Part of the Power of Focus Mini-Series
What really separates great accounting firms from the rest?
That question is what led Brannon Poe and Ian Brennan to put together this mini-series. And after years of working with firm owners across the country, lifting up the hood on hundreds of practices, the answer kept coming back to the same thing: focus.
Welcome to the Power of Focus, a mini-series produced in partnership with Accounting Practice Academy. Throughout the series, you’ll hear from APA alumni, members of our Poe Group team, and other industry voices sharing real-world perspectives on what happens when firm owners get deliberate about where they put their energy. Whether that’s focusing on the right clients, the right staff, the right type of work, or simply on where you as the owner add the most value, the firms that get this right see results that compound over time.
THE CONVERSATION COVERS:
- Why 80% of accounting firms are underperforming, and what the top 20% are doing differently
- Two distinct models for a highly profitable practice (high complexity/high value vs. high volume/high efficiency) and why most firms get stuck between them
- The “closet analogy”: why pruning before you can grow is the move most owners resist
- How client selection may be the single biggest lever in your practice
- The fear behind price increases, and why most firm owners are sitting on more pricing power than they realize
- What it looks like when a younger, entrepreneurial owner grabs hold of these concepts and runs with them
KEY INSIGHTS:
The most successful firm Brannon references had $2.3 million in revenue, owner cash flow over $1 million, and the owner took three months off per year. That kind of result doesn’t happen by accident. It happens when a firm owner gets deliberate about what they do and who they serve.
One of the more counterintuitive moments in the conversation: raising prices often doesn’t cause the client exodus owners fear. Many APA members have implemented significant price increases and seen far less pushback than expected. In some cases, the goal was to create capacity by losing clients. The clients just didn’t leave. The real takeaway: if you truly want a client out, you have to terminate the relationship directly. Most firms have far more pricing power than they use.
On client selection, Brannon puts it plainly: the most frustrating thing in your practice is usually the wrong clients. The right ones are already in your portfolio. The work is to study what you love about those relationships and find more of them.
This episode also touches on why change usually doesn’t happen until something forces it. A health issue. A key staff member leaving. A wake-up moment looking at the P&L. Brannon and Ian both note that the concepts themselves aren’t complicated. The gap is in commitment and follow-through, which is exactly what structured accountability is designed to close.
BOOK RECOMMENDATION:
The 80/20 Principle by Richard Koch
ABOUT THE SERIES:
For more tools and resources from Accounting Practice Academy, visit accountingpracticeacademy.com.
TIMESTAMPS:
- 00:00 Introduction and episode overview
- 01:49 Where Brannon’s thinking on focus began: the 80/20 Principle
- 02:50 What the Pareto Principle is and why it shows up everywhere
- 04:43 How reviewing hundreds of CPA firm financials revealed the pattern
- 06:24 A real-world example: $2.3M revenue, $1M owner cash flow, 3 months off
- 08:06 Two models for a highly profitable CPA firm
- 09:51 Why both models are harder to build than they look
- 10:40 Niching down as a focus strategy, and why it scales faster
- 12:01 Delivering value as the core of everything
- 13:04 The closet analogy: you can’t add until you prune
- 16:19 APA alumni spotlight: Bill and Chris Murphy and the first domino
- 17:45 Pricing as a lever most owners aren’t pulling
- 20:09 Why creating capacity through price increases often doesn’t work the way you’d hope
- 21:52 The shortage of CPAs and what it means for your pricing power
- 23:45 How to identify your right clients (the answer is already in your practice)
- 25:24 Asking your staff who they love working with
- 27:40 The mindset obstacle: the belief that you already know it all
- 28:25 Why change usually waits for a crisis, and how to change before one arrives
- 29:26 Greg Toner: what happens when a younger owner grabs the vision and runs
TRANSCRIPT
Ian Brennan (00:40):
Hi, I’m Ian Brennan. You may recognize me from past podcast episodes. I’ve been on a couple—one interviewing you and Carol about the making of Accounting Practice Academy and then some others in this series. I’m the Workshop Director of Accounting Practice Academy. I’ve been doing that for several years now. I’ve been with Poe Group for about six years and I’m loving it. I get to work with accounting firm owners and help support them, help build a vision, integrate and make changes to just run a better firm and essentially just enjoy life a little bit more.
