The Virtual CFO

Where I’m Going: Putting Client’s Best Interest above Billable Work

As I’ve written before, I encourage my small business owners and entrepreneur clients to learn the accounting activities that affect their businesses (Where I’m Going: Teaching and Mentoring Clients ). I normally recommend that they perform the bookkeeping themselves when they have the time to do so during normal business hours. The reason I do this is that accounting is the backbone of a business and understanding accounting and financial reporting increases the odds that a client’s firm will be successful.

When I opened the Nashville CPA firm, CPA for Small Business , I thought that a major part of my practice would be accounting services (i.e., bookkeeping, payroll, etc.). During the first six months I was open, I observed that prospects were looking for a accounting service more because they didn’t understand accounting than that they needed to outsource their accounting because they didn’t have the time to do it.

Once I determined that this was the case, I began to offer to set up accounting systems for these prospects (in QuickBooks, Microsoft Office Accounting, etc.). As part of the accounting setup package, I provided the client with policies and procedures on how to perform routine accounting activities for their business. When I deliver the database to the client, I walk them through how to perform the necessary accounting and bookkeeping activities on my laptop. Almost every client I have set up an accounting system for has expressed gratitude for learning how to perform the accounting themselves. Understanding this aspect of their business makes them better businesspeople and managers.

This is an example of how I put my prospects and clients best interest above billable work for CPA for Small Business to perform. There are more billable hours in performing accounting services on a regular basis than in setting up an accounting system, but I would rather recommend what is in the client’s best interest. I just feel it is the right thing to do.

I do have accounting services clients that I perform routine bookkeeping and accounting activities for at my Nashville accounting firm. I’ve learned that the best clients for these services are those who would have to perform the accounting at night/during the weekend if they didn’t outsource it to me. The small business owners who need accounting services are those who are so busy with their company’s sales and operations that they don’t have time to perform these activities themselves during normal business hours.

Where I’m Going: Treating Sole Proprietors the Same as Multimillion Dollar a Year Clients

One of my biggest pet peeves is vendors who treat you one way when they think they can make money off of the relationship and another way when they don’t think they can.

I have experienced several business-to-business vendors who treated me one way when I was the CFO of a company they served and another way when I was no longer with that firm. These vendors included insurance salesman, CPAs, and commercial banking officers.

This is why I made the conscious decision that I would treat all of my clients the same when I opened my Nashville CPA firm. I give the same service to sole proprietors who gross less than $10,000 a year as I do my larger clients who gross over $1 million a year.

First off, I feel that it is wrong to treat clients differently based on what I can make off of the work I perform for them. Secondly, I believe that treating clients differently based on my billings is shortsighted because all of my big clients started off small.

As CPA for Small Business grows, I will ensure that any partner or employee I bring on board will share in this philosophy. If not, they can work somewhere else.

As a business owner, I appreciate vendors who have done the same for me. These vendors include Bill Seaver at MicroExplosion Media and Brad Butler at The Butler Insurance Company. Thanks guys!

Thank You Linda!

I graduated from Tennessee Tech University with my Masters in Business Administration on December 13th. Here’s a picture of my wife Linda, my daughter Hannah, and I after the ceremony (http://twitpic.com/sy9n).

Pursuing my MBA was a commitment not only by me, but also by Linda, who performed a large amount of the family chores while I was studying.

During the ceremony, the president of the university asked the graduates to give applause to their families for supporting them while they were in school. I was one a handful who gave a standing ovation. After the ceremony, Linda remarked that it touched her that I did this since I was the one who studied all the time.

I told her that I’ll always remember something she did one Saturday the fall of 2007. The gutters needed to be cleaned out, which was a chore I performed after all the leaves have fallen off the trees. On this Saturday, I was working on a case for the Accounting Information for Management Decisions class I was taking that had to be emailed to the professor the next day. Linda came into the office and said she would like to clean the gutters, but she couldn’t maneuver the ladder because it was too heavy. Linda told me she would clean the gutters if I helped her with the ladder.

So every ten minutes or so, Linda would wave at me through the window and I would go outside and move the ladder for her. When she had finished the job, she had dirt on her face and leaves in her hair. Linda cleaned the gutters so I could study.

During the time I was in the MBA program, Linda performed many chores like this, without complaint, so I could concentrate on my studies and on building the Nashville CPA firm, CPA for Small Business. I appreciate her support and the way she facilitated household tasks so I could take care of business. I really enjoy being on the same team as Linda (who deserves many standing ovations for this).

Where I’m Going: Teaching and Mentoring Clients, an Example

Last year, I met with a prospect who owned a rapidly growing firm. The reason the owner was looking for a Nashville CPA was that neither his bookkeeper nor the external accounting service he was using was presenting him with information that helped him run his business.

