In this podcast discussion with Hugh Stedman of C&H Stedman in Hemel Hempstead, you'll hear Hugh talk about how discussing the future of his clients’ businesses with them, instead of looking at historical reports, has enabled him to offer strategy and then accountability meetings, which have transformed the way his clients see his firm. In Hugh's opinion, actually talking about the future is so where we need to be as a profession.
Hugh also shares his stories of helping clients with outsourcing, strategy, recruitment, and how a serious illness last year created a huge opportunity for his firm and allowed his team to step up in a way that has had a profound impact on the future of the firm.
"I've gone into loads of client meetings with a lot of worries and yet we always end up having good meetings.
"You don't know more about their business than they do, but you do know more about business than they do, because you've seen so many businesses, and you can take those ideas from one business and push them into another. And that's really powerful."
Connect with Hugh Stedman
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Resources and links from this episode
Set up and insist on the use of a checklist for the business critical tasks in your firm. Even if people know what they should be doing...
The Checklist Manifesto referenced by Hugh and Paul during their discussion.
TRANSCRIPT - unedited
[00:00:00] Paul Shrimpling: [00:00:00] Welcome to the humanized, the numbers podcast, series leaders, managers, and owners of ambitious accounting firms, sharing insights, successes, and issues that will challenge you and connect you and your firm to the ways and means of transforming your firms results.
[00:00:22] Hugh Stedman: [00:00:22] I mean, I've gone into loads of meetings with a lot of worries and always we have good meetings.
[00:00:27] We can't. Because you actually, you do know so much more, uh, you don't know more about their business than they do, but you know, more about business than they do because you've seen so many businesses and you can take those ideas from one business and push them into another. And that, I think that's really powerful.
[00:00:46] Paul Shrimpling: [00:00:46] Where's the value in an accountant, having a strategy conversation with a client and then accountability conversations with clients. Well, in this podcast discussion with Hugh Steadman of [00:01:00] CNH Steadman and handle stead, you'll hear Hugh describe his views on how, uh, talking the historical reports from annual accounts is so last year and actually talking about the future is so where we need to be out as a profession.
[00:01:15] Where you need to be as an accounting firm. Let's go to that discussion with you name.
[00:01:22] Hugh Stedman: [00:01:22] Hello, I'm Hugh Stedman, CNH Stedman. Uh, we're a partnership accountancy firm, uh, established 1st of October, 2001. So we're coming up for our 20th anniversary. Congratulations. Well done. Thank you. And then my background, I, um, Well, actually, I was going to be a brittler when I left,
[00:01:48] Paul Shrimpling: [00:01:48] I've got a brick layer as his son here, my youngest son's currently been a brick
[00:01:53] Hugh Stedman: [00:01:53] layer.
[00:01:53] I was going to walk out of school, having done GCCS. Yes, I am that young. And then I [00:02:00] decided I would do a levels. Right. And I really enjoyed math and statistics. I've always enjoyed numbers, but I really liked the statistics. And I didn't really see that as a career progression until my father who has been working in tax for many years, said to me, what are you trained as an accountant?
[00:02:17] Right. So I thought, okay, like the sound of that found a job with a friend who was an accountant. I worked for him for a few years. He had two businesses. One was more on the wholesaling side and I ran the accounts department and the other one was helping him in his accountancy practice or then moved on to one of his clients and ran his accountancy practice.
[00:02:39] And fro, sorry, not his accountancy practice. I ran his accounts department. And then from there. I started to, uh, set up my own business practice, um, as a sole trader. And then after a few years, things got difficult for my father and his job, and we joined together in [00:03:00] partnership and it went from there.
[00:03:02] Paul Shrimpling: [00:03:02] So that was 2001 when you kicked off that's right. Yup. And how, how many of the team now, then you, uh, there's nine of us, right? So nine people. And how many clients.
[00:03:14] Hugh Stedman: [00:03:14] About 120,
[00:03:16] Paul Shrimpling: [00:03:16] right? Okay. 120 clients
[00:03:19] Hugh Stedman: [00:03:19] and of massive degree of difference in sizes, like most firms.
[00:03:24] Paul Shrimpling: [00:03:24] Okay. Well go and explain to me what, what, what, how, how do you describe the, the difference between the largest client and the smallest client?
[00:03:30] The largest feeling this
[00:03:30] Hugh Stedman: [00:03:30] morning? Smallest car would just be somebody who we just do a annual tax return for. Um, just really to help them along. And we might only charge them a hundred pounds plus VAT just for keeping them on the straight and narrow. Yeah. Um, largest client we've taken over our accounts department have a, uh, good loyal client for many years who really grew during COVID.
[00:03:58] They had, they [00:04:00] do janitorial supplies and we would be charging them best part of 50 K
[00:04:05] Paul Shrimpling: [00:04:05] plus. Right. Brilliant. So that is a big cross section. So when you say 120 clients, has that 120 business clients or 120 clients, including the, um,
[00:04:15] Hugh Stedman: [00:04:15] it would include the little ones, but if, if it's a partnership, I would count that as one client, even if there'd be five or six partners.
[00:04:22] Yeah, yeah, yeah. Cool.
[00:04:23] Paul Shrimpling: [00:04:23] And, um, what, what, uh, approximately here, what's the total fees total on your fees?
[00:04:29] Hugh Stedman: [00:04:29] We, we hovered between four and 500,000. Right for years. And recently we've made quite a push 2020. We didn't push it forward 2021. We've just crossed the half a million Mark and climbing on target for this year.
[00:04:44] 600,000. Our three-year target is to hit a million pounds.
[00:04:49] Paul Shrimpling: [00:04:49] So in three years from now. So in 2024, yeah. Yeah. 20, 24 million pounds. That's what we're hoping for. Yeah. All right. Okay. So why, why, why are you aiming for that level of fees? What's [00:05:00] what's what's the driver.
[00:05:01] Hugh Stedman: [00:05:01] Just because it's a nice round figure.
