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We deep dive into both the theory and the exact steps you need to grow your practice in the way youve always dreamed. You will learn marketing, sales, hiring, management, pricingwe cover it all! The one thing we dont talk about is accounting skills. You already have those. What we do is give you the business skills you need to run a wildly profitable practice that you love.

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Let’s Talk about Debt, Baby
(Part 1)

Debt. It’s the four-letter word everyone wants to avoid, and yet we can’t stop talking about it. Whether it’s personal debt levels or the government debt ceiling, everywhere we look there is a discussion happening about debt.

There’s a common misconception that through the lens of Profit First, debt is always bad. But debt can sometimes be a useful tool to help you reach new levels of business growth and profitability.

So, let’s lay it all out on the table. Let’s talk about debt, baby. (Gen X, you’re welcome for the Salt-N-Pepa earworm.)

This article is part one of a two-part series on the “D” word. In this piece, we’ll define the two uses of debt. In part two, we’ll share a process to help you make sure you are using debt the “right” way.

Not all debt is created equal

The first thing we need to understand is that not all debt is created equal. And, no, I’m not talking about negotiating favorable interest rates, although that’s important, too.

There are essentially two ways to use debt. And, like the two types of cholesterol, one is “good,” the other is “bad,” but too much of either one can spell bad news for your business’s health.

What are the two ways to use debt in your business?

Debt leverage vs. debt bridge

Debt leverage is the “good” debt. When you use debt leverage, you have a planned, strategic use for the borrowed funds – to generate more profitability in your business.

For example, let’s say you need to increase your business’s production capacity to reach your next profitability goal. To do that, you need to acquire a new asset (this can be a machine, software, or an employee.) But you don’t currently have the cash on hand to acquire this asset outright, or – in the case of an employee – there will be a period when the cost of the asset is higher than the revenue generated.

This can be a good time to consider debt leverage. The debt you incur to finance the machine or the new hire’s payroll has a specific, strategic purpose, and you can make a reasonable assumption that the debt will pay off in the long run.

A debt bridge, on the other hand, is the “bad” debt. In the most basic terms, using a debt bridge means your normal, ongoing expenses exceed your normal, ongoing income. Your business is essentially living on credit cards (or a line of credit, or possibly even investments from your own personal savings.)

It’s easy to fall into the trap of relying on a debt bridge. Maybe your business experiences what you think is a short-term decrease in revenue, and you decide to “ride it out” by using debt until things improve…but that improvement doesn’t happen as quickly as you expect.

Or maybe you justify additional expenses in your business by convincing yourself they are strategic expenses, but you don’t put the proper tracking mechanisms in place to ensure you are getting a return on the expenses.

Or – and this is the worst scenario of all – you’re just so busy running your business, you lose track of how quickly your operating expenses are outpacing your revenue. Before you know it, you’re barely able to make the minimum payments on your debt, and you wonder how on earth things got to this point.

Important disclaimer

Although we’ve identified “good” debt and “bad” debt here, as a business owner you alone are responsible for making decisions about how to use debt in your business. In other words, don’t take our word for it; speak to your own trusted advisor before making decisions that will impact your business’s financial health.

Using debt profitably

Now that you know the two ways to use debt in your business, you might be wondering about the “right” way to use the “good” debt. How can you make sure your planned, solid leverage doesn’t become a rickety bridge that will throw your business into a raging river of “bad” debt? In part two of this series, we’ll share a six-step process to help you make sure you are truly leveraging debt to improve your business’s profitability.

Relay is now an official banking platform of Profit First

You may have already heard by now, but we’re thrilled to announce that Relay is an official banking platform for Profit First Professionals.

Many of our members already know and love Relay. But in case you don’t know them, Relay is a business banking and money management platform that is thoughtfully designed to help you and your clients put Profit First into action.

Why we’re partnering with Relay

We know how challenging it is for PFPs to find a banking solution that works both for them and their clients. It takes convincing, negotiating, and adapting to do Profit First banking. This costs time and forces you and your clients to make difficult tradeoffs.

We’re putting a stop to that. We’ve been on the hunt for solutions that truly embrace the Profit First method—not the other way around—so you can focus your time on your clients’ success. We also wanted a partner that is as invested in both the Profit First method and the success of our PFP family as we are.

Finding the right partner has taken several years. But it was worth it. We’ve found that partner in Relay.

Building better business banking

Relay knows accounting, bookkeeping and client advisory. The company was founded in 2018 by co-founders Yoseph West and Paul Klicnik, who have a long track record of working in payments (previously Wave and Hubdoc), with small businesses, and with small business advisors.

