Scaling New Heights Podcast
When highly acclaimed thought leader Gary Boomer talks, people listen. Recognized in the accounting profession as the leading authority on technology and firm management, Boomer, founder of Boomer Consulting, consults and speaks around the globe on strategic and technology planning, compensation, change management and developing a training/learning culture.
As part of his highly acclaimed podcast series, Joe Woodard sits down with Gary to discuss the advisory services model, leadership, and what the connection is between the two.
You can hear this podcast and others here.
Thank you for tuning in to this episode of the "Scaling New Heights Podcast."
Full transcript of the episode follows:
Thank you for tuning in to this episode of the Scaling New Heights podcast. During this episode, we will talk with Gary Boomer.
Our conversation with Gary and this entire podcast series is made possible by the generosity of our partners, Entryless, Neat, and SmartBiz Loans. We've partnered with these three companies because each of them help you create effectiveness in your own firm as well as guide your clients to greater levels of effectiveness.
As Gary is going to talk about in a few minutes, they are tools in your tool set. Implementing effective processes allows you to create profitability. In fact, effectiveness is a topic I discussed in depth with Paul Dunn in Episode 14. If you have not yet listened to that episode, I strongly encourage you to dial that up at Woodard.com/Podcast. and learn more about how focusing on effectiveness allows you to focus on your intellectual capital and how to level that to transform small business.
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As our partner, Entryless is offering you 2,000 automated bills for free so you can see for yourself how powerful efficiency can be. You can learn more about this offer at Woodard.com/Podcast.
Let me tell you a bit about our guest today, Gary Boomer.
Gary is a visionary and strategist of Boomer Consulting Inc., an organization that provides consulting services and peer communities to leading accounting firms. Gary is recognized in the accounting profession as the leading authority on technology and firm management. For over 15 years, he has been named by Accounting Today as one of the "100 Most Influential People in Accounting." Boomer Consulting also is a member of Inside Public Accounting's "10 Most Recommended Consultants."
He consults and speaks around the globe on management and technology related topics including strategic and technology planning, compensation, change management and developing a training and learning culture. He acts as a planning facilitator, he provides coaching and he serves on various advisory boards.
Gary is the author of multiple books as well as the author of "Boomer’s Blueprint”, a regular column in Accounting Today and he publishes the Boomer Bulletin™, a newsletter with worldwide circulation.
Before we get into today's discussion with Gary, let me tell you how another of our partners helps you create effectiveness in both your firm and in your clients' businesses. For the past few weeks, I've been telling you that Neat is no longer just the scanner company that you used to see on cable television at night.
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Gary: Thanks, Joe. It’s a pleasure to be with you today.
Joe: It's always great to talk with you Gary and I often refer to you, Gary, as the pied piper of the top 100 firms in the country, that’s the largest 100 firms in the country. I know you know how these guys work and they listen to you. You've got over a lifetime of reputation and experience that merits them listening to you. I know for many, many years you've been leading the charge with these firms – firms of all sizes really, not just the big guys – on advisory services model.
I know you've given a lot of thought to it and you've also seen tremendous successes in your consulting of these firms in this area. I just wanted to ask you some questions along that topic, if that's okay.
Gary: That’s great.
Joe: Fantastic. Let's start with leadership. I've heard you say before that there's a direct connection between leadership and advisory services. Why is leadership so important?
Gary: I guess I should start by saying I get asked all the time what is the one differentiator between the firms that are great and the firms that are existing. I would say it’s always leadership, regardless of if it’s advisory services, or compliance services that we’ve always had. One of the reasons for that is there are three things that add value when you look from an entrepreneurial perspective.
The first is leadership that provides direction. Second would be relationships that add competence. Third would be creativity which creates new capabilities. If you have those three, then you can add value and that is what advisory services is all about – adding value to the client.
Oftentimes, we hear clients say, “I want this” rather than “I need this”. Clients, when they want something, they don’t have to justify it and they are willing to pay more for something they want. That’s why we want the advisory services to be in that category.
The biggest challenge that we see in firms of all sizes is the change from more of the compliance to what people call reliance, we call “above the line services.” I think there is reason for that and I’ll get into those reasons later. But the challenge today is that most firms are making more money than they’ve ever made. So, the question becomes why should they change? And we will try to answer that as we go through the program this morning.
Joe: I want to come to that topic of above the line. You mentioned it, let's go ahead and call attention to it. What do you mean by above the line services?
