coming in to do a tax return. We turn those folks away. We don't want the the business that wants us to do their tax return, that doesn't want us to do anything else. We'll turn those folks away as well.

Jody Grunden: [00:39:32] And we only want to work with the clients that we are truly engaged with on that regular weekly or monthly basis, and it just makes it the flow so well that our tax team may be during tax season. We're 50, maybe 55 hours a week, just a couple a couple of weeks out of the year, but nothing significant. Most of time they're working 40 to 45 hour CFOs. You know, they manage a $1.4 million book. They may work with 20 clients, and they're probably working 40 to 45 hours a week. Nothing. Nothing too, too stressful. And then the accounting team underneath them, they're working typically, you know, 40 hours a week. You know, that's kind of the the model, the way the model was, which was completely different than what I grew up in, in the public accounting, where we killed everybody from January through March or April. And then they had a lower tax. Lower commitment the rest of the year. I didn't like that model. It was too stressful for me, and I had to create something that was a lot different. And this is the kind of the model that we we created. So to answer your question, yeah, it's a team approach all the time. We never just have one person on any engagement. And you know, with that, the nice thing about that is, is that if one person on the team has to leave, wins the lottery, whatever, we can slide somebody else in and not lose all of the the knowledge that was built up during that engagement.

Speaker3: [00:40:46] Yeah.

Blake Oliver: [00:40:47] I love that you're not killing your team all year. Well or not, the whole busy season, 50 55 hours is very doable for a few weeks in the year. And and with, you know what, probably 200 clients that you're doing the taxes for. Yeah, that's much more manageable than thousands of returns that a lot of teams are drowning in, right?

Speaker3: [00:41:08] Yeah. Yeah.

Blake Oliver: [00:41:09] And and you're collecting it quarterly.

Speaker3: [00:41:12] Yeah.

Jody Grunden: [00:41:13] So the financials are typically in really good shape when it comes to putting the tax returns together. You know ideally with I you know that would be great if, if that would cause us to reduce the time or tax people are doing during tax season because we've already got a solid product going into it with maybe a few adjustments in January, but not a ton. So it's not like you're looking at a financial statement. You see all the depreciation hitting in one month. You know December. You know it spread equally throughout adjusted throughout. As you know, things are you know, all the stuff is should be tied up and done to where the tax team is. Just simply taking that and rolling it through. I would say probably the biggest thing they spend their most of their time on are the multi state returns, because I would say 80% of our clients have multi states. They're in multi states. And so that's probably the biggest chunk of their time is spent handling that.

Blake Oliver: [00:42:02] Oh yeah. Because you got to allocate the revenue. And and that's I've had to do that before because I had a virtual firm. I mean I imagine that summit has to do a lot of multi state.

Speaker3: [00:42:12] Oh yeah. Right. Yeah I think.

Jody Grunden: [00:42:14] We're involved in probably 30 to 40 states that we actually have revenue coming from. Yeah. So we're yeah we filed just about all, all the states kind of kind of yeah. It's a bummer.

Blake Oliver: [00:42:26] Cost of doing business when you are a remote firm. And we haven't even touched on that yet. Why don't we do that with the time we have left? You started doing remote. Was that at the inception like when or you were you were going to somebody's office?

Jody Grunden: [00:42:40] Yeah, yeah. Initially we had the brick and mortar office actually own the building because I always told clients at the beginning I'm like, you know, hey, it's a really good idea to own the building that you're in, you know? Oh, that was like that was that was the biggest thing. And then it was fast forward ten years after I started. It's like we don't own the building. We don't actually have people in the building.

Speaker3: [00:43:00] We don't have a building anymore. Yeah.

