Episode 215: The 90/10 Shift That Made Ed Chan's Firm Run Without Him

Someone once told Ed Chan he should write a checklist. He was working 100 hours a week, so his answer was the obvious one. Where was he supposed to find the time?

Everything that eventually got him out looked like that. The checklist. Training the hire. Writing the policy. All of it sat in the pile he would get to once things calmed down, and things never calmed down. Ed explains what changed his thinking, and how far it took him.

✅ Why the work that never feels urgent is the only work that changes anything
✅ The question that decides whether your next hire should be a junior or a senior
✅ Why the money objection to hiring comes down to how you read your own numbers
✅ What happens to write-offs and turnover when people sit in the wrong seats
✅ The deep and narrow team structure, and why adding more people rarely fixes a workload

✅ How to hand work over when you are certain nobody will do it to your standard
✅ The exercise Ed used to sort every single thing he did into one of four places

Ed does not work in the firm anymore, and it still runs. This is how that happened.

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Transcript

Introduction And Why Owners Burn Out

SPEAKER_00 0:00

Welcome to The Wise Way, the show for accounting and bookkeeping firm owners who want more time, profit, and freedom in a business that can run without them. I'm Brendan Ward, your host, and each week we deep dive into the real stories, proven strategies, and battle-tested tools from successful firm owners just like you. Our wise mentors want to share their journey of how they've scaled and systemized their way to freedom so you can too. If you're stuck in the grind or you're ready to scale smarter, this is your blueprint. Let's get into the episode.

SPEAKER_01 0:38

Today we have a really good topic. We're gonna be talking about time, team, and capacity because I feel like most firm owners aren't really short on effort, they're short on structure, which is the whole point of having a firm that's self-running firm. So firm owners tend to be the busiest people in the firm, and it's costing them a lot of growth without them even realizing it. Ed has lived through the exact same issue. So let's start from there. Ed, can you give us a brief snapshot of where you were at the time where you realized you needed to make your first hire and what was going on in the firm at the time and in your week at that point when you finally made the choice of hiring someone?

Choosing Your First Key Hire

SPEAKER_02 1:22

Sure. Well, the first hire wasn't that hard because we needed a receptionist to answer the phone and to type tax returns because back then we didn't have computers, so everything was done on the typewriter, and we had to get the financials typed up and also a tax return. So we needed to hire uh someone to do that. So that that was an easy one. But the hard one was the accountant, the next hire, which was the accountant to do the work. And most firms sort of confuse between whether they should hire a junior accountant or whether they should hire a more senior accountant, someone that's more experienced. And I get asked that quite a bit, but the answer to that really depends on how much work, new work is coming through the door. And in in my case, I had a lot of new work coming through the door. So I realized I had to spend my time in the area that's the most important and that and the area that I could get the most return uh on my time, and that was seeing new clients and doing strategy work with the clients. So I decided to hire an experienced accountant because if I hired a junior, I would still need to train that person. So it would have taken more time out of my time, and I was already working like 100 hours a week, and I just didn't have enough time to dedicate to training someone. But then once I hired that uh that senior accountant, he uh did a lot of the work, so it took a lot of pressure off me. And then it wasn't that long after that, then I needed to hire a junior accountant to help him, and uh and then he could train the junior accountant, and I just kept doing what I was doing, which was seeing your clients, meeting existing clients with strategy work and the higher-end work where I could charge more for my time uh compared to the lower end work where I could charge less for my time. So just spending my time in the air is that maximized the return on the effort that I was putting in.

SPEAKER_01 3:31

Yeah, I feel like that's the position most firm owners are right now because they tend to be flat out, doing everything, not sure what to let go first. So the smart choice is always to let go of the low-value work so you can focus on the growth of the firm. So it's about seeing where your time is actually leaking to determine the next hire. So there's a lot of structure around

Covey Quadrants For Time Control

SPEAKER_01 3:53

that. And here wise, our philosophy is a lot from Stephen Kobe's book, The Heaven, The Seven Habits of Highly Effective People. And especially we focus a lot on the time management quadrants. So for anyone who's not aware of the book, Cobit splits his week into four quadrants. So the first quadrant would be urgent and not important. Quadrant two would be important but not urgent. Quadrant three is urgent but not important. And then we have quadrant four, which is neither. So not urgent, not important. So thinking about those four, Ed, where do you reckon firm owners are leaking the most amount of time usually?

