Building a Remote eCommerce Firm with Meryl Johnston of Bean Ninjas

Do you want a bank that has reliable bank feeds? Do you want a bank that has ultra-detail transaction data to make reconciliation and lightning fast? Do you want a bank that connects to both QuickBooks Online and Zero Directly? Do you want a bank that offers you access to your clients' bank accounts using your own login? Do you want a bank that has no account fees, overdraft fees, or minimum balances? Stay tuned to hear more from our sponsor, Relay, later in the episode. Taxes are slightly different in Australia. We don't have as tight deadlines. So our end of financial year is the 30th of June. And as a tax agent, you have up until about the 15th of May, the following year. So the work is spread out. So there's a little bit easier for us rather than the tax deadlines in the US. Coming to you weekly from the on-pay recording studio. Hello, everyone, and welcome to another episode of The Accounting Show. I'm Blake Oliver. And I'm David Leary. And joining us today is Merrill Johnson from Bean Ninjas. Hey, Merrill. Hi, guys. Great to be here. Great to have you. So Bean Ninjas is one of those firms in Australia that was an inspiration to me when I started my own practice, cloud source accounting years ago. Merrill, what makes Bean Ninjas different than your typical accounting firm done under? Well, I suppose we started with the name. I actually ran a different accounting firm which had my initials, MCJ Consulting, prior to Bean Ninjas, and made a lot of mistakes with that firm, found it difficult to scale. And so with Bean Ninjas, that was my attempt with my co-founder at the time, Ben, to build a scalable business model where it was. Bookkeeping only one tech platform at the time. We're 100% zero remote team, which is probably common now, but eight years ago, it wasn't. And fixed fees, three pricing packages that were on our website. And we really were trying to be like a software business where you could come onto our website, sign up, not have to talk to anybody, and then get straight into a really streamlined bookkeeping process. We realized that it didn't quite work like that when you're selling financial services, but that was the original goal. And people could actually sign up on your website. They could pick a package and pay. We started out like that. There was a sign-up pay now option and then into their, through Stripes, so then into their credit details and get going. Then we realized, actually, probably it's worth having a discovery call and having a bit of a conversation, making each other on the right package, setting expectations, and then off we go. You went really far in one direction. You went completely, we're going to operate like a software company. And you pulled back a little bit, but you're still way ahead of most firms here in the United States still. I mean, we've made progress. We've moved to the cloud. That's why we are no longer the cloud accounting podcast or simply the accounting podcast. We made it, finally, it took us five years here. But I think most firms are now. And a lot of us are moving towards those fixed fees and all those types of services. Can you refresh me a little bit on this? Because I listened to probably the first 30 episodes of your podcast back in the day. And it was great. As you documented the process and the journey you went on with your firm from day one. And you, initially, when I think when you launched, I don't know whose book you followed some model where it was like, we are going to launch in 14 days or whatever it was, and you really stuck to that. And getting kind of explained, was the model used and how did you get yourself to be comfortable with that? Because most accountants, they resist change. So to be able to just launch something that's not perfect, not done and just do it. But what was the model of the book that you followed? It was called The Seven Days Startup by Dan Norris. And he actually lives on the Gold Coast where I live in Australia and had written that book, which was applying startup methodology. So it's lean startup if anybody's read that but for service businesses. So he's saying you learn the most when you launch and talk to customers. So that was the model that we followed. My co-founder flew to the Gold Coast to meet me. And in seven days, we built a website. We came up with our fix fee packages and we got a customer within seven days. We'd never done bookkeeping before. We're accountants. So there was, we had to figure out how to do bookkeeping. We had to figure out how you run a bookkeeping practice. But the whole goal was sell. Talk to customers, figure out what they want and don't create a business plan. Don't spend six months figuring out what your market and strategy is. Just get out there, sell through that exercise. You'll figure out very fast. What is important to customers? Make mistakes along the way. And I don't quickly. I love that philosophy because I feel like we accountants have the opposite tendency, which is we want to plan everything out and have it all be perfect before we launch. And then we never launch anything. We're always planning. Oh, and then busy for decades. Right. And then busy season comes. And then we, we wait. And then we, yeah, go ahead. It's funny to say that I'm in a couple of accounting communities where people are at different stages of running their firms. And I was replying to someone yesterday. And he was saying, I want to create the perfect marketing system. I want to have my tech stack right. Who should I talk to? I can spend six months getting this organized. I was saying, no, no, no, don't do any of that. All of that will change once you figure out who your idea or client is and what they want. So don't plan out any of that out, figure that out. And you'll be, you'll probably change it two or three times over the first couple of years. So don't spend all that time planning. Just dive in. You can mitigate risks. So we don't want to be sending out reports with errors. There's a few things you need to get right that you probably need to get that locked down. But a lot of other things can, can happen on the fly or you can learn and iterate. So you started bean ninjas eight years ago. And you've recently moved into an advisor role at bean ninjas. So I take it, that means you've stepped back and you're not directly managing day-to-day operations anymore. That's right. And that was my goal even when we started the business. In fact, I was hoping to get there in two years, but it took more like six years to get that. That's still pretty good. Congratulations. Well done, you know. And it was quite a process. So I had the organizational chart sketched out. And my name in the beginning was basically in every single box. It was doing onboarding, marketing, sales, reviewing work, internal finance. As a gradually step-by-step, I removed myself from every box and eventually moved out of a full-time role. And now I'm part-time in the business. So I'm an advisor, which means I work with the other country leaders. So we're in Australia, the US and UK. And then I still run marketing, but I have a team that does execution. And that's probably more just because I really enjoy it. What order did you take yourself out of the business? What did you start with? So I started with service delivery. So that was hiring bookkeepers. Then it was hiring team leaders who could review work. Then it went to onboarding, which was providing a great first 90 days for our customers and then sales. So sales was one of the last parts. And I found that harder to hand over because I felt, and I was probably wrong about this, but I felt like, I'm instrumental