How do you build a million dollar accounting firm quickly? That’s the topic we ask Greg O’Brien in this week’s Growing Your Firm Podcast. He did it from scratch in 24 months!

In 2020, Greg was named a Top 5 National Finalist for the Tax Planner of the Year by the AICTC from a pool of over 800 qualified Tax Planners. Greg and his team specialize in working with entrepreneurial clients who own startups or small businesses, and individuals growing into more complex tax and financial issues. 

His experience includes advanced tax planning and CFO services for a wide array of individuals, start-ups and nonprofits. Also, he specializes in helping startups implement proper systems and ensure their accounting and financial statements are accurate as they rapidly grow and approach liquidity events.

Podcast

Summary

• About Greg O’Brien CPA
  • Billing Model
• Scaling From Solopreneur to a Team of 7 in 24 Months
  • Growing Clientele: Cold Contact
  • SEO and Google Advertising
  • Hiring Employees

About Greg O’Brien CPA

Greg O’Brien CPA is a forward-thinking, virtual tax planning and accounting CFO firm that is headquartered in Boston, MA. Though Greg is the only one physically present in Massachusetts, the other six employees are completely remote. Greg says he was always a big believer in the virtual model, even pre-COVID, and he would spend hours studying other virtual firms. 

The firm offers tax planning compliance, virtual accounting, and virtual CFO services to individuals, start-ups, and entrepreneurs. Greg O’Brien CPA’s best work results involve producing a tangible result for clients in the form of physical cash saved through taxes or seeing an owner’s reaction to CFO and accounting systems increasing their bottom line.

Billing Model

We’ve emphasized several drawbacks of the hourly billing model and have been vocal advocates of the value billing system. Greg started his business out on the value billing system to begin with, so there was no need for any drastic adjustments, only refinements which came as a result of the development of systems which helped to narrow down the services Greg offered. Clients are charged an onboarding fee for tax planning and set up into their systems. Next, they are presented monthly packages that are value priced to the client depending on their needs.  

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In the beginning, Greg studied several business models in the hopes of acquiring another firm and simply couldn’t understand why there was such low profitability. Eventually, one of his mentors recommended that he strike out on his own and think outside of the box. As a result, his average monthly fee exceeds the expectations of several within the industry: they average between $1,500 and $2,000 per month for each client.

Growing Clientele: Cold Contact

Many people believe that they need sophisticated software, a business email address, or even a unique marketing tactic in order to generate leads and convert them to loyal customers. Greg didn’t have any of that. Instead, he hustled, and he told us, “I really started from day one with cold outreach.” After combing through tech magazines, he would note that a new startup formed. He then became an internet sleuth, figuring out the business owner’s email address. From there, he sent an email to see if the business needed assistance with their first C-Corp tax return.

Because of this one-on-one direct contact, he ended up scoring three clients using the cold contact method, and he still has these clients on a monthly subscription today. From the direct one-on-one contact, clients referred his services via word of mouth, and the “flavor,” or niche, of the services varied from location to location. Greg explains, “So, I’ve developed a nice little niche out in Southern California, and then some of my local clients have just spun off.”

SEO And Google Advertising

“You know, almost every CPA out there has a lousy website. I looked around and saw there’s a lot of websites that are old or lacking. I saw that as an opportunity,” Greg said as he explained another facet by which his business grew.

During the first year, Greg knew it would be wise to invest in SEO and Google advertising for their website. His website alone ended up being the marketing tool that attracted a particular client who had an online start up. “He became a very valuable client to me,” Greg explained. His client referred several other clients to him by the fourth month. Eventually, Greg began actively investing in books and information about SEO and growing an online presence. 

I stopped looking at [advertising] as an expense. I started looking at it as an investment, so if I can spend a thousand dollars a month, but I’m getting several thousand dollars back, it’s kind of a no-brainer.

As Greg began to receive more clients, he eventually had to begin thinking about how to complete the new influx of work.

Hiring Employees

Aside from a part-time bookkeeper, Greg was working alone. He knew that he needed someone full time who could help him, and his bookkeeper at the time was pretty adamant about remaining part-time. So, Greg took his search to the online job boards.

On Indeed, he found one person who had his own firm. After connecting with him, Greg sent him work as a contractor, to test the waters, and the partnership was fruitful. Greg hired him as his first full-time employee. Prior to his hire, Greg had been using Jetpack Workflow as a solopreneur, and after having hired several others, Greg had to figure out how to adjust its functions to accommodate the work of a team. He handed over this task to his new hire, “And now he’s a wizard at it,” Greg says. This freed him up to focus his efforts on finding more clients.

However, he still needed more hands on deck. “I was not prepared for how fast the growth was going to happen,” Greg recalled. He realized that once an employee says they are up to their eyes in work, it’s too late: more hiring should have been done weeks ago. It takes about four to six weeks to hire someone, so, as Greg said, “Hire number two was a scramble.”

From this experience, Greg learned that hires are also an investment. No employee wants to live always on the edge from an overload or in a state of burnout, so it’s important to always plan ahead. Already, he had a system in place for distributing work amongst his team members to prevent burnout, including two tips for how to do so:

1. Greg explains that he has divided up his clients to “A” clients, “B” clients, and  “C” clients to reflect the nature of their contract and how much work it would involve. 
2. Once his team hits 75% capacity, Greg knows it’s time to make another hire.