Jody Grunden: [00:43:02] No, no, it's because what happened was, you know, when you think about it, the building really kept us. The building actually helped, made the building, made strategic decisions for us not knowing it. And what I mean by that is that we had 18 folks. We're like, okay, so we've got room for three more before we had to actually build something. So now what? And so then it was like, okay, so slow that down. We can't grow that fast. We got to build this building. What do we do here? And so the building was causing us to make decisions good or bad. And when in 2000, I think it was 11 when we picked up our first what we call true virtual CFO firm in Rhode Island, they just happened to never have had an office. Basically, that was the only thing they've ever had. And with that, the nice thing about it was that we learned so much from them. You know what works, what doesn't work, how they do their meetings, how they communicate back and forth, you know, are they successful, highly successful, high revenue driven? They were geez, they're probably a $10 million company, 60 folks, you know? And it was like, wow, this is kind of cool. I would love to try this. And, you know, with that, you know, I'm not risk averse. You know, I love taking risks, but I want to make sure that everything's calculated. Nothing's ever going to be perfect before I jump in, ever. You know, I'm going to take that risk. And nothing can really be perfect when you take a risk.

Jody Grunden: [00:44:23] And so I thought, you know, hey, this would be a great opportunity to see what we can do. And if we can hire people outside of just Fort Wayne, Indiana, because really, you're kind of limited in the geographic location where you're going to hire people. And, and, you know, I thought, hey, this could be a great opportunity. And I thought, so I went to our meetings. We had 18 folks at the time I owned the building. There were stand up meetings, you know, so that, you know, it was, you know, I did everything that everybody, you know, every book I read and I and I always started off with a joke. And so all my meetings ever start off with a joke. And even our meetings today start with a joke. And, you know, with that, my, my, I didn't didn't really think of the joke. And I said, hey guys, I got this great idea. We're going to go remote. And everybody's like waiting for the punch line. And then the punch line didn't happen. And it was complete silence. And it was like, you know, back 18 years ago. Well, yeah, back in 2013. So when actually when we actually did it, you know, they're like, what do you mean we can't go remote? We're you know, we got to collaborate. We got to do this. We got to do that. And I'm like. Why can't we do it if we're doing it to our clients? We're remote on our clients team. Why can't we do it? And it's like, well, because internet's not good.

Jody Grunden: [00:45:27] Because my got kids. Because, you know, all then all the personal reasons why they couldn't do it. Come on. I'm like like, wow. You know, I completely had out of the 18 people I had two people thought it was a great idea. And even my even my business partner Adam thought it was a horrible idea. He had five kids at home, and there's just no way. And you know, with that. You know, I'm like, well, I can't lose the team. So let me go ahead and just do this. I'm going to go ahead and really remodel the office for 30 people, because we'll never get more than 30 people. Right? You know, fast forward, we had 50 people three years later and, you know, and I'm going to make it so nice that they're going to just love this office TVs, big office space, big cubes, everything. And I kicked everybody out for six weeks. And construction probably took a little longer than that. And it was like one by one they came to me and said, man, I really like this work from home idea because I forced them to work from home because I gutted the entire place and it was like one. It was like one by one. I'd say 14 out of the 18 people were like, you know what? I want to work from home like. You're kidding me. I just spent 100 grand. What are you talking about? You want to work from home? And that was the.

Blake Oliver: [00:46:34] Price of the experiment.

Speaker3: [00:46:36] That was.

Jody Grunden: [00:46:36] The price. And it worked out well. And when you fast forward to the pandemic, you know the exact same things happen. You know, people were like, you know, hey, I can't do this. And all of a sudden, oh, I can do this. This does work. You know, for for the folks that didn't it didn't work. Well, it's because the processes and technology wasn't conducive. They didn't have, you know, they didn't have they weren't ready for it. Whereas with us, we had the opportunity to learn from somebody that was doing it for two years. And then then we jumped in and we actually started implementing a lot of what they had done. And man, it worked out really well. Client. Our clients had no issues with it at all. They didn't care. The bank was kind of funny about it. They're like, because they actually got a loan once. They're like, they sent somebody out there like, where's all your people? And they're like, well, they're all across the United States. Like, what are you talking about? Because it wasn't a thing. You know, we were one of the first 125 companies in the world to go remote. And the company that we learned from was probably one of the first 25 companies.

