The Wize Guys

Episode 4: How to make your clients deal with your client managers and not you

July 23, 2021 Wize Mentoring for Accountants and Bookkeepers Season 1 Episode 4
The Wize Guys
Episode 4: How to make your clients deal with your client managers and not you
Show Notes Transcript Chapter Markers

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Episode 4: How to make your clients deal with your client managers and not you

In this episode of The Wize Guys, Brenton Ward and Ed Chan in the participation of Wize Tribe members tackle about the things to know in transitioning clients to deal with client managers in every accounting and bookkeeping firm.

You might be seeing a pattern now - creating efficient operations for your firm. You’ll hear the lessons that Ed, Jamie, and Brenton have learned about managing teams and how to structure them to handle probably the most time-consuming part of running a firm - communicating with clients.

Find out how you can start to implement this strategy in your firm today!

Timestamps:

1:10 - How to manage clients
3:34 - Ed’s journey from being a prisoner of his business to freeing up his time
7:20 - The importance of implementation
10:46 - Existing clients VS new clients
16:06 - Reasons why clients managers should have strong interpersonal skills
20:34 - Tips for transitioning clients to your client's managers
23:03 - Client manager roles: working part-time VS full-time
27:04 - How to cross-check clients’ feedback
30:49 - Best strategy to allocate your people to training
33:31 - The difference between hiring offshore to part-time and full-time team members
40:54 - Hiring junior staff VS senior staff
47:40 - Why you should start creating Standard Operating Procedures (SOP)
48:43 - How to allocate work and capacity with your team

Quotations:

“... the worst feeling in the world is to lose clients. So you gotta put systems in place so that, it allows you to have control without being controlling.” - Ed Chan


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Episode 4: How to make your clients deal with your client managers and not you


“You won't be able to scale your business. If you allow your clients to manage you. And therefore you need to be able to set up the team structure and educate the clients to deal with the team and not with you.”

Brenton Ward: How are you, Ed? 

Ed Chan: Good day Brenton. Good day, everybody. 

Brenton Ward: Now You'll notice that we're missing the Best looking wise, mentor Jamie Johns because in the last week, he's trying to make himself prettier and lose his glasses he had laser eye surgery and he's laid up in bed for the last couple of days. And is he crazy? He's normally going a minute. So he's apologizing for not being here, but it'll definitely be around for the next one and a much better-looking record. So we'll, we'll keep the glasses club going stronger. 

Now, today we didn't necessarily post a specific topic that we're gonna talk about to start today's Wize live. We wanted to basically go back and have a look through the Wize Tribe and have a look at some of the questions we've been asked over the last couple of weeks and see where some of the trends were.

So the topic that we've landed on, start the discussion questions with your clients to deal with the client manager and not you. This is one of the biggest things that cripple firms or cripple accountants from your experience working with firms. 

Ed Chan: Yes, because you won't be able to scale your business. If you allow your clients to manage you instead of you managing them. Okay? Often the clients will always say to you, I only want you to deal with me. There are only eight hours in a day or 10 hours in a day. And if you work, there are only 12 hours in a day, you've gotta sleep and you can't charge more than that. Therefore you need to be able to set up the team structure and educate the clients to deal with the team and not with you. There's a technique that you've gotta adapt. And if you don't adopt that technique, then you're gonna struggle to grow your business. 

Brenton Ward: So we're gonna dive into that in a little bit more detail. I'd like to take you to take us through your journey of experiencing this yourself and then how you help firms overcome it. But just to let everyone know who may not necessarily have been on a Wize live session before. So for the first sort of half-hour, Ed's gonna have some wisdom on this topic. Then beyond that for the next sort half an hour, or as long as we need the questions from the background.

Now Ed, on your experience with how you faced this issue. So growing you, being the senior client manager and the client accountant. How did you experience this yourself, and how to transition away from it?

Ed Chan: Yeah, I did everything wrong, right? The dug a big hole that I thought I could never climb out of because not only did I see the clients myself and I even did their tax returns in front of them. I did the iReturn in front of them. So they'd come in, and I'd do the work. I'd finished the work off, they'd pay there. Then, they'd leave. The next one would come in. From that to that's with I returns. So I was working very long hours and then the business clients who'd come in and they'd only wanna see me. And then eventually, like there was just wasn't enough hours in a day to handle everybody. Then you start hiring staff to try and help out. Of course, you are still spending all your time with clients, not with your staff. So then they start making mistakes and then they start doing things that you wouldn't have done yourself. The clients started complaining. It just felt like it was just impossible. I started dropping them between trying to hire the right people, getting to work, and then seeing all the clients, because they all said they just wanted me to deal with them. 

Brenton Ward: So was there a catalyst or a tipping point there in terms of say fee level or the number of hours worked a number of clients that you were looking after that you realized that something had to change?

