Episode 64: Choosing the work you want to do and not wearing all the hats in your practice

Ever wondered how stepping back from your business could be the key to its growth?

Join us on an eye-opening journey with Tim Causbrook, Kristy Fairbairn, and Ed Chan, as we discuss leadership, the withdrawal process, and the importance of focusing on the work you enjoy. Our insightful conversation explores the benefits of building a business that is managed from the bottom up, creating a culture where everyone rows in the same direction.

Building the right small business team is crucial to achieving success and scalability. In our chat, we emphasize the importance of finding employees who complement your skills and passions, creating a one plus one equals five effects. We also examine the concept of 'deep and narrow teams' vs 'running flat teams' and what it means for employee retention. 

Strategic planning for business success is crucial, and we delve into the delicate balance between security and achieving goals. We discuss the need to delegate and outsource tasks to free up time for more critical endeavors and examine the impact of artificial intelligence on the industry. Stay tuned as we share valuable insights on how to maintain a positive attitude and stay competitive in the face of challenges!

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Transcript

Ed Chan: 0:01

You've got to master leading yourself. So that's about self-discipline, that's about experience, that's about controlling your feelings. So you've got to lead yourself.

Wize Mentoring: 0:14

From Wize Mentoring is The Wize Guys Podcast, a show about accounting and bookkeeping practice owners and the many stories, lessons, and tips from their experience of transitioning from a time-pull practice to a business that runs without them. I hope you enjoy and subscribe.

Tim Causbrook: 0:34

Today's topic is choosing the work you want to do and not wearing all the hats in your practice. Now, I love you to set a bit of context Ed but statements really directed towards the owner in terms of choosing the work they want to do and not having all the hats in the practice. But I'd love to hear from you a little bit about how that also applies to employees and also why withdrawing from the business is a good thing for the business, including the employees as well. That would be really great for us.

Ed Chan: 1:09

These sessions are for the leaders in the organization and we talk about building the process in the system so that it's managed from the bottom up, not from the top down, because you can't scale a business if you try to run it from the top down. So you need to get everyone working together, everyone's rowing in the same direction builds the culture, build the thinking, so that it's easy to run the business because everyone is rowing this boat in the same direction, as opposed to everyone's rowing in different directions. So the leaders of the organization and generally it starts from the owner down need to determine that culture. And then you've got to get everyone to come on board And often people don't know what to do and they don't know how to bring people along and so forth. So if you're a leader in an organization, whether you happen to be the owner generally leaders are the owners, but they're also an employee and it's really irrelevant which seat you're in because it is also all about leadership And we all grew up doing the work and everybody can do the work.

Ed Chan: 2:09

But when you get promoted to a management position and you've got to learn to manage people, that's huge. That's a completely different skill set And you know as an employee as a grinder yourself. If you work under Manager A versus Manager B, you're so much more productive or happier under A versus under B. It's just the style of that person that's managing you if you're the grinder. So if you're progressing your career into a leadership role, into a management role, into managing people, then you want to be that manager that can get the best out of the people below you. And these are all the things that we talk about here here are no real courses that you can go to. You promote someone into a management role and you expect them to lead and manage their people, but you don't give them any training and you just try to wing it. And poor management causes so much damage. It hurts so many people, hurts clients, it hurts staff, it hurts the shareholders, it hurts everybody. So on this journey, if you want to scale your business and you've got to withdraw, on this withdrawal journey, but also you got to bring your team up with you and they've got to understand what you're doing before you can all be rowing this boat in one direction.

Ed Chan: 3:21

So I constantly encourage the owners of the organization to bring the leaders in the organization into these sessions, because it's a third-party- like endorsement. So if you try to tell yourself this is what you do, then there's a little bit of pushback. But if they come to these sessions and everyone is talking the same language, then it starts to break those barriers down and it makes it easier for you to lead your team. And if you're a senior client manager and you're trying to lead your team and you're getting pushback from them, then bring them along to these sessions so that they can understand what we're doing because often there's a saying that you've got an employee mentality or you've got to employ your mentality and the mentalities are completely different because their drivers are different. But if you get both of them on the same wavelength then it's so much easier to grow your business.

