Speaker 1: Hello Chara. It is great to have you on the show.
Chara: Thank you. I’m very glad to join you.
Speaker 1: Chara, you’ve told me that you are [inaudible 00:00:09] changing what you call your firm and what they do from bookkeeping to internal accounting operations. Tell me a little bit about that distinction.
Chara: It really … The crux of the matter is modern technology and I think that the term bookkeeping is still too much … conjures up the idea of check writing and old school ways. And technology is really where things are happening in accounting and I think that internal accounting operations speaks to that larger picture.
Speaker 1: Great. Help me make a distinction between what you do and say what a tax accounting firm does, because you’re typically not actually preparing someone’s taxes. What is it … What are the functions that your firm provides?
Chara: So again with the kind of internal accounting operations term, speaking to internal company. So within the four walls or four virtual walls of a company, what’s happening around dollars numbers and how that’s touching operations day to day and the way I describe it to people is we do everything you could think of in accounting that’s not tax. And so the outside tax accountant is going to be handling the income, personal or business income advisory, tax preparation. It’s very much a symbiotic relationship between us and the tax accounts, we work together a lot but that is the distinction. Tax for them and operations for us.
Speaker 1: Okay. Great. So in sort of a broad brush view of the world, my observation is that people might go through several phases in their accounting life cycle. So someone who’s just starting a business day one, they just got their LLC and they have no revenue. A lot of people will start by tracking their expenses and hopefully revenue maybe in Excel, so sort of day one. And then at some point people realize, “Okay. This is not really that robust.”, and people will upgrade to a self serve accounting software probably. And then they might be happy with that for a while and maybe forever if they stay as maybe a sole proprietor. At some point, people might get to a size where they say, “I need to go to an outside bookkeeper or internal accounting operations, outsourced provider.” And they might stay that for a good long time and at some point, whether it’s at 10 million or a hundred million or some large number of revenue … I mean at some point, a company is gonna say, “Okay. Well it makes sense for me to have an internal accounting team.” Right? And actually have an accounts payroll manager, an accounts receivable and an actual accounting group.
Speaker 1: So let’s … What I’d like to do in this show is explore a little bit about the different phases and your firm is really at kinda phase three. Let’s start with phase kinda one and two and I’d love to get your advice to a lot of the listeners who are either doing Excel or doing some kind of software. Maybe we can talk about some of the software packages out there, the pros and cons, and also love to your kind of guidance and recommendations in best practices, things to watch out for for someone in that phase. So maybe start with that. So for someone who’s using Excel or switched up to package A, B or C, what are some kind of things to watch out for?
Chara: Yeah. I think … Interestingly, I think this might be a surprising place to start with an answer. I’m always asking person where they’re productively spending their time. If you are a sole proprietor or running a business that has light transactional volume, it could be millions of dollars but there’s not that many transactions, and so it’s pretty easy to manage. It’s not impinging on your time needed for work to actually do the work or provide the service that your company offers. If you’re not like spending weekends, every weekend handling your own internal accounting, then by all means handle yourself, use the tools that you’re familiar with and comfortable with, Excel. Perhaps if you want to do something that’s a little more automated, you might reach out to a consultant who would be able to advise you transitioning to whether it’s QuickBooks or Xero or FreshBooks or Zoho or google that, and there are so many different options out there. The main thing is to look at them and see what interface makes sense to me that I can work with and to what professionals do I have ready access if I need a little bit of help along the way. Not someone to come in and do it for me.
Chara: So at that one end of the spectrum, call it the DIY, do it yourself area, there’s a lot of possibilities of how to handle that. I do recommend if someone is not comfortable with the technology, investing in that … It could be as little as a few hours of having someone come in, show you the ropes. It gets you up to speed very quickly and has you using the tools appropriately from day one rather than say setting something up incorrectly because you misunderstood something in the software, and then having things turn into a really big mess that you’re not really capable of cleaning up on your own. So at that low transactional volume or the company itself is in that startup phase where there’s just not a lot going on from the accounting side, I think there’s a lot of options.