Gary: I’ve tried to position this in a graphic throughout my career and over the last five years we’ve gotten clearer. If you will just draw a horizontal line on the paper and say that your compliance services of tax and assurance services are below the line, then above the line would be performance services like business advisory, outsourced CFO, analytics, forecasting, family office and those kinds of thing.
Then above that would be strategic services: we call those level three services and they’re above the line. Those would be services like strategic planning, succession planning, mergers and acquisitions.
You really have below the line, compliance, and above the line, level two and level three services. Some firms are comfortable offering those. Some people are not as comfortable…
Joe: What makes them uncomfortable and how can the listeners of this podcast become more comfortable in that above the line service area?
Gary: I think we have used the term trusted business advisor for a long time and I would say that most people, most CPA’s or accountants are trusted technical advisors when they’re below the line, because they are focused on hindsight and perfection. When you move above the line, then, at the performance level, you’re focused on insight, progress. We say that all progress starts with the truth; so, where you are today and where you want to be a year from today, six months from today is very important.
As a trusted advisor, you can help your clients get there. By using some of those compliance services and data, then you become an outsourced CFO or do more analytics and forecasting for the client. At the highest level, that is where foresight and progress really occur and that is at strategic planning, succession planning, and mergers and acquisition.
So, to be innovative today, I think you need to have hindsight, insight and foresight. And most CPAs have that, it’s just they’re more comfortable when they know how to price the compliance services. But the clients are really asking for the underlying …
Joe: I hear you say it's one reason - one reason they don't embrace it, Gary. And if I'm hearing you correctly that one reason is pricing. If they knew how to price better, they could go into this more confidently. And do you think there's also a knowledge gap? Do you think that firms just don't feel as if their core expertise is above the line?
Gary: Well, in some cases I think that’s probably true, but they’ve always been taught that value is created by time. And that is a bad lesson that we teach many people coming into the profession. Because value is created in the eyes of the client in many different ways and it’s all not about the effort you put in but the results that come out of that engagement.
So, I do think we need to training in that area, but also packaging the services and having a menu of services to offer clients can be very helpful. I mention the menu, because if you go into a salon, you don’t just go in and get a haircut. Normally, they will offer you a package of services, that could include washing your hair all the way to a massage to a manicure. I think that is how we need to think more as the profession, is how do we offer services that the clients really want and are willing to pay for.
Joe: You know I like that menu approach, too. If you have a complex need, it gives you the ability to stack in more of the line items and create a deeper, richer, more value-infused package. But if my needs are more simplistic, I can streamline when I’m purchasing from the firm. You’ve worked a lot in Boomer Consulting in the realm of the larger firms and you also have deep knowledge into the small firms.
I would say Woodard is just the inverse. At Woodard, we work extensively with the small firms and we have deep knowledge into the larger firms. The small firms who support small businesses are saying, “Mom and Pop doesn't need advisory services.” Well, I’ve got an analogy I can bring in here that might help some of the small firms listening in our audience today.
I don't have a lot of hair. This is going someplace, just hang with me. For those of you who've seem me lately my hair's pretty much gone, but I still go to the same place to get my hair cut that I’ve always gone to, even when I had hair. They have all these amazing offerings for people that have hair.
Funny story, Gary. Normally my haircut's 14 bucks, but the other day they charged me ten bucks. I said, "No, I'm not eligible for a senior discount." I thought it was the senior discount. I said, "You can charge me the whole 14." The lady said, "No, this is not the senior discount, this is what we call the simple haircut discount." Basically, I didn't have enough hair to pay full price.
That showed me a couple of things, and I'm just extending your analogy here. It showed me that the haircut chain understands value pricing, which blew me away. The reduced price they charged me was based on the reduced value I received. Second, if we can create streamlined, reduced-value packages for businesses that have lesser needs, like I have less hair, if they have a streamlined need and we can create a streamlined package, well they are going to purchase those services more readily.
Gary: I agree. Firms have struggled for years, large and small, with cross-selling. I think it’s because firms often operate in silos – tax, accounting services – and they don’t coordinate or collaborate. But in the advisory services realm, it’s a team sport today, in the larger firms particularly. That may be one of the differences. In a small organization, people may try to be the rugged individualist, but as you move into advisory services, there are different skill sets for strategic and succession planning than there are for tax and audit specialties.
You have to work as a team and you can look at that team as being either people within the firm or you could go outside the firm to acquire access to resources. We help people …
Joe: I'm sorry to cut you off there, Gary, but is there an opportunity for the small firm that maybe only has the resources to do one or two aspects of this above line consulting? Is there an opportunity for that small firm to partner strategically with the large firms and are you seeing this play out?