Ed Chan: 4:05

So that's the theme of what I'm trying to explain is, people in these sessions are the leaders in the organization and some happen to be owners, the others happen to be managers of other people and we don't need to get trained up because we don't let our staff prepare tax returns and financial accounts without training And yet we push them into management roles without training. So while the withdrawal process, or the session we're doing today, is about the owners withdrawing, it's also about the leaders in the organization moving to the next stage and how they do that.

Tim Causbrook: 4:39

Yeah, Ed, can we focus in on that last bit you said, because I love that. How does the owner withdrawal provide more opportunities for the key leaders in the firm?

Ed Chan: 4:48

Yes, this withdrawal journey requires the owner to start withdrawing from certain parts of the business. Now, obviously, when you're small, in each of those boxes, in all the boxes in fact when I first started my business, I had to do everything. I saw clients, I did the work, I went down to a post office to collect the mail and I made the coffee. I did everything. And then, as you got busier, you have less and less time and you've got to bring somebody in. So you draw from your admin first. And why do you withdraw from admin? It's both a cost situation where you don't want the highest cost person in your business and you've got to separate yourself from the business. You don't want the highest- cost person doing the very low- cost work, so you want to bring in someone at a lower cost for the lower- cost work. So that's the first issue. The second issue, obviously, is the more you can get in front of your client. That's where the real value is getting in front of your client and spending that time with your client. So everything else should be taken care of so that frees you to spend more time with your clients.

Ed Chan: 5:49

If you're small, then, of course, you get bigger from that. Then you replace yourself with a senior client manager who's then doing the face-to-face work and you withdraw yourself even further from there. So you withdraw yourself from admin, then production, then you're now there doing managing of people, then you withdraw yourself from that. Then the sales. You stay with the sales because when you're small you want to be able to convert and you're the best person to convert I prospect into a client. And then you replace yourself in sales and then you just do the marketing and then you withdraw from that. You replace yourself with somebody else to do that, and then you're the CEO, and then the Executive Chairman, and so forth, and finally the shareholder attending board meetings and so forth. So that's generally the withdrawal process and you don't withdraw, obviously, until you've found the right person and you've trained that person up, and then you withdraw. You don't just hire somebody and disappear, because that's called abdicating, not delegating the task.

Tim Causbrook: 6:50

A lot of businesses don't have all these divisions, to begin with. In my experience as a Wize Mentoring firm doing more than a million dollars, even if the owner enjoys doing the sales, they soon reach a point where they couldn't do the sales for 100% of the clients or 100% of the client, managing to use another phrase themselves anyway. So it's not always necessarily my experience about them wanting to get out of the business. Some of them love it, but it's about staying where they provide the most value to the business, which is usually in the growth part of it or the oversight, and that provides multiple opportunities for the key people internally to be promoted into positions that they otherwise wouldn't, be able to be promoted into if the business wasn't growing and the owner wasn't withdrawing and delegating more and more of the stuff they were doing to people.

Ed Chan: 7:36

And it's about playing people in position, not out of position. So, using sporting terminology, if you take a football team or a soccer team, we've got different positions, from goalie to wingers, to center forwards, and you want to play people in position, so you don't want to put the goalie on the wing, you want to put someone really fast on the wing. Now, as you're withdrawing from this journey a cost aspect of it, so you want to reduce the cost to the business. There's the other aspect is playing people in position. So if you're a people person, you need to be working towards a senior client manager role, where that's what a senior client manager does handles all the communication with the clients. But if you're more of an introverted person and you like the detail and you like to do the work and the path is more of a senior production manager role, so you don't want an introverted person, can have that role, but they may not be as effective in the senior client manager role, where you've got to be a little bit more extroverted and be able to have people skills and be able to communicate. And also, the more you like something, the better you are at it, the more naturally you are at it. And as you're withdrawing, as the owner, or if you're a senior client manager, as you're withdrawing, you've got to determine what is the best position for you. And, for example, if you're the owner of the business, if you're not a practice manager, if you don't have the skills, or if you don't like the management of the business, then you may have to bring in a practice manager and get them to do the things that compliment you.

Ed Chan: 9:04

The biggest mistake that small businesses make is that when they're recruiting people, they recruit on the basis of you know, I hear this. They say I wish I could find someone just like me. All right, so that's a big mistake. You don't want someone just like you, you want someone that compliments you. So if you're a fast runner, you want to be on the wing. Well, you want to find a goalie that's got really good reflexes. You know. You don't want to find another fast runner and put them into a goalie because they're just like you. You want to be able to compliment yourself with the skills and the things that you're not good at and you don't like doing. And then the things that you may not like doing, somebody else loves doing them.