But there’s an even deeper alignment between Profit First and Relay: a shared belief that business advisors—accountants, bookkeepers and coaches—play a critical role in the lives of business owners. At Relay, this belief is reflected in their banking platform, which is built to meet the needs of advisors as much as business owners. It can be seen in their content, through series like Gearing Up, aimed at uncovering the tools and strategies that help accountants and bookkeepers thrive. And of course, it’s something that we believe here at Profit First Professionals.

Because of these shared communities and commitment to business owners, we’re so excited to come together to make it easier for businesses to be profitable. We know the impact that Profit First has in building permanently profitable businesses, but we often hear from business owners that they don’t have time to go to the bank and set it up. With Relay, not only does their product truly enable Profit First banking, but it can be set up for free in just 10 minutes. With this partnership, Relay has built dedicated Profit First features, such as auto-transfer rules, to make implementing the system easier than ever before.

The gold standard for Profit First banking

Here’s why we’re making Relay an official banking partner of Profit First and giving them the Profit First Professionals stamp of approval:

    • Sign-up online, from the comfort of your own home, in just 10 minutes.
    • Forget about fees. You and your clients can bank with Relay with no monthly fees, no minimum balance requirements, and no overdraft fees.
    • Open up to 20 individual business checking accounts (i.e., real accounts — not just virtual envelopes) per business entity. And each account can have its own unique nickname, like “Profit – 5%”.
    • Allocate your money by your Profit First percentages. Transfer money from your Income account to your other accounts all at once and have the math done for you.
    • Create automatic transfer rules based on account balances, so your Profit First transfers will get done no matter what.

Reliable bank feeds that don’t break, skip or duplicate. Relay integrates directly with Quickbooks Online and Xero so you can reconcile accounts faster.

  • Streamline accounts payable with Relay Pro to automate bill approval rules for your team and unlock faster, same-day ACH and free wires.
  • Get secure, role-based access to your client’s Relay account to review expenses, strategize, and keep you accountable.
  • A partner portal to manage all of your clients who bank with Relay, so you can advise them and keep them accountable from one login.
  • Get hands-on support from the Relay team that’s here to help you every step of the way.

A Profit First Certified banking partner

Relay is building a banking platform that gives you total clarity and control over your cash flow because they know how critical it is to entrepreneurial success.

Most of all, Relay believes in the impact that our two matching tools—Profit First and Relay—can create for business owners. The team gets it. As part of their commitment to Profit First, Relay has become a Profit First Certified firm, with members of their team—Deanna Zubrickas and Olivia Cummings—completing the PFP training. Having invested the time in becoming PFPs, they know deeply the pain points that PFPs face and are committed to building features that are a perfect fit for your practice.

Tailored onboarding for current and aspiring PFPs

Profit First Professionals new to Relay can get a personalized demo, including how to get the most out of Relay’s newly-launched auto-transfer rules. You can book a 1:1 onboarding session with Relay’s Certified Profit First Professional Deanna here. In it, you’ll get a personalized session where you’ll learn:

  • How to get started with Relay
  • How to set up your Profit First accounts
  • How to set up automatic transfer rules
  • Tips for moving clients to Relay

Helping businesses become permanently profitable

We’re excited to join forces with Relay to provide Profit First Professionals with the tools they need to gain total cash flow clarity and help their clients build successful, profitable and long-lasting businesses.

Sign up for Relay

Profit First? Ew.

A couple of weeks ago, the following email landed in our support inbox:

“WOW…PROFITS FIRST? Really? Not ‘PEOPLE FIRST’? Really doesn’t say much about the corporate culture there.”

And that got me to thinking: It’s time to write a blog about this particular elephant in the room.

Profit and corporate greed

We’ve all heard the headlines: Corporations are reporting record profits during a time when it’s becoming increasingly difficult for families to afford a carton of eggs. At the same time, executives at many of these same companies are paid tens of millions of dollars in salaries and other benefits.

Meanwhile, workers’ wages are increasing…but not enough to offset the rising costs of basic necessities. Yet, rising workers’ wages are one of the things blamed for inflation.

This article isn’t about all that.

Of course, the headlines rarely tell the full story, and I’m not going to argue whether or not certain executives deserve millions of dollars in compensation.

But it does shed a pretty bright light on why many people – financial professionals included! – are opposed to the concept of “Profit First.” Because, when you look at profit from this perspective, there’s very little positive about it for most people.

Profit in the “real world”

Let’s look at profit in the “real world.” I’m not saying large corporate profits don’t have real world impacts but remember: This article isn’t about all that. What I am saying is that, for most businesses in America, “profit” has a very different meaning than what most of us think when we hear the word.

