2 Lessons Clients Taught Me

Older businesswoman pondering, seated by windowWhat our clients can teach us.

By Frank Stitely
The Relentless CPA

Let's discuss Lean Six Sigma as it applies to CPA firms. Let's discuss lean processes and error tracking.

MORE: CPAs Can’t Help You | The Value-Pricing Con Job | No Consultant Can Solve Your Biggest Problem | The Agile Accountant | The 21st-Century CPA Firm | The Great Marketing Hoax | The Cure for Commoditization | Ruthlessly Efficient Workflow Management | What the Value-Pricers Get Wrong | Four Amusing Millennial Myths | The Annual Tax Meeting is Dead. Clients Killed It. | 3 Rules for Asking Great Tax-Return Questions


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You’ve probably heard of Lean Six Sigma. Our manufacturing clients implemented it back in the 1990s.

I’m betting this is the first time you’ve heard of its application to the CPA world.

Recently, I read some articles referring to lean processes for CPA firms. They don’t explain what lean means. Here’s a quick lesson in lean as it applies to CPA firms and project management.

Any step in a process that does not add value to a client service or isn’t required by regulation should be eliminated.

When was the last time you read a book on managing people in a CPA firm? Some books cover it tangentially. We’ll dive into it here, and use concepts from “The One Minute Manager.”

There are three great sources of information on transforming CPA firms:

  1. Successful peers
  2. Successful clients
  3. Books and publications that are not about the CPA profession

Why are peers a great source? Unlike consultants, they walk the walk every day. If you’re a $250,000 annual revenue firm, cozy up to a $500,000 firm at a conference. In a roundtable discussion, sit at the table for firms one size larger than yours. Be a rebel. Go rogue.

Every year I attend the annual user conference for our tax software. I get to go for free because I help them with prospects. The conference is gold. I attend every roundtable discussion I can schedule.

Last year, I got a great tip on managing files posted to our portal. One firm told me that they had a designated portal person who was responsible for retrieving client-posted files and incorporating them into personal tax workpapers. We’d struggled with the workflow around capturing thousands of client-posted documents and getting them to the final workpapers. That tip will ultimately be worth multiples of $10,000 in terms of productivity and client happiness.

Most conference attendees avoid vendor exhibits like they’re spreading Ebola as well as ink pens. During the first conference break, I walk through the vendor exhibit room making notes about vendors who have new or interesting products. During later breaks, I’ll visit those booths. I attend one conference mainly because of the vendor exhibits.

Our CPA world changes at an incredible pace. Conference sessions run a year or two behind the vendors in terms of technology advances. I like to find out what vendors are planning a year or two out. The big vendors, like Intuit and Sage, won’t tell you much, but the exhibitors who actually own companies will tell you lots.

Do you have some clients who just seem to print money? I do, and I’ve learned a lot from them. One construction contractor client works on a 30/10 business model. He only accepts jobs with 30 percent gross profit leading to a 10 percent bottom line. If potential jobs don’t fit in that model, he won’t even submit a proposal.

One of my government contractor clients is basically a sole proprietor with a $400,000 bottom line. He relies on subcontractors, whom he doesn’t have to pay when business is slow. He works from his two homes, one in Northern Virginia and the other in … Hawaii. He has no overhead. He is entirely virtual.

You have clients like this as well.

The first one taught me to have a mental model in my head of projects that work financially for us.

The second taught me about scaling without adding staff.

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