in this process. And I'm going to have a higher conversion rate. Actually, we've got great team members that handle sales. And that was actually key. Because if I handled the discovery call, then it was hard. People would then email me if there was a problem a few months later. So it was really an important step in removing myself from anything client-facing. I had the same, I don't know, call it arrogance, if you will. I don't know, I felt like I was good at the sales. And so I delayed giving that away. And then as soon as I did, our conversion rate went up. I mean, go figure like an actual person who's got experience and trained in sales could do a better job than me. Yeah, it makes sense now. But I had trouble with that. So you're fully remote. That's another thing that's not so new now. But when you started doing that eight years ago, was that like a revolutionary thing where people saying, how could you do this? It was uncommon. And the reason for it was partly because Ben, my co-founder, lived in a different city. So he lived in Sydney. I lived on the Gold Coast. So we were forced to work remotely. But we actually met in a community for location independent entrepreneurs, which is, I suppose, kind of like digital nomads. People that want to run businesses from anywhere. And so that was really important to us. We were trying to create freedom. And you probably can't see it behind me. If I move my head. One of our core values at Benigners is freedom. You got that on the wall there, freedom. Yeah. Yeah. And the other one is always growing. I see that. Yeah. And so that's about continuous growth. So making 1% improvements. But freedoms at the core of what we do. So we wanted to have location freedom that we could run the business from anywhere. And we could hire people from anywhere. And our team could move around if they wanted to. We wanted to have freedom over our time. So no set business hours. We could work when we wanted, not 9 to 5. And then also we're trying to create financial freedom. So we have some financial goals as well from running the business. So that was a core part of who we were. And so we built the business remote. And that gave us the advantage that we could hire people from anywhere back when having team members in different countries wasn't as common. So I see David. You've got a question now. Now you have a location in Tucson. Like that is right. Absolutely. By the way, I've visited a couple of times. Is this your US headquarters? Then the US headquarters are in Tucson? It is. Yes. So my business partner Wayne is based in Tucson. And we say headquarters, but Wayne is the only person that lose there. But the same kind of thing. We do have other team members who work on the US business, but they're scattered around. So we've got someone in Utah, our director of service delivery in the US lives in Barcelona. So we have people that are kind of flexible as to where their location is as well. So your team is distributed. They can be all over the world. They can work whenever they want. So if you're not tracking their working hours, I assume that you're not tracking time. How do you manage their work? So we do actually track time, but that's not performance related. That's to first scope creep purposes, just to check, are we capturing? Do we need to have a conversation with the client about extra work that we're doing? And that's a good way to pick it up. But we're not really managing based on hours. We're managing based on outcomes. So as a remote team, one of the disadvantages is that it's hard to train junior staff. I think training works much better for junior staff when you're actually in the office together. Getting really fast feedback. So we now, we're forced to hire senior staff that can manage their own portfolios. So each team member would have a portfolio of clients that they manage. And as long as they meet their deadlines, we don't mind if they're a mum and they want to work in the evening when their kids are in bed. They want to have time off during the day to go to school assembly or to play sport. It's pretty flexible about the hours that anyone works as long as they can meet their deliverables and also be available for team meetings when we need that. So if someone chooses to take a team leader position, then they have a bit less flexibility because they have to be able to sync up with their team members and be there to support them. So we found sometimes that doesn't suit someone that wants a lot of flexibility, even if they're ambitious. And there's definitely challenges as the team grows in having that level of flexibility. But it's at the core of what we're about. So we just figure it out and work around the challenges that come with people working at different times. And Merle, you guys went niche right away. That's correct. And then can you speak to like the niches you started with and where you're at is regarding what niche you're in now? And then also I know you said you guys are exclusive, but I think now you support QuickBooks online as well. Like kind of what the timeline is for the expansion and changing of platforms and priorities of customers, right? So it was all in evolution. So in the early days we worked with any type of customer and as long as they wanted one of our fix fee bookkeeping packages. So I was off at B&I, which some people might know of. That's an in-person networking group where there's plumbers and signwriters and lawyers. And so we initially had some customers like that. But then we were also involved in online communities with online business owners. And we figured out within the first year that actually we provide a more valuable experience to these online entrepreneurs because not many bookkeepers understand people selling in Stripe and using PayPal and selling in multiple currencies, having overseas contractors. So again, all of these things are quite common now. But eight years ago, there weren't that many bookkeepers that understood that kind of business model. And so we started to carve out a reputation there. And that's actually how we ended up expanding overseas and outside of Australia was because US businesses and UK businesses were talking to each other saying, hey, being in just, they understand this online business model, go and talk to them. They might be able to help you, even though they're based in Australia, they can probably help you. So we can talk about that, the international expansion later, if you want. So we went from every type of customer to only online businesses. And that, so we focused on that. So it used to be the tagline was bookkeeping for online businesses. So we did that in about 12 months. And we stayed with that for around three years. And then we started to realize, oh, there's actually segments of online businesses. There's e-commerce, there's software, there's marketplaces, there's coaches who are selling courses. So there's different business models. And our services are more valuable to some kinds of businesses more than others. And that's when we did a deep dive, let's pick one of these. And so we had a spreadsheet. We were looking at our profitability per industry group. What kind of customers are referring? Work to us. We rated them on if we liked working with them. There was some other criteria. And that's where we realized our e-commerce is that's what we should focus on. But it took us a couple of years again to kind of rip the banner off and change the header on our website to say, Beninger's e-commerce growth accountants. So behind the scenes, we were focusing on e-commerce. We were selling off portfolios of clients that weren't e-commerce. So we were kind of moving towards that. But