Jody Grunden: [00:47:30] And so it was it was just a super new concept and it was pretty neat. It solved a ton of issues. It was it kind of opened the floodgates on the opportunities to hire really quality talent, which was the biggest thing. It wasn't quantity of talent, it was quality. I can be picky and choosy on who I wanted to bring on. When we when we actually introduced the fact that we're remote, we're actually going through and we market through the website, through tons of content marketing and everything. We've always done that. And with that, you know, it opened the floodgates where we had in the first week. Well, actually, Forbes came out and interviewed us, and that's how that's how I know we were one of the top 25, because they put us in this big article with listed everybody. It was like Apple and Microsoft and Summit, CPA Group and Dell. You know, it's like, well, how how did this happen? I was like by far the smallest on that list. And we had probably 2000 resumes hit our inbox probably within a day and a half. Wow. It was unreal. And it was from partners, from accounting firms.

Jody Grunden: [00:48:27] I mean, we're talking high quality people and we had to figure out another process. Now, how do we deal with that? You know, I can't open up every resume that comes in to look for somebody. And so we had to put processes in place in order to, to manage even that small, small thing, which was which was nice. And so it worked out really well. The remote thing's awesome. We've been doing it. And, you know, you fast forward here to the the merger with Anders. They're a fully, you know, brick and mortar team in Saint Louis that I would say probably half their people are working remote in some fashion, whether it's three days a week or two days a week or whatever, our service line is 100% remote. And so we've got, I'd say, 100%. We're kind of hybrid now because we've got about 14 or 15 folks that were originally in that office. That's part of our virtual CFO service line that's still in the office 2 or 3 days a week, but the remainder is spread, you know, all from east coast to West Coast, you know, Michigan to Minnesota to Texas, you know, all over the place.

Blake Oliver: [00:49:27] And even though this is a merger, you're not losing the summit name. You've kept that.

Jody Grunden: [00:49:34] Yeah. So we kept that. So the deal that we made with them is that we would gradually lose that over time. And so because and the reason being is because we, we do a lot of we do a lot of marketing and our marketing, we spend about 7 to 11% of our annual revenue in marketing. And so that.

Speaker3: [00:49:50] Tells you 7.

Blake Oliver: [00:49:51] To.

Speaker3: [00:49:52] 11%, 7.

Jody Grunden: [00:49:53] To 11%. Yeah. And we've done that from the very beginning because, you know, I used to be in sales a long time ago. I was a cutco rep. I was the the knife person. I sold knives and I did it for three years. Loved it.

Blake Oliver: [00:50:04] Oh my gosh, Jody, you got to you got to do that at a conference someday. Just like show up with the knives.

Speaker3: [00:50:11] And put them right.

Jody Grunden: [00:50:11] Out in front. Yeah.

Blake Oliver: [00:50:12] And and it'll be like Joshua Bell playing in the subway station. We'll have to do that.

Speaker3: [00:50:17] Yeah.

Jody Grunden: [00:50:19] Yeah. And I actually loved it. But but I understood that it's super hard and I didn't want to do that on a regular basis. I didn't want to go out and have to fight for every client, because when you think about it, we offer at a very different service that nobody had heard about. We're offering it virtually now. And so how do you go door to door? How do you go business to business, and how do you how do you target different companies when you're actually nationwide now and not just simply looking for, you know, businesses in your area? And so a content marketing was the only way of doing it. And back then there was no such thing. You know, we were blogging every day and we've been blogging daily probably for ten, 15 years. And we we write a ton of content. In addition to that.

Speaker3: [00:51:01] You've got your.

Blake Oliver: [00:51:02] Own podcast. We got to mention that. Shout out to your podcast. What do you have going right now?

Speaker3: [00:51:07] Yeah, I've got, we got we got.