SPEAKER_02 4:34

Yeah, so what Stephen Covey talked about was he explained how very effective people spend their time in one of these quadrants. And because time can get wasted very quickly. And if you don't spend your time in the right quadrants, you won't get the return. Um, so you want to be more productive uh in less time. And the way he explained it, which actually changed my whole life, because I went from working 100 hours a week down to about 20 hours a week, and then eventually, not at all, uh the work the business was running without me. And it was all about implementing these principles that very clever people have come up with. And what Dr. Stephen Covey said was, and I'll just focus on quad one and quad two, because quad three and quad four is the areas that you should stay away from. And I let me explain it like this quad one, uh, from an accountant's perspective, I call that uh your PL work. And quad two, which is important but not urgent, is more like an investment. So, as you know, an investment is is important, but it's not urgent. Whereas um if you work in your PL, you know, if a client drops the work off, you have to do that. It's important and it's urgent because the client wants the work done. So you drop everything to do the work. So that's what I call PL work. And it's more about reacting, reacting to things, whereas quad two is about preventative work. And let me just give you uh an example, and then I'll like an everyday example, then I'll go into how it affects an accounting firm. For example, putting out fires is a reactive activity because if if there's a fire there, it's important and it's urgent to put that fire out. But if you were to put in some preventative measures, then that's important to put in preventative measures, but it's not urgent. And another example is if your car breaks down the middle of the road and it's holding everybody up. Well, that's important and it's urgent. So you need to fix that problem, get the car out of there because it's holding everyone up. But if you were to service the car, servicing is important, but it's not urgent. So people tend not to service their car. And if you don't service your car, then it breaks down. So, and often we will make excuses. I'll service it next month, and the next month comes around. I'm too busy, I'll service it the month after, and eventually the car breaks down and it causes a reactive activity to put the fire out. Another example is poor health, for example. Someone's suffering from poor health, you need to deal with it. And so that becomes quad one activity, it's urgent and it's important. But if you exercise, exercise is important, but it's not urgent. So we would make excuses. We'll go down to the gym, you know, next week. Next week comes around, we'll we'll go down next, we'll start next the week after that. So we keep making excuses for it, and then eventually we have poor health. Now, how does that affect our business, particularly at the accounting business?

Balance Sheet Work That Prevents Fires

SPEAKER_02 7:45

So I used to work in quad A, which uh quad one, which is reactive, putting fires out, and typically doing the work is a quad one activity, it's urgent and it's important to do the work. But training someone, for example, training someone to do the work is important, but it's not urgent. So because it's not urgent, we tend to think like this: well, it's quicker if I just did it myself. So you train or invest in that person and you just do the work because it's quicker and it's faster. And the other excuse I hear is you know, by the time I've trained that person, I could have just done it myself. It's just quicker if I just got it done. But that's all quad one activity. And if you keep working in quad one activity, then you'll just never get out of that busyness, the busy, busy, busyness. And until I realized it, and until I started to work in quad two, which was things like training, which was things like preparing a checklist so the staff could do a checklist of the work that I'm doing, creating policies. They're all important, but they weren't uh urgent. So take a policy, for example. Whenever there's a problem, problems only occur when you leave a vacuum. But if you fill that vacuum up with a policy, then it tends to get rid of the problem. But if you don't fill that vacuum with a policy, then you just other people just fill it up with what they think, how things should be done. But as soon as you fill that vacuum with a policy, and of course, people will say, Well, I'm just too busy to prepare a policy, again, it's a quad two activity. But I found that the more I worked in quad two, the less I needed to work in quad one. So don't forget, I was working a hundred hours a week, and someone would say to me, Why don't you do a checklist? And I'd say, Well, where am I going to find time from to do a checklist? You know, I've got so much, I'm so busy. You know, but if you just made some time and worked out that checklist, it just saves so much time later on. So it's it's just an investment. Other people call it an investment. You know, I call it working in your balance sheet versus working in your PL. Working your PL is your quad uh one and investing in your balance sheet is your quad two. So over time, the more I worked in quad two, the less I end up working in quad one. And that includes hiring someone and training that person. That's a quad two activity. So if I don't hire somebody, then I'll just have to keep doing the work myself. And I'll just, you know, the more clients I got, the busier I got and the less time I got. So it was it was actually counterproductive.