it still felt risky to actually change the headline on our website. So we moved in that direction, but it didn't have an overnight. It's scary because who wants to narrow their focus and potentially limit the number of clients you can work with and leads you can get? You might cut off your source of new clients. Did you find that you were getting fewer inquiries after you did that? It was the best thing we ever did. So there were a couple of benefits but it didn't happen immediately. So once we decided, okay, we're focusing on e-commerce, there were two things that happened. One, it became really clear what tech stack we needed and where our team needed to focus their attention on learning software like A2X, dear inventory. We could really specialize and go deep on that software rather than trying to learn the tech stack for all different kinds of businesses. So that was really helpful in building our expertise which ultimately meant we could charge much higher prices. So our fees significantly increased once we moved into the e-commerce specialization. We were saying we're experts in this one thing and so we could charge higher prices and then marketing also became much easier. What events do we go to? Well, we go to e-commerce events. What podcasts do we sponsor? Oh, things in the e-commerce industry. So it became very clear what our marketing activities should be and where we should focus our attention. And so again, that didn't pay benefits on day one. It probably took a year of that kind of sustained effort to see the benefits there. But ultimately, we've got, we could charge higher prices. Our team's more focused, so more efficient. And then we built a marketing engine that brings in more of our ideal client. Yeah, I've always questioned this in general. I mean, going back years and years and years, like, I don't know how you can do anything and accounting firm if you're not niche, frankly. Like, it's just, there's too many apps. How do you market? How do you get customers? How does your staff gain any knowledge? I just, I'm always shocked that that more, I'm surprised more don't niche, actually. I don't know how to run the firms. Like, especially for how the bookkeeping firm. Well, that's, but that's my first. Most firms don't have a specialty, right? And that's when they rely on wood at math, referrals from their existing customers, that their staff are pulling their hair out, trying to learn 30 different apps in the ecosystem. And it's hard to go deep on any of them. I think it would make sense just for most firms to have some kind, it doesn't have to be one. If that feels like it's too risky, but have a couple of specializations, focus on that, go to those events, build a profile as the expert in that space. And I think it's a, it's a more relaxed or calm firm to run that more profitable too. I mean, that's, that's how we were. I mean, we didn't, my firm didn't really focus at the beginning at all. We just took all comers. I was a freelancer, I needed money, right? I needed to survive. And, and the problem is once you've done that and you've taken all these different kinds of clients, it's really hard to focus now because you got to let them go if you want to do that. And so, you know, I had attorneys. I had e-commerce businesses. I had agencies. You know, I had, I can't even, a SaaS business. Like, I had all these different clients that I was serving. And yeah, it was a tech stack disaster. So, I, if I was doing it again, I would absolutely niche down. I think the hard part is just getting started with that. Like, from zero, right? To, to be in a niche is really challenging. Or maybe, I don't know, maybe not. Maybe it's easier to start from scratch. What do you advise firms to do? If I was to do it again, I would pick a niche straight away and just focus on that and start networking to go into industry events in that specialization. So, say it was farms or digital, digital marketing agencies. Whatever it is, I'd start trying to build relationships and network there. I think going to the events is like such a good idea because how often, like David, I think you've said this before, all you have to do to pick up clients is like go to the massive conference for whatever it is. Destruction conference, whatever it is. And wear a QuickBooks t-shirt. That's all you have to do. You know, walk around, right? Because there's nobody else there doing that. Sorry, Maryl, I cut you off. You were gonna add something to that. Yeah, absolutely. I think events is the fastest. Well, in person is the fastest way to get that handful of customers. And they do a great job. And then they'll tell their friends in the industry and then also some kind of longer term play, some kind of content play that's a podcast or a newsletter or something that's specific for that industry. So, what are some taxes that are relevant for the construction industry? Or what's their accounting tech stack? So, to things that are not just general accounting content but something that's specific to that industry. So, I think it might take a little bit longer to get the flywheel going because your friend down the road who runs a restaurant they might not be able to work with you family members that might be your original or early clients. It's probably gonna take a bit longer to find those early clients. But then I think you'll get the flywheel going and you'll have a much more enjoyable business to run. How many months did it take for your firm to get expertise in just e-commerce or just in your niche itself? Well, we were already working with a lot of e-commerce clients and we had been for probably four years before we actually committed to it. So, we already were building that expertise but it was hard to go deep while we had all of these other clients. I'd say, probably took six months for us to really feel like we were experts. I mean, I don't really like to use that term expert but six months of really concentrating on that, doing trading with the team, skilling up but also just getting exposure to lots of different clients in that industry. Then we start to see patents and also start to see exceptions and can recommend best practice. Say, well, you want to do it like that but we've got 20 other clients that are doing it this way and this is the benefit and the reason that we recommend you follow this process and this takes back. So it's like, you know, six months minimal till I get good at a niche because I've seen this where you run into accountants at conferences and believe you've talked to them at this conference and like, I'm doing dentists and then you see them six months later and they're doing a different niche and I'm just like, you haven't done any niche long enough till you get good and actually get the benefits of going niche. Well, and Merrill said it was four years of working with the conference clients before deciding your focus. It probably depends how you define good because if you're a smart accountant then you probably, often you just need to know more than the client to feel like they're getting value. So because I don't want people to feel like they can't start in a particular niche. So you just need to stay a little bit ahead of when they're right. Yeah, to be good enough. But then to be good where you can have conversations with the client about, well, this is what we're seeing in the industry. Your margins aren't in line with what we would expect. This is what we're seeing other businesses, similar type of businesses do. Have you thought about this? This looks a little bit odd. Probably have a chat to your supplier about that to have those kind of conversations. It takes a while to build up that industry knowledge