Nuts and Bolts Series

Today our guests are—and you heard that right, two guests today—Tom Parker, and Layne Bodily. Tom and Layne, along with Tyler Fates are partners in the firm Fates, Bodily and Parker—FBP for short, in case you guys couldn’t figure that out. FBP is a CPA firm in Itasca, Illinois; the firm was created when the three partners bought out an existing firm, MFI, and rebranded to FBP. This last January, they added another firm to the practice.

Today, we’re going to do something a little different, we’re actually going to start a series, talking to Tom and Layne, and Tyler, if we get an opportunity. And we’re going to discuss the growth of, the birth of, and the managing of, FBP over time. My goal is to do this as an annual podcast, probably at the beginning of tax season next year, and we’ll just follow along with what they’re doing and their business. I think it’ll be a lot of fun. Tom, Layne, welcome to The Unique CPA.

Thanks. Yeah.

Thanks so much for having us. Fun to be here.

Well, we’ll see if it’s fun when we’re done here. Hopefully you guys have a good time. I try to. This is a new thing I’d like to do. I think I really like this idea of a series, and I’m glad you guys agreed to do this, and so as an industry in general, partners’ ages have been advancing in general. I think it’s well over—well over 50% of partners and CPA firms are over the age of 50. And actually, from a small to medium sized firm, that’s even a larger number. And because of that we have a lot of transition going on within firms currently. That transition often comes in the form of a merge up, where you know, a smaller firm is merging up into a medium or larger size firm.

So you guys did something a little different—you were able to identify this firm, that you were able to actually take over ownership of, rather than them merging in as an exit strategy. So their exit strategy was the three of you coming in and becoming partners, and taking over this firm. I’m just wondering, you know, how you accomplished this, and give me the background story of the birth of FBP.

So it’s kind of a funny story. So I bought a house in Itasca, I took my son for a walk, and we went up to go to Kean’s bakery here in downtown Itasca, grab a donut. Walking down the street, I look over and I see two CPA firms. So I did a quick Google, and I was like, “Well, it’s interesting that these guys are around here. It’d be nice to not have a long commute anymore.” Whatever, I just took note of it and mentioned something to Layne not that long after that. And then nothing really came of it for a while.

Maybe three or four months later, I was talking to my father in law a little bit about it and he’s like, “Oh, I know, Bill.” So he’s like, “You want an introduction? Just to chat with him?” And I said, “Sure.” And then about six months later, we were working here!

Really? And Bill was one of the MFI’s? What of the three was he?

The F.

He was the F. The face, the original face.

Okay. And so at that point, were they looking at an exit strategy, or ready, or that just happened to coincide perfectly with you guys going in there?

I think they had started thinking about it, but hadn’t necessarily found the right fit.

We were looking at where we were, at the time, a partnership offer, possibly coming up. And we were looking for advice, actually. And so because of the relationship with Tom’s father-in-law, we went out to grab drinks with these guys. So even walking into that, we didn’t really know what they were looking for necessarily, and it kind of came out in that meeting that they were looking for someone to take over the firm and kind of do a transition. So that’s how it sort of kicked off with those guys, at least the initial conversations.

All right. And then so Layne, did you live out in that same area, too? Was this a form of convenience for you, too?

I lived in Arlington Heights at the time so it was about the same. I worked in Park Ridge—to go into Itasca is about 20 minutes either way.

And just so everybody knows, these are all northwest suburbs of Chicago that we’re discussing here, and this is the area that I grew up in, so common cities that I’m hearing here today.

Alright, so this just kind of came out of the blue, you really weren’t looking forward, you were looking for a place that avoid a longer commute to, but that worked out nicely. So going into this then, since you kind of just fell into it a little bit, did you come up with a business plan to start this whole transition, or what were your your goals going in? Was this written out or it’s  just like “Alright, we’re taking over. Let’s see what happens.”

We did have a business plan. It’s kind of interesting—the business plan started off actually more as a practice for our internal, what we’re offering clients, ’cause we do that for clients as well, and we’re trying to put more structure behind it. So Tom and I decided, “Hey, let’s design or let’s just, you know, make up an accounting firm, how we’d make it look.” Not that it’s anything, you know, earth shattering that no one’s ever seen before, but just how would we do it, where would our values be, things like that.

