Shooting the Breeze with Scott Scarano
Episode 65 of The Unique CPA is “pure vaporware”—just ask Randy’s guest, Scott Scarano, host of the Sons of CPAs Podcast and President of Padgett Business Services of Raleigh-Durham. Randy and Scott have a great time talking about everything under the sun, from beer and other methods of “relaxation,” to one of the key tenets of The Unique CPA: The changing face of public accounting, which also happens to be a heavy focus of Scott’s show.
Today, our guest is Scott Scarano. Scott is president of Padgett Business Services in North Carolina, and he is founder and co-host with, it seems like, very many different co-hosts of the podcast, Sons of CPAs. Scott, welcome to our podcast, The Unique CPA.
I’m excited to be on.
I’m excited to have you on.
How’s it going, Randy?
Well, I’m doing great. You?
Good. Yeah, I’m great.
And where are you sitting today? You’re in North Carolina, right?
Raleigh, North Carolina, in my basement. Not in my new normal recording room, as we said, but this is my office. And I honestly, I have a clear schedule after this, so…
Oh, we’re going hours then. We’re going hours. This may be an all-day event.
Haha yeah, a marathon. Yeah. I’m used to it, though. I mean, on Monday, we had, I think I recorded for two or three hours different guests and different specials.
Well, your podcast, I’ve noticed you do tend to have some lengthy ones, right? I mean, I think I saw John Garrett was on—it looked like it was close to an hour. Is that normal?
Yeah. Well, I don’t know if it’s normal in the podcast world. But since we started recording, we always just blocked off an hour to record, and when I’m editing, I don’t know what to take out.
Like sometimes we record for over an hour and I try to trim it down to an hour. That’s what it was with John. So it was like an hour and 20 minutes, I trimmed it down to try to be in the 50 minute range somewhere. Got to fit the ads in there, too. So there’s usually two minutes for two ads. So four minutes of ads. So we try to keep about an hour on the regular episodes. And then I try to do my specials during the week down to in the 20 minute range somewhere.
Yeah, I did notice that. We’re gonna go off topic already. But I did notice you have quite a few. I mean, we’re once every other week, and it looked like you were multiple times per week. How often do you release episodes?
Oof. So yeah, Sunday is “Sons Day,” right? That’s the guests—we usually have a guest episode, a regular episode, scheduled on that cadence. And then somewhat during the week, maybe Wednesdays, sometimes Thursdays. I’ll do a special. Right now we’re currently doing a series with Nikole McKenzie, and I call it—I call her Nix because she spelled her name with the N-i-k,-o-l-e, So I call her Nix. We call it Nix’ tips, and we do a word that starts with the letter P, as it relates to running our firms. So we got a series of P letters. I don’t know how this came up, but it’s cool.
So just P letters. This is just random. I mean?
Process, profitability, pricing, podcasts, payroll, professionalism, partners—it goes on. I think we’ve done like, 12 of them so far. I don’t know how many I’ve released.
Wow, that’s amazing. All right. See, it’s unique.
Yeah! I love your name.
That’s why you’re on The Unique CPA here. I honestly don’t remember how we got that, other than I didn’t want—you know, I don’t want to say anything, not gonna use somebody else’s podcast name and make fun of it. So I just didn’t want anything that was just generic, like, “let’s talk accounting.”
Sure. Well it’s unique, and it’s, I just realized this two days ago, that the word “unique” and “unicorn” are almost the same word. So I assume that a unicorn is a unique horse, and you’re a unique CPA.
There you go. I don’t have any horns, but that’s it.
I do feel I’m a unique CPA. I’ve done quite a few things in the industry, and so maybe that’s where we got it. I think someone else came up with it, though, and I said, “Yeah, that’s a great idea.”
No, it just came to me. I said, “Yeah, that sounds okay,” and then the more I thought of them, I’m like, “Yeah, you know what, that is a good name.” So I’m glad we did it. Alright, enough about me, this is all about you today. Well, I’ll make it about me too. What the heck.
That’s how we always do it. Like Ackerman always, like, my one co-host always says it’s not about me, but honestly, it is about you too, because you’re the co-host—you’re the host of this. So it’s about you. It’s about your guests and as it relates to running, I mean, I guess that’s kind of what’s the tagline of this show, The Unique CPA?
Yeah, it’d be good if I knew that because then I should probably keep the shows based on that. But it’s basically… okay, I think I know it: “Keeping you at the forefront of the changing face of public accounting by having conversations with interesting leaders and bringing you their stories, insights and advice?”
I love it.
I think it’s something like that.
That, right there. Like that’s kind of in different words, in your own words, that’s almost what ours is. And I almost have ours memorized. I’ve been doing that for a year now. But that’s ours is like, well, I guess you’ll have to listen to the Sons of CPAs to know that I say it every episode.
Do you? See, they recorded mine. So that’s why I didn’t think I remembered it, and I probably missed a part of it.
But alright, so let’s talk a little bit about, because you and I were talking ahead of time, and it’s funny, because, you know, we’d never met until two months ago via just a connection. But then we were talking before the show—we know a lot of the same people. And I think it’s partly, or maybe fully, the podcast world, that has done this. But you know, you’re in North Carolina, I’m in Chicago of all—you know, during the winter, I’m on the West Coast, just to avoid the Chicago winters right now. But I was just looking through the list. I mean, John Garrett, who I just had on the show, Josh Lance, who has been on the show a couple of times, he was on our virtual conference, Kristen Keats, I know real well, Terrell Turner has been on the show, Blake Oliver was on the show.
It’s really interesting doing podcasts, because you get to meet all these interesting people, and they don’t have to be in your backyard to do it. So I assume the podcast has increased your world as well.
It’s increased my ego, maybe. Naw, I mean, it has, it has. It’s made the world a lot bigger and smaller at the same time. And I know I’ve said this in the past about Xero—Xero did that for me first, okay, by inviting me to be on their partner Advisory Council, the XPAC. That’s how I met a lot my core group of people that I kind of pal around with, like when you mentioned Josh, and all of our connections kind of started at “Ground Xero,” no pun intended, and kind of built up from there.
