Episode 75: Buying back your time - how to stop working IN your practice

In this week's episode of The Wize Guys Podcast,  prepare to swap your practitioner hat for a business owner's crown as our esteemed guest, Ed, shares his enlightening journey and helps us navigate this challenging yet rewarding transition. We pick Ed's brain on the critical aspects involved in transforming your practice into an independent business: redefining your mindset, mastering the art of cost reduction, and becoming a pro at managing your team. His valuable insights on stepping back from being a player to being a coach will set you on the path to a thriving business.

Delegation is a powerful tool in business, but recognizing when and how to delegate can be a game-changer. In this episode, we take a deep dive into the world of delegation - examining the benefits it can bring to your business and presenting you with effective strategies to delegate tasks and manage work in your organization successfully. We also inspire you to motivate your team, enhance your leadership skills, and keep the business engine humming. So, sit back and join us on this captivating journey, exploring how to build a business that runs without you and enables you to regain control of your time. With Ed's guidance and our enriched discussion, you'll be well-equipped to take your practice to stellar business heights.

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PS: Whenever you’re ready… here are the fastest 3 ways we can help you transform your accounting/bookkeeping practice:

1. Join 40,000+ subscribers to our transformation Friday tips – Every Friday, our Wize Mentor and Thought Leader of the Year, Ed Chan will send one actionable insight from his experience of building a $20 million accounting firm that still runs without him – Subscribe here

2. Download one of our famous Wize Accountants Growth Playbooks – Our FREE Playbooks on how to build and scale your firm are more valuable than most PAID business coaching programs! See for yourself – Download here

3. Join the waiting list for a free login to the world's best accounting business intelligence software for scaling your firm. Take a look at the app we use to build our own $10million firm in just 7-hours a week – Get a FREE login here

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: 0:35

I think if you could find a more fundamental topic to what we do and what we're on about at Wize Mentoring the theme today is buying back your time, how to stop working in your practice I'd love to just dive in and get into it. Just a reminder we've got recruit, design, and scale the three different areas of the journey in Wwise and today is really about design. It's all about designers we'll jump into. So, without further ado, let's jump into the Wwise withdrawal journey with Ed. Ed, I've thought about this a lot over the years. Probably the biggest differentiator between yourself and other accountants is really that you did this withdrawal journey and this was a key component to how you run your business. And similarly, with Jamie, which we'll come to in a moment, I'd love it if you could explain briefly if you can. It's a long process, but if you can explain the methodical process a firm owner should focus on for removing themselves from the day- to- day of their practice.

Ed Chan: 1:30

Sure, Tim. Yeah, so I guess for me it started with you've got to start with your thinking. If you think the right way, then the decisions and the actions that you take will shape your destination, where you end up. But if you think the wrong way, then you end up in the wrong place. And, as you know, life is short and if you've got to, don't waste time working in the wrong areas. So you've got to start with your thinking.

Ed Chan: 1:59

And I think most people, like myself who first started, think of themselves as a practitioner, someone who wants to run their own business and do the work, and as a practitioner, you think in a particular way. And so you've got to change your thinking from a practitioner to a business owner. And what I mean by that is that and I'll drill down into and I know there are some client managers here and not just owners, so predominantly there are owners here, but there are some client managers and staff here as well. So then talk about how that applies to you in your position as a client manager. But as the owner, changing from how you think as a practitioner to thinking as a business person is absolutely paramount. If you don't change the way you're thinking, then you're going to have a practice, as you know. As a practice you do everything. You know you answer the phones, you do the filing, it doesn't matter what it is, you just get in there and you do it. But as a business person you can't do that because you've got to make profits and it's not a lifestyle, it's a business. It's got to make profits. So in order to make profits you've got to drive the costs down and especially the costs are good sold In your P&L, in your profit and loss statement, the highest cost to your business is your staff wages and in our business it's what I call our cost of goods sold.

Ed Chan: 3:34

So some businesses buy and sell products. You know they might buy calculators and they buy at a certain price and they put their margin on and they sell it at a particular price. Well, our inventory, if you like, is our staff. Managing our cost of goods sold is extremely difficult because, unlike buying a calculator, where you've got a fixed price other than the currency exchanges, if you're importing it from overseas you know what your cost is. But with running an accountancy business, your cost of goods sold can go up and down. And what I mean by that is it just depends on how your staff are feeling. One day they're very productive and the next day they're not so productive. So one day you know the cost of your product is costing you X and the next day might not cost you Y because of how productive your inventory is, if you like.

