Pete’s Blog

Step Away from the Script

From the desk of Peter Margaritis

The unlikely blending of Accounting and Improvisation is something I have in common with my two guests, Kristen Rampe and Jason Lieu, from Slide Deck Improv. Both Kristen and Jason started their careers in the Accounting field but later discovered Improv as a creative outlet. This prompted Kristen to create Slide Deck Improv, which features improv-based workshops as a way to put the fun back into the way professionals communicate in their workplace.  

Slide Deck Improv marries both worlds by working on presentation and communication skills with an improv angle. Besides being in a classroom learning environment, the audience also plays improv games, which is a great way to teach people to think on their feet. The experience not only taps into the creative process, but it also gives you more faith in your abilities and boosts confidence. Participants learn to enhance their speaking and storytelling skills so that they can connect with others in more impactful ways. It teaches people how to observe and try new skills while having much fun in the process. 

Kristen designed the program, so there is “a little bit of learning, a little bit of practice, and just a whole lot of fun.” Also, the course helps participants build confidence by assisting them to get “comfortable in the uncomfortable.”  

Professional development workshops are notoriously dull, but this one is not. According to Slide Deck Improv, they offer “a fresh and fun classroom experience to help professionals tap into their creativity and gain confidence presenting to groups.”  

Besides teaching improv skills, volunteers in the workshop present before the group. They present five slides (one picture per slide) that they have never seen before and a topic that will be selected by the audience. Just imagine a seasoned tax professional speaking on the subject of Botany. At the same time, a picture of cows pops up on the screen. While laughter ripples through the room, the group learns how to make public speaking a little less scary.  

All professional groups from sales to engineers will benefit from learning how to engage people with the newfound confidence that Slide Deck Improv provides. Whether it is interacting with your sales team, customers, or management, these skills can be utilized in your profession, but also transfer over into your daily life.  

Many professionals are highly analytical and spend a lot of time in their heads. Jason described his experience with Improv as, “In any given moment, I’m in my head trying to digest information. And I like to go back and analyze everything before I come up with an answer. Improv gave me this tool that allowed me to live in the moment, listen to people, and to engage in real-time, and I love the feeling and energy of it.”  

Jason expands on the benefits of the program. “I love Improv because it’s such a general skill. It’s not just a business communication skill. It’s a life skill. You can bring this into all your facets of everyday life. And it’s all about connecting with your audience no matter who the audience is. It could be your customers, clients, sales team, internal, external, whatever. It comes down to people talking to people. And if you can connect and engage people, you’re going to have this newfound confidence in your work.”

Everyone can benefit from this kind of workshop, whether you are a CEO or a young professional. Improving your communication skills while in a less traditional forum sparks more productive business relationships. 

You can join in on the fun, while Kristen and Jason show off their improv skills during season 2, episode 13 of Change Your Mindset podcast by clicking here. You’ll get a taste of how the programs work while gaining valuable insight into the process. Thank you, Kristen and Jason, for taking the time to share your innovative program.

Visit SlideDeckImprov.com to find out more about how you can ‘Step Away from the Script.’

FASB is the villain

From the desk of Peter Margaritis

After I heard this from an audience member for the third time, I realized I was perhaps on to something. This third time came when I was presenting a keynote at the University of Nebraska in Omaha, hardly a hotbed of radical CPAs. 

With the flood of complex changes to GAAP foisted upon us in recent years, it’s no wonder that accountants – and our clients – see FASB as a villain. Not only is FASB considered the enemy, but I recently learned that GAAP is the name of an actual demon!

The guidance from FASB is getting more and more complex. In 2018, the entire codification was over 10,000 pages, in five volumes that were more than a foot high. This complexity translates to full employment for CPAs and auditors. But for business owners and other stakeholders, this is incomprehensible and of minimal value.

Following GAAP and getting an audit are what business owners have to do, not what they want to spend money on. After all, what value is an audit report that’s dated three months (or more) after the end of the year?

GAAP is out of touch with today’s economy

The basic format of a set of financials hasn’t changed much in the last 100 years, as Baruch Lev and Feng Gu point out in their book, The End of Accounting. In that book, they put the 1902 financials for US Steel side by side with the 2012 versions. Except for the numbers, the format and the categories are exactly the same. 

What’s changed in the last 100 years is our economy. Back in 1902, businesses were far more reliant on heavy equipment and machinery. In today’s information age, customer lists, patents and intellectual property are more valuable. 

As Lev and Gu point out, the most important things for investors and analysts today aren’t even on the balance sheets. You won’t find contracts, proprietary know-how, and employee knowledge, except as an afterthought in the notes. In our current knowledge economy, the most important asset is the combined skills, proprietary processes and knowledge of employees. Yet the costs for developing “the most important asset of our company – our people” are expensed.

