Earmark Podcast | Earn Free Accounting CPE

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Tim Petrey: [00:00:00] We want to be the Chick fil A of payroll providers. We want to make sure that when people are done with their experience with us, they feel like they were important. You know, hence the white glove. You know, it's a service. It's a are our team members, the people that are processing payroll are payroll concierges. You know, we want to be the Maserati of payroll services, not the Toyota Corolla. And that's what was important that we communicated because we weren't selling based on price. We are not the cheapest payroll provider.

Blake Oliver: [00:00:34] If you'd like to earn CPE credit for listening to this episode, visit earmark Cpcomm. Download the app, take a short quiz and get your CPE certificate. Continuing education has never been so easy. And now on to the episode. Hello and welcome to the Earmark podcast. I'm Blake Oliver CPE talking today with Tim Petrie. Tim, welcome to the show.

Tim Petrey: [00:01:01] Thanks for having me, man.

Blake Oliver: [00:01:03] Tim You are quite a busy guy. You've got two main businesses that you're running, HD, Davis CPAs, and you also own a payroll firm, I understand white glove payroll. And between the 270 employees in about $7 million a year in revenue. So I guess I should say first, thank you for making the time in busy season to come on the show. I appreciate it.

Tim Petrey: [00:01:27] Absolutely, man. We're we're pumped to be here. It's it's a crazy time of the year, but it's it's a good kind of crazy now. So it's exciting.

Blake Oliver: [00:01:35] The topic of today's show is taking a traditional firm and becoming a progressive firm. And from what you have told me in advance of this episode and what we've talked about on LinkedIn, it sounds like you're doing really progressive things, but your firm started as a very traditional one. So I'm wondering if you could give us the background on that. Like how did you start? What was what did things look like ten years ago when you got into this business?

Tim Petrey: [00:02:03] Yeah, I mean, it's a pretty interesting story. When when I first started our firm, we had about four people. It was 2008. It was the midst of the financial crisis. Cpa firms weren't hiring the same way that they are today. It was an entirely different labor market. I actually started working for H.D. Davis at the time as the receptionist. I was making eight, nine bucks an hour just answering the phones. And I was I was lucky enough to get close with Harold Davis, who was the owner of the firm at the time. We became really good friends. He became my mentor. He became my business partner to some degree. A father figure over that period of time really took me under his wing and he always had a different style of running our our firm and had a different perspective on our business. He was always really an early adapter and one that was always adamant about balance and enjoying time with your family. And he had an amazing relationship with his kids. So it was just one of those things that he was so far ahead of the curve. Um, it gave me a foundation to build from. So we worked together for about a year and he said to me, he said, Man, I really think that, that you've got something here. I think that we can we can grow. And so he continued to kind of guide me As we got started.

Tim Petrey: [00:03:27] We started acquiring a lot of small practices together, you know, anywhere from $100,000 a year of revenue to $400,000 a year of revenue, mostly tax based businesses. And we got we got a few years down the road formalized our partnership. I took on more ownership, took on more responsibility. And then I realized quickly that as a tax based business, you can only grow so far. You're kind of stuck in that confine of of February and March and how much work you want to do for those two months. So at that point we kind of evolved from a tax business to a full service CPA firm. We brought in my current business partner, Joe Kilgore, to establish our R&R side of the business and started to add the audits and the reviews and some of the more traditional accounting services. And as years continued to go go by, we realized that even that had some serious scaling problems. It could only go so far. It could only grow so big with two partners. And and we were both young guys and we really didn't want to go out and admit a bunch of new partners because we wanted to retain control of the business. So we eventually then spun off the payroll portion of the business into its own entity and decided we were going to go all in on that company to make sure that it had the room to scale because the payroll business doesn't doesn't require the partner to sit down and meet with a client and review everything.

Tim Petrey: [00:04:55] It's a little bit more scalable of a product. And like the market was bad. I mean, the competition in that space just basically just said, we're going to abandon customer service and we're just going to give software to people. So that that was one of the things that we tried to do to just scale a little bit more efficiently. And then shortly after that, I just continued to find more of a of a passion in that in our fractional CFO space. We were really early on that I had started our fractional CFO division back in 2012 and we were already kind of servicing that middle market. So it was a really natural and easy transition. And then, you know, as we continued to just get momentum and became a little bit more of a recognized entity, we were able to attract higher level of talent and we were able to attract the really great people. And and as we continued to accumulate great people, the business just took off. There was just no stopping us once we had the great people in the seats. You know, there was really no slowing it down. So we've we've gone through this full blown evolution of a tax business to now a full blown advisory based business in a very progressive firm in our space.

Blake Oliver: [00:06:10] So it sounds like you got into this around the same time I did the fallout of the financial crisis. So were you working at the front desk because you needed a job? Like how did you end up in that role? Because that's kind of what happened to me is I got into bookkeeping because I couldn't get a job doing anything else.