I built a lot of these friendships. And then that’s kind of how this podcast started. Even though Ackerman wasn’t in my class of XPAC, he graduated before me almost—I call XPAC the high school that we all went to, right? And he graduated before me. I’ve already graduated. There’s some new people in now, the next freshman class. But that’s kind of how it all started.
And then as I started doing the podcast, I poked my head outside of my own world out in the real world. I started meeting all of these new people. And then when you bring up these names, it’s like, “Oh, yeah, I know him from this, or I know him this. I know her from this. I know her from this.” And so it’s comforting to kind of know that there’s a place in this world and a lot of people kind of have that same watering hole, almost. And I don’t know what that watering hole is. But I think it’s accountancy or accounting or the CPA world. That’s where we live in. Right?
It is. There’s an interesting connection, for sure. And then there’s all different aspects within there, which is—that’s what I find so interesting. I mean, talking with Josh, and you know, he was a virtual office, you know, well before anybody else, and people had to catch up over the last two years, and building a niche practice. And just, you know—it just all the unique stories everybody has, I just, I just have fun.
Deep in my heart. I want to be Josh, Josh is the steak of it all. And I’m just sizzle on all ends. Josh kind of has the—he’s the meat and the potatoes all in one. Like, and I remember a lot of the things that we do at our firm were ideas I got from Josh, and I know Josh got them from other industries—he’s got his ear to the streets, too. But he’s a, you know, he’s an integrator and visionary all in one, which is amazing. I mean, he wouldn’t call himself that, but I call him that.
Yeah, I don’t know how many years more he can be on the “40 Under 40.” I’m guessing he’s getting close to not qualified anymore?
Yeah, he’s got about a year and a half left, give or take? He’s about my age, so.
Alright. So he’s getting close. But he and I have a connection other than just the podcast in the accounting world, is we’re both craft beer fans.
You’re also both Chicago—
—We are both Chicago, although we have not gotten together in person yet, even though that was the plan. But Josh will be probably excited to hear, I mean, I don’t know if you know this or not, but a very sought after beer is being released out here in California where I am right now on Friday. So Pliny the Younger is going to be at my local bar—my local, I’m here for a month in this area—my local, and I’m guessing Josh will be jealous that I get to go taste this beer. I don’t know if you’re into beer at all.
I am into weed. You’re in California, I’m in North Carolina, so that is where my head’s at, and I am not high right now. But most of the time I am, especially when I record and that’s I don’t know if it’s a downside. I’m starting to smoke less. But I don’t drink much. And honestly, like that’s my envious side is like you’re in California, and I would love to start the next Untapped— Like, have you heard of Untapped?
Oh yeah. I don’t use it much anymore.
But yeah, I want to call it “Unfiltered.” With weed and marijuana products. Yeah, I think I’m gonna get into the app world and try to develop an app—I’m just kidding.
Well there’s probably some money in that! I’m thinking Untapped’s probably done alright. I did see that on your LinkedIn profile at the very end that you say “Scott is very into weed” I think you said, or something like that?
Ah yeah, so, “Scott loves weed.” And I didn’t even write that—Liz Mason wrote that for me, and I left it in there. I was like, I think we were doing something sometime last year, and she says, “Do you have a bio?” And I said, “No. Do you want to write for me?” She said yes, and she wrote an awesome bio. So I put it on my LinkedIn. And I use that anytime I need a bio. And I left that spot in there obviously.
Nice. Well is it legal where you are?
You know, it’s not.
That’s what I thought.
So there’s that too. I mean, I don’t know if I’m gonna get a knock on my door in a minute. But, I mean, it’s very discreet these days. It’s not like I have flowers or anything. It’s all these vapor pods that I’ll get from other states, when I go to Denver, when I go to California, and I’ll just bring the pods home. My parents bought me a bunch last time they were in Denver, and they drove it back. Yeah, they bought me Lil Wayne’s weed. We’ve got Lil Wayne cartridges. He’s got his own like, proprietary thing going on, Gkua.
Yeah, I mean, we don’t need to make this podcast about that.
No, probably not!
But that’s vertical, that’s an industry vertical. You guys are in craft brewery—Josh is.
Liz is big vertical, because she’s in a state that it’s legal—is the cannabis industry. And that’s, and being the operations manager at my firm, we’re just waiting for the day that it’s legal in North Carolina, because that’s a vertical that we will dive into headfirst for sure.
Yeah, it is big. I mean, every CPA firm that I deal with—I deal with CPA firms around the country—if they’re in a state where it’s legal, they have their own division, just dealing with that. I did a webinar on that industry a year ago where I was reaching out to everybody I knew in the industry that deals with that. There’s just so much information out there, and there’s so many complications, obviously not being federally legal when it comes to the tax standpoint, that I can’t even I can’t even explain it all. But yeah, it’s definitely a big business.
Yeah, I think I’ll call it tokin’ tax… purposes. I just made that up. I need to think that one through.
Look at you. On the fly, a little bit of everything.
Alright. So let’s change subjects. Although I did like the steak and sizzle, because I listened to your first podcast a little bit this morning, and you use that analogy.
Yeah. Is that what it was? Yeah, he was the steak, you were the sizzle?
Yeah. And I still definitely agree with that one. I bring the fun and entertainment. He tries to bring the real questions and keep me aligned. So my head’s in the clouds—in the cloud accounting, not in the cloud clouds, but yeah.
Well see, you’re the idea man, you come up with tokin’ tax right away.
I’m sure someone else has been able to come up with that one. I just made that. I’m sure if you Google it.
Well I haven’t heard it! I’m sure there is.
There will be now if they’re listening to this!
Yeah. You better copyright—here, just say your copyright of that right now on this show.
Trademark. Tokin’ trademark.
