Managing People: The Heart of Effective Project Management, bad clients crowd out good ones.

By Frank Stitely
The Relentless CPA

Somewhere in the period between the Neanderthals and Homo sapiens, the first accountant evolved.

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He looked around and realized this Earth thing might become immensely profitable and set out to get capital gains treatment.

Two hundred thousand years later a woman gave birth to the best possible tax preparer in the history of all creation – me.

No creature, man or beast, could prepare tax returns better than I could. My fingers created tax magic on the keyboard. No item of income escaped deductions, and no credits went unclaimed. My clients got tired of big refunds. I was master of the tax universe.

Then my practice grew. Vacations and sick days became an unlikely theory. I called my kids every evening to say goodnight, because I would never be home while they were awake. Weekdays bled seamlessly into weekends to the point where sometimes I didn’t know the day of the week.

This was the success I sought? There had to be a better way to live.

There was, and someone else discovered it long before this self-anointed genius did. I’d like to say I invented delegation, but you’ve been kind in indulging my ego thus far. I went back to a book that my boss gave me when I was promoted to my first supervisory job, “The One Minute Manager” by Kenneth Blanchard and Spencer Johnson. If you’re new to managing people, there is no better place to start – or return to, if you’ve forgotten the lessons.

I’ll assume that like most of us, you’ve managed people in the past. You just got caught up in the day-to-day grind of running a practice and need a good kick in the rear to apply management techniques to your business instead of someone else’s business.

Let’s start out with some math showing why delegation is so important. Let’s look at three ways you could prepare a tax return:

  1. All by yourself
  2. With the help of an admin person
  3. With the help of an admin and a staff person

In the following illustration, you can see how much it costs to prepare a return in each scenario. You could quibble with the exact numbers in your situation, but the big-picture trend is what’s important. You can make more money per tax return, or any other service, if you use lower-cost people to prepare segments of tax returns.


Chart of return preparation costs
Tax return preparation costs


The numbers are clear. Scaling your practice means hiring people. Otherwise, you’ll cap out at a size where you’re always nearing total exhaustion with clients constantly complaining that you don’t provide the same service you used to. That’s a valid choice, but not one I’d choose.

Someone not so wise described managing people as like herding cats. Many days, I’d gladly opt for the cats. Cats are mostly quiet.

I’ve wondered how some employees remember to breathe. We’ve had employees who could get the answer to two plus two right about 80 percent of the time. We’ve had employees who couldn’t copy a column of numbers accurately from one page to another in Excel using copy and paste. We’ve had drug use in the bathroom. I could go on and gladly would with you over a beer.

Nonetheless, our practice is more profitable with people than without. I can concentrate on the highest-value tasks and let others do the rest. As I write this, we have our best team ever, including a couple of fresh-off-the-college-boat newbies. My primary role is traffic cop and client communicator. If I personally prepare as many as 20 tax returns this year, including my own, I’ll be disappointed.

There’s a hidden value to assembling a team. Your business will be worth more. I’m putting on my certified valuation analyst (CVA) hat. What’s the most valuable type of small business? One that isn’t dependent on the owner. If you can hand the office keys to someone else and the business chugs along, you have an easily salable business. If the business depends on you, you have little to sell. A buyer risks your clients leaving when you do.

My business partner and I used to talk about maintaining the illusion. The illusion was that we appeared to be doing all of the work. Clients would never talk to staff, and hopefully wouldn’t even know they existed. We operated under the false assumption that clients wouldn’t tolerate working with anyone other than our exalted, high holy, CPA firm partner selves. Kneel and genuflect when you speak our names. You can return to your seat now.

So you still think your clients only want to deal with you? Here’s why that assumption is wrong. The top few thousand firms in the country seem to have gotten past it. Many of the people you meet at conferences have gotten past it. Do any of the Big Four still have a name partner? Of course not. And their clients produce a lot more revenue than yours – or mine, I must reluctantly admit. Your clients expect to deal only with you because you have trained them that way.