Speaker 1: Good. That’s great and I think most of the listeners of this show are probably in the state where on the revenue side, it’s a smaller number of transactions, is my sense of … at least people that I know where you’re doing … maybe you’re doing one or two or maybe three or four projects at a time. But they’re typically not, “Okay. I do two here, two hours there.” But it’s, “Okay. I did a three week project, a two month project.” The expense side might be a larger number of transactions … larger number of expenses that you can import from credit card-
Speaker 1: Or what have you. Let’s break down and explore a couple of those … parts of that answer. So first, you mentioned a few different software packages. I imagine that you’re somewhat trying to maintain some kind of professional neutrality across them. But is there any kind of pros or cons across the major ones that you would talk to someone about to help them decide which is the right one for them? Between QuickBooks and FreshBooks and Xero and Zoho and I don’t know if there’s one or two other big ones out there.
Speaker 1: How do you start exploring which one is the right one for you?
Chara: Well I think so … One of the things that I’ve always recommended people talking to me is … it’s starting with who is going to assist you if you run into problems. And so there are so many options out there in the marketplace and there continue to be more and there’s no knock against any of the newer entrants to the marketplace and newer including they could be around for a decade. But QuickBooks and Intuit clearly came in a long, long time ago, has built a significant standing in the marketplace and corners a large market share. And therefore, have a lot of people, professionals who are very familiar with it and therefore provides a lot of resources. Your accounting firm is going to be familiar with using QuickBooks nowadays. That maybe wasn’t so 10 years ago, but it’s certainly the case now. As I mentioned, the concept of reaching out to a professional to gain assistance in setting something up or potentially troubleshooting something if something’s not making sense in your financials and you can’t figure out why. It’s not a math problem, it’s something gone wonky in how the data has been entered.
Chara: Then … Pardon me. And the other softwares have their … They’re all equally viable, there’s just not as many vendors out there to be found yet to reach out to for assistance. Xero is a very easy platform as far as integrations with third party applications, with banking, et cetera. It bears no resemblance to QuickBooks. So someone who is very familiar with QuickBooks, when they first move into a Xero environment will be completely lost. The language is different, the underlying functionality is completely different in those two applications, Xero having been built for the cloud, QuickBooks having begun in the “real world usage.” FreshBooks and Zoho, I’m personally less familiar with. FreshBooks is definitely an entrant that was designed to be for the non-accountant.
Chara: So for any … Say someone who’s even from an artistic [inaudible 00:10:18] and doesn’t have an MBA and isn’t so comfortable with spreadsheets, et cetera, should be able to walk up to FreshBooks and get started on it and feel comfortable with it. So the interface is very easy there. So I think it’s really kind of going … If someone’s moving into software or application shopping, let Google do the work for you. Search each one, look at the interfaces, utilize whatever online demos are available and to assess what literally just feels more comfortable and seems on the face of it to make more sense to you as to how it operates. And then I revert back to my first point, which was making sure you have access to a professional or people who will be able to help you out if you’re running into problems on it.
Speaker 1: Great. And I don’t even know what I would search for if I was searching for find someone who can help me solve a QuickBooks problem that I messed up. What would I … Would I go to Upwork? Like what’s the name of that-
Chara: Well so there’s … Intuit has a program called QuickBooks Pro Advisor. And so for that specifically, you could be … the search term would be QuickBooks Pro Advisor and there are thousands located all over the country, all over the globe really. But if you wanna be working on a U.S. version of QuickBooks, which I would assume most of your listeners would be. But you can really be working with someone around the corner or across the country. So that’s absolutely a first start and then honestly also for … In area that’s so almost … I don’t know. I wanna call … Like it’s personal, right? Money is a very personal thing and people have … they have feelings about it. And so sometimes I think reaching out to your accountant to ask them for a referral or recommendation to other business owners that you know, those personal referrals are going to yield resources that have been vetted by people that you already know and trust. So the trusted advisor is always a place to go, I think.
Speaker 1: But the title, it’s not like … I’m not searching for an accountant really. I’d be searching for like a FreshBooks expert-
Speaker 1: Or FreshBooks bookkeeping or what would you could even search for?
Chara: Yeah. I would take the software that … selected and then plus the word bookkeeper. I know that I’ve been making that distinction between bookkeeper and internal accounting support, but bookkeeper is definitely still a term in use out there in the world. And the bookkeepers are going to be and should be the hands on people who know the nuts and bolts and the guts of these softwares and applications.