Ed Chan: Well already above Brenton because my life, I was a prisoner in my business. I didn't have a life. I wasn't seeing the kids. They're all growing up. And then, I wasn't making the money that I should have been making based on the number of hours that I was investing in the business. So it all had to change. 

A friend of mine, well was a colleague who was running a practice that was 10 times my size. He was working a fraction of the hours I was working. I guess that was the wake-up call because we both did the same thing. We both prepared tax returns and profit and loss statements and our books and things for the clients. But we did it differently. We just did the work differently. How was the thing that was different? What we did was the same, but how we did it was different. 

So I guess that was a big catalyst. He then put me onto a couple of books, The 7 Habits of Highly Effective People by Dr. Stephen Covey and The E-Myth Revisited: Why Most Small Businesses Don’t Work and What To Do About It by Michael Gerber. And that sort of helped me change my practice and helped me understand that some of the things like the 80-20 rule, 80% of your clients will just do as you tell them to do, 20% of the clients will complain then so that when someone complained to me about they just wanted me to do their work. I realized that 80% of them were just waiting for me to lead and they would just be happy if I said to them, ‘You gotta deal with Mary.’ They would've just said, ‘Yep. Okay, no problem.’ And I was reacting to the other 20% and reshaping the whole practice for the 20% when the 80% was just waiting for me to lead the principles that I've found in those books helped me run the business. 

Brenton Ward: So just before I go to the next question, Ed. To make sure that we're in the right room and everyone's in the right place, I'd love you to open up your chat boxes, everyone. 

Give us a scale from 1-5, one being that you don't experience this at all. It's not an issue that you faced to 5 being that you very much sympathize with the situation that was talking about that you're working a lot of hours. You look after way too many of your clients, and you think they all rely on them or rely on you. Where do you sit on that scale? At the moment, you've got a five straight-up couple of threes. Two years ago, the client said you were a five. You've definitely done a lot of improvement in that time client. So, okay. We're all, this is a topic that I think we need to focus on it. You did mention that.

Ed Chan: Well, I guess, firstly I'll explain how I did it. Now that I do mentor other accounting firms, their challenges, and then they're no different from the challenges I had, but the difference is just the implementation and having the courage to do it. When someone says to you that they only want you to do the work. What they're really saying to you is that they don’t know in the office. They haven't met anybody else. They don't know anybody else, but what they're not saying to you is that once they know somebody else and they're confident with that person and they're comfortable with that person and that person is doing the work the way they want it done, then they're quite happy to deal with them, right? 

So that's not, that's what they're not saying to you, but that's really what they want from you. Sure. And if you don't lead them if you don't encourage them and lead them and simply react to what they're saying to you, then you are letting them manage you and not you managing them and they'll drag you into their nightmare. That's what happened to me. 

So let, let me just quickly go through, cause I did everything wrong from doing the tax returns in front of the clients. In other words, I was the highest cost resource in my organization and I was doing the lowest value product. And that was really silly from a business perspective, you using a really high-cost resource to produce a very low-level product. Not to mention that I wasn't investing into my balance sheet, investing into my staff because of all the IP. The intellectual property was sitting in my head and I wasn't passing that onto my balance sheet. So that forced me to continue to work in my P and L. And I see that with accounting firms where the partners are 65 years old and they're still doing, iReturns, they're still working in their P L because they haven't invested in their balance sheet so that somebody else would do the work. So put that aside for the time being, but I'm just talking about the transition at the moment.

So the first thing I did was with those people, I got one of the staff and I'll call it Trudy because, you know, I trained her for a couple of years and she was just fantastic at doing the work. And she had really good interpersonal skills. So the first thing I did was I brought her in with me. So I break it into two categories, the existing clients that you've dug this hole for yourself and you've gotta get out of. Right. They're the hardest. So I'll talk about handling that. And then I'll go to the new clients, which are very, very easy, right? So I'll do the old ones first. 

So, I'll break the old ones into iReturns and businesses. So, iReturns I've brought Trudy in and I said to the client, ‘Look, would you mind if I'm getting treaty to help me do the work for you?’ And they said, ‘Yeah, no problem.’ So I sat there and just spoke to them, truly would do the work, finish the work, do everything that I'd normally do. And I'd just talk to the client. And then halfway through the meeting, I'd get up and I'd say, ‘Look, I'm in my room next door. And if you need me just call out to me and I'll come in.’ And then before they went, I'd pop my head in and say, ‘How's it going?’ Everything was good the next year they'd come in and they'd ask for me again and I'd bring Trudy in. And then in that second meeting, I'd say, ‘Did you know that you could actually drop the work off?’ And they'd say, say something like, ‘Oh, I didn't know that I said in this day and age there's the technology and you know, there's no need for you to travel, you know, three cause of an hour and wait an hour for us to do the work. And, you know, it takes up a lot of time, just email it to tours or drop it off.’ So we're constantly educating them to drop the work off and so forth. So, I transitioned them that way. Never lost a client. 