So today I’ll be interviewing Brannon to ask some questions about the power of focus in accounting firms. We’ve got this mini-series that’s all about the importance of focus. Brannon, I’d like to pull out some pearls of experience when it comes to what you’ve seen focus do for accounting practices. So I guess our first question—how did you start thinking about the importance of focus in accounting firms?
Brannon Poe (01:49):
Well, you know, it was about 15 to 20 years ago. I picked up a copy of a book titled The 80/20 Principle by Richard Koch—not the Richard Branson, the famed one that founded Virgin, but Richard Koch. And it was a book that just sort of changed the way I looked at a lot of things, not just in business. If you haven’t read that book, I highly recommend picking up a copy. It’s just a really interesting phenomenon about how humans behave and how we operate.
Ian Brennan (02:45):
Yeah, for those who don’t know, tell us a little bit about how that principle works, where you see it.
Brannon Poe (02:50):
Yep. So it’s also known as the Pareto Principle. It was discovered by an Italian economist, Vilfredo Pareto. He noticed—this goes back hundreds of years—that about 80% of the property was owned by 20% of the people. And so that got him studying all sorts of things. He realized that this pattern is just repeated over and over and over again in all sorts of human behavior.
You know, if you think about it yourself, if you look at the clothes in your closet, for example, most people wear about 20% of their clothing items 80% of the time. And that 80% in your closet very rarely, if ever, gets worn. It’s that way with traffic patterns in your house, the rooms that you occupy in your house. The pattern is just infinite in its applications.
Ian Brennan (04:05):
It’s all over.
Brannon Poe (04:14):
That’s what got me really thinking about the power of focusing. If you think about from a business perspective, I’ve known this for a long time because I’ve been in sales for a long time. And it happens on sales teams. Like 20% of the salespeople will produce 80% of the results of a company. And that’s a pattern that’s just consistently reported with sales organizations.
When you look at client lists in an accounting firm, when you look at the activities that you perform on a daily basis, 20% of those activities are probably responsible for 80% of your results, and so on and so forth. We work with a lot of firms and we see a lot of profit and loss statements because people are always wanting valuations, they’re wanting to get their practices ready for a sale, they’re putting their practices on the market. So we’re privy to all that financial information. And I’m reading this book and I’m doing the work that we do and I’m recognizing—man, there is this huge disparity in results in accounting practices. There are practitioners out there that are just doing amazingly well because they’re focusing well. The pattern became very recognizable to me as I’m looking at different accounting firm financial statements on a daily basis. So that’s kind of how it hit me.
Ian Brennan (05:53):
That’s great. It’s fascinating to be able to apply that across the board, but specifically niche down into accounting firms. Because we’re selling them, we’re lifting up the hood, we’re seeing what’s going on inside and pulling out all the pieces that reflect that 80/20 principle. Can you think of any stories—without naming names—or examples where you really saw that principle? Were there some firms doing it really well and some that were struggling with it?
Brannon Poe (06:24):
Yeah. I would say most are struggling. 80% are struggling and 20% are doing really well. There was one in particular, a practice that we sold probably 10 to 15 years ago now. In today’s dollars, these numbers would be even higher. It was a single-owner firm. The revenue of the practice was about $2.3 million. That’s rare in itself at the time for a single owner to do that much revenue. And then his cashflow to owner was over a million dollars a year. So his margins were really, really strong. And then the real kicker—he took three months a year off.
This is a phenomenally successful firm. So what’s the key here? That was a really interesting example. And there have been several of those examples. You’ve heard the expression, “there’s more than one way to skin a cat.” Well, it’s the same here. What he did, what he was really good at, is one model. But there are several models I’ve seen that are very successful, and they’re going about it in different ways.
Ian Brennan (07:54):
Could you enlighten me to a few of those models? Are some people really focusing on mix of service? Are some people really focusing on advisory or the clients? What are the angles some firm owners could take?