Another big change is the rise of the subscription economy, as Tien Tzuo describes in his book Subscribed. Today, besides all the SaaS applications we have on our smartphones, you can subscribe to almost anything under the sun. Toilet paper, vitamins, dog food, clothes – and even cars! Hertz and Porsche both have subscription offerings that let you swap out cars for a monthly fee. 

But as Tien Tzuo points out, nowhere in GAAP-basis financials will you find any of the numbers that are important to a SaaS company. No annual recurring revenue, no customer churn rate, not even the number of subscribers. 

When GAAP doesn’t make sense

Now according to the FASB’s own website, their mission is “to provide useful information to investors and other uses of financial reports.” What a noble goal. But how do you square that with the contradictory results that the head of a SaaS company shared with me when they implemented ASC 606?

Previously, revenue for the implementation phase of a contract was recognized upfront, while the periodic revenue was recognized over time. But under ASC 606, that implementation revenue is recognized over the expected life of a contract. Not a problem if your customers stick around for the entire contract period. But now, losing a customer – which is operationally bad – results in immediate recognition of the remainder of the implementation revenue – which pumps up revenue. 

So, if you give your customers such lousy service that your churn rate goes through the roof, your financials will still look great because you’re pulling all that deferred revenue to the top line. How does that make sense? 

This complexity and irrelevance have led to an increased use of non-GAAP metrics, which are perhaps intended to give investors more realistic information, but in reality, can be manipulated to conceal less than perfect performance. In 2017, 97% of companies reported non-GAAP financials. This likely contributed to the rapid downfall of WeWork – just WTH is “community-adjusted EBITDA??”

The black box that is GAAP

Of interest to leaders of CPA firms, this complexity leads to a value gap between what we do and the value we bring to our clients. Our work has become a black box that they can’t see inside. How many of us have become the reluctant biller, embarrassed to charge a client for complex work that largely remains invisible to our clients? 

If we don’t have the ability to explain the complexity behind the numbers, then our clients indignantly ask us “how hard can it be to put numbers in boxes?” Translating what we do into normal English isn’t generally in the CPA’s toolbelt.

Slay the FASB villain by becoming data storytellers 

FASB and GAAP are not likely to change much in the near future, so our role must be to translate those rules into English. But we can’t stop at explaining FASB rules. GAAP-basis financials are backward-looking. They don’t contain the insights they need to grow their businesses. 

We need to evolve to become data storytellers. As data storytellers, we can guide our clients to slay the FASB villain and help them to be the heroes of their companies. Stories help us connect what’s in their numbers to what’s in their hearts. 

Business owners and entrepreneurs don’t think the way we do as accountants. We have insights into company performance that we’re not sharing. But when we share those insights in story form, we shine a light on their path forward.  

AI and technology remove the human error and the manual effort so we can spend our time on the higher-level work that computers can’t do. With technology tools as our allies, we can 

uncover the hidden treasures in our clients’ numbers. We can show them the real trends so they can make decisions based on data, not just the gut-level instincts they have relied on in the past.

Our superpower is knowledge of accounting. We can help our clients defeat the villain of FASB by using our superpower for good in the world.  

Published in Accounting Today, January 15, 2020

Train Every CPA to be Anticipatory & Future-Proof with Rebekah Brown, CPA

From the desk of Peter Margaritis
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“It’s really about being able to pivot and move to those future-ready skills,” Rebekah said. “Also, developing communication and leadership skills will set you apart as a professional, and that will be the game-changers in success.”

All three of these phases will be crucial, moving forward — because the business is changing, regardless of whether or not you’re ready for it. 

For example, Rebekah told the story of a group of chief accounting officers she spoke to, who worried that their auditors were falling behind because of a lack of future-ready skills. 

“They were saying, ‘We’re doing robotic process automation in our accounting department, and our auditors don’t know what to do with it,’” she said. “They need to level up and get ready because we’re doing it regardless.” 

The same mindset needs to embrace in any technological innovation in the accounting industry. You may not be ready to switch over from your 10-key to Excel spreadsheets, and you may not be interested in learning how artificial intelligence (AI). But accountants’ lack of adjustment doesn’t slow down the continued innovation. It’s happening, no matter what.

And being able to adapt isn’t just about making your life today easier. It’s about finding new ways to grow for tomorrow.

“CPAs spend so much time, heads down, versus looking up and seeing what is in front of us and beyond. CPAs are completely missing out on huge opportunities to grow,” Rebekah said. “And it’s that mindset shift of ‘Yes, I need to do my day-to-day job, And part of my day-to-day job needs t be looking out to the future.” 