Okay. So that's from the old people and then with the business, it's sort of the same. So I never went to see a client without a client manager. So I might go see the client and we work out what the problem is. Then I then called the client manager in. In the end, I introduced the client to the client manager. I'd say something like, ‘You and I design would design the architecture of your business. Trudy here, he's a builder. She'll put it all together for us. My team will work with your team to get this done.’ Then eventually they got to know Trudy and then they just continued ING with her and then we flipped it the other way. So that 80% of the traffic would go to her first. And then she'd only bring me in for the last 20%.

So then I could keep my, what I did at a quality level, like strategy, tax, planning, all that kind of stuff. And all the lower-level stuff is handled by the team. So, it was just managing the traffic flow and keeping the traffic to me at a very high level. So I can charge, $300 an hour, $350 an hour and, and truly, you know, charged it at the lower rate. So it's just the ability to manage that traffic flow. 

Now, what I found was that 80% of the clients would go, ‘Yeah, Ed, just tell me what you want me to do and I'll do it right.’ The other 20% would say, ‘No, Ed. I only want you to do it, right.’ And then I found out of the 20%, they just take longer to change habits.

Okay. So I use an example that if you are brushing your teeth with your right hand, and I asked you to brush your teeth with your left hand, it's gonna take you a little while to get used to brushing your teeth with your left hand. And it's just changing habits. So some people will change their habits after the second meeting with Trudy. Most people will change their habits from the first meeting. 80% will change straight away. They'll start dealing with Trudy. Then the other 20%, may need to meet Trudy a second time. On the second time, they'll change over. Some will need to meet her four or five times. The really long ones would take 20 times. But eventually when they get to know her and they trust her and she's really good at what she does and all that. Eventually, all of them go across, we've got over 9,000 paying clients in the group and none of them deal with me. And so it can be done. 

When I started mentoring client accountants, they'd go to me. ‘Oh, my clients just want me to deal with them and they'll leave if they don't.’ I remember when I was still practicing, I had this one client and he was, it was worth about $80,000, a really big client. And he said to me, ‘They interviewed three other accountants and he's chosen me.’ But his only condition was that I had to do the work. I said, well, ‘I've got a team here.’ And he said, ‘No, I don't care what it costs. I just need you to do the work. So if you wanna charge me more for your time, then I'm happy to pay that, but I need you to do the work.’ 

So anyway, I took your mind and after a while. After six months, he was dealing with Trudy it's just because the only person he met was me. Once he got to know Trudy and knew how good she was. He was quite happy to deal with her. So don't let those clients who say to you, ‘I only want you to deal with me.’ 

Brenton Ward: Other Trudy side of things, was there anything you specifically had to do to gear Trudy to get ready for that? And Paul just said, ‘Hey, how do you find a bloody Trudy?’ 

Ed Chan: Yeah, that's a good question. Because you need the people that you need, that you earmarked to deal with the clients have to have really good interpersonal skills. Just to give you an example. Trudy was not an accountant. She is a receptionist. She came and worked for me as a receptionist when she was 15 years old. So technically she wasn't very strong, but she had very strong interpersonal skills. She had this rapport with people that people just loved her. And unfortunately ended up getting MS and I still keep in touch with her today, but the clients still ask for it even today. After 20 odd years, they still ask for it because she had such good interpersonal skills. 

So what you gotta understand is if you pick someone for a client manager role, they don't need to be really strong. Technically they just need to be really strong interpersonally, and they need to be able to sell the sizzle, not necessarily the sausage. So Trudy had such good interpersonal skills that, but she didn't have very good technical skills, but she had a team of accountants. I called the grinders below her working for her. Listened to this, she didn't even finish high school. She didn't do an accounting degree. She learned everything on the job. So she knew enough to talk about the sizzle, not the sausage. But we had chartered accountants doing the sausage for her. So she even did complex self-managed super funds returns. But she'd go to Jeff, who's the chartered accountant grinder, geeky accountant, who had no interpersonal skills, no communication skills, but he could do the work and is technically very, very strong? 

So we matched them up. So we had the Trudy talking through clients, knew the sizzle, but not necessarily the sausage, when it was required for her to get the sausage, you'll go to Jeff. And bring Jeff into the meeting to do the technical things. None of the clients would like Jeff, but he didn't matter because Trudy was the bridge between the technical, the interpersonal, and relationships. So you've just gotta match the people up with their skill in the right seat.

Brenton Ward: Is there a misconception there when you're working with firms that the person, Trudy if you like has to be very highly technically skilled?

