Capstone Webinar: "Let's Talk Practice Management"

Hector Garcia summarizes the key takeaways from all seven episodes of this series. Discover the most important things accounting firm owners need to know about positioning, the business model, technology, sales process & onboarding, value pricing & offering guarantees, attracting & retaining talent, and innovation.

Thank you to our sponsor, Avalara! Avalara’s award-winning tax automation solutions help accounting practitioners of all sizes, from sole proprietors to Top 100 firms. Avalara simplifies sales tax compliance with real-time rates, automated returns filing, registrations, tax research and automated tax solutions for specialized tax areas. We live and breathe tax so you don’t have to. Learn more at Avalara.com/Accountant

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• (00:00) - Build A Focused Firm Episode 08
• (00:05) - Intro and thank you to our sponsor, Avalara
• (03:43) - Series recap and practice management
• (04:11) - Positioning
• (16:55) - Business Model
• (20:44) - Thank you to our sponsor, Avalara
• (22:04) - Technology
• (27:01) - Why aren't more tax softwares cloud based?
• (29:34) - Sales process and onboarding
• (32:19) - Value pricing and offering guarantees
• (37:27) - How do you value price tax returns?
• (41:25) - How do you scope these types of engagements?
• (44:21) - Attracting and retaining talent
• (48:42) - Innovation
• (52:08) - Practice management "system" and software
• (58:51) - CRM's and things to consider before deciding
• (01:06:21) - Designing a workflow
• (01:11:39) - How to pick your practice management software
• (01:14:31) - Some questions about employees and their training
• (01:21:19) - How would you get CAS clients in a practice that mainly does 1040s?
• (01:29:23) - Wrap up and how to earn free CPE

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Thanks for watching or listening to the final episode of this series!
For more, visit earmarkcpe.com/focus

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Get free CPE for listening to this podcast:
https://app.earmarkcpe.com/?course_id=11d08a91-988a-4465-8e0c-e974240b637d

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Connect with Hector Garcia, CPA:
Website: http://hectorgarcia.com
LinkedIn: https://www.linkedin.com/in/hectormgarciacpa/

Connect with Blake Oliver, CPA:
LinkedIn: https://www.linkedin.com/in/blaketoliver
Twitter: https://twitter.com/blaketoliver/

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Download the Earmark CPE App:
Apple: https://apps.apple.com/us/app/earmark-cpe/id1562599728

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Creators & Guests

Host

Blake Oliver

Certified Public Accountant. Co-host of @cloudacctpod. Founder of @earmarkcpe. I have approximate knowledge of many things.

Host

Hector Garcia, CPA

Quick Bookkeeping & Accounting LLC. QuickBooks® Training Services. Business Consulting. Tax Planning. My e-mail: [e-mail] / office: 954-414-1524

What is Build A Focused Firm with Hector Garcia, CPA?

If you want to build an accounting or bookkeeping firm that gives you joy, you need to stop, and focus. Learn strategies and best practices for practice management and earn FREE CPE while you're at it!

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: [00:00:05] Hello and welcome to our series Building a focused firm with Hector Garcia, CPA. I'm Blake Oliver, your moderator for today's webinar. This is the final installment in an eight part series, all about how to build an accounting or bookkeeping firm that gives you joy by focusing on what matters. Thank you to our sponsor, Avalara for their financial support to make this series possible. I'm wearing my Avalara T-shirt today in honor of them. Avalara is award winning tax automation solutions help accounting practitioners of all sizes, from sole proprietors to top 100 firms. Avalara simplifies sales tax compliance with real time rates, automated returns, filing registrations, tax research and automated tax solutions for specialized tax areas. They live and breathe tax so you don't have to. Learn more at avalara.com/accountants. Thanks everyone who has joined us today for the webinar. Please chat with us. Please ask questions. That's the main point of this webinar. Hector has made himself available for the next hour and he's going to answer any questions you have from the first seven episodes of this series. And don't worry, if you didn't watch them all, you're welcome to ask any questions you like. There are no dumb questions. And if you're looking for CPE, let me tell you a little bit about that. This is not a traditional webinar. We don't have polling questions. Instead, what I'm going to do is send you a link via email after the webinar, and then you will be able to take the course on the earmark CPE app. It's a mobile app that you'll download and you can say that you've already watched the webinar. Take a quick quiz and get your CPE certificate. You will need to be signed up for the email list to get that link. So if you are not signed up, please go to earmark cpcomm Slash focus and enter your email. If you've already been getting my emails then no worries you will get the link for that. And that's it for the housekeeping. With that out of the way, let's get to Hector. Hey, Hector. How are you doing?

Hector Garcia: [00:02:09] Hey. Hey, Blake. How are you? Really quick for the people that are watching. So this is live on YouTube right now. It's also live in webinar format. Yes. Okay. So we might be getting questions in YouTube or in the webinar format as well. So please be asking questions. Blake will do his best to bring him in when it makes sense. We're going to do a recap of the seven part series and we're going to talk about practice management, what it means, what it doesn't mean, what what, what are sort of the main things that I think about when I hear the word practice management. And then we're going to leave it open for Q&A. So, Blake, let me make sure I can share my screen.

Blake Oliver: [00:02:51] Yep. And we've got Rafael in the webinar. We've got Jeff, thank you for joining us. Hey, if you want to let us know where you're at, how you're doing, are you overwhelmed with tax season? Are you looking forward to the end? Do you see the light at the end of the tunnel? Just check in with us. You can put your comments there in the comments and I'll see those. And again, ask your questions if you like.

Hector Garcia: [00:03:18] Absolutely. So welcome to Building a focused, firm Part eight Capstone series. After we did the seven part podcast, we talked about positioning business model technology, sales process and onboarding value pricing and offering guarantees, attracting and retaining talent and innovation through thought experiment. What I like to call an in a box for any accounting practitioner. And now we're going to talk about practice management. So what does it mean at the at the after we talked about all these concepts, what does it mean in tangible terms? Like what do we do with this information? How do we implement it in our firm immediately and what the heck does practice management really mean? So let's talk we're going to talk about those two things, the recap and then the the system. What a practice management system means. And then we'll open it completely to Q&A. So let's start with the series recap. So positioning, this was the probably the biggest concept that we started with positioning is the space that that your brand occupies in your customer's mind when they think of your firm, firm A and they think of firm B, do they just think of two firms that do the exact same thing, or do they think Firm A is different because they specialize in X or is firm A different because their experience feels this particular way? Or are they different because they have a specific set of talented individuals working in there, which makes the experience unique? Are they different because they're located in a particular place or they use a particular piece of software? So again, positioning is that space that that your brand occupies in your customer's mind.

Hector Garcia: [00:04:58] And and when you go buy a product or service or even fly, right? So you you have in your mind. Spirit Airlines means to you what Frontier Airlines means to you, what Delta means to you, what JetBlue, what American Airlines, everybody has, you know, their thought about what that what that means. And then when you look at pricing, because at the end of the day, if you fly with one or the other, it's still an airplane. You still go through the same airport, you still end up in the same city. But do some people pay more and some people pay less based on what the positioning means to them? So do we really want to be known as just the vehicle in which people get on and get off? Or do you want to really be part of your customer's life, financial and business and personal? You want to be part of their life by doing what you love doing with the with your purpose in mind and your customer aligning to that purpose. That's positioning. Now, I talked about specialization and whether it's vertical or horizontal, so most people get scared of vertical specialization because in their mind, vertical specialization means, Hey, I only work with construction or I only work with doctors or I only work with marketing firms and that's vertical specialization.

Hector Garcia: [00:06:10] That means that we pick a particular category, a particular vertical, and we specialize on them. And the reason why that's one of the options is because when you when you do vertical specialization, it's easier to talk the way they talk because if you're dealing with doctors all day long, you don't talk about their customers, you don't say your customers, you say your patients. And it's it's built into your mind because doctors never meet in a doctor conference. And they say, oh, my customer had a stomachache. They don't do that. Right. You know, they'll say, they say my patient. So when you work with the same vertical, the lingo gets built in and becomes pretty much second nature to you. So when you're speaking to someone that's in that in that industry and you're using their terms and then they're comparing you against another accountant, that's only using generic accounting terms, who are they going to think this person understands me better? Who are they going to think this person was put on earth just to help me solve my really expensive problem? So without vertical specialization, it makes it really difficult.

Hector Garcia: [00:07:15] Now the option is horizontal specialization, which means you don't care about the type of client that you deal with, but you do care about the problem. So, for example, a heart doctor, okay, most heart doctors have they don't have a vertical specialization. So in this case, vertical would be like the type of customer a heart doctor would be horizontal. That means they can operate on male, female, old, in some cases young. And it gets a little more complex, obese, non obese person with a heart condition and cancer, you know, that sort of thing. And they can choose to continue to to specialize on the vertical. So the horizontal would be like like a cardiologist. Right. And then they can even more horizontal would be surgeon and even more horizontal would be children and more horizontal would be children with cancer. Et cetera. Et cetera. Right. So as an accountant, we can also do that. Like we can not only look at the type of industry that our client is in, but we can look at the type of problem. So, for example, I only work with construction companies that are over $1 million in revenue that need the whip report for bonding, that are growing so fast that without real time reports they're going to lose their shirt like this.