[00:05:03] All right. So, and always, always wanted to have a million pound practice when you're under half a million, you think, is this really possible, but it's a dream and now things are starting to happening. So that's really encouraging. Yeah. Yeah. That's
[00:05:16] Paul Shrimpling: [00:05:16] it, it almost seems like a short hop. Doesn't it? That long hot to 600 K short hop from 600 to a million versa.
[00:05:22] Hugh Stedman: [00:05:22] Brilliant. Brilliant. Okay. Along with that, Paul. We've expanded our offering such that we found opportunities that we hadn't really appreciated were out there before, particularly in relation to, um, re completely running a firm's accounts department. Um, if they can drop one or two people out of their business.
[00:05:41] Yeah. Then your replacing weight is in what you're doing. They're prepared to pay significant amount of money for it.
[00:05:46] Paul Shrimpling: [00:05:46] Yeah. Yeah, yeah. Yeah. So, so tell me about how that came about then here the first time. It's always like when you do it the first time, you're all. Oh, right. Yeah. Maybe we can, and then you do it a second time and then all of a sudden you go, actually, there's a real business model here.
[00:05:58] So tell me about how that came [00:06:00] about. First
[00:06:00] Hugh Stedman: [00:06:00] time around, um, we had a chat with some friends who are business advisors. And just went over what we were doing. And they said, Oh, well we know some, like an accountant who does credit control, right. That we thought we'd never thought doing credit control, but I used to do credit control.
[00:06:14] I understand it, of course. And so we start to talk about it and we said, well, hang on. We know at least a couple of our clients where they seem to be stuck with somebody in their accounts department who they've outgrown. They're not good enough to grow, but they haven't really got a position where they could get rid of them.
[00:06:33] Because they would need to replace them. Yeah. So if they outsource the accounts department, they can then say the job's no longer there, it's a bit cynical, but that's the way to move it forward and just to help them help the client progress.
[00:06:47] Paul Shrimpling: [00:06:47] Yeah. So if a client's got an issue and a challenge and you can actually.
[00:06:50] Talk to them around a solution, then you're helping the client. Okay. Now there may be a human cost to that in terms of jobs, but actually in the round there isn't because you're [00:07:00] hiring people or you're working with people and, and, and, and, and, and they maybe move one or two people into a different role in the business that might benefit the business.
[00:07:08] Cause I've, I've, I've heard that happen here where, you know, instead of this being seen as a negative, it can be seen as a positive and it's worked for me. You know, my accountant approached us and said, Paul, do you really want Kate doing all your bookkeeping? Cause she's spending, you know, one and a half days a week, you know, doing that when she could be free to do other things.
[00:07:27] And it's like, well, actually what she wants to learn, you know, revisit learning the piano again and they go, right, well, what, what could, what, what, how do we do this and what will it cost? And then, you know, we ended up paying instead of paying 5000.8 and a half grand a year. But Kate's freed up from, uh, from work that she doesn't really want to do.
[00:07:42] And is playing the piano again. Brilliant. That's it? It's a it's, it's, it's a positive flip, isn't it? As opposed to actually what we're going to do is put somebody. Yeah.
[00:07:51] Hugh Stedman: [00:07:51] And quite honestly, if you're, if you're in a job and you're struggling with that job and you're getting pulled up all the time and, you know, under pressure to.
[00:07:59] You know, [00:08:00] jobs do get beyond people after a while. Some people are much more comfortable in a small business than a larger business.
[00:08:04] Paul Shrimpling: [00:08:04] Yes. Yes. And so there's a humanity in the change. It's not just , that's benefiting everyone. Albeit maybe one or two people might not see it in that moment when they end up doing something that they've.
[00:08:15] Feel better out our bets, right? Yeah,
[00:08:18] Hugh Stedman: [00:08:18] it is actually, you can meet a space where I feel a lot more comfortable as well, because although I am an accountant and I can do the accounts and I can do the tax to a degree, my father tends to do more of it than I do. Right. Um, the bookkeeping, the credit control, that sort of thing.
[00:08:33] I would happily oversee a hundred people doing that, but I wouldn't happily oversee a hundred people doing accounts. Yes.
[00:08:41] Paul Shrimpling: [00:08:41] Brilliant. Brilliant. So, um, how has that, that family business piece then? How does that, how does it, how does that work for you and your dad?
[00:08:51] Hugh Stedman: [00:08:51] Yeah, it seems to work very well. I think that because we started the business up together rather than in many family businesses that he started up and I came [00:09:00] into it.
[00:09:00] Um, we've always worked very well together. He's always been very generous with me and always, let me take the lion's share of the profit, which is very kind of him.
[00:09:08] Paul Shrimpling: [00:09:08] Right. You'll have to introduce it to me. Cause my dad didn't when we set up in business, they weren't like that at all.
[00:09:15] Hugh Stedman: [00:09:15] And now I've got my own challenge because I've brought.
[00:09:17] My eldest son into the business, um, as a partner, and I've also got two of my daughters working for me as well. So we're
[00:09:25] Paul Shrimpling: [00:09:25] very much right. Girl, family business. So, um, uh,
[00:09:30] Hugh Stedman: [00:09:30] interestingly poll, our marketers of marketing people are doing designing our new website. I've really seized on that. The fact that we've, we're a family business and a lot of our clients are also family businesses and they're bringing that in to the model.
[00:09:45] Paul Shrimpling: [00:09:45] Yeah, yeah, yeah. Yeah. Fantastic. Well, well done them. Well, they'll now cause it's something, um, you know, it's worthy of notice to use one of our, our, our core values is if you're doing things worthy of notice, it will, uh, it, it will resonate. It will mean something to your clients. Uh, which is fantastic. So, [00:10:00] so you're, uh, 19 members, but more than half of them, it sounds the family do the other feeler.