Tim Petrey: [00:06:29] A. Basically that was it. I mean, we, you know, our our city here, Youngstown, Ohio, got absolutely obliterated by the collapse of the steel industry in the in the late 70 seconds, early 80 seconds, and just never really recovered all that well until recently, you know, So at the time, the financial crisis hit pretty hard here, but especially hard in the financial markets. So, you know, the CPA firms and the the tech shops and everything just didn't have the ability to keep hiring. So I wanted to stay. I wanted to stay here. And, you know, I had a few opportunities to leave town and go work for a bigger firm outside of my city. But Harold and I kind of looked at each other and said, You know what? I got six months before I got to leave and make a commitment to go to a big firm in Washington, D.C. Let's just see if it could work. And that's kind of how it started. It was really supposed to be a temporary thing. It was supposed to be kind of like a six month job just to help him out, give me a little bit more experience. And then we realized quickly it was going to be more than that.

Blake Oliver: [00:07:35] So you majored in accounting?

Tim Petrey: [00:07:38] Yes. Yep. Here at Youngstown State.

Blake Oliver: [00:07:40] And I should say you're a CPA. Yes. As well. And the firm is a CPA firm. Correct. Davis Got it. You said you were just doing tax like when you started at the front desk. It was just tax. And it was a really small firm, right? Like, how many headcount are we talking about? We had about four people.

Tim Petrey: [00:07:58] We were doing a 3 to $400,000 a year in revenue, you know, and it was tax and kind of the bookkeeping that you needed to do to to do the tax work.

Blake Oliver: [00:08:07] Got it. So it.

Tim Petrey: [00:08:08] Was true like shoe box style accounting, you know.

Blake Oliver: [00:08:12] Like and people actually brought in shoe boxes. Did that happen?

Tim Petrey: [00:08:16] Oh, yeah. Mean shoe boxes, brown paper bags. I mean, whatever medium of, you know, smelly receipts you could bring in. They were doing it.

Blake Oliver: [00:08:25] My favorite story from that era of my life is I was I was in LA and I was doing some, you know, write up work for a tax CPA. And he sent me out to his client, who was a composer, a musician and musicians. I am a musician myself, so I know that we are probably some of the most disorganized people on the face of the planet. And when it comes to business and the guy, he's really great. I love him. He's still one of my favorite clients I've ever had. He goes into his office and he says, Well, he says to me, I'm going to get my receipts. Let me go into my office and get my sheets. He comes back and he has I kid you not one of those big black trash bags. Oh, no, that's just like full. It looks like Santas sack of toys. Right. And in it are all of his receipts that have been crumpled up into little balls. Oh, yeah.

Tim Petrey: [00:09:12] I feel like I have some some level of of PTSD from those early years of that kind of stuff. I mean.

Blake Oliver: [00:09:19] So so I told him, I looked at it and I said, well, you know, the good news is I don't have to. You don't have to pay me to uncrumple all these little balls because I'm just going to log in to your Chase Bank account and pull out everything, you know, we're good. He's like, okay, great. I said, Just hold on to these for the IRS in case. Yeah, just in case. Yeah. Well, so you were just attacked shop, doing some bookkeeping, spun out the payroll into its own entity. I want to talk about that. That's pretty neat. And then got you added the audit and the assurance. Yep. And then you just started acquiring firms like. And you said small ones, right? A few hundred thousand.

Tim Petrey: [00:09:54] Yeah. We we acquired like the problem children, you know, we acquired the people whose succession plan failed. We acquired the people who maybe got an unexpected illness and needed bailed out at the last minute. We we were taking on the the acquisitions that nobody else wanted. And you know, in part because, you know, I didn't I didn't have a huge bankroll. I came up from nothing. I mean, I put myself through college washing semi trucks, you know, working full time, going to school full time. There wasn't there wasn't any financial backing that was making this thing come together. So, I mean, we truly bootstrapped this thing from the beginning in in we learned so much by taking over some of those troubled practices. Each time we learned something not to do and got better and better and better and more efficient in that process. And and it worked. I mean, I don't know that I'd want to try to do that again today because it was most certainly a grind. But once we got to kind of that point of momentum where we could hire really quality people, things got a lot easier.

Blake Oliver: [00:11:01] So so what did things look like from a tech perspective when you started and what did you do to change it?

Tim Petrey: [00:11:09] Tech, tech, tech. So a funny story about when I first started, we had tax returns from 1946. In our building, like a lot of them, there was paper everywhere. You know, we had a garage that was filled with paper. I mean, there was no tech at all. We when I started, they had just gotten computers like networked, and it was networked by my business partner's son who was my age and just kind of, you know, pieced everything together. So, I mean, there was there was no nothing was nothing was integrated. Nothing was networked between each other. I mean, we were using a tax software. Obviously, we weren't doing tax returns by hand, but not anymore. Yeah, Yeah, We we had we had clients that were still doing their bookkeeping and DOS programs, I mean, up until probably 2012. So I mean, it was one of those situations where I, you know, I've had a computer in front of me my whole life. I'm pretty handy around around the Internet and around a PC. But this was this was a big task and a big undertaking. And we're just now finally getting to the point, you know.