Hector Garcia: [00:08:31] If they don't know exactly which jobs they're making money and losing money in. Right. So so that's so you you start broad and you go narrow, narrow, narrow until you get to the point where the total amount of customers that exist on earth that you can serve are essentially the total amount of clients that you can serve. And that would be the ideal situation, right, where your narrow, narrow, narrow up to the point that you could be a capacity and you could be happy at capacity. Right? Of course, that's very realistic. But that's that's what we look forward to as we get go narrower and narrower. And it's okay. You don't have to choose a vertical specialization. You just pick the horizontal. So I only reconcile bank accounts and that's it. Or I only fix inventory problems and that's it. Or I only convert people from desktop to online, whatever platform it is, and that's it. Or I only move people from enterprise to some other mid-market and that's it. So that's that could be a horizontal specialization based on the task. And when you do that over and over and over and over, you become such an expert that the next customer that you deal with, you're going to be able to do it faster, more efficiency with less errors. So you can essentially charge more and do it faster and somehow the customer be thankful for that.

Hector Garcia: [00:09:41] Right? Because you think about it and I'm just I'm dealing with this situation right now. Um, my my bathroom has a leak. My, my shower has a leak. Right. And I had multiple quotes, but the highest quote is also the one that told me we'll get it done the fastest. And I got to tell you something. If you want to have a happy relationship with your spouse. Don't take the shower away from for more than a month. So I would pay the premium to get it done faster. That's the point that I'm doing. And these guys only do showers, only do the type of problem that I have. So it's kind of the concept, you know, the reason why I probably ended up paying more instead of, you know, going for a lower quote, that sort of thing. Next thing on positioning is you want to be able to articulate your firm's strategy. So people who are the people in your firm or who what is the type of people you want to attract in your firm and whom who are those customers that you want to serve? So obviously specialization and niche that all that's all part of it. The problem that would be the horizontal. Right. So that's the what what what do we solve? When do we do it? Are we are we quiksilver's Do we take a long time? Where do we do it remotely? Do we do it from our office? Do we physically go to our our clients locations and the process.

Hector Garcia: [00:10:56] This is the unique know how this is. This is what you guys do that's unique, that no one else does. Or maybe it's the same thing everybody else does, but you have maybe your own spin to it or is or is adapted to to, to your skills and the type of people in your firm. Then you want to be able to articulate your firm's purpose. This is your why. This is what makes customers want to work with you. This is what makes customers forgive you when you make mistakes. Because the specific task that you made a mistake in doesn't break from your purpose and people will stay with you and follow you because of your purpose. And they they're more future minded. They're more big picture minded than when customers don't understand your firm's purpose or don't align with your purpose, then they will be more task minded. They will be more job minded. Right. So you want to work with customers that are going to be looking at the big picture just like you and not looking for the immediate gratification of seeing progress on the immediate tasks. Okay. So yeah, go ahead.

Blake Oliver: [00:11:55] Like what amazes me about this and this is a great episode and I've put the link to the playlist for anyone who wants to go back and watch this again, or if you missed it, you can watch Episode one. What struck me about this, Hector, is just how different this is than even how getting clients used to be 20 or 30 years ago, where you were stuck with just clients in your local area, and so you had to do everything. If you wanted to build a firm, you had to serve everyone. And now we're telling people actually it's the opposite, because we can serve clients all over the country, all over the world. We can be super specialized in what we do. And that is such a dramatic change. I think a lot of the profession still hasn't caught up to that.

Hector Garcia: [00:12:43] And I think beyond having customers all over the country or customers all over the world, we also have employees all over the country and employees all over the world. And that changes the dynamic of things, too, because, you know, if you if all your employees were in Miami, for example, which one of my cases actually, you know, I have a couple of non Miami employees, but when I started was all my employees were in Miami. Then it was obvious that only thing that we could do when it comes to like sort of on site surveys would be would be in Miami. But now that I have, you know, have employees in Tampa, I have someone in in Texas. So now our even though a lot of customers most of the work gets done remotely but our customers knowing that have a person in Texas, even if he's in Houston and they are in San Antonio, at least they feel like that person has some identity with the type of businesses that they have, even if they really don't know anything different than, you know, doing business in Texas versus for just having presence there could change the dynamic of how you work with people. So and also people from different walks of life or different states. They're also going to have different perspectives. You know, like the typical Texas employee is probably different than the typical California employee, which is probably the different than the typical Boston employee. Right. So and that could bring interesting dynamic into the mix.

Hector Garcia: [00:14:03] And it could also bring it could also throw a wrench into the dynamic of of the firm. So not having a why it makes it can you can create silos so people can everybody can sort of be in their own world by having a why you only attract people that even though they're from different walks of life or different physical locations, they all gravitate towards the exact same purpose. The last the the last concept that we talked about in in the positioning session is focusing on the expensive problems. A lot of my colleagues, accounting professionals, they focus on your books are unreconciled and the world is on fire to the accountant because the books because the banks are not reconciled or there's a reconciliation discrepancy or there's 13 transactions from 2019 sitting unclear on the bank and the world is on fire. But your customer doesn't care about that stuff. You know what your customer cares about. Am I going to be able to get the loan, you know, for to buy the warehouse for my business? I'm not going to be able to buy to get the loan to upgrade my house. Am I going to be able to afford an extra employee? It's this employee even worth having or is this employee costing me money? Is the compensation plan for this employee, such as the amount of commissions that we're paying to a salesperson even aligned with the profit margins of the business? Those are the expensive problems. And sometimes we completely forget that.

Hector Garcia: [00:15:24] And we think that reconciliations or tax deadlines or whatever, those are the expensive problems. And don't get me wrong, right? Filing taxes on time so they don't get tax penalties. That's avoiding an expensive problem. So for the tax pros, you know, yes, but for the non tax people you know most of. The generating panels and balance sheets by the second week of the month. Type of action. That's not expensive problem like expensive problem is what people can do with the with the fruits of your labor. What can these business owners do? What kind of actions can they take if they get those reports on time and they understand them. Right. And they're tracking the right things and all that stuff. So finally, the sort of the big conclusion to positioning is could you articulate who you are to your next prospect by being able to say a sentence like, I am the X for Y with Z problem or I am the X for Y looking for Z future state. So could you condense this entire concept of positioning, specializing your strategy, your Y expensive problems that you solve into a single sentence? And can you make that single sentence the one thing that all your employees put in the LinkedIn profile and the Twitter profile and in the in the Facebook profile, in the bottom of the email, you know, could you rally behind one strong positioning statement? So this is the big one. If you get this one right, everything else sort of sort of falls into place.

Hector Garcia: [00:16:51] So this is probably what we spend the most time recapping this first section. Okay. Next one that we talked about was your business model. Now, your business model is how you approach creating value for your customers and your strategy to capture a portion of that value. So how you approach creating value for your customers and how you capture a proportion of that value. If you don't have a strategy that says this is what I do, and because I do this, my customers get $20,000 worth and because I can give $20,000 worth, I get, you know, 3000, 4000, 5000. If there's no economic reason for you to exist, they probably shouldn't be any reason for your business to exist. And because of that, the business models of the future and we're seeing this now now is going to be a subscription based model where customers can hop on, hop off, they can speak with their wallets by saying, I'm not getting any recurring value from your business. I'm simply going to subscribe, right? So the Netflix of the world and the Disney Plus of the world, they do such a good job at just making it really easy for the customer to go, I'm getting value. I choose to pay, I'm not getting value. I don't choose to pay, you know, on the on the old models like charging by the hour. Typically there's this big production to convince the customer that you know what you're doing, that you're not going to be wasting your time.

Hector Garcia: [00:18:16] Then there is doing all the work, then is sending them the invoice for all the work that you did. Customer being completely surprised because they thought it would take ten hours, but in reality it took 20 and then you writing it off because you don't want to hear the customer and you're busy and you got to go to the next one. And it's this back and forth of convincing someone that you're good, convincing someone that you that you that you worked all that time, convincing someone that your time is really worth that. And then maybe possibly getting paid. I mean, that's just a horrendous, horrendous business model. And somehow our entire industry was built on that, right? So so I'm a big proponent of value pricing. I think value pricing, it's really important conceptually, but I think that especially with how everything is moving with with technology and apps and and like Ron Baker says, right now, if you have a customer that uses Amazon Prime, they're going to compare you against the concept of opening their app, pressing three buttons in a few hours, something shows up at their house. I mean, unfortunately, at some point in time, all these industries are going to move into this direction. Same thing with Uber. Like you take out your phone, you press a few buttons, magically someone's right there in front of you to pick you up. I mean, and in accounting, we don't have anything like that and we don't have any industries that have done that.

Hector Garcia: [00:19:34] But, you know, could a firm do this type of thing where you open up your app, you press three buttons, That means you let's say you grant people access to the bank and within a couple of hours, boom, you get a on balance sheet. I know it's more nuanced than that. I know it's, you know, accountants are going to be like Hector. That's impossible. I get it. But trust me, with the way technology is and the way things are moving, this is going to happen. So people are going to be comparing your services against that. So the future is going to be to offer something subscription based or something performance based where, hey, if you get value out of it, we get, you know, we get paid sort of like how tips work in restaurants, right? So there's no agreement that you are going to pay a tip. You're not forced to pay a tip. So depending on how well the server does, you're going to give them a tip that's big or small or none, Right? So I think that at some point in time, not that we're going to be tip people, but at some point in time the customers are going to demand that all services being done are always proportionally measurable against some sort of proportional value. And and almost all services might be contracted. My space. So, Blake, any questions so far? Do you want to go into our break?