[00:10:06] Hugh Stedman: [00:10:06] It wasn't 19 pole. It was nine,
[00:10:08] Paul Shrimpling: [00:10:08] nine, nine, nine, but half of them are more than half of the family. Do the others feel like outsiders? Cause that's a, that's a interesting, uh, possible,
[00:10:18] Hugh Stedman: [00:10:18] well, I think they would do if we treated them as outsiders, but we just embrace them and they're all part of the family. Oh,
[00:10:24] Paul Shrimpling: [00:10:24] right.
[00:10:26] So it's, it's often easy to, um, say that and chuckle about that, but how, how, how, how do you make that work though? You know, what is it you're doing so that they are genuinely included inclusive? It's an inclusive environment.
[00:10:40] Hugh Stedman: [00:10:40] Yeah, I think that just the way that we reward them and we look after them, um, it very interesting.
[00:10:46] We've taken on a, um, Polish guy who, uh, worked for a firm in Harrow before he came here. And after I think four weeks, we said to him, how are you getting on? And [00:11:00] he said, well, he said, um, what I don't understand is why nobody gets angry, right? Oh, really? He said, if you do, you don't show it. Right. So I thought, Oh goodness, what on earth has he come from?
[00:11:13] Paul Shrimpling: [00:11:13] Yeah, yeah, yeah, yeah. Yeah. Well, different cultures, different working practices, different standards as well. Isn't there, you know, different
[00:11:19] Hugh Stedman: [00:11:19] firms, but yeah, I, I mean, I would like them to be cared for and looked after and not to feel that they're outside of the situation because they're not. Part of the family.
[00:11:30] We're really pleased to have others working for us because of course, you know, unlimited in family, a limited in family members, but not with none of them, the
[00:11:39] Paul Shrimpling: [00:11:39] rest of the employee, you put the possible people you could employ. Yeah. Brilliant. And I guess, you know, a family business will appeal to certain types of people wanting to come in the firm and not to others, I guess.
[00:11:49] So how has it impacted your ability to recruit?
[00:11:54] Hugh Stedman: [00:11:54] Um, we've recruited a couple of our. Um, [00:12:00] Dios members relatively recently, and both of them, we found pretty easy to recruit. Right. I think that that's partly because of COVID and people, some people losing their jobs. Right. Um, but yeah, we've got two really good new team members and we're very, very pleased.
[00:12:18] Paul Shrimpling: [00:12:18] Right. So it sounds as though, um, 2020 has been an interesting year for, in terms of you've been able to flip from that sort of 500 K to actually we have 500, 500 K 600 K business. You've hired extra people, presumably because of the growth and the need to expand your capacity. Um, Uh, so what was going on before then?
[00:12:41] Uh, is there anything else that's kicked off in 2020 that we can add into the mix here? Or is the, um, is that a good reference point for how well the businesses?
[00:12:50] Hugh Stedman: [00:12:50] Yeah, I think one of the biggest things that we did is we moved away from, um, work in progress.
[00:12:57] Paul Shrimpling: [00:12:57] What do you mean exactly? What do you mean exactly?
[00:13:01] [00:13:00] Hugh Stedman: [00:13:01] Recording all of our time spent on clients and billing, according to that, right. We made a conscientious move to monthly billing. And, um, we did for a while actually stop recording our time all together, but we have moved back to that. Yeah. Um, just for internal, uh, assessment and purposes. Right. But in the mind, the 2020 was a struggle.
[00:13:27] Because we had some clients who came to us and said, we're having things really difficult. Could you reduce your fees for six months? Uh, which we generally did, um, just, just to help them along. And, but also because we'd stopped this work in progress side of things, and there was a. If you like a, a natural decrease, because generally speaking an accountant, overvalues their work in progress.
[00:13:52] And those write-offs now we run our business. We still have a little bit of work in progress. We haven't been able to move away from it entirely, but, but we were [00:14:00] generally running it under 10,000. Whereas at one point we're about 150,000. So that's a massive, massive difference. Right. And I'd recommend it to any accountant.
[00:14:10] Paul Shrimpling: [00:14:10] Um, Y w w where's the, where's the upside benefit of doing it this way, rather than the other
[00:14:14] Hugh Stedman: [00:14:14] way? I think the biggest upside benefit is the time it takes to analyze your work in progress and the negativity that comes in when you spend a lot of time with one client, right? What are the biggest mistakes that we use to make?
[00:14:27] Was we take on a new client. We would take a long time getting their information where we needed it, build them a lot of money. And within a year or two, they got disgruntled and moved away. Right. Okay. If we do it now, we agree the fear out front. We probably lose money on them in the first year, but we don't lose the client.
[00:14:46] We've got a long-term relationship, which, um, you know, you make the money as the years go along.
[00:14:52] Paul Shrimpling: [00:14:52] Yeah, yeah, yeah. Uh, so the, the negative negativity on one client around whip is from the client's perspective [00:15:00] in that, you know, the clock just keeps ticking. You charge
[00:15:03] Hugh Stedman: [00:15:03] a fortune, but not just that, the other thing is that you're in a situation where you don't charge them and you've got a massive work in progress.
[00:15:11] Did you suddenly have to write 10,000 pounds off or something? It kind of doesn't strengthen that relationship if you don't know that. Yeah. There's the pain isn't there in the same way. And you just do what you do best, which is look after the client.
[00:15:23] Paul Shrimpling: [00:15:23] Yes. Yeah. So actually, whether you look at it from the client's perspective or yours, and possibly even your team's perspective, it's creating those negative emotions, which result in actually the relationship not working as well as the other would done, which will also contribute to the client leaving because you're feeling disgruntled that you're not getting paid for the work,
[00:15:39] Hugh Stedman: [00:15:39] right?
[00:15:40] Yeah. The phone rings and it's the client again. Yeah. Yeah. And you know that we're already well over from what you're billing them and it can, it will show it your voice. Yeah. Yeah,
[00:15:49] Paul Shrimpling: [00:15:49] yeah, yeah. And, and, and, and the delays that you might then fact, you know, you might promise to do it by a certain date and you don't because it's like, well, they've got these other clients who we are making money on that I need to do it precisely.
