Firm poised to double in size with CFO services.
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The Disruptors
With Liz Farr
James Graham’s firm, Richtr Financial Studio, gave up the billable hour 10 or 15 years ago, and Graham points to that choice as making the biggest difference in his firm.
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He said it’s because “it really changes the nature of your relationship with the client” when the client is no longer looking at the clock with “that dollar per hour in the moment, always hanging over any interaction.” By removing the focus on time, “it allows everyone to move forward better because the focus is on running the business.”
His firm, which specializes in outsourced accounting and fractional CFO services for innovation companies, is in the process of growing from 26 to 50 team members. “One of the things that I really like about growth is it creates opportunity for our team,” Graham explained. These opportunities include moving to a higher position or becoming a specialist. He also notes that firms that don’t offer growth opportunities risk losing people.
“Good people leave because they realize someone is in the seat ahead of them. And that person isn’t going anywhere for ten years,” Graham said.
As they have grown, they have promoted diversity, equity and inclusion by hiring people who are outside of the typical profile, bringing two separate benefits. “One is, you can get some really great qualified people that you’re going to ignore otherwise.” The other benefit is that you will attract “clients that relate to who you are as a firm.”
10 More Takeaways from James Graham
- Ideas to help the talent pipeline:
- Establish license levels with different education requirements. Core accounting would require four years, while compliance would require five years.
- Educate the public about the many things you can do with an accounting degree.
- Create a flexible work environment that doesn’t burn out employees.
- Accounting tech companies are increasingly adding people as a backstop, so they’re providing a combination of technology plus accounting. So far, this has been limited to unsophisticated work. But in time, AI will be able to do the more complex pieces like job costing, revenue recognition and lease accounting.
- Growth also allows firms to leverage the blue ocean concept, which means, Graham said, “You’re trying to find places in the market where there are opportunities that you can distinguish yourselves and where there are good opportunities for quality clients.”
- Effective communication isn’t just spouting out what’s on your mind but also means considering other people and what needs to be done and communicating at the right level.
- Employ empathy with clients so you think about how an email will be received on their side before you send it.
- Don’t just focus on the transactional work, but focus on what their true needs are. What can you do to help them grow as an organization? Think about it from their perspective. In addition to tax prep, many people need tax planning and financial planning. Look for true unmet needs.
- Set priorities by distinguishing between ants and elephants. A charging elephant is something you urgently need to pay attention to, like a tax deadline. The marching elephants – client relationships and keeping up with CPE – are important but easy to forget because they’re creeping up on us.
- Marching ants are likewise easy to ignore because, according to Graham, “everyone gets that a marching ant isn’t that important.” However, he explained, it’s easy to “get distracted by charging ants, things that have a false sense of urgency,” like those clients we’ve all had who are “in your face” and “yelling at you.”
- AI and automation are forces we need to harness and work with, not fight against. This trend is not going away.
- The increase in non-professional companies entering the professional services space results in an increased opportunity for specialization to distinguish your firm from the competition.
About James Graham
James Graham, CPA, is the CEO and founder of Richtr Financial Studios. He’s a licensed CPA in Colorado and California with a very diverse background assisting hundreds of rapid growth innovation-based businesses, from start-ups to Fortune 500 companies. He has worked in a variety of C-level & board roles – and is also an occasional Angel Investor. He serves on the State of Colorado’s Office of Economic Development & International Trade’s (OEDIT) Advanced Industries Grant Review committees. As a board member of “Pledge 1%” he encourages founders who share a common commitment to their community to give back 1% of their “exit” to a non-profit organization of their choice.
Transcript
(Transcripts are made available as soon as possible. They are not fully edited for grammar or spelling.)
Liz Farr
So, all right. Welcome to Accounting Disrupter Conversations. I’m your host, Liz Farr, from CPA Trendlines. My guest today is James Graham, founder and CEO of Richtr Financial Studio. How are you today, James?
James Graham
I’m doing all right.
Liz Farr
That’s it’s great theory. You know, we’ve met up a couple of times at Digital CPA and you always have very interesting things to say about how you operate your firm, and what you think the accounting profession should and shouldn’t be doing.
James Graham
All right, well, thanks. Thanks. I’m glad someone finds them. Interesting. So Well,
Liz Farr
I think more than you think more than you think finds you interesting. Now, accounting talent in the US and around the world has been scarce for years. Uh huh. Right. COVID, may COVID made that much worse. Right? What? What are some ideas you have on how to make things better?