Ed Chan: That's right. It depends on the clients. So if you have really large clients that are very, very complex, then you need a much higher level technical person. Our clients are mainly small clients. The tradies, the consultants, it could be three and a half thousand dollars, $5,000 fees. The treaties of the world handle them very, very well. We don't go for the really big clients, but we don't go hunting for the really big clients because they require really high technical skills because they have really complex tax things which require a partner to handle. 

So whilst we don't say ‘No’ to them, our perfect client is the smaller client where I can use a Trudy and it's highly scalable because I can find lots of Trudy. So I just can't find very highly, technically skilled people with interpersonal skills and communication skills. It just depends on the client base as to what kind of client manager you hire now. Don't get me wrong. We've got Cindy who here who's very, very technically competent, a chartered accountant, very, very good technically, but also got very good interpersonal skills, communication skills. So she's a client manager and all her clients are quite large clients. So they've got very large complex tax problems and she handles them. But interestingly, the team that truly looks after is a lot more profitable than the team that Cindy looks after really right now. 

Brenton Ward: In terms of working with firms one on one and working through this process of shedding clients and introducing the client manager, from your experience that no clients really kicked back and it was more so just a matter of how long it took them to transition. The clients that really kicked back in any sort of aggressive, negative manner. I'm assuming that if they do probably the clients that you wanted to part ways with in any case. So have you had any issues where the firm that you're working with has approached it wrong or approached it not in a way that you would recommend that you can highlight any of those steps?

Ed Chan: There was a handful. But it got to a stage where the parade is 20% of your clients give you 80% of your problems and they fell into that category. So I just kept persisting to push the work. So they email me, and I'd email it to the client manager to respond to him or her, and I just kept pushing it away. So either two things happen, they accepted that, or they left. I just got to a stage where I was prepared to lose them because they generally gave you all your problems. They generally don't pay your bills. They always complain about the bills and they want all your time, but they won't pay. So they're, they're generally the real troublesome ones. And that they're only a handful in, and everybody on this webinar will relate to what I'm saying, that, everyone's got that client. So you just gotta make a decision and I did that I just kept pushing getting the client manager to respond to them. 

So in our team structure, it was the assistant client manager and the trainee client manager who handled the C and D class clients that I just kept pushing to. Then I just got her to respond when constantly, and he'd send the email back to me. Then I asked the assistant client manager to respond back and eventually, two things happened either they left or they continued on with the assistant manager.

Brenton Ward: Okay. Got a question from Paul that I'll quickly ask, ‘Do you think the three days per week, the parent who's experienced personable, and relatively expensive due to experience could role?’ 

Ed Chan: Could you read that again? Sorry. 

Brenton Ward: Yeah. 

‘Do you think the three-day-per-week the parent who's experienced personable relatively expensive due to the experience but they're part-time, could they fit the client manager role?’ 

Ed Chan: We do have a lady like that. She was full-time and she then went part-time three days a week. The thing is she had a very long relationship with these clients. So, they were prepared to work around her. It's not ideal if you are trying to grow the practice and get referrals, you've gotta give lots of services, and a client manager who works three days a work a week can get away with it because of the relationship with the clients. You probably won't get a lot of referrals from your clients. And if it's just about maintaining, then it's okay. But if you wanted to grow it, then it's not ideal. You want someone that's available five days a week. 

However, this particular client manager she's been with us for 20 odd years, she was in her sixties and wanted to slow down. So, we worked around with the assistant client manager who's been stepping up. She was taking on a lot of the clients for her and was able to get away with it on that basis. Cause there's always someone there five days a week when Lauren wasn't there, the name was Lauren. So when she went to three days, that team that we created with Lauren as the senior client manager and her assistant client manager, they managed that when she decided to go down to three days a week. It's not ideal, but it can be done. 

Brenton Ward: So just to go a little bit further on that question, Paul's asked, ‘So perhaps part-timers are better suited to the technician grinding for client managers, or do you avoid part-time entirely where possible?’

Ed Chan: Yeah, there's a plus and a minus to that. I agree that the part-timers are the best suited to the grinding because then they can do it when they're there. The plus to a part-timer is that like a mum they're so productive. They come in and they get so much done because they're so organized and the productivity is huge from part-timers who are very good. The flip side of it is that you lose some continuity because they're only there for three days. And the other two days are not there. So you do lose a bit of continuity with that. 

So, if the person is good enough and they're really productive, it could work, but it works best as a grinder behind the scenes, grinding the workout rather than upfront talking to clients who then when they ring up and they're not there, they get to bit disappointed. And it comes back onto the partner.

Brenton Ward: Actually, in your experience working part-time, are there particular days they're working three days a week? Are there particular days that you would suggest those days be scheduled?