Is that what it is? All right. Got it. All right, that’s yours now.
Tri-Merit’s TM—that’s trademarked right there, I’m sure.
I don’t know the legal stuff.
I’m just saying, the initials. I have an affinity for letters.
Oh, trademark. I didn’t even notice that. Yeah!
See, I’m a numbers guy. I don’t see letters, I see numbers. When I see Tri-Merit, I just see what number they are.
I see colors. I think in colors. That’s like, I’m always attracted to the colors. I like how the gradients of blue on yours goes from like darker blue to lighter blue. It’s like the night and day kind of contrast.
Yeah. That was not our original logo. The original one was just straight blueish purple. And then we got a marketing team, and they switched it to that. So I don’t know what that means.
But it really highlights the T, Tri-Merit or tax and all that. Like I can see T-A-X in the logo itself.
Yeah, the first logo, I think I spent $99 on some online company then said, “Here’s my name, can you make a logo?” And they did.
Oh ——, you’re gonna have a lot of money to spend when that ERC money comes in too! I don’t know if you’ve talked about that on the podcast.
Done a few podcasts on that. We’ve done a lot of Employee Retention Credits, for sure. And I’m actually pretty—I’m pretty happy, I’m pretty proud of the fact that it appears that people consider me a leader in that industry.
Because there’s a lot of misinformation out there on the Employee Retention Credit. And I could get on my soapbox, and we won’t do it now. But I could get my soapbox for a while where I just see credits that—I should really concentrate on the credits that aren’t being taken. That should be. Because there are tons of businesses that haven’t taken advantage of. I should. But I get so worked up when I see credits they’re taking that shouldn’t be. It’s just like, you know, the company just said, “Hey, you got $5 million in credit. I’ll apply for it for you.” And I look at the company afterwards and I go, “You didn’t have any credit so I don’t know why you’re being promised these big dollars,” but alright, enough of that.
Sorry, I do that with shifts.
You get me going on the ERC and that’s a problem. I’ll talk all day.
We’re talkers too. So somebody’s gonna have to keep us in line. We’re both sizzle, right?
I was gonna say that’s why we both do podcasts. And honestly, I’m very fortunate to have a pretty big team, and so I get to just do the talking, whether it’s the podcast, whether it’s webinars, whether it’s in-person presentation. And fortunately lately, I’ve been writing a lot of articles for different accounting magazines and journals, which has been kind of fun. So I guess there’s a meat to that, but a lot of what I do is sizzle too, you’re right.
Mmm hmm. Now, you gotta hold down both, because you’re the host, you’re not a co-host. And I’ve always done that to myself the—I needed to anchor myself with somebody that had some substance too I think, because I tend to feel like I’m just a vapor. Like, I like to vape, you know, I have the vape pen, and I’m just vapor, I don’t have a lot of substance. I’m vaporware, right? That’s what Scott is, vaporware.
Well you got some substance, you know. I’ve heard some of the conversations you have. You definitely have substance there, so.
I don’t wanna give myself credit, though.
But you’re the thinker.
Ahh, thinker. You’re the thinker, right? Is that what you are?
Thinkin’, tokin’, talkin’ tax. That’s what it should be.
You got all the T’s. But again, you gotta, if we’re going to use letters, as you’re using the P’s already with Nix, you should be based on the S’s maybe.
Like I got around my neck.
Do you? Oh, Superman.
Oh, well, it’s S for “Sons,” right?
But it looks like Superman.
It is Superman.
It’s a Superman S. I’m gonna get a dollar sign one so I can have 2 Chainz on an episode. He’s a rapper, his name is 2 Chainz.
Well, yes. I think I may have heard that before. I’m a little older than you. So I may not know everything you know, but…
Age is a mindset.
I don’t feel old.
You don’t act old.
Well, my legs, With all the hiking we’ve been doing in California, my legs are feeling old right now.
So check this out: that when you say the letters, right? There’s the P’s. You said S’s. So we’re doing—I did a series on words that start with the letter C. I’m also working on a bunch that start with the letter A. And I want to take these as 20 minute segments and weave them together in one powerful episode. That’s a C, P, and A.
So you could have communities, perspective, and accountability. And those two don’t weave each other—weave together. But you know what I mean? Like if there’s three topics that are somewhat interwoven, that’s gonna be a higher production podcast. I think I’ll call that podcast “the CPA Podcast” maybe.
But that’s not that unique!
It’s evergreen material!
For sure. But the name is—but I understand.
Exactly. That’s the point. I wanted to be un-unique in the name, and then unique in the idea, because somebody’s got to own that name. I mean, I’m not even a CPA. I don’t have it tattooed on my arm like Byron does, Byron Patrick. But, yeah, so yeah, he has it tattooed on his arm.
Who is Byron Patrick?
He’s with Botkeeper.
Okay, I should know this. See, I don’t know all these software packages. I know that you know, you probably deal with—
It’s in the clouds.
I don’t know the cloud stuff. I know some of it. But again.
You’re the tax guy. The Unique CPA.
I’m the tax talker.
So should we get into any substance here?
Since this is going to be the vaporware episode?
I’m already wondering what that producers are going to name this podcast because they come up with so yeah, we’ll see.
Ooh, I’m excited. Yeah. I assume they’re gonna be “Tokin’ Tax,” but I don’t know. Let’s try to come up with a better name.
I think that’s probably good.
Well, I was gonna ask you about Padgett. But I think we might skip that, unless…?
We can about Padgett. So Padgett’s a franchise nationally. Been around for about 55 plus years. I’m a franchisee of Padgett’s and my office is a Padgett office. They’re redefining who they are as a franchise, I think, and I don’t think they’re gonna shy away from that. But they’re not really the same that they were when I started. And that’s intentional, because the industry has changed. The industry. And that’s also why I’m kind of doing this podcast, like Sons of CPAs is a metaphor for the next generation, and the next generation of accountants, next generation of CPAs, the next generation of firms, that look different than they did before.