What does profit really mean for small businesses? It means the ability to

  • Hire more workers and pay them higher wages.
  • Provide those workers with life-changing benefits, like paid medical leave if they get sick or have a sick family member.
  • Upgrade equipment with more frequency, which makes work safer and more pleasant.
  • Sponsor a Little League team, build a Habitat for Humanity Home, or contribute to a community garden.

And what about owners’ wages? Well, profit – especially under the Profit First methodology – does two things:

  1. It makes sure the owner is paid a living wage for working in their business. Have you ever worked for an employer who was concerned about making their mortgage payment? It doesn’t make for a very pleasant work environment, and it often leads to the employer making some pretty bad business decisions…decisions that compromise not only the owner’s livelihood, but the livelihood of every employee in the business.
  2. It puts guardrails on the owner’s overcompensation. If you’ve never worked for an employer who was worried about making their mortgage payment, perhaps you’ve worked for one who raids the business checking account to purchase a new car and then asks you to wait a few days for your paycheck. Profit First ensures the business owner gets compensation increases as the business grows – as they should – while acknowledging that a growing business will require more funds for operating expenses…like employee salaries.

Profit First is the antithesis of corporate greed

As a methodology, Profit First is designed not only to help small businesses operate profitably. Its percentage-based and scaled format virtually eliminates “runaway profits” and “corporate greed.”

At the highest level of Real Revenue (revenue after accounting for pass-through costs), the Profit target allocation percentage maxes out at 20%. Granted, 20% of $10M-$50M is a LOT of money…but so is 65%, which is the amount allocated to Operating Expenses at that level. That’s $6.5M-$32.5M for worker salaries, benefits, and other expenses that support the business.

I’ve implemented Profit First in dozens of businesses. Some of those businesses have grown into multi-million-dollar companies. And in every single case when a business using the Profit First methodology has hit the multi-million-dollar level (and in most cases before they’ve hit that level), I’ve seen some combination of the following:

  • Profit sharing with employees.
  • Vaulting cash reserves with the express purpose of being able to continue to pay employees during a reduction in business revenues.
  • Capital improvements to make work more pleasant for the employees.
  • Employee wellness programs.
  • Community giving, either through charitable contributions or service projects.

Profit First = People First

The employee in charge of our support inbox isn’t a Profit First Professional Guide or an accountant, bookkeeper, or business coach. However, she nailed the nature of Profit First in her response to the person who expressed concern about the corporate culture of a business implementing Profit First:

We totally understand how it sounds when we say to put Profit “First,” but it’s never meant over people. Profit First is a cash management method that ensures you put a percentage of your earnings into a designated “Profit” account to ensure that your business stays profitable and sustainable.

This company has been the most family-friendly of any that I have ever worked for, the first that has said they are “family first” and meant it. But – our goal is to eradicate entrepreneurial poverty and to make that happen, we have to convince people to pay themselves first.

Only sustainable businesses can put people first, and Profit First keeps businesses sustainable.

Why Your Firm Needs a Technology Account

The accounting industry spends billions of dollars each year on technology. Ten short years ago, the majority of that spend was in once-every-few-years equipment and software purchases. A firm could spend a few thousand dollars on a computer and software for each employee, then breathe easily for a few years until upgrades were needed.

Today, equipment is relatively inexpensive, to the point that computers and laptops are often considered a “throwaway” expense. And the days of purchasing a software package once and using it for multiple years are a thing of the past. Even a small a firm can easily spend several thousand dollars every year on “inexpensive” computer equipment and software as a service (SAAS) fees. Additionally, the prevalence of cloud accounting and the increasing popularity of remote workforces has made cybersecurity insurance and protection a must-have.

Technology is a critical part of your firm’s budget. But you must manage your technology spend properly; otherwise, what should be a key investment for your firm becomes a bloated overhead expense. Fortunately, there is a simple way to manage your firm’s technology budget.

Open a Technology Account

At Profit First Professionals, we advocate taking your cash management system beyond the core five bank accounts detailed in the Profit First book and leveraging additional accounts for strategic purposes. One account we always advise our member accountants, bookkeepers, and financial coaches to open is a Technology Account.

The purpose of this account is three-fold:

  1. Once funded, you can easily take advantage of annual payment discounts for your SAAS subscriptions without having to leverage credit card debt.
  2. By allocating a percentage of your firm’s revenue to your Technology Account, you can eliminate the guesswork about whether you are spending too much (or enough) on your firm’s technology.
  3. Because you allocate a percentage of revenue to your Technology Account, your technology budget will naturally scale with your firm’s growth.

