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? And one way is the topic of today's episode, and that's by transforming your practice into a business to help me with the discussion.

I've invited Martin Bisset, advisor to accountants. Martin, welcome to the show. Adam, it's a pleasure to be here. Thank you very much for having me. Yeah, I'm excited about this episode because we're going to talk about the difference between, an accounting practice or a bookkeeping practice and accounting or bookkeeping business. So start off. What's the difference? Well, an accounting practice in definition is probably about 95% of us.

What everybody sets up to do. And that is that we have a set amount of technical ability. We look for clients, we charge them by the hour, and our recovery rates, and the number of recoverable hours we have against the maximum recoverable hours is where we set the bar, and we work to capacity. And so basically, we sell our time for money.

Simple as that. I think just about any, professional in practice could relate to that model. Now when you have that model, it's a very common model. But of course, therefore pricing is your issue. Client mix is your issue. Price sensitivity and profitability is your issue. And you end up, in most cases, not all. But in most cases, telling people like me that, number one, you're not making enough money.

Number two, you don't value your clients. And number three, you can't hire the right type of people. And that is the most common lament of the profession. So there's your accounting practice. An accounting business takes a different approach. Right. And rather than having a job for yourself and some others, you're now building an operation, an organization, even an empire.

That does not rely on time and does not rely on you. And so an accounting business has the the functions far more commonly found in your clients businesses. It has an administrative function. It has a production function. It has a sales nasty word function. It has a marketing function a cash collection function. And it is structured as a traditional business might be structured where where the perhaps these this the sole practitioner or the senior partner in an accounting practice is dealing with a board of partners or various different reports.

And what you have there is a money management structure below you. In the accounting business, far more like a CEO role. And the management structure below you, is reporting into on areas of the business that they themselves have got responsibility for. And what's the main difference between 1 and 2? The main difference between 1 and 2 is ambition.

Is what? Ambition. Ambition. Okay. Because I'm speaking with at the time of recording, with 26 years of experience and just over 1800 firms, I've encountered at one level or another, and nobody has ever come up to me and said the things that a business owner would say, Marty, we want to conquer the world, Marty. We want to be number one in class, best in class.

Marty. We want to put our competitors out of business. The sort of things that business owners would say to you, I can't just do not say that. They do not say that. They say very honest and earnest things such as we want to serve our clients to the best of our abilities. Yeah, well, if you're not making a lot of profit and you don't have a lot of spare time and you're at capacity, you're not serving your life to the best of your abilities.

Absolutely. You're not resenting them, in fact. And an accounting business is usually helmed by someone who has the ambition to build something much stronger than an accounting practices organizationally, much stronger profitability wise, and something that doesn't rely on them. I think this is a very important topic. In fact, you know what you're describing. We talk about this all the time as essentially the accountants trap where they're stuck.

They want, like you said, they want to provide a great service to their clients, but they've they've created for themselves a job that they own instead of a business that they own. And. Yeah. Or is this trap. Yeah. Or they've created a welfare state and they got some employees because in that time based model, when you've got people who who are off sick, people who are not working to full potential, people who are actively toxic in the culture, you know, you're you're having to feed them all because you're the breadwinner, you know, and you're the one who's having to make it all work.

And a corporate structure doesn't work like that. The sales function is fed by the marketing function, the finance function as the sales function. To be a certain level of profitability. You go to the, an accounting firm owner and say, what's your turnover? Then they can probably tell you to ask them what their gross or net profit percentage of margin is.

And they've got and the guessing at that point, a business owner, an accounting business owner would have their finger on the pulse of all the KPIs in the business. And not only that would know what they're trying to achieve and why they're trying to achieve it. So if we were to, to quote my good friend Brian Coventry, if we were to say to the audience listening today, tell me about your firm in these terms, we exist to what?

So that you can do what you know. And if you go to any given a captive audience and put them on the spot and say what you exist other than paying your mortgage or filling up your pension pot, why do you exist? And what does that allow? What does that mean? Exist for that reason? For what reason? And the audience will struggle.

They will struggle greatly with that. And an accounting business. No purpose, no. Its vision knows its mission. Let me ask you, Martin, why? Why do most accountants and a lot of bookkeepers own a practice where they essentially own a job versus a business? Why? Why is this a thing, especially in this industry? In my experience, three main reasons one, at no point where they ever trained to do anything else.

