Geraldine Carter said that eating kale for two weeks taught her an important lesson about the accounting practice. In this episode we sit down with Adam Hale, Jody Grunden and Geraldine Carter, founder of She Thinks Big Coaching to learn about the intriguing story behind Geraldine's discovery and to deep dive into how changing your mindset, using simple solutions and implement these new strategies can help your firm scale.
"When I look at the accounting profession, same thing, super well-educated well-trained putting in lots of years licensed, and all that. Do they suffer sometimes from the same kind of, let's just say blinders, because they're so well-trained and thinking that the solution has to be complicated and nobody else could possibly come up with it that they walked right past easy solutions." - Geraldine Carter
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Jamie Nay: Hello everybody. Welcome to today's podcast. Every once in awhile we get a email about a podcast that really makes us think. A recent email that I got from our guest today said, what eating kale for two weeks taught her about the accounting profession. So once we saw that, we really had to bring her on. So today we are joined by Geraldine Carter. I'm going to let her do her introduction. She has a podcast called Smart Strategy for CPAs. She has a website. So I'll let Geraldine go into everything she does.
Geraldine Carter: Hi Jamie. Hi Jody. Hi Adam. It's great to be with you guys. So my work is one-on-one with CPAs and accountants to help them shift from tax factory to more high level virtual fractional CFO services, advisory services, and get out of the hamster wheel and the trap that's created by hourly billing and being a generalist. So that's the work that I do as a coach and consultant one-on-one with.
Jody Grunden: Great. So how many are you working with right now?
Geraldine Carter: I am working with 11, capacity for one more..
Jody Grunde: Is it like an ongoing relationship? Like you're meeting with them on a regular basis?
Geraldine Carter: Yeah. I start off with a four month setup to get through a bunch of material and help them get results quickly so that they can start to feel the momentum and the direction change. I think a lot of times it's easy to get caught in the belief that, you know, this will never change. I'm just stuck in this tax factor. I'm trapped. And what I want is for them to have the experience of actually, no, you can really shift your business and you can shift it quite quickly if we focus on it and we free up your time to allow you to focus on shifting your business and getting out of the being the technician.
Jamie Nau: Great. So people will want to know where to find you because I'm sure they're going to love all the information you are going to give. I want to make sure they know how to find you right away there.
Geraldine Carter: So they can find my website shethinksbigcoaching.com and they can email me at: podcast@smartstrategyforcps.com. And if you just search smart strategy on your podcast app, it'll pop up.
Jamie Nau: Awesome. Great. So before you go too far into this story, I'm curious when you mentioned the word tax factory, what that means and what you see in that area.
Geraldine Carter: Yeah. So a lot of people who come to me will say, I feel like I'm on a treadmill, I'm running on a hamster wheel, I'm getting nowhere and I'm just churning out compliance work all the time and it's not work. I used to like compliance, but now there is so much of it and I'm so buried underneath it that I don't even like it anymore. I've started not even liking my business. I work all the time and then on the weekends I catch up and there's like, there's just no end in sight. And of course, 2020 and 2021 delivered a rather special experience for CPAs that just exacerbated the whole situation. So there are three main problems. There are plenty of challenges in the accounting profession, but the ones that I deal with primarily are being a generalist and doing too many things for too many different kinds of clients, focusing on deliverables instead of outcome transformations and billing by the hour instead of bracing. And those three things conspire to create a trap that's really difficult.
Jamie Nau: I think all of us can relate to that. All three of us have been at different accounting firms and seen different accounting firms and all of us can relate to those issues. So, I am excited to get to the kale story cause I've been waiting a couple of weeks to actually hear it.
Geraldine Carter: So, I have an auto-immune disorder. Since I was little I went to all kinds of physicians and they prescribed me steroids and prescriptions to reduce the pain. Then when I was 42 things got kind of bad. I went to my physician and I told her I can barely push the buttons on the microwave in the morning. It feels like walking across glass when I get out of bed. And that’s when we talked about basically suppressing my entire immune system so my joints don't fuse. And I was like, I'm not ready for my joints to fuse either so can we avoid that? And she told me about all the drugs and everything. And I was like, yeah, you know, that doesn't sound really great. I don't think I'm ready for my hair to fall out as a side effect of drugs. How about you give me six weeks to go home. I'm going to throw the book at this thing from every angle I possibly can. And if in six weeks I can't find anything that shows signs of improvement I'll come back. We'll talk about these biologic injectable drugs. So I went home. I had some other irons in the fire that I was kind of researching and looking at, but basically it amounted to scrubbing my diet down to kale, coconut cauliflower, rice, just super simple. After 35 years of being in pain, you know how long it took for me to notice that difference? You're not going to guess. It took two weeks until I started to notice. Two weeks. In four months I was 95% better. I went back to the physician, she's like, huh, it looks like we don't have to use these drugs. And I was like, great. And I haven't been on prescription medicine since, and that was two and a half years ago.