Ed Chan: 9:40

Or find someone that compliments you, because what you get is you get one plus one is five, not one plus one is two. And at school, we used to you know, if you're good at English and bad at maths, then you get a tutor to help you with your maths. But in the work environment, you don't do that. If you're bad at maths, you don't do any maths, you just stick with English And you bring in an employee or a colleague that's really good at maths to compliment you because if they stay in their flow right, they're going to do so much, so much better. And then, if you stayed in your flow and you're going to do so much better because you're happier at it, you're better at it, you're going to do so much better, and together you get the one plus one is five.

Ed Chan: 10:19

So this idea of building your business and being able to scale, it, is to have the organization chart, like the positions on the field, and you're the coach. Now You've got a soccer team, you've got all the different positions there and now you've got to look for the players that fit those positions. This is what we're going to talk about in the organization chart and what those positions are. Then you've got to look for the right people to fill those positions. One of those positions might be yours. You might say, well, I'm really good with people and I love the senior client manager role. Well, bring in a practice manager to manage the practice. Or you might say, look, I'm going to get somebody else to do the senior client manager role, but I'm going to run the practice because I enjoy running the practice. You might decide to do that yourself, but play people in positions and play positions.

Ed Chan: 11:10

Don't do what I call throw bodies at the workload because it doesn't work. I call that running flat teams instead of deep and narrow teams. Running flat teams is simply no one's playing in positions and everyone's just chasing the ball down the park. You've seen six-year-olds play soccer, haven't you? Everybody chases the ball, and that's how accounting firms run their business. They don't have positions, so everybody just chases the ball. Meaning just throwing bodies at the workload is where everybody just has a heap of people, just everybody's chasing the ball, which is the workload.

Tim Causbrook: 11:40

A lot of the owners I talked to, just because it's been such a tough hiring environment, probably more anxious than usual about employee retention. Not that that's the goal, but it's a byproduct of this thing that you've just laid out for us, Ed. People enjoy doing what they're good at and hate having to do what they're bad at. If you can take away all the stuff people are bad at, put them in a team with people who complement them and who they get along with. That's a recipe for retention. Another recipe for retention is another criticism I get of smaller accounting firms versus big corporates. There's not as much scope for promotion or ladder climbing. Ladder climbing sort of is a corporate thing. With this deeper, narrow team structure, which we're not looking at today, but also the seven divisions you've got here, you've created scope or the scaffolding to have that creep aggression.

Tim Causbrook: 12:25

To me, those are two very powerful retention levers that we get out of this model that make firms that run according to this wise method that we have more appealing and create more possibilities and opportunities for their employees. Then comparable firms of the same size revenue don't have all this structure and this withdrawal pathway. I think that's just something to be said for how much better it is to run your business this way. We've got a time frame down the right- hand side there. It's really not a race, is it, Ed? It's not about getting to take yourself out of the business as quickly as you possibly can. Can you talk to us a little bit about the timeframe and about, maybe, the part that revenue growth might play in this withdrawal journey? If you're working, for instance, with a firm that does 300K and the owner says I don't want to work anymore by next year, that might be an unreasonable expectation on that part.