Okay. And it's a so whether we're talking about training in, in college and university or whether we're talking about training within a firm, you know, they've come from a scenario where that's what they've been told they do. And I don't know, too many accounting courses that teach sales and marketing, for example. Yeah. Yeah. So first of all, it's it's all that, you know, so how can you adopt a model when you don't know that model when all you know is how to be in practice?

So I think that's the first thing. The second thing which I think is more prevalent is imposter syndrome, and self-doubt, unless I was and the clients will never pay this much money and I'm, you know, I just do the same as everybody else does. And they don't know their own differentiation. So if they don't believe it, it's going to be very hard for the client base to have a belief that they're worth more than they currently get paid.

I think that's the second reason. I think the third reason is that they don't employ people who are smarter than that. So they employ orderlies to carry out, compliance. Recurring compliance, work on a recurring complaint basis. And at no point do we bring in someone with commercial expertise. At no point do we bring in a branding genius.

At no point do we bring in, I don't know, an efficiency genius, you know? And as a result of that, you're the smartest kid in the room for your entire career in your firm, which massively limits your earnings potential. Absolutely. It reminds me of a client. In fact, 99% of all businesses are essentially small. And I think they fit a quarter at least here in the United States.

We have the US Bureau of Labor Statistics. They track this this type of thing. Well, essentially 98% of all businesses are considered small. And I do think they fit exactly what you're talking about. The business owner themselves start a business because they they're an expert at their craft. The accountant starts an accounting practice, a dentist starts a dental practice, an architect opens an architecture firm, and so forth.

And because of that, they they want to practice their craft because that's what they're good at. But all of a sudden they own a business, right? Where they have to be responsible for things. They're not necessarily good at sales, marketing, operations, logistics, and it's it's a struggle. It's a struggle for our client or for business owners out there, but especially, accountants who want to break through that ceiling that you're talking about and actually own a business.

Hey there, Adam here. From the Escaping the Accountants Trap podcast, I'd like to personally invite you to a free masterclass that we're conducting this Thursday called How to Start a CFO service. To register, just go to the CFO project. Com and click Free Training at the top. See you then. You've worked with a lot of accounting firms, accountants.

What is the what is the the sort of the number one piece of advice you would give them to start the process of transitioning from just a practice to a business? So the transformational process starts with a simple sentence, with more of this, I can do better than this. I want to do better than this. So lots of words.

I'll come up with ambition. So when when the the brain finally goes, no, no more, no more rock bottom pricing, no more client, calls at 8:00 at night to complain about something. No more somebody disputing the bill. No, no no, no, I reject all of those conditions. I am no longer prepared to accept those conditions. I'm no longer prepared to accept every single piece of work that comes along, because I think that if I don't take it, I might die.

You know, the scarcity mentality has to leave me. So I think is, a Dave Ramsey phrase, becoming sick and tired of being sick and tired. I think when when that condition hits you. No no no no no no no no no no no no no I want more than this I get the ambition arrives. Yeah. Okay.

So you become sick and tired of being sick and tired and all of a sudden it's replaced by ambition. Going got to do better, got to be better, going to be more okay I think comes ambition. And then ambition starts its journey to climb. And it gets quickly stopped by. Self-doubt to go now. But you're hopeless. Yeah, but you've never charged more than this much for this part of work.

Yeah, but you've never tried to do that kind of work. Yeah, but the clients want one day. Yeah, but the class won't pay for it. And it starts throwing missiles all the ambitions and will destroy this ambition nice and quickly. Then comes what I call the tipping point. Most firms will concede defeat there and go. Oh, yeah.

Sorry, brain, for being ambitious, I do apologize. I'll just go back to my place and carry on with work and. Yeah, you know what beats that? Tipping point is a simple word proof. By which I mean this. If I ask any room of accountants, tell me some of your best client stories. Tell me about where you saved their lives.

Tell me about how you help them achieve their ultimate ambitions. Tell me about where you got them out of a really sticky situation. Tell me about how you saved money. Tell me about how you change them around. Everyone's got a story. Everybody can tell me a story like that. They can tell me about a huge tax saving that was reinvested in the company, you know, as capital reinvestment or working capital.

They can tell me about how the, you know, the bailiffs were coming, to win the place up. And they got out of that. They can tell me about how they had five years accounts overdue, and they cleaned up the whole process and how they help with forecasting or finding finance or whatever it is. Everyone can tell me a story in the accountants room, but not one of them would have told me without me asking.