Ed Chan: 4:30

And then you've got to see yourself as the coach and not the player. Our user is sporting analogy. They'll use soccer because that's common across the world. You're the coach of a soccer team. You're now the coach of a business where, instead of you playing the game yourself, being a player or, in accounting terms, instead of going to work to prepare a tax return, you build a business that prepares the tax return. So a business is made up of people in systems, procedures and policies and so forth.

Ed Chan: 5:06

And then in a footy team and you're the coach of that footy team, you've got different people that plays in different positions. Or you're the conductor in an orchestra and you've got all your people playing different instruments and you don't jump in there and play an instrument because who's conducting? Or as a coach or a footy team, you don't jump in there and play a position. Then who's coaching? So, for a practitioner, if you want to do it right. You just got to do it yourself and by the time you train someone you could have just done it yourself. But if you look at yourself as a coach of a footy team, you can't take a player off and go on yourself and play the position, or you're very conductive in orchestras. Someone's not playing the guitar properly. You don't throw them off and go and play the guitar yourself. You're the conductor, you're up the front conducting the orchestra.

Ed Chan: 6:04

And as a business person, you're now no longer playing the instrument. You're no longer preparing the tax return. You're building this business that prepares the tax return and, as I said earlier, it's made up of people in the right seat and on the right bus, playing people to their strengths in positions like a soccer team. You've got all different positions in the soccer team. You can't just play them all over the place. You've got to select the right person to play goalie, you've got to select the right person to play the wing and so forth, and in your accounting business it's exactly the same. So you've got to find the right people for those positions. Now, when you're very small, you've got to foot in all of those positions. You know you're doing everything. And in the withdrawal journey you've got to then withdraw from those positions over time.

Ed Chan: 6:56

And for those of you who've come to our sessions in the past, you'll know that I talked about an organization chart which is made out of seven divisions. And division one is your strategy, where your board of directors sit and they determine all the direction, strategy, how the business or the journey of the business, and you might wanna invite some people from your team to sit in that division and you meet once a month, you go through the numbers and you discuss strategies, you discuss direction and so forth. And then you've got division two, which is your marketing, and division three, your sales. Division four, your production. Division five, your quality. Division six is your admin and division seven is your accounts, accounts, receivable accounts, payable reports. That's all in division seven and your journey is to withdraw from those divisions, one at a time.

Ed Chan: 7:57

And as you get bigger and you can afford it, you start withdrawing. Well, the ones that you withdraw from are the ones that you can pass the task to somebody else at a lower cost. And as a business person, you've got to think of your business in terms of resources and how much the resource is gonna cost you and the highest cost resource to your business not your practice to your business is the partner, is the owner. They're the highest cost resource. So if you're the owner and you're picking up the phone and answering the phone or you're filing or you're doing production work, well, it's costing your business a huge amount of money and you wanna be able to push the lowest cost task down to the next person, so it's not costing your business an enormous amount of money.

Ed Chan: 8:45

And the first department that you or division that you pull yourself away from is your administration division. So just get someone to do the admin, and that's division six. If you're finding you're running out of time, that's the first one you should refine an employee for. The second one is production. So find someone to do the production, the preparing the tax returns and the financials and so forth. And then the next one is your accounts, financial accounts and reports for your organization, for your own business, and get someone to do that. And then the next one is quality, which is division five, and then sales, which is division three, and then, finally, you should be just sitting on the board and division one, which is where I'm sitting at the moment, but from a client manager's role it's exactly the same from there, but a lot more within your own team is to push the work down to the lowest cost person, because your division in your team is about making as much profit as you can in that division, and making profit is about increasing your turnover.

Ed Chan: 10:01

So as a client manager, your role is to get more new clients in, not to get more new clients in. You can't be at your desk doing work. The best way to get more referrals is to get in front of your clients, talk to them about the results, get your team to do the work at a lower cost. Then you go and see the clients and that's the highest value work is the consultancy with your clients, the face to face, because that will generate more referrals from your clients. It is a journey and you've got to think the right way, because the way you think will shape the kind of decisions you make and the decisions you make will shape the actions you take and the actions will lead you to the outcomes. It starts with you thinking.

Tim Causbrook: 10:54

Thanks, Ed, on that note. I like that you ended on that note because I'd love to pivot to Jamie now and get his take on this. I can't help but agree with you on that, ed. I've got a friend who's a former employee actually, who's doing $4 million in Sydney and he's absolutely integral to his business. If you took him out of the business, you wouldn't have a business.