Brannon Poe (08:06):
So I’ll give you two very different examples. One ties in with the model of the seller I was just talking about. His model was high price, big clients, high-value services, very strong team, very complex work. High price, right?
And then the other model I’ve also seen successful is high volume, low complexity, high efficiency, also having a good team, but that kind of efficiency model.
Ian Brennan (09:01):
Got it.
Brannon Poe (09:03):
I think a lot of accountants chase the efficiency model, but they don’t get the pricing right or they don’t get the staffing right. It’s hard to build that.
Ian Brennan (09:12):
Or they’re trying to be simple, but they’re still bringing on too many lines of service. So it complicates it because you’re trying to go in too many different directions.
Brannon Poe (09:18):
Yeah. I mean, both of those models are kind of hard. They both have their separate challenges. To do really complicated professional services, you’ve got to have the right people and those people are hard to find and they’re hard to keep. Whereas the high-volume model, it’s easy to get out of focus. You start piling on different service models and service things, and then before you know it, you have complexity because you’re trying to do too many things.
Ian Brennan (10:05):
These sound like these models feel almost like threading the needle. You’ve set yourself up, you’ve found the good staff and it’s taken you years to build. If somebody’s just getting started really trying to focus in, I’m sure there’s a couple areas—I mean, we’ve seen it in the workshop—where you can focus. I think about a future episode that we’ll have in this series with Greg Toner about focusing and niching down. Can you tell us more about how that can affect a practice and what that can do for a firm?
Brannon Poe (10:40):
Niching down. That’s a really good example of focusing, right? You become laser-focused on one niche or niche, however you want to say it. And what happens when you do that is you get really good at that work and your competence gains really quickly when you’re highly focused on one industry or one vertical.
The other thing that happens is I’ve seen those models scale faster because if you’re competing with a generalist—let’s say you’re specialized in dental practices and you’ve really got a really good model, a good client service model. The clients love the service because you know the industry, you’re knowledgeable, you’re competent, and you’re efficient because you’re probably doing some volume as you scale. It’s pretty easy to get new business that way. And it’s also easy to get business where geography doesn’t matter. So it’s easier to scale geographically in a niche.
Ian Brennan (11:58):
Right.
Brannon Poe (12:01):
Because people say, okay, the quality is there, the value is there, right? You become more valuable to the client. And ultimately that’s what this all boils down to—are you delivering value to the client? And the more value you put out in the world, the more is going to come back to you.
Ian Brennan (12:20):
How does somebody sit down? What’s that conversation with themselves look like? Am I providing the value I need? What else should I be offering? What kind of questions get that stirred up?
Brannon Poe (12:34):
Well, I think realistically, a lot of the times, let’s go back to that closet example. You walk into your closet and one day you realize—your practice is your closet, let’s say. And one day you walk into your closet and you realize like, this is a mess. I’ve got stuff everywhere. I have these jeans that need to go. They don’t fit. I haven’t worn them in 10 years. But you go into that closet every day and for some reason it doesn’t bother you. And then one day it bothers you.
And what most often has to happen is you’ve got to prune and you’ve got to create capacity before you can do anything else. And so I think a lot of practitioners find themselves in the situation where they’re overwhelmed. They’ve got to do something. And the niching idea, sometimes a lot of people go, “Gosh, I can’t just eliminate work. I can’t not—if I’m narrowing my market down that much, I’m limiting myself. I’m missing out.”
And so it’s sort of, especially if you started the firm. I mean, if you started the firm from scratch or you started really small and you’ve grown, you become very accustomed to feeling like, “I’ve got to grow this business. I need more. I need more clients. I need more revenue.” And so pruning just feels really weird to have to do that.
Ian Brennan (14:22):
Right, right. But I think about that closet, walking in and having the stuff that you don’t wear be in the way of the stuff that you do wear and that you do want to prioritize. What you’ve called out that I like is noticing when frustration shows up or when you’re tired of a situation. Those are your alarm bells telling you something needs to change. We need to refocus again. We need to create capacity.