A lot of things kind of stayed true at the core, even at Padgett—the core of our chart of accounts is never going to change, you know, in the way that we do taxes and you know, certain systems that we have in place through and from Padgett haven’t changed over the years. But the makeup and the outside—the dress, you know, the dress definitely changed. They just rebranded—new brand, fresh look. I haven’t even rebranded our website and I still have a closet full of polos that are old Padgett logos that I don’t want to get rid of. But I don’t even wear polos anymore. I mean, you know, as I got these, I got a lot of Padgett branded stuff like on the other side of this wall or wood you’re seeing, I got a big Padgett logo that was on our office, I don’t even have an office anymore. You know?
Like what we did used to be very localized, And the offerings that Padgett had for franchisees was, here’s your local territory Well, we have clients all over the country, we always have.
And the way that we did things was Xero was different because they had their own proprietary software that most offices were using when I moved on to Xero. And so yeah, I mean, again, I don’t want to go too deep into the nuts and bolts of it, but you know, they’re kind of redefining they got some new leadership and with Jeff Phillips and Amanda Aguilar. You know, they’re just changing, and I’m sort of stuck in the middle of that, bridging the gap, you know, between the old and new because I know the old, and I am embodying the new way we operate.
Yeah, I was gonna say, I assume the change is good, the change is needed?
Yeah, it is. Changes is a good C word.
Oh! So there you go. You’re already working on the first episode.
Already got one. It’s already recorded.
Do you really?
Alright. Well, cool. All right. Some of the things you just said. Let’s talk about that. Because you’re the next generation in public accounting. I think, what’s your podcast’s thing? I wrote it down here. “Question the current state of the accounting and tax industry with the next generation of professionals leading the space. We are all change agents in the industry fraught with money and inertia.” What’s all that mean?
What does it mean to you?
It means that the profession should change and is changing, and that some people—the older generation—is probably not keeping up with change, and you’re out there to help force change. I don’t know the money and inertia part of it.
Yeah, maybe I need to fix that. Maybe I need to change that, right? I have a growth mindset on my intro.
Money and inertia is like, you know, inertia is, you’re content, right? People that are in a firm, and in a practice that’s making money that’s doing well, that’s profitable. What’s the incentive to change? You know, why would you want to change?
What’s the motivation to go and get this new software package or do this differently than you’re doing it, because your clients are still paying you, you know, and you’re still doing fairly well. Across the board, a lot of firms that haven’t changed and that want to do things the same way, it’s because—I read something in Accounting Today, like “the same as last year,” “Saly.”
Yeah, yeah, yeah.
It’s just, keep doing it the Saly way.
Same as last year, and let’s not change anything, because there’s already too much change going around in the world around us. But the accounting industry, to a large degree, is very, very behind the times when you compare it to other industries, and the other ways of doing business. And I don’t know if that’s because of the IRS, it’s because of the bureaucracies and structures, or is it because of the employees and the firms that don’t want to change? So that’s the money and the inertia part. You know, maybe I need to elaborate a little more on that.
Okay. Makes sense. And I agree with you on that completely. I think change has to happen. I think a lot of—I mean, I can see, I know some larger firms that I’m not too sure they’re going to survive, just because their partnership’s average age is so high. They don’t want to change because they’re at the end, and it’s like, “why am I going to do this now?” That may be one reason private equity is looking at public accounting, “Hey, let’s get in now. Because there is opportunities, it is a cash flowing business, it is, you know, having ability to increase with different offerings now more technology,” whatever it is. But yeah, the change has to happen.
I think that was the reason why we started the podcast is to help push things forward and to help move the industry forward. That was our ultimate goal doing this podcast is to continue these conversations around the next generation and to keep moving things forward.
So what are some of the pitfalls that firms are sticking to that they need to change that you see? Or what are the top three or something most needed changes?
Oh, I’m all vapor man. I don’t have that in my back pocket. I can try to tell you like, I think part of it is, you know, everybody has the same conversations and they have been. Time. You know, like billing on time. This is low hanging fruit. I guess, if we’re going to talk about things that still haven’t changed to a large degree, but I think a lot of firms have adopted a growth mindset, or are on fixed fees, and starting to charge some form of fixed fees, starting to restructure the way they think about time.
But we started tracking time last year—we never tracked it. And now we track it in a way to measure profitability on clients to get our pricing right for new clients.
Are you going backwards?
I think so. Like, and so, like I said, I don’t have a very fixed mindset on anything. And I can flip flop from one day to the next on new ideas, because if we have somebody on the podcast that has a compelling argument toward time, “Okay, well, maybe I should check time.” Now I write about how profitable we are with all of our clients across the board, and we’re not tracking it to keep—I don’t micromanage anybody at the firm. I’m very hands off when it comes to that. What I want to know is, are we pricing things right, or can we be more profitable? How can we tap into our profit margins and looking at that overhead, when you’re a firm that does payroll, taxes, accounting, and everything for your clients, it’s kind of hard to figure out where everything’s going, where our resources are going.
You know, offhand, my co-host tries to argue that you don’t need time for anything. And I was in his corner until we started doing the podcast, and more and more, the time conversation continued to come up. And everybody tracks time at their firm. Yeah, he’s one of the only firms in the country that don’t track time.
Is that Jason?
And they do all tax, I don’t think you need to track time on tax, I don’t care about the time spent on tax. I think it’s a lot of the cast stuff we really got to get it get a handle on.
So you’re gonna do it just to find that you’re pricing right and then…?
And then we might stop tracking it.
We’re really trying to redefine our—so I’m also rethinking value pricing too, at our firm, and I’ve been doing value pricing for the better part of like, six years, seven years.
And I myself can do it. But when I tried to scale that out and scale our sales process out—it all exists in my head. There is no clear fixed fee model at our firm, because we flip that upside down. We never track time. We never build on time, but we add fixed fees for everything. But then when I started value pricing, now it’s like “this person is paying this, but this person is paying this, we’re spending more time on this one, and they’re paying less, and much more profitable on this one.”