Jody Grunden: Oh, wow. That's awesome.
Geraldine Carter: So, yeah. It's awesome. I can tell you that I feel like a champion compared to how I used to feel. So talk of suppressing my entire immune system and all the risks that comes with and all the rest, it just got me thinking about a solution that was so obvious. It was right under my nose the entire time. It just got me thinking about walking right pass solutions that are really easy. That are really straightforward, but we almost don't see them because of a couple of things. We're trained to think differently. We're trained to look for complex solutions. We're taught to believe that it couldn't be possibly be that simple. And when you think about. MDs are well-trained, well-educated licensed individuals who have worked hard to gain all their knowledge, and yet she walked right past an obvious solution. And when I look at the accounting profession, same thing. Super well-educated and well-trained people putting in lots of years. They do suffer sometimes from the same kind of, let's just say blinders, because they're so well-trained and thinking that the solution has to be complicated and nobody else could possibly come up with it that they walk right past easy solutions. What I find with my clients, as CPAs, when we start working together I walk them through this exercise that is, you know, if you could have your way with one of your best clients and get them to do all the things that you know, they need to do, and they know they need to do, but they're just not doing it. And you had time to implement and execute and make sure that all the boxes got checked and everything, what would you do? And they list out six to eight standard things that they would look for, you know, stones that they would turn over to make sure that they're capturing all the possible tax benefits, making sure expenses are plugged, and a few other things. And then I asked them, you know, how much do you think this would save your client? If you were able to do all these things and actually get them to make the changes that they know they need to make in their business. And they rattle off a bunch of numbers and I capture the whole thing in a spreadsheet, and typically it's a range. And then I kind of backfill. I say, for example, I was doing this with a client recently who is a CPA for physicians who has clients with 3 - 4 million in revenue. And the numbers added up to $500,000 - $750,000 a year in potential tax savings, plus expense leaks, plus taking advantage of real estate options. And I asked, so what's preventing you from helping your clients save half a million or three quarters of a million dollars? Because for a lot of people, you know, that's real money. And the answer is always the same. I'm so busy. I don't have time. I don't have time to meet with them. I'm not sure how we plan this out. There’s a list of reasons, reasonable sounding and legitimate if it weren't for the fact that we're talking about a half a million dollars. This got me started, you know, once I saw this pattern across multiple clients, that the typical savings range from 10% to 20% of annual revenue. This was a key piece of me transitioning how I work with my clients to help them ensure that they capture that value on their client's behalf and that they're being compensated for it because this is the easy money. It's just sitting right there and it's too easy to think, you know, I've got to find something complicated. If it's not a complicated solution then it's not, you know, it might not be good enough. So this is what the simplicity of eating kale, coconut cream and cauliflower rice for a bunch of weeks and finding a simple solution. What appeared to be complex has helped me shift about what I see in the accounting profession.
Jody Grunden: You know, I love that a lot because it wasn't like you went in trying to figure it out. Something happened to you in order for you to kind of think a different way. With us it was exact same thing. When we started the practice back in 2002, it was one of those things where we started doing the traditional accounting stuff. We bill by the hour, we did tax returns. We wrapped up their financials at the end of the year and the boring basic stuff. I say it's boring and basic because I believe it is boring and basic. It wasn't really something that really motivated me any further than that. So I was like, what is a better fit for us? I kind of got thrown into opening up an accounting firm. Things weren’t working with the prior firm I was at and I really didn't have any other options. When I started it wasn’t that fun. So it was one of those things that thrust me into thinking let’s do something we can get more benefit out of. For me it was sitting down with clients and going through a forecasting modeling. And when we went to a recurring revenue model that was because we couldn't afford to be a bank. We had to make a big decision. That's when we said, well, let's just simply charge our clients on a monthly basis. We are going to zap their account every month. So back in 2004, we're pulling money out of client's accounts and people were saying, you can't do that. People aren't going to do that. That’s unethical, all these different things. It's like, no, it's not. I mean, they agreed upon it beforehand. We’re taking the exact dollar amount. And it made it really nice, but it allowed us to continue on as an accounting firm. Otherwise we would have been stopped in our tracks back then because we didn't have any money coming in. Wrapping back to your story, it’s the same thing, right? It was shock of what am I going to do? Am I going to go the normal route and really struggle through this? Or am I going to actually make a change?
Adam Hale: Geraldine, one question I had because I think one of the things that you pointed out in that where you were saying you were listing out the three things that kind of get in people's way is the focus on deliverables rather than outcomes. I think that's interesting because you know, for a lot of us, including Summit, we focused really heavily, heavily on deliverables or billable. We productized the service part of the advisory part of the business. I think there's a lot of value to that. What I hear a lot about though whenever it comes to outcomes is clients always ask other folks that we're advising too, like what's the ROI of this. So whenever you're saying, hey, we're focusing on outcomes rather than deliverables. And we're talking about what we could potentially save people. If we do these kinds of things, how do you help people answer that question? Whenever they're selling their services and clients naturally ask, okay, what's in it for me, what's my ROI? How do you usually address that or help folks with that?