Tim Petrey: [00:12:24] 15 years later where our tech is really starting to get to be cool and we've got some really smooth systems in place now that make everything a lot easier. But it took a lot of time to adapt, you know, those paper processes to digital processes, especially because the fact that we were we were doing things on a tight budget. Like that's the challenge for every small firm, right, is that you're doing things on a tight budget because you're afraid to charge the right price. And that's the that's the crux of every small firms problem is they're afraid to raise their prices and charge what they should, so therefore, they don't have enough money to pay for the right softwares. They don't have enough money to pay their people appropriately. They don't have enough money to retain their staff and invest in culture and do all those other things. So the minute that we started to to price A just a little bit more appropriately, we had a little bit more left over cash to reinvest into those types of things. And the momentum started to really get exciting at that point.

Blake Oliver: [00:13:24] So what's your tech look like now? You know, you've networked the computers or you did that 15 years ago.

Tim Petrey: [00:13:30] Step one, we we plugged the computers into a network. We we actually one of the things that we did pretty early on was we started opening these little remote offices so that we could kind of support those like C and D markets where there weren't an established presence of a CPA firm. So we were spinning up, you know. Virtual virtual networks in remote desktops when we were when we were going to those places. And we found at the time that our biggest challenge was Internet. I mean, we when you're in those random rural country, you know, think Amish country, right? That's literally where we were. You know, we didn't have Internet to support the system. So the software was only as good as the Internet that was going. So, you know, we we built a platform that allowed for us to go virtual pretty early because what we were doing was we were supporting those small remote offices with our main staff back here in Youngstown.

Blake Oliver: [00:14:30] Which allowed, say, remote office. Does that mean like one person out there or is it like a three or less? Three or less?

Tim Petrey: [00:14:38] Yeah, Yeah. I mean, they were really small, you know, operations, but then they they had either someone that retired or someone that was no longer practicing. So we needed to supplement some of that work back to where we had all the people. So now today our tech stack looks entirely different. Our tech stack is a is a really long list of different items. We're doing a lot of our our workflow sharing an Atlassian based product called Trello, which I'm sure a lot of people have heard of. Trello is a is a really great product for small firms because it's not remarkably difficult and you can customize the heck out of it and it allows for you to have a cloud based workflow system. We we tested all the other like industry based workflow systems and just did not like them. I really have struggled with implementing any of the, you know, traditional big brand products because they're all centric to a non-progressive mindset of how to run a CPA firm.

Blake Oliver: [00:15:39] I feel like the problem with most of the accounting firm practice management software out there is it was developed as a transition from the old really paper based routing systems. Those, you know, those routing sheets you used to have on tax returns. And they so the visual interface is not that great. Whereas Trello on the other hand was designed, probably had the best visual design of any task management software on the market when it came out and still is really good with the Kanban boards and all that. So that's really important to get adoption right is it has to be intuitive for the staff or they won't use it. You know, it's like that's the problem.

Tim Petrey: [00:16:21] And, and I think, I mean the tech has come just in the last two years. The tech that supports our industry has evolved by at least 10 to 20 years just in the last two. Yeah. You know, and that was the biggest challenge was when we're trying to convert from a traditional firm to a progressive firm. We're we're writing our own software, we're writing our own code, we're writing our own supplemental systems. And it's not like you could just go buy something out of the box because they just they just aren't there. So it's gotten a lot easier over the course of the last couple of years with implementing some of these nicer products. But, you know, we we still have a ways to go. We have a big project right now where we're setting the groundwork so that we can get away from timesheets next year.

Blake Oliver: [00:17:04] Okay, great. So tell me more about that. Like how do you how do you leave your timesheets? Because I think that's the biggest hesitation is like, what replaces it?

Tim Petrey: [00:17:15] Yeah, I think, first of all, I mean, timesheets are the dumbest thing that our industry has done. And the fact that we haven't like we're generally intelligent group of people as accountants and problem solvers and the fact that we're still relying on something as archaic as timesheets to me is kind of hilarious, especially the huge firms. It's like you guys haven't had enough scratch laying around that you couldn't, you know, reinvent the wheel here. You know, the the problem is, is that we've gotten so comfortable with the timesheet metrics and that's how we're so used to judging people's productivity and profitability is that it never forced anybody to try anything different. So, you know, when you leave a timesheet based system, it gives you the ability to have a platform of profit sharing, of productivity based pay, you know, so it no longer matters how long it took you to do it. The question is, do you want to give people the ability to work ten hours a week and make $40,000 a year or work that 80, 90 hours a week and make a boatload of money? That's that's the thing that you have to be comfortable with in in walking away from timesheets is that you've got to be comfortable with the fact that you're no longer going to say, Hey, I need you to work 50, 60, 70, 80 hours a week. The conversation is now how much money do you want to make? And that's how much you're going to work. And that's how we're going to assign out projects. And your efficiency and productivity is how you're going to get paid. So. It's it's more of a mindset shift for people. And that's the I think that's the most difficult part, is getting your staff to buy in to that and you know so.