Ed Chan: 13:14

There's a balance of all of that. There's a balance of the type of people you have in your team at the moment. You may not have all the skillset in the team at the moment to fill certain positions Because you didn't know what those positions were. You were just hiring body and throwing it at the workload. That's number one. Number two is you might be too small and you can't afford it from a financial point of view. You've got to get your hands dirty and get in there and do the work, because you just can't afford to get someone to do the work At 300K, for example. You'll still be pretty hands-on. You'll be doing all the client management, the face-to-face work, but you'll still be reasonably hands-on. You'll still be filling a senior production manager role as well as a grinding role, as well as a senior client manager role. You've got your foot in all those camps and the practice management role. You still got to manage the business as well. As your business grows and there's more revenue, then you can then hire somebody to bring them in. Then you've got to decide which person should I bring in first. Generally, you should bring in an admin person first, because they're easier to find and they don't cost as much as a senior client manager or an accountant. That's the first path that you generally withdraw from As your business grows. Then you can stop doing the work and get somebody else to do the work. You withdraw from production and then you might have to stay in the senior production manager role to check all the work. Then you still then go to see the clients, which is a senior client manager role. Then when you get bigger in the still with more fees, then you then have to hire somebody that's a lot more senior to take the senior production manager role to check the work, so that the eyes are dotted and teeth are crossed, so that when you get the work you don't have to do that yourself. You just run your eye over it on a global basis and you go and you talk to the clients, talk to the clients about the results and see the clients and do the higher level work with them, and then eventually that's all you should be doing, and then you can charge a much higher rate because when you do consultation you can charge a higher rate. You just can't charge a higher rate when you do production work, and so you're getting your resource, you're building your resource mix within your team correctly. So you've got some juniors in there doing the lower- level work at a low cost to the client. Then you've got some senior accountants in there that can finish the work off. Then you've got a senior production manager who's very, very senior, who checks the work and then they hand that across to a senior client manager who goes and sees the client. So that journey needs to be handled carefully with the money that's in the business about afford it and also the kind of people that you have.

Ed Chan: 15:53

So you don't want to play someone out of position. If they're not a people person, you don't want to put them into a senior client manager role. You set them up for a fall And I see that all the time with firms that often the owners complain the staff won't pick up the phone and talk to the client. They just send them an email. And when there's a problem it's best to talk to the client. But some people just prefer to send an email because they're not a people person. Like if you're an introverted person, picking the phone up and talking to someone, it's the hardest thing in the world. And if you expect someone to swim against the tides, so to speak, to go against their natural instincts, then you're going to scare them away or you're going to push them away, but if you play them in their flow, they're going to stay a lot longer, because they're a lot happier.

Tim Causbrook: 16:33

It's not a race to withdraw it. As you grow you'll have to hire people into health because you can't do it all yourself anyway And, as Ed said, it's not just about throwing bodies at the problem. This thinking about your business according to the seven divisions which we've got some of them here, not all seven will help you get the right person in from the beginning when you do withdraw from it, and it will just be a lot smoother because everything on this page has to be done anyway, regardless of whether or not you think of the divisions that Ed admin has to be done, stuff has to be produced, tax trends have to be produced, clients have to be met. It's just a really good way of thinking about how you could carve up the work according to different people in different positions. Hopefully don't want business owners in particular to get too overwhelmed by thinking about all the hats they have to wear. It is a gradual process. You are in this position, Kristy.

Kristy Fairbairn: 17:21

I do still wear a few hats.

Tim Causbrook: 17:22

Yeah Right, you still wear quite a few hats and you probably don't have exactly the revenue to completely withdraw yet. Or maybe you do, but maybe you don't have the inclination because you still want to kind of have your hand on the steering wheel, so to speak. We'd love to hear from you about what it's like working both as a mentor and as a firm owner, and any insights you would like to share about what's been effective in helping you withdraw from your own business to another business away. So love to hear from you.

Kristy Fairbairn: 17:48

Yeah, thanks, Tim. Always looking at starting with the end in mind. I know where I want to end up. I know I want a $3 million firm with three teams so I can afford a CEO. So every day I'm looking at what can I do today that has me on track for that. And there are setbacks, there are challenges, but they're great opportunities.

Kristy Fairbairn: 18:10

If we'd had this topic a month ago, I would have been almost withdrawn from the SEM role, but I'm back into it fully because we're now replacing a team member. So one of the great things is that I still had the capacity to be able to step back in and it makes me think how will I secure that for teams two and three? So, always look every time you get a little bit of a knock. what can you learn from it? What can you create out of this for better security next time? And continue coming back to that balance sheet so that you've got the safety and security as you reach your goals? And, yeah, definitely looking at what your capacity is.

Kristy Fairbairn: 18:48

Thomas and I in my board meeting recently I think this month we looked at what's my capacity and the capacity planner as the SEM and Firm owner. It's this many hours. So I give those hours to my production manager so that she knows you've got me for 10 hours this week. What's the most important thing for that time to go on and nothing else, so I don't get lost in the little bits and distracted? So really protect your time and energy with the hat that you're wearing.

