Welcome to the Escaping the Accountants Trap podcast. It's a podcast to help accountants, CPAs and bookkeepers escape what we call the accountants trap. It's where accountants are not getting paid for their value, and are forced to work long hours with high, demanding clients with little pay. Well, how do you escape the trap? One way is the topic of today's episode, and that's by creating a profitable bookkeeping practice without sacrificing your life.

To help me with the discussion, I've invited Jo Wood, the founder of six figure bookkeeper.com. Joe has been recognized as one of the top 50 women in accounting, and through her skill and expertise, she has been able to build a successful multi six figure practice from home with a virtual team. Joe, welcome to the show. Hi Adam, thank you so much for having me today.

I am really excited about this discussion because I think what you have accomplished, a lot of our listeners would like to accomplish, and that is being able to build a profitable bookkeeping or accounting or tax practice without sacrificing your life. So tell me how you've done that. Do you know what? I talk a lot about, like, the mistakes I've made.

You know, this was this has not been an easy journey. And it started back in 2003. When I started my first ever bookkeeping practice. But previous to that, when I was 18, I started in an accountancy firm, and I became an audit senior. But I got married at 21 and I had my first child when I was 22.

And I had this idea in my head, because of the culture and how accountants do tend to talk about bookkeepers, that it was a dumbed down version and it would be really easy to run this business from home around the kids. So I thought, you know, he was three weeks old. I'll start a bookkeeping practice from home. I'm not going back to the day job.

I'll just start that. So that's what I did. And I started outsourcing, you know, from other accountants to myself. Some some bookkeeping work. I didn't know what I was doing. I knew how to do accountancy, and I hadn't realized that bookkeeping was a completely different thing. So I got sacked. So then I had to learn how to be a bookkeeper.

And I went on some training courses and realized that there was more to it than how I'd been told. So I did some more training. I went and worked in businesses to figure out, you know, how does bookkeeping work day to day? Because it is more of the day to day function of how you help the financial function of a business.

So I did that. And then I started when baby number two came along, I started my second practice. And again an accountant was outsourcing work to me. And that was working really, really well. The problem was he was charging me out of 35 pounds an hour, and I was getting 12.50 pounds an hour. Now, to be honest, at the time that felt like a fair exchange because my, confidence was really low.

It felt like I was being given such a great opportunity that I was able to work around the kids, and I didn't, you know, I didn't know another job that would do that for me. And that was my brain was ticking over. I was meeting people. It felt like a fair exchange at the time. But then my husband lost his job just as baby number three came along in 2010.

And, he was made redundant. From the government here and here in Britain. And he did not know what he was going to do next. And he said, you know, your little job that you've got you've got to go and make that into a business because you've got to keep a roof over our heads. So I had to go out and get, you know, not just subcontracted work.

I had to go and get my own clients and build a business. And that's where it got scary. And then all these pricing conversations were coming up, and and what I actually did was I ended up being, going into partnership with a large accountancy firm, and they were like 2 million turnover. And they asked me to set up their bookkeeping and payroll division.

But what happened there? I was getting all of the clients that they got in. So it was every different type of software. It was every type of industry. I wasn't setting the pricing. And, I burnt out really, really quick. I ended up having spinal surgery. I had appendicitis, I got really, seriously unwell because I had three little children as well.

So my husband retrained at that time in payroll because I took on 200 payrolls as well at that time. So, you know, he was he didn't know what he was doing. So I found him his new career. And he he started doing all the payroll for the clients. So I ended up selling that practice, leaving it. And I fell out of love for the industry because it is so tough.

But what I did was I started really deep diving and learning about business, personal development and business development and started understanding what makes makes a successful business. And I think when we train so hard to get our qualifications and know how to do the job, we we do the job, we work operationally, but we don't ever think about how to become the CEO, the business owner, and how to be profitable because we need profit if we're going to, you know, survive in this game.

And when we when we don't have profit and we are time poor and money poor, that's when my body just kind of gave up. So I had to learn how to become a proper business owner. And by doing that, I gained so much more confidence in having conversations with my clients because I could help them not only with sorting out their solution for their finances, but I could talk to them about their selves, their branding, HR, you know how they could get the most out of their team.

So my confidence, Graham. And a few years later, April 2019, I started up my practice that I have now. I've been working as a finance director in an employed role, and I decided to step, I was made redundant. I done myself out of a job, I'd done a really good job. And I again built more confidence.

And this one, I was like, right, this is my final practice. And when I do it and when I build it, I'm going to document how I get to six figures. And what I did was I started my six figure bookkeepers community at the same time. And I shared my journey and then created a course on how I created a six figure bookkeeper business from my kitchen table.

