Rachel Dillon

How One Accounting Firm Transformed Their Business Model and Thrived in a CAS-Driven World

Earmark Team · June 3, 2024 ·

As client expectations shift and technology advances, many firm owners find themselves at a crossroads, wondering: How do we transition from a traditional tax practice to a thriving Client Accounting Services (CAS) model?

In this episode of the “Who’s Really the Boss” podcast, Rachel and Marcus Dillon share their experience transforming their firm from a traditional tax practice to a successful CAS provider. The Dillons learned that to transition successfully, firms must adapt their processes, technology, and management approach while carefully balancing client relationships and financial stability.

The Catalyst for Change: The Last Worst Tax Season

For Rachel and Marcus, the decision to transition from a traditional tax practice to a CAS model was sparked by a pivotal moment in their firm’s history: the “last worst tax season” in 2017. With over 1,000 individual clients and 2,000 tax projects, the couple became overwhelmed and exhausted, working long hours and sacrificing precious time with their family.

Marcus recalls, “We walked away exhausted and were beyond our tipping point and decided that was it. Nothing like that ever again.” This experience was a wake-up call, prompting the Dillons to reevaluate their business model and seek a more sustainable and fulfilling path forward.

As the Dillons’ story demonstrates, recognizing the need for change is often the first step in a firm’s journey toward a more sustainable and rewarding future.

The Reality of Client Attrition

One of the most significant hurdles firms face when transitioning to a CAS model is convincing existing clients to embrace the change. As Rachel and Marcus discovered, many clients who were satisfied with their current arrangements resisted adopting a new approach, even when presented with the potential benefits.

Despite their best efforts to communicate the value of CAS, the Dillons found that only a small percentage of their existing client base was willing to make the transition. As Marcus shares, “We were a very heavy annual-only client roster in 2017. We were not able to convert 95% of our client base to CAS. And so the oversimplified advice of people that just tell you, hey, you should go convert all your clients to CAS is probably not going to hold most of the time.”

Because many clients will not make the change, firms need to be prepared for client attrition and have a plan to refer clients who don’t fit the CAS model to other providers.

To mitigate client attrition during the transition to CAS, consider the following strategies:

Communicate the value of CAS services and how they address clients’ pain points.
Offer a phased approach to transitioning clients, allowing them to adapt to the new model.
Provide exceptional service and support during the transition to demonstrate the benefits of CAS.
Regularly seek client feedback and promptly address concerns to maintain trust and loyalty.

Embracing Cloud-Based Solutions and Real-Time Collaboration

As firms transition from a traditional tax practice to a CAS model, they quickly discover that their existing processes and technology may not be well-suited to the demands of ongoing client engagement.

Firms must adopt processes and technology that effectively track project frequency, timeliness, and client communication to succeed in a CAS model. Cloud-based solutions and remote access become essential for collaborating with clients and providing real-time insights into their financial performance.

The Dillons’ experience illustrates the necessary changes firms must make to their processes and technology to thrive in a CAS environment. By embracing tools that facilitate seamless collaboration and real-time data sharing, firms can position themselves to deliver the high-touch, proactive service that CAS clients expect.

Shifting from a Partner-Centric to a Team-Based Approach

One of the most significant challenges firms face when transitioning to a CAS model is adapting their management style to support ongoing client engagement. As Rachel points out, “We have to hire and then empower our team to work with the client to deliver the information, to have conversations, to have a relationship. We have to trust our team so that we can serve clients. If not, the practice isn’t scalable, so you’re not really better off one way or the other.”

In a traditional tax practice, partners are often clients’ primary point of contact, handling everything from client communication to project management. However, in a CAS model, this approach quickly becomes unsustainable, as the ongoing nature of client engagement requires a more distributed approach to client service.

To scale a successful CAS practice, firms must shift from a partner-centric model to a team-based approach, empowering staff members to take on greater responsibility for client relationships and project delivery. This requires a significant mindset shift for many firm owners, who may be accustomed to maintaining tight control over client interactions.

Learning from the Challenges and Triumphs of Others

As the Dillons’ story illustrates, transitioning from a traditional tax practice to a CAS model is a journey filled with challenges, surprises, and growth opportunities. While every firm’s path is unique, there is much to be gained from learning from the experiences of those who have gone before.