And as we were kind of building that business plan, we started asking ourselves, “You know, I think we could actually really do this.” And this is all kind of the same that actually started probably a little bit before we even met these guys. So the timing of it all just kind of lined up. And so you know, so yeah, we had a business plan, we talked about what we’d want to focus on, how staff would play a role, what the partners ought to be doing in a successful firm, what kind of clients we wanted to focus on—we kept it really high level and loose, knowing that we were going to, with Tyler, for example, we didn’t really know him that well. So we didn’t want to come in with like, “Here’s how we’re going to do it,” it should be all three of us making a plan together.

But we did have a general idea. And I think that was a good way to do it. Because you know, things change over time. And you kinda have to, you know, roll with it. Yeah, so there was some planning, but we figured it out as we went as well.

Okay, and so, “Roll with it. Let’s see where it takes us.” But you also mentioned something about , you know, they’d been in business for a long time. And they probably were fairly, you know, as I mentioned earlier, you know, partners in CPA firms in general—higher age level, they’ve probably been doing things the same way that they’ve been doing it for a long time, probably had a different structure, than you guys were identifying when you were putting this generic business plan together, of how a firm should look. So were you able to start implementing these new ideas as soon as you guys took over ownership of the firm?

Yeah. I mean, we got really lucky with these guys, honestly. From the time that Tom and I took over with Tyler, they pretty much said, “Listen, you guys do what how you want, we’re here for advice.” And of course, we’ve used their advice. They had a really, really nice firm for a long time. But they didn’t really give us any pushback. And really a lot of the values that Tom and I believe, they were already part of this firm anyway. So it wasn’t like it was a big, stark contrast or anything like that. But I wouldn’t say there was—I wouldn’t say it was a big problem with a lot of friction. It’s been It was pretty easy, actually. And that’s credit to those guys for making it easy for us.

Well, that’s great. But I know one thing that was a different approach, and I know, Tom, you had talked to me about this before—you had mentioned that the way that they were, the three partners, is they pretty much had their book of business, which is not uncommon for a partner to work on their specific clients.

But you guys, Tyler and Layne and yourself, Tom, wanted to do this whole one firm approach. And is that something you’ve been able to start implementing, and I guess, can you define how that looks for you guys?

Yeah, we have started implementing that. Basically, what we’ve done is, “Okay, that’s not my book of business, this is my client, don’t touch it,” it’s more, “What can you add value to?”

So I don’t have any attestation background, but Tyler does. So I have some clients that need reviews, or audits, I can bring Tyler in for that, and you can kind of help out. Layne’s got a really good handle on doing some consulting type with CFO services, where we’re coming in and helping people with month closes, and it’s a little bit more hands on a little bit hand holding, and he’s really good at that, so I know I can go out and pitch that to my book of business and say, “Hey, we can add this service to you.”

Client engagement is key to FBP’s growth, especially as an up-and-coming firm.

So I’m not afraid to introduce my clients to either of them or any of the staff. So we’re really trying to build that together, and it goes as far as like, how we’re compensated—it’s based off of the profitability of the firm, it’s not based off of “Oh, Tom’s book is the size, this is what he should get.” There’s going to be some factors that we’re gonna try to build into it, but we haven’t really built that out yet. It’s kind of just split up a third, a third, a third right now.

Yeah, and I’m assuming that’s going to change over time. Obviously, there are different things that different people bring to the firm, and probably the values need to be identified a little bit separately. I’m no expert, but I’m assuming that’s the game plan going forward?

[bctt tweet=”I’m not afraid to introduce my clients to either of them or any of the staff. So we’re really trying to build that together, and it goes as far as like, how we’re compensated—it’s based off of the profitability of the firm.” username=”TriMerit”]

Yeah, I think this year, that’s one of the targets is probably to try to figure out how we can more define and have some measurables for how compensation should look at some point—especially looking down the road, probably a ways. Once we add other partners, it’s going to be harder to say, “Hey, everyone gets an equal share.”

Right. It’s something you need to identify, I think, early on in the process, and I think you guys are doing a good job to get on that early.

So the way the firm was set up before, with the three partners having their individual books of business, there probably was I’m assuming, and I could be wrong here, that three almost individual managing partners: Did they have an agent partner identified at that time or they all just ran their book of business?

They did. It was Bill.

Randy Crabtree
So they did have managing partner. So the reason I’m asking that is, have you guys coming in now, decided how you’re going to handle that? Are you all working as a group now, or is there a plan going forward to have that one—obviously, it’ll be a team effort, I would assume—but that one person identified as managing partner?

