1st Steps to Lucrative Virtual Controller & BPO service

Your Title Goes Here

How to Take the First Steps to a Lucrative

Virtual Controllership/CFO

Business Model

A Special CPA.com WebinarSeptember 24, 2014


Thomas Gawne,

CPA, Director, CPA.comDirector of Professional Services for CPA.com.28 years in the tax and accounting technology sector.


Empowering CPA’s and businesses for the Digital Age

CPA.com is a subsidiary of the AICPA


Dixie McCurley• Trusted CFO Solutions, Co-founder & Partner

• Headquartered in Atlanta, GA (9 Staff)

• Certified Intacct® BPO Partner & Bill.com

• QuickBooks ProAdvisor, Member of Mindshop International

• After spending six years in Corporate Accounting at EarthLink, Inc and four years to Business Advisory at GH&I, LLP, Dixie is building the Client Services Accounting Practice at TCFOS.

• Nationally recognized thought leader in cloud-based accounting.

• As a self-proclaimed “foodie”, Dixie spends her free time dining at the hundreds of restaurants Atlanta has to offer.


• Expanded CAS Verticals – to Professional Services, Distributors, Start-ups

• Currently 12 staff• 2 CPA’s• 1.5 Business Developer (FT)• 1.5 Intacct Champion• 3 Managers• 3 Staff• 1 Project Manager

• Fully Integrated Intacct, Bill.com and Paychex, Avalara

• Complete Paper-less System

• Vertical Restaurants - CAS

• Started with 2 clients & 3 staff

• Used many different accounting systems

• Attended CAS Roadmap to Profitably workshop in DEC 2011

• Consulted clients as outsourced CFO & Controller Services

• Realized by the hour and “consulting” wasn’t as great a value as outsourcing their accounting operations

• Signed on with Intacct & Bill.com

TCFOS OCT 2011: TCFOS 2014:

Trusted CFO Solutions Then & Now


• Assessments - $10,000

• Implementations - $10,000 - 25,000

• Monthly Services - $7,500 – 10,000

• 2014 - Projected 230% Revenue Growth year over year

• Now, fit clients to our services

• Say “No” a lot, if not a good fit

• Profitability = 30-35%

• Assessments - $2,500

• Implementations - $2,500

• Monthly Services - $2,500

• 2013 - Experienced 338% Revenue Growth year over year

• Started with 2 clients

• Would fit our services to clients

• Say “yes” a lot, even if not a good fit

• Profitability = 10-15%

TCFOS OCT 2011: TCFOS 2014:

Trusted CFO Solutions Then & Now

Our Agenda

Opportunity in the Cloud

Restaurant Niche Example

Key Elements to Success

Next Steps


The Second Industrial Revolution - 2010

“The full implications of the new machine age are going to take at

least a century to play out.”

- Erik Brynjolfsson, MIT Professor,

co-author NY Times Bestseller

“The Second Machine Age”

Source: TED Talk (Feb. 2013)


Growth of Cloud Computing

And Many Others

Small BusinessHas Moved to the Cloud

Network growth: >150% last year$150M recently

raised

QuickBooks® Online 500K users

Paychex Equity Investment

Efficiencies saving 90 minutes per employee per day

Serving over 10k firms and top US banks

$45M recently raised


Hype Cycle for Emerging Technologies - 2013

Source: Gartner’s 2013 Emerging Technology Hype Cycle

Cloud Computing

Technology Trigger

TIME

VIS

IBIL

ITY

Peak of Inflated Expectations

Slope of Enlightenment

Trough of Disillusionment

Plateau of Productivity

Big Data

http://www.gartner.com/newsroom/id/2575515




Moore indicates that we have crossed to early majority…

Inno

vato

rsEar

ly A

dopt

ers

(Visi

onar

ies)

Early

Maj

ority

(Pra

gmat

ists)

Late

Maj

ority

(Con

serv

ative

s)

Lagg

ards

CHASM

Helping Firms With Adoption Curve

Firm Solutions

CPA Profession


1990

2000Today

Transformation of Client Accounting

Today’s opportunity

Cloud-based

Integrated

Paperless

Dashboards

Real-timeSmall businesses push work

back to firms to focus more on their business

Role of firms reduced,QuickBooks introduced

to small businesses


Accounting Services Today• The Opportunity

• Ride the wave of demand for outsourcing

• Leverage cloud technology to achieve productivity

• The Challenges

• Commodity practice

• Low margins

• Hard to scale

• Hard to upsell to higher value “virtual CFO”

services


Firm Value Chain

Input Data

Assemble & Verify Report Analyze &

InterpretAdvise & Consult

Higher Value & Future Focus

Lower Value & Historical Focus


What is Needed?