Blake Oliver: [00:20:44] Yeah, let's take a quick break. And don't forget, Hector is here to answer your questions. So do put those into the chat if you have them. In the meantime, let's thank our sponsor, Avalara for their financial support that makes this series possible. Did you know that 52% of accounting practitioners from small to large still rely on spreadsheets and manual processes for sales tax compliance? It's time to stop and focus on automation. The Avalara for Accountants Suite empowers even the smallest practitioner to support clients tax compliance needs. All firms can benefit from their referral program. Simply refer clients to avalara and let them assist on your behalf for practices that offer direct compliance services. You can use Avalara for Accountants award winning tools to help you start or grow a tax compliance or CAS service expressly designed for accounting service providers with multiple clients. Solutions include real time rates, automated returns, filing registrations, tax research and automated tax solutions for specialized tax areas. Partner with avalara and grow your practice with efficient and accurate sales tax compliance while reducing risks for you and your clients. To learn more, contact Avalara at accountants at aba-liga.com or visit them at aba-liga.com. Slash Accountants. All right. Let's talk about part three. Right. Technology, my favorite part.

Hector Garcia: [00:22:10] Absolutely. So I share my screen. So can you help me with that piece? Yes. Put this back up there. Okay. So technology again, we just reemphasize that you it's it it would be great if you have seen the last, you know, seven sessions. They're going to be available. They are available in audio only podcast format. They're available in YouTube. If you also want to see the slides and whether you go through YouTube or audio only, you can get CPE. If you're an accounting professional, which I assume most of you guys are, but you're just doing the quick recap. It's just kind of just to set up, okay, what is practice management mean at the end? So technology. So basically there's three types of technology. And I'm recapping what we did and we recorded this. This part, I believe was November of 2022. And this is a pre chatgpt world because the world has forever changed after Chatgpt. So we didn't even talk about Chatgpt. So a couple of comments to that, but don't, don't want to go down that rabbit hole. But there's three types of technology. Essentially, there's going to be your cloud web based. So systems like Xero or QuickBooks Online or Sage Intacct or tax software like Intuit, Proconnect and don't know what other professional tax software is, 100% Web based. And then there's also a cloud Cloudified desktop based. So think the big the big package, not CCH. What's the other big package that that does tax ultra tax. Okay. So ultra tax or ultra the whole ultra series of of practice management that has been that has been a traditional staple in our in our world in our industry, but has always been desktop software but they've always offered for a very long time they offer hosting so you can still be on the cloud, but it's desktop software because haven't really, you know, made it into a web based app yet.

Hector Garcia: [00:24:10] And this is, you know, industry. This is very common because there's QuickBooks desktop. So people still use QuickBooks desktop or people still use Sage 100 or people still use desktop level software, for example. Think Excel is a good example. So even though I want to be cloud and I want to be online, I can tell you productivity wise, nothing beats desktop based Excel versus cloud based Excel or Google Sheets. Just I know the shortcuts. The tools are there, but I do want to be on the cloud. So the best compromise there is to have cloud ified based system which uses desktop software on the cloud. But think little by little, I'll probably say I would suspect that in the next 5 to 10 years, all the desktop software that you thought could only run in desktop software will be on the cloud. Okay. The Photoshop, can you imagine that? Adobe Adobe Photoshop, There's a cloud version and it's really powerful. Again, not as powerful as the desktop version. There's, you know, we talked about Microsoft Office and and Microsoft Word. These things already have cloud Web based versions of them. And little by little, all these desktop type of tools will still be available on the on the cloud. I mean, with QuickBooks is a little bit different still because QuickBooks desktop is still much, much powerful than QuickBooks Online.

Hector Garcia: [00:25:30] So if you want to have a cloud experience, quote unquote with QuickBooks Desktop, you got to be on a hosting service. And there's and obviously the one that we all know which is on premise, which is you're going to have to make a decision which tech will be on premise, which tech will be desktop based cloud and which tech would be web based. Now, most of the apps that are being developed are going to be web based. As a matter of fact, I don't think I have seen a company in the last ten years that have that has gotten actual money that that that started with desktop software. Like it just almost never happens. Now, one thing that's interesting is and you and you do want to make sure that you recognize this piece too, is there's a lot of desktop add ons to cloud web based software. So for example, QuickBooks Online has a desktop browser, so it's software that you install in your computer. But all the data it's it's on the it's on the cloud, for example, you have things like Clickup, which is a Clickup is a web based database, but there's cloud, there's a desktop based tool. So you can sort of like launch it from your, you know, from your computer or add interact with it from your computer. There's a lot of chrome extensions that give you desktop experience functionality for cloud based apps. So you keep that in mind. That's also a thing that you can still use to sort of bridge that gap. Okay. So any questions on that?

Blake Oliver: [00:27:00] Blake No, it makes sense. It's. Just, I guess I. I don't come from the tax world. So for me, I've been completely cloud for the last ten years only doing accounting work. And I just, I cannot understand why not one of the I mean we've got Intuit Proconnect right. That's cloud but that's it. I mean how can how can there just be one tax software that's truly cloud?

Hector Garcia: [00:27:26] Yeah. So what's interesting is and this is really interesting, the, the consumer apps of traditional desktop software, especially on on on cloud I mean that that were desktop first that have moved to the cloud have been on the consumer side only. So for example uh, I don't think TurboTax desktop is something that people buy anymore. It's still kind of exists, but TurboTax is a cloud based software and if you want to interact with the experts at Intuit, the TurboTax Live or whatever, it's called TurboTax experts, you have to use the cloud system. Taxslayer I prepared my first tax return ever like by myself. My dad sat down and taught me how to prepare tax returns when I was 18 years old. This is 1998. Using a software called Taxslayer and Taxslayer might be the first, you know, sort of pioneer into tax software cloud based. But yes, it is very strange how, you know, the cert hasn't gone to the cloud or Proconnect has gone to the cloud or ultra tax has gone to the cloud. I believe there might still be that fear of security since, you know, the tax has so many implications when it comes to identity theft and stuff like that. And um, scammers always target tax practices or they try to hack into the emails of tax practices because, you know, they know customers, email, W-2s, you know, you know, that sort of thing.

Hector Garcia: [00:28:55] So I think there's still sort of a fear that, you know, until they're 100% sure that everybody has gone through all the possible issues when it comes to security and they learn from that, that they don't want to put it on the cloud. I really don't know. But that's you're right. It is pretty surprising. And and kudos to into it for for bringing Proconnect and Proconnect uses the Lazanis engine I think I think that's that's what they've they've advertised so it's technically almost like less cert on the cloud but still you know why do all the other even Drake Drake is very popular in the small practitioner work. How come Drake doesn't have a cloud base? So yeah, interesting nonetheless. All right, let's move to the next the next slide here on the recap, which is sales process and onboarding. So we talked about two important pieces in here. So one, and we spend the most time on this. And I think even Blake, that's the part that you really like is filtering your your prospects quickly. It's about the best muscle memory that you need to build. Okay. So we talked about specializing. We talked about picking the clients that you were put on earth to, to help the problem is that in order to do that, you have to stop wasting your time with the ones that are low value or the ones that don't fall into, you know, that specific target customer you want.

Hector Garcia: [00:30:16] And unfortunately, we're nice people and we're people pleasers. And my customer referred me, their cousin, and I have to at least respond with something. And we spend so much time, so much time just trying to figure out a fit or trying to figure out how to tell people that they're not a fit, that that that time is the reason why when when I come to you and say, hey, spend a little extra 30 minutes in this value price this deal, instead of just giving an hourly rate and people tell me, I don't have time for that, but you do have time for it. The problem is you need to like shift the time from not filtering all all these people to just having quick filtering systems, to not waste your time with with them. And at the same time, there's a, there's a expression that I love from Blair Enz, which is the sale is the sample. The sale is the sample. Okay. So when you go to Costco and you're going to and you're looking at this new pita chips and then there's a person there with pita chips and they give you a little thing and you can try it. Okay, that's a sample. That's a real sample.

Hector Garcia: [00:31:17] Okay. You're actually tasting it. But in accounting, we don't have this cost cost type of samples we can give to people and go, Let me give you a sample of how good my tax returns are. It doesn't work like that. So the only possible sample, the only possible perception that people can have about how good your services are or how great the experience is or how much you know is through the sales process. And if the sales process is rushed because I'm squeezing it in between two meetings because I have too many of them, then you're not going to be able to give this customer a good sample of the quality of your work, and then you're going to be forced to, you know, bring your prices down, compete with pricing, or just quickly just give them an hourly rate so you can move on. And then if they say, okay to the hour. The rate that we take you in as a customer. So those are the two really important things, or at least the sort of the summary of of that session. But I really recommend, I think we did almost more than an hour and a half on this one because the sales process is just very complex. The next session that we did, we talked about value pricing and offering guarantees. So value pricing is very simple.