Jody Grunden: [00:51:09] Three podcasts going right now. We've got the virtual CFO, CFO, CFO Success Show, which is geared more towards creative agencies. We got the modern, which is helping out CPA firms, modern CPA success show, helping out CPA firms and kind of giving insights to what we're doing here. And then we have one for young professionals. So we've got, you know, people just love the idea of the websites and listening to it. But but the the music or the best part about it is, is that our writers can take the content that's on those websites and repurpose those for YouTube videos, for articles. You know, there's a lot of great things that they can do, not only just from the content they get from those, but it's a great repurposing thing. And so we use it for a lot of things. Get the word out there as a thought leader, but also repurposing it to even become more of a thought leader through content marketing.

Speaker3: [00:51:58] Yeah.

Blake Oliver: [00:51:59] Well, you know, I'm biased, but I'm a huge fan of podcasts as a, as a way to generate content because, you know, you and I can just get on here and talk. And it's so easy for subject matter experts to talk about what they're doing or their firm or something they're doing every day. Whereas if I asked you to sit down, Jody and write about it, how long would it take you? It would never happen.

Speaker3: [00:52:20] It's brutal. Yeah, it was brutal.

Jody Grunden: [00:52:22] Yeah, because I did that because for a long time I would take the first two hours of my day, and that would be writing the most brutal two hours in the world, and client stuff would always take precedence. So it became that I would actually spend I'd earmark two hours a day and I would maybe write for half an hour and and you're right. And so I had to you have to get and I think the key to that is you have to really get good people to help you do the writing. And so, you know, I have I have for the very beginning, I had contractors that helped me write. They'd interview me, they would ask me questions, they would write an article. I would then proof it and make changes to it and and boom, it was it was great. And that was so much quicker than me trying to do it myself and so much quicker. If they've got something they can look at versus now me actually interviewing every day, they just all these different podcasts I'm on, they'll they'll hop on and they'll put 2 or 3 articles just from this podcast alone, you know, out, out in the ether there.

Blake Oliver: [00:53:17] You know, you are on a podcast with Brandon Poe going back to this merger with Andrews and you on that show that you had been approached by a number of top 50 firms about joining. So what made you decide to pick Andrews instead of any of these other?

Speaker3: [00:53:35] That's a great.

Jody Grunden: [00:53:35] Question, because it's kind of funny because you and I were on a podcast together and and we were talking about I couldn't tell you I was under an NDA. So I was like, it was horrible. It was like, you're asking, right?

Speaker3: [00:53:46] Yeah. I remember, you know.

Jody Grunden: [00:53:48] Anything about this podcast? It was one of those things that, you know, just continue. I was like, this is so coincidental. But, you know, we got approached by a ton of PR firms. We got approached by a ton of accounting firms, really large accounting firms to really I wouldn't say small, but I'd say mid-sized and so forth. And and we were always open to talk. And I always told people that I'm open to talk. You know, I just wanted to hear what they had to say because my, my vision was, hey, I really didn't want to sell the firm until we got to 20 million. And we've been growing so fast. We've doubled our size every three years. And so that's our growth pattern at a 20 to 25% profit margin at the bottom, which is unheard of. Most companies that are in this are growing baby fast, but no, no margin or low margin. And we were growing with a good profit. Margin. So that was a good thing. So everything everything was in our in our in our favor going into this. And with that, you know, like I said, we at the time, we were actually talking to three different CPA firms at one time and not interested in selling. We just kind of listening because I knew that, hey, it's going to be about three years before I truly want to sell, you know, and so because we'd be at the 20 million mark.

