Pay for Performance, Creating a Self Managed Organization

Today I an spending a very enlightening 7 hours with Dr. Bill Abernathy learning about pay for performance. If you have any questions on performance pay post them in the comments and I will follow up with Dr. Abernathy to get you an answer during Q&A or breaks.


Doctors vs. Trainers: The Changing Role of CPA's

According to Jason Blumer the accounting profession as it relates to small business is experiencing a paradigm shift driven by technology. This shift requires CPA's to reevaluate the role they play in client's businesses and strive to redefine what it means to bring value to that relationship. I am thankful for Jason's voice and leadership. I believe he is dead on in his reasoning and vision for what our profession can and should become.

As I work out what this shift means in our business I try to imagine what it is that our clients need us to do. What does this new landscape look like from their point of view and how could their world change for the better because of it. In any field experiencing rapid change it is helpful to contrast the old school of thinking with the new.

In an effort to distinguish old line services from the new CPA paradigm I want to draw an analogy. Traditionally CPA firms have been much like the old school family doctor. You went in when you were sick, often you were told to wait it out and it would take care of itself, and if you ever needed medicine the experience left you wondering if the cure was worse than the illness.

The role of CPA's is changing as the profession and the tools at its disposal evolve. Technology is a huge part of this, but it's not the biggest factor. By far the greatest driving force behind these changes is the new role young CPA firm owners are choosing for themselves. Rather than old school family doctors they fashion themselves as personal trainers, and they do so in three interesting ways.

First, they view business growth and progress as a wholistic undertaking. For example, they understand that accounting is a function that reaches deep into business processes. Tax planning is a component of overhead management. Revenue generation is a result of sound marketing and execution. In the same way that a personal trainer would not presume to increase upper body strength while neglecting the back and legs these CPA's don't mandate accounting changes that hamstring other parts of the business. They're discussions often range from technical accounting matters to customer service, to product mix, to human resources. They understand that the more integrated their solutions are to the entire business the more successful they will be.

Second, this new breed of CPA's understands that the process is iterative. When you visit a trainer you don't begin fixing everything at once. You may be tasked with improving your cardiovascular fitness first so that you can endure more strenuous workouts later. Over time you will work on nutrition, flexibility, endurance, balance, explosive strength, coordination, etc. You tackle one area at a time and build on that success in a process similar to continuous improvement. Similarly, business owners can benefit from a long term approach that doesn't try to address every area at once. Improvements in record keeping efficiency can create more time for strategic planning. More detailed and accurate records can support the creation of more relevant and insightful key performance indicators. The separation of responsibilities can not only improve internal controls but make the expansion of the organization chart less stressful. This iterative approach is much more effective than the old school philosophy of "bring me your problems and I'll fix them."

Third, the relationship itself between a forward thinking CPA and client is constantly evolving. When you begin working with a personal trainer the role is primarily one of teacher and encourager. As you make progress and become more knowledgable the role transitions to one of counselor and coach. As your training and development become more advanced you and your trainer may find that you are both learning from each other and benefiting from one another's experience in different ways. This same dynamic occurs as business owners progress in their knowledge and understanding of the principles that most impact business growth. After a while their experiences and hard won knowledge help the CPA see new options for other clients who might be facing similar challenges.

Ask yourself whether your experience is more like that of visiting an old school family doctor or working with an engaged personal trainer. If you aren't satisfied ask your CPA to trade the black bag and stethoscope for a medicine ball and stopwatch.


My Personal 90 Day Makeover

For the past week I've been enjoying a vacation with my family. It has been over 2,500 miles of good times, countless one liners from 3 and 6 year old passengers and lots of good, old fashioned road trip family time. It was also the first time in over a year that I have had more than a couple of days away from the office to think and reflect on how things are going. It was during those times of reflection that I decided to get honest, perhaps more honest than I have been with myself in a while.

I am in the business of helping clients build better businesses and as I look back over the last few years I have to admit that I have not done a good job at following some of the advice I dispense on a daily basis. I'm not going to sugar coat it. I am not where I thought I would be six years after starting Axiom. There are plenty of reasons, some strategic and some tactical, some environmental. However, the biggest reason has been staring me in the mirror for the past week.

The great joy of my job is working with extraordinary clients. What has always impressed me about these folks is that you know, you just know, that whatever they decide to do they will do it well, do it profitably and help a lot of people in the process. So I asked myself "If some of my most successful clients were in my shoes what would that look like on a daily basis?" I thought back to biographies of great leaders that I've read, contemporary and historical, and asked myself what habits they would try to cultivate.

I came up with a list of twelve things that I want to do better. Some of these areas are more personal and some are more business oriented. But I don't think you can successfully segregate the two, nor should you if you want to be genuine and sincere in all you do. So here is the list of things I am committed to improving in my daily routine.