Right now, we have a split where we’re each handling parts of what a managing partner would probably do. So we don’t have a specific “Hey, this is the lead partner.” Like right now, I’m kind of handling the business development piece and marketing. Tyler’s handling the internal controls, and like the day-to-day management of the firm, I guess, and then Layne’s really building out like our client service offerings and making sure that we’re bringing the quality that we’re telling people that we can offer.

And then I’m assuming there’s a monthly meeting there, or that you go over this and where we at? Or am I am I making too big of assumption there?

No, we actually meet every week. We meet on Thursday, you know, it’s on the calendar for I think, one or two hours, but sometimes it goes a little over. You know, those meetings are for kind of like what’s happening right now. But there’s also time carved out for the overall like, what are our long term goals look like? And how are we doing with that?

Nice.

And part of that is we tell our clients that they got to take time to work on their business and not necessarily in their business. So we feel like we’re trying to practice a little bit of what we preach, maybe not all of it.

No, but that’s a great way to jumpstart. I mean, a lot of these podcasts I’ve done, I’ve talked with major partners of larger firms and, and often they identified their biggest client as a managing partner to be the firm. And some of the times, that’s their only client—their client, their responsibility is the firm. And now you know, at a $100 million firm, it’s easier to have that responsibility than at x million that you guys are at. But, interested to see where that goes. That’s what I want to do this as a series. I’m interested to see where you guys go here in the future.

Alright, so that’s the management side of from just transitioning from one group to the next, from how you’re handling the clients in general. How about technology? Did you guys have anything? I know one thing we discussed is project management software, but were there any other technology things you had to work on?

So I’ll take that one. I think, you know, we kept the same tax software and the same time entry software. It’s pretty standard UltraTax, Thomson Reuters products. What we did add, so one of the differences is if we’re going to try to leverage, you know, hire more staff and have employees and kind of build that way—in addition to us doing your own work—you need more visibility into what’s going on. So if you’re doing it all yourself, I don’t really need to know what Tom’s working on. I see his billing as he’s working. But if I’ve got staff, I need to make sure that I know where the stages are. If the client calls me out of the blue, I need to be able to look up quickly what’s waiting on or something.

So we put in Docket, which is like a paperless workflow management tool. Spent a lot of time, actually. I mean, it’s a pretty good software out of the box, but you do want to customize it a little bit. So we spent a lot of time defining the stages that we’re used to. We tried, and I think did a reasonable job, because they already had paper—like routing sheets and things—we wanted to sort of merge that into our docket into our different checklists to kind of make it more seamless.

But that’s probably the biggest technology changes: put putting in that paperless document flow. So we can at any time know where a client project is at and what’s going on with it.

Automating document prep and workflow is priority one for Tom and Layne as FBP grows.

Then another thing with technology, unfortunately, we’ve been forced to be a lot more remote than last year. Were you guys set up with that, or was that a struggle, or to make at least that partial if not full transition?

I think it was a struggle.

Yeah, it was it was a little bit of a struggle. I mean, I think it was easier just because we’re so small, like, we didn’t need to go buy a hundred new laptops and second monitors, it was we need—how do we get our hands on four?

Yeah. To me the struggle for working remote, it wasn’t as much the—like we had to get the laptops and some setup, we paid for them, employed some things to get them going. The hard part for me is, because we just started this firm up not that long ago, and we’ve been adding employees ever since, it’s hard to get a like, camaraderie built up to where you want it to be when everyone’s working from home.

When you’re in the office, there’s going to be some, you know, just some casual conversations, you’re gonna have lunches in the lunch room, things like that. When you’re working remotely, there’s not a lot of opportunity for that. So the struggle of working from home wasn’t so much the  technology, or like the getting it done, as much it is like a cultural thing where it’s hard to get a brand new firm with all new people to kind of come together and feel like they’re part of a team.

So speaking of goals going forward, I think when COVID finally, you know, if and when it finally goes away, we want to get back out there and do more like, you know, to we used to volunteer, we used to like have drink nights, you know, things like that. Getting back to that would be a lot of fun.

Yep. And have you done any of that? Because I know a lot of firms have been going to just to, you know, virtual happy hour with a firm or virtual trivia games or anything like that. Is that something—and I obviously I know you guys are concentrated on running a new firm—but is that something that you’ve looked into or thought about or done?