Tim Causbrook: 11:12

A lot of people think, yeah, this is a problem for sole traders or a problem for people with one or two employees.

Tim Causbrook: 11:18

I've seen it be a problem for my own firm and other large, large firms and it's a problem that scale doesn't necessarily solve, which does make me think it is about mindset. Jamie, I'd love to hear your take on this. I think mindset is a huge part of it, as you've emphasized, ed. I also think, as you can see from this chart, there's a problem which is that if the owner is trapped talking to clients and managing staff, there's very little time for them to work on the business and you've got to take out extra time to work on the business and your workload will actually increase in the short term to medium term until it decreases, which we can see. On this inflection point here. Jamie, I'd love to hear your take on some of those topics the mindset, the pace, and eating out time to work on the business. I'd love to hear a bit about your own experience in Sky Accountants and how you achieve that working with Ed. Thanks.

Jamie Johns: 12:07

Tim, 10 years ago I was to sit there in the office and think about, I think, albert Einstein's quote. He said the definition of insanity is doing the same thing every day and expecting a different result. If you go to work every day and you do the same thing, obviously nothing's going to change. That quote really got to me. In the end. I thought, well, I've got to make a change. If I'm going to sit here for the next 10 and 20 years and expect something different, I've got to make a change.

Jamie Johns: 12:33

There are different things that get through to different people and it doesn't matter how many times you hear it. Sometimes it might be the 10th time you hear it that Penny drops. That was the thing for me Then. Another thing that, when I look back in reflection, is Newton's Third Law. He said that for every action there's an equal and opposite reaction. In other words, I thought, well, if I keep just one hour a day, if I just take one hour a day and work on my firm with the right activities and we always call them Pod 2 activities, quote Dr. Steven Covey then I'll eventually get some change.

Jamie Johns: 13:06

There's always different ways to look at things. In the WizeV ault there's a lot on withdrawing from the org chart, as Ed just said. At the same time, if you start doing different activities, then what will happen is you'll get an outcome First at the mindset, then you'll start doing different activities. Different activities are like training, training people, educating your clients, hiring people, delegating. These are all not urgent, but important things. Another way to look at it is simply by being conscious of what you do every day.

Jamie Johns: 13:46

I think I've told this story a thousand times For quite some years. I had a sticker on the top corner of my computer screen and it said what am I doing? What am I doing? Every time I look at that sticker, I think hang on, is this a task that someone else should be doing? Do whatever works for you. Put a sticker on your computer screen, put a big poster on your wall, do something that will remind you that you shouldn't be doing the task yourself. Busy account in the world or bookkeeper in the world will say it's quicker if I just do it myself. Well, it's not. That's just a short-term quick fix. This is short-term. It doesn't get you anywhere. It's like the hamster on the treadmill.

Jamie Johns: 14:24

The point is, every day, when you go to work and you start doing some work. Think about can I delegate this? When you delegate it, it'll be a task somewhere in that all chart on those seven divisions. Like Ed said, it could be in the accounts area. It could be in the admin area. 18 years ago, when I started my own firm, tim, I did everything. I started with one client. Like Ed, I actually did absolutely everything.

Jamie Johns: 14:50

Then you have to learn to delegate. One of the biggest steps to delegate is Division 4, is the production work actually doing the tax returns, doing the financial statements or doing the bookkeeping Right. And then a bigger hurdle in that is client managers. As you investigate all the wise knowledge and the blueprint, you'll come to the point at some point in time where you have to hire a client manager and I'm just looking in the room here there's some people have already done that.

Jamie Johns: 15:16

And that's a really game-changing too, Tim, is when you hire a client manager and you have to take a courage pill. You don't have a packet of Tim Tams or something there, whatever some sweet. Every time you refer a client, have a double backer meeting, and hand over a client to a client manager, give yourself a pat on the back. It takes a lot of courage.

Jamie Johns: 15:35

Some people can't do that, and so here at Wize, we encourage you to take that next step in division four in sales, to introduce your clients to a client manager and then delegate that process. So it is a journey and you will be challenged, but it's worth it, because it's all about getting a better lifestyle, looking after your mental health, looking after your physical health, scaling your firm, learning the skills of how to delegate successfully. I think that's one of the biggest things that you'll ever learn is how to delegate successfully and continue on the journey and hopefully, in the wise community, you can learn those skills and be supported by ourselves and the mentors so that you'll come across all these issues and a lot of the issues are people issues, Tim because you've got to be a leader. You have to be a leader and what's that? I didn't know what that was and you can learn leadership, and that's what we're here for.