Brannon Poe (14:48):
And what’s crazy is, I don’t think this is part of human nature, but a lot of times we don’t change until a crisis happens, until we have to change. Either it’s a health problem or it’s a relationship problem, a family problem, whatever it is, a key staff member quits. There are lots of little trigger points that just take you over the edge. But what’s kind of frustrating about human nature is you can avoid the suffering. You can change before you need to. But few people do.
Ian Brennan (15:19):
Right. Yeah, I get it. I totally get it. I mean, that’s the experience with all of us at all times in so many different areas. It’s about looking at the practice and realizing that there’s—I can’t remember the exact book—but they talk about the domino habit, the first habit that changes so many others behind it. And I think about how there’s a couple of those, depending on how your firm’s set up, that if you knock the domino, whether it’s a packaged service model or a price increase or letting go of a couple of clients, you knock one domino. And I’ve heard from so many firm owners through the workshop, it all just started to fall. We just started to change things and move things. What are some other examples from APA alum that you can think of where they kind of knocked that first domino or what that domino might have been?
Brannon Poe (16:19):
Gosh. Well, I think about Bill and Chris Murphy, who took Academy, I think, in 2022. I know we’ve got a podcast that we’re going to release from them about their experience. Really, when they looked at their client list and they saw how much work was being done for how little money on a certain segment of their client list, that was like a profound aha. And then they started taking action. They took really swift action. They pruned their clients that weren’t profitable. That takes a lot of courage. And it’s not easy because you have relationships with these people.
Most accountants are very caring and very truly client-focused. And so that’s a really hard thing to do—to let some clients go. And it’s an example of, they were ready to make change. They were committed to making change. So once they had that, I think that was the first domino for them.
Ian Brennan (17:45):
Yeah, I think about pricing as well. There’s just so much. You keep saying it’s a big lever that a lot of people aren’t quite tapping into. Could you tell more about that? The importance of pricing and how it’s not a threat to your clients. It is a way to serve them in a healthier way.
Brannon Poe (18:11):
Yeah, I mean, if you’re undercharging your clients, they probably know it, but they’re not going to come to you and say, “Hey, I think you should charge me more.” It just doesn’t happen very often. I’ve just seen it so often. There’s so much underpricing that happens in this profession for a number of reasons. I think part of the reason is accountants are caring, they’re client-focused, and most accountants or a lot of accountants are somewhat personally frugal.
And so maybe they’re price-sensitive in their own life and they don’t realize that their clients are really not that price-sensitive. And so there’s this fear of implementing price increases that might upset clients or might lose clients. There is a lot of uncertainty when you start raising prices. Sometimes clients do leave. Sometimes they do get upset. That’s part of it. And so, again, it takes courage to make that move. But a lot of times, okay, you need to lose a few clients, right? You need to lose some clients that are not profitable. And it’s okay to lose some.
Ian Brennan (19:38):
Yeah.
Brannon Poe (19:39):
Yeah, you’ll get a few phone calls. But I would say most of our members in Academy who have raised prices have been surprised by how little pushback they got on price increases and how few client losses they’ve had. We’ve had members really make some pretty dramatic price increases in order to create capacity. And they realized, it didn’t create any capacity. Nobody left. Maybe one or two left. And they’re like, “What do we got to do to create capacity?” And the truth is if you really want a client to leave, you’ve got to just terminate the relationship.
So there’s a lot more pricing power. Most accounting firms have more pricing power than they realize. And when they do, it drops to the bottom line. It just all drops to the bottom line.
Ian Brennan (20:41):
I mean, we always say nature abhors a vacuum. When you create space, no matter what, it will fill back in. So to be able to lean in—
Brannon Poe (20:52):
Yeah, you’re right. I mean, you’re exactly right. Losing a client is not as big of a problem as people think either. Even if you lose your largest client, most practitioners who’ve been in the business for a long time have experienced that. Maybe not because they terminated a relationship, but maybe the client outgrew them and they lose their biggest client. It’s happened to a lot of people. And I always ask when I hear that, I say, “How long did it take for you to replace that revenue?”