If you want to listen to the entire episode, please click here.

Accountants, It is Time to Think Like a Marketer with Kate Colbert

From the desk of Peter Margaritis
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Thinking like a marketer can be difficult when most of us — well, think like accountants. Marketing isn’t a space in our brains; we use that often. Sometimes it’s because we don’t want to, or don’t feel like we need to. Other times, it’s because we don’t even know where to start. 

Luckily, I had a guest on the podcast who’s expertise is in just that. Kate Colbert is the author of “Think Like a Marketer: How a Shift in Mindset Can Change Everything for Your Business,” as well as the owner of Silver Tree Communications, a full-service marketing company. 

Kate has (thankfully) broken down how to think like a marketer into five simple steps — which we can all apply to our businesses. Without further ado, because, as Kate says, “the perfect time to start thinking like a marketer is now”: 

1. Communicate for connection and meaning, not just to transact sales.

Communication should be the top priority for anybody doing business, whether you’re in the accounting world, retail, restaurants, or publishing. Communication is about adding meaning and value to potential customers – not just trying to snag a check from them. 

For example, most people only hear from their accountant around — you guessed it — tax season. They get a simple email reminding them to make their appointment, and maybe a follow-up or two. However, outside of that season, customers typically aren’t getting much year-round value from their accounting firm. Also, it doesn’t have to be that way. Blogs, podcasts, and newsletters are all great ways to engage your clients (present or future ones) and add meaning to your relationship, without asking them for a sale of some kind.

When a change in the tax code occurs, accountants need to reach out to their clients who will be impacted by this change.  For example, “There is a change in the tax code, and I would like to have a conversation on its potential impact on your business.  Can we meet for cup of coffee to discuss?” 

“The accounting professionals who are finding ways to create meaningful conversations are the ones that are creating sustainable businesses for the long haul,” she said. “And (they’re) capturing a lot more value to the bottom line because they can raise their prices because they’re [bringing more value to their clients].”

2. Live and die by your client’s insights.

Are you paying attention to what your clients are saying? What they like and dislike, what they want to see more or less? If not, you’re leaving tremendous marketing opportunities on the table. 

“What’s interesting to me about financial professionals is that, here’s a group of subject matter experts who are all about the data, right?” Kate said. 

However, how many accounting firms are invested in the data of what their customers think? What’s your net promoter score? How is it trending? 

Give a survey, or set up a focus group — you glean your information is up to you. Make this a priority in your marketing strategy. Otherwise, you’re not going to know where to go.

“Once you have those clients insights, you know what pivots to make in your firm to be able to grow,” Kate said.

3. Market in a way that’s strategy-religious and tactic-agnostic. 

So many companies — accounting and otherwise — take the opposite approach than this. They’re all over the place with their strategy, but married to one tactic, just because they think that’s what the rest of the industry is doing. 

The trick is in the opposite approach: Be married to your strategy (once you do the front-end work to come up with a robust one). Try a little bit of everything when it comes to the tactics — aka the vehicles by which you deliver your strategy. 

Maybe the tactic is a video series, a workshop, a television commercial, or a newsletter series. Perhaps it’s a combination of all of the above. However, the trick is to experiment with a variety of approaches and see how best to deliver your strategy. Where are you seeing the most engagement, or the most leads coming from where? Pay attention to the numbers, and start devoting resources to the tactics that are producing results (and pulling resources from tactics that don’t).

“It’s about being willing to try new things,” Kate said. “And then walk away from new things.”

4. Create cultures and processes that align with your brand.

If your firm has a brand associated with never surprise-invoicing people, then you should, as a firm, build billing processes and packages around that core value. According to Kate, structure your pricing in a way that there’s some cushion. Just in case people call and ask for further advice, you don’t feel like you’re giving it away for free. 

Also, if you have a brand focused on being accessible and comfortable, and not nickel-and-diming the client, then build a culture surrounding that. An example Kate used is Southwest Airlines. This is an airline that’s built its brand around never being late, and not putting more costs on the customers’ shoulders. When a Southwest plane lands, all the crew going around and cleaning so that the aircraft can be used again for its next flight on time. Southwest built a culture in its employees around its “never late” branding, and that shines through in their marketing.

“What are we willing to do differently to deliver on the story that we’re telling the marketplace about what makes you a better accounting firm than the accounting firm down the street?” Kate asked.

5. Do everything in service of maintaining a virtuous cycle of creating value for the client while capturing value for you. 

