If you’re looking to grow your CPA firm fast, would you consider a firm merger? Rob Cameron started his first firm in 1989 and since then has expanded his practice across Central Illinois through a firm merger with new partners.

Sometimes, you may have to merge when unforeseen circumstances arise…Rob tells about his.
In this episode of Grow Your Firm Podcast, with Jetpack founder David Cristello, Rob walks you through:

• What is the most important piece in determining the success of a merge [it’s not what you think]
• The timeline for a merger from discussion to completion
• What to EXPECT when you first merge

ADDITIONAL LINKS:

• Rob’s firm in Springfield, Illinois
• Rob’s Contact Information
• State CPA Societies

Ready To Start Implementing A Workflow Process That Will Actually Save You Time?
At Jetpack Workflow, we have created a workflow software geared towards maximizing efficiency and effectiveness within CPA and accounting practices.
To learn more, check out our free 14 day trial at JetpackWorkflow.com. 
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The Steps Leading Up to a Merger

Rob Cameron became a CPA-entrepreneur in 1989 when he began his firm (with his partners). It started off as a smaller firm and slowly grew.
Around the end of the 90’s, Rob merged to form Cameron, Smith & Company. When this relationship began, his partner had a “cut-off” point to begin his retirement.

Because the finish line was so far off, for many years they worked hard at simply growing the firm.

The firm grew from two to seven members with both partners splitting the work and the fees as 50/50 partners. Suddenly, the deadline for the partner to retire was approaching.

In the meantime, Rob was in the process of grooming a manager in the firm to be the successor. Unfortunately, just a short period before the retirement deadline, the manager unexpectedly left the firm.

Scrambling for a succession plan, Rob spent many months interviewing managers of other firms. The problem was he found a disheartening fact: Many managers at other successful firms were in great positions with pay they enjoyed, thus they were not eager to make the move into becoming a partner of a smaller firm.

He knew he didn’t want to sell.

Rob went through periods wondering if maybe he (himself) just wasn’t a good partner. Was he doing something wrong?

A Merger Candidate “Emerges”

For many years, Rob was involved in the Illinois CPA Society. He helped with the peer review processes around the state. This position allowed him to meet other firm owners, learn from them, help them, and grow with them.

He recommends: if you’re a CPA firm owner, get involved in your local society so you can reap the same benefits.

While doing peer reviews, he regularly worked with another firm owner on a regular basis. Being the entrepreneur and quick-thinker, he asked for a lunch meeting to discuss the opportunities.

In the meantime, Rob put together an acquisition plan for other smaller firms in the area and sent out direct mailers. With an astounding 25% response rate, he had many lunch meetings set up with smaller firms. In the end, it came down to three firms and one was acquired.

This helped even-out workload and grow the firm to make it more attractive.

It was then, he had his meeting with his peer review partner at the CPA society. They both agreed.

Merging could be a massive opportunity for both of them. They were 60 miles away from each other, but could extend the reach of the firm plus have additional resources at their fingertips (on both sides).

The Important Piece to Determine a Mergers Success:

Rewinding back a period, since Rob was a regular peer reviewer of CPA firms around the state, he saw what it took to successfully complete a great merger. Some firms merged to grow, some merged for resources, and others out of necessity.

He says there’s only one thing that determines the success of a healthy firm merger:

– The Right Culture.

Rob’s own firm is very tech-y (they are Jetpack Workflow users) and laid back. They’ve built a culture where employees can enjoy themselves, their work, where they can laugh.

Others, Rob says, are much different. Some will be very “Suit & Tie”, head-down, no talking,”pencil to paper”, just work, work, work.

“Some firms will have members “occasionally” pick up a computer to do a spreadsheet”

If there’s such a major disconnect between culture and practices, the merger can fall apart right away such that the firms split up again.
Rob made sure he went through the proper due diligence to merge with a firm who shared his culture and practices.

Timeline You Can Expect For a Merger And The First Months:

Ready To Start Implementing A Workflow Process That Will Actually Save You Time?

At Jetpack Workflow, we have created a workflow software geared towards maximizing efficiency and effectiveness within CPA and accounting practices.
To learn more, check out our free 14 day trial at JetpackWorkflow.com. 