and you need exposure. I think to quite a lot of clients in a particular area to build up that kind of knowledge but to process accurate bookkeeping with appropriate tech stack you could probably solve that problem fairly quickly. So it probably depends on the definition of good. This episode of the Cloud Accounting Podcast is sponsored by Relay. Between Blake and myself, we now have three, four, or maybe five business entities, 20 or so checking accounts and dozens and dozens of virtual cards. It would be impossible to manage all of this if we weren't using Relay as our small business bank. Relay is truly a part of the tech stack we use to run our businesses. Relay allows Blake and I to each have our own logins. We can grant access to our team and even our account without sharing passwords or two-factor authentication codes. Relay allows us to grow and scale our baking needs without ever going into a physical branch. I recently added an account to receive inbound merchant services with just a few clicks and had to create a payroll checking account. Again, just a few clicks and I instantly had access to my A.C. ancient vote to give to my payroll provider. With Relay's virtual cards, we can issue debit cards to our team around the world for needed business expenses. I can instantly spin up a new Visa debit card and set both daily and monthly spending limits and when a team member doesn't need their card, I can freeze it until they need to use it again. To learn more about using Relay in your firm and with your clients, head over to cloud accounting podcast.promo slash Relay. That is cloud accounting podcast.promo forward slash R-E-L-A-Y. Hey, do you mind if I go back to an earlier topic, the remote work topic? And allowing people to work whenever they want, here in the US, I don't know what it's like in Australia, but there's this whole big debate going on in corporate America about return to the office. And my wife works for a fortune. I think they're like top 20, you know, Fortune 500 company, right? And that's going on at her company right now. Like everyone wants to go back to work, swipe in their badge. And the idea is like, we all work better together in person and we can communicate more efficiently. How do you get the team communicating when everybody's on different time zones, different schedules? This async communication is really a challenge. What are you doing to make it work? I think it can be a challenge, especially if you've come from an in-office environment where I think you can have what I call lazy conversation. You can just pop by someone's desk, interrupt them, and have a quick chat about something immediately. And it doesn't have to be planned and it doesn't have to be thoughtful. But the downside of that is interruptions and everyone has to be in the office. I do think there can be collaboration opportunities and brainstorming opportunities if you're in the office. So there are some downsides to remote work. But for me, that freedom, I think there's a massive lifestyle upgrade that has been in my case with remote work. And so it's about finding a way of how can you communicate effectively? And it might take a little bit more effort. How can you build relationships? So I talk about some of the things that we do. So I'm a massive fan of asynchronous communication. So for listeners that aren't aware what it is, synchronous is where you're talking at the same time. So this is where recording this synchronously, where all online at the same time talking. But asynchronously would be an email. So I send it and you might read it 10 hours later. Or my favorite, I record a loom video with me walking through something or sharing my thoughts. So it's kind of like a conversation. Then you go and watch it in your own time at two times speed often. And then can think about your reply and not put on the spot and then you can reply back. So we communicate a lot. David is grimacing right now because I went through a phase where I was sending him loom videos every day. I couldn't keep up. He was like, oh no, I got to watch another loom video. Blake, can you just send me an email? People probably say that about me. Loom has just statistics. So I think I generally create about 80 videos a month and then watch a similar amount. And that's actually my preferred style of communication. So I'll give some examples. So every Tuesday, so Wayne's Monday. And we have a scorecard where we look at all of our key metrics for the business. What's our custom account monthly recurring revenue, money in the bank, any churn, team member count. And that's just a two minute loom video. Whereas when we started, that was an hour meeting once a week to go through our metrics see if there were any issues. But there's lots of updates like that that can just be a quick video that you don't need the hour meeting. It takes two minutes to watch it. And you can stay up to date with things. With our content, we have a weekly scheduled content call. But often, so we discuss the agenda before the call. Because videos going backwards and forwards and then we can cancel the meeting often. We don't need it because we've already addressed it asynchronously. So that's one type of communication we encourage. But then we also want to build relationships. And it's harder to build relationships when you're just having more transactional conversations like that about status updates. So we do have things like team games via Zoom. We'd be better in person, but we have people in six countries. So in person is difficult to do often. So the Zoom meetings, we encourage team members to do one-on-one coffee call. So every month they have the opportunity, one-on-one to talk with someone else, have a virtual coffee and a chat and we pay for that and provide the coffee or their meals. And then we also prioritize in-person retreats when we can. So we'll fly people out to Australia. We tried to do one in the Philippines a couple of years ago, but COVID hit. So that's on the pipeline for later this year. So we do prioritize in-person where we can. We do have face-to-face calls, which are more about relationship building, not to talk about status updates or work. And then what a face-in-crowness communication. So how? It's been eight years. Eight years ago, it was you and your co-founder. How big's the team after eight years? So it's almost 30, but that's split across different business units. So there's the US team, there's the UK team. There's a, we call it like a global operations team that kind of does internal finance and some marketing for all of the regions. We did have an Australian team, my business partner there got sick last year, so we had to sell that part of the business. So with that, and so all of that team moved to a new firm. So we're, yeah, between 25 and 30. All right. Is there a head down at the moment? And you said you started with bookkeeping, not with tax. Are you doing tax now? We're still just bookkeeping. So we, that's an interesting question. So when, so the Australian side of the business, so that was where we started. And then we expanded into other countries. And then we also had an Australian firm merge with us. So they were e-commerce specialists called cloud counting. And they also had a tax service. So they merged in and became Beninger's Australia. And so for about a year and a half, before we sold that business, then we also offered tax services in Australia. And I'm in two minds about tax services. So that, that business actually started as a bookkeeping business for e-commerce as well. And then the owner there got so frustrated, working with 30 different tax accountants who all wanted things done differently. The bookkeeping