SPEAKER_01 10:32

Yeah, that's exactly it. And I feel like so much of your week gets swallowed by that part and you don't even realize it because you're doing low-value work that feels productive, but in reality it doesn't move the firm forward. So at the end of the day, the firm owner just got himself a very complicated job that just feels like running a firm when in reality they it's just that a really complicated job that you could uh train someone else how to do. So the way out of that is actually getting the work off of the firm owner's desk. So that's a team question. And again,

Team Roles That Fit Strengths

SPEAKER_01 11:06

back to uh the team. When you see struggle in firm team today, what's the most common thing you see that's set up completely wrong about their team?

SPEAKER_02 11:15

Well, firstly, it's a mindset, it's a mindset issue. So they've got to think differently about how they run the business. And generally, most people have that quad one mentality. It's quicker if I just do it myself. And you can tell someone that's thinking quad one because the way they think is this is the way they think. They say, Well, I've just got to put in longer hours, I've just got to work harder. That's how they think. But someone that's working in quad two doesn't think like that. He he or she thinks like this. She thinks he or she thinks like, I don't have enough resources to get this work done. I don't have the right team. They don't, they're not trained up sufficiently, and they're wrong, they're in the wrong position. So they're not playing in position, they're playing out of position. So if I can just give an example, like a soccer team, you know, in the soccer team, you've got uh positions, and and everybody plays in out in position. So if you're a goalie, you have particular skills, and they're different to the skills that the skills that a winger has, and the wiener has a different skill set to the forwards, the strikers, and they're different to the the mid-the mid-range people. So everybody plays in position, and when you do that, you have a championship team, not a team of champions. When you have a championship team, everyone's playing in position, and the sum of its is much greater than the end result, it's greater than the sum of its part. So a championship team will always be a team of champions, where a team of champions, they might be brilliant players, but they're not playing together as a team. So business owners have to then go from being grinders doing the work to building these teams. And um, I call it flat teams versus deep and narrow teams. A flat team is where a person or an owner uh simply hires people, it throws, I call it throwing bodies at the workload. And then the more workload there is, the more bodies they hire to try and get that workload done. And typically they end up in what I call a flat team. And it's not very effective. It's a bit like a team of champions, and um, instead of being a championship team, so what you end up having with a flat team is you've got lots of write-offs, you got staff turnover, you've got people not being happy because they're not playing from a position of strength. Yeah, they've just shoved into this role that they expect them to do everything. Now, everybody's different. So some of us have got really good interpersonal skills, we've got great communication skills, and we're people, a people person. And then other people are what I call uh grinders, they just like doing all the work and they don't like to talk to people, they don't like interacting with people. But those two personalities are very, very important because when you get them working together, the the outcome is much, much greater than greater than the sum of its parts. But you've got to create a structure so that in the output is about service and client. So we have a deep and narrow team structure where the team leader is a people person and they're interacting with the client and they've got great communication skills then and they enjoy the people contact. And then underneath them, we've got a production manager who doesn't like to communicate with people, they just like to do the work and that they don't mind um managing the team. So, this what I call a deep and narrow team is where people are playing from a position of strength. And when you play from a position of strength, you're much, much happier. And when you're happier, you're much more productive. And when you're much more productive and you're happier, you stay a lot longer. And also the write-offs are much, much less because when you're playing from a position of strength, you're generally very efficient at what you do. So to come back, sorry about a big long answer for a quick question, but uh it's the common thing that I see wrong when uh owners set up their business is they run flat teams and they don't understand that they're really a coach for building this team structure to go out to battle and to play this game, and he or she needs to find the right people for the right seat in the right bus. But again, but they don't even know the ideal team structure. So they don't even know who to recruit because you've got to start with the ideal team structure, and then with that ideal team structure, you go and hire the personalities to fit that team structure versus just throwing bodies at the workload. That's I I call that just throwing bodies at the workload.