Ed Chan: No, it's more the hours. I prefer someone that works from 10 o'clock or 9:30 am to 3 o'clock rather than having a whole day off. Because if they, if someone caught up at 4 or 5 o'clock and they're not there, they've just gotta wait one day to the next morning to talk to someone. But, when they just take days off, it's quite a lot more disruptive. It was up to me. I'd go for five days, but shorten the hours on that day. 

Brenton Ward: Now just the final question, before we open it up to everyone to us. How do you best monitor the progress and the success of your client managers dealing with clients when you're doing this transition? 

Ed Chan: Yeah. That's a good question, Brenton.

Because as you get bigger, you are further from the pulse of your organization. Meaning as we’ve got 9,000 clients and I don't see any of them. So how do you know that they're happy? You could have cancer in your organization if you like losing clients. That's the worst feeling in the world is to lose clients. 

So you gotta put systems in place so that, it allows you to have control without being controlling. We do that through our surveys. So every time a job's done, a survey goes out and it gets filled in by the client. When I read the surveys, I know whether they're happy or not happy. The research shows that if someone's not happy, they'll let you know. If you ask them if you address it very quickly, they're not only will you win them back, but they become advocates. So it's really important that what's going on, but without having to see every client personally, you need to have a system in place that allows you to be on holidays, but the surveys come back and they're all giving your staff a 9/10 or a 10/10.

Brenton Ward: That Reminds me, Jamie is quite passionate about heavily on a system called client heartbeat, which I know integrates with some of the accounting software packages. But bases its surveys on the net promoter score. So the 1 to 10, ‘How likely would you be to refer us to your colleague?’ From that one question alone, he has the system set up where he got each client manager, and then they send out the question to a client after the piece of work is done. So he can see very clearly where the client's really happy with the work. They ask that client for another referral or testimonials or two, where there's an issue or an alarm bell going off due to a potential issue and they can jump on that quickly as well. So there's some good technology out there now that helps facilitate very easily. 

Ed Chan: Yes. There's another software called Survey Monkey. That works quite well. We've actually automated it so that when the tax return is finished an automatic email goes out to the clients where they can fill in the survey online and it comes back and it's all completely automated. Then the report goes to the client manager, goes to the partner who then shares it with the client manager. Then if we get a survey that gave us a 10/10, we would then ask them for a Google review, and a Google review really important because in today's day and age people look at all these kinds of reviews to determine whether they wanna work with you or not. 

In fact, in Pimble we've got over 20 Google reviews, 5/5 Google reviews. Since we've had that in, our referrals have gone up. It does work. So this whole systemization of the practice gives you comfort because as you get bigger and you are further away from the pulse of your organization, you need to replace it with systems like this to give you the feedback that you need so that you can feel that feel like that everything's going well. 

Brenton Ward: Now Ed, Carla actually mentioned here, she was speaking about the Wize Tribe this week, the issue that she's finding, and if you could comment on it.  Is part-timers’ amount of time taking out of their productive hours doing the training?

Ed Chan: Yes. There are two types of training. There's the in-house training and then there's the sending them off to MTAA training. We don't send the part-timers out to training like an MTAA training. The part-timers get trained by the senior accountants or the senior client managers in-house and we send the senior flight managers out to the MTAA training sessions. Then when they come back, they then train the rest of the team. So there's a two-prong reason for that. One is from a cost point of view and the second is that when you are asked to train someone else when you get back, you are at a heightened level of attention. You listen a lot harder than if you were just sent there to listen to be there, it gets quite expensive. If you're sending the whole team to MTAA, and they're just not really paying much attention, but if you ask one of them to come back and do the training, then you get your money's worth because they do pay a lot more attention.

Brenton Ward: Okay. I hope that helps Carla. 

Just to answer your question, ‘Is there a section in the Wize program that helps define when to do the net promoter score?’ WizeVault - Step #11: Net Promoter Score is a net promoter score. Jamie has a couple of videos in there on client heartbeat. If you step questions on posted the Wize Tribe and we'll get on that.

Now we'll the questions. Dianne, just give us a quick introduction to your firm, and if you may have a question that's on your mind at the moment that we could potentially help you with. 

Wize Tribe Dianne: Hello. So yes, just you into the Wize mentor's program. I have a bookkeeping business based in Melbourne and have been in business for 14 years. It's just organically grown just as a response to client needs and has only grown through a word of mouth really. So we've got about 10 people on the team and for probably the first 10 years, or probably the first 9 years really, we did utilize the part-time staff. I always thought that particularly school moms were brilliant because they've done their accounting degree in education. They love their family, and they wanna be there and present to be a part of those years before nine 30, and after two, which was just fantastic. It was a win-win. But as my business has grown we'll have larger clients that we need to look after. I can't deliver that service between that two hours. I need people or whole team there five days a week, 9 ‘til 5, cuz there are sorts of organizations that we are looking after. Most of them are multimillion-dollar turnovers and they've just outsourced their whole accounting department to us. So I'm looking at transitioning at the moment of the majority of part-timers to changing to a full-time team.