In the meeting, I suggested that the owner should take the time to learn to navigate QuickBooks and understand its financial reports. I explained that he didn’t need to become a QuickBooks expert, but that he should know how to pull up information in his accounting system. The owner disagreed with me and said that he had a bookkeeper and external accounting service to perform this for him. He also explained that he was too busy to learn QuickBooks.

Six months later, the owner called and asked for a second meeting. He told me that he had fired his bookkeeper, moved to a second external accounting service, and was still not receiving financial information that helped him run his business.

We rolled up our sleeves and went through the financial reports he had been receiving. I had him explain to me the problems he had with the reports and why they were not useful to him. I also had him explain to me what information he needed to run his business.

I then made suggestions on how to improve his accounting system and financial reporting so that it would be useful to him. He agreed to let me make the changes to his accounting system and to provide him with procedures on how to perform his firm’s routine accounting tasks. At the end of the meeting, the owner told me that he now understood why I had pushed him in our first meeting to learn to navigate QuickBooks.

I had several successive meetings with the owner where I taught him how to perform routine task in QuickBooks. I also mentored the owner, helping him understood how to use his firm’s financial information to improve the performance of his business. A few months later, the owner told me how grateful he was that I had helped him understand accounting and financial management.

This is an example of why I strongly believe that I have the responsibility to my clients to teach and mentor them on accounting and financial management matters that affect their businesses. The more owners know, the greater the chances that their business will be successful.

Where I’m Going: Teaching and Mentoring Clients

CPA for Small Business has been open for two and a half years. During this time, I have learned that many CPA’s and accountants create a Chinese wall between the work they perform and what they provide to the client. I have a hunch that they believe they are giving themselves job security by not allowing the client to learn about the accounting and financial management functions they provide. I personally don’t believe in this business model.

I feel that I have the responsibility to educate my clients on the accounting matters that affect their businesses. I also feel that mentoring clients on using financial management to improve the performance of their businesses is vital to my practice development.

When I owned a logistics company, I was the general manager as well as the sales manager. After shutting this business down, I served as the chief financial officer of several companies. One of the activities I liked most in these roles was helping employees improve their performance through teaching and mentoring. When I opened CPA for Small Business, it was natural that I continue this practice with clients.

I enjoy watching my clients develop an understanding of the accounting and financial matters that affect their businesses. I do it because it is the right thing to do. Teaching and mentoring also increases the chances that my clients companies will be successful; which is good for my practice.

As CPA for Small Business grows, I am going to ensure that new partners and employees adopt the culture of teaching and mentoring that I have established.

Where I’m Going: Having a Passion for Serving Small Businesses

The reason I decided to open a public accounting firm that specialized in small businesses is the passion I have for helping small business owners and entrepreneurs pursue their dreams.

I’ve owned two small businesses and I’ve spent most of my professional career working for small businesses. I’ve been the CFO of a wide range of firms, from start-ups to companies financed by venture capital. So I have a wealth of small business accounting and financial management knowledge. But knowledge doesn’t translate into passion.

My passion for helping small businesses comes from the enjoyment I get when I contribute to a client’s success. I really love working with small business clients, using my background and experience to help them find solutions to their problems. It is fun for me to see clients improve their businesses using my suggestions.

I understand the psyche of my entrepreneurs because they are just like me, taking on the risk of owning a business in order to control their own destiny. My passion comes from my desire to help clients pursue their dreams.

As I grow CPA for Small Business, I will ensure that anyone who works for me will have the same passion for serving small businesses that I have.

Where I’m Going: My First Entrepreneurial Experience, Failure, and Passion for Helping Small Businesses

Justice Freight Systems, my entrepreneurial logistics company, was open for four and a half years. During the first two years, I couldn’t do anything wrong. The last two years, I couldn’t do anything right. I’ve thought about writing a book about this experience entitled “How I Went from Being an Entrepreneur to an Entre-Manure”.

At BarCamp Nashville 2008, one of the speakers stated that the average entrepreneur has 3.8 failures before building a successful company. My first entrepreneurial business failed. This experience provided me with the passion to help other entrepreneurs successfully grow their companies and to avoid the mistakes I made during my first small business venture.

My business failed for two primary reasons. First, the principal markets we served suffered a major downturn. We provided outsourced logistics for importers of raw commodities, such as steel and lumber. In 1995, the bottom dropped out of these industries and our sales dropped dramatically.