Gary: Yes, we’re not seeing as much as I’d like, particularly in the strategic planning area. Think of how a strategic plan really opens up a lot of service areas to the accounting firm. Even a small firm, if they go in for a client and do a strategic plan, they now know what the vision of that company, the core values, the priorities, where they’re going to put their resources, their dangers.
And they can help with various services and those could be CFO related services, those could be merger and acquisition services. It just creates a different conversation between the client and the accountant than it does when you’re talking about compliance of tax or revenue recognition in the audit area.
Joe: All right, so let's shift to tools, because we've talked about what we need to do and we've talked about why we need to do it. To me the tools answer the question how. You're working with a lot of larger firms. They're offering these kinds of services. What tools are they using? How are they actually doing it?
Gary: We always jump to the tool and I think mind set, skill set and tool sets are all important. I will say, as we’ve moved to the cloud, this has become more complex. As the advisor, I need to have a tool box full of tools, because you don’t just buy the tools from one vendor. You probably have to orchestrate and put tools from multiple vendors together.
I like to refer to this as the business capability model. In other words, what tools do I need not only to do the production and do the accounting, but what tools do I need for scheduling of work, work flow, managing my database of prospects, CRM would be one in marketing and sales. What do I need in HR to not only do the payroll but to do performance reviews? What do I need in working with vendors?
I really call them business partners rather than vendors because they are part of the supply chain and if you treat them like partners rather than vendors, I think you get more out of them.
There are many of these apps coming on the market from various places, many outside of the United States. Knowing which apps work together and the companies that are going to be around are very important. I think anybody that is going to be in the advisory services area today has to have a good understanding of who the major players are.
I’ve touched on some of the apps, but I haven’t mentioned data analytics, which most accountants have used a spreadsheet in the past. But there are many tools to do data analytics, automate it and get away from the spreadsheet. Some I can think of right off my head are Fathom, Spotify, CrunchBoards. These are all systems that take the data from your accounting systems, allow you to make assumptions, and produce nice dashboards and graphics and do a good job of reporting.
Joe: Yes, and you did a great job laying out those categories. Those of you who are driving along please don't try to jot these categories down now. You can come back when you're at your desk and you can check those out and jot them down. You can replay the episode.
I love, Gary, talking about that categorical approach. With the categories, it gives you intentionality. When you go to say Apps.com to explore the QuickBooks Online integrated apps, there's this universe of product. Or when you go to a show like Scaling New Heights in June in Orlando, there’s going to be a universe of app choices. The categories help you narrow down how to make your choices and make sense of all your options.
Gary, I love all the categories you mentioned, but there is one that I usually add that you didn’t mention of collaborative tools. It is just one of those in-house components, those internal firm-use tools. It. It would also include things like client-portaling, allowing your clients to upload their tax documents securely.
Folks, Gary's absolutely dead on. If you take the categorical approach that he just laid out, you can make your selections within those categories and then vet the solutions. Make sure you ask developers the size of their user base, how long they've been in the space, which general ledger solutions they integrate with, and how long they've integrated with those solutions. This will give you some idea on the most stable choices you can make.
Then the other advice I would give, and Gary you can let me know if this is something you advise for larger firms. Watch what your peers are doing. Just the popularity of something doesn't necessarily make it right or make it the better choice, but it could be a soft validator. Then, if a critical mass of the top 100 firms have adopted a particular solution, then it's safe to say there's been extensive vetting behind those decisions. Gary, would you agree?
Gary: Normally, I agree with that. I mostly agree with that. Although, un the accounting profession, I would say the use of the term cloud has been very loose, and some of our leading vendors have been in the fog, not totally in the cloud. Therefore, one of the risks is just watching what the herd does.
Now, if you watch what people who really know what they are doing and are peers that are on top of it, I think that is a good way to leverage some of your R&D. That is why we recommend being in a community for both large and small firms, so you don’t have to have the expense of all that R&D. Plus having access to expertise and other peers saves you a lot of time and provides you with confidence in the market spot.
This is a more complex business, and that is why leadership comes back to it. You don’t want to put the weakest link in the firm into advisory services or you’re not going to probably succeed. You want someone pretty strong and entrepreneurial.
Joe: I couldn't agree more, Gary. I just wanted to say that on the other side of that, you do have observing what your peers are doing, you have the side of the coin that you just talked about. But I want to call attention to a very formal process that you’ve established for larger sized firms called Technology Circles. Can you tell us a little bit more about Technology Circles?