James Graham
Right? Well, I mean, a few ideas I’ve have around this, and some, some are a little more solid than others. You know, I think one thing that profession may want to reconsider is the five year requirement for the CPA, you know, is that, is that getting in the way? Is it really needed? Is it possibly getting in the way of a lot more people getting in at least at the CPA level of the province? And then another possible thought I had just how they’ve kind of have theirs? Right now, there’s almost different license levels of the CPA, do they possibly calibrate the education levels, you know, whereas compliance may have a longer maybe a five year track, and maybe, you know, kind of the core Accounting has a four year track, and possibly, possibly, there’s some different levels there. So I don’t know all that goes into that, or what, you know, what would be the trade offs there, but it’s just a loose idea, I’m pretty far removed from taking the CPA, which I’m which I’m very happy about. stuff, I still remember it. I mean, another I think another one would be just possibly, you know, some of the organization like the AICPA that’s a leader in this space, you know, them possibly doing some sort of PR campaign to really help educate the public about, you know, just how many things you can do with with an accounting degree, all the places you can go, and because there’s these, there’s these kind of really goofy, old stereotypes, that everyone’s just sitting there, keying away all day, and doing nothing else, and it’s like, uh, you know, there’s so many things. I mean, even in my career, I’ve done a ton of different things, you know, I’ve helped a ton of businesses get started, we, you know, now I have a much larger firm, I have a firm of 26. And we help innovation companies that are just essentially creating the future, their aerospace, defense companies, life science companies, and all sorts of AI software and tech, and all these leading innovation companies that are creating all kinds of amazing solutions. You know, I never heard of a lot of these things until our clients told us about their work. So you know, so that’s just one kind of level, it’s kind of prepared me over the years to be a CEO. And so having, you know, I’m a little removed from doing the day to day work, but how to run a business of 26. You know, we’re moving towards 50. And so that’s, that’s one area. But we I’ve also done work with closing down banks, you know, during the SNL crisis, we were going in, and we were told to not tell anyone, we’re coming and we’d show up and close banks, just like it’s happened recently, been involved in some fraud in bigger investigations, you know, and this is when I was in public accounting with Laventhol and Deloitte. But yeah, different fraud investigations, you know, have located fraud multiple times, you know, even when we’re not looking for it, it can also lead to defense related work. And so, I have a little bit that I’ve done in that space. And then also, you can also work, you know, you can also work for example, it’s a really good door opener, the FBI working at, you know, even Department of Treasury, you know, in fluid, you know, with if there, there’s global sanctions going on about you know, with rogue states, they want people that are really technically competent, so they’re looking for people that are, you know, CPAs and coders and, you know, you know, kind of data, data analysts, but you know, CPAs are a big part of, you know, people at Treasury, for example. So, anyway, those are a couple ideas of just how to make it. You know, how to make it more appealing, you know, and then there’s the more mundane things that people are doing. Just kind of make Ensure that, you know, the work situation is flexible, it’s not these kind of old school workplaces where, you know, they’re kind of where you’re just kind of burning people out. And it’s just a little bit more flexible work environments, and you have to be able to monitor the productivity in those environments, but also, you have to understand it’s more than just productivity. And so understanding that dynamic and that, I think another one is, you know, at the firm level, the firm’s need to be looking at how they can essentially use less labor, you know, how they can use automation, and, you know, automation and software solutions, and in a variety of different, you know, machine learning AI type solutions. And, you know, and also I’m seeing firms or, you know, outsourcing, you know, to where there’s a better match with the type of work and the availability of talent, just because, you know, talent is pretty, pretty scarce these days, for people that are really, you know, well qualified. So, but those are, that’s kind of those are my thoughts on just how some some areas, we can work to make the, you know, accounting profession a little bit better.
Liz Farr
Yeah, and there are so many different things that you can do with an accounting degree. And I agree, the AICPA and state societies don’t really do a very good job of marketing, the variety of work. One small exception, is that, you know, here in the Albuquerque area, Netflix has a big studio. Okay. And so one of the local universities has set up a program in accounting for movies, or TV shows. So it’s a it’s a specialty, right? So yeah, and so I think, you know, something like, that would be really appealing, and you could be on set and you get to hobnob with the celebrities and maybe get a selfie with the stars, and they have a movie or a TV series is being made. I think that’d be really fun.
James Graham
Yeah, yeah, I mean, ultimately, what you’re really kind of pointing to is that that’s one example. But there’s tons of examples of industries you can get into. And, you know, often, you know, it’s not uncommon that see, you know, people work their way up and CFOs are ended up being the CEOs. And so you can, you know, some people are good at getting into the wine industry, you know, running breweries, brewery bars, doing, you know, just pretty much any industry out there, that’s interesting. You know, having the accounting, finance, business knowledge of how the business operates, is, you know, is a really key part of how they, what their success is. And so, the key, you know, once once you get on the inside, you learn in industry, and you become part of that industry. And so, there’s all sorts of avenues and all these different industries as a result. So, so yeah, that’s a it’s a great gateway. So, so anyway, we gotta get you gotta get that PR campaign going.
Liz Farr
It’s it’s right. Well, we’ll, we’ll try to do our bit by, by this conversation, right now. Now, one thing that hasn’t really hasn’t really changed in accounting until recently was just the overall business model. Many firms have been using the billable hour, and operating with these very strict hierarchical structures. But we’re beginning to see some firms doing different things. I mean, you’re you’re the CEO of your firm, you’re not the managing partner. So that in itself was just is a little bit of a change. What are some of the changes that you are seeing and things that you’re doing in your firm?