Geraldine Carter: Yeah. So it's a fair question and an important one because people want a return on their investment, right? And the more you can show that there is a return on that investment, the easier it is to bring on the right kinds of clients. Also we understand that, you know, our clients are different and the ROI isn't going to be the same for anybody. So there's a couple ways at it. One way is to capture a range and actually capture the ROI that your clients are getting. You guys probably do this. You benchmark, you know, where your clients are when they start out, what their cashflow situation is. What's their net. What's on their balance sheet. What they are casually doing month by month. Then where they are a year later and track that information. And once you track it across, you know, 20 or 50 clients, you've got a reasonable data set. You've got a sample size for what the ROI is across your clients. And people who implement get results. I can tell you that my best clients who implement the stuff that we do and make the difficult changes that we talk about making, and not all changes are difficult, but the ones who do the stuff that we're talking about and implement the advice that we're giving them are our best performing clients. I don't guarantee that cause like, I'm not in control of what choices you make at the end of the day. But if you know we have a history, we have a track record of clients getting these kinds of results. Is that kind of ROI something that might be of interest? And of course, if your ROI is solid and you're doing good work for your clients, which it will be, and I'm sure that it is, then it becomes a much easier. Sometimes your clients, they want to push back on you and they just need you to push back a little bit against them so that they have their concerns mitigated.
Jody Grunden: Yeah I'll tell them the same thing. I'll say, well, you can't control the outcome with what you do. We can give you advice and tell you how to implement it. But we find that our typical client has a net income of 15% as at least a set, you know, 12% of their annualized revenue in the bank. That's your ROI getting into that. I think the peace of mind is the big ROI that a lot of people are looking for.
Jamie Nau: That’s exactly what I was going to say. You can measure ROI several different ways, obviously with money. But I think one of the things that I talk about a lot is kind of to Jody's point is the consistency. If you're working with us, you're going to consistently know where your numbers are at. You're going to consistently have someone outside of you looking for pitfalls. That's one of the ROIs we provide. But in addition to that, you also have someone just to talk to. I think a lot of small business owners feel like they're in this world by themselves and they have to make the decisions by themselves. There are things that you can't pay for that are worth more than money.
Adam Hale: The big thing is though, like whenever you're talking about a lot of that stuff, most of the time, because we're talking in dealing with accountants, they want to see the numbers. A lot of times we'll steer people away from that. I recommend that if there's going to be one thing that you kind of memorize and kind of get down as an elevator pitch it's what you bring and what that ROI looks like. Have that prepared so you're not fumbling around going, well, you know, you could do it this way and it could be numbers or, you know what I mean? Like, just make sure you practice and really think about what your value proposition is and what outcomes they should get from working with you. And just make sure you kind of know that inside and out and be prepared not to quantify it with numbers as we would like to do. So, you answered that perfectly. That's why I was kind of wondering how you advise people.
Geraldine Carter: I mean the other piece in here that's valuable is learning how to assess and understand the value of those intangibles and so-called immeasurable that you just mentioned. Between the three of you, you just rattled off consistency, avoiding pitfalls, not feeling like you're alone. Being able to make clear decisions, getting your time back and being able to focus. I would say that in there there's measurable value. That is quantifiable in some you know, not squishy non-scientific way. But that doesn't mean you can't quantify it by putting a dollar amount to the amount of time you save, because you don't have all those things weighing on you.
Jamie Nau: Yeah, for sure. I think that makes a lot of sense. Especially as an accountant, you can find a way to equate anything to money if you really take those next steps. So I think that's definitely a great point. So the next section here, I want to get some examples. I know Jody already mentioned this, but I think the interesting correlation I saw in your story is if you told someone like me who doesn't have the same threats that you had in terms of your health issue, it would be hard to get people to commit to eating kale and drinking coconut water. Oftentimes it takes a big problem in order for someone to have to make those decisions. I think that really equates to accountants. Like if you're running a 10% net income business and you have $3 million in revenue, you're doing just fine. You're probably not going to take these next steps because they feel drastic to you. But to Jody's point earlier, if you're to the point where you're just being a bank and you're barely making any money and you have just enough to afford your house payment, then you know, it takes that drastic step of something big. I'd love to hear some examples of some of the companies that have come to you at that stage and what it took for them to make that step to start eating kale.