Gary: Our original Technology Circle began in 1999 and it was really to bridge the gap between technology and management, focused on the internal technology. But in recent years now we have what is called the Advisors Circle that focuses on client services, how to package price those services, how to put applications together and make them work in the cloud. So, it’s got a little bit different focus.
The people that participate in that learn from each other and they learn in a controlled environment. Because oftentimes in the firm, if you start talking about, “We’re going to test something,” everyone assumes there’s a change coming. Most innovation honestly starts as a bad idea, especially with the incumbent. To get over that bad idea, you have to do it in silence, or do it with your peers. Having access to others that have already done this can save your firm a lot of time.
Joe has a group that meets, the smaller firms for the most part, but if you participate in these groups, you are going to get far more out of the groups than the cost. It gives you some time to think, rather than just be focusing on charge hours all the time.
Joe: You're absolutely right. It's an up periscope to give you some perspective on what's happening with your peers in a larger industry. We've got time for one more question and I want to focus on something I've heard you call the “Drink Your Own Champagne” strategy. What do you mean by that Gary?
Gary: Accounting firms have always felt like they’re different from their clients because they have had practice management where they’ve captured their time and billed through that program. But I would say any accounting firm out there outside the Big Four are probably the same as any other small business.
In fact, banks and other industries would view the accounting profession mostly as small businesses. Even if you go down to the top 100, that’s about $35 million in revenue at the bottom and the other 45,000 CPA firms out there and probably another 45,000 – 50,000 advisory firms, they’re really just small businesses.
If you use the tools internally that you are recommending to your clients, you have a lot more influence and a lot more knowledge and can help the clients. We use the tools internally that we recommend to the accounting firms out there. We don’t do tax returns, but we do have work flow, we have document management requirements, we have payroll, we have performance, we have vendors to pay. I think that is what I mean by drink your own champagne.
The first time I heard this, it was from Bill Gates and it was, “You have to eat your own dog food.” Well, champagne tastes better to me than dog food, so that is why we are on the champagne kick right now.
Joe: That's fantastic. I do like that better, because it really should be champagne not dog food.
Let me sum up what Gary's talked about here. He started off by saying leadership is critical and as an accountant if you haven't developed, haven't honed your own leadership skills, you now have two reasons to do it. One – because of your internal team and second – because of your client.
Then we moved into some challenges. Why haven’t more firms embraced an advisory services model? We talked about challenges like pricing and we talked about the knowledge gap. I think, and Gary focused on this too, that our obsession with efficiency as a measurement point rather than effectiveness as a measurement point is also a challenge to embracing the advisory services model. We are so focused on production, on making money, on internal metrics that we forget to layer that with some of the effective metrics that are client-centric.
We talked about the obstacle of tools and we talked about a wide-range of tools, including collaborative tools that small firms need to embrace that maybe some of the larger firms have embraced more quickly. Maybe the larger firms had a greater and more compelling need for that and in the smaller firms it’s more proactive.
On top of that tool set, we talked about how the small firms could partner with larger firms using that as a resource or a form of a tool so they can offer services that are outside the scope, the capabilities, or the scale of what their firm might be able to embrace.
If we can get our knowledge increased, if we could increase our intellectual capital, if small firms would start collaborating more proactively with large firms, if we could embrace the right tools, hone our leadership skills, sounds like we can start drinking our own champagne. Right Gary?
Gary: Right. I think it is an exciting time in the accounting profession. I just wish I were 20 years younger to take advantage of more of this.
Joe: Yes, it's going to be exciting. The next twenty to thirty years are going to be absolutely game changing for the profession. I’m so glad that folks like you Gary and like Jim Boomer who has taken the reins of Boomer Consulting, are leading the charge and guiding the professionals through all these changes that are going to come. I think the whole profession is going to transform. Gary, it has been so great having you here.
Gary: You are quite welcome, Joe. It’s my pleasure.
Joe: Thank you for tuning into today's podcast and our conversation with Gary Boomer. Gary talked a bit just now about bundling or packaging various types of services into the value priced options you give your clients. Providing funding options for your clients in today's tough small business lending environment is a great way to infuse value into these types of packages.
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For more information about today's episode, to explore other episodes in this podcast series or to learn more about our annual conference visit Woodard.com. As always, we encourage to stay tuned, stay connected, never stop learning and scale new heights.