James Graham
Right? Well, we’re doing a lot of things that you know, if you if you talk about the, if you talk about the billable hour, we gave that up 10 to 15 years ago, and so we haven’t done it for a long time. And in fact, we will refuse to do it. We’ve had a couple of times where people want to say, well, how much is it an hour? You know, no, I you know, I want to work by the hour but we won’t do it. Well, say let me you know, it’s not a fit. So, in the reason is there’s there’s some you know, there’s some people that have, you know, some really knowledgeable people in the space that have just, you know, have talked at conferences, about it for a while, and they just have pretty compelling arguments. But, you know, for me, the thing that makes the most differences. One is it really changes the nature of your relationship with the client. Because if people, if the client is always going to be looking at the clock, they’re always going to be just, you’re gonna have to have that dollar per hour in the moment, always hanging over any interaction. And once you take that off the table, it allows, it allows everyone to move forward better, because the focus is on running the business. And so if you take the philosophy that your clients always going to know, without surprises, what the costs are up front, then that makes it a lot more, I just makes a better fit in terms of relationships. So we, we spend more time upfront, making sure we have true alignment with what our client’s needs are. And we scope it based upon experience. And yeah, it’s a little scary, you have to kind of make a you have to make a bit of a guess sometimes, but you also can put parameters in there to kind of, you know, put some guardrails into how it’s structured, but it just, yeah, it just, it basically gets it, we actually, you know, unlike what’s some of the, you know, kind of these gurus that record, you know, kind of talk about the hourly rate, we actually track time, because we want insight and into the project profitability. So we’re trying to, we’re also trying to get that feedback, you know, if we’re really going off on a particular engagement, and really starting to lose money, or it also can help spot outliers in terms of areas that are profitable, etc. But we try to make it kind of lightweight, and we’re using it for information purposes, the time as opposed to for billing purposes. And then, yeah, it’s just, it’s just a very different relationship. And I think people just really appreciate working with that. Clients. So I,
Liz Farr
I applaud you for getting rid of the billable hour, a long time ago, because, uh, you know, even when I was in public accounting, I could see that these billable hours and whip all of that was, in many ways, kind of meaningless. Because the partners would Bill what they were going to bill. If they were going to bill $800 for a piece of work, then it really didn’t matter if there was $500 worth of whip in it or $1,200. Right. Yeah. So yeah. So I really didn’t get why we were tracking your time so carefully.
James Graham
Yeah, so it’s, you know, we, like I said, we use it for information purposes, but we’re nitpicking people, or, you know, we’re just trying to understand broad trends, and it’s really helpful for that, for giving us that insight. Yeah, so on the other hand, you know, if people, if people if you do work out, really and give people this itemized ability, it almost just encourages a client to start poking away at it, you know, oh, is this is this, you know, if your description isn’t good enough, and it just, it just drags the quality of the relationship down, you know, sometimes into the mode, and, you know, and so, if you want elevated client relationships, you know, moving away from the transactional into advisory and collaboration, you gotta take some of these things out, that are kind of dragging, you know, can drag the relationship down, like, you know, surprises they weren’t expecting, etc.
Liz Farr
So great, and it makes the relationship, I think, much more easy.
James Graham
Right. Yeah. And then I think, yeah, you asked what other what other changes, you know, are seeing out there, you know, obviously, there’s one big trend is a lot of companies are increasingly outsourcing what they insourced you know, and so they’re in the cast client advisory service space, there’s, there’s more opportunity, increasingly over time, because companies are getting more accepting of just dealing with their core competency in house and outsourcing, you know, areas where there’s expertise and not trying to manage an accounting department, for example. And so we work with some, some pretty good sized companies, you know, that historically, probably wouldn’t have, you know, 100 100 employees, let’s say And whereas, you know, we’re the main accounting finance machine on the back, you know, and on the back end of what they’re doing, and you know, we may collaborate with a couple people internally, but historically, a lot of these firms would have just kept it all in house. And it wasn’t so easy to outsource before, every, you know, we’re getting very digital. And so you know that, you know, bandwidth is increasing software capabilities. And, you know, a lot of things are making it just much more doable, you know, everyone being in the cloud and everything sub. And then I think one other thing, I have two other big trends I see is, one is that companies are getting much more multi state and international, you know, got the software, and people are COVID did it, and they’re just going all over the world. So we work with clients, you know, throughout the world, quite literally. And, you know, time zones are still in issues. So get rid of that. But you can work pretty effectively at distance, if you have the right, you know, like collaboration and right technology and setup. Another big trend I see is that there’s a cap there, software firms are kind of non professional, not that they’re unprofessional, but they’re non professional firms getting into accounting, finance, space, as well, as you know, you know, forces, you know, people coming from overseas and trying to deliver services here in the US. And so those are some kind of increasing trends, whereas a lot of a lot of the big tech companies used to be software focused, and they’re starting to backstop that with people on the back end. So they’re kind of providing a combination of technology plus, accounting, you know, for example, into it. And I mean, it, there’s been a lot of attempts and, you know, h&r block and some of these others, and there’s been a lot of attempts, and generally there on the lighter side of, you know, it’s pretty unsophisticated, a lot of what we’ve seen, at least so far in terms of the work that’s actually done. And it’s, you know, once once it gets into some complexity, like Job Costing, accrual accounting, and so forth, that it falls down or anything special, like, yeah, revenue recognition, lease accounting, doing anything with sophistication it, you know, the it’s, it hasn’t I haven’t seen it yet out there. And these kind of these sort, you know, kind of, I don’t know, we’ll just call them kind of mass type solutions that are out there.
Liz Farr
Right. Yeah, yeah. I think that those probably work. Well, if it’s really just a matter of collecting the bank feeds and classifying things and making sure that all the payments are going in, all the expenses are going out, and you’re classifying things correctly. But when you get into more advanced accrual, and really GAAP accounting, that’s where it gets a little trickier. Yeah.