I’ve heard they’re super awkward. I don’t know if that’s true. But like, you know, so if you’re on a call on there’s ten people or fifteen people on a Zoom call, only one person can talk at a time. So like at a party when you know Tom and I are having a chat and you’re over there with someone else. And a Zoom call, we’re all just like sitting here waiting for one guy, and you’re talking over each other. So I mean, not to say that it hasn’t been done successfully, but maybe we’re just not like doing it the right way. So we haven’t tried it yet. But um, I don’t think we’re going to, either.

[bctt tweet=”When Covid finally goes away, we want to get back out there and do more. We used to volunteer, we used to like have drink nights, you know, things like that. Getting back to that would be a lot of fun.” username=”trimerit”]

I’ll give you some advice. So we have done, oh, fifty—probably more—virtual craft beer tastings, where we just send the beer out, and tasting glasses out, get on, do a 45 minute education and, and beer and then talk for 45 minutes after. And for us, it’s, you know, getting to know, you know, stay in touch with our clients and our CPAs that we work with. And it’s been a lot of fun. I can see when it gets, you know, too many people, it can get a little bit hard to communicate. But overall, it’s been good. So I wouldn’t, If I was you—and now’s not the time to do it, and I don’t need to give you guys advice, you’re doing a good job in this firm, but—

—Oh I’m sure you do, you can give us plenty of advice. We’re all ears. Actually, having a specific topic for one of these party things… Maybe that’s the missing link.

So we can talk offline after, but there’s some ability to do some stuff. I think it’s been a lot of fun. So just something to keep in mind, you’re always looking to learn. So hopefully, I can help educate on a few things. It’s been good for us.

So let’s go into a few other items. I don’t want to spend hours—although I do want to spend hours on this—but we’re going to a couple key topics that I’m wondering if anything changed since you guys took over. Big topic in the industry and public accounting in general is just billing, you know. Are we hourly billing, are we value billing, are we doing a three-tier billing model? Have you guys adjusted anything? Or do you have philosophy on how you want this to go forward? Tom, you want to give us some info on that?

Sure. I mean, I don’t even know what a three-tier billing system is. So we’re not using that one. At least we don’t think we are!

Well, we’ll do some more education offline afterwards.

So we’re kind of a hybrid. I guess it’s a combination of that—value billing and the hourly billing. It really depends on the engagement and the client. I’m really trying to push some of my bigger accounts to move towards where it’s basically just a retainer, and you pay me a flat fee, and then somewhere in time, like six months into it, and then like a year into it, we’re looking at it and saying, “Okay, we need to adjust up or down, if it’s way out of whack,” or “Hey, where are we pretty close to this is how many hours we thought we’re really going to spend.”

And my clients have been very receptive to that. They’re like, “I like that, like I have a routine, I have an attorney on retainer, why not have my accountant on retainer?” So hoping that comes down, because I hate spending hours of time every month doing my billing—like it’s nice to get it done, but it’s also a huge time drain. So trying to streamline that is really a goal.

Yeah, I think that’s kind of what the three tier is—if you just give your clients, three different levels of service, and there’s a fixed price for each of those, and then what’s identified in those three buckets of services. And then, you know, they’ll select one of them, and they can always, you know, upgrade or downgrade. And that’s the short version—I’m no expert on it—but that’s the short version.

My marketing people will be mad at me then, because we do we actually have that.

Right, so you do! So this is nice. Okay,

They use smaller words for us, because we can’t handle the big stuff. It’s probably called something simple.

Level pricing, maybe?

Yeah, maybe.

And then how about, I guess the back end is helped with the workflow. Anything else special? I mean, is one person work on project from start to finish? Or doess that change hands or how’s the workflow go?

We try to keep it pretty consistent. Like  if a client knows a partner and a staff, which is the ideal for us, at least, we want to kind of let that continuity be there where they can build a relationship. Internally, I guess it is possible, especially with tax returns, especially with like annual tax return, there’s not a lot going on, that could sort of move around. I think we have a manager who can help balance workloads, and part of our weekly meeting is also looking at workloads. So if someone gets pulled into something, yeah, I mean, whatever was assigned to them is not just going to get put in the back burner for two weeks. We can rebalance it. But especially for our clients that have, you know, weekly or monthly services or somewhere in between, we keep it pretty consistent with with those clients.