Hector Garcia: [00:32:25] It means always charge a fraction of the value you provide, and it's almost impossible to know up front how long something's going to take you so you can figure out that you're charging a fraction of the value you provide if you do it based on after the fact hourly billing, right? So if you know up front what work you're doing and you know up front what that's worth to your customer, then you can know up front how much you can charge, does a fraction of that, and then you can backwards engineer that number into. However, is it that you measure productivity or how long it's going to take you or how much it costs you to do that work? And then if those two things are aligned right, so the customer knows how much the the customer knows how much your work is worth, you know how much you're going to charge, which is a fraction of that. And then you know that it's going to cost you below the fraction of the value you created. Then you move forward and say, Yep, we'll do this job. So we're we're talking about flipping the business model on its head. That way you always give a flat rate because that's always a better experience, always a better experience. And people always ask me, Well, Hector. How do I deal with the uncertainty? How do I deal with, you know, not knowing how long it's going to take me? Or what if they had a PayPal account and they never told me they had a PayPal account? Okay.

Hector Garcia: [00:33:51] This is this is part of what we do, guys. I mean, we we we get customers with surprise bank accounts and credit card accounts all the time. So you have to figure out, you know, about how often does this happen, how much more work it it will be and then just law of averages. Right. So if one of the three customers surprise you with a extra bank account, then you figure out how much work is an extra bank account. Okay. It's an extra X amount of work. Okay. So build that into your fees, build that in and average it out. Some customers you will win, some customers you will lose. But that's how insurance companies work. Okay? The insurance companies, they they know that someone might or might not die. And there's so many ways to die or so many ways not to die. And they how is the insurance company going to on every customer, you know, have this well, what if the guy has a heart attack? Why if the guy jumps off a building or jumps off a plane in a parachute or whatever, like, you know, insurance companies don't don't deal with that.

Hector Garcia: [00:34:50] Right. They know we win some we lose some, You know, they certain aspects. Right. Your age, your whether you smoke or not, that stuff does come into play when you price. So so it's a $2 million construction company. It's a, you know, 100,000, you know, e-commerce startup. It's a beauty shop down the corner. I mean, all these factors are who the customer is will change essentially how much you price. I'm not saying price is the same thing to everyone, but what I'm saying is law of averages average out that risk. Now the more guarantees you add to the mix. So you say, I guarantee that I'll do it by Tuesday or I guarantee that you won't get a penalty or I guarantee that after this you'll be able to, you know, get your loan approved. But technically, that's that's maybe borderline unethical. But I guarantee that, you know, that that the IRS will accept this amendment so you can make whatever guarantees and then you can charge a premium for that. Okay. And and the more guarantees you make, the more risks you're transferring from the customer over to you. And that's what you charge a premium for. And that's why insurance companies call it premium, because essentially that's what they're doing. They're charging an amount over the. Calculated cost of the risk. So we have a question, right? I think you're muted.

Blake Oliver: [00:36:15] All right. We had a question from Edgar on YouTube. He said, how do you value price tax returns? And I think, Hector, you've already started answering that question quite well.

Hector Garcia: [00:36:27] By shifting risks. Yeah, always shifting risks. And Edgar, also, you want to add the things around the tax return. Go. Go ahead. Go ahead. Blake.

Blake Oliver: [00:36:36] I was just going to say, like, one really easy way that I've seen to do it is to take take your last year's tax returns, right? And put those all into a spreadsheet and then try to figure out, you know, could I charge just like three different prices and bucket bucket your customers, your clients into three different buckets and see if you can do it and if it's pretty darn close, right, Based on how much you were charging them last year, maybe you could switch to a very simplified pricing model based on what you're doing now. That's not quite value pricing yet, but it's one way to get to at least a fixed fee. And then the other thing is, like you said, Hector, I'm not sure if you said this exactly, but I was taking this away from what you said is, is we need to start focusing on what what is the price that the customer is willing to pay and then build the service around that, correct? Correct.

Hector Garcia: [00:37:27] But but this is the thing, Edgar Edgar's question is verbatim How do you value price a tax return? So when you ask a question like that, a tax return is a thing, okay? And if you're focusing on the thing, if you're focusing on the task, if you're focusing on the job, that's what we that's when we have it wrong. Edgar, your question should be, how do I value price the client for this tax return? But the reason why you don't ask it like that, Edgar, is because I don't know anything about your client. So you're going to say, How am I going to ask Hector? How do I value price this client on the tax return when Hector doesn't know anything about my customer? Well, there's the answer to your question, right? If I don't know anything about that customer, I cannot value price the customer. So it's not the tax return that we're value pricing. It is the customer that we're value pricing. And the way to value price the customer is to know who they are, how much this matters to them. So, for example, you know, most people are that we deal with our customers are over 18. That means that they filed a tax return in the past. That means they have some sort of experience with tax returns, whether it's they did it by themselves in TurboTax or they had another practitioner. So you can start by saying, Hey, before I give you a price, could you give me an understanding of how you've done tax returns in the past? Okay, I've done TurboTax It cost me 75 bucks.

Hector Garcia: [00:38:46] I use this accountant, it cost me this. If they use another professional that you can ask. Hey, just curious. How come you didn't use keep using that professional and they'll tell you something. Well, that professional was was late or that professional didn't answer questions through the year or that professional screwed up on this particular form or that professional asked, you know, charge too much or didn't tell me how much it was going to charge in front and then gave me a surprise. Bill. So then you can say, okay, so if I get this correctly, what you want is an accountant that will do your tax return. It would do it quickly too. That would be available for you all year to answer any tax questions. Three That guarantees that there's no mistakes. And if there is a mistake, I will redo the return and pay the penalty in your behalf. Am I hearing that correctly? Is that kind of what you want? And if they say yes, they no longer want a tax return, they want the price to the experience of being compliant, Right. So so when you change the language, you change your world. Okay. Remember, like Wayne Dyer said, when you change the way you look at things, the things you look at change, if all you're looking at is an 1120 with 16 attachments, if that's all you're looking at, then you can't help but to figure out how to multiply your price times the number of sheets or times the number of hours that it takes you to do it.

Hector Garcia: [00:40:03] So you have to change the thing from a tax return to the experience of being compliant alongside a professional that's courteous, smart. And there and when you frame it like that, then the question is how do I value price this customer that I'm going to give this customized experience to you go back to your customer and say, Hey, I know you paid 500 bucks for a tax return before and it had all these flaws, and unfortunately I can't match that. If what you want is the service around the tax return, I could do all the things that I promise. It's going to cost you $1,000 a month, $12,000 a year, whatever the number is, and you will have a tax return. Is that what you want to work with? And the customer says, no, I want the $500 tax return. Send them to to to Walmart to get the tax return on next go to the next customer. Work on your purpose statement, work on your positioning statement, remarket yourself and don't deal with customers like that ever again. That's how it needs to work.

Blake Oliver: [00:41:06] Now, one of the big concerns of value pricing return sector and throwing in all the bells. And whistles like you've talked about. Making it more of an insurance policy is that I'm going to not be able to deal with this scope. And we had a comment from Lori who said a defined scope of work should protect you from hidden items. So do you want to speak to how you scope these types of engagements? Yeah.

Hector Garcia: [00:41:31] So, um, why let me ask you a question, Lori. Why are we so concerned with protecting ourselves versus protecting our clients? Okay. And if our interests are 100% one sided, then your customers are always going to be combatant with you. If you are always only looking for your interests, your customers are always going to fight for theirs because you're not a partner to them, right? Protecting yourself from hitting clients is the opposite of being your customers partner. So the reason why you ask it like that, Lori, is because the way you work is I want to get as many customers as possible with with a pricing that's as very comparable to the market because I don't want to spend I don't want to invest time on making myself different and differentiated. I just want to like get the customer and move on and grow my book of business as quickly as possible, as fast as possible, and just keep them enough so that they don't leave. So yeah, so if that's your business model, then I completely understand why you need to protect yourself from, from hidden items. And, and when you go rent a car, right, and you don't pay the extra super premium, what's going to happen? They're going to walk the car. They're going to look at every nick. They're going to look at every little piece. They're going to make you sign a paper that says, hey, this car is free of nicks and little things. Right? And then when you come back, if the car is not intact exactly the way you gave it back to them, then you're going to get charged, you know, ten, $20 per little hit in the car, whereas a more premium service has a little bit more leeway.

Hector Garcia: [00:43:05] Right. It gives you a little bit more leeway. It says, hey, stuff happens, you're paying extra, you're a VIP customer. So you got to figure out where are you going to be? Are you going to be on on the low end of the spectrum where what you're offering is so tight when it comes to resources because you have so many customers, because you have to serve so many people at the same time that you have to jam packed people into your capacity. Whereas protecting yourself from hidden items is your business model shifting completely to a business model where maybe have half the customers? But what I'm doing is I'm protecting my customer from having gotchas and getting dinged on the future. Therefore, I'm looking for the hidden items all the time because what I'm looking for is to shift my interest to be my customer's interest. And then my customer sees me as their partner and they're no longer talking about price because X, Y, and Z person down the street that also protects themselves from hidden items. It's pricing it lower. So that's how that's that's the non-answer to your question, Lori, because transformation starts with language and you got to change your words before you change your world. All right. Get me all riled up here, man.