Speaker 1: Okay. Great. So we talked about software, let’s talk about … And you mentioned for finding the professional to help you kinda set it up. So if you were gonna give me kinda the … and I had come to you and say, “Hey Chara. I’m setting up let’s say QuickBooks for my own business.” What’s some of the top level guidance that you would give me of, “Okay. Here’s the things to look out for. Here’s some of the top things … Here’ some of the …” What are even the tasks that I’m gonna have to do? Like for someone who’s never seen the software before, what does it mean even to set it up? What are they gonna have to go through and decide and do?
Chara: Right. So in any software, it doesn’t matter which one, a foundational cornerstone of your accounting operations is your chart of accounts and that is built differently depending on the company, and also the goals of management within the company. So do you have different types of revenue streams? We have flat fee retainer services, we have subcontracted services of XYZ, whatever those distinctions are that are going to make sense for you. Do you have specific cost of sale or cost of goods that you’re to be tracking? What type of expenses do you want to look at? And I’m a very big fan of the concept … the goal, sometimes hard to obtain, is a profit and loss statement that will fit on one page because it’s digestible. When you start to have two and three and four page P&Ls, that just doesn’t make sense to the human brain any longer, and so the way to get there is to have a structure of you main buckets.
Chara: So when we set up a chart of accounts that will include something along the lines of between three and five primary buckets depending again on the type of company. So your general and administrative expenses, your payroll and benefits expenses, sales and marketing. Some companies will break out occupancy expenses as separate from G&A, and then all of your other expense categories or expense types are going to be subsumed under one of those parent companies … pardon me, parent accounts. That gives you the ability to step out from the 10 thousand foot view and just look at what are your expenses running in those big categories and then zoom in and and see what’s happening in your G&A, which might be my office supplies, my transportation expenses, my general liability insurance, et cetera, et cetera. And so by setting up the chart of accounts intentionally at the beginning, you then … from that you then build in the possibility of creating very usable reporting, which then can feed into kind of your KPI or key performance indicator tracking, that over time I encourage every business owner to be utilizing.
Speaker 1: Okay. So that’s not something that I guess I would’ve thought of immediately because … I mean software packages come with probably a preset, default set of expense types.
Speaker 1: But what you’re saying is … I guess it actually seems to me that it might be an area where you really wanna get some advice right up front and pay for a QuickBooks expert or FreshBooks expert to help you think through that chart of accounts, so that when you are doing analysis in the future, if you want to say, “Well I wanna be able to track profitability by type of revenue stream or by big account or by client, or by professional in my firm or by industry practice.” Then you would have set it up initially to allow that to happen.
Speaker 1: What are some things that you see people making mistakes at? So you mentioned earlier like calling in a pro to help fix some things at the end. What are some common mistakes who someone who doesn’t get outside help initially … What are some common mistakes that people make?
Chara: Oh, one of the biggest ones that I … It doesn’t happens frequently, but if it happens it’s a really big problem and people who are familiar with their numbers will hopefully catch the problem. They may not know how to resolve it, but the issue is in double reporting of income. And so when people don’t understand the connections between … How can I describe it? Modules or components of the software that they’re using. So there’s a … I’m gonna use QuickBooks language for a moment. There’s a way to record something as a sales receipt. So it’s kind of like an invoice and a deposit all in one and it’s recording the … of course the income on one side of transaction and the deposit into the bank account on the other. Then you have the possibility of creating an invoice type of a transaction, receiving a payment from customer and applying it to that invoice and then making a deposit. And as I describe that, what can happen is that people are receiving the payment against the invoice, which records the income within QuickBooks on a cash basis, and then they can also make a deposit as an additional transaction because they don’t know how to connect those two.
Chara: It’s a little complicated and I’m making like … I’m waving my hands in the air as if I’m talking to someone and they can see, or as if I’m pointing out something on the screen. But just … I think like the gobbledygook that I just said, it gives an impression of how someone who really doesn’t understand how the software itself is functioning could potentially venture into those waters of misstating income.
Speaker 1: I can definitely see that happening. I mean that would … sounds like it’d be a pretty easy mistake to make and then you end up with more revenue on your books than you actually had and you think have more money than you do, but even worse, you’re reporting to your tax accountant-
Speaker 1: More revenue than you had. That’s not good.
Speaker 1: Paying taxes twice on that money.
