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Jun 29, 2020

The Keys to CPA Firm Modernization

The coronavirus pandemic has made it clear: it is absolutely essential for the modern CPA firm to enable its staff to work remotely. But what other traits are essential for the modern CPA firm? According to our guest, Ryan Lazanis of Future Firm Inc., that list includes bolstered technology solutions, a scalable business model, and an openness to new pricing models. Listen to his podcast and get more of his insights at https://futurefirm.co/.

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By: Bill Hayes, Pennsylvania CPA Journal Managing Editor


Podcast Transcript

What does it take to create the modern CPA firm in this day and age? The list includes bolstering technology and automation options, making your business scalable, and prioritizing value pricing over the billable hour. And apparently, in the case of today's guest, Ryan Lazanis of Future Firm Inc., it also helps to not be a fan of accounting or tax.

Joking a little bit there, but in reading about you in the lead up to our call, I saw where you said that you're not a traditional CPA and that you don't really like accounting or tax. With those major pieces of the CPA landscape pushed to the side, what would you say it was that drew you to the profession?

[Lazanis] Truthfully, what drew me to the profession is two things. Well, maybe three things. One, my father. Two, the language of business. I always enjoyed business. And three, job security. I came from an entrepreneurial family and I've seen ups and downs in my family and I wanted to make sure that, no matter what happened if I started a business on my own, I'd have job security down the road. Those are just a few reasons why I went into the CPA profession.

One thing that you said about your original firm, Xen Accounting, which you started in 2013 and sold in 2018: it was 100% virtual, it was focused on automation, and it employed a remote team. Why did you choose to go about it in this way and why should fellow CPA firms be moving toward doing the same?

[Lazanis] For me, I was very disillusioned with the accounting profession at the time. My accounting career started in a very small traditional CPA firm here in Montreal, Canada, and I always identified more with the entrepreneur and the business owner and the client more than the accountant in the accounting firm. And I saw the way that services were delivered and work was getting done didn't really jive well with how business owners wanted to work in the digital age. So, the main purpose of starting Xen Accounting as one of the first online firms in Canada at the time was the elimination of pain. How could I make accounting easier and pain-free for business owners because we all know that business owners don't like accounting. They'd rather be driving sales, dealing with their team, all sorts of other things. Accounting typically is one of the last things on their list.

I really just wanted to eliminate the pain that business owners had when it came to dealing with their accounting and also dealing with their accounting firm. That was really the idea at the outset. I analyzed a bunch of things when I was working at a CPA firm and I identified a few areas that I felt could have been improved, and that was really the basis for my firm.

Let's talk about some of the steps you recommend for modernizing a CPA firm: How important are bolstered technology options and automation, especially at this point? And what benefits will they bring a firm?

[Lazanis] So I started my firm, my online CPA firm, in 2013. It was acquired in 2018. One of the big reasons for that is because they liked the technology that was implemented. They liked the streamlined processes. They saw it as a more scalable model. After the acquisition, I started a new venture called Future Firm, which helps other firms modernize and leans on my experience from running my own firm from scratch to sale in five years. When it comes to modernizing a CPA firm today, I think we all think about technology and automation being one of the big things that we can do to help modernize the firm. But I think where it all starts and which most firms neglect – I'm saying like 95% plus firms out there neglect – is having a strategic plan.

Without that strategic plan, you're going to bounce around from idea to idea all the time. I see this happening all over the place. You're jumping from one shiny object to the next. There's a lot of cool things out there that you can do to move your firm into the future, but you can't do that if you don't have a roadmap. The first thing you want to do is have that roadmap in place. You asked how important is the technology aspect of things. We're seeing that it's absolutely critical. Firms are moving more and more to an online model. Customers and clients, they're preferring to work with accountants digitally. They're seeking automation. They're looking at their accounting firms as more technology advisors and not just financial advisors. I think it's more important than ever that we have good technology implemented in our firm and good levels of automation.

Can you explain what it means to have a scalable business model, and why is it essential for CPA firms especially?

[Lazanis] When we look at a typical CPA firm, a traditional CPA firm, it's really focused on file work. Getting whatever kind of work comes in through the door and just getting it out however you can. That's been the typical model for decades and decades. But I think what we're seeing now with technology and automation that we're able to leverage is, if you can standardize your processes, standardize the type of clients you bring on, that standardization that you can implement can help scale a business model a lot more effectively. We haven't really seen professional firms able to scale properly. I think that's been largely because of lack of proper technology and also lack of standardization. A scalable business model really has to do with having the right standardization in place. And I think it's important because it helps you grow faster and more easily.