Blake Oliver: [00:44:18] Those are great comments. Great questions. Keep them coming, folks. Right.

Hector Garcia: [00:44:22] So the next one was attracting and retaining talent. So first most important comment I made was, at this point, the way our profession is, we are probably more starving for a new employee than a new customer. And we are willing to fire many, many customers to protect our employee. I mean, this is something that hasn't happened in a very long time, a long time ago. The customer is always right. If the customer complains, it's the fault of the employee. If there's too many complaints, you get rid of the employee. Now, because of talent shortage, we tend to protect our employees more and we're willing to basically do things that we didn't do before to keep our talent. So now I'm thinking that branding, even though it's really important for the purposes of pricing and all that stuff that we talked about earlier. So none of that stuff changes. Okay. Pricing is still I mean, branding and positioning is still really important for you to value price or or or price as a percentage of the value you create. But I'm also thinking that you have to invest some of that branding into being able to have the dream employees that you want, attract the dream employees that you want. So when when employees are thinking about working for you, they're working for a firm that protects them, that invests in them, that is looking after their future, that's not just looking to transact with them. That's going to give them balance, help them grow as human beings.

Hector Garcia: [00:45:46] So your brand needs to communicate that so these people want to come work for you. The other piece is you must continuously invest in education. And heard I believe was Ron Baker said this once and repeated all the time because it's such a it's such an important anecdote, which is. As a consultant. I went to a customer and and I was convincing them to and this is an anecdote. I didn't come up with this. Right. So just clarify it. I was convincing them to to educate their employees, to train their employees, to make them better. And the business owner comes back to me and says, Hey, what if I invest all this money in training for me, for my employees and they leave? And then my answer to them is, what if you don't invest in any education? You don't train them and they stay. And that's a really important piece. That's a really important piece. Because think about it, if you send your kids to a school and there's an inexperienced young professor or young teacher in that school, okay, and they don't know anything, they're just getting started. And. You know for a fact that school does not invest in making that teacher better. Do you want to send your next kid or your next kids in line to that teacher? No, you're not going to want to. And your your your customers are going to feel the same if they feel that your employee interaction, the interaction with your employee three years ago, it's just about as basic as it was three years ago to now.

Hector Garcia: [00:47:22] And they don't see any development. They're going to want to just jump that employee. They're going to go straight to the supervisor or go straight to you, go straight to the partner, and it's going to make you very inefficient. So your customers need to feel that they're dealing with really, really talented people and you have to invest in their education. And the last piece here is at this point, you have to get creative with your compensation to stand out. You know, maybe, you know, maybe pay as a percent, pay a percentage of that book of business that they manage or maybe, you know, add more to their, uh, to their education. For example, we talked about this. I spent I have every one of my employees as a $5,000 education budget every year. And then they come to us and tell us this is how I want to spend it. And as long as it makes sense, it's within what we do. We spend it and we don't even blink. And it's it's part of it, including taking them to conferences to open up their mind about technology and and things that are out there. And a lot of my employees have made friends with other people in other firms and they talk to each other and they help each other with stuff, you know, so had like have free help, you know, just because my employees made friends with other colleagues that are in in a similar situation.

Hector Garcia: [00:48:38] So you almost you almost have to do this at this point. Okay. And then and then the seventh episode, we talked about innovation. I broke down what the word innovation means to me in for inside, like inside your head, Nova or Nova for new Latin. For new and action. For action. So inside new action that means think differently, right? You cannot innovate if it in your mind you don't think differently first. And that and unfortunately the way we are trained as people is we need language to think different. Like we like don't think we use logic and reasoning through abstract thought. Typically we need a label, so we have to give words and labels to things for us to think differently. This is why when I get asked a question, I start with something like, Hey, are you asking the right question? Are we using the right wording? Are we using the right language? And if we change the language, does it change the question? And that's an essentially answer your question by saying you just have to use a different word and think of it differently. And with this concept of thinking differently inside, right, we talked about what if Disney were to open an accounting firm? And in that session we talked about three things. One, price. We said that for sure Disney would charge a premium because everything in Disney sends a signal of quality, right? So they wouldn't even be competing with anyone else. They would probably be charging one price like an admission ticket to a park that includes many, many things.

Hector Garcia: [00:50:15] They might be charging a second tier like a plus tier, right? That would be like a fast pass where, yeah, you get access to everything, but you can do it quicker or, or, you know, maybe even that D23 club that they have, which is like the super VIP stuff or you pay for like private tours of the park or whatever where people would pay kind of the premium, but they subscribe to that. Okay. And Disney was one of the first probably the first theme park that you can subscribe to it basically, and go unlimited times. Second is language. Disney would definitely use different words, like they would call their their their employees dream builders. They would call their customers dreamers, you know, they would call their the, their their products or services that would name them after, you know, Disney heroes or maybe Disney guides like Yoda or Jimmy the cricket like so. So they would use Disney fied terms, but they would change the language so people connect to accounting and the firm in a different level. And the most important thing is that we upped the ante when it comes to experience. And the biggest issue that we have in our firm and we came to this conclusion just by, you know, brainstorming like and one of the biggest issues we have in our firms, including my firm, is dealing with the black hole that it is.

Hector Garcia: [00:51:36] I send you the documents. When is my stuff going to be ready? Right. That that weird gap between when documents get sucked into something, whatever it is, whether they emailed it or put it in a portal or they or they dropped it off at the office all the way to the point where they get the end result that they want that in between. Typically the only answer we have is we're working on it. It's in progress, we're working on it, it's in progress. Or I told you I needed this document. I can't get started. Think that piece of the experience, like Disney does with their lines in their parks is what they would definitely upgrade. So that was the recap of that. So now let's talk about the second piece is, okay, what what does that all mean? So practice management, I'm going to start by separating two concepts inside practice management. There's practice management, the software and there's practice management, what people do and let's just call this the workflow. And these are two different things, okay? Most people get confused and they think that practice management is going out and acquiring a practice management software. But I got to tell you, I know this firsthand because I've worked with a lot of accountants and I've talked to a lot of accountants and conferences, and my brother is a practice management software consultant. And I can tell you that most practice management software implementations fail. And by fail means is they get it and they cancel it or they get it and they don't use it or they get it and they use it, but their employees use some other parallel system and it creates more consternation than than improvements.

Hector Garcia: [00:53:15] So practice management software without a system, without a workflow that's out that lives outside of the software, it's completely useless. So this workflow is typically broken down into four things. One is external triggers, internal triggers, process and exceptions. These four things is how you design your entire system. We're not talking about the software. The system is by these four things. We'll get deep into those soon. So let's talk about practice management software first. So no, I'm not going to do a review or a demo of the different practice management software out there because there's tons of them and you probably will need to read up on them and set up a one on one demo and go through 3 or 4 of them to see which one works best for you. But I'm going to name some of the notable practice management softwares and I'm going to break it down into three groups. We're going to have the generic any industry ones, the tax focused ones, and then the accounting focused ones because tax and accounting workflows, even though they're really almost the same, they're different because most tax accounting software is more focused on the signature capture and the security behind documents and hiding Social Security numbers and stuff like that. So it's a little bit different than accounting workflow.

Hector Garcia: [00:54:36] So let's start with practice management software that exists for all industries. These that I'm going to mention you can use in your firm, but also other people that are not accountants could use them, so they're not like out of the box ready for accounting firm. So Monday, probably the biggest one. Monday.com we have Asana, we have Trello, we have Clickup, Todoist notion practice ignition, which I think is just called ignition now. But it's easier to say practice ignition, 17 hats. Okay, so these are the ones that if you ever heard these names, like you get one of these and none of these are going to have accounting terms, right? They're just going to be like tasks, you know, project completion date. They're all going to use just terms that we don't connect with automatically. So there will be a longer learning curve to understand it. If you've never worked with any sort of practice management software outside of accounting, then we're going to have the, the, the accounting, the tax ones sorry, the accounting ones. So the ones that are specialized for accounting that were built usually by accountants for accountants, and they usually sync with the software, that sort of thing. I'm going to be the accounting specialized one. So keeper Carbon. Lisio Arrow Workflow Client Hub Financial Sense. If you hear any of those, these are accounting specialized apps and I don't know if I did. I miss one. Blake that you might be familiar with. Or are these kind of the ones that you you see all the time?

Blake Oliver: [00:56:05] I'm looking at the list. This seems this seems right. I don't think we missed any. Let us know if you're watching live. If we missed one that is your favorite which.

Hector Garcia: [00:56:14] Was the use. We'll give it a shout out.

Blake Oliver: [00:56:16] That's right. We have had some comments come in, Hector. Not exactly on practice management software, but on training, employee training. I can save those. We can get to them now.