SPEAKER_01 16:02

Yeah, so the problem is not usually the people, it's the seats that they're sitting in. And I feel like that's such an important distinction because most owners think they have a hiring problem when in reality it's just the structure behind it that's completely wrong. So their team is basically set up for failure. So

Hiring Maths And The Investment Mindset

SPEAKER_01 16:22

whenever we get to this point, owners tend to somehow or some ways they can get the same objection, which is the money. So a lot of owners feel like they cannot afford to hire. So what would you say to that?

SPEAKER_02 16:37

Yes, again, it's a it's a mindset thing because if you see your staff as an expense versus an investment, then that plays with how you uh approach your situation. So if you see it, see them as an expense, then of course you don't want to put on any expenses. But if you see it as an investment, so the more investment you have, the more return on your investment. And then again, that that changes the way you you look at your business. But just to give you an example, you could in an accounting firm, you you'll break down an admin staff, administration staff to an accounting staff. So some people might say, oh look, administration staff don't make me any money, they're just an overhead. Whereas accounting staff are actually making me money. So I'm not unhappy to put on the accounting staff, but I'm unhappy to put on an admin staff because that's an overhead. And yes, that is one way to look at it, but if you look at it as an investment, then that admin person actually saves you a lot of time and that allows you to do what you do in your area and bring in more work. So effectively it's making you more productive. So again, that's an investment and not an overhead. But it's very, very easy to mix the two up and think of both as an expense and not as an investment. Now, if you thought of it as an investment, and let's say uh one accounting staff made you, and I'm making this up, made you $60,000 profit. So they they charge you out their time and you've paid them their wages, and the net profit is, or the gross profit is $60,000 for that person. So if you had 10 of them, that's $600,000. And if you had 20 of them, that's $1.2 million. So again, it changes the way you think and how you look at your business will determine the kind of decisions you make throughout your journey. And you need to think like a business person and not think like an accountant, and whereas an accountant sees everything as an expense and not as an investment.

SPEAKER_01 18:42

I love that because the mat actually goes both ways because the expensive thing is not the hire itself, it's the owner doing the cheap work. So the hire ends up paying for itself whenever the owner has time, his time back. So even when owners feel like they can't afford it, sometimes sometimes they can still hesitate. And I think that's more about trust. And it goes back to the it's better if I do

Delegation Without Craftsmanship Overkill

SPEAKER_01 19:09

it myself type of mentality. So about trust and delegation, how do you hand over work when you're convinced that nobody will do it as well as you do?

SPEAKER_02 19:18

Yes, that's a really good question. And that's a that's a really big problem that a lot of accountants face. And I think it's to do with their personality. Accountants are perfectionists, they need to dot the I's and cross the Ts. And and you know, society needs accountants to be perfectionists, especially if you need them to be an auditor to audit your firm. So there's a reason for that personality. However, when you're running a business, it's different again. And and and I use this analogy and uh hopefully it makes sense. Um accountants are a perfectionist like a craftsman. A craftsman does things to his own level, right? And it's a very, very high level. So he wants to, he or she wants to make sure that the quality of work is at his or her standards, right? So that's what a perfectionist is. But when you're running a business, you can't be a craftsman. Craftsmen don't make money, right? They they might love what they do, but they just don't make money. So you've got to be a tradesman or a businessman. A tradesman builds the product to the customer's uh level, not to their own level, but to what the customer wants. And if you build it to your own level and you're a craftsman, you're gonna go broke. And if you have a team, a team that's full of craftsmen and they're doing it all to their own level, then you're gonna be writing time off constantly and you're gonna be losing money. So you've got to not only get yourself not to be a craftsman, but to be a businessman or a tradesman. And again, it's not about cutting corners or anything like that. A tradesman builds it to what the customer wants. A craftsman builds it to where to what they own, they themselves want, right? So you want to be a tradesman, you're building it to what the customer wants. You gotta get yourself doing that. That's really hard. But what's really, really hard is to get the craftsman around you doing that, and and accountants tend to be craftsmen when they when they graduate. So that is the the big, the big challenge for accountants running businesses.