Blake Oliver: [00:19:06] I've got some friends who are firm owners that hear me talk about this all the time. And they said one of them said, you know, I went to my staff and I asked them, would you want to drop the timesheets? And the staff actually said, no, we like our timesheets. You know, there's a certain comfort factor in. Yeah.

Tim Petrey: [00:19:24] And so I'll tell you, my, my opinion on on running our firm has been, you know, we hire adults right. And and the timesheets to me are simply a way of micromanaging people. Now some people need micromanaged, right? Some people want that. They thrive on that. They prefer the timesheets. That's fine. But I have some really high producing entrepreneurial people that they're just the timesheets are never going to encapsulate the value that they bring to their clients. So, you know, they find themselves in a position where they're like, okay, well, now I have to I have to post 14 hours of this, even though it only took me two because that was the value that I created in this equation, right? And why should I be penalized? Because I'm bringing value to someone and it only took me two hours to do it, you know? So I think that, you know, it's not for everyone, you know, it's it's not something that you could universally apply to your entire firm and just say everybody's going away from timesheets. But I do think that the more options that you have when you can say to people, hey, do you want to come in and work in 5:00 in the morning and leave and two in the afternoon, do you want to work a 9 to 5? Do you want to work noon to eight? You know, the idea for me is to build a platform where people can come to work and work how they want to work, and we can come up with a way of making it profitable for both of us because there's a huge shortage in our industry. So people that want to be rigid and don't want to adapt and don't want to evolve and give people these various different opportunities, they're just going to get left in the dust because they're not going to be able to retain and attract the right kind of talent. So.

Blake Oliver: [00:21:08] Yeah, maybe that's the way to do it, is what you implied there. It sounds like you're going to give people the option of keeping their timesheet or switching to a different type of compensation structure. And I would have been one of those employees who said, yes, reward me based on my outputs, not my inputs. Yeah. And part of the reason I left my firm I was at was because I didn't feel like I could get rewarded for what I was achieving. I was capped by the hours I could work. Yeah. Yeah. So that's that's great. I'm going to have to come back and talk to you more after you've implemented this to hear your your takeaways. That would be great.

Tim Petrey: [00:21:46] We're starting with a small group of people. We're starting with our folks and our fractional CFO department because those are the right people like our fractional CFO team are just more entrepreneurial problem solvers that are that are generating value versus, you know, our our tax team is amazing, but sometimes it's hard to quantify that value beyond just tax filings, whereas, hey, you're in a fractional CFO situation. And I just sat down and coached you on how to charge the right price for your product and coached you how to negotiate discounts with your vendors or manage your cash flow or any of those solutions that a CFO would provide. And it took me it took me two hours to do it. But the reason it took me two hours to do it is because I just spent the last 15 years learning the mistakes.

Blake Oliver: [00:22:33] Exactly. That's a perfect area to not do timesheets because there's not this link between the hours you work and the impact you have on the client. You can have a really big impact in one hour. And and is that worth $300? It's it could be worth $300,000. Right. There's no way to to. Yeah. Quantify that with hours. Well let's talk about your CFO practice because a lot of accounting firms want to add advisory services. Cfo is one of those common ways we describe it. The AICPA is all over this. All the state societies say got to move to advisory. So, yeah, tell me about that practice. How did you go about starting it? Starting it up because you didn't have one when you started?

Tim Petrey: [00:23:18] Yeah, it started with a terrified phone call. I was actually on a trip with a client. I was on a I was on a fishing trip with one of my clients and I got a phone call from one of my largest clients, and he was just in an absolute shock. His CFO had passed away unexpectedly. They he got in a car accident and he knew everything about the business. He was a young guy, so they weren't really worried about a succession plan. They weren't really documenting a lot of procedures. And the owners of that company relied on him 100% to make sure that everything was taken care of. So when he passed away unexpectedly, I was the first phone call. They said, Hey, so-and-so has passed away. We need your help. We need you to help us figure this problem out. Okay? I'll be there tomorrow. So I drove home. I got to their place, and I proceeded to spend the next month acting as their CFO while I was still running our practice. And, you know, I got through that and it was one of the most rewarding times of my career because, you know, it's one thing to to save somebody some tax dollars and to help them understand their tax return or to do some of the more traditional services. But. This was different.

Tim Petrey: [00:24:48] This was me. I solved a real problem in their world. And by the end of it, we we had formed such an amazing friendship and relationship as a result of me being able to come in and figure that out, build processes, and then help them hire their next person and, and, you know, train the next person and get that person going. It just felt so much more rewarding. And I never forgot that feeling. And as we got further and further down the road, I said, I want, I want, I want that again. I want more of that. And, you know, as we got further down the road, we saw the labor problem start to have happen and we saw the accountant shortage start to happen and we saw some of these other things come to fruition and. We decided to launch that division specific to the nonprofit space. And we came in and we realized quickly, because I was on a bunch of boards and volunteering and helping local nonprofits around here with just my time that they all had the same problem. They couldn't afford to to hire somebody good. They couldn't afford to retain someone good. So we said, okay, well, we think that we can do this in a way where it's going to get you guys the service that you need as the nonprofit.