Chara: Yeah. Yeah. I mean as I stated at the very beginning of this [inaudible 00:20:33] vignette, someone who is … has a feel for their numbers, which many business owners really do, they can operate on the back of the envelope pretty well. They have a gut feel for, “I know how much money’s coming in each month. I know how much money is going out each month.” And people can often manage pretty well that way. It’s when you get into territory of either someone’s not watching, they don’t have the capability or they don’t have time, and then there you are like six months down the road, all of this data has been recorded potentially incorrectly. Now you’re looking back at it and going, “Well I know that it’s unrealistic and impossible to gross profit of 92%. Gee whiz, what’s going on here?” And now it’s turned into a huge big project and problem to resolve as opposed to going back to earlier things we mentioned in conversation today, getting the professional to help you set it up correctly in beginning. And then make sure that you’re understanding how the components of the software or application are working with each other, checking it as you go. Once you know you’re off to a good start and then you keep it and are able to maintain it easily over time.
Speaker 1: Let’s talk about nexus issues. So someone does a project, they live in New York City. The client’s headquarters is in San Francisco but the consultant spends … let’s say make it simple, 100% of the project working at a satellite office in Chicago. So they live in New York, the headquarters of the client’s in San Francisco, they’re doing the work in Chicago. A naïve consultant might just be reporting the income as regular New York and paying New York state taxes and so forth. What’s the problem with that? What do people need to be aware of?
Chara: Right. So we’ll start off with the word nexus as you began your question. It is one of the most complicated areas of impacting tax, corporate and personal income tax, and then also sales tax if someone’s doing something that’s sales taxable. And the issue is that … is to keep in mind that we have as many tax laws as we have states. And so what needs to be looked at is all of those components, where the service provider’s company is situated, where the actual service person providing the service is situated and where the recipient of those services is situated, which actually could be in two locations. It could be that you’re providing services to an office that is a division of a company that is headquartered in another state.
Chara: So in fact, now you could have four different states coming into play and I will not even make any kind of specific advice in a context that is as you can see four different states, four different tax laws. Now pick a different four states, now pick a different four states, et cetera. You can at least understand for your own company and if you are using subcontractors and they always are in your example in Chicago or if they are always in Houston, Texas. Then at least you have two of those variables that become fixed and then you’re looking at each situation depending on where your customers or clients are located. And it really … It needs to … Here’s where I believe that both the internal accounting operations or bookkeeper people and also your tax accountant need to be involved in order to research on a state or location basis. And then we even had recently the situation where we have a foreign vendor providing services, so that can bring in even more variables into play that need to be researched.
Speaker 1: So my take away is you should talk to your tax accounting firm and saying, “Hey. Here’s the situation. Here’s where the person lives, they’re doing 80% of the work in Chicago and the client’s based here, but 20% of the work is gonna be at home. I’m based here.” You could then lay out that situation and say, “Okay. Tell me what the rules are for this particular scenario.”
Speaker 1: And then you need to tell your bookkeeper or internal accounting operations person or team or do it yourself, you need to be tracking the location of revenue and maybe location of expenses, which is something that I think is not just intuitive to someone even like a smart person starting this up on their own. They might not be thinking about, “I need to track the locations of all this stuff because the end result is right, that you may need to file a tax return in different municipalities or different states.
Chara: Absolutely. You hit the nail on the head and that goes back to this concept of your structure in place when you’re setting things up. How are you going to be tracking the revenue allocation by locality? And … Pardon me, because what happens very often in companies that haven’t thought about this ahead of time is that suddenly the year is over and you’re well into tax season and now you’re discovering that you have all of these compliance issues that you were unaware of. You’re now filing late in places that you didn’t know that you had filing requirements for, et cetera. And so really talking ahead of time about how to set up and be prepared and also to be clear, there’s an expense with all of this. To do a tax return for the single state in which you reside or your company is located is one thing. Now to start adding returns for six additional states because you have consultants all over the country and/or clients all over the country becomes a whole different matter, and you need to take that into account in your costing analysis.
Speaker 1: When should someone start thinking about transitioning from maybe this level two to level three, from doing themselves in QuickBooks to thinking about getting a outside … outsourcing that piece of the work?