With a Technology Account, you can stop worrying about how to afford your firm’s technology stack, take the sting out of paying for it, and get back to helping your clients transform their businesses into profitable enterprises.

Leveraging Financial Literacy Awareness Month

Did you know April is Financial Literacy Awareness Month in the US? As declared by President Biden in 2021, the month of April is dedicated to helping educate the public on long-term financial success.

By mid-April, most Americans have handled their taxes and feel the need to be in better financial shape next time Tax Season comes around. This month has the potential to be the “new year” for financial professionals in the same way January impacts gyms.

Business owners have finished the first quarter of the year and may already feel some financial strain or confusion about their money. Where is the profit they had to pay taxes on? There sure isn’t any money in the bank! How are they supposed to pay themselves? Will they ever be able to hire?

Profit First Advisory services are an easy way to enhance business owners’ financial literacy and create stronger relationships with a loyal client base.

Sharing is Caring

The experience and knowledge that you have are so valuable and Literacy Awareness month is a great reason to look for opportunities to get more involved in your community, while sharing what you love. With that in mind, February and March are the perfect time to start planning and scheduling workshops, lunch and learns, or speaking engagements to increase financial literacy throughout April. Here are a few ideas to help get you started:

  • Partner up with other advisors to sponsor a lunch and learn or workshop.
  • Host a webinar or in-person seminar to teach the basics of business finance.
  • Present in your networking groups, chambers of commerce, or on podcasts to share how financial literacy can create a lasting impact.

Hopefully, these ideas help spark some excitement for how leveraging Financial Literacy Awareness Month can impact your business and deepen your impact in your community.

If you’d like to level up your advisory services to create long-term financial health for your clients regardless of the month, apply now to become a Profit First Professional.

What’s In a Name?

You already provide advisory services to your clients. Cash flow management and forecasting are second nature to you. And, on top of that, you’ve read Profit First.

So, why should you become a Certified Profit First Professional?

Lessons from the pharmaceutical industry

Tylenol. Benadryl. Claritin. These are well-known brand name drugs. So well-known, in fact, that you probably refer to them by their brand names even if you take their generic equivalents: acetaminophen, diphenhydramine, and loratadine.

In pharmaceuticals, the brand name is the go-to, gold standard. The original. The safe, tested, and proven choice. Once the company that owns the brand name loses its patent, other companies are free to create generic equivalents based on the information available about the core components of the medication.

In other words, they are free to copycat the original.

Now, I won’t get into the efficacy of generic drugs vs. their brand-name predecessors. Plenty of people claim the generic works just as well as the brand name, and the FDA requires this to be true, to an extent. But there are certain, proprietary components in most brand-name medications that aren’t always present in the generic version. The “secret sauce,” if you will. And for some patients, that “secret sauce” makes all the difference.

Profit First Professionals Certification is the Secret Sauce

As a member of Profit First Professionals, you will learn much more than you can learn from simply reading Profit First. Our certification is the global standard for safety and growth. Business owners look for credentialed Certified Profit First Professionals badges to be sure they are working with a qualified “prescriber” of the Profit First methodology. That is why our badges include a “click to verify” tagline – it’s like the state board certification you see on your doctor’s office wall.

When it comes to finances, business owners do not want to work with an accountant, bookkeeper, or coach who provides Profit First services without certification. Why? Because – unlike with generic pharmaceuticals – there are no testing standards or regulations for Profit First services outside of our membership and certification process.

Become the Prescription-Strength Gold Standard

Can you use the Profit First methodology with your clients without being a Profit First Professional? Sure…in the same way a pharmacist can recommend an over-the-counter medication for a minor illness. But if you want clients and prospects to know that you are authorized to provide prescription-strength cash management and profitability consulting, that you have access to the “secret sauce” only our brand provides, that are you are part of the gold standard, then apply today to become a member.

Let’s Make a Decision

We make thousands of decisions every day.

“What should I wear today?”

“How much should I charge for this service?”

“Should I keep this client?”

And then the one I love to hate: “What’s for dinner?”


Decision fatigue is real, and it impedes our ability to continue to make sound decisions. In fact, by the time the average person goes to bed, they have made over 35,000 decisions that day. And that happens Every. Single. Day.

If you’ve ever answered “I don’t care” when your significant other asks you what you want to watch on Netflix AND MEANT IT, that’s decision fatigue at work.

Having a process for making the big decisions we face daily ensures we make sound choices where it really matters. (And it also saves us from watching Top Gear for the fifth night in a row.)