James Graham
So yeah, so anyway, so yeah, and I’m guessing over time, they’ll increasingly, you know, their sophistication levels will get, you know, as they figure it out, as you know, AI was getting getting smarter and smarter. And you know, more and more, some of this stuff will get figured out. So it’s like, good to have strategies that will keep you keep you from trying to compete with some of these things that are these super wealthy, you know, 100 million dollar startups that don’t have to make money.
Liz Farr
That’s right. That’s right. Yeah. Wish we could all be that lucky. Yeah. Yeah. Now, what about growth? You mentioned that you’re 26 firm moving towards 50. And so that’s, that’s interesting. Are you doing this because you see that there’s a need for the services or because you just want to be bigger?
James Graham
Right, right. Okay. So Well, first of all, I think, you know, you know, I guess, you know, kind of the core of this is really, you know, what’s the value, what does growth do for a firm and one of the things that I really like about growth is it creates opportunity for our team, you know, if we’re growing, we’re creating new positions, we’re creating opportunities for people to move up. And a lot of firms that are kind of not growing people, you know, good people leave because they realize someone is in the seat ahead of them. And that person isn’t going anywhere for 10 years or five years and so, so So that’s one of the real pluses of growth. But yeah, we’re trying to grow because a couple of things, we have some ideas on our verticals of how we want to build out our capabilities, and how we can, how we can best meet those capabilities. And so you know, trying to work with larger firms trying to work with, you know, some more sophisticated, more more complexity, it allows us to have people that are specialists in different areas, because as you get bigger, you’re not just keeping the same structure, you’re, you’re adding on certain different types of skill sets, you know, at a certain point, you can add on, you know, an operations manager, you can add on assistant that that Operations Manager, you can hire someone that focused on technology and other person that you can start specializing within the group, having people focused on just payroll and compliance and tax, you know, what have you, but it allows you to start doing some structuring, organizationally, that can be really helpful to be to be really efficient functional as an organization. The other thing about growth is it can allow you to operate in a different place in the marketplace. So it’s really hard for a solopreneur to be servicing, you know, a big company, for example, right? When you have a team and you have the expertise and so forth, you can work with bigger companies. And so one of the things I’ve tried to do with our with positioning us well is that kind of like really like the idea, but the blue ocean concept. So it’s kind of a, you know, a little bit of my North Star, so to speak. And ironically, we’re our firm is richter.io. And I think that means Indian Ocean is, you know, it’s the URL for the Indian Ocean, and people people actually use it, but, but, um, it was just actually that was just pure coincidence, but, but but the idea of blue ocean is you’re trying to find places in the market where there’s opportunities that you can distinguish yourselves and where there’s good opportunities for, for quality clients. And I think it’s at the beginning, you know, smaller organizations, they have a hard time paying for it, they tend to read, you know, their tent, they can’t often afford what they really need, even at what was good, they can’t afford it. So you can find your way into different specialties, you can find your way into the upscale of the market that can really afford what, what, you know, what they really need. And, you know, there’s true collaboration, and, and also the need for for greater services. So anyway, that that’s a bit of, you know, what we’ve tried to do in terms of our growth path. And so and it also makes it more interesting for people, you know, our team likes it when we’re, I mean, if they’re feeling too busy sometimes then they may not like it for a little bit, but they they really like that we’re adding new clients and that we’re moving forward. And so it creates, you know, attraction quality, you know, when people when we’re hiring people, you know, people are really interested in firms that are growing, as opposed to stagnating or going backwards. And so I forget, yeah, can really help from a team perspective. So
Liz Farr
I like what you said at the beginning about creating different position. You, you just can’t do that with a small firm, right? But when you grow to a certain point, then you can, you can break up the old standard org chart. And instead of having a senior staff, you can say, Well, hey, you know, you’re really good with technology. And so we want you to be the technology expert. Yeah. Or you’re really good at figuring out systems. So we want you to be in charge of operations. And that is something that the smaller firms really are lacking. Yeah. And, and I think that, that variety of positions is something that tends to help keep people in the profession longer. Because they’re not just looking at well, you know, if I stick around for another five or 10 years, you know, doing the same thing, you know, maybe then I will get to be the partner. Oh, boy.
James Graham
Right. Yeah.
Liz Farr
So, I think that’s, I think that’s great and, and making it more exciting, plus the ability to really Enter an industry deeply and find the big clients that you can serve well, and who can pay for your services and who want to pay for your services? Yeah.
James Graham
Yeah, we do we do a lot. On the flip side, we, when we work with clients, we do a lot of financial forecasting. And so we’re helping them plan for their growth. And so right, you know, in a sense, what you’re doing over time is you’re adding new positions, and you need to make sure you’re adding the right positions in the right order. And some of it is your maybe your core competency or like an engineering firm or something you add in different types of engineers or programmers or you know, what have you. But at a certain point, you have to add in certain other capabilities. And so that’s, that’s, that’s what you know, forecasting can be really helpful for whether it’s within your firm or for clients, helping them in their journey.
Liz Farr
Yes, yes. For the forecasting, they can really see that if we pull this lever in our financials and our business model, then that has these impacts over here. Yeah. So at this point, well, maybe we will need to hire somebody, and we will have the financial capacity to fund that position. Right.