Hector Garcia: [00:56:28] Yeah, let's get to them at the end so we can continue with this. So. So Jessica added Pixie Pure workflow. Jetpack. Yeah. All those. All those we didn't put on the list, but yeah, they're worth mentioning too. Okay, so let's talk about the tax ones. And these are the ones that typically you if you have a tax practice, you get to see this more often than you see. The other ones is we have tax dome canopy firm 360 tax flow and then the ones that get attached to the. Tax software like the practice management, the Drake Tax Practice Management and Intuit Proconnect has been building a huge practice management add on to just encourage people to go from desktop to online tax software. So these are those three. Those last three are usually bundled with tax software. And I guarantee you that most other tax software that I haven't mentioned here has some sort of their own version of practice management. But remember, these guys only build this with their software in mind so they're not going to sort of work for for for everyone. And of course, you know, we didn't mention it here, but Excel and Google Sheets, it's one of those things that a lot of people use for practice management, and there's nothing wrong with that. I mean, there will be a point in time that it will be almost impossible for you to manage your firm with six employees, with a hundred customers with Excel or Google Sheets.

Hector Garcia: [00:57:54] And I tell you, we I use practice management software. I'm using three right now. Don't don't ask, but I'm using three right now and we're trying to consolidate. We have it for different purposes at different types of a firm we're using Monday, we're using Tax dome and we're using keeper. I have used Arrow workflow. I've used carbon in the past. I mean, I've, I've used multiple systems in the past. So it's not just the ones that I use and I'm not biased towards any of them because at some point in time carbon was the best thing for a firm. At some point in time, Arrow workflow was the best thing for our firm and at some point in time Monday.com was the first thing, the best thing for our firm. And we made a decision to move from from Arrow workflow to Keeper for a very specific reason because we want keeper actually talks to, to QuickBooks, to our clients files. I've found that to be just like really an interesting piece and we'll talk about that briefly. And the next natural question that people tell me, Hector, I have a CRM software that's practice management. Well, no. So CRM is really mostly for marketing and lead management, and it will have some aspects of that, such as a to do list, a list of customers assigning tasks, attaching docs. So it feels like practice management. But CRM is different than practice management because typically when you think about practice management, you're going to think of these things.

Hector Garcia: [00:59:20] One Onboarding. So what is that first experience look like to capture the initial data that I need from my customer? Sometimes that happens during a sales call and we talked about this in one of our deep dive series where you capture that information and maybe you put it into the system or sometimes it's a mixture between some of the stuff that we capture and some of the stuff that you capture with your customer. These are the famous tax organizers. Now, I'm not a fan of the experience that customers have through a tax organizer, but I am a fan as a firm of opening a client and having. 200 points of information for that client, so don't have to try to find it or call someone or call the client and be embarrassed to potentially ask a question that's been asked before. So I love having a place where I can see them all, but I kind of hate and customers hate it too, having to, you know, what it feels like to be on the customer side, asking, answering a gazillion questions so that onboarding usually, um, what you want to look for is a system that has flexible onboarding, where maybe for some customers you do this long, complicated process. For some customers, you do like an express sort of brief process and for some customers you as the employee or the firm owner or the person that's dealing with the customer, fill in some of the information preemptively and then just give the customer the balance of that right.

Hector Garcia: [01:00:45] The last the next thing to consider is the client portal. What is what is the client portal look like? I feel that if your customers don't like the portal or they feel icky when they're in the portal or they feel like this weight on their shoulder, when you tell them, go to the portal and upload whatever, If they feel like that, you're not going to have a successful practice management software. To me, the customer experience is probably the single most important part of that piece of the practice management, which is which is weird because most people think that practice management is only an internal thing and true. It could be just an internal thing. But if you want to truly be successful with it, it needs to be good inside and needs to be good outside too. So the client portal, they need to be able to upload documents, they need to have communications. It would be perfect to have a single place to talk to your customers instead of having a and a text message and a and an email and, you know, so having all these different ways of your customer communicating, if you could have it all in one place and even if your customer, um, sends you in an unconventional way, sends you information, if you can always go back and copy and paste it in there, that would be ideal.

Hector Garcia: [01:01:56] A place where your customers can see their invoices and their balances and a place where customers can see their job status. So it's not a black hole. Okay. The next thing to consider when getting practice management software is just the basic stuff, you know, can you manage projects, can you manage tasks, can you manage deadline management? And this is the stuff that it feels a little bit like CRM software has this. But then when you deal with things like e-signature capture, which is mostly for tax software or to capture signatures on engagement letters or proposals or estimates, that sort of thing. So can you capture a signature and do you have a place to do both internal and external communication management where can communicate with my customer, communicate with my team, and then choose which team communications that customer gets a copy and which ones they don't because there's some value on a given example, let's say your your practice management software doesn't doesn't have a job status. Like there's no way for you to know whether you're 0% there or 100% there. But they log in and they see you and your employee going back and forth saying, hey, do you have a yes? Hey, did you adjust this? Hey, you know, can you make this adjustment? Hey, send me If they see you guys talking about the return, it might just be implied that it's it's pending.

Hector Garcia: [01:03:12] They're working on it. Right. So there are certain processes that we that we choose to make visible and some that we don't choose to make visible. I always think about the the car wash when I was a kid, um, you know, there were two places to get the car wash. One, you get out of the car and you wait in a waiting room and you kind of watch it go through the assembly line and you watch it go through the machine and the the hand, the hand soaping, and then the machine again and then the hand detailing. And the other one, you would be inside the car. Right now they have this gas, the little gas station ones. But back in like the early 90 seconds, they had these really long ones. And you spent like 30 minutes inside this this thing, you know, while the car is moving through the machines and you have to choose. Do you want you want the customer to feel like you're inside the car where the machines are, you know, banging on the car and washing and washing the car, or do you want to be outside and just look at it when you want to look at it? Right. So some processes we make purposefully, purposefully external and some we don't, depending on how we design the experience for the customer. And the other thing you want to think about is, you know, does it have a knowledge base? Like is there a place for me to, to, to to put what I learned? You know, what did we learn about this not just knowledge base of how to deal with the customer, just how to deal with the problem.

Hector Garcia: [01:04:26] So we have this new type of IRS letter that we manage for this customer. Is there a place for us to go? Hey, let me just copy and paste these things that we did here and boom, there's a history on how to deal with this problem in the future. So I think a lot of practice management softwares are missing that. And this is where notion, I think notion is kind of like the big one that was pretty much built to fix that. So if notion can come into the accounting industry and and fix our process stuff, I think we're going to really love, you know, that knowledge base piece of it. Then email sync and think. At this point they all do email sync, but sometimes it's easier to just contextually see your notes and also see the emails next to each other and then possibly the attachments from the emails automatically going to the client file. Then we have accounting firm sync like your customer list and your invoicing. I think that's standard across all the like tax and practice management software, but the one that's not standard is customer sync. So I don't know how many apps do that. I know Keeper does and I'm not trying to give keeper free free promotion here or anything, but with keeper is pretty cool because you have your you have your customer list and if all your customers are in QuickBooks Online, you can actually see information about your customers in there, like when they were last reconciled or when you know what their total revenue is.

Hector Garcia: [01:05:47] I mean, actually don't know at this point. We're just implementing keeper now, but in your customer list, you can add elements of your customers individually in it and you can work in there and you can generate reports. So that's a really innovative way to think about practice management. So. You know, with with tax software practice management, you would get like the customers or the customer's total refund in the master client list. Like that's, that's the same, same type of concept, right? Like you get one piece of information from inside the customer that goes sort of inside their file to get that from. Okay. So after all that, right, so you have an idea of what to look for. You know, there's different types. And we talked about, you know, all these deep dive concepts of building a focus firm. How do we design a workflow? So the first thing that I recommend you to do, and this is going to take some practice and there's no manual for this. I don't know if there's a book out there or something that teaches how to do this, but this is how we learned it in my firm is, first, you want to list all the possible client triggers.

Hector Garcia: [01:06:48] So there's, let's say, five different client triggers. You can get an email, you can get a phone call, you can get a somewhere in some social media thing, you can get a text message. Any of the employees can get a text message or a WhatsApp, right, or a walk in, right. So you're going to design. You're going to design. Okay, these are all the client triggers. And then we're going to write a process on how we manage this, right? So the the process is we're going to take this information and we're immediately going to decide if it's going to either be a task. Right? So and a task goes into your software and it becomes a task and it has a deadline and it has a person assigned or is it just an event or a record, an event? The record means the customer sent me some information. Now it becomes part of their database. It doesn't require an action. It's just there, right? It's there. It's available. So you have to think about what are all these possible cases and, you know, and then we're going to decide what's the route? Do we route them to a task or do we route them to an event and record? Okay. And then we're going to we're going to break down, you know, by event, you know, how does the task end? Right? So does the task end with just recording it as an event, the record, does it end with assigning it to another user or assigning it back to the client? Because in in our work there's collaboration, right? So we send you the list of asthma accountant transactions, or we send you a list of uncategorized expense transactions and we're waiting for that.

Hector Garcia: [01:08:12] And then it's all spelled out in your workflow that when it hits that trigger, you're waiting and it can't move forward until the customer completes this task or it can't move forward until the review. So can't move forward until, you know, we we scan the documents, right? So you're going to you're going to you're going to create a workflow, right? That either ends with the event, the recording ends with a task, or it ends with some piece of communication. Okay? Because that communication piece is really important. And then after you do all this and you go through and you test it, then you're going to start recording your exception list. So when you implement this in the real world, there's going to be exceptions. They're going to be things that don't fall into any of these that we don't know how to manage. We didn't have a record for. And you're going to record you're going to record that exception and you're going to keep it in a separate list. Okay. We're not going to add that into a regular workflow yet because we're going to learn from that exception later.