By sharing their struggles and successes, Rachel and Marcus offer valuable insights and guidance for other firms considering a similar transition. Their story serves as a reminder that change is rarely easy, but with perseverance, adaptability, and a willingness to learn, it is possible to navigate the complexities of the CAS landscape and emerge stronger on the other side.

Charting Your Course to CAS Success

For firms embarking on their own CAS journey, the Dillons’ experience offers several key takeaways:

Embrace the need for change: Recognizing when your current business model no longer serves you is the first step towards a more sustainable and rewarding future.
Communicate the value of CAS: Clearly articulating the benefits of CAS to both existing and prospective clients is essential for building a successful practice.
Adapt your processes and technology: Embracing cloud-based solutions, streamlining workflows, and eliminating inefficiencies are critical for delivering high-quality CAS services.
Empower your team: Shifting from a partner-centric to a team-based approach is key to scaling a successful CAS practice and providing exceptional client service.
Stay committed to the journey: Transitioning to a CAS model takes time, effort, and a willingness to learn from both successes and failures.

By remembering these lessons and staying committed to the journey, firms can chart their own course toward CAS success, building a profitable and personally fulfilling practice.

Are you ready to take the first steps toward building a successful CAS practice and shaping the future of accounting? If so, tune in to the Who’s Really the Boss podcast and hear Rachel and Marcus Dillon’s inspiring story.

Rachel and Marcus Dillon, CPA own a Texas-based, remote client accounting and advisory services firm, Dillon Business Advisors, with a team of 15 professionals. Their latest organization, DBA | FIRM, supports and guides accounting firm owners and leaders with free resources, education, and operational strategy.

Struggling to Communicate Your Worth? Revolutionize Your CPA Firm’s Pricing Strategy

Earmark Team · May 10, 2024 ·

Are you tired of wrestling with pricing your services for potential clients? Do you struggle to communicate the value of your accounting services? It’s time to rethink your pricing strategy.

In a recent episode of the “Who’s Really the Boss” podcast, Rachel and Marcus Dillon, the founders of DBA, share their journey of transforming their pricing model from traditional, transactional pricing to a value-aligned subscription approach. By aligning their pricing with the value they provide to clients, Rachel and Marcus have streamlined client relationships, better communicated their worth, and optimized their practice for growth.

Let’s examine how adopting a value-aligned pricing strategy can benefit your firm. We’ll delve into the process of developing a subscription pricing model, the importance of analyzing internal data and conducting market research, and the benefits of communicating value through transparent pricing.

The Evolution of Pricing at DBA

Like many CPA firms, DBA initially priced their services based on what clients paid their previous CPA, a practice known as “apples-to-apples” pricing. Marcus Dillon explains, “We priced just like every other CPA firm does. And I know if you’re listening to this and you hear what I’m about to say, you’re going to shake your head. Because if you can gain access to their QuickBooks Online account and see what they paid in the past, you’re going to charge them what they’ve at least paid, or a little bit more.”

However, as DBA grew and evolved, they realized that this pricing approach needed to reflect the additional value they provided to their clients. They then shifted to value-based pricing, which aimed to align their fees with the perceived worth of their services. While this was a step in the right direction, it presented challenges. Value-based pricing required individual negotiations with each client, making it difficult to scale the business.

The turning point came when DBA decided to implement a subscription-based pricing model. This approach allowed them to streamline their pricing, remove owners from setting prices for each client, and better communicate the ongoing value they provided. By offering a set of standardized service packages, DBA was able to create a more predictable revenue stream and simplify the client onboarding process.

DBA engaged a consulting group to conduct secret shopping to gather insights and benchmark their pricing. The consulting group reached out to firms similar to DBA, posing as potential clients, and obtained quotes for comparable services. This process provided valuable information on competitor pricing and helped DBA ensure their fees were competitive while still reflecting their unique value proposition.

Developing a Subscription Pricing Model

DBA’s subscription pricing model offers a straightforward approach that benefits the firm and its clients. The model consists of three service plans: Essential, Premier, and Elite, with base prices of $1,500, $2,000, and $3,000 per month, respectively. Marcus explains that these prices are not set in stone: “We do give ourselves a little bit of flexibility in that we could customize that pricing based on complexity of the industry or number of transactions.”

The primary differentiator between the plans is the level of advisory services included. Clients on the Essential plan receive annual CFO meetings, while those on the Premier plan have quarterly meetings, and Elite plan clients benefit from monthly CFO interactions.