Jody Grunden: [00:54:54] And so, you know, Andrew's approached us, they heard me on at engage, I was at engage speaking at one of the one of the panels. I also write for CPA trend lines. And so they saw an article there or articles there, and I was approached and said, you know, hey, we'd like to talk. I'm like, sure, no problem. And so I spoke with them, and initially I wasn't super excited. I wasn't even sure I was going to go with the second time around, to be honest with you. And I thought, you know what? Adam hasn't had a chance. Let me let me have Adam be in this conversation. And and so we met with Dave Hartley at, at Anders and it was like, wow, this dude's pretty cool. I like him, I can relate to him. I came off very genuine, somebody that I felt I could communicate with, and I thought, well, this could lead to something. And so we then we met Robert the, the managing partner at Robert Minkler, and I was like, wow, this guy is also really cool, you know? And so it was like they met the cool test, which to me, a lot of them were all in suits and stuff like that. These guys were, you know, casual, you know, they must have read or heard me talk about it.

Blake Oliver: [00:55:57] And for our listeners that haven't seen Jody in person or aren't watching this on YouTube, Jody is famous for showing up in the Hawaiian shirts. And really, just like that's your signature style. And it doesn't matter if it's an AICPA town hall and everybody else is wearing a suit, you are wearing your your Hawaiian shirt and I love that.

Speaker3: [00:56:16] Yeah, yeah.

Jody Grunden: [00:56:16] And yeah. And I always wanted to be a genuine I guess we want to call it there. And so yeah. So and again these guys were that way. And so they were comfortable with you know there was a lot of things I asked and a lot of questions we asked. And I always came down to five things that I, that I asked all of them and none of them could come up. None of these firms could answer all five and satisfy the five. I was in no hurry, so I didn't really care. So it was one of those things that I had all the power and didn't really even know it, or realize I just wasn't interested. And then, you know, you know the five things.

Speaker3: [00:56:48] So what are the five things? Yeah. Yeah.

Jody Grunden: [00:56:50] So so basically they had to take care of the team so that we pay our team on a different way. We pay our team with a variable comp structure. So it's a salary based on national average. Then they get variable comp based on the book of business they're actually managing. And so it eliminated all kinds of biases that we could we eliminate them 100%. Because if if you're in if you're in New York City, you're working $1 million book of business. You're making the same amount as I'm making in in Fort Wayne, Indiana or Fort Lauderdale, Florida. Made no difference if you're white or black. Makes no difference. Male or female makes no difference. It's all based on the effort you're putting in. The more effort in there, the more money you make, so you can control how much you make. Which is the nice thing about the variable comp and which is completely different than a CPA firm where comp is based on tenure. And so that was that was one thing. The other thing was we don't bill by the hour and there's no hourly requirement. And so it's all driven by results. And so I don't care if you're working 35 hours a week and managing a $2 million book of business, you're not going to ever hear anything from me. Congratulations on on the success of your being able to manage a book versus a typical CPA firm and say, well, if you're working 35 million or 35 hours and doing 2 million, you should be able to do 40 hours and work 2.5.

Speaker3: [00:58:02] Double it, double it, or 70.

Jody Grunden: [00:58:05] Exactly, exactly. And so it's like that was not the way that we had structured it, not the way we wanted to do it. And so the team had to be taken care of. And that went from our the very lowest person on our team to our director level. And so again, everybody was on, on that same in that same bandwidth, which most firms would say, no, that's not how we do it. And you can't do it that way. The other thing is we had to be able to run as independent unit. And so I didn't want to come into Anders and then my marketing gets pushed and their marketing, my tax goes their tax. And I didn't want that because I knew that wasn't sustainable for our growth. If we were going to grow this from 20 or 10 million to 50 million, which is what the goal was now, I needed to make sure that, you know, hey, we had a unit in place and a marketing team. Everything was going going solid. The national brand was the third thing because we created a national brand. We didn't want to go back to a local brand, you know, a Saint Louis firm, Saint Louis brand, super strong brand in Saint Louis. Maybe not as big a brand nationally, you know, from East coast to West Coast. We again, small firm at that point in Fort Wayne, Indiana.