Four resources to help you make better decisions

We’ve created four resources to help you make better decisions when the going gets tough.

  1. The Business Crisis Trend. There’s nothing easy about going through a crisis. The Business Crisis Trend resource is a great reminder that every crisis follows a trend. Knowing this pattern exists and being able to identify where you are in the trend helps you see your way through it. When you can identify you are in Shock and Desperation (where inaction or wrong actions happen), you can more easily move toward Evaluation and then on to Deliberate Action.
  2. The Survival Trap. You can move in many different directions in a crisis. That is the Survival Trap. But there is always one action that will move you in the right direction. Remember the song “Do the Next Right Thing” from the Frozen 2 soundtrack? That’s what you want to do when you’re in crisis.

    How do you know which thing is the right thing? It’s the action that will move you toward your vital need and your ultimate business goal. This isn’t always the easiest thing to do but doing it will save yourself and your business time and money in the long run.

    Still not sure where to start? Skip ahead to #4 on our list.

  3. The 10-10-10 Method. Have you ever wished you could just flip a coin and be done with the decision-making process? Coin flips are no way to run a business (or your life, for that matter) but the 10-10-10 Method is the next best thing.

    Whenever you are faced with a decision you are unsure about, ask yourself how you will feel in the next 10 minutes if you take a particular action. Then ask how you will feel in the next 10 months. How about 10 years from now? Now ask yourself how you will feel if you don’t take that action.

    The 10-10-10 Method helps you see both sides of the decision. It also helps you overcome resistance due to short-term discomfort when you realize the long-term benefits of the action.

  4. 1-Step Back Method. Every end goal is made up of multiple little pieces. Start with the end goal or your final offer in mind, and then ask what the first step back from that goal or offer is. Then step it back again. Continue until you get to the first step you need to take to move toward your goal. Not only will you know what to do right away – you’ll also have a complete roadmap of steps to get you to your goal.

Sharing is caring

Of course we want you to use these tools the next time you are faced with a difficult decision. But we also want you to use them to help your clients navigate their difficult decisions. This is client advisory services amplified – never again will your clients see you as “just another financial professional.”

There is so much more to Profit First Professionals membership than just certification in the Profit First method. These decision-making steps are an example of the sort of coaching we provide to our members as they transform their practices into profitable advisory service firms. To learn more about the many benefits of membership, apply here.

Cash is King?

“Is cash king?” my friend asked me.

With all the confidence in the world, I said, “Duh! Of course it is!”

But then I started thinking about it. And I wondered… is cash really king?

As you read this, you’re probably thinking, “Yes, Ron! Cash is king! It’s the blood that flows through the veins of a company.” And you might be wondering if I’ve taken a knock on the head. After all, isn’t Profit First all about cash?

When your business is in a cash crunch, the “obvious” solution is for you to pull up your bootstraps, buckle that sales helmet chinstrap, and sell, Sell, SELL. It works; you successfully bring in the cash and go from cash crunch to cash flush. Boom! Nice job.

But wait a second. What happens with that new cash becomes your new problem. And you know what that is because it’s happened before: You spend the money, have little idea where it all went, and wonder why you still can’t pay yourself enough and why your business isn’t profitable.

And the cycle repeats.

Business owners make the same cash-based mistakes over and over because they don’t correct the behaviors that cause their cash flow problems. But there’s an easy way to correct those behaviors: implement a system that works with the behaviors instead of vowing that this time things will be different.

For many businesses, more cash isn’t the answer. A cash flow system to manage their cash is. A solid cash flow system will put guard rails in place to curb overspending, prevent wasted spending, and give you measurements to determine the ROI of cash you do spend.

A cash flow system will make sure you stop financially neglecting yourself and your family.

Without a solid cash flow system, you will continue to make the same cash-based mistakes you’ve always made. Not having cash is a problem, but it’s a problem that’s easily solved with sales and innovation. Implementing a cash flow system takes a bit more work, but a Profit First Professional will make the transition as painless as possible.

You have systems for hiring, marketing, fulfillment, and inventory, but you probably don’t have a system for cash flow management. In fact, a cash flow system is the number 1 neglected system in businesses. Do you remember the relief you felt when you got your hiring, marketing, and fulfillment systems in place? Now multiply that by the frustration your cash position causes, and you’ll begin to understand the relief that having a cash flow system brings.

If your business truly needs more cash, by all means, bring it in. But make sure you have a system in place to manage the cash so you don’t find yourself in the same boat again and again.