And then how does somebody adjust somebody’s prices or offer more services to this client, and it doesn’t seem very lopsided. So what we’re trying to do is rebuild our pricing platform—and there’s more P words there—but we’re trying to become more, “profitability with our pricing.
Yeah, good. You’re on a roll.
And create more processes involved in that become more… You know, so it’s just, at Padgett—there’s another P—like, they had a fixed pricing model that they would give everybody, but it was too low. And so I needed to change that, and we shifted the pricing, and we scaled that upward significantly, and realized that clients will definitely pay because they’re paying for a relationship.
And now I just want to figure out what’s a profitable price that we can walk away with and have this revenue range, this industry, this price, you know? And so have a better pricing menu or pricing matrix? We don’t really have that.
No? And when you did the fixed fees, or you’re doing the fixed fees? Is it a three tier or is it…?
Yeah we’re are practice ignition, another fee. And so Practice Ignition, we have you know, we’ve been doing three options. But I started following James Ashford and GoProposal, and he believes that you don’t need three options. Give the person the option that they need, and then work down or work wherever from that. And so we started paralleling, GoProposal and Practice Ignition, and we haven’t started using GoProposal yet, but I liked the theory, I like the method behind it, a pricing menu and, and just everything backed by an algorithm that they have buried into the platform—another P. And that algorithm kind of basically dictates you mark, check all the boxes of this client, and this is the price and then you can tweak different things: frequency, cadence, you know, I guess just the different offerings for that client’s proposal to really drill in. And then so the options are kind of built into that rather than say, “Here’s the three options that we put together based on our call, and now let’s work within those to figure out what’s right for you.” It’s almost kind of the same thing. It’s still kind of offering but…
…it’s automated. So this is a software platform that you can buy and it’s going to help you in pricing?
Sage just bought them out.
Yeah. So Sage just bought GoProposal. I started paying for it—we’re really not using it yet, but was trying to develop this new pricing system so I can get out of the sales process. That’s like the only thing at our firm that I’m still involved in. And I want out.
So what’s your role after that?
I don’t know. I got to figure out my purpose. I’m a podcaster now.
P.P.—Purpose Podcast. Alright I gotta stop because now I’m listening for every time you say a P.
Yeah, I’ll stop. This wasn’t gonna be the P episode but give me some inspiration for our next tips.
Nice. Alright, so that when you were talking about whole thing, I know you recently talked around Baker did that help in your whole pricing model thought process?
Absolutely… Absolutely not?
I don’t know. I mean it did. It did. I just didn’t want to talk about time with him. I wanted to talk about everything else. We talked about the art of business. We talked about his history. And I’m just fascinated by Ron. Like, that was the whole goal of the podcasts back January of 2021, when ee started recording I was like, “One day I want to have Ron Baker on, and Mike Michalowicz.” And we got Mike coming on April, and we had Ron on a couple of weeks ago, or last month. So. I’m just gonna put the mic down. I’m done.
That’s it. You can retire now, huh?
No, it’s like, it was everything that I thought it would be. Like, I haven’t started editing the episode, but he stayed on for an extra, like hour, just chatting with us too. And we recorded for like an hour and a half. So I don’t know what I’m gonna do, chop it up into multiple episodes, I guess make a special out of it or just release it as one.
I mean, I love Ron. I love everything he’s got about value pricing and his theories. And now the subscription model. Because every one of our clients is now paying us monthly for everything that we do for them. We don’t have any—I think we have one client left, that still pays for their tax returns separately, but almost every other one, maybe like 105 clients that are all paying a monthly fee for everything.
And we’re trying to figure out what’s the right fee for us to stay profitable, and you know who really helped on that? We had Jody Grunden on from Summit CPAs. I think his model is almost perfect.
Well that’s funny. I just talked to the guys from Summit yesterday.
Yeah, Andy and Jamie.
Yeah. So, Jody or Jamie? I don’t even know, Jamie.
There’s a Jamie as well. There is a Jody, but Jamie, yeah. That was actually on—they have multiple podcasts that was on one of theirs.
They have like three, too, yeah. So I just yeah, I love what Jody does. And he still does some sales. But the way that he runs the firm is kind of similar, like to go back to your question on what I want to do—I mean, if I continue doing this, that’s kind of how I want to run the firm, is the way that he does. I mean, he just, he has time for anything. He hops on a call. I reached out to him on LinkedIn. And he’s like, “Use my calendar, hop on a call whenever.” and he seems like he’s got this, like, very laid back approach to the way he does everything. And the way that he’s done his firm is a model, I think, for the industry going forward. I think that is, ideally after everybody that we’ve talked to I think they’re doing it right. There’s no right and wrong way. But I think they’re doing it right.
No, I had a great time with them. And actually, I’m doing another recording with them next week. So now I’ll have to, you know, throw your name out there.
“I said what’s up?” Yeah.
Exactly. Alright. So should we do one more serious question then?
So we got into the pricing a little bit with Padgett. What about just business model from a—because, going back to the podcast, you know, kind of shaking up the industry, think changes need to happen. Just the whole business model of partnership. And, you know, there’s a divide between maybe the partner level and everybody else and not all communicating, not maybe on the same page. Do you have any opinion on the whole, you know, should we structure firms differently?
I think Kenji and Matthew at Acuity kind of have it figured out, or they’re starting to—the way that they’re doing it—and it’s almost a reverse. I’m trying to think of, like, where I want to anchor this, so…
I knew you’d have an opinion. So that’s nice.
Yeah. I mean, like, so they run it like a corporation. And they’re running it like a business. But now they’ve merged with Catching Clouds. And Scott and Paddy now have ownership, but they’re not operating this like a partnership model yet, and that’s kind of how a partnership is, right? Different firms merge and then they add more names to the board, and it’s different silos of of basically just still operating as different companies.