[00:15:59] They, they, [00:16:00] they get, they get the second fiddle rather than the first, uh, first level of client service. Um, but ultimately from what you've described it, though, who is you still losing money the first year round with some clients. Yeah, but you don't feel as bad. How does that work? That it still doesn't sound right.
[00:16:20] Hugh Stedman: [00:16:20] Does it, I mean, I look at a client relationship as a long-term relationship. So, you know, if it means we've got to spend extra time and investment now in getting things right for them in the first year. And if you're not, yeah, you could really strengthen the relationship and they can identify the fact that you have moved things forward.
[00:16:38] Um, for them they're going to stay with you. You're going to make money with them in the future years. That, to me, that's brilliant.
[00:16:44] Paul Shrimpling: [00:16:44] Yeah. Yeah. Yeah. So even if you could get to a place where it sort of breakeven year one, and then margin after that. But if there's mild losses, if you've got them for seven, 10 years, it all stacks up in the, in the long run, that's it?
[00:16:56] Yeah. Yeah. Yeah. Cool. It's interesting. You there's a lot of firms that [00:17:00] we've come across in that we work with, who actually agree at different year, one fee to year two, in order to acknowledge all the learning that has to take place. Now they're often really uncomfortable with going to a client and saying, look, we want to charge you this amount, as opposed to what they really want to do is charge a lower amount that they're more comfortable with.
[00:17:20] But from the client's perspective, they they're, they're looking at you for the first time. They don't know what the first price is until you come up with it. And it sets that internal perception of price that, um, That they are challenged internally that the clients less challenged.
[00:17:35] Hugh Stedman: [00:17:35] Um, yeah. So sometimes in a situation where we know there's a lot of extra things to do, initially we would charge a one-off initial fee and then it goes to the monthly agreed fee.
[00:17:47] Yes. And because the customer or client is generally ready to change at that point that they do that quite happily.
[00:17:54] Paul Shrimpling: [00:17:54] Yeah. Yeah. They'll they eventually suck up and realize that that's got to be done in order to get the thing going in the right way. [00:18:00] Yeah. Um, Brilliant. So a big shift from 2019 to 2020 from whip style bill what's on the clock, or write it off to one where we've got, um, what, uh, monthly agreements with every client
[00:18:12] Hugh Stedman: [00:18:12] now.
[00:18:13] Uh, it wouldn't be every club, but most clients. Yeah. So we set ourselves a challenge on monthly billing. Right. Um, when we would, it was about 16,000 a month. Yeah. And now we've got it to over 40,000 a month.
[00:18:28] Paul Shrimpling: [00:18:28] So how far back do we go when it was on 16 a month?
[00:18:31] Hugh Stedman: [00:18:31] I think that was the beginning of 2019. So we went a year when we were concentrating on it, then made the decision to stop the work in progress billing, and that it's kind of continued to climb up.
[00:18:42] And I think it's made us a much more valuable business as well because people love monthly fees.
[00:18:48] Paul Shrimpling: [00:18:48] Yes. So, so I just want to talk that one back. So people, you mean your clients love. Monthly fees. They don't want an annual thing. Yeah.
[00:18:58] Hugh Stedman: [00:18:58] Clients love it. [00:19:00] Right. And so would an investor.
[00:19:02] Paul Shrimpling: [00:19:02] And so when an investor, so from the capital value of the business perspective, they would, if they were, if you were selling or you wanted to part sell.
[00:19:08] Yeah. Um, so I, I agree wholeheartedly
[00:19:11] Hugh Stedman: [00:19:11] with that. I swaddled things I always try and find for my clients as well, is the something where you could introduce monthly billing in some way, shape or form.
[00:19:19] Paul Shrimpling: [00:19:19] Yeah. The monthly payment plan, whether it be direct debit, GoCardless or whatever, then there's a there's ways and means.
[00:19:25] Um, but Kevin just pursue the clients. Love it. What resistance have you had from clients to shift from an annual whip what's on the clock type approach to monthly billing? What sort of resistance have you
[00:19:37] Hugh Stedman: [00:19:37] met? We had it, we sold it. Well, I think we just said to them look the way we're doing it at the moment.
[00:19:43] If we have a bad day, you pay for it, right. Yeah. Interesting. But now if we have a bad day, we pay for it. Right. But the other thing it does is it forces you to look for efficiencies because the more efficient you are, the better you get paid. If you're doing [00:20:00] it on a monthly billing, whereas if you're doing it on a per hour, there's no re nothing to stop.
[00:20:05] You stretching the job out.
[00:20:07] Paul Shrimpling: [00:20:07] Yes. Uh, and, and how connected are your team to that commercial reality? That's different when you're looking at web. Um, so my, my argument here is that with, um, you know, time-based billing. Um, the, the team can see that if the, if the clock goes up, they're going to build more, the reality is the partner or the client manager writes lots off.
[00:20:28] Yeah. Um, but the team members goes, Oh, we're just going to make more money because I'm spending more time on it. And actually I need to get it. Absolutely. Right. So I'm going to spend more time on it. And therefore the write-offs and the lack of profit or the loss on those jobs goes up compared with now, let's agree.
[00:20:41] A monthly fee and your point about, well, if we've gone a monthly fee, we're going to actively seek out the efficiencies. Um, you would, but I'm just wondering what's the impact on your team? Do they see it that way as well? Or how are they responding?
[00:20:54] Hugh Stedman: [00:20:54] Yeah, that's a good question. Um, it was my son who really encouraged me to [00:21:00] move away from whip.
[00:21:02] Right. Um, so he was on board right from the start and he's also tech savvy. So he was looking at all of these efficient ways of increasing and helping efficiency. Yes. Um, yeah. As a breed, if I'm allowed to say that, uh, accountants, accountants tend to be quite pernickety and not very commercially minded.
[00:21:27] And so they will take a long time over a job. I think we've got one or two members in the team who just encourage them to speed up and find alternative ways. And that really helps. One thing we do is we have a checklist for jobs. And we have a time column to show how long it took us to do each part of the job last time and how long it takes this time.