I’ll ask you again, “Is cash king?” No, a cash flow system is king. The cash is the queen. (And you can always get another queen. Giggle, giggle, giggle)

Don’t Call It a Cleanup!

clean (someone/something) up
to make a person or place clean and tidy

Growing up in the 70’s and 80’s was a ton of fun. We played outside every day, and we made a mess!!!

I can’t recall a day when my mother did not tell me to “clean up that mess!” Yes, with an exclamation mark. Usually said with frustration. Sometimes said with anger. To this day I cringe when I hear the words “clean up.”

I didn’t realize that while I was having fun, my mother was working hard.

She was an office manager for a small manufacturing firm. She went to work early and was home by the time school finished. I loved that my mother was home for my brother Justin and me.

At the time, I did not appreciate how hard she was working to keep the house clean, to keep food on the table, and to have dinner ready for my father. What kid does?

My mom didn’t like to clean. She did not get joy out of vacuuming, dusting, or folding clothes. But she did it. She did her best, and she did it every day.

I didn’t understand that when my brother and I tracked mud into the house, spilled drinks, left food out, didn’t wash our dirty plates, left toys and clothes everywhere, etc., that it was a mess my mom was always battling. How frustrating for her!

You’re insulting your prospects.

To this day when I hear a professional say, “We need to clean up your books,” I cringe.

As accounting professionals, our professional opinion is that many (most? all?) of the books we take over need to be “cleaned up.” Many times, we take over bookkeeping from a business where the owner did it themselves.

What we fail to understand is how hard that person worked to get their books into the shape they’re in when we see them for the first time. How hard they worked to get them to the point of running a business and paying taxes.

When the first thing you tell a prospect is that you’ll start by “cleaning up the books,” you are INSULTING them. You’re insulting their hard work. You’re insulting their lack of bookkeeping knowledge. You’re insulting their business.


Ever wonder why a meeting seemed to go well but you still did not get the opportunity to work with the prospect? Maybe you insulted them – or their spouse or another family member – without realizing it.

You’re insulting your profession.

Now, think about what you’re doing to the profession when you take over the books from a peer and say, “We need to clean up your books.”

You are insulting the previous professional.

Ever wondered why bookkeepers don’t get the respect they deserve? Business 101 is “do not insult the previous provider.” But our profession does it every day.

No wonder business owners don’t what to pay higher prices! Why would they when every time they switch providers they are told that the previous professional made a mess…and now they have to pay a lot of money to have it “cleaned up.”

mess /mes/
1. a dirty or untidy state of things or of a place:
2. a situation or state of affairs that is confused or full of difficulties:” the economy is still in a terrible mess”

Don’t call it a cleanup!

The remedy is simple: Stop calling it a cleanup!

Choose a positive descriptive word instead. I like renovation.

ren·o·vate (rĕn′ə-vāt′)
tr.v. ren·o·vat·ed, ren·o·vat·ing, ren·o·vates
1. To return to a condition of newness, as by repairing or remodeling.
2. To impart new vigor to; revive.

Whatever word you choose, take a novel approach and complement the demanding work that has been done…even if it is not up to your standards. Which are largely personal vs. technical, by the way.

Stop beating up your predecessor when you evaluate a prospect’s books. All you are doing when you tell the customer they need their books cleaned up is that the previous bookkeeper did a bad job! That the prospect themselves, who selected that bookkeeper, did a bad job. That the owner should have known better, and that they “let” the books get this way.

How deflating. You can see how the prospect might think, “Am I making the right decision to move to another provider? I know what I have now, but what assurances do I have that this professional is any better than what I currently have?”

The next time you speak to a prospect, try saying, “I have reviewed your books, and they have done a great job getting you to where you are. However, my suggestion is that we renovate them and implement a slightly different structure. One that not only supports you where you are today but also has the flexibility to scale as we work together.”

By simply using a different word to express how you’re going to help the prospect, you are providing a much better EXPERIENCE. That is how you unseat the incumbent.

Regardless of what word you use: renovate, remodel, optimize, etc. just remember this: “cleanup” is now a dirty word in your firm’s vocabulary.

Ron Saharyan
Co-Founder of Profit First Professionals

The Two Elements of Future-Focused CAS

In our last article, we decoded CAS – client advisory services – and uncovered some of the reasons why this offering has grown at more than double the rate of traditional accounting services in the past few years. Given its popularity – and its profitability – it’s obvious that CAS should be an area of focus in your firm.

But there’s a problem: CAS is so broad as to be almost undefined. Depending on who you ask, CAS can include everything from bill payment and payroll to “outsourced CFO services” – a term almost as broad as CAS itself. Furthermore, many of the CAS offerings suggested by accounting industry leaders are backward focused: they look to solve problems today’s business owners experience using yesterday’s approaches.