James Graham
So, exactly. In one tiny add on is, a lot of what we’re doing these days, with all the technology is complicated, it’s really hard to keep up on everything, all the different technology that’s going on out there and just have one to be a solopreneur doing all that using mastering all that technology, all those licenses, you know, you know, searching for new technology, and on top of doing the work. So, scale allows, you know, a little bit more saneness in terms of the management and all that all the technology.
Liz Farr
Absolutely. You now, you know, back when you and I started out as accountants, you had to be really good with the 10-key.
James Graham
Ah, but
Liz Farr
Thanks to bank feeds, we don’t really have to do that too much anymore. Yeah, yeah. What skills do accountants need to be successful today and in the future?
James Graham
Right? Um, well, I think, you know, it’s, it’s a kind of a mix of hard and soft skills, you know, and, and maybe I’ll just start with the soft skills, because those are often overlooked. And, and actually, there’s some times pretty lacking when people are getting started in their career, because they don’t realize how important they are. But, you know, effective communication is one, you know, you know, it’s just not not just kind of communicating what’s on your mind, just because you want to spout it out, but more just being how do you, you know, how are you effectively considering other people and what, what needs to be done? And how do you communicate at the right level. And so, that’s, that’s another that’s one. Also just trying to really employ common sense in the big picture, you know, just understanding what you know, what you’re doing in your role. I mean, I remember like, way, way back in the day, when I was getting my audit training with the first firm I was with in Chicago Laventhol, they told the story of you know, they’re trying to essentially teach us the same thing. They said, Don’t be track tappers. And so what it was, is people when, I guess back in the day used to go along with hammers along the rails, and, you know, and kind of bang the rails a little bit and they, you know, one of the supervisors came up to people and said, What are you doing while we’re tapping the tracks, you know, like, but why we never know. But in a sense, the purpose the purpose of what they were, you know, should have known you know, I may have been a supervision thing because they may not have been told and they may not care and attention but really understanding what the purpose of what you’re doing is you’re trying to prevent you know, trains from crashing and you know, your but it’s you know, we all do this at different times, but we don’t get the big picture the way we should and And so developing those I don’t know if there’s empathy you know, kind of client experience if you’re dealing with clients and you’re really thinking that from their side like okay, I want to send this email but how’s it going to be received on their site so almost starting what what do they need to hear what you know, what am I employees need to hear? You know, what’s what’s lacking right now and just trying as much as possible to think about, you know, the completeness of the story and what you know, how to communicate it and you know, what other what other people or what other people need out there. And then, you know, another one where I think Accounting has a real losses, I think, you know, just developing a real solid skill set, you know, you can, you know, some people might choose before, you know, between a general business degree in accounting, but I think it really does help to have a pretty solid skill set that can be really, you know, that almost dives a little bit deeper, it’s great to have general knowledge, but it’s almost easier to obtain over time, as opposed to, you know, really solid technical knowledge. And then I think, you know, in terms of learning and the, you know, generally it’s kind of stated a lot, you just, yeah, just keep learning, you know, and particularly areas that are interesting, you know, and so hopefully, hopefully, people liked the areas they’re in. So like, I, I’m, I love economics, for example, and I’m always just listening to, you know, listen, quite literally, to play an hour a day of podcasts about economics, as I’m, as I’m moving about, and so forth. And I, it really helps inform the work we do, just because it’s explaining the dynamics of what’s going on in the economy and business and so forth. And so, I don’t know, having that curiosity and, you know, and I think the other is that, really, right now, there’s, there’s a, you know, in a lot of circles, there’s this real, I don’t know, I call it an epidemic of mediocrity and Malaise out there, you know, just so many people are just feel, I don’t know, just victimized hurt done by, you know, just like, just don’t want to work, you know, figure out how they can get by with less, and I just don’t think, you know, you know, we’ve moved to this remote work situation, which can be have some real pluses for people, but at the same time, you know, theory that if everyone’s getting what they want, and have, we should have this great increase in happiness. And I’m, I’m not seeing a massive increase in influx of happiness, you know, in terms of where people are at, in their satisfaction about life, and, etc. And it’s more complex, there’s, there’s lots of factors up there. There’s climate change, and there’s all sorts of things affecting people’s, you know, where people that are at, and rightfully so, the economy and, you know, wars and everything, but, yeah, I think, you know, just for people to really engage and learn and, you know, try to contribute, and try to help outcomes and help other people and, you know, mentoring other people, etc, can go that can go away.
Liz Farr
So, when you put a lot of really good ideas out there, and, you know, what are some things that you have done concretely in your firm, that have really made your firm a more interesting place a more satisfying place to work?