The workload for a CPA firm used to be much more evenly spread throughout the year. Nowadays, most work is bunched up into about six months of the year. When the first discussions for the firm merger took place, it required precise scheduling and a sprint during the “down” months.
For Rob’s merger, it took about six months since the initial meeting for the process to finalize.
– TIMELINE:

• Initial meeting for 3-4 hours
• Then, lawyers become involved in the discussions
• Non-disclosures are signed 
• Busy periods where discussions will halt for 1-2 months
• Begin process of merging cultures and best practices
• Adjust, then finalize

Their timeline was to have it completed by December 31, 2014. This was to get out ahead of tax season the following months. A hiccup they ran into was adjusting all the marketing materials and headers with the new names and pieces of the firm. Rob recommends starting that much earlier due to differing opinions and compliance.

With the firm merger still fresh, Rob advises to let the early stages develop naturally.

“There will be some awkwardness.”

At first, both (newly minted) partners were hesitant to reach out to the other for help and advice. Especially, as they merged and went right into tax season, it took a couple months before they could evaluate everything. Some things are still being merged, such as employee policies. Since they are 60 miles apart, little things like that are still being ironed out. Yet, so far, everything has merged successfully.

Firms merging can have some roadblocks even when the culture is a fit. It’s up to the partners to make sure there’s a window to let everything “seam” together while maintaining the culture the employees like.

Have you been a part of a merger? What did you experience?

“Nothing happens without the intention for it to happen.” – Rob Cameron

Ready To Start Implementing A Workflow Process That Will Actually Save You Time?
At Jetpack Workflow, we have created a workflow software geared towards maximizing efficiency and effectiveness within CPA and accounting practices.
To learn more, check out our free 14 day trial at JetpackWorkflow.com.

Steve Major, renowned podcast host and “Timesheet killer”, sees more and more CPA firms every year lose money because they don’t implement value pricing and because they don’t ditch the timesheet.

“The timesheet is the #1 cause of depression in a CPA Firm.” – Steve Major

Most of your employees probably hate it, and there’s a reason. They’re people, not machines. Steve preaches on his podcast, Pricing Power, about how firms are missing out on almost 20% of profit each year because they aren’t being paid what they’re worth. Steve ran his own practice for many years and saw the opportunity to show other firms what they are missing.

In this episode of Growing Your Firm Podcast, David Cristello and Steve Major dive right into:

• The “myth” that time sheets shows productivity [Steve debunks the myth]
• The problem most firms experience that cripple them when they onboard a new client
• The exact timeline for how fast you can implement value pricing in your firm

ADDITIONAL LINKS

• Value Pricing interview with Ron Baker (on the Grow Your Firm podcast)
• Parkinson’s law

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The “Myths” Debunked About Timesheets:

Steve Major had built his own firm until the mid-2000’s then took off on his own to help firms become more profitable.  Based in Australia, nothing makes Steve squirm more than when he hears how timesheets track “productivity.”

It’s not true. In fact, he goes even further to say that time sheets are the #1 cause of depression in CPA firms (yours too!).

“Firms based on time cannot charge Premium Prices” – Steve Major

Timesheets only create behaviors in a firm. The behavior is it gives the partners the “Illusion of control.” Because they can see everything everyone is doing, they can plan accordingly. The problem is it’s only a snapshot of time.

All timesheets do is treat your team as machines, not people. Because CPA firms are so eager to get to work on a new client, they never plan properly, such that they spend way too much time doing the unnecessary follow-ups, extra discussions, and more that only adds to the time.  There’s only so many hours in the day, it’s hard to scale up faster when you are restricted by time. Timesheets treat all time as equal, it doesn’t plan on the future. Instead, it only looks backwards.

“How do I Make Sure my Employees are Productive When I Don’t Know the Time?”

Steve has a simple solution for this common question. “Look at the turnaround time.” You look at your email and notes to see when a project comes in. You then make a note when it goes out. If it goes out in 3 months, how can you get it down to 2 months or even 1 month?

Looking at turnaround time (instead of time) let’s you also see where the hiccups are. If it spends 3 weeks on someone’s desk, you know you should move it to another team member. You can realize this without the headaches of tracking time.

Where are the “choke” points? Once those get fixed up, it becomes simpler.

Going deeper, to check even more productivity, group projects or clients into different categories: perhaps larger and smaller. Watch the progress of these categories and see if the same issues are affecting both. See if there’s a connection between perhaps a team member is the one slowing it down.

These are easy ways to check productivity without the grueling process of keeping every hour of your day logged.

Mistakes Made When On-Boarding a New Client Most “Timesheet” Firms Make:

Steve’s seen this issue with many firms. They have a new prospect in the office and already they have their timer going. They’re already putting someone on the clock and thus already “jumping” into the work.

The firms are so eager to start billing, they miss critical steps. Then, the prospect gets hit with a large bill and no one’s happy.

Steve recommends: Take the extra hour or so to make sure you receive ALL the information. Many firms get a little bit, then do some work, then ask the client, get a little more, do a bit more work, etc.