Tim Petrey: [00:26:03] It's going to ensure that you've got consistent quality information. You're not going to have to worry about the person sitting at the desk if they get sick or they want more money or they get another opportunity or they just abruptly leave, you no longer have to worry about it. We did a couple of those and it was an absolute game changer. We were providing way better information to the boards than they had ever received. We were making real, tangible impacts on their organizations. And, you know, I just I look back and I said, okay, this is that feeling. This is that feeling of of purpose. And then, you know, as as I'm continuing to go down and run our practice and growing our practice and I'm seeing people just burn out and leave and turn over every couple of years, I said turnover is the problem. Turnover is the issue that we need to figure out how to resolve. And there's only so much you can do to resolve the turnover problem, right? I mean, you've got to charge the right price. You've got to be able to pay people the right amount of money. But even if you're paying them the right amount of money, you're still missing that function of purpose. You're still missing that. I feel great about what I did today.

Tim Petrey: [00:27:19] So that's when we when we decided to go pretty, pretty hard at the fractional CFO division called one of my my buddies up. Oddly enough, the guy that I hired to be that CFO was the guy that I then hired back to run our fractional CFO team. So it came full circle. As a result of that, that client was our first our first fractional CFO client. And then we just we just continued to grow from there because of the fact that what what happens now is you get your first couple of years in public accounting, you learn the ropes, you understand how to do bookkeeping, you understand how to do taxes, you understand the the broader principles at play. So now I have a pipeline of CFOs that are getting trained through the public accounting firm, right? So instead of at three years them leaving and going being a comptroller somewhere because they don't love the craziness of public accounting, now it's, hey, you know, I'm three years in, I feel pretty comfortable about what I'm doing. Can I can I start to work in that fractional CFO division? And it's immediately making drastic improvements on our our organic turnover. I mean, for the last two years, we've had single digit percentage organic turnover in our industry, which is crazy.

Blake Oliver: [00:28:36] Congratulations. Yeah. For anybody who doesn't know the numbers, typical firm turnover is in the double digits, if not 20 or 30% right now. So yeah, that's amazing. That's that's so smart because it has been just a given that firms would hire and turn over their staff every two, three, four years. But you've given them a place to go if they want more. Yep. And. They can learn to do all that comptroller and CFO stuff. So it's not like they're not going to eventually go to industry, but you get to keep them for even longer potentially. Yeah, that's that's fantastic. How do you how do you price advisory or CFO services? Are you doing it hourly at the moment and you're going to switch it to fixed fee? Do you fix it? You know, what's your strategy?

Tim Petrey: [00:29:29] We're fixed fee almost completely. Very rarely do we do hourly engagements. You know, basically it's part of our initial assessment period where we sit down with the client and we say, Hey, what are you paying right now? What are you paying your CFO? What were you paying your accounting department? And I take.

Blake Oliver: [00:29:43] It you're usually coming in when they've lost their CFO or they've lost their controller?

Tim Petrey: [00:29:47] Yeah. Yeah. So, you know, part of our solution that we've provided for people is that our payroll company has HR consulting services. So sometimes we get asked to come in and help them hire a new person so we can give them that option. Hey, we'll build out the job posting, we'll help you find a great person. We'll, we'll filter through those resumes for you and get you some quality interviews. Or if you if you aren't finding the right people that you want for the right price, then let's see if we can build something for you that would satisfy your needs at the right price point. Because you know, what we can do on our end is instead of having that, you know, CFO level individual doing all the work, we can break it up, right? So instead of having the CFO person entering checks, we've got our administrative staff entering checks instead of that CFO person doing bank reconciliations, we've got the administrative person doing the bank reconciliation. That's right. And we've got our senior level staff reviewing that. And then by the time it gets to that CFO level person, it's clean and then they can do the real CFO level service at that point in time. So more often than not we're able to come to them and say, Hey, you were paying somebody $100,000 a year, you know, we can come in at at below and or around the same cost.

Tim Petrey: [00:31:06] But now you don't have to worry about somebody quitting. You don't have to worry about somebody getting sick. You don't have to worry about somebody's vacation time and health insurance and benefits and all the scary stuff about employment, you know? And then the COVID happened and then it opened up the door to doing things more virtually, and it obliterated the labor market and it caused this crazy supply and demand problem for accountants, both internal and external. So it was just we were in the right time. We were in the right place at the right time. We were prepared for that opportunity and more and more people became open to it because initially when we first started doing it, they were like, Well, why aren't you here every day? And why aren't you sitting in my office with your suit and tie on every day like our CFO used to write? And, you know, eventually we had enough of those conversations where we said, look, it's different. It's different now. And people are really starting to feel it now because it's just impossible to hire those people.