And because I had other people watching me, it kind of put, you know, I had to get there. I had to create the business I said I was going to create, but I didn't straight away, I was my main job was to make myself redundant from doing the bookkeeping, and I had to put that CEO hat on and make sure that I, I didn't get too much in the day to day because a business is a profitable enterprise that runs without you.

So I needed to create a true business, and then I let everyone else follow and watch as I did it. Very, very interesting. And so what would you say is the biggest difference between this the the practices you just created, the one that you got to six figures on and before and all the businesses before. What was the the 1 or 2 biggest differences?

I think the biggest difference is that I was not transactional anymore. I started trying to be transformational for my clients. I wanted the conversations I focused on what the numbers were telling me and having those conversations and how I had bigger results than my clients and just adding more value for them. It's really hard in what we do, you know, no one sees.

We're not creating something physical, you know, especially with software. I mean, at least in back in the day when you had bags of, you know, boxes of paperwork and then it came back or tidied, at least you could see something. But now, you know, we have 100% in the cloud. That's, completely paperless. Everything's a bit like smoke and mirrors, and it's like.

So you've spent how long doing what, and where's the result? You know, I mean, I know I, I get excited when I see, like, zero items to reconcile the bank, but the clients don't feel that way and they don't understand that. So we have to share and give our value in other ways, and that is in conversations and helping them to create that freedom, flexibility and better lives for themselves.

Yeah. And what's interesting, and by the way, I love the term they use transformational versus transactional because if you could be transformational with your clients, they're going to value that way more than just being transactional. Because like you said, let's face it, most business owners have no clue what a bookkeeper does, nor can they adequately judge a good bookkeeper from a bad bookkeeper or a good accountant from a bad accountant.

But one thing they will judge you on is how they feel after working with you. And if they feel more confident and, and, and they feel more prepared and secure in their ability to run a business, they'll work with you longer. Absolutely. People remember how you made them feel, not what you said. And that's what we have to do in our meetings.

So basically what I've done in my practice is I don't touch a bank rack. I don't do that return. What I do is I do the sales, marketing and I onboard clients and make sure that they are that I have a 22 point onboarding checklist, and I do that alongside a client manager who kind of I back off and the client manager takes over and they do all of that.

But I come in maybe monthly or quarterly, alongside with the client manager, to have those really good conversations about what does it mean, what are the numbers saying, how what are your goals? What what does this business need to do for you? What's your exit plan? All of these things. That's that's where we have those amazing conversations bring in.

That's where the value comes in. So another topic that you brought up that I want to explore a little bit further is that you sort of alluded to the fact that a lot of bookkeepers, and I think this applies to accountants, think of themselves as having a job versus being a business owner. And I also think that that applies to the clients we serve, like someone that starts a roofing business, thinks of themselves as a owning a job instead of a business.

So tell us a little bit about that. Yeah. Have you ever read the book The E-myth Revisited by Michael Gerber? Yeah. And that entrepreneurial, you know, myth that there is that, you know, we work in a job and we could do this ourselves so much easier because we're so good at the job. So why don't we just do it for ourselves?

And then we go out there and realize that there's so much more to running a business than the operations. And I think it's natural that, you know, we've all been there and, you know, being in that position is younger and worked in the job and thought, oh goodness, they have it so easy. Those people at the top not really understanding what's involved, the stresses and the extra hats that they have to wear.

So but the truth is, if we always keep ourselves busy in the work, we create a job for ourselves and that's fine if that's what you choose. I always say this if you want to be self-employed, then create a job for yourself and you can be on your terms. Now. Don't expect to have the flexibility that you thought you were going to have because you won't have it.

You're creating a job, and you'll most probably be the worst boss that you've ever worked for, because you'll work longer hours and you won't have the holiday that you used to have, and you won't have leave, and there'll be no one else to cover you ever. But if that's what you want, that's fine. But just know that's what you've created.

I speak to so many bookkeepers. I think they've created a business, and they haven't. They've created a job, especially if they've gone down the hourly rate trap. And they are just swapping time for money. And there's no value exchange. Then you truly have created a job to create a business, you have to find people to do the operations.

Your job is to write the systems, the processes ensure that. How do we know when there's been a good job done? How does the person know that they've arrived at the, you know, final destination? And it's been a good job. How do you, make sure that the clients journey is slick, but without you being there? I can now go on holiday for two weeks and enjoy my holiday.

And the true testament of if you have a business, a true business is you go on holiday and the business is better when you come back than when you left it. That's, you know, that's the aim. That's what we should all be working for. And I think the best way and I think this is kind of people don't think like this, but when you start a business, you need to start with the end in mind.

When we get to the end, what do we think? We think of sales are selling it. We think of we're moving ourselves and retiring and maybe taking, you know, dividends or, you know, just working very part time. But that's what we need to do now. We need to stop building that business. It's going to going to be ready for sale now and gives you choices.

