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okay gang two million dollar year firm two full-time employees three hourly bookkeepers Scrooge McDuck mode activated let's roast to firm presented by firm 360. you call that a profit margin yeah who needs automation when you've got five monitors there is a mouse always that what the client said well maybe the client should prepare the return then huh [Music] let's dig in so the party piece here two million big ones a year now a catch they're working with mid-market companies and do Erp implementation so they carry a lot of client software costs it represents about 500 000 a year in Revenue so adjusting for that they're really more like a 1.5 million dollar year firm where were we they only do tax work for accounting clients so let's say that's 90 Accounting they're in a mid-sized City and have two full-time employees and three hourly bookkeepers yeah I see you running the 10 key pain points they've got a problematic bookkeeper they're struggling to learn new things and are very Reliant upon their peers the owner doesn't enjoy running client Communications or wrote work and the greatest bottleneck today is the monthly close what are they enjoying they love solving complex system issues and restructuring client processes they enjoy helping clients Implement new tech is this a self roast right now and they quote love wild cleanup projects never mind this isn't a cell for us also the whole team's very close but they acknowledge this is both a good thing and a bad thing there are any your Cadence is super boring they see a little bump in January as they're running 1099s but they only do 1099s for those clients that leverage their bill pay service so they have control over the W9 collection throughout the year smart the rest of the year they kind of just do the tax work when they get to it not much in the way of OT cleanup projects are scheduled in advance when they have availability all clients are on monthly engagements and the only real workflow of volatility is that monthly close now workflow core services are performed ing to a weekly schedule most clients are touched twice a week they update the bookkeeping and complete any AR or AP tasks accounts are reconciled on the statement closed date so for example credit cards could be closed mid-month with the exception of a couple core programs they generally work with their client systems they'll occasionally meet with clients at month end but since they're generally in touch week to week this is more for planning and goal setting than it is for reviewing the month internally they're using ignition for proposals and payments QuickBooks time smart Vault Trello Microsoft Office and teams but externally lots of one-off apps for specific client projects now pricing each engagement is priced independently all are on fixed monthly fees factors include client communication volume and the accessibility of the systems they use clients can bring their own programs it just costs more cleanup work is built 100 up front with a 50 deposit taken on agreement and the other fifty percent taken when the work begins they began taking that deposit because they'd find people would go to another provider if they couldn't start the project right away but the deposit has mitigated that they only take new work by referral they do a one hour kickoff meeting and if they look to initially be a fit they give the client a list of tasks to complete setting up accounting access bank access that sort of thing then if all looks good they'll draft a proposal okay before we dig into this do me a favor comment with your emoji reaction to these firm metrics comments help the video in the algorithm and it's kind of funny the different reactions I've seen to this firm so this is our fourth firm roast I will link the playlist below and as always a few weeks before this I put all the details of the firm out on Twitter for public comment and this is where things always get spicy so let's see did Twitter rip them to shreds they're available [Music] what is this unicorn this one for the first time in the roast series great job everybody I feel like we actually got through this in a civil way now at the end here I'm gonna share my own three top tips for the firm but here's a few of them like the meteor tweets I really like Luke says clap fire your bookkeeper you run the risk of waiting too long to do so and start thinking about your exit Luke clearly the guy at the party hanging out by the door Ashley says take care to ensure that the bookkeeper isn't bringing everyone else down been there before this is usually punishing to your top performers just as much as it is to you good one here from Greg who are your Visionaries and integrators basically who are going to be your Big Picture People and your executors the one in charge of your systems and accountability and all that need to balance both he says join pasba find a community of folks who are also managing bookkeepers if you're a Visionary consider a mastermind I'd also extend that to integrators develop a scorecard for your bookkeepers and give yourself a big juicy slap on them back now I also asked a couple of friends for their input here's what they had to say if this was my firm 100 I would be doing a discovery form I wouldn't meet with anybody for an hour until I at least figured out if they met the base criteria for becoming a client of mine so for example I had a client a prospective client came to me as a referral and they seemed perfect but when they