If your firm is to make the most of the demand for CAS, you need to offer future-focused advisory services. And the best of these services can be integrated seamlessly into your firm’s current offerings.

What you DON’T need

For too long, the accounting and bookkeeping industry has focused on helping business owners by teaching them to think like accountants and bookkeepers. We’ve educated them on the need for checks and balances. We’ve taught them how to read and interpret their financial statements. We’ve even created magnificent tools to display key performance indicators in their businesses so they can consume the information at a glance.

In essence, we’ve been talking to business owners in conversational Swahili, whereas they just ordered their Swahili to English dictionary on Amazon yesterday.

As you are preparing to offer CAS in your firm, you need to think like a business owner – not an accountant or a bookkeeper. Yes, your clients are paying you for your accounting knowledge and expertise, but this must be translated into a language in which they are already fluent.

The two elements of future-focused CAS

Two CAS elements can be seamlessly integrated into your firm’s current offerings and help business owners without forcing them to think like an accountant or a bookkeeper:

  • Technology management and training
  • Real-time cash management

Technology management and training

Business owners aren’t looking for new technology for the sake of having new technology. They want something that is easy to use and will make their lives easier. When you help your clients learn to use technology that streamlines checks and balances in their business and simplifies their internal accounting processes without needing to understand accounting concepts, you help them take control of the accounting side of their business.

But wait…doesn’t that mean you are putting yourself out of work? Or at the very least reducing the amount you can earn from a client?

Absolutely not! Effective technology management requires an even higher level of accounting knowledge than doing the accounting soup to nuts. And, when you customize technology for your clients, you are providing them with a personalized solution with a much higher value than an out-of-the box software purchase.

The bonuses are numerous:

  1. You can now focus on advising your clients on things that will help their businesses grow instead of spending all your time doing compliance work for them.
  2. Technology management and training is profitable: A skilled employee in your firm can manage the technology in less time than one could to the compliance work. And much of the training on technology can be evergreened.
  3. You can look outside of the accounting industry for employees to help with technology management and training. Yes, someone will need to make sure the numbers produced by the technology make sense, but setup, optimization, and much of the oversight can be done by a tech-savvy non-accountant. Given the scarcity of seasoned professionals in the industry, this solves a huge challenge faced by many firms.

Real-time cash management

82% of small businesses fail due to a lack of cash. Even if a business is profitable on paper, if it runs out of cash and can’t quickly raise capital, the business will close its doors. Add to that the stress a business owner faces when they can’t pay themselves a living wage, and you can see why cash management is of utmost importance when building your future-focused CAS offerings.

But your focus shouldn’t only be on cash management. To offer effective, future-focused CAS, you must focus on real-time cash management.

Technology cannot provide this. When you rely on software or – shudder – spreadsheets to manage cash, you introduce a friction point: Someone, be it you or your client, has to update the technology in order to get the information the business owner needs to make decisions.

The one resource that can offer real-time information about a client’s cash position is their bank account. And Profit First is the system that leverages this resource as an effective real-time cash management tool.

Administered with the proper training and guidance, Profit First:

  • Helps business owners manage their cash effectively, making sure they don’t close their doors due to a lack of cash.
  • Helps business owners pay themselves a living wage as well as routine bonuses for running a profitable business.
  • Propels businesses to sustainable, profitable growth.

The demand for CAS will only grow

By all accounts, the US economy – as well as other leading world economies – is heading toward a recession. As the pandemic taught us, periods of financial uncertainty lead business owners to seek more advice from their accountants and bookkeepers. Focusing on the two elements of future-focused CAS now will position your firm to meet the demands your clients already have while preparing for future CAS needs.

Decoding CAS

“CAS” is the buzzword du jour in the accounting industry. Short for “client advisory services,” it’s something all the experts are saying accountants should be offering. But aside from the decade-old “compliance is dead” argument, few are really telling accountants why they should be offering these advisory services.

The value of CAS

According to Amy Bridges, professional development manager for CPA.com, the mean gross profit margin for CAS grew from 34% to 47% between 2018 and 2020. The profit margins for more traditional accounting services also grew during this time…but only by 6% (from 28% to 34%.)

Why did CAS grow at more than double the rate of traditional accounting services?