Blake Oliver: [00:32:06] Yeah. And that's why highlighting the continuity is so important and you're doing that in your marketing is you're saying, look, the biggest risk is you're going to hire somebody and then they're going to leave. If you hire us to do this fractionally, then you don't have to worry about that. We provide the continuity. And and also, I love how you're pricing in context of what it would cost them to fill the position. You're not doing it from an hourly perspective. No, it's and that's how people think about prices when they're looking at buying something. It's what are my alternatives, right? And so that's that's the way to go. So. Well, that's great. I mean, I imagine that practice is just growing by leaps and bounds. The, the, the CFO practice.

Tim Petrey: [00:32:52] Yeah, It's it's been fun to watch. It's certainly an interesting thing. And it's just one of those things that as technology continues to get better, the service gets better because now we're able to provide better reporting dashboards and better reports and all this other great stuff. So it's just getting better and better literally every day.

Blake Oliver: [00:33:11] What about your payroll company, White Glove payroll? Why spin it out into its own entity? Because a lot of firms, you know, they might still do payroll in-house. Often it's not its own business. What was the what was the rationale for that?

Tim Petrey: [00:33:27] Well, for a couple of reasons. I mean, number one, I'm I'm a big fan of being able to motivate people with equity and profit sharing. Right. So one of the things that was important to me was once I had that person that was running that company, I wanted them to own a piece, and I didn't want them to be subject to the confines of a CPA firm ownership. Right, because you don't need to be a CPA to to run a payroll company. You know, you can have that learned knowledge about the CPA industry. We can have CPA support. But that was important to me to be able to have that option for those folks. It was also important to me so that it was independently branded, because being a CPA firm that does payroll and a payroll company that's outstanding at customer service are two different communications, right? You know, generally speaking, the CPA firm that did payroll is like, well, I guess we'll do it. You know, we're okay at it. We don't love it. We don't know how to price it. We don't have the right technology. But you didn't like working with the national providers and it makes it easier for us to do our job. So we'll do it right with us. It's it's different. I mean, we we want to be the Chick fil A of payroll providers. We want to make sure that when people are done with their experience with us, they feel like they were important, you know, hence the white glove. You know, it's a service. It's a are our team members. The people that are processing payroll are payroll concierges. You know, we want to be the Maserati of payroll services, not the Toyota Corolla. And that's what was important that we communicated because we weren't selling based on price. We are not the cheapest payroll provider.

Blake Oliver: [00:35:17] However, because you're white glove so correct. It makes sense.

Tim Petrey: [00:35:20] Because you don't worry about it, man. You know, it's a great service. You love talking to your person. They know your business. You know, when you submit a timesheet that's wonky, somebody forgot to check out or clock out of your time system, your payroll. People know you well enough to to ask and say, hey, this this payroll looks a little weird. It looks like we're paying so-and-so a little bit too many hours. Is that right? You know, so just those little things, just those little incremental wins on the service side of things has again, continued to provide value. And it all comes back to that same concept of if we're providing value to our clients, our clients appreciate us. If our clients appreciate us, then you enjoy going to work because you're communications are with people that value the work that you do. And it's not about just some commodity. It's not about just putting, you know, the numbers in the boxes for the tax returns or just, you know, processing payroll or whatever. It's it's about having purpose, which again, has has provided us a really cool opportunity to retain our employees. One of the other things that's really cool about White Glove and I think this is probably my favorite, is that it's completely remote and the vast majority of our labor pool are stay at home parents. We we saw a huge opportunity in the labor market that no one was satisfying was that, you know, we're in Youngstown, Ohio. It's not easy to get get great people to come to work.

Tim Petrey: [00:36:51] So we needed to make sure that we I was going to find those great people wherever the heck they were at and and realized quickly that there's a ton of great people that are, you know, staying at home with their kids and still want to work and still want to be a part of something and still want to have some purpose. But, you know, this allows for them in the first couple of years that the kids born, you can do 1 or 2 payrolls, you can keep your skills sharp, you can have some social interaction with people, you've got something to do. And as the kids get a little bit older and they go to daycare, they go to preschool, they go to grade school, you can dial up, you can add a few more payrolls. And it just it was one of those things that we thought might work, but we had no idea how great it would work. And we had no idea how much those people would love those jobs and love that flexibility. And that business was 100% remote well before COVID. So once COVID hit, we had just a slew of great resumes. We had a slew of great people that we were able to bring in, teach them how to do payroll, you know, monitor them to ensure that the quality of the service was still great. And they were thrilled. They loved coming to work. They loved being a part of it because it was an opportunity that they just they wouldn't have had otherwise.

Blake Oliver: [00:38:07] I love that you provide that flexibility to employees. I feel like one of the challenges of our profession is that it has historically been very inflexible. You were either all in at an accounting firm or you're all out. There's there's no in between. In all in might mean crazy busy season hours, especially at the bigger firms. Yeah but not everybody's interested in that and guess it worked in the past because there was this growing pool of labor for a long time. Right? The the boomers and then the millennials, the boom after that. But now every generation is been smaller. And so we don't have just this giant pool of labor and the firms that adapt and provide flexibility and flexible working options really have their pick, right? Because I think that's what the unemployment number hides as we record this. It's February, and I believe that US unemployment is the lowest it's been since 1970. But but that masks all the people who have opted out of the labor force. Correct. Parents who are staying home to care for kids because child care is too expensive. Or maybe older folks who don't want to go to work because they've got COVID fears. You know, all anything, anything and everything, right? Yeah. There's so much there's so much labor out there If you go to nontraditional workers.