was done beautifully, full reconciled, balance sheet accounts, beautiful work papers, really proud, we're proud of the work that we do. And then the tax accountant would pull it apart and say, why is this here, why is that there? So hang on, where the e-commerce experts, we know there's a reason that we've done it this way. And then we have to explain it over and over again. So she actually went and, she's a chartered accountant, but went and trained and got a tax agent license in Australia so that we could use the accounts that had been prepared. There's a few tax adjustments, but it's pretty easy, not easy. Straight forward to put together the tax numbers, if you've got a really clean set of accounts, and it saves a lot of time working with all of the different accountants. So that was the reason, but I found it stressful. There was a lot of different tax laws to stay on top of. There's a lot of changes. It felt like a higher risk service than the bookkeeping. So on the one side, I like that. We were retaining that margin because it's high margin work and there wasn't that much work because of the woodbookkeeping work we've done. But it disseemed higher risk if you make a mistake or if there's some obscure tax law that you haven't stayed up to date with. So yeah, I don't know if it's for me or not. So you're still doing it or you got you? Well, we sold that. So when we sold the Australian business, the tax fees went with that. Yeah, it's tough call. I mean, here it's worse, right? Like the laws are even more complicated as so I've heard. And you can make a lot of money, but the deadlines are just brutal. And the thing I always loved about bookkeeping is that it's just year round. Maybe you got some extra work to do at the end of the year, the end of the fiscal year, but it's not that much if you've been on top of it. And it's steady. And that's a beauty of it. I'm much preferred. Yeah, the bookkeeping business model. I love recurring revenue. And bookkeeping it makes sense. Just there's work to be done every month. And it's a lot more predictable. So you know roughly what's going to happen throughout the year. You can build a team to service that clients are on retainer paying on the first of every month. And taxes are slightly different in Australia. We don't have as tight deadlines. So our end of financial year is the 30th of June. And as a tax agent, you have up until about the 15th of May the following year. So the work is spread out. So there's a little bit easier for us rather than the tax deadlines in the US. So I first heard about this from Giles Pearson who was a tax partner at PWC in New Zealand and now runs a countess. They have 12 months also from the end of their fiscal year to file taxes. And I went over to my friends here who are tax people in the US. And I said, why don't we do that? Why do we have to have this crazy tight deadline? And even with the extensions, it doesn't really help because you still got to pay. It's just mind boggling to me why we do it here this way. From a workload perspective or a lifestyle perspective, it doesn't make sense. Why would you want everybody to have to cram and do all of that work all in one go? And then what work are they going to do the rest of the year? Maybe they go into cash or something else. But it doesn't make sense from an industry executive. So you mentioned that if you do tax in Australia, you've got additional pressure to get things right. There's more risk. But there's not the same workload compression that we issue that we have here. Is that right? Like do people... That's right. There's not like a busy season the same as it is in the US. So it depends on the business. So some businesses, so larger businesses can have deadlines. For example, I used to work in audit and then if you're doing an audit, then you need tax numbers that are fairly accurate. So the tax team still had to do most of their work before you could sign off on the audit and then big companies only have until the 31st of October to do that. And if you're working in big business, it's probably different. But small business tax practices, like the kind of business owners and accounting firm owners we would know, they can spread their workout across the year. They would complain that they never get a break because there's work for the whole year and clients will still not provide that information until the eight month mark. Yeah, same problem here, right? Universal, universal issues. But I suppose that's, you know, that's a practice management, management issue that can be dealt with. I've always said, I've always, I mean, I've never done it, so I don't know if this would work. But I would love if one of our listeners would try it. Set your pricing based on how soon the client gets you their information. So, so, right? So if you get it to me in month one, it's a totally different price and if you get it to me in month eight and see what happens. Maybe it wouldn't inspire some, you know, timely, timely clients, I don't know. I'd be interested in that too. But that's six lot of courage to reprice things that way, right? It's just everybody's afraid, like, oh, you're going to get rid of clients. If you do that, but chances are, everyone has too much work. Maybe it's better to have a lot of low-playing clients that have all the reduction loader and give you a really nice package. Yeah, right? Maybe that's actually better. Nobody knows because nobody's done it. This episode of the accounting podcast is sponsored by FinDaily. Your accounting clients don't want another shiny out that they have to log into. They want to be met where they live in their email inbox. FinDaily does just that. FinDaily automates the communication of key financial data by sending it to your clients inbox daily. Blake and I have been using FinDaily for a few months now. Each morning, we get one email with the high-level accounting information for both our companies. And even though one company is on QuickBooks Online and the other is on zero, we still get everything in one email. FinDaily senses the bank balances from the bank that bank balances in QuickBooks and Zero, our open bills and unpaid invoices. It allows us to stay on top of key metrics in our business about having to sign into dashboard apps or multiple accounting GLs. FinDaily is fully customizable for each client and has connections to Plagg, Grypers Online, Zero, and Zapier, allowing you to quickly create a daily email for each client with the financial data they care about. If you're ready to provide your clients with the numbers they need in a way they can quickly digest, hit over to accountingpodcast.promo slash FinDaily. That is a accountingpodcast.promo forward slash F-I-N-D-A-I-L-Y. What do you say to accountants and bookkeepers that want to do niche, but they have that mindset of like, what if the niche goes away? What if nobody buys anything from e-commerce? Now you put all your eggs in one basket. I know I have my own pins on it, but I'm kind of wondering where your mindset is. We're seeing that a little bit at the moment because e-commerce boom during COVID. And so we just saw our clients making so much more money than they had projected to make. And now I think there's a bit more of a downturn. And so they're not doing as well, not as many new businesses. So it does feel like we're exposed a little bit because we've picked one niche. And if that industry goes badly, then we don't have another industry. But for me, the upside of focusing on one area outweighs that. And I think there's enough solid businesses. So we're seeing some clients that have had some travel. And that happened in COVID as well. If they were selling travel