Chara: I’m gonna go back to kind of … start with a quality of life guideline. When you’re staying up nights or working weekends in order to do your accounting, you’re most likely not replenishing your personal energy sufficiently. So as soon as that happens … What’s that old phrase? Work smarter, not harder. What’s your per hour dollar value? You can figure that out, it’s … with a calculator and calculate that out against the cost of hiring a professional. And I go back to the concept of that money is an emotional thing, it’s not just intellectual and people feel sometimes like they can’t afford it, it’s not the right time yet, “Oh, I shouldn’t do that. I should save money.” I just … I personally don’t think this is a place to save money or to attempt to save money because the potential for mistakes and costly mistakes is great in this area. Again, like with the idea of nexus or some compliance thing that comes down the pipe that you’re unaware of, that now you get hit with a fine because you weren’t compliant because you didn’t know this new thing that you’re supposed to do.
Speaker 1: Can you give some examples of those? Like I’m … I’d love to hear some examples of like just the compliance nits or things that a smart but naïve professional doing it him or herself-
Speaker 1: Might run into.
Chara: Yeah. So an easy one is worker’s compensation insurance. So a lot of people don’t understand that your worker’s compensation policy is supposed to be audited every year. And if you do not respond to the audit, the insurance company will simply assign a dollar amount and charge you accordingly. If this is allowed to continue year after year, what can happen … and the way, let me step back and say. If the insurance company is left to their own devices, they’re not going to be conservative for you and say, “Oh, well probably payroll stayed the same or it probably was exactly as estimated.” They’re going to say, “Oh, you said that payroll for the year would be $100,000.00. We’re now going to assign an estimated payroll of $150,000.00.” Now the second year that an audit is not filed, now they do that $150,000.00 times 1.5 again and they do this year over year, over year, and you’re paying worker’s compensation insurance on ever escalating payrolls when perhaps your payroll was actually $80,000.00 per year for all of those years. So it’s kind of the tricks of the trade if you will that a seasoned professional will know about and know to watch out for and to look at, that will not be obvious to someone who’s out there running their business quite well, but just doesn’t know the ins and outs of things like that.
Speaker 1: Okay, great. And then beyond the simple kind of recording type work that we’ve been talking about, of recording revenues and expenses. What are some of the functions that a firm like yours would do in addition? I mean preparing invoices or reports. Talk to me about some of the things that you might even be doing, you might not be wasting your … or spending your weekends or evenings doing, but if you had a firm you might say, “Oh, wow. That would be great.” Some things that you’re not even doing today, but would be useful.
Chara: Yeah. So this ties into like my … I keep hammering on it, bookkeeping versus internal accounting operations and I think what our firm and many firms are moving into, this kind of more consultative, advisory role. We refer to a lot of our work as controllership. Controllership being the financial controls of your company. So people aren’t writing checks anymore. They use software to do that, online payments of whatever stripe, whether it’s through your bank or a third party application, et cetera. And so the real value from outsourcing to a professional provider comes in the types of analytics that they may be providing. The things that you could look at but you’re probably not going to get around to it unless someone puts it in front of you.
Chara: So looking at year over year or period over period variance analysis, why is that happening. Revenue is up but my gross profit is flat as a percentage. Looking at things as percentages rather than as fixed dollar amounts in order to see trends, how are things moving. Doing projections and doing multiple types of projections so that … Depending on the personality of the business owner, some people are say maybe they’re really strong sales people and I find sales people to be highly optimistic in their projections. So if I’m working with a sales person, I will take their projections and then I will do variations on it that are more conservative, and then use those projections, those different variations to say, “Well if it turns out like this, what am I going to do? If it turns out like that, what am I going to do?” And so the role of the outside advisor if you will, is to kind of help the owner get out of their own echo chamber and be confronted with questions that they then are able to think through and it just makes you be more prepared for all the different types of what if eventualities that could come down the pipe.
Speaker 1: Let’s say someone decides, “Hey. I’m spending my Friday nights doing accounting and I’d rather be going on a date with my spouse.” So they’ve made that decision.
Speaker 1: How do you recommend that someone go out on searching for a internal accounting operations firm or maybe more commonly … it’s a bookkeeping firm. How do you go about that search and how do you vet potential … Obviously ask friends for recommendations, someone does that. But how do you kind of vet the different people that show up and say, “Yeah. That’s what we do.”?
