By Jody Padar
The Radical CPA
Before we can fully leap into the future, we need to understand where we’ve been.
MORE ON RADICALISM: The Radical CPA: Always Changing | The Four Factors for Fixed Pricing | Clients Buy Solutions, Not Time | How to Leverage Social Media | Target Content to Consumers, Not Industry | Narrow Your Social Focus | Why Transparency Matters to Clients
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The foundation of any Radical or New Firm is comprised of the four tenets.
What are the tenets of a Radical firm?
In my first book, "The Radical CPA: New Rules for a Future-Ready Firm," I identified four tenets that make up the New Firm of today:
- cloud technology,
- social business,
- value pricing and
- customer experiential process.
How you apply these tenets will depend on your firm’s lifecycle and specific niche and specialty. Application will vary.
The beautiful thing about these tenets – and I’ve seen this in my work with other CPAs – is they will help you create new rules for your firm. These new rules, practices and behaviors will make you future-ready.
Say goodbye to change management.
Creativity and innovation are now part of your DNA. It starts to envelop your whole firm, and everyone becomes part of it. Those who don’t come with you will need to be let go – no matter if he is a customer or an employee. You’re no longer catching up, and you’re no longer constantly trying to respond to one specific change, because it’s just ongoing. Let me repeat: There is no end to the change! The benefits to running your business this way, believe me, are exponential.
So, the four tenets. They are foundational. Understand them first. Without them you’re not really a New Firm. But this is The Radical CPA 2.0, right? We’ve evolved and the tenets have evolved with us.
Tenet #1: Cloud Technology
We all know technology has leveled the playing field. Just mere years ago, bigger firms with sophisticated resources had the upper hand and competitive advantage. Today, because of the genius of the cloud, that has changed. My firm, New Vision CPA Group, comprises only five people, yet we’re regularly competing with firms on a global and national level. Our nimbleness allows us to compete faster because it’s harder for the bigger firms to move.
I’m convinced this is because we use technology at our core. Video meetings have changed the nature of how we work. It doesn’t matter if our customer is in Los Angeles or Rome. With a strong, reliable Internet connection, we can be screen-sharing and talking about financial statements with our customers within minutes. Anywhere in the world.
I love technology and, at my firm, we swear by it every day. But I’m the first to say, that’s not what it’s all about. Technology is a tool. What’s at our core as CPAs is practice management. It’s about how I run my firm. I’ve seen too many people get focused on the widgets of technology and the shininess and coolness factors. That’s good and all, but what I want to know is, what is it going to do for your firm and, more importantly, your customers?
Be somewhat choosy here. Step back and think about what the technology is doing. Think about how it’s going to affect a business process and the results of that change. There are a ton of vendors to choose from, all with decent marketing and a promise that your life will get easier. But will it? You must do the research.
Technology isn’t the disruptor to your firm, though it may sometimes feel like it, with constant updates and new inventions coming out daily.
Being available in real time is the disruption.
It’s a fact that customers want to be connected to us all the time, through all available channels. Let’s thank our mobile devices for that.
Tenet #2: Social Business (Not Social Media)
When I talk about social business, I’m not just talking about using social media via marketing, I mean really becoming a social business, and using your social channels to connect with your customers. Think about that for a minute.
I’m using social media tools to enhance my customers’ experience. I’m not just blasting messages out in some one-sided way, which today, I think a lot of CPA firms are still doing. The messages are canned and impersonal, and many firm owners wonder why there is no ROI. This isn’t just content marketing where you’re giving them information and then leaving them be. This is a different animal. I allow my customers to connect with me on a personal-friend level. Just by the nature of doing that, that makes your business social.
At my firm, some of our customers reach out to us via Facebook and ask us tax questions. They ask us the types of questions that traditionally would have been asked via telephone or email. Instead my team and I get questions via Messenger. To our personal accounts! Imagine that. Not only are we friends with them via Facebook, but I, as the managing partner of the firm, must trust my employees to be able to field those messages properly. And I do. So, not only is it a whole new idea of friending your customer and being transparent with them but it’s allowing your team to do the same thing.
Tenet #3: Value Pricing
Just say no to time and billing. Go ahead, you can do it. Those of you who have done it know the far-reaching impact of this great change.
Think of it this way: Time and billing is focused on ourselves. It’s a way of looking at only charging for inputs and not a result.
Value pricing is focused on our customer.
The customer doesn’t care how long it takes, they just want their problem solved. If you want to be in a partnership or a relationship with someone, do you always want to talk about yourself? People don’t want to be with others who always talk about themselves. But why is it when we engage with our customers in our firms (and our websites, for that matter) that we are always talking about ourselves? This is particularly true when we work from a model of time and billing.
Here’s where alternative pricing comes in. It’s time to experiment with fixed pricing and value pricing. Fixed pricing is when the service itself is priced – when the same level of transactions, same gross receipts and same deliverables share the same price across all the customers. Value pricing is when the customer is priced, not the scope of the service. It’s based on the customer’s perceived value of the solution you are providing. It takes a lot more work in the proposal process and should only be done for engagements that exceed a specific amount.
I combine the two pricing models in my firm. The key takeaway here is: Time and billing is focused on ourselves while value pricing is focused on our customer.
Tenet #4: Process
The last tenet to focus on when you are working to create a future-ready firm is your customer experience and process. And guess what, you can’t improve a process if you can’t identify the process. Too many firms really don’t know what their processes are, or if they’ve evolved. Because they aren’t typically giving them the attention they deserve, they aren’t updated in a way that can increase efficiency and ease.
As a firm owner, you really need to identify and articulate your processes so that you can change them.
Too many firms don’t even know what their processes are because they’ve never been documented and therefore they’ve never been formally updated. This leads to inevitable chaos (and not the good kind) because team members are all doing firm processes differently.
Being Radical is work.
Now, I know what you’re thinking. When you start making all these changes – you start adding new technology, you start getting more social, you start updating your prices – suddenly now all your processes get disrupted and need to change.
And this is the reason why many CPAs prefer to stick their heads in the sand and not deal with reality. The disruption.
It’s real. And if there’s anything I’ve learned from the many CPAs who contacted me after my first book, it's that it’s scary. I agree, and I know from my very own experience.
Therefore, we see old-school firms struggling. It’s because they really need to rethink all their processes around these new developments. Cloud. Social. Pricing. Process. It’s the fundamentals.
Think of it this way: A firm no longer has three days to get something done. If you’re working in real time in QuickBooks Online, your customer sees that file exactly when you see it, and you don’t have the option to have a team member work on it, a staff person review it, get a manager’s input and then turn it around two or three days later. It needs to be done in real time, and that’s what is creating the chaos in our firms. Customers’ expectations have gone from hours to minutes! You better believe that if there’s a live file and no one reviews it, that means we must get better at training team members up front. Which again points to the importance of process and constantly staying on top of how work is flowing.
The future is bright.
As we move forward into the future, we must get better at setting the communication expectations correctly so that our customers don’t feel the chaos that we feel internally. We’ve learned a lot over the last few years, and now we’re older and wiser, with a lot more experience (and yes, confidence) under our belts. This work takes our beloved tenets to the next level and shares what my firm and my team have learned, as well as what the most progressive firms in the country are doing.
Many of you reading this are already Radical. I will help you go deeper into your applications of our tenets offering tips, tricks and strategies from those who have taken risks and changed the cultures of their firms. Consider it your roadmap to updating your new business model or revamping it all together. And if you’re a managing partner of a midsized firm, kudos for reading this; I’m glad you’re here!
Buckle up, you’re in for a ride!