It gives you a choice whether you decide to working it, you know, you can still work full time if you want to, but you've got the choice not to as well. And if somebody, you know something happened, you could sell the business quite quickly and remove yourself because you've already removed. So the business doesn't rely on you. So but this is the same advice because we are business owners as bookkeepers and accountants, this is the same advice we should be giving our clients.

So if we start living by these rules and start doing this and actually living like building a business that's going to be ready for sale, what does that look like? What does it need to do? Then we can have those conversations with our clients. And how much more value is that? Then I've completed your bank rack. I mean, there's there's no value in that.

Today. I've worked with some of my bookkeepers in my membership, and we created our perfect profit and loss. What is the perfect profit and loss look like for us when we've reached our destination? What's the profit? Then we work it back and what the cost would look like, and then what would the turnover be and how many clients would we be serving for that?

And what is the the optimum average spend per client. And then build that business. You need to know where you're going. If we get we wouldn't get on a bus that didn't have a destination. We'd go round around in circles. So why don't we do that with business? We need to know where we're heading. So you need to build a business with the end in mind.

And if you don't want to get off and you want to stay on, that's absolutely fine. But it means you can go on holiday, means you can go on the school run. It means you can attend sports days or whatever, you know, whatever freedom looks like for you. Absolutely. And by the way, that if you can do that for your clients, they will value, like you said, you way more than just doing bank reconciliations or processing the books.

And we, you know, we say in our program that, you know, people that own a job, a business that's more like a job. They almost have the worst of both worlds. They have a they have a job without the steady paycheck. And then they have the, the, the, their they are almost trapped by their business because they can't afford to take a day off because they are the business.

Yeah. It's this, this weird catch 22 that they're they find themselves in and so they don't take a day off and then they burn out, and then their business suffers because they are the business and they burn out and their employees and the customers suffer. Yeah. It's a vicious circle, isn't it? It really is. And absolutely. I think one of the biggest you said to me, like, what's the biggest difference?

So definitely having that end in mind, removing myself from day one, when I started in April 2019, day one, I took on a bookkeeper to do the bookkeeping. And there's something with our industry that we believe we can start a business up in accountancy or bookkeeping with no investment, and it really bugs me. So I often hear people say, oh, that software is too expensive.

Or, you know, oh, I don't want to invest in that or I can't take on a member of staff. But if you were starting up a high street shop, you would, you know, invest in a solicitor to make sure that the contracts were correct. Your lease agreement was corrected by a two. You'd buy the stock you didn't expect that you'd have to invest in that business.

But this is where the problem with practice and business keeps coming up again, because people think they can start a practice with no down payments or no invest. And you can, but you will create a job for yourself rather than a true business. And so I do. I'm do that is fine. You create what you want, but just know what it is you're really creating.

Yeah, absolutely. And you know what you're saying makes sense because a lot of accountants and bookkeepers especially, they want the flexibility that comes with owning a business. But they find themselves in this, this trap, like we talked about, where they are, the business. And so they lose that flexibility and they lose that control over their time and money.

And I, I want to repeat this because I think it's so important for the listeners to understand that your clients, your clients are business owners themselves. They are in the exact same trap they want. You know, most businesses are started by owners because they they are an expert at their craft. So like that, the the chef starts a restaurant, their hairstylist starts a hair salon.

And so they end up having a business for themselves. But they but they also created a business because they're an expert in their craft, but also because they want flexibility of time and control of their ability to make money. And so if you own a job, you lose that flexibility of time and you lose that control of making money because like you said earlier, you are then, saying as a as a job owner, you are really the only differentiator between you and somebody else.

And a lot of cases is how much you charge. And so then it's a race to the bottom, especially in bookkeeping, where your clients can't really see the difference between a good or bad bookkeeper. So why would they pay you more? So yeah, and they need to get out from behind the computer. You know, I think we are naturally introverted.

My husband says I'm an extrovert. I am to a certain degree, but I also like my quiet time. And I love, you know, getting into a spreadsheet and, like, setting out, you know, it's it's it, you know, but I, I see this a bit like, you know, when we find a new software and we get really excited and we think, what?

We won't test that on our client first. We'll test it internally, we'll test it on our practice and we'll try this new software out. Well, like I always think the more fun we're having, the more money we make. It just tends to happen that way. Gamification like me talking about that, you know, let's play a game and create the perfect profit loss.

Let's just play it. Let's see what it looks like. Let's just think outside the box. So if you even like you're thinking, I can't think about the end in mind, but just, you know, play with it. What if I knew how to run a business and remove myself? And if I started doing that and I could start documenting what I was doing, then I could start having conversations with my clients, because it's so much easier to have those conversations if you've truly lived it.