Chara: Yeah. I go back to saying most definitely reach out to trusted advisors, whether that’s your attorney or accountant, other business professionals that you work with. They are working with these providers and they have the experience working with these providers and they have the experience with these providers on which to base a recommendation. It’s not like shopping for office supplies on Amazon and let your fingers do the walking to me personally. I just would not … I wouldn’t be searching out this type of service online. You can certainly go do your research about a company once you’re getting your shortlist and you want to include that in part of the vetting process, but actually kind of finding a bookkeeping service, I’m not … I’m a little reticent to do the … just the kind of google searching methodology. And then I would say when you are … When you’ve gotten some recommendations, you should be speaking to a minimum of two providers. You can’t like … You can’t assess something in a vacuum. If you only talk to one person, you have nothing to compare it to, so it’s really difficult to make a decision. And then you don’t wanna past more than three or four providers because now it’s like being confronted with 27 serial boxes like, “Oh my … I don’t even know what I want. I don’t want anything.” You can have info overload and not be able to make a decision.
Chara: So kind of getting a minimum of two, maybe maximum of four different providers that you would speak to, talk to them. I would say first and foremost, trying to understand the philosophy of the company, their overall approach and then drilling down into the nuts and bolts of what do they do specifically, how will they do it, who will do it. Will you have a dedicated support person or will the personnel be cycling through? On what schedule is the provider able to work? On what schedule do you want them to work? Is it 100% remote or do you want any onsite? That’s also a thing that … Many companies have gone to 100% virtual, but there are companies out there still who will go on site if that’s appropriate for your situation or if you feel more comfortable with that. So it’s … I’d say that’s the first path of how I would approach it.
Speaker 1: Speaking of remote, let’s say that someone is gonna work remotely and then does it matter at all other than maybe just time zone difference, if the person is in your city or state area? Or let’s say that it’s a … I mean this … I think the listeners of this show are global. We have people listening from all over, but let’s take the case in the United States. So if you’re based in the United States, does it matter if they’re somewhat local or can you get someone from anywhere in the country? Is any kind of local knowledge important?
Chara: You want someone who’s going to be plugged into certainly your state compliance issues and that’s pretty easy for a vendor to do. So I’d work with someone from Idaho as long as they have … I’m in New York, as long as they have more than myself as a New York based client. I would not want to be someone’s only client from whatever … from my state because then of course they’re going to be defacto, less plugged into what’s happening in my state as things change. So because we’re located in New York and we have very many relationships with accountants, we’re on all kinds of mailing lists, not to mention the state and … various state and federal agency mailing … email mailing lists that one can become signed up for through the process of doing business. And so you get all kinds of notifications, heads up or after the fact, and that keeps you plugged into what you need to be taking care of. So again, if your provider’s in Idaho and they have zero clients or only you from New York, they’re not in that network … and not yet in that network and may overlook something. I will step back from that and say that in general if the service provider has a strong business experience, not just accounting but business experience, they’re going to know say the 92% of what you need in order to get your operations taken care of appropriately.
Speaker 1: Yeah. I mean on that note, one thing that I guess we didn’t mention yet but probably is a good thing to ask is for listeners of this show, mostly independent professionals or people running small boutique consulting firms. You probably wanna ask if the person has other clients with that sort of business, so you kind of know the ins and outs of how to set up a chart of accounts for a small boutique consulting firm.
Chara: Right. I mean it may be not exactly the same industry, but have similar accounting needs. So for instance a consulting firm and a public relations firm, which is to me a type of consulting, right? They have the same type of reporting needs. So you may … They might not have other general consulting clients, but they handle five PR agencies. They’re really going to be solid in doing things like expense reimbursements, project cost tracking, that type of thing that’s going to be really relevant. So it maybe … might not be a direct hit, but certainly you want someone who’s in the same ballpark.
Speaker 1: Right. Other independent professionals or small-
Speaker 1: Professional services firms. Okay. We didn’t really have a chance to talk about your firm. Could you just give us an overview of the size of your firm and how you’ve grown?
Chara: Sure. We are … This is our 20th anniversary year.
Speaker 1: Congratulations.
Chara: Thank you. It’s been a mountain climb but it’s really fun and I’ve really been enjoying it the whole way and we started from a handful of people, now we’re 20. And as kind was intimated in some of what we’ve talked about, the company began as a … literally as a bookkeeping service, and has morphed into what I now call internal accounting support services because of how the industry is changing. And I can typify if by describing a recent rehire of an employee. She just rejoined us about six months ago after having about a three and a half, four year break for family. And my first check in meeting with her after she returned to us she said to me, “This job is completely different now. I don’t do any data entry any longer.” And that exactly typifies how things have shifted in our industry and will continue to shift. And so I think that the real focus for us now because I’m also … I’m always like what’s on the horizon and I’m always looking forward, I’m really excited to be focusing on the continued implementation of technology in our industry, and how that’s going to change and shift who we are and what we do on a day to day basis.