Tim Petrey: [00:39:35] Right. And it's just one of those things that a lot of the historical traditional firms got fat, they got comfortable, they got complacent. It worked for decades and decades and decades. So why did they need to change? Why did they need to adapt? You know, so for those of us that were just building from the ground up and were forced to look at things a little bit differently, we had a competitive advantage through this process. So, you know, it's not I don't think that it's you know, obviously it's not any one person's fault. It's just one of those things that it it it worked for so many years. And it it took great care of a lot of those partners that made a ton of money at those big firms. But there was there was just no one to challenge it because there was always someone that was next in line. You know, the the traditional public accounting firm is essentially a pyramid scheme, right? I mean, it's only as good as the person that's going to ultimately end up buying it in the end. And when you had an endless supply of those people that you could convince that being a partner at a CPA firm was a great thing, it worked. But now, you know, the the pool is much smaller and there's not as many people. And those people are looking at it and saying so. So you're telling me I need to work, you know, 80 hours a week for the next 30 years so that I can retire and get a reasonable amount of money when I retire? That doesn't add up. Something doesn't make sense. You know, we're we're kind of a generation of of now. We're a generation of having the Internet in front of us. We can learn very quickly. We can adapt very quickly. So we're just not really getting super excited about that traditional CPA partner role.

Blake Oliver: [00:41:21] I wonder how much of this is the fault of Instagram and TikTok? Because now whenever your friends go on vacations, you see it like right there in your face. Oh, how's Lake Como? It looks nice in Italy. And here I am sitting in my firm working the, you know, the long hours. I feel like that's got to somebody's going to do a study and figure out that has something to do with it.

Tim Petrey: [00:41:42] But I'm sure it doesn't hurt. I mean, it's just and I think it's a generational thing, too, is that, you know, we saw our parents go through things like 2008 where where they were just dispensable, They were disregarded. They were cast aside, they were fired. They were, you know, not valued. They were not important. And it was like, okay, well, you worked all these years and gave so much and then you just cast me aside. Right? So I think that that's just a generational differences that a lot of us in our our 30s and maybe early 40s even are looking at this differently and saying, okay, well I don't need to buy as much stuff, right. I don't need to be as materialistic, I don't need the fancy car, I don't need the huge house. I would much rather go somewhere that I feel valued and appreciated and I can love what I do. And what a lot of people are realizing now is that, oh, man, when I when I actually love what I do, I'm better at it. And then consequently, I'm making more money as a result of the fact that I'm better at my job, right where everybody was just afraid to take that leap. And I think that, you know, to your point, social media has proven that you can take the leap and that there are there's so many opportunities and there's there's reason to believe that you can you can further yourself by going all in and committing to yourself rather than just staying in the confines of what historically worked.

Blake Oliver: [00:43:08] Yeah, I'm a big fan of instead of trying to I mean, trying to make more money is great and being entrepreneurial is great, but figuring out how to do that in a way where you're not sacrificing your health and your family and your friends. Right, Right. And the easiest way to do that, to have it all, is to leave those high cost cities that lots of us are in. I was in LA and you moved to a place that can be a A half the cost and you can live a really high quality life. Yeah. And the beauty of accounting now with the cloud is we can do it from anywhere, right? So even if you're not making as much money, even if you're making. Half as much money as you were in the office tower in New York or LA or Seattle. You're still better off. Yeah. And I think a lot of people are realizing that.

Tim Petrey: [00:43:56] Yeah, us accountants are finally looking at the net number. Right. Which is shocking that it took us that long to figure that out. But yeah.

Blake Oliver: [00:44:04] Yeah, you have to quantify everything other than the money too, right? It's not just about the money. It's about the time. I don't know if I mentioned this, Tim, but you have achieved some accolades in your career already. You're a 40 under 40 on the CPA practice advisor list. Your firm has been named the number one firm for women in the country, as well as one of the top three small firms in the nation in back to back years. You were the number two best employer in the state of Ohio. That's according to the Crain's Business Journal. You were recognized for having the best culture in the alliance in 2022. We've talked about some of the things you're doing right, obviously, which is creating the flexible work and giving people opportunities to move up into more advisory roles. Is there anything else that you are doing that you would highlight to other firm owners who want to create a better workplace?

Tim Petrey: [00:45:02] I think we're- The biggest thing that sets us apart And what people find to be different when they come here is that we genuinely care about our team's success. We care about people's individual progress in their careers and their success. So we work really hard to find. The right path for people rather than just saying, Hey, we need people in the audit department, let's just jam you there. We need people in the tax department. Let's jam you there. We've had a lot of nontraditional hires, a lot of people that weren't, you know, classically trained accountants or degreed accountants that came in. And we taught how to be bookkeepers or we taught how to do payroll. So we've taken a genuine interest in people's careers, I think is a is a huge part of it. And then our our leadership team has worked really hard to improve their communication skills. One of the things that I was frustrated about in our industry was that, you know, leaders in the public accounting space manage people poorly. You know, they manage people based on I need to see you at your desk from eight in the morning until 8:00 at night.