The Benefits of Subscription Pricing

Subscription pricing offers several advantages for both CPA firms and their clients:

Predictable revenue: Firms can better forecast their income and plan for growth with a subscription model.
Simplified client relationships: By clearly defining the services included in each plan, subscription pricing reduces the need for constant negotiation and scope creep.
Improved cash flow: Regular, recurring payments help to smooth out the peaks and valleys often associated with project-based work.
Enhanced client retention: Subscription pricing encourages long-term relationships and provides ongoing support and advisory services opportunities.

By adopting a subscription pricing model, CPA firms can create a more stable and scalable business while providing their clients with the clarity and support they need to succeed.

Aligning Pricing with Value

To effectively align pricing with the value provided to clients, DBA conducted a thorough analysis of their internal data and considered their desired profit margins and business goals. This process involved examining write-ups, write-downs, services provided, and team capacity to understand the resources required to serve clients effectively.

Marcus says that DBA worked backward to get to the pricing. He says, “To get to that point and know what we wanted to charge, we reverse-engineered how many clients we wanted to serve on an ongoing basis. And our max limit is 150 client relationships. Beginning with that in mind and knowing the size of the business and the size of the team that we wanted to work with, the amount of profit that we wanted to make – that’s how we started to engineer pricing and make sure it was in line with market and the value we could bring.”

This process relied on considering their desired profit margins and the size of the business they wanted to build. By setting clear goals and working backward, DBA could create a pricing structure that supported their long-term vision for the firm.

The Importance of Data-Driven Pricing

CPA firms looking to align their pricing with the value they provide should consider the following steps:

Analyze internal data: Examine write-ups, write-downs, services provided, and team capacity to gain a clear picture of the resources required to serve clients effectively.
Set clear goals: Define your desired profit margins and the business size you want to build, and use these goals to guide your pricing decisions.
Conduct market research: Gather data on competitor pricing to ensure that your fees are competitive while still reflecting your unique value proposition. Consider engaging a consulting group to perform secret shopping and obtain quotes for comparable services.
Continuously monitor and adjust: Regularly review your pricing and make adjustments as needed based on market changes, service offerings, and client base.

By taking a data-driven approach to pricing, CPA firms can ensure that their fees accurately reflect the value they provide and support their long-term growth and profitability.

Communicating Value through Pricing

One of the key challenges many CPA firms face is effectively communicating the value of their services to potential clients. This is particularly true for firms offering comprehensive support and advisory services, as clients may not be accustomed to paying for these offerings. As Rachel notes, “When I was conversing with people, they weren’t expecting the price that I would say. A lot of the people that were finding us, either by referral or just Google search, were mostly looking for a tax return and tax savings. They hadn’t experienced someone pricing all of the services that they’re going to need for the entire year, plus one of those services being advisory. So they just weren’t expecting it.”

To address this challenge, DBA decided to publish their pricing on their website. By providing transparency around their fees and the services included in each plan, DBA could better communicate the value they offer and help potential clients understand the comprehensive nature of their support.

Publishing pricing also had the added benefit of streamlining the sales process. By allowing prospects to self-qualify based on their budget and needs, DBA reduced the number of initial conversations with clients who were not a fit for their services. This freed up time and resources to build relationships with clients who were more likely to benefit from their offerings.

Tips for Communicating Value through Pricing

If you’re considering publishing your pricing or looking for ways to communicate the value of your services better, keep the following tips in mind:

Be transparent: Clearly outline the services included in each pricing tier and the value clients can expect to receive.
Highlight the benefits: Focus on the outcomes and results your clients can achieve by working with your firm rather than just the features of your services.
Use case studies and testimonials: Share success stories from past clients to demonstrate the tangible impact of your work.
Offer a range of options: Provide different pricing tiers or service packages to cater to your target market’s diverse needs and budgets.
Be open to customization: While published pricing can be a helpful starting point, be prepared to create custom plans for clients with more complex needs.

Embracing Value-Aligned Pricing for Long-Term Success

By analyzing internal data, considering desired profit margins and business size, and conducting market research, DBA developed a pricing model that communicates the value of their services and supports their long-term growth.

Are you ready to unlock the full potential of your CPA firm? Start by examining your current pricing strategy and identifying opportunities to better align your fees with the value you provide.