[00:21:51] So all the time we're challenging, the time that we take to do a job. And if it takes a lot longer than usual, we'll say, well, why was that? What happened this month? Or this quarter? That [00:22:00] was different to last time? Yes.
[00:22:03] Paul Shrimpling: [00:22:03] Very good. Very good. So cool. Couple of interesting points there. One is the checklist, the jobs.
[00:22:08] So w when you say checklist for jobs, is, was that within your workflow planning tool, or is it a physical manual check? How do you make that work?
[00:22:16] Hugh Stedman: [00:22:16] Uh, we've got both. We have got it within, uh, our, um, CRM system, which is carbon. Right. Um, which works well, but we have also got paper copies for those of us who are not.
[00:22:27] So it savvy.
[00:22:31] Paul Shrimpling: [00:22:31] Very good. I won't dive into that one day. You, right. Um, so there's, there, there is an argument that, um, checklists are an inhuman way. To work with intelligent, motivated people. When we actually, they, they know accounts, they should be able to make it work. What's your view on the humanity versus inhumanity of using and sticking to checklist?
[00:22:54] Hugh Stedman: [00:22:54] Uh, well, I'll go to the checklist manifesto book, which, I [00:23:00] mean, if doctors need it and it helped them improve than accountants need it.
[00:23:05] Paul Shrimpling: [00:23:05] And, and I would argue if airline pilots need it, then accountants can also benefit from it. You know, we, all the safest form of transport on the planet is actually an airplane, which is many, many tons in the sky, which I can never quite get my head around.
[00:23:22] But the, one of the reasons it's the safest is because of the preflight. Pre fright, preflight checklist that is running every plane across the
[00:23:33] Hugh Stedman: [00:23:33] planet. Yeah, I think a lot of time is wasted. Just thinking about what you do next and if you've got a checklist or even a to-do list, you move on, um, seamlessly.
[00:23:44] Paul Shrimpling: [00:23:44] Yeah. Yeah. And I, um, I it's Atul Gawande, isn't it? The checklist manifesto. It's a simply outstanding piece. We've got a, uh, added a four page business breakthrough report, which just captures, captures the essence of that. So, um, if you're listening to this and you want to avail yourself of that four page, you will put it [00:24:00] in the, uh, in the show notes for the podcast and I'll forward you a copy yet here.
[00:24:03] You might be interested in that. Yeah, capturing that. It's it's I love it. I loved it. And I that's why I asked the question is, is a checklist more or less human and, and what, what was brilliant for me in that was how, um, uh, who that Atul Glenda described, how there was a natural human resistance to checklists.
[00:24:22] Yeah. But once they get into the rhythm and the habit of using them, they see that there's a freedom attached to that, and you can apply your prefrontal cortex to the smart stuff within. The pathway, the checklist is a pathway to what you do next, as you quite rightly say, actually it was a marvelous piece of insight.
[00:24:41] Hugh Stedman: [00:24:41] Yeah, he's really good. But along with that to add the time taken means that you can kind of challenge it and look for your efficiencies at the same time.
[00:24:50] Paul Shrimpling: [00:24:50] Yeah. It's a good waste management piece in terms of creating a, an opportunity to have conversations with the team. And if they're contributing to the improvement of the process and therefore the speed of the job.
[00:25:00] [00:25:00] They're going to feel as though they've contributed more than just doing the work aren't they?
[00:25:04] Hugh Stedman: [00:25:04] Yeah, definitely. Yeah. You kind of, they make sure they tell you if they do it quicker than last time.
[00:25:08] Paul Shrimpling: [00:25:08] Uh, absolutely. Uh, so, so there's that almost that natural Kaizen, you know, continuous improvement piece coming to play, which is actually, I believe is more human than them just coming in and doing a job and going over and coming in and doing a job and going home.
[00:25:21] Yeah. Um, brilliant. Brilliant. Um, so, and any other big challenges or shifts in, in recent times that, um, signpost that, you know, things we can talk about in this humanized, the numbers space, you know, getting the best out of your team, getting the best out of the numbers?
[00:25:40] Hugh Stedman: [00:25:40] Well, um, I'll try to keep smiling on this one, Paul, but all right.
[00:25:47] End of November, I caught COVID. Right. And, um, I was quite poorly with it for a week. Right. And then beginning of December, it went to my chest and I had COVID pneumonia and I was in hospital, [00:26:00] um, for eight days, seven of them on oxygen. Right. And, um, yeah, I didn't know whether my last day is a scary, scary.
[00:26:09] It was very scary. But what was amazing was that my son really stepped up and. He, I mean, it's been said you don't know how tall a man isn't to, to stretch him while he's already six foot five. All right, boy, he stepped up. Right. So the degree that we brought them into the partnership now, because he made himself invaluable to us, but it was a real lesson, but to me, because I'm quite sure if I hadn't gone through that experience negative as it was, there's a massive positive in the, I rely on him so much more now and realize that he's got so much more potential than I ever realized.
[00:26:48] Paul Shrimpling: [00:26:48] That's that's this sounds weird. I'm sorry. But it sounds like a brilliant story in terms of, um, that, you know, the expectations we set on our people, even if it is our son within the business, our family, [00:27:00] and now I work with my son and my business too. So I've got some real sympathy for that. And, um, the, I w I w I worked with a firm up in the, uh, , uh, Chuck called Nigel Bennett, who some people listen to this low Nigel from holidays, and I was wanting to me to be Nigel.
[00:27:14] And he said, isn't it interesting, Paul, how we, um, our people perform down to our expectations of them. And I, that was a brilliant line, but I know I just, ah, what have you just said that I don't need to go to, to say it again. And it's like, well, we wouldn't do that with our kids. It's what we would expect the best from our kids.