James Graham
Right? Well, one thing we’ve done, you know, we’re, we’re in multiple locations. So I’m in Boulder, Colorado, now we have a small office in Denver, we have another office and in San Diego person in the bay, we have people in Virginia, Georgia. And so we’ve had to put a lot of work into trying to keep team and culture it’s one thing when everyone is in one office, and you know, everyone’s in the office, and you’re kind of connecting, it’s so much, so much easier, and somewhat, but you almost have to be very intentional about how you build a team and culture. And so a couple it was all before last, we got our whole team together on an island in San Diego, for you know, a full team get together. So that was a little bit of a team building. And we, you know, worked on refining our vision, mission and values together. You know, and also just had some nice quality time and also worked on, you know, kind of personality, communication styles and so forth. So that’s, that’s one thing that we’ve done. And then another thing we’ve done is just tried to be really promote diversity, equity and inclusion within our firm in terms of how we operate and meet it’s, we have this kind of amazing, it’s, it’s like, almost a little un here, or, you know, or wherever radish and say here, but, you know, we have people with different age groups. We have people, you know, I’ve two partners, I’m the co founder, but I have two partners who are women. You know, one one originally came from, you know, she’s originally from Poland, we have a number of people, you know, a number of different religious people, you know, people represented, we, you know, we have LGBTQ representation on our team. You know, just also, you know, it’s pretty, you know, multiracial Um, so, you know, it’s, it’s a really big mix. And so a bunch of that is two things. One is just being really open, because I think historically a lot of firms and you’ll still see it, you go and, you know, everyone gets some certain profile or, you know, whatever, whatever the model of the person choosing is, that’s the profile, but, you know, just being really open to, you know, people and who they are and the possible in their possibilities. And I think that there’s two things that can happen. One is, you can get some really great qualified people that you’re going to otherwise ignore. And that’s not a smart thing to do. And then the other is you can get clients that relate to, you know, who you are as a firm as a result, you know, it’s possible, we’ll lose them, but, you know, I won’t lose sleep over that. But, yeah, so anyway, so that, that’s one thing we’ve done as a firm is just tried to try to be tried to build team even though we’re distance, it’s harder than ever with all the remoteness. And, and, I mean, we’re connecting all the time on Zoom. But yeah, just trying to, and, you know, I want to increasingly look at how we can build it keep our team and our culture, even though it’s going to be different at distance. So can I guess one other thing we do is we try to, we try to bring our, you know, our team along in terms of training and, you know, a team, you know, kind of providing education about just different things, we work with innovation companies, so we’re, we’re sharing a lot of information about what’s happening, you know, so like, a month or two ago, I was showing them ChatGPT and just encourage Chungdahm, which is kind of an AI. You know, everyone’s heard about, I think, now they would, hardly anyone had heard about it right at the time. Yeah, and kind of encouraging them to use it at that, you know, not not to just not check it, but you know, as a tool. And we’re constantly just talking about technology, and just, you know, in providing training for our team and, you know, technical skills and trying to do, you know, one on one, mentoring, uncertain giving people feedback, and so forth. So trying to develop our team as we grow to.
Liz Farr
That just sounds like a progressive kind of firm. And as a CEO of another tech company, I’ve done some work for put it, you’re encouraging people to become better human beings. Yeah. And I think that that’s something that’s maybe been missing from a lot of the traditional firms. The The purpose was to bring in more revenue, so that the people at the top can get more money and get their RVs, or their yachts or planes or whatever, second homes. And those those things are not bad. Yeah. But when it’s at the expense of helping your team develop to become better humans, then I think you’re really missing the boat.
James Graham
No. Yeah, no, it’s something you know, it’s something we’ve worked hard to do. But it’s also something I want to double down on, just because I agree, it’s, I think it’s really, it’s really important. You know, we’re only here here for so long. And we want to we ideally will enjoy the people we’re around the work we’re doing. The clients we’re working with as much as possible and to try to constantly be working on those those areas. And I think we’ve done a reasonable job of it, but I know we can do better. So that’s actually one of the initiatives we’re working on is just try to, you know, figure out how to more even more effectively kind of bring our team along in terms of training and mentoring and so forth work in process.
Liz Farr
Well, at least you you recognize that it takes effort in tension. It’s not just something that will happen. Yeah, exactly. Yeah. Now, what are some things that you think accountants should stop doing immediately?
James Graham
By? Well, I mean, I think one of them we’ve already really touched on, you know, is getting away from the hourly billing, you know, it’s, it’s just yeah, it’s just, uh, yeah, for a lot of reasons. It’s just, it degrades your client relationship and it’s just not a just not a fun way to work. It’s actually think of doing it back to back when we used to do it. And I guess another one is really stop focusing on just transactional, and advisory and kind of almost called like, lower end work, so to speak. And just to really, you know, it may be an important part of your package of what you’re doing, but really trying to focus on what true needs are of clients, you know, what can you do to really help them grow as an organization? And if you think about it from their, you know, perspective, you know, what do they fully need, you know, like, if it’s a tax firm, you know, what about looking at everything they need, from a, from a tax perspective, I just see, a lot of firms that are tax firms are just doing the tax brackets are so busy with tax crap, it’s so easy, they, you just turn the crank, turn the crank, and, you know, by the time they’re caught up with all the stuff that didn’t get done, here’s the next, you know, maybe a little break and some CPE. And here comes the next tax season. And so, you know, I think more progressive firms are putting packages together, where they look at what the clients need, throughout the year, they create, there’s MRR or monthly recurring revenue they build in, it’s like, they want clients that are going to not just create this big, you know, you know, it’s like a, you know, Anaconda eating a water buffalo or something, you know, this thing, right, going. Under during a short period, they spread it out over the year, they have a fixed price agreement, certain subject to certain parameters, you know, there if you need to add special projects on but they’re, they’re doing the estimated taxes, for example, they build in tax planning at the appropriate times a year, they’re, you know, perhaps doing some pre work so that, you know, as much as possible so that the books are up to date, they’re doing the actual tax prep. And then, you know, they may be, you know, they may tie that in with financial planning, or just some more holistic work like that, you know, you know, because a lot of people that need tax prep, need tax planning, need financial planning, you know, so there’s, there’s a lot of places you can go depending upon your firm, but so many are just, they can get by with just turning the crank and I saw anyway, so that horse is done whimpering. But, but, anyway, so, yeah, so anyways, so that’s it. And I think really looking for true unmet needs, you know, you know, I think that’s, that’s what I would be looking for, you know, and there’s a lot of ways to do that.