Okay. All right. Nice. And then anything special with, one of the biggest things out there, again, in public accounting is dealing with employee retention, employee—you know—finding the right employees. Have you guys had any issues with that, or feeling good with where you are currently?

We’ve gotten pretty lucky with our staff so far, in terms of finding them, and having really good people on staff. We’re always looking for more people. So I think trying to figure out how to keep that pipeline full is probably our biggest challenge.

Yep, yep.

To add to that, too, I think, you know, with our firm when we started off, it was kind of like let’s see how it goes and be kind of lean. And as we’ve sort of gained confidence, I think, in growing, new clients, bringing in other accounting firms, and then also just taking clients that we have and turning them into something more. Now we’re sort of changing gears where we’re like, we’re not opposed to having extra staff where it’s like, maybe today we don’t need them, but they’re not easy to find. You know, CPAs that are really good and talk to a client and that kind of stuff are hard to find. So if we come across one, we’re gonna hire him, then we’re gonna hope that you know, maybe Tom finds some people for that guy to work on.

Yeah, exactly.

So Layne, you are not alone with the “finding the right people.” That is one of the most common discussions that goes on at conferences that I go to—which I usually go to twenty a year talking to CPAs—so that is a topic that’s out there. Unfortunately, I don’t think that’s going away. I think I did hear that there may be an uptick in enrollment in accounting degrees. Hopefully that’ll help as we go forward. But also, people do start in public and often try something else at some point. So we’ll see where that goes.

Just going back, I mean, two of our people came from private industry, actually. So they came back to public accounting. They were in publi, went to private and came back. We’re okay with chasing that too.

No, that’s not a bad thing. So if I ever retire from Tri-Merit. I’ll come and work with you guys.

We got a spot for you.

I think if I ever retire from Tri-Merit, I’m retired. So unfortunately, I’m not sure that’ll happen.

But since we are going to touch base again in a year—assuming that you guys enjoyed this enough to do it again—any topics, anything you identify for 2021? Obviously 2020 was a strange year. 2021 is going to be, not our normal year, probably for quite a while as well. But, you know, is there things that you’re identifying that you’re looking to touch on at least after tax season that we can discuss about the how it went next year?

[bctt tweet=”But we want to really focus on our internal culture. During COVID it probably feels like working anywhere. So I’d like to bring that in a little bit, make it a little more fun, do a few more outings, things like that.” username=”TriMerit”]

I think a couple things. I mean, one, we want to finish up—so our business plan Tom and I made we still have, but we’ve been trying to get one, you know, with Tyler involved as well, so that it’s really “ours.” So we want to kind of finish that. We started it, tax season started, and like it’s not really a great excuse to stop working in those kinds of things, but the reality is, we just were still kind of small and like, it’s hard to find the time. So by the end of the year, we’ll probably have that done.

And then I think too—one of the things that Tom and I talked about that we know we agree on whether the business plan is not done yet. But we want to really focus on our internal culture. We want staff to really like working at our firm. I think the way that things are going during COVID, it probably feels like working anywhere. So I’d like to bring that in a little bit, make it a little more fun, do a few more outings, things like that. So that will look different next year compared to this year.

Yeah, our goal is to have like three or four like charity outings a year where we’re going—like we’re doing Feed My Starving Children in April, and we found that they’re taking people so we’re going to do that like right after tax season. And we’re looking for a couple other organizations to kind of sponsor. We’re helping out with a food drive for Easter meals with a company in Roselle. So we’re looking to try to figure out how we can help out the community and build the culture all at the same time.

I think that’s great. I think that’s important. Again, that’s a topic that comes up a lot, is that culture within the firm, that work-life balance, that charitable work is a very important thing to most firms out there these days, at least the firm’s that are transitioning from the old regime to the new regime—which looks like we’ve done here.

So I want to thank you guys for being part of the show today. I really look forward to catching up next year. But over the years and see where you guys go, and I have high confidence that this is going to be a firm that’s gonna be around growing and thriving for quite a while. So I want to thank both of you for being here.

Thank you so much.

Thank you for having us. It was fun.

Yeah, no problem! And I want to thank everybody else for joining us today. You can find all the links and show notes for today’s episode as well as more about Tri-Merit at TheUniqueCPA.com. Remember to subscribe and join us for our next episode where we will bring you another interesting guest and hear their stories and insights.