And most people think, “Gosh, it didn’t take long at all. I got filled right back up. My year-to-year numbers didn’t even really change that much. And the following year I was way up.” So, especially in this market, there’s a shortage of CPAs in this market. So there are a lot of firms—I talk to practitioners and they say, “We’re not taking new clients. We can’t. We have to even be selective about the referrals that come to us.” And I hear from people all the time, they call around and they can’t find a CPA. Nobody’s taking new clients. So it’s a supply and demand equation. It’s pricing power.
Ian Brennan (22:08):
Yep, yep.
Brannon Poe (22:10):
And you shouldn’t feel guilty about that because it allows you to pay your people better. It allows you to give them better working conditions. And the profession needs that to attract new people into the profession because new people are not coming into the accounting profession because the old guard is not running their firms well.
Ian Brennan (22:36):
80 hours a week isn’t going to cut it anymore. It’s not what anybody wants to work and it’s not what they need to be working. There is a way to provide quality service with a team that’s happy, with a payroll that’s good, and the clients are coming away knowing that they’re being taken care of, knowing that their business is being served well. There is a transformation going on in the accounting industry and I think that the old guard is having to change places.
So yeah, it makes me think the importance of pricing comes with—I’m coming back to the theme of focus—the right clients. You need to be able to focus on the right clients to know what to price, how to price, what they’re wanting. And that takes almost a deep dive into their needs and what they’re asking. And it takes time and space with that ideal client. Can you talk about maybe some examples or just some things you’ve picked up when it comes to the right client, how to find and focus on that right client?
Brannon Poe (23:45):
Yeah, well, I think client selection is probably one of the biggest things that we have uncovered as… I heard a quote, I can’t remember where it came from, but the biggest source of head trash is to have the wrong clients that are just frustrating and you don’t enjoy talking to or working with. And as you know, we’ve got a podcast by Rick Payne all about client selection and the importance of it.
I think the right client is going to be different for different CPAs, right? The right client for one might definitely not be the right client for another for a variety of reasons. But what I say is, you probably have some really good clients that you like, you enjoy working with already in your practice. Well, there’s your answer right there. Just go and analyze those top relationships. What is it you like about them? What is it about the work that you like? And are you good at it? Do you know you’re providing value? It’s generally… it goes back to that value proposition. You know you’re providing value. You see it, the client sees it, they appreciate it. That’s usually what it is.
And unfortunately, back to the closet analogy, you walk in that closet and it’s hard to figure out where to put your attention because it’s just such a mess. And if you’re putting out fires all day long in your business and it’s just this chaotic day-to-day existence, you’re probably ignoring those better clients in some way because you’re not focusing on them.
Ian Brennan (25:45):
Right, right. And I even think where you’re tuning your staff’s focus, I actually imagine sitting down and asking your staff, “Who are the clients that you want to work with? That you come away feeling like you did a great job, you feel valued, who are they? Let’s build a list. Let’s build that A-tier list.” And then, yeah, I think the answers are under the hood. It requires taking some time, stepping back and doing a diagnostic on your own practice.
We talked a little bit about, and I smile as I think about this, the idea that CPAs—it’s tricky to implement because they know it all. They’re very smart. And I mean that with all endearment, you’re very smart, but there is a… that can keep you in the weeds.
Brannon Poe (26:32):
Yeah, well they are, they’re smart.
Brannon Poe (26:43):
Yeah, it goes back to that quote I had in my email signature years ago: “The biggest obstacle to learning something new is the belief that you already know it.” And that is a real obstacle. And so I think you have to be willing to realize—maybe I don’t have all the answers. Maybe I’m not focusing my efforts in the right places. Maybe there is a better way.
And if you can’t get to that point, then you’re going to get the same results that you’ve always gotten because you’re going to be doing the same things that you’ve already done. It’s really simple. So, again, this stuff is not really that hard conceptually. Most things are not. They just take focus and commitment.
Ian Brennan (27:33):
Easy to wrap your head around.
Ian Brennan (27:40):
Before crisis.