Well, they’re trying to create now a—they’ve compensated for their shortcomings as Acuity was, they take on Catching Clouds to bring on another industry vertical, and also highly structured processes and systems into Acuity and now, to try to make it more tightly woven, and they don’t operate like a traditional partner model, yet, they have you know, a stake now. And they’ve they’ve created a merger or acquisition or however you want, an amalgamation, however you want to call it—it’s another good A word actually. Basically like to create another model of how corporations are typically run outside of the accounting and professional services world.
So I like where they’re going with it. I think they’re a good model to move forward with that, because they have a great approach, everything that they do, and they know the industry. And they also know where they want to go as a firm. And they’re, they’re on their way to 11 million now. And they have, you know, over 150 people.
I think that’s actually kind of just a good way to, you know—again, there’s no right and wrong ways—I think the partnership model just doesn’t work. Because there’s not one person at the helm. Even if you say you have a managing partner, you still have to answer to everybody. There isn’t one person that can make a decision. Because it doesn’t matter if it’s unanimous. It’s a decision that has to be made, and no decisions get made. That’s the inertia part of not changing, because nobody can agree. Well, it doesn’t matter. Just get on board, or leave. And most of the time, a decision just has to be made.
And people are afraid of perfection, and they fear that it’s not going to be perfect, or this person is going to be upset with this, or I’m going, or this person might leave. Nobody’s gonna leave. You know, overall, if everybody has the same vision and alignment in where they want to go as a firm, the one person making the decisions isn’t going to ____ everybody over because they made one decision wrong, or they did something that three other people don’t agree with. Decisions just have to be made and change has to happen. I think that’s my opinion.
Now I feel I can give another serious question, because then you can go on but I don’t have any other—I probably do.
Give me a serious question. I can do it.
Actually I can’t even think. I didn’t write any down. I was going off—like this isn’t even a question but just, you know, all these people in the industry that I have no idea who they are. And this is more I think, like software based companies, you’re talking about, like this Acuity and all this?
No, they’re a firm.
They are! I don’t know this.
Pretty much kind of like a CPA firm, but they’re not, you know? Like they can’t—like because of state laws and different things, you can’t be a CPA firm and have Acuity. There’s different states that wouldn’t allow that. I mean, but they’re basically accounting, tax, payroll, you know, anything that a lot of firms do—Acuity. And Acuity I guess sounds like a software company.
That’s what I thought.
Yeah, you know, there’s other firms that I could think of, but not, you know, not traditionally speaking, you know? I think a lot of these firms are kind of butting up, like, you’ve got High Rock that’s another one that’s doing things, right, Liz Mason in Arizona, I mentioned her earlier. But like there’s, I just have models of people that are doing things differently, right? And that’s the change.
I think some firms definitely have the money and the backing, to change the way they do things, and model off the new, you know, whatever, best practices, and firms are going to adapt, and they will, I have no doubt that every big firm will make it through on the other side and be doing things all the right ways and scale continue to scale up and continue to grow. But some might not make it. Some may eventually just, you know, kind of stay at odds with each other. And the partners don’t really agree on anything, and they kind of just stay still and they get left behind.
Yeah, well, I mean, I’m fortunate, I know a lot of firms in the industry. I know, probably the, you know, the bigger firms, that’s just our base. And it’s funny, because you can see the ones that you know are gonna thrive, that are doing things different, that are not afraid to change, like, like you’re suggesting. And then there’s other very large, successful firms, that each partner is its own business, and it’s just, we’re not all on the same page. And I just don’t know how they survive in the long run that way.
They’re very successful.
And they’re make a lot of money. And there’s no reason that they should change now, because nobody’s leaving them—except employees. I mean, I think to a large degree, if they continue the way that they are treating their employees and just working them to the bone and not really focusing on their people as much, that’s probably where they’re going to suffer. Because the market, I mean, the market for CPAs and for talent is—I don’t know what you want to call it. Just shrinking?
Well, the market is shrinking, but I think what’s happened is that there’s not a lot of barriers anymore, either. I mean, you can live anywhere and like we talked about, you know, you work around the country. Josh’s employees, Josh Lance, are everywhere. So if you find that place, like Josh or you, or somewhere that you are going to treat you right?
Okay, yeah. And you’re gonna attract the people that everybody else wants because you give more flexibility, you give more fun, you give more freedom, whatever it is. And if you’re stuck in this big firm that I’m working you to death, why am I gonna stay there?
It’s like, Reconciled. Michael Lee. His firm is—they’re almost at 100 people, maybe they already are. And they’ve always been remote. They’ve never had an office. They never had a structure like that. And so that was their value add. During COVID It was like, “Okay, well, we’re doing the same as everybody else has to do now.” But now on the other side of it, people are going back to the offices and these remote firms tend to be more attractive to the younger base of talent.
And so everybody has a hard time hiring right now. I mean, I can be very empathetic, like, to that situation. That’s kind of why I’m hampering our growth, because I don’t want to have to go back out and hire more to deal with what we have internally. Also, that I’m not focused at the firm as much as I should be.
You’re an open book, that’s for sure.
It’s just… Yeah. I don’t have any secrets. I don’t talk about anything.
Well, you know everybody.
I don’t know everybody, because when you start talking about traditional firms, I don’t even know the names of the top four firms. I honestly think it’s PWC and EY, and I don’t even know the… Deloitte maybe.
Deloitte and KPMG. Alright we got ‘em all.
And I couldn’t tell you what the acronyms are. Price Waterhouse Cooper, maybe, PWC? But I don’t know much about that world. That’s a world that I’ve kind of just never really dipped my head into. I think that’s a whole nother exploration of people that I’d like to meet, is who’s running these big firms? I would like to have them on my podcast and see what they’re doing differently.
Man, I probably had four or five of the top 100 firm managing partners on the podcast. I’m guessing.
You’ll have to introduce me.
Yeah, there’s some really, really interesting people out there.
