The beginning of success is great. Your firm covers your own income and you can hire a few people. Your first batch of clients love you. All you have to do is keep doing what you’re doing, right?
Unfortunately, once you reach a certain size, the skills you need to grow further change. You need to learn systems development, process development, and how to hold your team accountable. You also need to learn what to look for in a firm.
On this week’s Growing Your Firm podcast, we’re speaking with Gretl Siler. She’s the owner of Lighthouse CPAs and has successfully navigated this hurdle. If you’re stuck in the beginning stages of success and feel you can’t take on any more work without going nuts, take a listen and learn how Gretl did it.
- About Lighthouse Cpas
- What Freed Up Gretl to Hunt for New Firms to Build the Business
- How the Team Manages Communication In the Firm
- Shifting Your Mindset About Hiring
- What Gretl Looks for In a Firm Before Making a Bid
- Lighthouse CPAs
- Gretl’s email: email@example.com
Switching Your Role Smoothly
Lighthouse CPAs is a full-service firm that serves small-to-mid sized companies. They have clients with a broad age range, but they specialize in newer companies that need extra help in the beginning. They are earning half a million in revenue and working to hit their first million. Gretl’s hope is to make the firm at least that large, get it running smoothly, then sell the firm off and retire.
How Gretl is doing that is by aggressively acquiring other firms. This stage can scare firm owners because integrating a bought firm into your company is an enormous challenge. We asked Gretl what gave her the freedom to do this.
Freeing Up Her Own Time By Hiring Staff
She does reviews of corporate returns, but the staff does most of the work. This kept her from falling into the trap of taking on all the extra work herself after a firm acquisition. It’s tempting to do that because you want to make sure you do things your way, but it leads to a lot of extra stress and long hours in the office.
Using Jetpack Workflow
She uses the tracking system to ensure that everyone goes through all the steps, and for documenting everything about the client’s special needs. All those special exceptions and personal nuggets of knowledge need to get out of the heads of people in the company and into somewhere others can see them. Not just things like templates, but little things like how the client prefers to be called and how they like to communicate.
The goal here is that if a new person came in and had to serve that client, that person would have all the information they need to take care of them.
How the Team Communicates
There are five people working at the company, including Gretl. Thanks to Jetpack Workflow, Gretl doesn’t need to talk to her team very often. She can watch the jobs flowing through the workflow software, see where any roadblocks are, and address them. The firm used to have face-to-face meetings when something was stuck or with a new client, but with COVID-19, those have stopped even in the office.
Like many businesses, she’s turning to Zoom to do online meetings. Her intent is to have weekly group meetings on Fridays to talk about issues instead of individual meetings. They are also experimenting with screencasting software to talk about issues with any documents, both internally and with clients.
With the clients, the hope is to avoid the phone tag game. By making a small video of the document and talking about the issues, then sending it over email, it’s much easier to stay in touch.
Beware the Good Interviewer
We asked about what Gretl had to learn to grow her team to be so reliable. The first thing she mentioned was that she was a little too kindhearted and held on to people too long before letting them go. It’s easy to think it’s your fault and you didn’t train them enough, and sometimes that is the case.
However, there are some people out there who just do not have the work ethic or the mindset necessary to work in this field. They’re the wrong fit for the position. Even if you think they’re a wonderful person, they just won’t get it. Cutting them loose will help them find a job more suited to their personality, and will keep them from harming your business’s goals.
Catching this problem before it starts is hard because interviews can be gamed. Some people interview really well but can’t do the job. Others may be great at it, but because of introversion or nervousness, they bomb the interview.
Choosing Firms to Buy
Taking on a firm is always tricky, but there are two things you can look for to avoid firms that look too good to be true.
The firm needs to charge enough money before you buy it.
Gretl has found that a lot of firms set their prices too low. If she bought those firms and raised the prices, it would drive away a lot of the clients in that firm and lower the value of the purchase.
If you go through a broker, you can get the average prices for different services of the firms they’re selling. If it’s about 10% lower than yours, it will be easier to bring up safely in a year or two, but if it’s too low, then ignore it.
This means that you need to set your prices appropriately before you start buying firms. One mindset shift that will help is to think of your business as an asset, not a job. Build it with the intent that someone else could walk in and run the business.
Examine how long the firm’s clients have been with the business.
You want to find firms where the clients have stuck around for five or six years. By this point, they’ve bought into that firm’s brand and will be less likely to switch after acquisition.
We’d like to thank Gretl Siler for sharing her insights and experiences with us. If you’d like to learn which two best business books she’s read this year, take a listen to the full episode at the link above!