Tim Causbrook: 16:33

Yeah, awesome, jamie, thanks for that. And if you could share really one action point I love what Jamie said about figure out what motivates you, or figure out what will help you stay on this journey with big on persistence and consistency in this community, because we know what we've got to do. You've just got to make sure that you do it each day or each week or each month, and you will get the result in the end, and everyone's different. So, ed, it's overwhelming. I know I was pretty overwhelmed when I started with this. There's so many different aspects to the journey.

Tim Causbrook: 17:02

You've already said that look at each of the seven divisions and withdraw methodically from those, and that's a really great one. Do you have any other action points? Maybe just one action point that you'd suggest taking next to act on this discussion? If someone hasn't really even thought about their business as a passive investment or as a business, and it's more that they go to work and they have a bunch of people who help them do their job and they've got more of a job than a business, can you share? Where should they begin? What's the first step they should take?

Ed Chan: 17:31

I guess the hardest thing. We all grew up as grinders. We all grew up doing the work, so it's really easy doing the work and for some of us who are now running our businesses, we enjoy doing the work.

Ed Chan: 17:47

So there's a tendency to want to do the work, but that's okay as a practitioner and you've got unlimited amount of time. But if you've got a limited amount of time and you want to run a business because the only way you can scale and make decent money and have a better lifestyle is to scale and critical to your ability to scale and run as a business is your ability to delegate. But there's a difference between delegation and abdication and I think that's probably, if I'm going to pick one thing, that's probably the biggest challenge for all of us who've grown up, if you like, as grinders, as people that are doing the work, and now we've got to manage the work and there's a huge difference between doing the work and managing the work. And then if you find it difficult to delegate, then there's a tendency to go back and just do the work, and hence I get people say to me it's quicker if I just do it myself. But you can't scale, that there's only so many hours in a day and you have to learn to delegate and part of the delegation process this is what I used to say to myself if I do the task from start to finish, then I'm not managing, I'm doing, and your value to the organization is not in your doing, it's in your managing, because the only way that you can scale the business is to improve your management ability. Now, this is the way I used to try and help myself think and, as I said, I was a grinder and I moved into a management position and nobody taught me how to manage people. So I used to say to myself if I'm doing a task from A to Z, from start to finish, then I'm not managing, I'm doing, and I need to give it to somebody else to do 80% of it, and I only do the last 20%. So if I'm doing 100% of the task, I'm not managing I'm doing, and being a doer is of no value to the organization.

Ed Chan: 19:50

Being a manager is where the value is to the organization and to your own team and to the people around you, and so forth. So every task that you're doing should be pushed over to somebody else, and then you end up doing the last 20%. And if you're not doing the last 20% and you're doing it from start to finish, then you're not managing your doing so. It's as simple as that. So try and think of it in those terms and never do a task from start to finish. All your tasks as a manager should be done by the team and you should be doing the very high levels, the checking, reviewing and the last 20% of that job. And if you train your people well enough, then eventually they'll be able to do 99% of that job where you can just run a quick eye over it. Or if you're the owner of business and you've hired a client manager to do the work, then you do 0% of that work and also the whole team is doing it from start to finish.

Ed Chan: 20:52

So if I was going to pick one thing, I'd say learn how to delegate and not abdicate, and learn that you're a manager and not a doer. And it's not quicker if you do it yourself. But it takes a little bit longer to train someone and it takes a bit more patience and it takes consistency and the right kind of thinking. Because, tim, you know and I know even in our own firms and in your firm and when you're coaching other firms, the hardest thing to do is to get the owner to let go and to delegate and to manage and not do. But then you go to the client managers and it's one of the hardest things is to get the client manager to let go and push the work down. And they just want to hang on to it for several reasons.

Ed Chan: 21:44

One they don't understand right that their value to your organization is to push the work down. They might like doing it, so there's a tendency to hang on to it, but that's not their role as a client manager. If you're doing some administration work or some production work, you're getting paid a lot of money to do a very low task activity. You'll either cost the client a lot of money right, because you're charging an accounting rate for an administration task and all the organization is going to write that time off because you've gone over the budget, because you've misallocated resources to get that task done. So if you manage your work, you work out the resources that you need to get that work done. You don't jump in there and do it yourself. That's very, very costly to the organization.

Tim Causbrook: 22:35

Great point there, Ed. Delegating and pushing down the work not just at the owner's level but all throughout the organization.