It’s a bad process that wastes time. Instead, Steve recommends having a designated “project manager” in your firm.
The project manager:

• Looks at every new (and old) client
• Determines the scope of the project, what it needs, what the team member who will complete it needs
• Determines the price

With most firms now, it’s really just “Give this to the next team member and Good luck.”

That’s where inefficiency creeps in. The project manager, after seeing multiple similar projects, will soon be able to scope projects within minutes and the process can be replicated and recorded for others who might become the project manager.

“How Do I Know Who Is Doing a Great Job?”

Many firms use the timesheets as the benchmark for raises and bonuses. Steve already mentioned timesheets are the #1 cause of depression in your firm. Now, you tie your team members compensation to how long they are in the office?

“As partners in the firm, YOU KNOW who is not pulling their weight.”  – Steve Major

When you are a good, present leader, you can determine (without timesheets) who is getting their work done and who isn’t. Team members will fill their work day with work without time. If you give them a deadline, they will work hard to meet it. It’s called Parkinson’s law.

Everyday, it’s worth having a 5-10 minute meeting with the project manager to see where every project is. From these quick meetings, you can see who is moving along and who isn’t. Daily huddles give members more incentive to get the work done.

How to Start Implementing Value Pricing in Your CPA Firm:

What you don’t want to do is go “cold turkey.” This would cause chaos on your team. Instead, Steve recommends a 3-6 month window of slow implementation. He recommends making sure you develop the systems, and workflow software to get the pieces set for the move to value pricing.

Keep the timesheets in throughout the 6 month move, but slowly remove them with smaller than larger clients. At the end of 6 months, they will all be gone. The problem: the employees are usually on-board for a swift removal of timesheets, but it’s actually the owners who take the most adjusting. Remember: they are used to thinking timesheets give them “control.”

Get everyone into the mindset of “outputs.” Timesheets are all about “inputs.” When you price each “output” correctly and get everyone thinking (and remembering):
Clients only care about getting a great output and in a timely fashion. Value pricing focuses on those pieces and not the “time” input.

Value pricing is getting more and more common in the CPA industry. The reason? It’s simply more profitable and it brings back the ENJOYMENT of doing accounting. Rather than stressing about keeping the minutes, you can focus on your clients and your work. When your team members are enjoying their work again, they will get the work done faster and better.

Have you tried or trying Value Pricing? Tell us your story in the Comments!

Shelley Johnson worked many years under her mentor, Bruce Allman, until one day he gave her the opportunity to take over the entire firm. In 2010, Shelley re-opened the doors to Allman Johnson CPA’s. Shelley’s motto is to “Become an advisor for your clients.”

Suddenly, she went from a more managerial role to now having to focus on: cashflow, new technology changes in the accounting industry, client growth and more.

She admits she is still growing, learning and adapting to her new role as the Owner, but she’s made incredible strides. Her firm was named a “Firm of the Future” by Intuit.

You will hear why.

In this interview with David Cristello, of Jetpack Workflow Software, you will hear Shelley elaborate on:

• Organic growth of your firm and why it is still important
• The steps to becoming a trusted advisor with your clients so they are long-term clients and pay more
• The importance of finding other firm owners to mastermind and go over issues with
• Even with the “Firm of the Future” tag, she has loftier goals she aspires to. David and Shelley discuss those near the end

ADDITIONAL LINKS:

• Allman Johnson CPA’s
• Interview with LiveCA – “Mushy” points
• Interview with Darren Root – “RootWorks”

“Fortunate to be in the Right Place”
For over 20 years, Shelley Johnson worked under someone she called her “mentor.” Bruce Allman. Shelley started with Bruce under a different firm name in 1990. Bruce guided her craft, her understanding of running a firm and managing people and clients.

“Bruce made sure I wouldn’t fail.” If the job he gave her was working out, he already had another position in mind as a back-up. The firm was traditional — working with individuals and businesses that came in the door.

In 1995, Shelley became a minority owner in the business and the name changed to its current form “Allman Johnson CPAs.” For 15 years, the firm grew organically, Shelley ran more of the accounting arm of the business while Bruce managed cash flow and the health of the firm for the most part.

Then, in 2010, Bruce offered Shelley an amazing opportunity. The opportunity to run the firm and own majority stake. Shelley jumped on the opportunity. She was now the Owner and head of Allman Johnson & CPA’s.

The First Years as Head of Her Own Firm:

It was tempting to immediately start changing many things right when she became Owner; however, she knew, to keep her team in place, she needed to move at a comfortable rate.