goods, then they got impacted. So things can happen. But there's still enough solid businesses with strong financials, a good foundation, a good management team, that it feels like we will have enough client work to continue, even in an economic downturn. But it is something happened to the industry. And it's like it did with travel in COVID. And the client base goes to zero. Then I just think, well, start up mindset off we go. We can probably go into another niche and create a stamp there in six months. So we just have to iterate, pivot, and try something different. And off we go again. And now we've got experience. I think we could do it much faster than we did next time. So not ideal. But I think we solved that problem. I would suspect because you're a newcomer. You're going to, you're probably know that there's this downturn happening way before an accountant who has clients doing everything realizes through e-commerce clients are having a downturn. And so I always thought it was an illogical fear, right? Like, yes, it could happen. But you being the expert in that field should know before even the clients know. Because you have access to lots more data. Like you would know that it's coming in theory. You know? Yeah, well, that's, that's right. And so we are seeing that a little bit. It's definitely harder for e-commerce brands at the moment. So there's less capital and they need access to working capital, particularly if they're growing, because they've got to buy the inventory before they sell it. Just global shipping is still a bit of a nightmare and times to get their product. So it does feel like the market is tightening up. And it's harder to, especially with not as much cheap capital around. So we do see that, but I'm not making any changes to the business at the moment. It feels like we're in a pretty strong position to write things out. But if something happens, then, yeah, we'll pivot. Well, speaking of declines and downturns, one of the topics that we talk about a lot on this podcast, perhaps too much on this show, is the accounting talent crisis going on here in the United States? Merrill, I'm curious to know, is there the same decline in accounting, enrollment, and colleges in Australia? There is. So I don't have the exact statistics, but I'm on the Chartered Accountants Queensland Council, which is like an industry body like CPA. So I go along to the monthly board meetings. And so that is one of the hot topics, is that university or college enrollment numbers in accounting are down, which then leads to lower enrollments in the industry bodies, which is contributing to the talent shortage. So it's definitely an issue. I mean, we're seeing it just that it's hard to hire accounting. So it feels like there's a talent shortage, but it also is trending in the wrong direction. What do you think is the cause of that? I think the professions not seen as attractive. There's other options. If you're a smart 18-year-old and you're thinking about, well, what profession should I follow? I think a lot of them are looking at, well, what are the graduate pay rates? What kind of salary can I expect in five years' time? And anecdotally, I think they're choosing fields like finance, banking, or going into investment banking, or tech. So joining, not necessarily a startup, but more like a scale up, where there's opportunity for larger salaries. So I think it's partly that. And I think it's partly a perception problem. I think back when I started accounting, it wasn't seen as a sexy profession. It was definitely seen as a good choice. Get a good foundation. There's a lot of career opportunities. Even if you move into something later, it'll open up the career path for you. And for some reason, I don't think students are thinking like that anymore. Well, I think, I mean, correct. This is by bringing you in will help us, because we see some of the news in your app, and you're not totally, it's not clear in my head. But arguably, the accounting industry has lost a lot of respect down under over the last four or five years. There's been scandals at many different levels, with the latest being the PWC Australia feeding tax possibilities. But even with the governing board of accounting, there were some issues, right? There would be like corruption at the AACPA level here in the states. But it's like national news. It's not like it's just only on the accounting podcast talking about it, right? Can you tell us in the last half decade of drama? Yeah, how big a deal is the... I want to hear about all the scandals going on in Australia. But like, especially the PWC one, how big a deal is it? So that feels like a big deal in that that is national news. And people outside the profession know about it. And it's actually been brought to the attention of the Australian federal police. So it might be a criminal matter. So that is front page news. Some people still in the street still probably wouldn't be talking about it. But if anyone knows you're an accountant and they're like, ah, what do you think of the PWC scandal? So I can explain it briefly if you'd like me to talk about what's happened. Yeah, I think that would be great to get your take on it. Because we've been watching, you know, probably how you Australians watch our elections here. We've been watching the PWC scandal unfold from abroad. So yeah, give us the insider take or the close to the action take. So the quick version is that there was a partner at PWC. And he was involved in advising government. So PWC has a government contracts arm. And so he used confidential information there, which he then fed back to other PWC tax partners and put that in an email to help these other partners sell advisory services to their tax clients about how they could get around these new rules coming out. So he's breach confidentiality and he's using his position with the government to then try and profit and help PWC profit. So that was part of the issue. And then the Senate in the Australian government then realized that PWC not only had used this information for profit, but then they were actively trying to cover up the scandal as well. So that's led to I believe eight partners that have now stepped down. The CEO of PWS Australia has is in the process or has has left. And it's been referred to the Australian federal police. Something else that's interesting is that the government contracts arm was doing about 600 million in your revenue in Australian dollars a year. And that whole business unit, I guess the PWC name is got some brand damage in Australia. That was sold for one dollar to another business that's taking over. That was a private equity firm allegro. Yeah, that's incredible because I also read it was like 20% of PWC Australia's revenue was the government consulting business. They sold that whole thing for a dollar. Yes. That's how that's how much risk. That's a lot of money, right? I mean, like if you just valued it at one time's earnings, I'm sure it was a lot of money. Hundreds of millions of dollars. Hearing anecdotally from people that work in government that if you were hiring someone often they work with the big four, you would you don't want to risk your career by picking PWC as the winner of that tender or that contract. So I think not only they've got all of these brand problems but also any of the government bodies or the staff that work there are going to be very careful about who they award these contracts to in the future. Which I suppose is partly why PWC sold off. And they're basically it's a similar team using a different name. So I don't know whether everyone's going to see through that or not. Yeah, right. It's just put a new probably the same building