Ed Chan: Well done, Diane. That's a great effort. The growth by word of mouth is always the best.  So obviously it's because you're doing something right. That's why you're getting so many referrals. But do you use outsourcing at all Diane?

Wize Tribe Dianne: Interviewing at the moment to put on our first two people outsourcing. One is going to replace two part-timers that we've got at the moment. One of the part-timers has already said that she's leaving and the other one they're casual. So I wanna have replaced one of them. That's just straight one-for-two there. Right? And the other person that I wanna get is to take the workload off myself and I call her a practice manager, but I think I'm using the wrong term there. I have two I see, right? So both of us are doing way too much accounting work and management reporting. I want someone up in just outsource that too, and they'll prepare the financial reports each period. And we can just check that before that goes out. 

Ed Chan: Yes, we outsource to Towa in the Philippines and they've got about over a thousand staff and we've got about 12 with them at the moment. It works really well. They're very experienced. Well, the staff that we've got, we've trained up and over the years. So they do all the bookkeeping, the basses, and everything's done. Our role here in Australia is mainly the relationship stuff ~ talking to the clients and addressing any concerns. They have that kind of thing, but the grinding is done overseas. So because there's a lot of stuff there that you can get. So in terms of your scalability, it's hugely scalable. Today because the technology, it allows us opens that door for us to do that.

Wize Tribe Dianne: Yeah. I've already made up my mind to do it. I'm very, very excited about taking that leap. So the other staff I have at the office, I've already got someone that I've appointed through the local university on the student placement program. I have another 3 university students who are second and third-year accounting students. And they are absolutely remarkable. We're fast-tracking their learning and they're gonna be a goal to any accounting firm who will want, ‘cause these students will want to further their career in the accounting field. And I'm giving them their transactional-based love of every transaction, right from the word go through to trial balance. They are so good that one of the other services I'm doing at the moment to the industries providing relief staff. Never advertised it, but people ask me, ‘Oh look, well I need someone, my accounts, the person's just resigned. Can you come in and do our work and then teach the new person what to do?’ And I'm getting repeat business on that. 

Ed Chan: That could be, that could be another opportunity, but in terms of getting the flow, working and getting the production done, our overseas people, they just do the grinding and the managing is done by the people here. They've got interpersonal skills and relationship skills. They might see a new client they'll go in there and they'll implement the bookkeeping, the software, the charter of accounts, they'll do all that. Then they introduce the overseas bookkeeper to the client and they become the bridge between the grinder overseas and the client here in Australia. And that works really well. 

Wize Tribe Dianne: Are they full-time though? 

Ed Chan: Yes, they are full-time. Yeah. 

Wize Tribe Dianne: So that's where I need it because I've got two of my account. I call them to account managers, I've got 4 account managers who look after the clients to go to work I don't deal with the clients at all right? They do all that first end, that face to face with all the clients effectively. Then they dish out the work to all the grunt work or the grinding work to the accounting students. 

Ed Chan: Well, if their part-timers and the clients are used to them and they can only do so much because of the limited days. If the clients are happy with them, you could just park that with those clients, and for any new ones, you'll have to hire some full-timers to allow you to grow. 

Wize Tribe Dianne: Yeah. Looking at doing the outsourcing, like what's the time cause I know you've gotta do a lot of training? When does it become across the benchmark of being profitable from training and the up and running?

Ed Chan: With bookkeeping, most of the staff over there are experienced in bookkeeping and accounting. The only thing that they're not experienced is Australian tax. So if you are not doing Australian tax, you've got a real advantage for an accounting firm like us where we've gotta train the tax. It takes about 12 months to train them up when the Australian tax. But pretty much all the bookkeepers that we hire or the accountants that we hire, they've all got either experience of Zero or bookkeeping. It's not as hard if it's just bookkeeping, but where you have problems is the tax. 

Wize Tribe Dianne: Yeah, no, we don't do tax. We got no interest in doing tax. We love bookkeeping. 

Ed Chan: Yeah. 

Brenton Ward: I'm just gonna interject. I've got Paul who I've unmuted just to contribute to this conversation. Paul, I'll let you provide the context or add the question that you've got.