For the first couple of years, she allowed the firm to grow organically. Shelley needed to start running the day-to-day cashflow and operations (very important in a firm’s viability).

“Everything went smoothly.”

One of her first major changes was to move all client files onto a digital platform rather than physical copies. She saw a shift in how technology was disrupting the CPA space, so she made the quick transition to start storing everything digitally.

She learned quickly the importance of “communication” within her staff. Due to some of her technological advancements, she lost employees because of it.
Sometimes employees get into a groove of doing their regular job day-in and day-out and might not be receptive to change. Before any major changes in processes and technology, Shelley learned to always discuss and be open with your team to make sure the transitions go smoothly.

If members of your team are against it, it does not mean you should not continue progressing. It’s then you need to evaluate the needs of the firm, the importance of the changes, and whether you are willing to risk losing certain employees to grow your firm.

“The more you communicate with your team on the ‘vision’, the easier it gets to make changes. You need to talk about everything more globally.”

Finding a “Mastermind” With Other Firm Owners:

As Shelley worked through many of the growing pains, she found Rootworks (David interviewed the founder Darren Root on the podcast) and learned the power of having a Mastermind. Rootworks helped her with coaching but what she found with having a Mastermind:

“The big takeaway was ‘I’m not the only one going through this.’ “

Many other CPA firm owners had many of the issues Shelley experienced.  Getting to see these other owners as peers and not as competition allowed open conversation and problem-solving.

Shelley Recommends How to Find a Great Mastermind:

• Find other owners who are in the same position as you [same size]
• Find a community that fosters a Mastermind [she recommends Rootworks]
• Be open to discussion and listening to others [everyone’s there to help and learn]

How to Become a Trusted Advisor to Your Clients — Not Just a “Paper Cruncher”

Shelley saw in her firm, and from hearing about other firms, how easy it was to be just a “paper cruncher” for your clients: You do their tax return, their planning, some bookkeeping and that’s it. There has to be more advising between ourselves and clients, she thought.

The issue was many clients did not understand all the implications of their decisions. “They don’t know what they don’t know” comes to mind. As an advisor, you learn everything the client goes through:

• Their daily struggles
• Their big plans for the future
• What’s going on in their personal life that might affect the financial picture

All of these points (and more) need to be regularly discussed rather than just collecting information at tax time.  

For example, one client was buying up a few companies and planned to simply combine all the equipment. Shelley stepped in and explained how it wasn’t that simple: there were debt and tax implications to walk through first. She was able to help them avoid any compliance issues and possibly saved on taxes.

If these discussions don’t take place, clients can make decisions without knowing the consequences.
Steps to Getting to Advisor-Status:

• Set up clients on a “fixed fee” per month so they “aren’t afraid to call you.” Let them feel comfortable with discussing issues without worrying about a large bill.
• Include regular check-in discussion points: Monthly, quarterly, semi-annually, etc.
• Have contact points where you dissect everything a client mentions. They might mention something they think is small (like combining equipment) but you need to step in and prove you’re both knowledgeable and there to help.

Aspirations for the Future:

Shelley was open in discussing how much more she aspires her firm to grow to. At the moment, she is working on a few points:

• Slowly getting clients into “value-based” pricing (a la Ron Baker)
• Making sure everything about a client is updated in a client file so they can continue to act as a trusted advisor
• Tracking the service lines to see which are the most profitable
• Testing many ways to stay profitable and stay on scope simultaneously
• Doing more with social media
• Working to not get pressured to focus so much on marketing rather than being patient with organic growth. “It’s fun to do marketing but you also need to look at the organic side: Which client of mine needs attention right now?”

Shelley continues to build her firm and is recognized for much of her work in the accounting space. She preaches being an advisor for your clients because they need your specialized knowledge.

The next time you think “You are just a CPA”, remember what Shelley says: She puts this on her Linkedin profile:

“CPAs are many things. They are chief financial officers for Fortune 500 companies and advisors to small neighborhood businesses. They work for public accounting firms, both small and large. They are well-respected strategic business advisors and decision-makers. They act as consultants on many issues, including taxes and accounting.
A CPA, or Certified Public Accountant, is a trusted financial advisor who helps individuals, businesses, and other organizations plan and reach their financial goals. Whatever those goals-saving for a new home, opening a new office, or planning a multi-billion dollar merger-CPAs can help.” – Shelley Johnson

Related Articles:

1. 5 Simple Steps to Transform Your Business Into a Radical CPA Firm
2. How can I communicate the ‘advisor’ to my accounting clients?
3. The “New” Rules of Marketing for Accounting Professionals