too, right? Take off the PWC logo, slap on the new logo. Oh, look guys, you know, we no longer do the government consult. What happened here was the crypto audits, right? Like they kind of instantly a whole new website and a whole new company was spun up under different. Oh, yeah. And they separated themselves from big firms. I forgot which one that was. So I think it was it was my old stomping grounds. Arminino had a crypto consulting practice. They cut it off and it started, you know, the same people just go and start a new firm. So and then that happened after N run too, right? With our three Anderson partners, they all just went elsewhere. I think that happens a bit with the consulting arms of the big four with the conflict of interest. I interviewed someone on my podcast recently who was a partner at one of the big four. But the type of work that she was doing, there was always conflicts with what the audit team was doing. So she ended up leaving and working under a different consulting practice. So I guess in that case, their independence and ethics studies were actually doing doing what they should be and preventing conflict of interest work happening. Unfortunately, though, I think like most of the time it doesn't and it kind of amazes me. It amazes me. I never was an auditor. So I never had to deal with this. But it amazes me that we allow audit firms, auditors to work at the same firm that does consulting. And that's how you end up with exactly this kind of situation, this kind of conflict of interest. Like maybe here's a crazy idea. Maybe auditors should only audit. You know, why not? Yeah, absolutely. That does make sense because otherwise you can, so I worked in audit video in Melbourne. And so the auditors were on one floor, but then there was consulting. There was international tax. There was corporate finance. And so you could see the partners come, come marching down and knock on the door of the auditor's office. Yeah. Hey, you just got a new audit client. Can you introduce me to your contact there? You know, I've got some great consulting services. Strategies. Strategies. You know what is cool? Getting CPE for listening to podcast. You know what is even cooler? Being one of the first people on the planet to get a brand new limited edition, the accounting podcast t-shirt. That's right. I'll send you your very own limited edition, the accounting podcast t-shirt. All you have to do is go to accountingpodcast.promo slash free shirt. Fill out the earmark for teams form. And in the comments field, add the cut of your shirt, mail or female. Add your shirt size and shipping address. Then if your firm adds an earmark for team subscription for five or more team members, I'll send you one of our very first and did I say limited edition, the accounting podcast t-shirts that we print. To get your free shirt, hit over to accountingpodcast.promo slash free shirt. That is accountingpodcast.promo forward slash F-R-E-E-S-H-I-R-T. I have two app news stories from Down Under. I want to get Merrill's opinions on. Well yeah, Merrill, I understand that you're an angel investor now. So you're like in the startup ecosystem there in Australia. Yeah, getting started. So I've made my first angel investment and invested in a service business as well this year. So pretty early to it. I'd say I'm in the learning phase. All right, well, then you're an analyst now for the accounting podcast. So let's hear what David has. And both of these articles have very grandiose headlines. So one of them, it's an app called Thrive Day. Like Friday, but with THRI, Thrive Day swings at big accounting platforms with an AI expense tool. Then the other one, this article I found was titled, a new threat to zero, the rise of Henry. This is H-N-R-Y, a one-stop shop for sole traders. And so many spelled names here. Okay. Yes, the misspelled names. I don't know if these are plays on Down Under words and we're not saying it properly. But what's the story on these two companies? Because they went, they're going after zero. Zero has competition now. Which one do you want to start with, David? I'll put it up on the screen. Let's start with Thrive Day. Okay, so this is Thrive Day. Do you know about this, Merrill? I know about Henry, not so familiar with Thrive Day. So... Make tax time or relax time. Thrive Day uses AI to automate accounting and tax. Get your small business finances sorted today. Perfect for businesses of all shapes and sizes. It is interesting. I mean, to me, it sounds quite hard to automate tax. When you talk to the tax accountants that are doing tax work, and there's still a lot of work they need to do to actually get the data. Into a state where it can be filed as a tax return. So I haven't actually heard of this business. But it sounds like this is actually lodging the tax return with the tax, or the Australian tax office, the ATO. I think it's from the full end to end. But their press release is very, they really got the right to call out zero in MIOB. Like, so they're really going after this, you know, the leaders of cloud. Like, it's like the next generation are coming up to pick a fight with zero now. Like, zero is in that. There are, there used to be zero picking the fight with everybody. And now these apps are picking a fight with zero, which are friends interesting. So I might take just generally with AI is that I think zero and a lot of the incumbents are playing around with AI. But similar to the way that zero rose to the front with cloud, I'm completely rethinking how things work. It might, there might be a new accounting platform that's more that's got AI at the core that might come and attack or threaten zero. With the tax tools to that sounds like they're also cutting out the accountant. And I think that was zero's early strategy that they went after the business owners directly and then change strategy and their main or their primary sales channel was accountants and bookkeepers. And they didn't want to be doing customer support to the businesses. So instead they went through the partnership channel of accountants and bookkeepers. And I think that's worked really well for them. So with a business like Friday, if they're cutting out, they're competing zero, I think they're also competing with the accountants and bookkeepers. And I'll be interesting who takes the liability if there's errors in the tax returns lodge. Imagine it's the business owner and then who does the customer support when the business owner wants to minimize their tax obligations and get some advice. So we're how complicated Australian tax law is at the moment. Maybe that would work for micro businesses who don't need a lot of advice. But I can't see it working for bigger businesses where the accountants fees are well worth their time in making sure that things are structured probably. It goes out as way to claim the founder says that Friday is not anti-accountant. You want to replace the account but not anti-accountant. And then Henry really, they're really calling out, you know, the question is this a threat to zero, right? They're going big after that. Now this is a little bit more sole traders, right? It's smaller. It is. So I've actually been chatting with some friends about Henry. And I think they're being a lot more specific with who they're going after. So it's sole traders. So the needs of a sole trader are generally quite simple. So it's not like they're writing a business and hiring lots of staff and have a whole little complication. So I could see maybe there's a market for something like this that it's simple, it's streamlined and it's going after something in particular. And I wonder maybe we'll see more of this in the accounting industry. I