SPEAKER_01 21:17

Yeah, that's gold. And I do feel like the standard, of course, it can drop because it's not gonna be to the level of the firm owner or how you would want it to be done, but at the same time, you can still delegate it properly. So there's a lot of systems for delegation, so you can do it the right way. So training, checklists, reviews. So I feel like delegation doesn't stick or it's not done properly whenever you don't handle it the way you should. So training your people, going through the task with them, teaching them how you the level that you want it the what want things to be done. So that's how the standard can survive without you being involved in the day to day.

The Quadrant Audit And Implementation

SPEAKER_01 22:00

So I do have one last question for you and I want to make this one a practical one. So for the firm owner who's watching who is stuck in that busy trap right now, what's the first thing that they should move out of their week and what should they put in its place?

SPEAKER_02 22:19

Well, I'll do what I did. Um, when I was working a hundred hours a week, I was at a crossroads and you know I didn't know how to fix it because I could only see it getting worse and there wasn't any more than a hundred hours a week left over in my in my uh wick. And uh so how you know, how was I gonna fix this? So all I did was I just wrote down everything I did in my business, in my practice, and I put them into quadrant one, quadrant two, quadrant three, and quadrant four. And and I got rid of all the activities that were in quadrant three and four. Now that left me with uh activities in quadrant one and two, and then I delegated all the activities that was in quadrant one to somebody else to do, and then I just spent my time in quadrant two. So initially it was really difficult because I was working 100 hours a week, there was no extra time. So the first thing was to hire somebody, and then you just got to get some hours somewhere to start training them. And the more I train them, but but you've got to be really clear first, which is what is quad, what activity is quad one and what activity is quad two, because you can get the two mixed up very, very easily, you know, especially when a client rings up and they want something, you know, and they just want you to answer or you to do it. So you get dragged back into quad one. So you've you've got all these challenges from not just from your staff, but from the stuff from the clients who are saying, I only want you to do it. So you're getting pulled. So you've got to be really clear what is quad one and quad two. So initially I spent 10% of my time in quad two and 90% in quad one. And then when I hired somebody and trained them up, then they started doing more of the work. Then I could spend 20% in quad two and 80% in quad one. And then over time I reduced the work in quad one down from 80% down to 70, 60, 50, 40, and eventually to 30 to 10%. And 90% of my time was in quad two. And for the rest of my life now, that's all I do. I just do quad two activities. What I'm doing here with you today, that's a quad two activities. Uh activity, it's important, but it's not urgent. Everything I do now, I think about is that a quad one or a quad two? And uh, and then I make sure or I try as best as I can to spend my time in quad two activities. So from a very practical sense, uh, write down everything that you do, all right, and put them into quad one, two, three, and four. And then that's very, very structured. Then then you then every day you know what you should be doing and what you shouldn't be doing. And it's it's easier said than done. Let me just say this to you. It's easier said than done. But you've got to implement. If you don't implement, our results only come about from implementation. If you just talk about it but you don't practice it or you don't put it into practice, then you're gonna be in quad one, working long, long, long hours, being stressed, and the rest of it. It's in you, it's within your control. So you can control this and you can fix it. And and just just follow that. That's very, very simple, but it is easier said than done because it's very hard to identify what is a quad A activity, a quad one activity and a quad two activity. But it's not impossible.

SPEAKER_01 26:00

100%. And I believe that's the perfect place to finish. Everything Ed shared today is exactly what we hope firm owners do here at Rice, just without the 40 years that it took you to get to this point. So thank you so much for your time and your honesty today, Ed. And if for you who's listening or watching us, if any of any part of Ed's story sounded like you're firm right now, don't ignore that. That's your sign. Take action and we'll see you in the next one. Thanks, Ed.

SPEAKER_00 26:29

Thanks. Thanks, Veronica. Thanks for tuning in to this episode of The Wise Way. If today's episode sparked an idea or helped you see things differently, please don't forget to leave us a review. And if you haven't subscribed to the podcast on your favourite platform yet, please go ahead and do that as well. Let's continue the conversation here through YouTube or any other social platforms that you can find us on. And just remember, if you're not a subscriber of our weekly Friday tip newsletter, you can get that to your inbox every week going forward. Whether you're starting out or scaling up, you don't have to do it alone. Let's build a business that works for you the wise way. We'll see you in the next episode.