So that absolute insistence on, oh, I have something fantastic here. I must keep that to myself. Yeah, okay. That's one. Once you go and get that proof, can you tell me first you tell somebody at first and then you capture it. Maybe you capture it by telling the story yourself. Maybe you get the client to recount the story.

Not a testimonial. Important difference. The story where they were your intervention and where they got to. And that's your intervention. There is your value or your improvement that you've created there. Okay. Yeah. And once that happens, you end up with a treasure chest. Let's say it starts with only three stories, okay. Three stories that prove that that particular accountant or that particular accounting firm goes the extra mile.

Not by a website promise, not by hype, but by cast iron. Third party, irrefutable evidence. Then you get your full story and you get first on and you get six story. And then we start to tell people. We tell it in a marketing communications, if we have any, we tell it on our websites, you know, even against those, we tell it in our networking conversations.

And heaven forbid we should have a triangle and get ourselves a little speaking gig where we tell it there as well, in front of our local business audience. And all of a sudden the accountant is now demonstrating, rather than telling why a business should consider working with them, why a business should consider giving up a long term relationship with an existing accountant over here to come and get something better over here.

Why a business owner should suddenly break a loan to barrier that they've had a make a sacrifice, okay? Because all of a sudden the firm is now articulating the sorts of reasons why you would work with them and the sorts of situations and their exact client base that the current business owner listening to them is going through right now.

That's me. When you hear the story, that's me. The problem I've got now, that's a problem I have to overcome. That's the issue I've got. You can solve these. And so if we rewind all that process, okay, we start believing in ourselves because we have the proof, because we have the ambition that overcame the imposter syndrome, because we got sick and tired of being second time.

I love that. And it's like you're, you're not only proving to yourself that you can do this in, but you're, you're showing clients like you said that, that I'm not just an accountant who records the past, I'm going to count it. That saves lives right? I'm going to counter that can help you. Do you know, just like I did for John over here and and and just like I did for Sally.

Right. And it helps your clients visualize how you can work with them. And just like you said, they're they're thinking their experience with their own account. It. Well, my client is not doing that. I want you and if you can, I speak to potential clients in a way that says, I want you specifically to work with me. You'll be unstoppable.

That's right. And it's and you better have a fantastic point. Now let's work on that. So it goes from and thinking about possibilities to the possibility of changing my accountants through to I'm thinking of working with that a that's right. That's the difference Burt Reynolds used to Todd Burton's the actor, used to talk about the stages of the actor's career as it applied to Burt Reynolds and in stage one, it was, who the hell is Burt Reynolds?

Okay. And in stage two, it was, keep an eye on that, that that Burt Reynolds. Okay. And in stage three, it was. Get me Burt Reynolds. Yeah. And in stage four, it was. Get me a less expensive Burt Reynolds. Yeah. And in stage five, it was. Who the hell's Burt Reynolds? And as he went, he went through that career arc.

Now, if we take that from an accounting firm perspective, when the accounting firm does no marketing, okay, then it's who the hell is Adam and Martin? Go, okay. Then when you start to tell stories through our marketing, through our conversations and networking, through our proactive efforts, let's keep an eye on the Ottoman. Martin and go then certainly one of those stories is going to hit home that business.

One, if it's going to be talking to them about their situation, it's get me out of Martin, go. And hopefully we never do get to stage four of a less expensive Automatico. But it all comes from the practitioner. When the practitioner decides it's time. It's time? Yeah, yeah. This is brilliant. So you have a community of accountants, essentially.

What? Why did you why did you start this community? I started the community. It was it's it's actually the second when I started, for general practice, and I did it six months before Covid hit, which made me look like a strategic genius. Bring the community together six months before the world shuts down. The reality is that I was a touring speaker and touring accountant, and so I touring speaker and touring consultant and touring author, and I was sick of planes and I was so good.

One thing in Toronto, I'm forgetting what my name was and what day it was, because on the tour and I needed something, some way of being able to communicate to the audience. That did require me having to be in different time zones every week. And at this point, you know, Skype was maturing into zoom and online comms were becoming a lot more, reliable.

In terms of the quality. And so I just decided to put together an online community. And I got very lucky with my time. And to be quite frank, I got very, very lucky with my timing. In hindsight, it looks like I saw it all coming. In reality, I didn't have a clue what was going on. I just got sick of touring.

And so what is the what is the number one thing that the members get out of the community? Do you know what I would love to say? It's me. But the truth is that they get, I've tried to give a different words to use than community. The community. It's that comfort of coming to like minded, to a place where like minded professionals are going through similar issues, and there's a confidence and trust within the room.