[00:27:31] But what you're saying is actually maybe we could expect even more from our kids. Maybe we can expect even more from every one of our employees and then create a working environment that enables them to achieve the best of each and every one of them. Um, and if it takes something like your, your, your illness in, in, in the winter to, to actually flip that switch, you go right.
[00:27:52] Doesn't it change the way you run your appraisals and you look at every team member. I mean, I'm curious to see whether it's changed any processes as a consequence of that [00:28:00] experience here.
[00:28:01] Hugh Stedman: [00:28:01] Yeah. I think he's just given us the confidence to move forward in it in a way that we were, I didn't have before.
[00:28:10] And it's also given my father the confidence to move more towards a retired role rather than a proactive
[00:28:18] Paul Shrimpling: [00:28:18] role as well. Um, cause you got that and he must feel brilliant about, you know, he's his son and his, his grandson, but actually, um, making this thing work. That must be, yeah, fantastic.
[00:28:29] Hugh Stedman: [00:28:29] He's starting to, um, wind down in the work that he does in the business.
[00:28:34] By five years ago, there wouldn't have been any thought of it at all, but now he's doing it and he's doing it with confidence,
[00:28:40] Paul Shrimpling: [00:28:40] right? And proactively the sound the way you're talking about it, which is fantastic. There's um, I got an experience of, um, like one of my clients who had a, a serious health issue a year and a half ago, uh, which forced him out of the business unexpectedly, but all credit to him, he was grooming, [00:29:00] uh, you know, one, one person in particular for the future of the firm, um, and his baring out the business happened.
[00:29:07] Um, and he's, he's not going back in just because his illness prevents it. Um, uh, but we were on earth, three year development program with the person to, you know, build up the skill and knowledge to take over the firm. And we were about 12 months in, so it was two years, way too early. Um, but him, like your son, uh, stepped up to the plate and has done an amazing job.
[00:29:29] Uh, despite all the challenges associated with someone in a, you know, 2 million plus turnover firm who was instrumental in everything that went on in that firm no longer being there. Um, and so I just, that, um, that insight from Nitel, isn't it interesting how we have our people perform downtown, our expectations of the, and actually if we can just flip our expectations, maybe just maybe we completely change our firm.
[00:29:53] Hugh Stedman: [00:29:53] Yeah. And another thing, which is interesting, Paul, which I didn't know before is that [00:30:00] I had put my son on a leadership course. Beginning of the year, which which lasted for about 12 months. And at the beginning of the course, you had to write down what his aspirations were and what you wanted to get out of the course.
[00:30:12] Right. What else, what other things he wrote down was I would like to run the practice for two weeks, with little or no input from my father.
[00:30:22] Paul Shrimpling: [00:30:22] So it's his fault.
[00:30:27] Wow. So
[00:30:28] Hugh Stedman: [00:30:28] he got his goal within 12 bucks. Yeah. It worked out quite the way I expect now. I'm sure he wouldn't have
[00:30:33] Paul Shrimpling: [00:30:33] wanted it
[00:30:33] Hugh Stedman: [00:30:33] happen that way forced into it, but he did a great job. So yeah, it wasn't very interesting experience as far as
[00:30:39] Paul Shrimpling: [00:30:39] that's concerned. Marvelous. So com can we touch on that? One of the subject then who, before we head towards the end of this discussion?
[00:30:47] Um, one of my arguments and it's not just mine, it's the, you know, the professional is talking about this. Every firm's talking about this in some way, shape or form that there's, this there's a trend, which is from compliance to wards advisory work. [00:31:00] Um, and I don't think ever will get to a place where there's no compliance.
[00:31:02] There will always be some. And, you know, the, the experience of Australian firms is as they go do more and more advisory work, they actually end up with more and more compliance work, which is interesting. In fact, they end up with more compliance work than the firms who aren't advisory firms, which I think is even more interesting.
[00:31:16] Um, what, what, what what's been your, and your firm's experience of this sort of compliance to advisor piece and, and, um, I guess what I want to do is dive into a little bit more detail about these, these businesses that you've been the virtual accounts department for you. So what, what. W what more has happened.
[00:31:32] And what more do you see happening in that space for you and your firm?
[00:31:36] Hugh Stedman: [00:31:36] Well, we set ourselves up as a very much a firm that offered management accounts as well as annual accounts. And we've done that for about 10 years now. Right? Most of our business cards would have either monthly or quarterly management accounts.
[00:31:52] Yeah. So that fits in well with the pattern of monthly billing. Cause we're doing things with them on a regular basis. Of course. [00:32:00] Um, so we very much see that, although it is still to a degree historic. Yeah. Um, you can advise someone in a much better if you've got up to date financials on them. Um, I agree.
[00:32:13] I hate the history teacher. So God of accounting, um, much prefer to be the visionary and. Look ahead and actually show them by the numbers, how amazingly different things can be with a minimal amount of tweaks. Yeah. Um, on the, specifically on the accounts department side, um, yeah, it's a big undertaking to take on an accounts department.
[00:32:39] It's, it's quite a different space if you like. So we couldn't take on too many all at once. Um, but we kind of take it on. Make it more efficient. And then we look for another one. That's the way we've, we've tended to do it. That's brilliant. And we'd take on, um, we have the [00:33:00] phone number for the accounts department dedicated to us, and we answer in the name of who's calling, which can be done quite easily with it these days.
[00:33:08] Um, we take on the email address for the accounts department and, um, just work with them in relation to taking it one step further. One thing I've started doing is that. One thing I've realized is that one of the major, major things that's missing in many, many businesses is accountability. Particularly family businesses.
[00:33:28] People tend to let each other off if it's family. Yes. So I've set up for a couple of businesses now, an accountability package, um, where I'm working with them on a weekly basis and they have to, they set their own targets. And then once a week on a Friday, Uh, my WhatsApp starts pinging away and it will be one of the two firms sending me their numbers for the last week and how they did.
[00:33:55] And that is proving really, really successful. And you're right. [00:34:00] They're in constant touch with the. Clot. They also put on there, if they have a good win or something and you can kind of give them a thumbs up, well, well done or whatever it's brilliant, or that is really human.
