Firm of the Future Profile: Blueback Accounting

Welcome to another in a series of profiles spotlighting the 2016 Firm of the Future finalists. Our newest edition features Jay Holmes of Blueback Accounting. Stay tuned in 2017 for details on how to enter our next Firm of the Future contest and continue visiting our blog often.

Danielle Ernst: It’s great to have you with us, Jay! What can you tell me about your firm?

Jay Holmes: Blueback Accounting has its world headquarters in Boise, Idaho. That is supposed to sound a little ridiculous, as we only have one office. We try to keep things light and not take ourselves too seriously. We started Blueback in May of 2011, and initially took any client that walked through our door. As we have grown, we have come to realize that the clients we deliver the most value to are the ones we have the most contact with. We now focus on serving business clients that need payroll, bookkeeping and tax services. That helps us build strong relationships and enables us to deliver awesome service.

DE: What makes Blueback Accounting a Firm of the Future?

JH: There is a lot of hype today about what the future accountant looks like. Some say you have to embrace technology and the cloud, while others say it’s all about value pricing and bundling services. I believe a Firm of the Future is one that disrupts the current business model of accounting firms. It’s less about what is currently being done, but rather, the drive for change. We work in an amazing industry of public accounting that has been entirely stripped of innovation and creativity, and are finally seeing the archaic model crumble.

Just take the name of our firm for instance. “Blueback” is a nickname for the sockeye salmon that inhabits the Pacific Northwest. After the ocean phase, the blueback navigates hundreds of miles upriver to spawn. I think that is a fine analogy to describe what a Firm of the Future is all about. In our space, we’re the ones who are swimming against the current, innovating and being creative.

DE: What has been your experience adopting new technologies and apps?

JH: We leverage as much technology as we can to be effective, without being overwhelmed. Adopting new software is a huge undertaking, especially if we are recommending these systems to our clients. In one instance a few years ago, we recommended an inventory app that we thought was a great fit after a few hours of research into the product. During the training, our client discovered it was limited to tracking inventory value back to only two decimal places. That was a game-ender, and we had to start all over again. We’ve learned that if we are going to recommend something, we have to be 100 percent confident it works well.

DE: How do you choose software and app partners before recommending to your clients?

JH: We always start in QuickBooks® Online Accountant’s App Center, and narrow down our options from there. When we think we have a few, we push them out to our network of accountants and get invaluable real-life feedback. We then usually test them out internally before actually recommending them to clients. QuickBooks Online, Intuit® Online Payroll for Accounting Professionals, Jetpack Workflow, Slack, Solve360, Mindjet and Evernote are our usual staples.

DE: What are some steps other firms can take to get online and leverage new online systems?

JH: Start with your firm and start small. Move your accounting and other software online. Build confidence and see firsthand how much time and energy is saved. From there, it’s a lot easier recommending online software to your clients. Having access to information at any time via the QuickBooks Online app on your tablet, smartphone or laptop is game changing. It significantly reduces the number of non-value added tasks that we used to handle because our clients can jump online themselves. By changing our mindset to value creation, we can now capitalize on the time saved to do value-added things. Our clients perceive this as superior service, and it essentially eliminates disputes over fees and the prices we charge.

DE: Now that tax season is upon us, how are you using technology to help your clients with tax preparations?

JH: We work in Intuit ProConnect Tax Online, and are starting to use the Link capabilities. We’re planning on sending client organizers out of this platform and encourage all documents to come through electronically in that system. We also have online portals for each client so that they can access all of their prior tax returns.

DE: What is your number one recommendation to your clients, with regard to tax planning?

JH: It’s all about cash flow – don’t spend $20,000 on a new truck to save $6,000 in taxes if your old truck runs just fine. You’re bank account is still $14,000 less than if you didn’t buy the new truck and paid the taxes. Think of what you can do with that $20,000 in your business that could earn a better return in the future.

DE: What inspired you to embrace value pricing?