  1. CAS is valued higher by clients. Over the past two years, clients have grown more aware of the help their accountants can provide. Accountants had a unique opportunity during the pandemic to step up and prove their worth, and as a result many businesses that otherwise might have failed, thrived. This real-life experience has led to business owners being more willing to invest in advisory services.
  2. CAS is valued higher by accountants. As they were helping their clients survive and even thrive, accountants started realizing clients really are willing to pay for their unique knowledge and business insights. This realization came at a time when accountants were experiencing a high burnout rate, exacerbated by changing legislation, moving deadlines, and staffing shortages. As a result, accountants started looking for ways to earn the same – or more – money without working themselves to the bone to do it.

In short, we’re in the midst of a once-in-a-lifetime opportunity where what clients need and are willing to pay well for aligns with services accountants want to provide. And accountants can charge premium rates for these services while still ensuring their clients get an ROI on their investment.

But what is CAS?

Like its predecessor, known simply as “advisory,” CAS has a definition so broad as to be almost undefined. Depending on who you ask, CAS can mean:

  • Budgeting and forecasting
  • Accounts payable management
  • Technology management and training
  • Payroll and HR services
  • Cash flow management
  • Financial statement preparation and review
  • CFO services…which has become sort of a catchall term for all the above

At its core, CAS – like advisory – goes beyond data entry, reconciliation, and tax returns and extends to strategic work with your clients.

How can CAS have the most impact?

Software developers would have you believe CAS is a matter of having the best dashboard for your clients to use. Traditional accounting organizations will tell you CAS is all about teaching your clients how to interpret and use their financial statements.

But business owners don’t necessarily want a fancy dashboard or to learn how to read financial statements. What they do want is an advisor who will help them look ahead and make predictions about how to move their business forward profitably. A combination of “real time” reporting and advising and future-focused guidance will have the most impact for businesses.

In other words, business owners want you to help them the way you helped them during the pandemic.

In our next article, we’ll take a look at some of the future-focused advisory services you can add to your firm’s offerings now that the world is returning to “normal.”

Making the Numbers Empathetic

Financial professionals get a bad rap. We’re seen as “numbers people” as opposed to “people people.” This reputation isn’t entirely unwarranted. We do like our numbers. Numbers don’t lie. They tell the story of a business without the emotional baggage. They cut through the “gut feelings” many business owners use to run their businesses.

Numbers help us see the truth more clearly.

The problem is, business owners want someone who can relate to them as people. And when we keep pointing to “the numbers” or “the data,” we’re not relating to our clients in a language they can understand.

If we’re going to get through to our clients, we must make the numbers empathetic.

Translating the story of a business

“Making the numbers empathetic” might sound like woo-woo nonsense, but you’re already halfway there. You already know that numbers tell the story of the business.

You just have to translate that story into language your clients understand. And you probably already know how to do that, too.

As a financial professional, you know that the purpose of most businesses is to generate a profit. The exception is non-profit businesses. Non-profit businesses exist not to generate a profit, but to fulfill a purpose. That purpose is the “story” of the business. Any net assets (the bottom line on a statement of activities report – the non-profit equivalent of a profit and loss statement) are used to tell that story and fulfill the non-profit’s purpose.

Most small business owners look at their businesses through this same lens. It’s not that they don’t want to generate a profit – they absolutely do – but they are more focused on what the success of their business means for them than they are on profit alone. In other words, they focus on the purpose of their business and the story they can tell with it more than they focus on the numbers.

How do you make numbers empathetic?

You can make your business clients’ numbers empathetic by connecting the dots for them. Ask your clients what they want from their businesses. Then ask why they want it. You might have to dig around a little, but if you’ve built good rapport with your clients, you’re going to get a lot of emotional, touchy-feely answers.

This is exactly what you want. The emotional, touchy-feely responses – freedom to work on their own terms, flexibility to spend time with children or aging parents, providing jobs to people in their communities – tell the client’s story in their own words.

Once you’ve gotten a client to tell you their story in their own words, you can translate the story for them. And the question you have to answer to complete that translation is:

“How much money do you need to make that happen?”

Aha! Now we have our client’s story in a language we can understand, track, analyze, and use to guide the client as they work toward fulfilling their purpose. Now we have a Rosetta Stone we can use in our conversations with them to help them see where their “gut feelings” might be leading them away from the plot of their story.

Now we’ve made the numbers empathetic.

It takes practice

Just like learning any new language, it takes practice to make numbers empathetic. Start with a client you already have a good relationship with. One who already values your advice from the perspective of a “numbers person.”

Ask them, “What do you want from your business?”

Ask them, “Why do you want it?”

Then ask that all-important Rosetta Stone question: “How much money do you need to make that happen?” Write that number down.

Over the following months, translate the numbers you see on their financial statements into the elements of the story they want to tell for themselves and their family.

This is going to feel awkward and – dare I say – hokey at first.

Stick with it.

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