Wake up at 5 am, every day. I am at my best early in the morning. I've known this since college, but without discipline I fall into a habit of getting up when everyone else does. By then I have lost the time and the environment to get my day off to the best start possible.

Have a personal quiet time. I am a spiritual person and I need time for scripture reading, meditation and prayer. When I don't make time to commune with God my priorities get skewed and I lose focus on what is important.

Exercise. I am 38 years old living in the body of a 45 year old. To accomplish my personal and professional goals I need both better stamina and better general health. Besides that I have two little boys that I want to be able to beat at any sport well into their teenage years. Daily exercise needs to be part of my life.

Professional appearance. I need to do a better job looking the part. Impressions matter when you are doling out business advice and to be taken seriously I need to take my wardrobe and all aspects of my personal appearance seriously. I am going to raise the standards for my dress in and out of the office.

In first. I set the tone for both work ethic and punctuality in the office. Getting there first insures that I have time to start my work day without interruption while setting a good example. It also means that I can establish some professional habits in my workday that will help increase my productivity.

In-reach. Clients set the stage for any success we enjoy. Without them there is no business to be had, no projects to complete, no expectations to exceed. Each day I need to have at least one deep, personal experience with a client to understand what is important to their success, what matters most to their business and family and how we are trying to help.

Out-reach. Clients are not the only ones I need to engage with on a deeper level. Community leaders, referral partners, colleagues and other professionals are all critical to our future success. Each day I need to be engaged with the people who can help spread the message about what we do, how we do it, and how different we are from our competitors.

Prospecting. New clients rarely beat down your door. Each day I need to be actively recruiting the clients I want to work with most. It is not enough to plan, strategize and coordinate. I need to be engaged in these conversations every day.

Plan tomorrow today. This is a practice advocated by time management and effectiveness gurus all the time. I have often done this but doing it every day is essential to realizing my full potential. For the next 90 days I will plan tomorrow before ending my day.

Evaluate the day. Reflecting on what went well and what did not is essential to making continuous positive change. Before ending each day I will spend a few minutes writing down my thoughts on where I succeeded and where I still need to improve.

Read. I need to feed my mind good material at the end if each day. Whether it is a few pages or a few chapters I need to make this a consistence part of my routine.

Improve my diet. To keep better tabs on what I am putting in my body I will keep a daily log of everything I eat. I need to be more disciplined and I just need to lose some weight. Research shows that people who track what they eat are more successful at changing their habits so that is what I am going to do.

Why am I telling you all of this? For one simple reason. I am ready for a change. I am ready to step up to the next level and I am smart enough to know that it is not going to be easy. By making this declaration publicly I hope to enlist readers of this blog, clients, family members, friends and co-workers in my journey. For the next 90 days I commit to make each of these activities part of my daily routine. Sundays will be a little different as I rest and worship, but most of these resolutions will still be part of my day. If you are interested in how I'm doing you can track my progress here. I will also post daily updates on my personal site, Feel free to hold me accountable, to encourage, cajole, needle, and urge me on. In 90 days I plan to be a better person running a more successful business.


A Holiday of Dependence

I love July 4th. Some of my fondest memories center on an annual July 4th family reunion in Florida's panhandle. My love for the holiday has grown as I've have become a fan of our country's early political history. I can thank one of my favorite clients, Wayne Dahlke, for introducing me to some of the great historical fiction writers covering this era.

As I recall reading some of Wayne's books and various biographies of our government's early leaders I am sitting among family members enjoying a truly wonderful and blessed weekend to begin a week long family vacation in Texas. Outside of Boston or Philadelphia I think you would be hard pressed to find an Independence streak that runs as deep and wide as the one through the Lone Star State.

But the thing about Independence is that it's just the first step on a journey. What you do with independence will determine whether you continue to enjoy its benefits. And the great paradox is that independence is anything but isolation and autonomy from the rest of the world. In the same way that the early United States had allies, champions and heroes you have a constellation of encouragers, helpers, partners and supporters interested in your success.

Business owners are perceived as having a great degree of independence, and in many respects that is true. But those who flaunt their autonomy soon find that progress is much more difficult alone. I want to encourage you this holiday. I would like you to spend a few minutes thinking about how dependent you are on the people who mean the most to you and your life.

Family first. Those closest to us are most likely to be taken for granted. Team You has a deep bench and you probably don't realize how often your spouse, your children, your parents, your nieces, nephews, cousins, in-laws and extended family admire, appreciate, and support all you do. Remember how big this family is, how great is its love for you and that little else will matter if they aren't part of your journey. I have been blessed beyond measure that the number of family members contributing to the person I am extends from Florida to Texas to Colombia and areas between. I love you all greatly.