completed my Discovery form they would not allow Qbo to connect to their Bank feeds which is a hard no for me and he actually thanked me that we didn't spend the time in a meeting knowing that our values didn't align on how we work so how do I roast this firm well maybe that number's too big only five employees doing two million dollars a year I'm going to bet that that owner that partner is doing a lot of work themselves and so can we really call it a business or is it more of a job very highly compensated job if you're the owner of that firm and you want to build a business where you're not working in the business but you own the business and you profit from the business I'd say double that head count get from five to ten and build a team that can service those clients without you having to be involved good stuff now three tips ing a little old me one find some big Brands you will never learn more than you do when you find a room of people running similar businesses to you you can keep your Consultants your experts your think boys nobody understands what you do like other people who do what you do and 95 percent of firms are not running at this production level which can make it feel like you're on an island if you don't have somebody to bounce ideas off of stealing validated ideas from people who are on your path will always beat figuring it out yourself and in my experience cut years off of my learning process Craig recommended pasba I don't really care what the group is just start sniffing around in them until you find your people two the bookkeeper was the easy Target on Twitter that is what the person said their biggest kind of pain point was right now but at the end of the day it's hard to quantify Jim takes up a bunch of Tina's time and it's just better when you can set a clear expectation of output from your team members then you can come alongside them if they can't meet that expectation I don't know all the details here but when I've paid people hourly even when I've paid people salary I'd find that I was very motivated to do things more efficiently but oftentimes team members could take it or leave it they weren't going to get paid anymore if anything they were going to optimize for Comfort regardless of how long a task took and when that starts happening it gets really frustrating now not every team member will be wired this way but you also can't really expect them to not be because they don't have the same incentives as you money and time so the only true fix to this in my mind is to at the very least high performance reviews to metrics if not compensation then everybody's in alignment they're executing to The Benchmark that you set now let's run through a really simple framework for how to do this with today's sponsor firm 360. a couple different reports we can leverage in firm 360 here I suspect since the bookkeepers are hourly they're logging time somewhere I can hop into the realization report specifically the revenue breakdown here we've got Billings by client and can Group by manager or partner in charge whatever makes the most sense what we want to get to is a revenue expectation for each team member depending on how many people have their fingers in each project what's really even better than tying this just to billable hours is to measure their overall engagement workload so for this firm since all their projects are fixed monthly you could just go down the list of all your engagements indicate who's in charge and establish a total threshold for how much each staff person ought to be responsible for another cool thing for M360 enables it would actually be great for this firm is you've got a workload report so each month you have an idea of how much work is on their plate and how they're progressing throughout the month on those projects is your practice management system that cool you saw how easy that was check out the firm 360 Link in the video description to learn more so in general always a good idea when those squishy human points of frustration come up not to personalize bring it back to clear measurable expectations now if they're hitting those targets and still leeching the life from their colleagues that's a problem but step one is to ensure that you've got those benchmarks in place three follow your own path that is decide what's best for you and execute in that direction if you want to have more fun right now maybe your new job should be the tech integrator you take on all the special projects double down on migrating them to your favorite systems do all the nerdy stuff maybe you want to work less and you need to start thinking about a manager for those bookkeepers but they're also your friends so maybe you enjoy that aspect of it maybe you want to make more money mitigate key man risk and find a more durable hiring pipeline so you start investing in an offshore team there's always a hundred things that you can do but the most important is the thing that's going to set you on a path that'll make you happy and make you love what you do even more in five years time because today we just can't afford to lose anymore okay okay we've got even more roasts on the way subscribe so you don't miss them and do you want to get roasted yes you do check out the form in the video description to have your firm roasted and check out this playlist for a whole whole crock pot full of roasts put it in there about eight hours little onion soup mix smelling it all day you know what it's like it's smelling nice you know what I'm talking about [Music]