Hector Garcia: [01:09:05] We're going to do an after action review and learn from that. Then we're going to have a similar workflow for internal triggers. So what are the things that get triggered by an employee? So what? What gets triggered by an employee? We're going to write down the process to managing all these triggers and the same thing. Does that employee trigger end in an event? Does it does it end on assigning a task to someone else or to a customer doesn't end in a communication and also keep a list of the exceptions. Then you're going to list and pre template all the communications, right? So hopefully you have a template for all everything that's in your workflow that at least so you can get that process started. You're going to decide which communications are automated and which ones are going to be added to A to do so. It's possible that some somewhere in your workflow you automatically have your system, email your customer and let them know that, hey, your, your tax return got moved from, you know, document verification to prep or you got move from prep to approve, you got move from approved to e-file or e-sign sorry, electronically signed for electronically signed to record payment information. Right. So you're going to you're going to set up your stages. But the important thing is to decide which of these communications get triggered automatically or which ones go to A.

Hector Garcia: [01:10:22] To do so, an employee can look at them and go, okay, wait. Before this gets sent out, let me change this. Let me change that. Let me add this nuance to it. So the customer doesn't get just generic communication all the time. Okay. Then we're going to list all the conditions that are required to close the loop on that trigger. Like how do we how do we close that? And then we're going to add all the learnings from exceptions into our next team event to get everybody realigned. We can do an after action review individually with the employees that work it, and then you're going to have to make a decision as a firm if any of those exceptions are not going to be part of our workflow. So they go from exception to like now there's a specific process. For it. Will they remain an exception? So because we still don't understand it, we're going to let we're going to see what happens in the future or are we going to design a stop of the workflow? Right. So when this exception happens, we stop working because we don't do that work or we don't work past that point. Right. And that's a really important piece because technically not everything that happens becomes a workflow, right? So some things are just a thing and we forget about them. And if any employee forgets about any of these things that we told them that it's okay to forget about it because it's a non thing, then that's fine, right? Because we didn't put it back into the workflow.

Hector Garcia: [01:11:39] So. That being said, let's go out there and shop for a practice management app and we're going to ask these questions to ourselves or to the or to the person who's selling us the app, which is one. Will this app adapt to my design workflow or will I need to change to fit into theirs? And keep in mind, sometimes your design workflow kind of sucks, and that's okay. So if that's the case, it's okay to adapt to theirs because adapting to theirs will force you to modify yours and make yours better. But sometimes yours has a specific. Thing that only works for your people, for your customers, for your problem, for your firm, depending on how you're set up. And then that practice management software, if they cannot change or adapt to you, you're going to have to change your entire business model and that might not be a good thing. The second question to ask is will they include support and training during our implementation or will you need a third party consultant? And that's okay too. This great third party consultants that do this stuff and sometimes having that consultant that's been there, done that, dealt with many firms like yours. Can add some insight to help you refine your process, help you define it, that sort of thing. The next one is, will they have a support group or do they have a support group that has many active users? I'm going to tell you something.

Hector Garcia: [01:13:10] In my world, learning from other practitioners is much quicker and effective than trying to learn from the support person of that software or the salesperson that was dealing with just because they're going to give you generic answers, whereas another user is going to say, Yep, I tried it. You know, they didn't understand this, this particular issue with their industry. So this is the, this is the workaround that we came up with. And a strong user group typically is a strong sign that you're going to have a successful implementation. And last one, this is a this one is not asked very often because most of them don't have is the ability to export or for you to be able to back up any information. Because one thing I tell you is, and this is probably true if you go with one practice management software and you want to change to another, you're probably not going to be able to migrate any information. I mean, if you and if you are going to migrate it, it's going to be having to export the data and then re import the data and nothing ever fits. This is not standard practice. Management is not standard. So that's it. That's it for, you know, picking your practice management app. So any questions that are left Blake So we can take it home.

Blake Oliver: [01:14:19] Yeah. Now these aren't specifically about practice management apps, but we had some questions both about the value pricing, scoping and then also training employees. Okay, let's go for it. Here's some comments Jacqueline said, Not training employees due to fear of them leaving seems scarcity based. Yeah.

Hector Garcia: [01:14:42] Yeah. That's that's the concept of a zero sum game, right? So the concept of a zero sum game, um, the theory says that and this is how we were trained, right? For every debit there's a credit, right? So for every debit, if you think like an accountant or fortunately we think of zero sum, all journal entries have a balance. All the debits have to equal credits. So when we invest in training, we think that our employee is the one that gains. So we spend. So it's our expense. Their income, we spend, they win. For us, it's a negative. For them, it's a positive. So just conceptually, you really Jacqueline, your own point, you got to have a mindset of abundance, which means that if you're always giving and giving and giving, I'm not saying to give in enough so you can be unprofitable or give or give enough so you become insolvent or you file bankruptcy. No, no. I'm saying is that when you do things you're doing, thinking and recognizing that both people can have equal amount of value from a transaction, it's not just a debit or credit. That's the abundance mindset. If you if you think like that and everyone in the world thinks like that, they will there will be no no scarcity, right? However, not everybody in the world thinks like that. I get it. But what you want to do is you want to think like that, attract employees that think like that and attract customers that think like that, the whole world, one thing like that. But maybe the ones that you're dealing with will think like that and honestly, that's really all you need.

Blake Oliver: [01:16:17] Laurie said. We ask our staff to spend 5 to 8% of each week working on learning new technology and certifying in these.

Hector Garcia: [01:16:25] Yeah, I agree. And actually one of the things I'll tell you could be useful to Laurie and you probably do this already, but. Compensation is hard, like knowing how to pay. What to pay people is a very difficult thing. Like how much do I pay this person? How much race do I give them? You can tie some of your compensation to certification achievement. So if you become advanced QuickBooks Online certified, you get a bonus or your salary goes up by this much. If you become an enrolled agent, you get a bonus or it goes up by this much. If you become an acceptance agent, what you can certify documents for an ITIN, you get paid this much or get a raise for this. So if you actually gamify, you know, your compensation based on sort of unlocks, you know, educational unlocks, you'll be surprised how quickly people get educated. And yes, you're right, if you invest in them, they can leave. But also if you don't invest on them, they can stay. So, yeah, absolutely right. So there has to be a balance.

Blake Oliver: [01:17:26] We also had a question from Albert. How many accountants truly have this perspective of protection of the customer first or perhaps.

Hector Garcia: [01:17:38] Yeah, Albert, I think not many, which means that's the that's our opportunity. Okay, you know what? Not many people on earth. Exactly with the last comment. Most people think that everything, everything that you pay is somebody else's win and that's it. So like the mentality of abundance is a very difficult one to have. And granted, when you have money, it's easier to think than what you don't have any. But. One of the reasons I create content in YouTube for free. When people tell me, Hector, why would you give away your knowledge? What would you give away your knowledge when you can charge hundreds of dollars or thousands of dollars to do that from someone? Why would you even what would you give that away? Why would you part ways with the knowledge that you can get paid for? And that's a good answer. But I want to give you a couple of things that I've learned from it. One is my friend Seth David told me once that somebody told him once. So it's like multiple attributions here that when it comes to knowledge, you have to give it away to own it, you have to give it away to own it. That is the most strange concept out there, because what you know, when you own it, it's yours, right? But you give it away to own it. And this is so true.

Hector Garcia: [01:19:03] So what ends up happening is I'll say something that didn't even come up with it, but people says Hector always says this. And so basically it becomes yours, right? Or teach somebody how to do something in QuickBooks and in my YouTube channel, some like some workaround and people call it, Oh, this is Hector's workaround. So what ends up happening is people start attributing you for this life experience they had with the learn how to do something and you become forever in their mind. This is positioning forever the mind the expert at that. So how how difficult is it going to be for customers to pay you a premium to work with you? The person that learns something from the person that they literally give a name and a last name to the technique or process that they learned because they learned it from you. And the other concept here is if you have $100 bill in your pocket. And. And it's in your pocket. Does that have any intrinsic value? I mean, it's got paper value. True, but but when does the value of the $100 bill manifest? When you take it out of your pocket and you exchange it for something? Correct. Same thing is with knowledge. If your knowledge is sitting in your head and you don't share it, if your knowledge and you don't share it, nobody knows that you know it.

Hector Garcia: [01:20:14] And someone will only know that you know it if they stumble upon paying you thinking that you know what you're doing and then getting the results of your labor. But how hard is it to sell something when you tell people, I promise you, I know about this, I promise you have experience on this if you have no way to show it. So the easiest way to show it is by teaching it, by giving it away. And that's a principle of the abundance mindset. And yes, for a firm owner, that means giving away money, right? Because you have to pay them pay for training. I get it. But also, like Laurie said, 5 to 8% of their time give away some time, give invest back into them by giving them cash or time so they can invest in themselves. And they might leave you, but they'll work for another firm and they might come back five years later with a wealth of knowledge that they could never learn from you. And you basically got it all for free because they came back and they realized that you were good to them. So this stuff all comes back like karma, serendipity, abundance, mindset, however you want to call it, it comes back to you some in one way, shape or form.