So that's why we all like to try the software first, because we don't want to test it out on a client. So you need to try getting out of your own business first. So you can really, truly have those meaningful conversations with your clients and they will know that you're telling the truth. They will know that you are living this as well.

They'll see the benefits that you're having. So ups and downs, do something wrong. Make a mistake. Tell them about it. I tell everyone all the mistakes I make. People love it because they won't. They make that mistake. You've given them a shortcut. Don't do this because I did it and it was wrong. People don't mind that you make mistakes.

People don't like it if you pretend it was easy along the way and then they realize it wasn't. So I just think, have a bit of fun with this. Think about, okay, if I was to start removing myself, what would be the first thing I would do? I often think about, you know, sometimes if we struggle with how we remove ourselves from the business first think about how can I remove myself from the household tasks?

Could I get a cleaner? Could I maybe, do I need to get a dog walker? Even if it was once a week? And that gave me an extra hour now and again, you know, what could I do? Stop practicing removing yourself from the things that you do all the time. And sometimes we find it a bit easier in our personal life before we start doing it in business.

And then it becomes a habit and you start to seeing opportunities everywhere to remove yourself from things. And you know, when we get over the fact that we're not actually the best person to do everything, and other people could do things far better than us because when we're the business owner, we could do something to 90% accuracy. Problem is, we don't have the time.

So then it gets to about 10%. Where was someone else in our team might be able to do it to 60% accuracy, but we could help them finish it off and bring them up. But it will get done. So we need to start really thinking about where can I pull back and let go of my ego, because I'm not necessarily the best person to do every single time.

Yeah, and I think that's so true. And I think a lot of times business of bookkeepers and accountants fall into the trap of wanting to, to do the job because that's where they feel comfortable. But I also think that there's a certain level of imposter syndrome that they have. And I know you and I were talking about that pre-show.

So do you see that in our industry? Massively. I see it everywhere. I see it in myself. I see it myself. And I, I've definitely had, you know, and I am really fighting, you know, my, you know, you asked me at the beginning before we came on about, you know, what's my passion, what's, you know, and, and I want bookkeepers to stand but side by side with accountants to know that we are just as worthy.

So not only are we, you know, and I know accountants suffer with imposter syndrome, but bookkeepers suffer with it in a different level because we're not the same qualified. And we I completely understand, you know, that there's more qualifications and absolutely there is there are differences, but it doesn't make us any less fallible. And also I've now, you know, growing multi six figure business from my home.

I know I'm actually I'm a I'm a good business owner. I'm not just a bookkeeper or just an accountant. I want to be a business owner. And when we realize that that's when everything is just alike, it's like, wow, the the conversations you have with your clients just open up to more human conversations about what is your business actually doing for you?

Where is it benefiting you? Where is it you slowing you down? Where is it causing you grief? And then how can the numbers inform us of where there are issues and where we need to tweak things and and make you happier at the end of the game? Yeah, I love that. And I think you touched on something that was very interesting.

You know, if if our goal is to be professionally qualified to climb the corporate ladder, then yes, maybe an accountant and no, and that world might be higher, more qualified than a bookkeeper. But that's not our goal. As a businessman or entrepreneur. Our goal is to own a business that happens to sell bookkeeping services just like matter. Does it?

Do you know what? What's hilarious is I run a bookkeeping practice, but we offer compliance, so I sell accountancy practices. I've got an accountant doing it for me, and I make profit off of that. Right. I don't need the qualifications. I make the money off of the service because I've become a business owner. Absolutely. Just like you could, you know, theoretically own an architecture firm without being an architect.

As long as you hire architects, your job is the business owners to run a machine that makes money. Yeah, not necessarily the machine. Yeah, actually, if we think about, like, the best CEOs in the world, they don't know everything that goes on and they don't do any of the operational things. They're just, you know, steering the ship in the right direction.

That's right. Joe, this has been a fantastic conversation. We definitely need to invite you on against the. We could continue this, but final question. Where can somebody who's who's listening or watching right now say, I want to learn more from Joe at six figure bookkeeper. Where can they go? So we have a free Facebook community called the Six Figure Bookkeepers Club.

It's the number six, not the not the website. So you could do that. Or you can just connect with me on Facebook, LinkedIn. And we're at six figure bookkeeper.com. Perfect okay. So we'll put the the website six figure bookkeeper.com and your Facebook group in the show notes. Joe, thank you so much for being with us today. It's been a pleasure.

Absolutely loved having this conversation. Yeah. Same here. And to everyone listening or watching, thank you so much for spending the last few minutes with us as we discussed how to escape the accountant trap. Bye for now.