Speaker 1: Can you share a little about how you’ve done business development for your firm? Is it strictly through referrals, do any kind of proactive outreach? I mean because you are running … You’re also … You’re really running a boutique firm that’s of a size that a lot of … that I would aspire to and a lot of our listeners would aspire to. Curious how you’ve grown your firm.
Chara: Sure. So my … I used to say it’s like a third, a third, a third. Referrals coming from accountants who are our primary referral partners, existing clients and networking. And I’ll start with networking, is literally how I built my business. It’s just the approach that I took that perhaps part luck and part a little bit of forethought seemed like the appropriate entry point for me. I didn’t see like way back in the day, dating myself, I wasn’t gonna take out an ad in the yellow pages and it seemed like finding people who needed what we did, the best way to go about that was going to be going out there and talking to people. So everything that we are today originated in my first forays into networking and meeting people in business and initially, that was just anywhere. I would go to anything called a networking event, to any kind of group gathering and just talk to people, and bit by bit build the relationships.
Chara: So it’s not that you just … you meet someone and you get business from that networking, then comes the work of building the relationships with the people that you’ve met. And you make those relationships based on … It’s easy as saying, “Like well who do I like? Who do I get along with? Who do I like to hang out with?” And if you think back to who do I give my business to, in a general sense, I give it to my friends and people I know. And so making sure you’re hanging out with people who know what you do, who you like to hang out with, et cetera, all of that was the starting point. And then once we started getting that traction, then we’d have clients who because they liked what we do, talked to other people about us and if anyone asks them, “Oh, my God. I’m breaking down in this area. What should I do?” Then we get that referral and likewise then would the accountants because we work with a great many accountants. All of our clients have accountants … tax accountants, and we build relationships with them on the one hand because we’re working with them on behalf of the client, and so we have frequent contact with them on that basis. And because they see our work and the results of work, we then get those additional referrals from them. So that’s how-
Speaker 1: You-
Chara: That’s how the house was built here.
Speaker 1: You’re running a successful business and with lots of clients that are … that you’re currently developing and serving. Do you have any kind of daily productivity routines or morning routine or daily routines that have helped you become more productive?
Chara: I am a process nut. So I turn everything into a process, test the process, check the results, if it’s working, keep doing it. If it’s not, throw it out and do something different. So as a for instance, I have a calendar entry on my calendar five days a week, it says daily revenue activity. It’s on there at five AM and I require of myself to do a minimum number of what I call daily revenue activities. My daily revenue activity list has about five or six things that can count and I make sure that I have a minimum of three per day. Now that’s not a lot … If you’re a sales person, that’s nothing. Like so if you’re a sales person, you should probably have 103 a day, but I’m also operating the business. So my goal … minimum goal is three of those activities per day and by doing that, I … the results come and so it’s things like that that I do. And then I’m a calendar addict too.
Speaker 1: What’s sort of the different subcategories of that daily revenue activities? Fascinating.
Chara: So harking back to my … our referral sources. So any phone call with a … or meeting with an accountant, it counts as a revenue activity, any … obviously any prospect phone or email, preparing a letter of engagement or a scope and estimate email. So there’s certain things … Like going to a networking event doesn’t count as a daily revenue activity … Sorry about that, I thought I had turned off my phone. Does not count as a daily revenue activity, but the ones that directly … have a direct path to a prospect and eventually a client, those are the things that I count. And it might be something that takes me one minute or it might take me if it’s a letter of engagement, three hours or five hours to calculate and put together and et cetera. They all count as an activity for the day.
Speaker 1: I love it. That discipline of doing something, even if it’s a little bit, but three activities a day adds up, adds up.
Speaker 1: There’s 250 days a year. So that’s 750 a year and it clearly is working. Chara, this has been awesome. I really wanna thank you tremendously for being on the show. Super, super helpful discussion.
Chara: Thank you. Thank you again for inviting me, I had a lot of fun.