Blake Oliver: [01:21:19] Edgar has a great question. We have mostly 1040 returns and very few businesses that are interested in Cass. How would you get Cass clients if you had to start over today?

Hector Garcia: [01:21:31] Yes, a great question. I've think about this because I am actually, um, I actually recently negotiated getting out of tax as a firm. We worked, we talked to another firm and we're going to merge tax practices. But that other firm is going to basically take take care of it all. And our firm is going to do only and only bookkeeping or or client accounting services, whatever you want to call it. Now, my firm and this is one of the challenges that I'm having my firm sometimes loses money on the bookkeeping and makes the profit on the tax and sometimes loses money on the tax and makes money on the bookkeeping. And that was the beautiful thing about having an on siloed firm where every person, the tax, the consulting, the bookkeeping created value in its own unique way and we were profitable as a whole. Now that I'm forced to split these things off and move tax to one department, one company and deal mostly with Cass or client accounting services or bookkeeping, I think about this a lot and the way I'm redesigning this is one. I'm only going to work with a particular type of bookkeeping customer. I'm only going to work with customers that have QuickBooks online. I'm only going to work with customers that have employees. I'm only going to work with customers that have employees but have outsourced their payroll either to QuickBooks Online or or something like that. And I'm not going to work, at least this this part of our business. I'm not going to work with anyone that has sales tax needs.

Hector Garcia: [01:23:06] And we have another subdivision that's going to do only e-commerce and sales tax, and that's going to work a little bit different. But I'm just going to I'm giving you sort of two scenarios. So and the reason for that is because I want to have a team that can do all that stuff really, really well, that can use the tech stack that we have put in place. We thought about bringing we're bringing keeper into the mix. So we're going to have QBO only we're going to have keeper only. We're not going to be dealing with payroll issues. And then I'm going to have a team dealing with that, that it's a total, total expert in bookkeeping and in QuickBooks Online that allows me to continually invest in them, allows me to make the pricing more predictable. The pricing is going to be subscription based. That means the customers will pay a price to subscribe and they can subscribe at any time. No contracts easily. Hop on, hop off and we're going to add a tip clause, which means that if something comes out of scope, remember, we're not protecting ourselves for hidden issues. We're not protecting ourselves for scope. Something comes out of scope. We'll just do it. And the customer can, at any point in time, reward us as a as a business with a tip and say, hey, thank you for, you know, getting this particular issue out. I recognize it was out of scope. Here's an extra payment and we're going to we're not going to depend on that.

Hector Garcia: [01:24:19] That's just something that we can use to reward our employees for for for working hard. Then the other thing that we're thinking about is once we nail that process and we know exactly the team that does that, then we're going to we're going to hold the team accountable for having profitability in this cluster of customers that are subscribed. And then based on that profitability, we'll be able to readjust or bonus the employees based on their ability to maintain that or grow that book of business. So Edgar, that gives you a general. What I'm thinking. If I were to start over today and that's that's what I'm going to do. You will hear me talking more about this as I as I go along, because this is going to be a very exciting venture for me to transform, to subscription business and to transform to accounting services only. Um, and that's what I would do. And the last thing I would add Edgar to this is I would pick also a vertical for sure. So like if you want to, that's why we're going to have an e-commerce division that's only going to specialize on that. I'm going to do a lot of content around e-commerce because we know those we can charge five, six times more than the average sort of like service based business because we have inventory sales tax. And I do need two separate teams to manage that because it's like two different worlds.

Blake Oliver: [01:25:33] All right. That sounds like a whole YouTube series. Hector you could just make make a whole channel just about that journey. Yeah, for sure. Laurie says we rolled out a marketing plan and sent direct mail to a large number of CPA firms offering cleanup and monthly maintenance services, while two CPA firms white labeling the work so they can mark it up. Well, that's that's actually very much how I got started. I before I got my CPA, I was doing bookkeeping work, freelance, and I just went around to the CPAs in my family network and said, Hey, I do bookkeeping. You got clients that need bookkeeping help. And they they said, yes. And that's how that's how I got started.

Hector Garcia: [01:26:19] And full circle on that. Laurie The key to making that white label service successful is going to be practice management, right? It's going to be, you know, are you using the same system that the CPA firm is is is using? So when the customers get communications from you, such as document requests or whatever, it all comes to that system, you don't even need to [e-mail] email address, you know, from that firm. If you use the entire practice management software to communicate, request documents, send reports, answer questions, then that that's pretty much a completely white label service. And to the customer they're dealing with that firm, not with your firm that you're doing this sort of outsourced work. And then you can have a successful, really successful. So what I recommend strongly is if you know the practice management software that you want to use in your marketing communications include that say and we will do everything through, you know, whatever system they're using, right? We'll do everything through canopy, we'll do everything through, uh, through tax. We'll do everything through financial sense, right? So whatever whatever those firms are using, you're going to use it.

Hector Garcia: [01:27:32] And I think Laurie is saying that you're also going to help those firms roll out financial sense. So that's even better. Look, you're adding double value. So one, you're you're helping those tax firms add bookkeeping services that they don't have to add capacity for. They get a piece of the business. I assume they get some margin of working with you and you also help them use the system that you know how to use, like financial sense. So in one way, shape or form, you're sort of Trojan horsing the practice management in there for them. And eventually that firm will be better because they're working with you. So that's a great angle. And that's how and that's, that's, that's the epitome of specializing. Like you're not just an outsourced bookkeeping firm that can white label services. You're an outsourced bookkeeping firm that can white label services for firms that are looking to also upgrade their practice management systems so they have a holistic view of the customer with tax and bookkeeping, with a partner at their side. And that's that's a beautiful position statement to to, to lead with.

Blake Oliver: [01:28:31] Yeah. And there's so much value there in what you're talking about, Hector. But we got to remember, we don't price that most of the time when we sell bookkeeping or tax, we're not even talking about, Oh, we have this practice management solution. You have a question, you get a form, you just send it to us and we'll help you with that. That's almost never part of the sales process, but it really should be because that's the greatest value for many clients is simply knowing that I've got Blake and because I have Blake, I can send him whatever form I get and he will sort it out. I'll tell you like that, that if I talk to my clients, they may not be able to express it that way. But that's why they chose me, is because I take on that responsibility. And if I can't handle it, I'll get it to the tax pro who can.

Hector Garcia: [01:29:19] Absolutely. Well, as a way as a as a great way to end it.

Blake Oliver: [01:29:23] I think so, too. Hector, this has been really wonderful. Everybody, if you have not signed up for the email list, please do because I'll send you out the link to all of the episodes. So go to earmark CPE. Com slash focus and put in your name and your email address and you can get all of these episodes. It's also on our YouTube channel. There's a playlist called Build a Focus Firm with Hector Garcia, CPA. There's this really long, impossible to type URL that I will now paste into the chat here so that you can check it out. And don't forget you can get CPE for listening. Go to earmark Cpcomm Sign up, download the app and look, we've got actually a different session that I did with Hector a while back in 2022 when we launched Earmark all about the future of QuickBooks. So you can get that too. You can earn nine caps or more with Hector on Earmark CPE. Thank you for your support of Earmark, Hector. It's been great working with you on all of this.

Hector Garcia: [01:30:33] Likewise, and I want to give special thanks to Avalara. Let me tell you something. When a company invests this much into their customers, accountants are one of their their customers that was checking out. So avalara it's a it's a great software for managing sales tax. This is going to be particularly useful for your growing clients that have multistate requirements because navigating that is really complex. They also do beyond sales tax. I believe that their that they acquired a firm that does all the salt stuff like the state and local income tax. So if you're dealing with if you're dealing with with customers, first of all, if you're an accounting firm, you should join the accountant network in Avalara just for the free education that they provide. Free CPE free education. And then hopefully once you're in their system and you're getting all this free education, you get this brand, you know, value in your head, and now you're now avalara is positioned in your head as a as a as a value delivering platform. Then it'll be easier for you when you're looking at Avalara and their competitors to go, you know, let's go with, with, with the big boys that wants to have provided all this great education all along. So so avalara is practice. What I'm practicing, what I preach, which is, you know, have have positioning in the marketplace, get value first. And hey, avalara is not going to be the cheapest. Right. Because they're providing all this value up front and they guarantee their work. So it's like I think they follow all the tenants of building a focused firm. So they're a perfect partner for this. So thank you, Avalara as well.

Blake Oliver: [01:32:06] And like you said, Hector, it's way more than just sales tax. Now, they also have business license management. They do transfer pricing and they do 1099. They they acquired, I believe it was track 1099, one of my favorite 1099 solutions. And that's now part of the Avalara portfolio. So they're really they're really taking care of everything beyond income tax compliance, right? It's all that other tax.

Hector Garcia: [01:32:36] So great. Great positioning. We take care of all the other taxes. Exactly. Yeah.

Blake Oliver: [01:32:42] And it's cloud. That's the beautiful thing, right? All cloud. So thanks again, everyone. Great to see you, Hector. And I'll see you around.