And we know that what's in the room stays in the room, and they can look to not just people like me. And we have other leaders as well, of course. And not just people like myself and Lucy and Will and so on, but rather they have, the professional peers and colleagues and accountants again, historically, traditionally aren't known for making friends with other accountants in different places.

And, and that's changing now with the younger generation. But they, they do that and they go, oh my goodness. So you're also a seven figure for I'm going through this. Oh, wait. So you're also a solo bookkeeper going through this? Oh wait, so what did you do with this? And and how do you work that thing, work with that thing and make it talk to each other?

We have no problem. Absolutely. I it's just problem solving. Problem solving in a safe space. I'd say problem solving, a safe space. That's what they come for. That's quick about. And they know full well that if that community doesn't have the answer, then that leadership will be able to do element. I love that. And so where if somebody is interested, where can they learn more about your team.

Oh well, for the community. Well, that's, W-w-what join the nation. The nation. Join the nation. Echo.uk. The the, that's community is called pronation. As in nation professionals. And don't be fooled by the UK either. It's an international audience as well. And so yeah. And so it's very, very I to say relaxed and relaxed isn't perhaps the word, but informal.

You're not expected to have to be as good as somebody else. You're not expected to have an opinion on everything. You know, expect to have to speak up at certain times. It's there for those who want to really take control of the meeting, to take control the meeting. And also we want to listen to just listen. It's really up to them.

But, that provides, I think, a and an incubator for getting that tipping point that I was talking about. It's like, yeah, I really want to do this, but I don't know where to start. Oh, wait, you two, how did you stop? Oh, I could do that. And the light bulb start going on and somebody else is not talking.

Just listening goes. So person goes, I could do that too. Yeah. And it just has that, that, that effect. But I think one thing I'd like to just mentioned briefly, if I may, is the reason for all of this. The reason for all of this, you know, why transform. Why make the effort? Why not just do recurring fees for recurring income?

Because you make a pretty good lifestyle, most cases. And you know, with that, with that model, why do anything else? And so the the real, driving force is that I am the son of a business owner who did not get help from the profession. He, built a business. His business became very successful, beyond his ability to handle it.

And when he got into trouble and areas, familiarity. So especially financial, familiarity. It was at a time when accountants didn't come forward and in fact, were actively regulated against coming forward in England, and therefore didn't know where to turn and therefore got into trouble and therefore started failing, and therefore the business crashed and burned, which meant that his self-esteem crashed and burned, which meant that his marriage crashed and burned, which meant that his alcohol, alcoholism took hold.

And we lost him, 11 years ago. Now, now, I'm a business owner, very similar to him, very good at what he does, as you can see, but not necessarily very good running a business. Yeah. Doing what he does. And the difference is I'm. I got help and my accountants saw me struggling and reached out. My accountant bailed me.

And as a result, we have a look back at that time it was a consulting practice. Bissett Group Holdings now has involvements in 21 different enterprises. Wow. And how many years are we on from there? Same number. So let's see. So that's the power that the listeners of this podcast or the watch of this podcast, that's the power that they hold.

They have the ability because of their financial literacy, to go to a world of people like us, the financially illiterate, and save us, or take us on a journey or drop us off at our ultimate destinations. Yep. But we don't know that until you tell us, and therefore you gotta communicate your stories. Otherwise we don't know and we will go with the cheapest, or we will go with the closest, or we will go with the person we hate the least.

Yeah. You know, we will not go with the best because we don't know who the best is, because the best isn't auditioning. And because I have seen an actual life lost. I'm on a business lost. But I have a life lost due to not getting the help and business they needed. And because I have seen the success of my own business, I have firsthand knowledge of the the literal transformational impact, the profound impact of an accounting professional and a business owner's life.

I have then gone out, made it into a career and seen hundreds, thousands. I'll go as far as claiming tens of thousands. I probably can't claim hundreds of thousands, but tens of thousands of other examples of firms who've done exactly that and then kept their mouth shut about it so nobody else knows, what and what an accountant has on them.

And I'll say, I don't have one accountant it has on them is the ability to save lives, save marriages, save mortgages, to create profits, to create peace of mind, to create ultimate successful exits. No other professional, or professional is quite professional or the profession has that ability. Yeah, 100% agree with you, 100% agree with you. And this is a great way to end the episode, because I don't think I could add any more to that.

Martin, thank you so much for being with us today. Adam. Thank you very much. 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 accounts trap. Bye for now.