[00:34:13] Paul Shrimpling: [00:34:13] Well, it is it's, you know, and essentially you've got a brilliant piece of communication, which is weekly.
[00:34:18] I mean, you know, how many accounting firms at the level you're at or having a weekly interaction with our biggest, best clients. And the bit won't be too many. Um, and I'll be it's seconds. It still means something to the client and you've got it focused on accountability. So you must be having some bigger discussions with them to set those expectations.
[00:34:38] If you will, of the weeks that are coming, how
[00:34:40] Hugh Stedman: [00:34:40] do you do it? Yeah. Well, we actually sit down and have an accountability session or maybe it may be a strategic session and they accountability comes in as part of it. Yes, but are very focused on letting them set their own goals. Yeah. The worst thing you can do is to suggest a goal to them, because then it's not their own and it feels forced on them, [00:35:00] but if they set their own goal, Then they've only blamed themselves
[00:35:04] Paul Shrimpling: [00:35:04] indeed.
[00:35:05] Well, they're not blaming you. Are they got them don't they don't they grow to dislike you because you're the accountability merchant does that, does that not like alien,
[00:35:12] Hugh Stedman: [00:35:12] probably hasn't been going on long enough yet to do that. Right. But the other thing, of course, there's lots of emojis on WhatsApp to do smiley faces and thumbs up and collapsed and stuff.
[00:35:22] Paul Shrimpling: [00:35:22] Yeah, yeah, yeah, yeah. Just to soften it, which again, you know, there's a humanity attached to that which didn't exist. And it doesn't, I guess it's creeping into emails now, but, um, Uh, brilliant. So, um, so you've got two clients in that space now. What's what, what are the plans? So you've got this journey to a million pounds in the next three years by 2024.
[00:35:40] How much of that is attached to this virtual financial department type role?
[00:35:46] Hugh Stedman: [00:35:46] Um, yeah, it's something I'd like to introduce most, it very much depends on the firm because some firms have got a good accountability within the firm. They're much more structured than others, [00:36:00] but he took in the client firms, the client firms.
[00:36:02] Yeah. On a client basis. We've offered it to some they've said, no, we don't really need that. Some have kind of jumped on it and seized it with both hands and just said, that's just what we need because we do let each other off. So instead of having to report to dad, you report to the accountant.
[00:36:21] Paul Shrimpling: [00:36:21] Yes. It, it does change the dynamic.
[00:36:23] Doesn't it? It's putting that third, third
[00:36:24] Hugh Stedman: [00:36:24] person in the room. Yeah. I mean, I had had a meeting with a client recently when we discussed it and he had his two sons in the room with him and unexpectedly, we decided to bring them in as partners that wasn't the aim of the meeting, but that's the way it evolved the younger one who I never really thought had.
[00:36:43] March ability has been hitting the phone as a result. He committed to 25 calls a week last week, he did a hundred and he's absolutely motoring. And they're pulling in new customers. Absolutely. Yeah, yeah, yeah. About it. Is the, I get credited with [00:37:00] that,
[00:37:01] Paul Shrimpling: [00:37:01] even though you haven't done anything. No, no, no, no, no, no.
[00:37:05] I know, but it's interesting. Isn't it? That, you know, uh, uh, Lots of accountants would feel uncomfortable putting themselves in that place where they're having a, a difficult conflict based conversation around setting goals and then the accountability. Um, so you you've made that leap. Whew. Ha ha. How did you break down this?
[00:37:27] Or this is, this could be a little bit uncomfortable or did it just feel like falling off a log for you?
[00:37:32] Hugh Stedman: [00:37:32] Yeah. Um, if I had my choice, I would sit down and have meetings with clients all the time and not do any work.
[00:37:40] Paul Shrimpling: [00:37:40] Well, I would argue that the real work. Yeah, I was going to say, I would argue that the real work is the relationship where it costs therein lies the real capital value of your business on the grounds that it's their ability and willingness to stay with you, which is mostly attached to the way they feel because of the meetings you have with them.
[00:37:53] Not because of the accounts work you do. Yeah.
[00:37:55] Hugh Stedman: [00:37:55] I mean, I've gone into loads of meetings with a lot of warriors and always, we have [00:38:00] good meetings with clients because you actually, you do know so much more, you don't know more about their business than they do. But you know, more about business than they do, because you've seen so many businesses and you can take those ideas from one business and push them into another.
[00:38:17] And that, I think that's really powerful.
[00:38:20] Paul Shrimpling: [00:38:20] Um, I agree wholeheartedly with you. Um, it's the, uh, there's an ambiguity, isn't there going into meetings. You don't really know what to expect. Yeah. In any meeting, uh, but you can ask a few prepared questions. You know, you have your checklist called an agenda and you can give some structure and form to the meeting, but ultimately, like you say, the client knows their business about the new day.
[00:38:44] Well, if you ask one or two dumb questions, you don't have to be savvy questions, just one or two dumb questions and all of a sudden you get great value out of
[00:38:51] Hugh Stedman: [00:38:51] the meal. Yeah. Yeah. And that's the interesting thing is so often they've got the answers. But all you need to do is to steer them in that direction.
[00:38:59] Paul Shrimpling: [00:38:59] Absolutely. [00:39:00] Uh, I was with, uh, a fast-growing from yesterday, uh, who, um, uh, they've gone from 5 million to 7.6 million in the last two years. And, um, and, and they were talking about their outside advisor who holds them to account like you do with your clients and they know nothing. About their business and accountancy and ask the dumbest of questions, which then creates the most valuable of conversations around which then they improve their business.
[00:39:29] And it's, um, you know, w we don't have to be the expert. We just need to be there with an ambition to deal with the ambiguity, to ask a few questions and engage in a conversation which results in the client making a decision, because it's their business. Have I got that right? Yeah. Yeah. Um, well, you would say that wouldn't you, because we're heading towards the end of the podcast, but it's very kind of you, it's very kind of, you hear what's.