JH: I read Ron Baker’s book, “Implementing Value Pricing: A Radical Business Model for Professional Firms,” a couple of years ago, and it was the most profound thing I have ever read. It completely flipped my world upside down. From there, I scoured the internet for other thought leaders in the pricing arena and have been obsessed ever since. A few others that have helped shape our firm are Mark Wickersham, Jody Padar, Darren Root and Salim Omar. All of these people are game changers, and we are so lucky to have them pave the way for us.

DE: How did you introduce value pricing to your clients? What was their reaction, and what changes have you seen in the way you collaborate with them?

JH: From our inception, we’ve almost always quoted fixed fees to clients and have thrown out billing by the hour. We transitioned to value pricing a year and a half ago, and it has progressed in an amazing way. We started with new clients, and then over time circled back to existing clients and converted them to it. We've now created a system (thanks to Mark Wickersham) that guides us through a value discovery process with clients, and lets us have a conversation around pricing. It's collaborative and, in the end, everyone feels like they win. It has also given us a framework, so anyone in the company can use this template to relay the value we deliver with the associated price.

DE: What are your thoughts on wholesale billing, and how have your clients responded to it?

JH: We absolutely use wholesale billing. The benefits to our firm from using QuickBooks Online and Payroll are so great that we pay for all of our clients’ subscriptions. We don’t want our clients to have any excuses to not use QuickBooks Online. Once they start using it, of course there’s no turning back. Our clients absolutely love it because we force them past a scary transition, and once they are on the other side, they wonder why it took so long for them to make the leap.

DE: What would you say to firms that are on the fence about transitioning from hourly fees to monthly fixed fees?

JH: Billing by the hour is a less favorable approach to pricing for a ton of reasons. Primarily, it puts all of the risk on our clients and inhibits us from being entrepreneurs. We live in an industry with rapid change and technological advancement that is allowing the accountant to be much more efficient. While we’re able to produce quality work in less time, we actually make less money in the bill by the hour model. The major contradiction here is that our services get done faster – think overnight delivery versus standard shipping. This actually increases the value of the service, but our pricing model would push the price down. That’s absurd. If we set a fixed price for a service, then it puts the risk on us to be better business owners, and hone our processes and tools to be more efficient and effective.

DE: What is your approach to acquiring new clients?

JH: There was a study done a while ago about two businesses. One of them spent a lot of resources trying to acquire new clients; the other one spent the same resources providing over-the-top service to their current clients. The company that focused inward grew in droves, as their current clients essentially became their sales force. We are a strong believer in focusing first and foremost on over-delivering to our current clients. Our referrals have grown both in numbers and in quality, and are one of the main drivers of new business.

DE: How valuable has your online presence been in helping you connect with potential and current clients?

JH: Your online presence, whether it be the ProAdvisor® Program, social media or your website, validates who you are as a firm. It strengthens your brand. We are a pretty laid back group of accountants that don’t need to wear ties to feel professional. We’re relatable to our clients, and they really like that about us. When one of our clients refers us to a friend, they usually go to Google and look us up. Being online in various places gives a potential new client the chance to validate what they have heard about us. Instead of a new client interviewing us, we have actually turned it around and now interview new clients to see if we want to work with them. I feel that has a lot to do with our online presence.

DE: How can a firm get started in establishing a social presence?

JH: I recommend getting a younger staff to champion the initiative, or hire it out. Don’t try and do it all by yourself at first. Once a system is in place, it becomes a lot more manageable for everyone.

DE: What future invention are you most looking forward to?

JH: My first tax season was in San Francisco. I lived in Berkeley and took the BART (Bay Area Rapid Transit, a series of both underground and above-ground trains used to travel the San Francisco/Oakland Bay Area) to work every morning. I absolutely loved it. It gave me an hour a day to let my mind wander. I am looking forward to self-driving cars (once they stop crashing) so I can space out on my short commute to work.

DE: What other words of wisdom would you give to a firm aiming to become a Firm of the Future?

JH: Get a support group. There’s a movement out there and plenty of accountants are willing to share. Get connected with groups like Rootworks, Thriveal or New Vision CPA Group. It makes a huge difference having people to bounce ideas off of and learn collectively.