Jody Grunden: [00:59:11] Bigger brand nationally. And so it was just one of those things I needed to make sure that brand was there. And so that's where the name came in. And I had to agree that, hey, you know, hey, we want to keep the name for at least a three year period so that we can really focus or really kind of wean our content marketing down to this new name so that we just didn't pull the plug today. And all of our all the effort that we've done for the last 20 years is gone. We want. That to happen because that would, in my opinion, happen. And so that national brand was super important. And then the incentive buyout was was important for me. And initially they came in, you know, a lot of firms said, you know, hey, you'll be part of our retirement program. And when you retire, you'll get this big money. It's like, no, that's not how we want to do this. So I came in and said, hey, here's how we're going to do it. I want 60% of the value of the firm day one, and I want that spread over five years. I don't want it immediately. And which is kind of weird. Why don't I want it immediately? It's like, well, I didn't want to take my incentive away.

Jody Grunden: [01:00:05] If I had all these, if I had millions of dollars in my bank account today, would I be incentivized to continue on? I didn't know, and I didn't want to find out. And so I wanted to make sure that, you know, hey, we're paid on a monthly basis there for the next 60, 60 months based on that 60% of the value of year one. I already knew that we're going to double our size every three years. We've always done it. Why wouldn't we do it going forward? We're trending it. We're building that flywheel to really blow that up. And so year five, I knew that, hey, if we grow it to 50 million like we think we can, being part of a bigger firm with more opportunities, I thought, wow, that's a bigger payout than than selling it at $20 million. You know, three years or two years from now, 2 or 3 years from now, I thought, this is a great, great opportunity. 50,000,040% of 50 million is a lot bigger. Right. And so our second part of the apple, there should be a lot larger than the first part, even though it's a different percentage there. And so I thought that that's a great incentive for us to really work hard. And the fact that my team, my, my, my director team received phantom stock and we gave Phantom stock to our team a long time ago based on acquisition, it incentivized them to continue on and work hard, too, because they saw the same thing.

Jody Grunden: [01:01:14] The more that they work, the bigger they build it, the more that they they actually make in the process. So it worked out really, really well that everybody was incentivized to really to actually, you know, for that same goal to hit that $50 million eventual goal mark there. And then the last part was I needed to have a seat at the table, meaning that my my partner Adam and I both had to be equity partners. You know, that was there was no no, no, no ifs, ands or buts. We had to be equity partners because I didn't want to jump into a situation and then have them change the rules on me a year from now, because I didn't have the ability to veto it or say no. I had some influence on it. At the time, there was only 13 equity partners, so we were two of 13, which I thought was very fair in that regard, at least gave us a seat at the table to to have a voice. And, and those were the five main areas. And Andrews said yes. When I was like, shit.

Speaker3: [01:02:06] Now.

Jody Grunden: [01:02:07] Now I wasn't playing on that to happen. And, you know, it was like, wow, this is great. And so I, I, I said, yeah, let's have you meet the director team and our two, two most senior CFOs. And if any one of them says no, then we will stop it there. If they say yes, we'll continue on. And I thought, well, one of them's going to say no. And they met the team. They met the Andrews folks. Oh, this is a great opportunity. We can't pass it up. Let's do it. I see the vision. And it was like, well, dang, now what do I got to do? I mean, they met all the requirements. Our team likes it. And I was like, well, okay, let's go ahead and do it. And so within a six month process, we went through that whole due diligence, the evaluation, everything. And you know, sold the practice. So it was a it was just one of those things I wasn't expecting it to happen. I wasn't looking for it to happen. Didn't think it was going to happen. And I was completely fine if it didn't happen. And it did happen, which which has been it's been a great experience so far.

Blake Oliver: [01:03:04] Well, and I think that attitude is clearly why you ended up getting all the answers to your five questions, as you weren't willing to compromise on that. And yeah, I've, I've talked to firm owners who didn't get that equity seat at the table. And then later when the rules changed, they really regretted it.

Speaker3: [01:03:21] Yeah, yeah it happens.