Kristy Fairbairn: 19:20

And yeah, definitely admin was the first place I withdrew. It's critical to the success of my business. I really need them, but it's not critical that I'm involved. Today we had our meeting and we're looking at sending a little nudge to clients to answer their queries or we're just proceeding with their sales tax lodgements. I've delegated that to my ACM to draft with the production manager and I'll do the final review. In the past, I would have done all of it. So just looking at how you can really nurture your time to really keep watering that butterfly garden in your business and in everything, attracting the right people, attracting the right clients, and knowing that you will get there. But it's definitely not a race. I'd love the quick solution, but I prefer the long term. I don't want to be going backward. You know, when I'm 20 years down the line, I want to be living Ed's life. I want to be going on those bike roads traveling around, having that freedom and flexibility. So, yeah, I know for my timeline that I'm on track for that.

Tim Causbrook: 20:24

I love what you said about it being like you know you do have backward steps. It's not like a constant progression. You do go, you do have setbacks because people leave or what have you. I think the way you said that beginning there, Kristy, that you keep in the end, in mind when you have those little setbacks. It's still really discouraging when it happens, but because of that bigger picture of where you're going, it's just a challenge that you'll overcome, you know, and it won't stop you from achieving it, which I think is just. I think there's a mistake that people make to think that successful people don't have setbacks. They just love a challenge and they overcome the challenges. So the most successful people I know have had huge setbacks.

Kristy Fairbairn: 20:59

If I could take these to become an overnight success. You can just do that in-bit.

Tim Causbrook: 21:04

No, exactly, really great hearing from you and hearing, yeah, like how you've been handling those setbacks and just keeping your eyes on the prize, so to speak.

Ed Chan: 21:11

If you're here listing and you're going, well, but I just enjoy doing the work. Well, you know that's going to disappear because of, you know, outsourcing, because of artificial intelligence. And you know, when I first started in this game, there were about 12 to 13 accountants per million dollars in fees. And then desktop accounting came in and that dropped down to nine accountants per million dollars in fees. And then, of course, cloud accountants come in and that's dropped it down to you know, four per million dollars in fees. And now artificial intelligence is there. You know everything is just automatically, you know, allocated it will drop it down to two grinders or one grinder per million dollars in fees.

Ed Chan: 21:52

So you know you've got to get into the management role because that's where the value is. So if you think I'm just going to, I like doing the work, I'll just sit here and do the work. Well, you know there's outsourcing. Now you can get it done for, you know, $8 an hour or $10 an hour, so there's a limit on your career and also how much wages you're going to earn because if someone can own it can go and get it done a lot cheaper. They're not going to pay you to do it, but they will pay you much more.

Ed Chan: 22:18

If you're in the management role, you're managing people and you're managing clients, because machines can't do that right. Computers can't do that. It still requires people to do it. That's where the value is. So progress your career to the management side because just purely on the society moving forward, it's going to make those jobs, the grinding level, a lot less available And certainly there's a lot of pressure on wages going up if they can just get machines to do it. So for those reasons, progress your career and learn how to manage people come to these sessions and learn how to inspire and lead people and bring them along with you.

Tim Causbrook: 22:54

Awesome. Now, thanks so much for that. It's really great to think about the wider direction the industry is going and it's unstoppable that progress with the tech.

Ed Chan: 23:02

So I'll just leave you with that saying about if you want to go fast, go by yourself, but if you want to go fast, bring your team with you right? So when you go from a grinder to a minder, it's a different skill set And you know, come to these sessions to learn it and bring your senior people here to help them, because it's not easy. If it's easy, everybody will be doing it. It's not easy to run a business. There's a lot of challenges And you know, being a part of a group like this, it sometimes, you know, you start questioning yourself. Or you'll have a setback and someone will say something to you and then you start questioning yourself. Or a client will say something like I only want you to deal with me, you know, and then you start questioning yourself.

Ed Chan: 23:42

When you come to these sessions, you just talk to like-minded people and it brings you back to the court on the right path because we're all going through exactly the same challenges and issues. So I'll just leave this with you if you want your business to be, you have to scale your business so that it's managed from the bottom up. Bring your people with you. you can get them trained up so that everyone's rowing in the same direction and they're not rowing in different directions. It just makes the job of running your business so much harder if everyone's off doing their own things and they've got a different culture and different thinking, and you know it's just too difficult. So I'll just leave that with you. Thanks, Ed.