In the area of pricing, what are the benefits of value pricing over the classic billable hour structure that so many CPA firms still work with?

[Lazanis] The focus has to be fully 100% on the customer. And what does the customer prefer? It's not what you prefer, it's what the customer prefers. We're seeing the importance of the customer experience driving buying decisions in this day and age. If you look at…I always like to give the example of the taxi industry versus Uber. Which one's winning that war? And it all has to do with remodeling the way that you offer your service and remodeling your customer experience. The billable hour is a very poor customer experience. Nobody likes getting a surprise bill. Nobody likes not knowing exactly how much something's going to cost them. Nobody likes to be on the clock. So, value pricing is more difficult to implement. If you could do it properly, I'd argue you could actually drive higher margins. But I think the bigger benefit is you're providing a superior customer experience to your clients because they just don't like the billable hour. Those are the primary reasons for why I'd advocate for value pricing.

One of your firm modernization musts is acquiring business online. What are the best avenues for accomplishing that?

[Lazanis] I grew my firm practically solely through digital marketing efforts. When I started my firm from scratch, I was knocking on doors, I was going to a lot of networking meetings, but I quickly saw that my efforts were better leveraged through online channels. I think you have to pick the channel you're most comfortable with and you might not know what that is at first and you might have to test things out. For me, the channel that worked best, and I'm almost making a living off of it right now, is blogging and writing. My personality comes through a little bit better in my writing. I'm able to connect with an audience. If people want to go and check out my blog, they can go to www.futurefirm.co and I'd highly recommend checking out my newsletter as well. That tends to be quite popular with firm leaders who are looking to modernize their firm.

Essentially, blogging has been huge for me. I'm able to attract business online with the right techniques. Podcasting, as you know, you're able to acquire a large audience that way. YouTube, some people are more comfortable in front of a camera. That's not my style, but it might be someone else's style. Obviously social media is one of the last bigger digital marketing channels as well. So you have to test around, you have to tinker and discover what you're most comfortable with, and then take it from there.

This podcast we're doing right now is going to be released in June. That's when people will be listening to it. But as we record it, we're in the middle of the coronavirus pandemic, which has been an issue for just about everyone. So it's ironic that right here we'll be talking about the remote workforce, right? In the area of the remote workforce, what are the largest benefits that you saw from your experience? Right now that benefit would be that you can continue doing business. But were there any complications that you or your employees needed to overcome when you started with this?

[Lazanis] It is an interesting time right now. We're seeing firms across the world moving to a remote model and it's shining light into weaker areas of the business. Some have that infrastructure in place and some don't. This issue aside, my firm went through a similar transition years back where we actually had a 100% in office setup. We gradually moved to a 100% remote model. I think there's a few big benefits there. Number one, I just think you're more efficient when you work remotely. Connecting via Slack and Zoom. It could be done instantaneously. The conversations are just quicker. You don't have meetings that lag on as much. I'm making a generalization here, but I think efficiency is a big one. Don't forget you gain time because you're not commuting back and forth from the office.

The other one, I think, is one of the biggest challenges for firms: staff acquisition and retention. This is not going to get any easier. You could either have a pool of available candidates in your local geographical region or you could have a pool of available candidates across the nation. Which is going to be easier if you're having trouble staffing up? I think the third one is people are actively seeking for this kind of arrangement. This just makes staffing up that much easier. Especially Gen Z and millennials, they're almost expecting this not as a perk, but as the new normal, let's say. And I think there's a lot of firms that are resistant to offer this, but the ones that can will have a much easier time picking up qualified team members.

What sort of time do you think it would take a CPA firm to implement some of these strategies and bring their firm to modernization? What sort of resources would it take as well?

[Lazanis] I think it depends on the size of the firm for the most part, but I also think it's largely based on the mentality of the firm leaders. Those that are resistant to change, you can see this dragging on for years and years. We've seen that largely as the case up until the coronavirus hit and then people were forced to modernize their firm during these times. But I don't think there's any radically huge things that you have to put in place in order to work more remotely. You need a few basic tools, a few basic pieces of software. I don't think there's anything crazy you need to do to use a cloud-based accounting system over a desktop-based accounting system. There's nothing incredibly disruptive if you really think about it just to get on the path to modernizing your firm. But it starts with that strategic plan, which a lot of firms are lacking. And without that you're really going to just go in circles and you're going to have meetings that go nowhere.

If you have a roadmap in place with some goal set, it's very easy to see traction. I think within a year you can see a huge modernization impact in one's firm with the right steps.

 

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Podcast transcripts are provided as a summary of the conversation and have been lightly edited for the written medium. The transcript is not a verbatim representation of the interview.
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