Tim Petrey: [00:46:08] They were not managing people based on the quality of their work. They weren't managing people based on all these other factors. So, you know, anybody that is a in a manager and above in our company has access to a communications coach and they work with that communications coach to write better emails, to give better feedback, to work closely to make sure that they're they're genuinely caring about the progress of the people that are on their team. There's plenty of other things that I think people love about coming here. You know, we're a pet friendly office. There's dogs that are in the office. We we provide people with a meal prep service during tax season. We say, hey, listen, if you've committed to the to the tax life, you know what you're getting into. You love it. You're a sick individual like myself. But at least what we're going to do is we're going to make sure that you're eating good food during tax season. We're not we're not going to order in pizzas and do all this other crap. Oh, no.

Blake Oliver: [00:47:03] Pizza parties. You're breaking the rule of we're breaking the.

Tim Petrey: [00:47:06] Old pizza party rule. Yeah, We have a company that delivers meal preps to our team once a week that they keep and use throughout the week. And they're, you know, protein, veggies, starch, very healthy, you know, meal for them to eat and stay fresh. You know, we do things like today at noon before everybody went and got lunch, we had a little we had 15 minutes where we all sat together and stretched. We had our wellness coordinator worked with everybody to to get good programs going for everybody and do things within the confines of what people's limitations are. So, I mean, the list goes on and on and on about the different things that we we do and have done to try to make it a great place for people to work. But I think at its core, it's just the fact that we we care about the people that we work with. We care about their success as much as ours. And it's not that mentality of it's a dog eat dog world and I've got to step on so-and-so to to move up in my career and I've got to throw this other person under the bus. It's we win together. And the people that don't like that environment and the people that want to win at the cost of their colleagues don't work here. And we fire bad employees and we fire people that we don't care if you're the most profitable employee in the world, if you're going out and you're just slamming new work and you're you're crushing all your statistics and this, that and the other, if you're a jerk, you're not going to stick around. I have a very strict rule about that. We had a somebody years back that was an outstanding accountant. But just talk to everybody like they were beneath him. And that person lasted two weeks with me. I'm a firm believer in you. Talk to the secretary the same way as you talk to the CEO, because guess what? I was the secretary, right?

Blake Oliver: [00:48:56] So you were the receptionist? Yeah.

Tim Petrey: [00:48:59] Yeah. Mean I want to treat people the way that I want to be treated. And I think that that simple concept is has gone really far for us. So like, to me, I'm, I'm excited about the accolades, right? I'm excited about the culture awards that we've won. But to me, it's really disappointing. And I think that that's the part that I've taken away from it, is that we're not doing anything crazy, man. I mean, we're just we're treating people the way that we want to be treated and we're caring about our team members. So that's the part that I kind of get a little bit frustrated by, is that, hey, we're we're number one in the country in and we're still figuring things out. We're still learning ourselves. We're not perfect. We still got a long ways to go, you know. But the fact that other firms haven't made that a huge priority to just treat people the way that you would want your child to be treated when they go to work, that's it. That's all we're asking for and that's all we're doing. It's not rocket.

Blake Oliver: [00:49:55] Science. Well, thanks for sharing your tips and your successes with us. Hopefully it will inspire other firm owners to do the same and make accounting a better place to live and work. Tim If people want to connect with you online, learn more about you. Where should they do that?

Tim Petrey: [00:50:13] You can find me on LinkedIn. I'm relatively active there. I tend to keep an eye at least on on. The communication of messages in there through the the slew of of sales, this, that and the other. We're in the process of of redoing our website. It should be done here in the next couple of weeks. That's w-w-w dot h D Davis cpas.pro and you can you can see our contact us page and check everybody out there. Cool.

Blake Oliver: [00:50:42] Well, you know, I got to say, I'm looking at your website right now. One of the things that sticks out to me is you've got pictures of people on your website, your team, right. And their families. And it's it's amazing to me that this is one of those basic things where show your humanity on your on your marketing and your website will really do a lot. So, Tim, thanks for your time today. Really appreciate having you on the show and hope to have you back soon.

Tim Petrey: [00:51:09] Thanks for having me, man. Love what you're doing. Keep killing it. It's it's contributing to something special in our industry. So big fan big supporter of the program and keep it up.

Blake Oliver: [00:51:22] Thanks for listening. I hope you enjoyed this episode and that you learned something new. And if you did, wouldn't it be nice to get some CPE credit for it? Well, I've got great news. My new app earmarked CPE offers free Naspa approved CPE credits for listening to podcasts, including this one. Visit Earmark Cpcomm To download the app, take a short quiz and get your CPE certificate. That's earmark cpcomm.