This last marketing value is related in a way to the first: It’s all about creating value. Kate states, “that might mean giving things away for free. If giving something away for free is going to land you even more business eventually, then it’s a good cycle to get into.”

“It’s about can you create value for people, not just upfront when you’re trying to win them, but continuously, how do you keep creating value?” Kate said. “But how do you capture it back? We’re all in business to stay in business. So it’s not about giving it all away for selling it for too cheap. It’s really about figuring out how do you make sure that you’re pricing yourself right.” 

Much of this value comes back to the concept of “delighting.” How do you not just serve your clients, but delight them? Whether that’s the atmosphere, you create within the office, the gift that you give a new client, or that phone call informing the client of a tax law change.  How do you delight your client enough to where they not only want to keep coming back, but they also want to bring you quality referrals? 

Strategically doing this — in a way that eventually brings money back to your bottom line — is how to create a winning marketing strategy (and business). 

“You can’t create more value for your clients, or future clients, or associates, or whomever you serve if you’re not capturing money back to the bottom line,” Kate said. “If you’re constantly working your marketing, your business is going to be around as long as you want it to be. Then you can retire and go buy a yacht.”

Click here to listen to the entire interview

Staying Ahead of Technology: Trends You Need to Know & What You Can Do to Protect Yourself with Byron Patrick, CPA, CITP

From the desk of Peter Margaritis
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Just like so many other instances in life, sometimes IT security comes down to trusting your gut. 

That’s one of the biggest lessons we took away from our session with Byron Patrick, CPA, CITP. He’s brilliant when it comes to keeping your business safe and secure from attempted security breaches, which are, of course, becoming ever more prevalent in today’s world. 

“Seventy-five percent of data breaches occur because of the human element,” Byron said.

Whether you run a large business, or you’re just interested in internet security for your personal use, the same principles apply. 

First, according to Byron, you’ve got to listen to your gut. If you get a suspicious email that you already feel like you need to forward onto the IT department to see if it’s a hacking attempt or something malicious, then you probably already know the answer! Go ahead and delete it. 

Second, if something is trying to inspire urgency or fear when you read it, that’s likely a malicious attempt, too. 

Sometimes, employees need a little practice in making these decisions — click or delete can maybe feel a little like “fight or flight,” so it’s all about honing that instinct. 

“We do security tests where we send phishing emails to our clients and see who clicks,” Byron said. “We’re helping to teach them what to look for, and put the fear of God that they’re going to fail the test and get in trouble with the boss, which protects them. … The other benefit is it enrolls them in a short 5- to 10-minute training that they then have to complete because they failed the test.” 

Plenty of these phishing attempts are getting more sophisticated as technology evolves. However, it’s not just your business; you have to worry about: It’s also essential to think about IT security when you’re at home. 

Who else owns some device — like an Amazon Alexa or a baby monitor — that hooks up to your home WiFi? These devices are incredibly popular, but unfortunately, we’re still not sure about how secure they are.

“There have been stories of crooks gaining unauthorized access to things such as baby monitors, watching the home, and learning the behaviors and activities, and they can figure out when the home is empty and go right in,” Byron said. “So that’s where you need to make sure that devices you’re putting on the WiFi network are segregated, isolated, and they require additional authentication. You want to make sure it requires additional authentication, passwords, or something.” 

In this day and age, there’s plenty of these conversations to be had: the risk vs. reward of convenience vs. giving up a certain level of security. 

However, as long as you’re using extra authentication, and protecting yourself against the human element of phishing attempts (training your employees to make sure they understand what *not* to click), Byron talked a lot about the benefits of running your business in the cloud. 

Cloud-based systems are enormous right now — this is where you don’t have to log in to multiple apps on your local computers. Instead, everything is browser-based, so your workforce can work outside of the office. 

“Organizations are now adopting all of these browser-based applications,” Byron said. “They’re adding multiple logins to all their staff. They’ve got data all over the place. Also, talking about how to gain control of that browser-based computing platform for your business, and how to do it efficiently, effectively, and securely.” 

So what are a few must-have apps that Byron suggests every CPA have to run their business? 

  • Some form of online accounting, whether this is Quickbooks or something else
  • Zoom (for communication with remote employees)
  • Office Lines (for taking photos and converting them into different file types, like a PDF or JPEG)

However, remember: The convenience of all these apps comes with an inherent risk. That’s why it’s essential to stay up to date on security risks. Above all, train your employees on how to minimize that risk and work safely and securely. Also, that’s exactly what Byron encourages through his work. 

“It is an ever-changing world,” he said. “And, you know, we’re trying to pivot and stay up to date to make sure that we can keep bringing that value to the industry and keep everybody relevant.” 

Listen to the full podcast episode by clicking here.