Blake Oliver: [01:03:23] Happens all the time with this with the smaller firms going into the bigger ones. And so it's awesome. You didn't bend on any of that.

Jody Grunden: [01:03:31] No. Yeah. Appreciate it. Yeah. The incentive I was looking for a reason I was looking for knows what I was looking for. I was looking for know really hard and and I and I found, yes, all around the corner. And that was, you know, that's a big no. I mean, equity partner is a big thing that just give somebody right out, right out of the gate. And that was just one of those things that I felt so strongly with that. And it also put a caveat in there is that Robert and Dave, the two folks, you know, the my two main, I guess if you want to call her who report to if either one of them left, I could accelerate the agreement. And so I thought that was super important because I fell in love with these two guys. And it was like, if these two guys are gone, then who knows who's going to replace them? And I was like, I don't know if I want to work for, you know, x, y and x or y, you know, type of thing.

Blake Oliver: [01:04:16] This is a great list. I mean, everyone should have those five points or six points really on on that. Um, Jody Grunden, it has been fantastic talking to you on this show. Where can people learn more about you, follow you online? And is summit CPA. Anders. Hiring should should people interested? Where can they go?

Jody Grunden: [01:04:40] Yeah great question. So we're always hiring because we're growing which is kind of the cool part. We have usually have a really good opportunity when we hire. We usually have a good pool of people we can actually look from. So yeah, if anybody is looking for a position, whether it's an accounting, CFO, consulting, whatever, always hiring, definitely reach out. You can reach out to me directly at Jody at Summit CPAs. Net. So I still have my old address and its net not.com. I didn't have the money to spend on.com back then. So with dot net and or you know you can just simply Google me. Really mean if you Google me, you'll probably find me on everything in YouTube. We do a lot. We do a podcast every every week. There's a lot of ways you can get Ahold of me. So I would say Summit Net is a great, great starter there for our website or just simply just Google Jody Grunden or summit CPA Group and you should be able to you'll see a lot of resources out there.

Blake Oliver: [01:05:35] We'll have a link to your LinkedIn in our show notes and the link to the summit CPA website, and links to those podcasts that you mentioned. They're definitely worth listening to. It's so awesome that you're out there putting out all that great content, and a lot of it is on earmark for CPA.

Speaker3: [01:05:54] So yes, it is.

Blake Oliver: [01:05:55] Not only this episode that we've done, but like many, many episodes of great podcasts about accounting and virtual CFO services and how to run a remote team, I mean, everything it's it's a wealth of knowledge. So yeah.

Jody Grunden: [01:06:09] Kind of funny not to interrupt you there, but it was kind of funny. I was just telling you, that gentleman I was talking to for a long time and we, you know, he's like, you know, hey, I finally had to get my CPA in. My assistant got all this information, all these different podcasts for the CPA. And I saw you twice and it was on it was on earmarks. So he's like, oh my God.

Speaker3: [01:06:28] So, you.

Blake Oliver: [01:06:29] Know, we can't discount the podcasting as like something that led to all these opportunities. You had these interests in acquiring your firm because you were out there in the public. And so a lot of people knew about you and they knew you were growing. And and they might not have, you know, maybe Andrews wouldn't have been talking to you if you hadn't been out there.

Jody Grunden: [01:06:48] Possibly. Yeah.

Blake Oliver: [01:06:49] So thanks a lot, Jody. Great talking to you. Hope to see you around soon.

Jody Grunden: [01:06:54] Yeah. Thanks, Blake.

Blake Oliver: [01:06:57] Thanks for listening. I hope you enjoyed this episode and that you learned something new. And if you did, wouldn't it be nice to get some CPE credit for it? Well, I've got great news. My new app, earmark CPE, offers free Naspa approved CPE credits for listening to podcasts, including this one. Visit earmark Cpcomm to download the app, take a short quiz, and get your CPE certificate. That's earmark Cpcomm.