[00:39:54] Um, what I like to ask is, uh, we spent the last, you know, 40, 50 [00:40:00] minutes talking about you and your business of all the things that we've talked about. What, what stood out that, uh, as, as it, as a gentle reminder, in terms of the, the, the, the journey you've been on, what, what aspects of our conversation do you think has been of most value to the firm?
[00:40:17] Hugh Stedman: [00:40:17] Um,
[00:40:22] I think actually Paul is having a vision or really, I mean, we stagnated for all those years. Um, but once we started talking about becoming a million pound practice, And putting things in place in relation to that and starting to seriously consider how we were going to get and spend a bit of time on the business rather than in it, that has made all the difference.
[00:40:47] And I send a weekly update to the team with it clearly stated on the top, what our vision is and what our target for this year is and where we're panning. And I'll get buy in from the team [00:41:00] on that as well. They often come back and say, brilliant, glad to see the ticket's still moving up, you know?
[00:41:05] Paul Shrimpling: [00:41:05] Yeah.
[00:41:06] Brilliant. Well, great that you put in, you've got a weekly reminder going into the team. Yeah. Around that vision. So 52 opportunities a year to remind everyone this is where the journey we're on, because I think it's one thing to have the vision and go through the process of setting it up. It's a completely different thing to prompt and remind everybody every week, this is where we're going.
[00:41:25] This is what it will look like. Eventually. Um, and that
[00:41:29] Hugh Stedman: [00:41:29] helps them to feel really included in what's happening as well.
[00:41:32] Paul Shrimpling: [00:41:32] And then they make a suggestion and okay, you knock it back. Cause it's not right. And you explain why and then make another one and you implement it. And all of a sudden their levels of engagement is higher.
[00:41:42] Yes. Again. Yeah.
[00:41:43] Hugh Stedman: [00:41:43] And you can move it in relation to that vision as well. So you can say, look, that's a really good idea. And in some situations it would be absolutely brilliant, but it doesn't actually fit in with our vision, which you know, is
[00:41:56] Paul Shrimpling: [00:41:56] this. Yeah. Yeah. Brilliant. Um, I'd I'd like to, [00:42:00] to finish off, I'd just like to throw a goal, a bit of a challenge, God, but then for you, uh, cause I, um, over the years we realized that, um, uh, accountancy firms really the capital values attached to their, you know, gross recurring fees.
[00:42:11] So you know that they get a bit fee obsessed as opposed to actually for the next 10 years we might be, feel obsessed, but wouldn't it be great if we actually made significantly more margin rather than just growing the fees? And, um, one of the conversations we've been having in recent years with all the firms we work with is what's your, um, what's your fees per full-time equivalent is a number and how far off being a hundred K per person are you now, I'm not asking you to answer this queue.
[00:42:38] I'm just posing a challenge to you and everyone listening that there's a, cause it can you see, as if you can get to a place where you've got an excessive, a hundred grand, a hundred thousand pounds per full-time employee, it starts, she. Looking at what you're doing in a different light, both from a pricing point of view and an efficiency point of view, as opposed to just from a fee-based perspective.
[00:42:58] Hugh Stedman: [00:42:58] Well, one thing I've kept a [00:43:00] bit secret from you through this poll is I I'm a bit of a price psychologist. Oh, right. And I love pricing. I know it brings out a lot of passion with me and I'm actually running a few seminars on pricing. So, but one of the things I would advise to anybody, my strap line of my pricing companies there's money on the table.
[00:43:22] Right. And one of the things that I would encourage anybody is if they're doing a quote for a client, make it three coat quotes, have a gold, silver, and a bronze. Yeah, it's amazing how many people go for a higher tier than you expect them to. But if you'd only gone in with the bronze price, that's all you would have got.
[00:43:40] Paul Shrimpling: [00:43:40] And do you might not get that because if you only go in with one price, you're giving them Hobson's choice. Yeah. And to wrap up, do you know where, who Hobson was here?
[00:43:51] Hugh Stedman: [00:43:51] Um, ring. Any balance?
[00:43:53] Paul Shrimpling: [00:43:53] Go on. All right. Thank you for the trigger. Thank you for the prompt. So, uh, I think it was Thomas Hobson, [00:44:00] 1780s.
[00:44:00] Something like that. And he ran a stables in Cambridge and rented horses out to the students, the undergraduates coming to Cambridge. Cause in the 1780s, there weren't things called cars. And, um, and a student had walked into the stables and he'd go right here. You can have this black one. So I don't want a black one.
[00:44:17] I want a white one. So where you can have the black one or you can, you can exit stage left. He said, I don't think he was that polite. Um, and so the phrase Hobson's choice, you've got one choice. So you've essentially, you've got no choice. So if you don't give clients a choice, You've taken their autonomy away.
[00:44:31] You've taken their ability to make a decision in their own right away from them. So I would argue that if you give people only one price, you reduce the likelihood of them saying yes, cause you've only given them two options. It's either yes or no, as opposed to giving them three the, where they can make a, an informed.
[00:44:47] Hugh Stedman: [00:44:47] Yeah. And this is what I say to my clients. I say to them, make it such. That the customer is choosing between you and you.
[00:44:54] Paul Shrimpling: [00:44:54] Brilliant. Yeah. Brilliant, perfect line. Absolutely Baobab absolute agreements on that [00:45:00] one. And I've got loads of experience with loads of firms talking exactly the same processes, you know, three option pricing, top drain, top down, work out what to take out and help the client make an informed choice, but down to void making a recommendation and just define the recommendation within the three, because they need to see you as a trusted advisor.
[00:45:19] Yeah. Um, brilliant here. This has been, um, uh, really enjoyable. I really appreciate you taking time out and, uh, and, and, and chewing the fat with us on this humanized, the numbers podcast. Thank you very, very, very
[00:45:29] Hugh Stedman: [00:45:29] much thus far, and I've enjoyed as well.
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