To learn more about aligning your pricing strategy with service value, listen to the full episode of the “Who’s Really the Boss” podcast featuring Rachel and Marcus Dillon. Their insights and experiences offer valuable guidance for any CPA firm looking to transform its approach to pricing and increase overall firm value.

The Two-Question Framework Every CPA Firm Owner Needs for Strategic Decision-Making

Earmark Team · May 8, 2024 ·

CPA firm owners are constantly bombarded with new opportunities, from taking on new clients to investing in cutting-edge software. But how can they decide which opportunities are worth pursuing and which will only lead to headaches and wasted resources?

In this episode of the “Who’s Really the Boss?” podcast, hosts Marcus and Rachel Dillon dive into a powerful framework for making strategic business decisions. By consistently asking two key questions – “Does this simplify my life?” and “Does this increase the value of my business?” – CPA firm owners can cut through the noise and focus on opportunities that will truly move the needle for their firms and their lives.

Introducing the Two-Question Framework

Marcus introduces the two key questions that form the foundation of the decision-making framework:

Does this make my life easier? and
Does this increase the value of my business?

The questions are meant to be widely applicable to various life and business decisions. Rachel refines the first question from “Does this make my life easier?” to “Does this simplify my life?” to emphasize the importance of long-term simplicity over short-term ease.

Applying the Framework to New Client Prospects

Rachel and Marcus discuss how the two-question framework can guide the evaluation of new client opportunities.

First, ask, “Does this make my life easier?” In other words, can the work be delegated across the team, or does it rely solely on the owner?

“We would only bring on prospects as clients if they were going to be served by a team approach, where any one person isn’t the full service provider for that client,” Marcus emphasizes.

Then, ask, “Does this increase the value of my business?” When considering taking on a new client, that question could become, “Is the engagement a profitable long-term relationship or a one-off project?”

By applying the two-question framework, CPA firms can focus on clients that will simplify operations and contribute to long-term firm value.

Using the Framework for Software Investments

The two-question framework can also help cut through the hype around new software and determine if it will truly add value to the firm.

Marcus and Rachel discuss their experience of moving away from over-engineered reporting tools that clients didn’t value and focusing time on client conversations instead. They highlight the importance of considering the ongoing support and future team’s ability to use the software.

Regarding the latest trend, AI chatbots, Marcus says, “I am not on the forefront of use of AI. I am not an early adopter, but I’m an adopter somewhere in that cycle. The reason why is I just don’t have enough time in the day, or I don’t enjoy investigating the use of AI in multiple different ways. That doesn’t give me joy. That doesn’t simplify my life.”

The framework helps firms invest in technology to streamline operations and enhance client service rather than chasing shiny objects.

Evaluating Potential New Service Lines

In the episode, Rachel challenges Marcus to apply the two-question framework to adding wealth management as a new service line.

While adding a new service line could increase firm value, Marcus notes that it may not simplify operations in the short term due to the learning curve and client acquisition needs. He emphasizes assessing if a new service line aligns with the firm’s overall strategy and client base.

“If I’m going to add wealth management, does that make my life simpler? Probably not in the beginning because we would maybe have to go out and acquire a different type of client,” Marcus explains.

The two-question framework brings rigor and structure to evaluating any potential new service offering, ensuring strategic fit and long-term value.

Embracing the Power of “No”

Of course, using this framework also means being willing to say “no” to opportunities that don’t pass the test. This can be challenging, especially in the early stages of building a firm when every client and every dollar of revenue feels crucial.

However, as Marcus and Rachel’s experiences illustrate, learning to say “no” to the wrong opportunities is just as important as saying “yes” to the right ones. By being selective and strategic, you can free up time and resources to focus on the clients, projects, and initiatives that will truly move the needle for your firm and your life.

A Roadmap for Strategic Growth

At the end of the day, the two-question framework is a powerful tool for CPA firm owners who want to build businesses that not only thrive financially but also support the lifestyle and well-being of their leaders.

By consistently asking, “Does this simplify my life?” and “Does this increase the value of my business?” you can cut through the noise of endless opportunities and make strategic decisions with clarity and confidence.

So the next time you’re faced with a shiny new prospect, a cutting-edge software tool, or a potential new service line, take a step back and put it to the test. Your future self – and your future firm – will thank you.