So, you think it has nothing to do with training your clients? How many times have you sold the concept to potential clients that you’ll personally keystroke every bit of information into their tax returns, unlike that competitor, Bob, down the street? In those moments, you are selling you, not the expertise of your firm. You have just promised a $350 client that you’ll spend $500 of your time on his returns. Don’t be surprised when he refuses to talk to anyone but you on April 15th.

Top-quality clients are smart people. If they own businesses, they get the delegation thing. They do it. They expect you to be a smart businessperson as well. If you’re printing your own tax returns or scheduling your own appointments, they won’t view you as a trusted advisor. If you can’t run your business, you can’t help them with theirs.

Will you lose some clients over this? Yep – the low-dollar ones. They’re the ones who tie up 90 minutes each March in meetings to show you all their W-2 forms, making sure you understand why their dog’s medical expenses should be deductible. Wouldn’t using that 90 minutes to serve your best clients be a better use of time? Bad clients crowd out good ones, and bad clients refer other bad clients. Let them infect your competitor’s practice.

By now, you’re either convinced or you need a psychiatrist. Let’s move on to the nuts and bolts of staffing. If you’re a sole proprietor, who should be your first hire? If you’re in a larger firm, take a nap for the next few paragraphs. I’ll catch you on the flip side.

As a sole proprietor, hire an admin person first. You could hire both an admin and tax preparer, but if you haven’t managed people in a while, try a tax season with just the unmitigated joy of having a good admin person. Assign the following tasks to him / her:

  1. Answering the telephone
  2. Producing final tax returns
  3. Scanning client documents
  4. Scheduling
  5. Ordering office supplies
  6. Keeping you from killing a third of your clients

Hiring an admin person risks very little. The wage rate will be relatively low. Admin people are also somewhat easy to find and not disruptive to fire quickly if one doesn’t work out. And from experience, I can tell you most won’t work out. When you find a good person, give him/her a raise after tax season to slightly above market pay.

Stability in your admin position is money in the bank. Two of our admin people have been around for 15 and five years respectively. Treat the good ones like family and the bad ones like a cancerous tumor. An admin person leverages your time, freeing you to prepare more tax returns. Imagine the efficiency of having someone year after year who knows your procedures. Then hire that person.

Hiring a tax preparer is more difficult. You have the chicken and egg problem – or at least you think you do. “I need to hire a preparer to grow my practice, but I don’t have the money to hire one until I grow my practice.”

Again, other people have conquered this Herculean challenge. Aren’t you at least as smart as your competitor down the street, who believes General Ledger won the Revolutionary War? We all know Mel Gibson won that one.

Consider hiring a per diem, part-time or tax-season-only person. You can call them what you wish. We use about 15 of these people to staff up during tax season. Are they as good as full-time employees? Generally, no. In general, you can’t control their schedules and workloads as tightly as employees. Also, as part-timers in the business, few actively pursue improving their skills.

But there are exceptions. Our best corporate tax person works for us part-time and lives in Phoenix. We are located in Northern Virginia. I use his workpapers, not mine, to train others. If I had to choose between his life and the lives of my children, well, none of my kids is that useful during tax season. One of my kids is a CPA, but she’s an auditor. We all know auditors aren’t that useful. He might replace her in my will.

People sometimes ask if I’m disappointed I have four daughters and no sons. The answer is no, but I’m disappointed I have no tax preparers as children. We need cheap labor. If you can’t exploit your kids, who can you exploit? Then I could “employ” my kids and deduct a salary that they never get, just like our clients do.

You can find the seasonal staff on Craig's List or some other similar site. Oddly, we have not found good full-time preparers on Craig’s List. I have no idea why. That’s just our experience. Here’s a Craig’s List hint: Set up a separate email address to handle the resumes, unless you want your inbox to become your spam folder, full of interesting ways to fill lonely nights.

Local homeowners’ association newsletters yield great candidates as well. Lots of full-time moms and dads look to use their professional skills on a part-time, or tax-season-only, basis. Welcome to the 21st-century gig economy. You can also find sole proprietors trying to use spare time while they start their practices. The danger with this last category is that, if they get busy in late March, your clients’ returns will wait.

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