Wize Tribe Paul: Yeah. Hi guys. I put a staff member on earlier in the year full-time and I've just got a casual remote-based staff member that's very much part-time. I put them on and got kind of caught up in the sales pitch. Financially the numbers and the fact that they're grinders, all made sense. The day that she started, I basically realized had an epiphany that for me to try to train somebody that's full time with Australian tax knowledge and accounting, etc. based on my capacity being at a hundred. I'm doing 60-hour weeks. It was just not feasible at all. To bridge that gap, I instantly realized that they were quite good about it. It probably cost me four grand, whatever. But they replace a person and helped me financially. That's what they're about trying to make fees out of an exit. But yeah, I quickly realized that they would be best suited to like working directly with senior accountants or others down the line, such that I should get two IC-strong seniors locally first to help free me up. 

Ed Chan: One of our officers. I think Jamie's also gone down this other path where they would wait a bit longer to get someone who's got Australian tax experience so that they didn't have to do the training. They can hit the ground running but it does cost a bit more. So both Jamie and one of the offices in my group preferred to pay a bit more for that. 

When I say a bit more, like instead of paying like $22,000, you're paying $26,000. So it's like you're getting someone that's like $80,000 in Australia or $24,000 - $27,000 in his experience.

As I said, one of our firms and including Jamie, their strategy now is not to hire anybody without Australian tax experience, but to wait a bit longer and to pay a bit more to get someone with that experience. 

Wize Tribe Paul: The sales guy essentially said that that's not gonna happen because the demand's too high. And potentially they push those types of people to better clients. I guess versus small firms. 

Ed Chan: Yeah, it's really hard. We've got 12 over there now. So when we hire somebody, the people over there train them. Our people who are over there, train them. So in your situation, you are training them. So that's obviously much harder, but because we've got senior accountants here, they do all the training. It's a lot easier for us. There is a benefit in getting size and scale in terms of training, leverage, and so forth. So 

Wize Tribe Paul: You'd agree though like your sole practitioner definitely needs two local staff before probably considering going to the tower, for example.

Ed Chan: It depends on your size, Paul. If you’re doing like $400,000, you need a senior person in there. I see firms with $400,000 and they go hire really junior staff because they're looking at the costs. Then it creates a huge blockage down the pipeline because those junior staff aren't experiencing enough to check the work and dot the I and cross the T. So it all lands on the partner's desk who then who's then got the added responsibility of having to deal with the clients and manage all traffic, the communication traffic with the clients. So it creates a huge blockage in that situation that particular firm should have got, it's a senior person who can get flow happening. So, without knowing your particular circumstances, it just depends on the size of a firm. And who else you've got in the organization to create this team that allows the flow of getting the water down the pipeline and flowing? But if you've got a senior client person in there, you can hire an outsource person because the senior guy would be training the outsource person. Then that frees you up to continue dealing with the clients from interpersonal skills and communication skills point of view.

Wize Tribe Paul: In terms of bookkeeping, you obviously do bookkeeping in the house as well because of two factors your senior accountants can be the essential bookkeeping manager, and tax compliance guy, and have to do the processing. They just do the month-end reviews, et cetera. So that you've just got that one person as the touchpoint for that bookkeeping space? Or are you very specific to say there's a bookkeeping client manager, and then there's a tax client manager, and then as a partner?

Ed Chan: No, Jamie runs a bookkeeping team, right? Where they do the bookkeeping for the client. Then they hand the work across to the accountants to do the tax. We don't do that. We, our teams are narrow and deep. Meaning that within each team, we have a bookkeeper and the bookkeeper gets it to a point where the accountants take over, but they work for that particular team. So if you go back to one of the steps, it'll show you the bookkeeping team and how we do it, but we have a bookkeeper within each team. And each team manages around a million dollars in fees, depending on the makeup of that team. You might have one or two bookkeepers that get the work to accounting and the tax stage. But they work for that particular team as opposed to having a team of bookkeepers that does the bookkeeping for all the other teams. Does that make sense, Paul? 

Wize Tribe Paul: Yeah. That’s good. Thanks. 

Ed Chan: Yeah. Cool.

Brenton Ward: Okay, guys, I think that was a good sort of crossover between Diane. What you're talking about in terms of having your two IC on the ground and some of your team on the ground and then looking to do the offshore team strategy? Paul hopes that helps you as well. 

Just to touch on it as well, Carla mentioned that when she got her first two. She got at the same time, the biggest challenge was finding the time to train staff. Now, one of the ways she said she got through this and it was an effective strategy was to video herself doing the work, even if it wasn't visually, they picked up things really quickly, and it gave them the starting point to ask questions. So even though the first said, three months wasn't overly productive, they did learn a lot from the videos and actually started assisting with structuring. So they quickly gained ownership of their roles that way. So that could be a good strategy for you guys to implement as part of your onboarding process to start doing the videos, which I guess kind of bottles into what we call standard operating procedures. It is a step one as well in our systems and processes. But thank you for that. Carla. 

Grant, do you wanna have a chat with us about your question? 