There was a lot more valuable information in the podcast that did not make the show notes, so be sure to listen to the full episode for more of Greg’s secrets to success! If you would like to reach out to Greg personally, check out his website, and connect with him on LinkedIn or reach out to him via email.

Ira Rosenbloom is currently the CEO at Optimum Strategies, where he consults with small-to-medium-sized CPA firms to enhance their profitability and refine their team management practices. In this show, we’ll talk about how he helps firms track and improve their practice performance, works with leadership to plan and implement succession, and guides them to make sound, strategic decisions for a more effective and sustainable practice. 

It’s rare that we hear first-hand accounts and advice for negotiating succession within a firm, so this interview is priceless. Take a listen!

Podcast

Summary

• Respect and Addressing Apprehensions
• Facilitating and The Magnitude of Emotions
• Checking A Remote Firm’s Pulse
  • Artificial Profit vs Real Profit
  • Efficiency

Laying Out Apprehensions

Ira explains that several challenges can come to the forefront whenever the founding leadership of a business passes the baton to others, for staff members and employees to work in concert with the vision and mission of business owners. Navigating change can be very complicated, and soft skills, often overlooked, can become an asset.

First, when approaching founding members, one cannot forget that they have a unique investment—both literally and metaphorically— in the business. With their investment comes a certain amount of pride for the achievements they have accomplished during the lifetime of the business. Ira reminds us that the goal is to “Open their eyes to the need, to pass the baton to somebody else, but by the same token, not insult them.” 

Consequently, extend respect to them. Realize that they may just be as keenly aware of the needs of the business as you, but put the anxieties, fear, and uncertainties out on the table. When beginning the transition between the founders to Ira’s current colleagues, they were honest about their apprehensions” with “and successors in one of Ira’s former firms, the ones taking over expressed apprehension and petitioned for the founders to act as their mentors. 

Furthermore, Ira and his team had set up retirements for them during the negotiation process. As Ira said, “This was not a situation where we were just cutting the umbilical cord. No, we had decided that we wanted to see some economic shifts, which would ultimately give security to the founders and enhance opportunity to us.”

Facilitators and Their Role in Assuaging Emotions

Part of being respectful and honest about one’s apprehensions involves also acknowledging reaction, whether it be of flabbergast or incredulity. The skills of listening and reading between the lines will become especially valuable. If someone says they’re not worried, Ira says, “They’re holding back.” 

He further explains that it’s the ability of colleagues and partners to solve problems which garners respect. Acting as facilitator to probe the underlying thoughts behind phrases like “Don’t worry about it,” or “I don’t trust this one bit,” shows trust in your leaders’ and colleagues’ abilities to resolve internal matters.

With that said, the devil was in the details of the transaction Ira had negotiated with. It was helpful to bring in an attorney to act as facilitator and mediator during the transition. While the personal working relationships through trust and respect made it completely possible to get on the same page, that relation had the potential to get in the way and act as a distraction. Ira explains:

“We’ve been at everybody’s…weddings, bar mitzvahs, and unfortunately even funerals, so we were able to gauge that until the very end. In many situations, you do need to facilitate an early out especially to hear those anxieties.”

If a legal professional or facilitator had not been present to aid in parsing out those emotions, it is highly likely that they would not have gotten addressed comfortably. While there was trust amongst the group, there may have been someone to disregard and insult the individual. Causing injury to sentiments is completely counter to the overall goals and vision.

Checking a Remote Firm’s Performative Pulse

The starting point for negotiations should reflect the current state and situation of a firm or business. During the remainder of the COVID-19 pandemic, special care should be taken neither to over-, nor under-, estimate the net profits earned.

Artificial vs Real Profit

Pre COVID-19 overhead costs such as office or building space were significant expenses for businesses. However, now that many employees are working from home, this expense has decreased drastically. Simple math would reflect this change as businesses have a net profit increase due to a decrease in expenditures. 

Business owners may consider further undercutting competition by decreasing the cost of services. 

Ira gives the following example: “If my competitor is charging $1000 for [a product], I can charge $750 for it because I don’t have the same overhead.” He calls this profit artificial profit because the product itself is worth $1000, not $750.  Keep in mind, even though the expenses are decreased, the value of the product or services still remains the same to the customer or client. They are unaware—and should probably remain unaware—of the firm’s expenses.

Now, another factor to consider as employees are working from home is their real profitability. While it may not be optimum to micromanage, it is critical to consider what the revenue per person is. 

Ira gives the following example of real profit:  “[Pretend that you] pay somebody $40,000 and, someone else is paying them $60,000, but both are doing [work worth] $200,000.” Here, the real profit comes from the employee being paid $40,000 to do the work. One major factor which could also increase the real profitability of employees per capita is to increase their efficiency.

Efficiency

In a previous interview with Arianna Campbell, we talked about ways to increase the productivity of a team by using the acronym DOWNTIME. One factor which can lower efficiency is overproduction, using more or not having enough resources to complete a task. Ira echoed this sentiment when he said, “The number of touches that have to go into moving the product is very important.”

Small firms must make efficiency the center of their work processes. Figuring out how much work is being delegated, when and to whom, is a key step to increasing profitability. It is ideal to limit the number of people who touch a product or take part in a project to those who increase the real profitability while also taking care of clients and solving their problems.

Ira revealed even more in the episode than we captured here. Take a listen to the full podcast! If you would like to reach out to Ira directly, you can do so at ira@optimumstrategies.com or via call or text at (215) 694-8084.