Secondly, I made bad decisions based on my inexperience that significantly increased the debt of the company (I learned the hard way that Happiness is a Positive Cash Flow). I believed that I could sell and market my way out of the situation because I had done so before. I had successfully bet the company’s cash reserves three times before this downturn and I had confidence that I could do it again. When I was unable to do so, the company’s debt was to a point where I had no other choice but to take corporate and personal bankruptcies and start over (I had personally guaranteed the debt of the company and several vendors had started legal collections proceedings against me).

I was less than two years out of college when I opened Justice Freight Systems. Looking back, this was one of the best experiences I could have gone through as a young businessman. I learned how to run all aspects of a business during this period and that that I loved being an entrepreneur and building start-up businesses.

I also gained a passion for helping other entrepreneurs run their businesses better. I’ll blog about this in more detail later in this series, but I enjoy teaching small business owners how to use accounting and financial management to run their company’s effectively and to facilitate more informed business decisions. 

It is this experience, and my passion for working with entrepreneurs, that sets CPA for Small Business apart from the competition. I spent a number of years on your side of the desk and I completely understand what you are facing as an entrepreneur.

Where I’m Going: The Seeds of a Small Business Focused Public Accounting Firm

I had the idea for CPA for Small Business long before opening the company in June 2006.

I owned the entrepreneurial logistics company, Justice Freight Systems, Inc., from 1992 to 1996. When I opened this business, I was a proficient salesman, sales manager, and operations manager, but I had no understanding or knowledge of accounting or financial management. Everything I learned about accounting, cash flow, budgeting, taxes, etc. was learned the hard way, through experience and trial-and-error. At the time, there were no public accountants or consultants who could help me navigate the financial aspects of my business at a reasonable cost. I would have welcomed the guidance of an experienced small business financial manager while I was building this firm.

In 1999, I helped Bolden Pipe spin off its grading division into a separate company called Bolden Constructors (now called Division 2 Constructors). I was responsible for the administrative and financial aspects of this. After the spinoff was complete, it was evident that there wasn’t a long-term position for me at the company. So I began looking for a new construction financial management job.

In one week during this job search, I had two small construction company owners ask me if I would be interested in working for them on a part-time basis. Both owners told me that they could really use someone with my knowledge and experience, but that there wasn’t enough work to justify hiring me as a full-time employee. I turned both of these owners down, but these two conversations laid the seeds for CPA for Small Business.

From that time, I kept thinking about the idea of a public accounting firm that specialized in small business accounting and financial management. In 2006, I made the decision to open such a company because of the passion I have for helping small business owners and entrepreneurs improve their company’s performance.

Where I’m Going with CPA for Small Business, LLC

Two weeks ago, I met with a prospect to discuss how CPA for Small Business could help his growing company. After deciding to retain me as his company’s CPA, the business owner asked me “where are you going with CPA for Small Business”.  From the context of the conversation, I understood he meant growth plans for my firm. I explained that my plans were to grow my company around other professionals who had hands-on small business experience and a passion for working with small businesses and helping them grow.

Since this conversation, I’ve given a lot of thought to “where am I going with my company”. Not from a growth standpoint, per se, but rather from a client facing standpoint as my company grows. 

So in this blog series, I want to tell you how I want clients to see CPA for Small Business. This includes CPA for Small Business:

1. Having a passion for serving small businesses;
2. Teaching and mentoring clients;
3. Treating a sole proprietor client the same as a multimillion dollar a year client;
4. Putting client’s best interest above billable work;
5. Doing what we say we are going to do;
6. Acknowledging mistakes and fixing them; and
7. Having clients who are nice to work with.

Now Back to the Regularly Scheduled Virtual CFO Blog

I started the Virtual CFO blog in June 2006. Over the last year and a half, I haven’t blogged as much as I did the first year. The main cause for this was that the time I normally used for writing blog posts was taken up by my MBA studies. 

When I started working on my MBA, I was l employed as the chief financial officer of a $6 million/year business. The reason I decided to pursue my MBA was that most high-level financial management job descriptions were written so that a “CPA was required and a MBA was preferred” or an “MBA was required and a CPA was preferred”. By earning my MBA, I was increasing the probability that I would be considered for a high-level financial management position. Additionally, the concentration of my MBA studies was in management information systems. I chose the MIS concentration because in the ten years I was a small business CFO, I constantly had one foot in accounting and the other in IT.

I decided to continue working on my MBA when I opened CPA for Small Business because I was gaining knowledge that could be used to improve my client’s performance. Even though it was difficult building an entrepreneurial public accounting firm and pursuing a MBA at the same time, I have never regretted doing so.

Now that I have completed my MBA studies at Tennessee Tech, I have time to blog on a regular basis again.

Stay tuned, I think you’ll like what I have in mind.