Brannon Poe (27:42):
Yes, before a crisis.
Ian Brennan (27:45):
Or I mean, even in crisis, but ideally if this podcast can get into your ears and help you think, “How can I focus today? How can I focus now that will set my future up?” We think about it in terms of, let’s say you want to sell the practice in three years or five years or 10 years, there’s a couple of things that can allow you to enjoy the practice, have a healthy team, a great client experience for those 10 years, but it requires some focus.
Brannon Poe (28:17):
Yeah.
Brannon Poe (28:25):
Yeah, you need to have a reason to change, right? And if you’re trying to exit, that usually is a very motivating reason to make improvements, to get your firm ready, to optimize it for the market, which a lot of our members do. But don’t you love it when someone who’s early in their career gets a hold of this stuff and just grabs it and runs with it?
I mean, Greg Toner is a great example of that, right? Just a younger, really sharp CPA. I’m referencing some of the podcasts in this series. So if you haven’t seen those, go check them out, or check them out once they get released.
Ian Brennan (29:14):
Yeah, well, even if you want to talk to that example a little bit more, like what lights you up about his journey? What feels so meaningful?
Brannon Poe (29:26):
Well, you know, just the success. I think when you get someone who’s—I mean, let’s face it, when we get older, we start to lose a little bit of energy. But when we’re young, we have a lot of energy and we haven’t made as many mistakes. So we’re more enthusiastic about approaching things because we haven’t ever really been burned. But just seeing him first of all, grab the concepts and you can see it, right? You can see the excitement once they take hold of a concept and they’re like, “Wow, I can see how this would work, right? I can see it. I can see the path. I can see the vision.” You kind of light up their vision. And being young and energetic, they’ve got the energy to execute. And so that’s what’s exciting—is seeing someone really excited about a new vision, excited about a new concept, and then quickly putting together what their path is and then just executing on it, energetically. It’s really something to see.
Ian Brennan (30:39):
Yeah. To move swiftly. I don’t want to say it’s lacking in awareness of the risk. I think he still understands the risk. I think a lot of practices still know that that bottom line or that revenue matters, their team matters, but there is a willingness to let some smaller risks bounce off you to be able to achieve the goal, to take the short-term pain rather than just put that extra pair of jeans back in the closet and we’ll deal with it later.
Brannon Poe (31:12):
Yeah. I do think there is a temperament component to this, right? I do believe Greg, for example, is very entrepreneurial. His mindset is—he came to us with very entrepreneurial mindsets where it’s okay to take a little risk. I can accept some imperfection. I can accept a little messiness in making this happen. And yeah, I do think our Academy is very much a mindset workshop. It’s really about those mindsets and getting you to challenge the status quo and getting you to think more strategically.
Ian Brennan (31:53):
And I would say that Academy aside, if any of these ideas spark some desire to change your focus, whether it’s your pricing or your clients, what we’ve learned, what I’ve seen working in the Academy for these past six years is that any temperament, any firm can focus on something and really see a benefit regardless of the workshop. You’re able to still make some changes in small ways that can be that domino to knock the rest. They have huge potential upside.
And it really does—if I can encourage anything—just stepping away for a moment, creating some space for your firm and lifting up the hood, just analyze your client list. Just take some time to see your practice from a high level. It can transform the future of your practice.
Brannon Poe (32:48):
Yeah, awesome.
Ian Brennan (32:51):
Well, great, Brannon. Great episode. This has been a ton of fun.
Brannon Poe (32:52):
Ian, you’re really good at this interviewing stuff. You should do it more.
Ian Brennan (32:58):
Thanks. Maybe I will. Maybe we start an Accounting Practice Academy podcast and just get into it. I love it. Great, Brannon. Any last things to share with the audience?
Brannon Poe (33:12):
No, I think you did a great job of grabbing some of this stuff. I think the only thing I’ll leave them with is, you know, we do have several episodes in this series that we’re producing. And hopefully if you got value today, keep listening to some of those and I’m sure you’ll get value from those as well.
Ian Brennan (33:33):
Great. Thanks everybody.