think we saw that in software that there were software businesses doing everything. And then they it was their job management platform for painters. So things became a lot more niche and specifically designed for a smaller subset. So it'll be interesting to see with Henry how their users go. Whether they're comfortable, not having an accountant that they can talk to. Is there a price on this website? Pricing. Because we were talking about two episodes ago. Let's talk about the pricing. You know, QuickBooks is the big dog in the States and keeps raising prices and zero kind of undercuts them. But the opposite's happening in Australia. And so is this? I think they charge differently, right? I have never seen an app that charges like this. They're charging a percentage of income. One percent of income capped at $1,500 per year. That is, that's very interesting. And I've actually suggested to firms to consider charging or at least ballparking or pricing. Rule of thumb using percentages of income or expense. Because that's what I ended up doing. I had this complicated matrix that I had built in Excel to do pricing. In the end, it would end up being a percentage of revenue. It was what I would figure it out as. Because I don't know, that's how I feel like business owners think in a lot of cases. I'm the budget 1, 2% for bookkeeping and accounting. So what is zero a month down Australia? They've just had a price right. So I think they've got the different packages. But the standard one was about $50 a month. And then they have a lot of extras. If you want projects or if you've got a certain number of staff. So it was around $50 a month. But I think the price has just increased. But I can't remember to what. So zero got you for everything. You might be paying $15 a year. Maybe. Yeah, depending on. Yeah. So this has a cap of $1,500. Wow. But that includes the service site. It sounds like as well. Yeah. It's a software. Plus the service. I am really curious to know. I feel like Australia and New Zealand have led the way for accounting technology. For many years. For modern firms. And is this is this where things are headed? Is is my question. Is it software plus a service? I mean, it seems compelling. If I was a sole trader, sole proprietors we call them here. Maybe I would sign up for this and have it all rolled together. Well, these are both kind of like QuickBooks Live. Right. And they have live in the tax. But going back to my prediction when we first broke the news on QuickBooks Live. Zero will have to do this one day. They say they'll never do it. But if you have competitors in your own backyard doing it now. You're going to have to do it. But there's no choice. I think it would be such a hard call for zero because the whole sales channel. It has been a kind of book keepers. But I've seen a shift in their marketing over the last couple of years, where it was all pushed through the accounts and book keepers and trying to keep them happy. But there's more direct to business marketing happening now. And from what I understand of this strategy, I think they're doing more of that. But also if you think of the early adopter curve in Australia, they're getting to the lagans now. They're pretty much all of the Australian accountants are on zero. And they've got to work pretty hard to convert the last few. But if they do this, they're going to upset the people that have generated the business for them. But I don't know whether they'd lose customers or not because I don't know. The business owners have a relationship with their accountant. But they also probably don't want to move off of the software. But something else I think is interesting is the margins that software companies make. So the margins aren't going to be the same on the services side. If I owned a software company and I didn't have to do services, I'd probably just want the software unless there was some kind of competitive reason or building a mode or some other reason to have services. I think the opportunity, the huge opportunity for them when it comes to that margin is the impact of GPT. If you can use chat GPT to answer and resolve most client questions, you could have really good margins, right? Because you could have an army of people just available on the back end like they have with QuickBooks Live and TurboTax Live available and monitoring everything that's going on. And that goes to like do it. Those tech companies, the Uber's and the lifts and the door dashes and the delivery companies, they're all valued at software valuations but they always have humans that have to do all that work. And there's a chance, a lot of this labor that you could do this in a way and scale it because in theory, the technology could help with the labor. It's not as labor-intense. Because who knows, true self-driving cars will ever be here or grocery deliveries by robots, right? That's so far away. Well, the problem with self-driving is you've got to get to 100%. But if you just want to increase the margin on a service business, you only have to automate half of what those people are doing so they can have twice as many clients. You can't have the automated car drive halfway there and then tell you to drive the rest. I always thought, couldn't they have self-driving cars that are remotely operated by people in a call center? People might be weirded out by that. How do we fly drones all around the world? Are kids to do this? They're all trained. They've been training their whole lives. Actually, the next version of Grand Theft Auto is just like you're actually driving real people around in their Uber's. Anyway, I've taken this way off track. And maybe that's a good way to end this episode. Merrill, you have your own podcast. Would you like to tell our listeners about that and where they can listen? Yeah, it's called the Lifestyle Accounting Show. And I'm interviewing people from the Accounting Industry accounting firm owners. And it's about how can you have a great professional career but also live a great life and a life of balance, have time for your family, and do other things. So you can find that at lifestyleaccounting.co. So .co. And Blake, you've been a, I guess, there and had one of our popular episodes recently. Yeah, I love that. That was so much fun talking to you about content creation and we will put that link to that episode in the show notes. And I would still play your old podcast. Being in just podcast. Like, if you could still go back to those old episodes you almost join Merrill's thought process on their journey as she's building the firm. It's a valuable, isn't it? So that's at bininches.co. B-E-A-N-N-I-J-A-S. And that would be probably the first 30 or so episodes where we're recording live as we're going through decisions about building the firm and challenges what's working well and what's not. David, anything else you want to add? I have no more down under stuff. So I saved it up. I saved it up for this episode. Thanks for chatting with us, Merrill. You can follow David. He is at David Leary on all the socials. I am at Blake T. Oliver. We'll see you around. And David, I'll see you next week. Bye everybody. Bye. Thanks, bye. Time for the class of fives. We don't like uncategorized transactions, we do like cats, and we love uncat. Thousands of accountants and bookkeepers have switched from sending spreadsheets of uncategorized transactions to their clients every month to using uncat. It's easy. Uncat syncs with quickbooks and gets clients responses back so fast you can close the books on time every time. And you're going to love the price. Uncat is just $5 per month per client. And bonus. 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