Friends forever. A decision to share your life with friends is a bold move. Deep friendships are exciting, joyful, a little edgy and always moving forward. Friends who care for you make you a better person than you would have been otherwise. They tell you things you might not want to hear and make sure you don't beat yourself up too often. To guys like Todd and Matthew and Larry and Frankie and Peter and about a dozen others I am grateful for my dependence on you.

Colleagues. The people you spend your days with include coworkers, customers, vendors, neighbors, competitors and countless others. Those people care about you or they wouldn't bother. We get busy prioritizing and optimizing and sometimes lose sight of how much these folks mean to all we do. My coworkers and clients are my business. Without them what I do everyday would be fundamentally different. Their decision to do business with me is strictly voluntary and I am incredibly grateful for their decision to do so. To Robbie, Patty and Mandy as well as Irene, Solondria, Mary, Theresa, Sam, Chad and Lynn I need to say thanks. To every client that has ever hired us to help with something I want to say thanks as well. It is a great blessing that the list of clients I'd like to name is longer than most readers would want to endure.

The list goes on. These three groups, family, friends and colleagues are common to all of us. But my list keeps going and so does yours. I hope you get a chance today to spend time with some of these people that mean so much to you. I hope you also take a minute to reach out to a few others and let them know that your Independence Day is filled with thankfulness and gratitude for your dependence on them. I just did it and my July 4th is off to an EPIC start!


The Death of an Industry (& it's great for clients)

My profession is undergoing cataclismic change just like many other other knowledge based businesses that have traditionally been heavilly data dependent. There's a mouthful in that sentence and I think Jason Blumer is exactly on the mark with his recent post The Accountancy Revolution. Jason tackles the issue from the side of the CPA. I'm going to take a stab at what this means for the client.

In the past clients were drowning in accounting data. They had to gather it, record it, reconcile it and report it. This was great news for CPA's and bookkeepers. The world of "write up" (i.e. producing monthly financial statements) was a great source of recurring revenue.

Here's the problem. Any business owner can now go out and buy or subscribe to a very capable software or web-based accounting system for under $400/year. Once setup properly and integrated into their workflow this system CREATES the accounting data in the form of purchase orders, estimates, sales orders, packing slips, invoices and checks. GONE are the days of gathering accounting data.

These same systems when interfaced properly with banking and credit card web sites pull down any missing data, reconcile existing transactions and leave the operater with a bit of coding to do on the new transactions. Over time the system learns to do this coding automatically further reducing the workload on the operator.

The final mile is covered when vendors are setup on autopay, paper statements are ceased and all payables can be handled through semi-automated services like

This is bookkeeping nirvanna for a small business owner and it represents the death of an industry to accountants. I'm pretty happy about it, but those who have been in the business much longer than I have may not be so upbeat. Still, for the client this is phenomenal news. Here's what you should be doing about it. 

  1. Automate. Find out how much of your current accounting and record keeping system can be automated. I sat down with a son getting ready to take over dad's business last week and by the time we were finished we had re-engineered the work flow so that after a new customer was setup ZERO data entry was required in quickbooks. To quote Home Depot "You can do this, your CPA can help!"

  2. Redesign. Ask your CPA to help you redesign any processes that create bottlenecks or high error rates. One business we helped had high error rates on invoices. We moved all the work that went into invoices right to the front of the order and had the client sign a "sales order" instead of a contract. Now when the order is complete an accurate invoice is created with ZERO errors with one click of the mouse.

  3. Embrace the technology. This is the hardest part for most clients, but realize one thing. Reluctance to use technology is about YOU, not some realistic concern that the bank is going to steal all your money or that every customer is going to receive incorrect invoices. Nothing your CPA is going to recommend should be risky or unproven. It's all as safe as online banking. It's all secure and it all works. I tell clients, "Give it 90 days and it will change your life."

  4. Decide to standardize. The most variable element in any business is the owner. We worked for a very short time with a business that had four or five different ways of invoicing customers. I appreciate the desire for great customer service, but this business was so focused on accomodating special invoice formatting requests that their actual service was slipping. When it comes to business processes you must decide how things will get done and then do them that way...EVERY TIME. Unless you do this automated systems won't work.

The small business accounting industry is changing, for both you and your CPA. Embrace it, use it to advance your business and don't get left behind your more open minded competitors. Once the basics are covered you and your CPA will have the time and accurate numbers to plan strategically for your future, and evaluate whether current plans are operating as expected. You can tackle exciting new initiatives like Open Book Management that catapult your business to a new level.

The role of the small business CPA is changing from that of a doctor who fixes things when they're broken to something more akin to a personal trainer. You need to have your CPA come alongside to give your bookkeeping system a good physical and possibly a rehab. Then you will be ready to get in the best business shape of your life. More on that in the next post.