Wize Tribe Grant: In terms of my practice after a national wage myself? I think that my ROI is a little bit on the low side, compared to what you suggest. So I suppose the question then is, ‘What should I look at as a priority? Should it go for growth? Or should it be the management of costs and largest cost?’ It's got a large number of fixed costs. This cost would be waged. So I'm, I'm probably not as narrow and deep as what you prescribe. And so therefore I'm interested in your comments about what procedure I should, or what priority I should pursue.

Ed Chan: Grant, are you happy to share your turnover with me? 

Wize Tribe Grant: Yeah, about 900.

Ed Chan: Okay. Well, that's a good size firm to get your team into narrow and deep. If you have shallow and wide, then you're generally not very profitable. That's what I found with firms. If you go narrow and deep, your profitability improves, but it can take several years to change because you may have set up those teams and they've been like that for a long time. You don't wanna sack anybody and a couple of people in the wrong seat, in the wrong bus, and you've gotta take several years to move them out or so. It will take time to move that around, but you will find that your profitability improves to try and get an illustration of it. Just so that the KPIs are making sense to you. 

I measure everything on return on investment and I structure my P and L to identify that. So the cost of goods sold should be made up of the people who are charging time out. Now, if you are the partner and you are charging 60% of your time, then you put 6% of your wages up in your cost of goods and 40% in your fixed overhead. The cost of goods sold should come in at around 35% to 40%. So if you're higher than that then you are too flat. You're too shallow and wide. You've got perhaps too many senior people on very high wages doing very low-end work. I find that's when profits get chewed up because they're on very high wages, but they're doing bases, bookkeeping, and that kind of thing. If you manage your traffic flow, then you don't your admin staff can be kept to a minimum. So at 900, call it a million you should have around one and a half admin person to do things like audit administration that you need to do with one and a half staff. Then, if you can keep yours to those kinds of numbers, and if you pay yourself a market rate, so about 160,000 in wages, you should get a return of around 25%. And my argument to people is if you can run that business and it runs without you like my practice, I only come back here once a month, just for the board meeting and it gives me around 25% return. Then that's better than putting my capital into stocks and shares or real estate, which gives you a rent return of about 3%, and dividends give you around five to eight percent. Does that make sense, Grant? 

Wize Tribe Grant: Yeah, it does. But I suppose if your admin is not one and a half, it's say two and a bit. Then if your professional staff as cost a good sold is a little bit higher than that. I suppose the question then is ultimate, do you know you've mentioned that it's hard to trim wages, like for say, professional staff? Do you then pursue growth and efficiencies dictated by pursuing that growth? Or do you focus on your costs?

Ed Chan: Obviously, if you can get growth, then that would ease off those KPIs. Because if you add a hundred thousand to your top line and you don't need any extra overhead. If you have more staff, then that flows straight to your bottom line and that would increase your ROI. That's if you didn't need any extra staff. 

So if you did a tuck for example, if you bought a hundred grand worth of fees, and if you can utilize your existing staff. I'm just it's hypothetical, of course. I don't know how busy they're, but if you could, that would go straight to your bottom line. That's a hundred percent profit. Even if you had to hire staff to do the work, the cost of goods sold to do would be about 35%. So 650,000 would go straight to your bottom line. So tucking in would help alleviate those KPIs. But you really need to fix the problem. The problem is, are they in the right seat, on the right bus? Are they working? Are they complimenting each other so that you get one plus one is five? 

So you've got the grinder doing the grinding work at a low rate to a lower rate. You've got the client manager doing the interpersonal skills to work at a higher wage. But then because their work from nine to five, if you like is only at that high level, then you can charge 'em out at $250-$300 an hour. Because they're, their time from nine o'clock to five o'clock is only spent at a very high level. So it's all about quality and you can charge at a higher rate and all the grinds are done at a low rate. If you get that synergy in those resource mix right, then 25 percent's minimum, you should be able to do a lot more than the 25% firms more than that mention I've seen them. Do you know? 30%. 

Wize Tribe Grant: Yeah. All right. Thank You. 

Brenton Ward: Happy with that? 

All right guys. Well, we don't have more questions coming through, so if you are happy, we might leave it at that end. 

Have a nice evening. One morning, wherever you are. And we'll talk to you soon.




How to manage clients
Ed’s journey from being a prisoner of his business to freeing up his time
The importance of implementation
Existing clients VS new clients
Reasons why clients managers should have strong interpersonal skills
Tips for transitioning clients to your clients managers
Client manager roles: working part-time VS full-time
How to cross-check clients’ feedback
Best strategy to allocate your people to training
The difference from hiring offshore to part-time and full-time team members
Hiring junior staff VS senior staff
Why you should start creating Standard Operating Procedures (SOP)
How to allocate work and capacity with your team