Liz Farr
Yeah, absolutely. Yeah. And you’ve talked about all the different things that firm owners can do. But they are constrained from doing a lot of that. Yeah, because they’re just cranking the wheel. What do you think, besides just not being willing, not being able to get out of that hamster wheel? What are some things that keep accountants from making those changes? Well,
James Graham
I mean, so much of it, you touched on earlier, Liz, is that legacy? Firm mindset is just the way, you know, that’s the way my grandpappy did it, you know, it’s, you know, it’s just the way it’s always been done. It’s that formula that’s based upon, you know, the partner in you know, billable hours. And, you know, it’s, you know, there’s not much joy in it. And, you know, it’s kind of these real, rigid steps and so forth. And so I think reassessing, you know, how firm is, is structured, and, you know, just relationships within the firm. I think the other big block to change is, I think change takes, you know, change doesn’t happen, well, change happens all the time, whether we like it or not, but I think a lot of changes as you were talking about before it takes intent and effort. Good chains often take some time and effort. And so, yeah, I think that’s about it. I think people often get just caught up in the here and now and they’re, you know, they’re just kind of caught, you know, they’re kind of caught up in emails and putting out fires and they they’re not, you know, kind of putting that strategic time away. You know, the kind of there’s the classic you need to spend time working on the firm, not just in your firm and so they’re failing to really carve that time out in different ways, whether it’s, you know, a little bit each day to plan the day, you know, in terms of what true priorities are or other are planning the week or, you know, planning retreats and planning collaborations with others on the team, etc. And then, yeah, and I think also, it’s just, yeah, a little bit of a failure to set priorities sometimes. Like, one of the things I you know, everyone on my team knows about, you know, the ants and the elephants, and I don’t, I don’t know, if that’s something that you’re familiar with. But no, you know, there’s, in terms of assessing what’s important out there. There’s, you know, the elephants are, what are things that are truly important, you know, the, you can, you know, ants, elephants are really important. If you’re, there’s a, if there’s a charging elephant or a marching elephant, you, you know, you want to pay attention, you know. And so, and then there’s the other thing is like, what is the level of the state of level of urgency. And so that, you know, they can either be charging, or they can be marching, you know, and so everyone gets how important a charging elephant is, you got to, it’s very visceral, and you got to get out of the way most people get, okay, I gotta pay attention to that. Right. But sometimes it’s easy to forget the marching elephants, things that are really important, but they’re not immediate, they’re kind of creeping up on us. And so we have to have a way to kind of address you know, not to forget the marching elephants. That’s what a lot of people do it, you know, their CPE or some gets gets behind or, you know, there’s, there’s a lot of client relationships can slip as we’re kind of focusing on the deadline. And then, you know, the other one, everyone gets that marching ant isn’t that important, so they ignore it. But sometimes they also get distracted by charging ants, things that have a false sense of urgency, but they’re like, Ah, they’re in your face. You know, we’ve all we’ve all had clients like that. And so you got to recognize when there’s a charging ant out there that you got to not give it false sense of urgency, just because it’s, is because it’s yelling at you. So anyway, people, you know, that’s just, you know, there’s others, but you know, these little ways you have to structure to be effective in terms of your use of time in terms of, you know, setting priorities, setting goals, you know, kind of, you know, setting long term strategic goals for your firm in terms of, you know, you have to break it down, there’s a lot of ways to do it, but not forgetting to do that. And then I guess another another key one would be to, yeah, just make sure you have the right priorities in front of you. Because your time time is limited. So one, one thing that is truly limited, you no matter how much money we have our is we know, we only have so much time, so we have to be really smart, and just how we use it. So anyway, those are, you know, kind of under the theme of, you know, blocks to change blocks, not to be confused with blocks change, but blockages to change. Those are those are some ideas.
Liz Farr
Yeah, those are those are all things that I think many firm owners could think about. Yeah, if they feel a little bit stuck. Yeah, they could try some of those things, especially just taking a little bit of time to work on your firm, and not just solely in your firm. Yep.
James Graham
Yep. Yeah, appreciating technology appreciating, you know, just all, you know, being open to where the possibilities are, even if it’s not comfortable. You know, just, yeah, it’s not comfortable. And it’s, you sometimes have to do what’s uncomfortable just to, you know, to make the right long term decision for you, as well as your team.
Liz Farr
Oh, absolutely. Now, now, I want you to kind of get out your crystal ball. And think about what will be the big thing in the future? Why in accounting services is really big now. What do you think will be the next big thing?