That’s my next step is to see, traditionally speaking, what these firms are doing to differentiate themselves for the market, to continue to stay relevant, because I think they will. And I think what they’re doing is probably really interesting, too.
Yep. I’ve had—the people that I—Richard Kaufman from Aprio. I think he’s doing a great job. John Sensiba.
Did you hear that Richard changed his middle name? That was kind of a thing with Acuity.
Ohhh, you know this story.
‘Cause North Carolina. My state.
Yep. Yes, it is.
And that’s, that’s another one I would I would love to have Richard on. Because I know that story very well. And I admire that.
I’m just amazed how many people know the story, because I knew about it like, right when that happened, he said, “Don’t tell anybody!” And now I talked to people and everybody knows the story. So it’s funny. I think that’s the second time it’s come up on this podcast in the last couple of weeks.
I love it. Yeah.
But he does interesting stuff.
I was just thinking about that. Cuz Bruce was supposed to be on our podcast.
He’s a big change agent. Yeah, he’s an OG. You know Blake sold his firm to Bruce.
You know, basically, before he became Aprio.
Yeah, I didn’t know that what that whole connection was, but I knew Blake Oliver had a connection with Bruce Phillips. And then Bruce Phillips merged in with Aprio. And now it’s Aprio Cloud. And they might have changed the name again.
And our outsource team is the same one they use—a double role turned into the back room. And that’s because they knew Xero and they had a process. So our outsource team is kind of connected to that as well.
Alright, well, I think we’re gonna have to wrap up. So maybe this is your role going forward as just podcast host, podcast guest? You’re just gonna need a lot more sponsors, probably to make that a career.
I’m gonna need some sponsors. Yeah, I gotta get a new chain. That’s a 10% of our budget line item is my next chain.
Chain like necklace chain? Or what are you talking?
Oh, yeah, diamonds. That’s the dollar sign like so. It’s my initials. Right? The Superman.
See, it didn’t even make sense to me when you said you wanted another S. I didn’t understand why, now I get it. It’s not a number, it’s a letter. That’s fine. So my wife’s an editor. So she, you know, she’s got the letter side of things. I got the number side of things. And we work well together there.
I just have the toddler side of things. I noticed this in my daughter, in my youngest. So I got three kids, and my oldest is 14, and I didn’t see it as much because I was never around. I was always working, like 80, 90 hours a week. And now that I’m working at home, I can see in my youngest, the way she is with her sorting things, taking her pile of toys and moving them around, and like sorting the colors. And I just see that’s how I am now as an adult. Like, I like the organization—that’s my accountant side of me, you know? I want things to be organized, I want them to be you know, kind of just fitting in. There’s always a right answer to things, and I like that. I’m very much wanting them in their place.
I wouldn’t have guessed that.
I know. You wouldn’t have guessed it, but that’s like, deep, deep within me, my subconscious. It matters like the books behind me are sorted by color and I actually—
I see that now! Wow, that’s crazy.
I don’t like it right now because I need to fix that. There’s some colors that need to be moved around.
Is this an OCD thing?
OCD. So when I was born I don’t have CPA behind my name, but I have a lot of letters. I was born with OCD, ADHD. So all of my credentials were just handed to me down genetically. They weren’t, I didn’t have to take a test for that.
See, but this is something that I don’t think kids should be labeled with that kind of stuff. Because then they think that is them. I don’t know, do you have an opinion?
I wasn’t as a kid.
You did. Okay.
I labeled myself. Yeah, it was like my brother was the one who got the labels. And I think it hurt him down the line, because that was like always his handicap. Nobody ever gave me a handicap because I did well in school. Like I ultimately, like I did well, and then I got kicked out of college. And so then I had to figure out my way back into this whole world. But yeah, I mean, I was like, I figured it out later. Like, I definitely, I have attention deficit. And yeah.
Well, that one, I would have guessed.
Yeah, but mix that with the OCD, and it’s a different side of the spectrum, right?
Yeah, I’m sure it’s everywhere.
Oof. It’s hard to deal with me sometimes.
Well, I was labeled as “the shy kid” growing up. And I don’t think that really fits. I just didn’t want to say anything, unless it was important. And now I don’t care if it’s important or not, and I’ll say it.
I think it served you well, though, because now you do have some substance. And I like you know, where you went with this conversation. You know, I think that you’re an introverted extrovert, maybe?
I’ve met a lot of people that call themselves that. And you know, Josh is very much like that, too. You know, just using that example, because you know Josh, but it’s like, yeah, I mean, I think naturally, you tend to be able to move around and talk to, and have different conversations with people because you’re an observer too
Maybe, yeah, I’ll take that. I’m not sure if it’s true, but I’ll take it. Alright. Well, this has been great for me. A couple of things before we wrap up one. Anything else you want to add?
I’ve added enough. We’re on—do you only record for like a half hour for most of these, but 25 minutes is the goal. Oh, is this gonna be a doable episode, or they’re gonna have to really edit it down?
Well, they’ll edit out your part of it, just leave me in is probably what they’ll do.
You’ll have some mic bleed! Like I probably interrupted you a few times.
Oh, I’ve done the same. But we have two tracks, so I think they just take out those interruptions.
So I’m pretty sure that’s what they do. I honestly don’t listen to the shows after they’re recorded. But I think if I talk over you, they probably edit my portion out.
So I listen to mine too much. Because I gotta edit it. I spend like five hours editing, and then I’ll listen to it again, as a listener, after I’ve released it. I learn stuff from it!
No, and I shouldn’t do that. I have to listen to one I recorded last week, just because I know there’s some things I have to edit out. And I have to tell them what to edit. And so they’re waiting for me to go listen to it and tell them okay, at this minute mark…
Did you say something wrong, or did you say something you don’t want to repeat?
It wasn’t me. It was the guest that I’m not sure. He’ll say it’s fine. I’m not sure, if I put that against the legal team, they would want it out there.
Oof. That’s why we don’t have a legal team on mine. We just release everything.