Geraldine Carter: I think it would help to kind of swim upstream a little bit on this question, because what clients are really buying or what's most valuable to clients is transformations and outcomes, right? And the more pain a client is in the bigger, possible transformation, right? If a client is doing the example you cited of $3 million and they've got 15% margins and they're swimming along. They're doing fine. And they're in maybe something of like profitable mediocrity. It works, but it's not ideal. That's not the transformation. The delta of their transformation will be smaller than somebody who you take from, if I don't make this change now I'm going to have to close the doors of my business, and then you can transition them to having six months reserve in the bank. Being able to save for retirement, giving employees raises, like that is a huge transformation. To the extent that you can work with clients where you can provide significant transformations for your clients it makes it much easier to work with them. It makes it much easier for them to be willing to pay you because the value is there in the transformation. So for examples from my own clients, typically what's going on, especially in the last 18 months is that they are just working like mad and they're working 60 hour weeks, 80 hour weeks. They haven't taken a full day off since March of 2020 and their tax load has just gotten bigger. It hasn't reduced. The tax code has gotten more complex. They're still waiting for guidance. And you know, now they've got everybody on extension. It's now August, they're still wrapping up 2020 returns. They are just wiped out and there's no end in sight. They've got the fall deadline coming and then they're back around to the 2021 starting 2022 tax season. So what does it look like? What do the results look like? So we've got to first off, get rid of disengage the clients who are really driving the firm down. And oftentimes this looks like orphan 1040 tax work that isn't tied to any other business, any other client in the business. And, you know, I'll get pushback from the CPA who's like, but that return only takes me 15 minutes and I charged 400 bucks. That's good money, but really it's trap money. It's opportunity cost money, because you all know the margins on doing higher level CFO controller advisory type work are much, much higher than transactional level work. So we need to get rid of the clients that are slowing the business down and create space. We look for opportunity to add more value in your best clients by providing better services, more solid services that have higher much higher margins. So in terms of actual results, I have a client, for example, who we just started three months ago and she's working 80 hours a week. We meet later this week. I'm going to find out what's up with her, but she has got about half a million dollars’ worth of fractional CFO work in conversation, which will allow her, it's about a million dollar firm to potentially get rid of, you know, half a million dollars’ worth of compliance work and take her client load from 700 down to like 50. So that's one. Another example on a smaller scale level is somebody who came to me, not at all enjoying compliance work. And within the first 12 weeks, she created a hundred thousand dollars in consulting stock option consulting work. So, you do the math. Another client who is niched into farmers in south Texas. So she's doing VCFO services for farmers exclusively 5 to 10,000 acre farmers. And in her first 12 weeks, she had three contracts worth about $120,000. And those were guinea pig prices because she was, and she told me she's like, we didn't just add one zero to my prices. So she was a little on edge, but disbelieving that her clients were going to pay her this much just because it was a hundred times more which she had previously charged them, obviously for different work, for different outcomes. Once she got into the groove, her prices are rapidly increasing up to high five figures for fractional CFO services for farmers. So those are just three examples. I could give you more, but you know, we've got time limit with your episode.
All: Laughing [in audible]
Geraldine Carter: I think Jamie, you mentioned at the top of this episode, it's amazing to me how much you all know and how much money you can save your clients and how much you can prevent painful potholes because you all know it inside and out. It's so easy to think to yourself, doesn't everybody know this stuff? And the reality is that, you know, the rest of us who are not CPAs or accountants don't know this stuff, right? My own CPA saved me from sending $30,000 to the IRS by not selling my house before the two year ownership deadline. I had no idea. How would I know that I don't study tax code 179. So, you know, it's just this, these small snippets of information. Of course the more complex stuff too, but even just the small ones.
Jamie Nau: Yeah. I also think you made great points too, about evaluating your clients. I think that's something that you do with your clients right away, but I also think it's something you need to do at least annually and have a process around it. Oftentimes your business model changes. So, what's good two years ago might not be a good now. And so you want to make sure you understand what a good client is. What's a good gross profit on that client. All the things that make good clients that way you can evaluate that annually and make it a process. That's something that we started to implement. That's been really helpful for us. So I wanted to take a real quick second to throw our email address out there. It’s cpa@summitcpa.net. We'd love to have more guests. Now we are coming up on a time so one final thought from each of you.
Geraldine Carter: Keep your eyes peeled for obvious places to capture value.
Jody Grunden: Yeah, I would say if you're in a situation where you're not sure where to go reach out to Geraldine. She’s there to help coach you and get you out of those issues.
Jamie Nau: Adam final thoughts.
Adam Hale: I agree with both of them. Geraldine, some of that self-realization, it's hard for folks whenever you're in the thick of things. So having somebody like you to be able to help, you know, make you think about these obvious value adds that you can do for your clients is a huge win. Jody and I always recommended reaching out to some if someone is struggling in the day-to-day grind.
Jamie Nau: Perfect. Well, thanks for joining us Geraldine. We will have to have you on a future podcast. I really appreciate you coming on.