James Graham
Right? But I think there’s my crystal ball just came back from the shop. So you’re in luck. It’s been broken for a bit, but they just about it. So there’s a lot of there’s a lot of things happening right now. You know, I think I touched on before I’m just seeing increasing openness of more and more of accounting positions being outsourced bigger and bigger companies that are looking to do that right away. When we were first doing it. It was pretty, you know, it was only people were doing it because they said they knew they couldn’t have someone in house, you know, it was it was much harder sell, you know, way back when I was getting started. Now people that can easily have someone else realize it’s not the right choice in their context, they’re not going to get the expertise, they’re not going to get a full team that can address everything from bookkeeping, to CFO, and yet, you know, they just get a CFO, you know, they are having that CFO now that CFO now is doing bookkeeping with half their time. So yeah, just recognizing there’s a lot more possibilities there. So I think that’s a big trend, I think AI and automation are just the forces that are just going to continue marching. And so it’s something we as a profession need to really work to harness, not fight, but recognize, you know, there’s, you know, the day of the Luddite is over, we got to really, just really, you know, look at how we can use these solutions to be more efficient, more effective, you know, to be able to do things we couldn’t, couldn’t do over, you know, do in the past, you know, that bring, bring more capabilities of what we can do. And I think another one, I think that trend, I mentioned it before, also is just a more non professional firms are getting into the professional services space, you know, whether it’s in or, you know, it’s whether it’s SAS solutions with, you know, adding employees behind it, you know, like h&r block, and, you know, Intuit are doing or if it’s, you know, overseas, doing almost the same to the US using that, you know, the, you know, the, you know, the labor differential, as a benefit. And so anyway, so that’s a big force. I think there’s, you know, as a result of that, I think, for people that are servicing clients, there’s an increasing need for specialization, because if you’re trying to compete against that, you know, that’s not a good place to be, you know, it’s just John Henry in the steam shovel, you know, yeah, just, you know, doesn’t matter how amazing he was, you know, it’s hard to beat the steam shovel, you know, at a certain point, so you want to think, okay, maybe I need to be a steam shovel operator. Right? Or have a fleet of steam shell. So anyway, so yeah, just trying to specialize in different ways to distinguish yourself. And there’s, there’s a lot of ways to do that. And, you know, a part of it is, there is, you know, a whole bunch of new opportunities emerging. And so that provides new, new opportunities to do that, you know, there’s, I mentioned AI, there’s a lot of different AI type firms, we have a bunch of firms in the AI space, there’s crypto and blockchain is another area, there’s the cannabis space that, you know, I see firms, some firms are getting into there’s, there’s e commerce is a big, big area, and that’s going to just continue to grow as we you know, that’s it, there’s an you know, there’s a lot of unmet needs out there. There’s, you know, demographics are going to be changing. And so healthcare is a huge area of need. And so there’s a lot of unmet needs out there. And then another one is just traditional areas where there’s just like, managing, manufacturing, and inventory and so forth. There’s there’s eat because of the complexity, I think there’s huge opportunities for people that specialize there. And so, even though it’s not new, so to speak, there’s, I don’t know if it’s a new thing, but it’s an you know, it’s an opportunity that’s just sitting there for people. And I guess, as long as I’m just my crystal ball still working, it’s getting, it’s getting a little fuzzier, but, you know, the whole, the whole realm of, you know, ESG, or environmental, social and governmental issues, you know, for example, accounting for carbon credits. You know, I think that the, I think it was at the AICPA conference I was at or the Woodard conference recently, I saw a firm that had software that really is specializing in carbon credits. And so, you know, just some of these new emerging areas, or, you know, or just opportunities or even just totally sort of related what does it like, you know, the, you know, there’s podcasts and therefore, you can do accounting podcasts. Through that, so that’s So, you know, that’s an emerging opportunity that wasn’t a real option 10 years ago. And so it’s just recognizing, hey, there’s a need, I can fill that need. And I’m actually interested in that meeting so I can get CPE.
Liz Farr
It’s pretty cool. And, you know, the things you mentioned are things that were not even approached, not even introduced to me when I was finishing up my accounting degree, right? I haven’t I haven’t been an accountant. As long as you, you know, this was accounting was the second or third or fourth career form? Right?
James Graham
Yeah.
Liz Farr
But, you know, these things that you’ve put out are just so exciting. Yeah. There’s so many opportunities out there.
James Graham
Yep. Yeah, I think people get, you know, afraid of the technology, you know, thinking that AI is can eat my lunch, and may be able to describe your lunch, but at least not yet. It’s not going to eat it. But they’re, you know, the key is, yeah, there’s, it’s such a classic thing where there’s opportunity, where there’s, there’s opportunity, where there’s unmet needs, and yeah, we, there’s so many opportunities, you just have to a little bit, think and try to understand, you know, having the experience and looking around can help help a bit more, but there’s loads, loads of possibilities, and you just have to align up and I say you I just generally you align what you what really lights you up, because you do best the things that you’re you’re passionate about, and try to align with the types of businesses and, and needs and you know, the service that really kind of resonates, and hopefully, hopefully it pays decently.
Liz Farr
Paying well, it’s always good. Yeah. Yeah, well, I think that’s a perfect way to wrap things up that there are opportunities everywhere. Yeah. I want to thank you so much, James, for taking the time to talk to me. If listeners want to connect with you, what’s the best place to find you?
James Graham
Right? Um, I think a few things that I don’t know if I can give you a slide, you can put it at the end of the podcast. But that’s one not one idea. Another I’m on LinkedIn. So it’s James P. Graham. And I’m in Boulder. Boulder number. Another is my email James G like grape at Richter, ric htr.io. And we also have a website out there, www dot Rictor. or ACH? tdr.io. So those are, those are a few of the carrier pigeons. Give that a try.