We have about six lawyers that are, you know…
You have to! Because your firm is yeah, and Tri-Merit. You’re representing Tri-Merit.
Right. In fact, one of our partners is an attorney. You know, that’s the thing with Tri-Merit. We’re not all CPAs. In fact, for the longest time, I was the only CPA. Now we probably have four or five CPAs, I’m guessing probably got five or six attorneys, tons of engineers.
You’re on your way to be that after this check gets cashed for the ERC, you’re probably in the top 100 for damn sure, right? Like, did you ever figure that out? Or looked at that?
No, we wouldn’t be top 100. This year, we’ll be very, we’ll probably increase from last year, which you know, which is a huge increase from two years ago. And then we’ll see what happens. I’m kind of like you. I’m getting myself out of everything, except…
Dude! We’re so far removed, right? I can’t answer too many questions. And I love it! It serves me well when a client asks me a question, I say, “You know what, I don’t even do my own taxes.”
So talked to somebody this morning in the firm. And he said, “Oh, yeah, I just handed that off to Julie.” I go, “We have a Julie?” “He goes “Yeah, I think she’s new.” Like I probably should know this.
Well, that’s, yeah, I mean, and that’s like, when you’re out of that process, and you know it’s working? You know, you’ve built something that’s going to last, right?
Yeah, it’s kind of cool. You know, and I’ve said this on the podcast here before, but when I gave up the magic partner role five years ago, and my partner took it over, he is so much better at that process end of things and coordinating everything internally and you know, getting—we have the marketing team now, And we have the specific 179-D team and then we’ll 45-L team and the R&D team and the ERC team. They’re all different.
We all get together, you know, communally on whatever, but there are specific people for specific jobs at the whole, “Well, here’s our, you know, mission going forward.” So that’s not my thing. I’m not good at it. I’m good at this. I’m good at going out and educating CPAs, and that’s where I have fun.
Are you the visionary?
Visionary. I think I’m, I think I’m…
It’s an EOS term.
I think I’m very good—so I haven’t done this. So there’s this, what’s this? There’s this one thing you do where you find your top five traits that make you who you are. I can’t think of what it’s called.
Working Genius? Or?
Yeah, the people in the firm say “you need to do this.” So I need to do it.
Oh it could be like the, I don’t know, there’s visionary, integrator and EOS, but there’s a lot of different personalities.
Sure, it’s something like that. My thing is, I can come up with the idea I can see where we’re supposed to go. I just can’t take us there. I can facilitate the—
Take it 10% of the way there.
I just, I can’t do the whole, “Let’s put all the processes in place to get us there.”
So you’re the visionary, and you described, your managing partner is the integrator. That’s kind of how it is that our firm and everybody needs. Every visionary needs an integrator, and every integrator needs a visionary, because a visionary that can do it all is Josh Lance. He’s an integrator and visionary and that’s hard to come by. Yes, that’s a unicorn. That’s a Unique CPA right there.
There you go. Well, he was on the one of the first probably six shows. We go back, we start with Josh, we’re running with Josh.
The one last thing then before we go, if anybody does want to find out more about you or reach out to you or find the podcast or…?
Oh! I need more followers on Twitter. Just in the beginning too. I got to. Follow me on Twitter I’d never cared about that until like now that I see that I have a very sorry following on Twitter.
I’m the same way.
@ScottScarano on Twitter, and our podcast is Sons of CPAs. Find it on Apple, Spotify, any of those others. And then if you like it, leave us a review too. They love that stuff. You want to connect with me, I’m on LinkedIn.
There you go. Alright. Well, hey, listen, I had fun.
We went off in five hundred different directions.
I was nervous, but you’ve made me feel comfortable. I’m usually not on this side of the mic.
On the other side of the mic.
I’ve gotten used to being on that side lately.
And I’m not high either.
Look at you. You’ve got through this all on your own. I appreciate it. I appreciate you being on this.
Without Lil Wayne’s help.
Well thanks again for being here.
Sons of CPAs on Apple and Spotify
Scott Scarano on Twitter
Scott Scarano on LinkedIn
About the Guest
Scott Scarano is the Owner and President of Padgett Business Services of Raleigh-Durham. He founded the Sons of CPAs podcast in 2021.
Scott’s “Why” is empowering all growth-minded entrepreneurs in his reach to thrive and prosper by approaching problems from a different perspective and analyzing solutions.
Scott earned his B.B.A. in Accounting from Campbell University, graduating Summa Cum Laude. Upon graduation, he spent several years working as a staff accountant at local CPA firms in Durham, NC, when Scott discovered his passion for working with small businesses. He is a licensed Enrolled Agent and a certified QuickBooks ProAdvisor.
Meet the Host
Randy Crabtree, CPA
Randy Crabtree, co-founder and partner of Tri-Merit Specialty Tax Professionals, is a widely followed author, lecturer and podcast host for the accounting profession.
Since 2019, he has hosted the bi-weekly “The Unique CPA,” podcast, which ranks among the world’s 5% most popular programs (Source: Listen Score). You can find articles from Randy in Accounting Today’s Voices column, the AICPA Tax Adviser (Tax-saving opportunities for the housing and construction industries) and he is a regular presenter at conferences and virtual training events hosted by CPAmerica, Prime Global, Leading Edge Alliance (LEA), Allinial Global and several state CPA societies. Crabtree also provides continuing professional education to top 100 CPA firms across the country.
Schaumberg, Illinois-based Tri-Merit is a niche professional services firm that specializes in helping CPAs and their clients benefit from R&D tax credits, cost segregation, the energy efficient commercial buildings deduction (179D), the energy efficient home credit (45L) and the employee retention credit (ERC).
Prior to joining Tri-Merit, Crabtree was managing partner of a CPA firm in the greater Chicago area. He has more than 30 years of public accounting and tax consulting experience in a wide variety of industries, and has worked closely with top executives to help them optimize their tax planning strategies.