For more insights on navigating the challenges of running a CPA firm, listen to the full episode of “Who’s Really the Boss?” and subscribe to the podcast for future valuable discussions.

The Team of Three: How DBA’s Unique Structure Weathered an Unexpected Resignation

Earmark Team · March 26, 2024 ·

Imagine receiving an email from a team member resigning effective immediately. How would your business cope with such an unexpected challenge?

In a recent episode of “Who’s Really the Boss,” Rachel and Marcus Dillon, the owners of DBA, a leading accounting firm, shared their experience of dealing with a team member’s abrupt resignation and the lessons they learned about building a resilient and adaptable team structure.

The Unexpected Resignation

Rachel and Marcus were caught off guard when they received an email from a team member resigning effective immediately, a first in DBA’s 13-year history.

“Any time you get a notice, like resigning effective immediately, you need to think, ‘Okay, something extreme has happened.’ And as a leader, can you do anything to help?” Rachel recalled.

This experience highlighted the importance of having a team structure that can handle unexpected turnover and the need for clear communication and swift action in such situations.

DBA’s Team of Three Model

One of the key factors that helped DBA navigate this challenge was its unique team structure, consisting of a Client Service Manager, Client Controller, and Client CFO.

Marcus explained, “So with that team of three model, there is always overlap. And that’s why we designed it that way. It’s very unlikely that all three people would leave the team at one time. If two people leave the team at one time, that’s drastic.” This model provides built-in redundancy and ensures smooth service delivery, even in the face of unexpected turnover.

The team of three model allowed DBA to redistribute responsibilities and maintain uninterrupted client service quickly. The Client Controller and Client CFO stepped up to initially cover the departing team member’s duties while the company searched for a replacement. This seamless transition demonstrated the resilience and adaptability of DBA’s team structure.

Capacity Planning and Lessons Learned

Proper capacity planning is another crucial aspect of building a resilient and adaptable team. Rachel and Marcus emphasized the importance of maintaining excess capacity to handle unexpected situations and opportunities.

“We’ve learned it the hard way. Whenever you burn out team members – and thankfully, some of those team members that burned out, they’ve stayed on the team. We’ve restructured their role. We restructured their client list to make it more appropriate for balance,” Marcus shared.

Overworking team members can lead to burnout and turnover, undermining the team’s resilience and adaptability. DBA learned this lesson and made conscious efforts to ensure their team members have a healthy work-life balance. They have removed blocks of annual tax clients and avoided filling up the team’s capacity with seasonal work, prioritizing long-term sustainability over short-term profits.

Navigating the Transition

When faced with the unexpected resignation, DBA took immediate action to ensure a smooth transition. They notified the leadership team, reassigned clients and responsibilities, and communicated with affected clients. The company’s well-defined offboarding and onboarding processes were crucial in navigating this challenge.

DBA’s offboarding process involved disconnecting the departing team member’s access to various systems, reassigning email and communication channels, and ensuring a seamless transition for clients. The company’s onboarding process, which includes training new team members on client-specific information and gradually introducing them to clients, allowed for a smooth integration of the replacement team member.

Having a pipeline of candidates and a structured hiring process also contributed to DBA’s ability to fill the vacancy quickly. Within two weeks of the resignation, the company had identified and onboarded a new Client Service Manager, minimizing disruption to client service.

The Importance of a Resilient and Adaptable Team

DBA’s experience highlights the importance of building a resilient and adaptable team structure in today’s fast-paced business environment. Handling unexpected challenges, such as a team member’s abrupt resignation, is crucial for maintaining client trust and ensuring long-term success and sustainability.

A well-designed team model, like DBA’s team of three, provides built-in redundancy and ensures smooth service delivery. Proper capacity planning and a focus on employee well-being contribute to the team’s resilience and adaptability. Well-defined processes for handling transitions, both offboarding and onboarding, allow businesses to navigate challenges smoothly and maintain client confidence.

Building a resilient and adaptable team requires a proactive approach and a commitment to continuous improvement. By learning from experiences like DBA’s unexpected turnover challenge, business owners can develop strategies to strengthen their teams and prepare for the unexpected.

Listen to the full episode of “Who’s Really the Boss” to learn more about how Rachel and Marcus Dillon, with the help of their team, navigated this challenge and the valuable lessons they learned along the way.