What is Needed?

The Roadmap to Success

• Model for evolving Accounting Services as a practice

• A guide to technology investments required

• Change management strategy – internal and external


3 Key Strategic Decision Points

• Determine current and desired state of your client accounting service practice

• Evolution of client accounting services

• Identify technology investments appropriate to stages of transition underway

• Organize change management around specific business practice transformations and technology deployments

• Orchestrate change initiatives that minimize wasted efforts and maximizes lasting improvements


Getting Vertical through the Cloud

Business Intelligence Reporting

Real-Time Client Collaboration

Standardized Workflows

Client Accounting Capabilities

driven through

cloud computing

• Professional Services – 90%

• Construction – 76%

• Retail – 75%

• Not-for-Profit – 73%

• Manufacturing – 65%

• Wholesale Distribution – 61%

• Technology Companies – 59%

• Transportation – 48%

• Hospitality – 45%

• Franchises – 40%

• Government – 29%

Most Popular Client Verticals for Outsourced Accounting Services


How the Restaurant Niche Got Started for us . . .

Passionate about the food service industry

Wh

y t

he R

est

au

ran

t In

du

stry

?


To Transform Restaurant Accounting

Restaurant Group

Today: Disconnected Systems Ideal: Connected/Holistic

QuickBooks POS Payroll

Manual Processes

Restaurant Managers

Many checkbooks

Several locations Bookkeeper Inventory


Significant Growth Opportunity

• Vertical Growth – distributors & suppliers

• Customer Loyalty & Financial Reporting

• Management Accounting & Restaurant Consulting

• Scalable from 1 to over 1,000 clients

• Leads to other Niche areas – retail, hospitality, private clubs, franchises, etc.

• Are you keeping up with the growth?

Wh

y t

he R

est

au

ran

t In

du

stry

?


Typical Restaurant Structure

M-ConsoleShared

Corp Restaurant 1 Restaurant 2 Restaurant 3 Restaurant 4

CompanyM-Console

Company, Inc.Currency USD

CompanyCurrency: Cayman



CompanyCurrency EUR

CompanyCurrency: EUR

CompanyCurrency: CAD

CompanyCurrency: GBP

Consolidations 1Currency: Cayman

Consolidations 2Currency: EUR

Consolidations 3Currency: USD

SIMPLE

COMPLEX

Single Accounting Console• One common set of data across all locations• Locations are created within single

transactional environment• 1 TIN for entire company for all locations• No ability to manage locations independently• Books maybe balanced by location and/or by

entire company

Multi-Entity Shared• Shared Data

• Chart of Accounts, Customers, Vendors etc.

• Single Intacct Database• Single Base Currency

• Each entity may be managed independently or from top

• Books maybe balanced by entity or by entire company

• Consolidations performed from top level


KPI’s

• Number of table turns

• Food categories

• Turnover of total room

• Guest Counts (growth)

• Per person Average

• Controllable Income

• Average Ticket Price

• Food & Beverage Mix

• Historical vs current

• Total # of seats

• Comps

Other Measurements

• Prime Costs

• COGS + total labor + ee benefits

• Food & Beverage Mix

• Revenue 60/40 average

• COGS 33% food; 25% bar

• 13 week periods

• Labor

• Mgmt 4%; direct 14%; other 5%

• EBITDA: 25-28%

Restaurant KPI Examples


• Restaurant operators• Scrutinize food and

beverage costs• margin by menu item• by location • by server

• Business actions that increase gross margins

• Role-based dashboards

• Management by KPI’s

Reporting Examples

Food Sales

Liquor Sales

Other Sales

Food Sales

Food Costs

Food Margins


Trusted CFO Solutions – Our Method

AssessmentPhase• Discovery• Assessment• Recommendations

ImplementationPhase• Project Planning• Prioritizing Goals• Take Action

ClientServices• Back Office Accounting• Virtual CFO• Cloud based Solutions

Fixed Fee Products &

ServicesRon Baker says:

“Billing ≠ Pricing”

Alternatives to pricing your services based on client-perceived value, rather than hours spent


The Critical Pieces of Getting Started

• Learn and Build out Your Roadmap

• Champion Needed to Lead the High-Value CAS Firm

• It starts with the Business Plan

• Don’t go it alone – Employee, Professional and Client Advisory Boards

• The standardized practice & “Getting Vertical”

• Mandatory Client Assessment as a stand-alone engagement

• “Before-and-after” presentation

• Engagement Letter and Service Level Agreement

• Procedures Manual (shared with client)

• New Client Orientation

• New Client Training

• Technology

• Financial Statements, KPIs, Critical Success Factors


The Standardized Practice• Consistent/standard Chart of Accounts (COA) as one package

price. Premium fees for a custom COA

• Standardized services by industry vertical and by type of service

• Standardized Internal Management Reports/Services

• Procedures Manuals for each client

• Service Order Requests for services outside of the engagement agreement – retainer always on account for these requests and for “concierge” services

• Dedicated client-service staff to provide top client experience, while sheltering our production staff


Client Accounting Services• The services offered within Client Accounting Services groups

generally fall into three categories:

Financial statement preparation using the accounting data provided by the client, which often requires compilation

Transaction processing, such as entering accounts payable, receiving approval for payments, sending payments

CFO/Controllership services, includes reviewing financial performance and providing input and strategies to improve business processes and performance


Increasing Firm/Client Collaboration

• The economy requires closer CPA firm and client collaboration to deliver better financial advice, help them make faster, smarter business decisions and improve their financial performance– Real-time vs. after-the-fact decision making

• Firms are focusing on technological improvements to enable heightened collaboration and are making the following shifts to their client accounting services practices:


Client Accounting Services

• Firm typically has 25-200 clients

• Clients have $1 - 5 Million annual revenue

Firms are charging value-add bundled retainer fees for these services – $1,500 - $5,000 / mo.

Most Common Services:

• Financial Statement

Preparation

• General Ledger/Trial Balance

• Payroll Reporting

• Cash Flow Management

• Payroll Preparation

• Transaction Processing (BPO)

• Virtual CFO Services

Majority of Outsourced Accounting clients have between 5-25 employees

CPA Firm Client Accounting Services Profile


Service Delivery Platform

• The service delivery platform is a term used regularly in the “cloud-computing” world. • defined as the available technology components and/or solutions that will

be used in the client accounting service delivery model

• For example: could include the following integrated business solutions– Intacct Financials-on-demand– Bill.com cash flow and bill management – Paychex integrated payroll services– XCM workflow management


Steps in the Prospect-to-Client ProcessQualification of prospect / analysis of existing client opportunities

Learn how at the Client Accounting Workshop!


Cost-Estimating Tool


Defining the Scope


Assemble Your Team

Partner-In-Charge CAS Business Group

Business Development Marketing/Sales, Finance,

Human Resources, Technology, etc.

Director of Client Accounting Services

Virtual CFOImplementation & Client Support Services

(separate positions as the firm grows)

Client Relations (Client

Scheduling, Contract

Maintenance, Client

Satisfaction)

Virtual ControllerAccounting Manager

Accounts Payable

Accounts Receivable

Payroll


Plan

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=y-5S1BHl2-9SMM&tbnid=bjFQ463E4T9zKM:&ved=0CAUQjRw&url=http://www.planware.org/pwb1/pwb04.htm&ei=nKOGUtyuENLgsATqn4HADw&psig=AFQjCNF5OjK5nFIOrJHE00HLq27htiJK6w&ust=1384641806944826

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=d3WUI7QAAzdVYM&tbnid=mSGcMWJTBqxg7M:&ved=0CAUQjRw&url=http://www.practicalhacks.com/2008/03/08/marketing-briefly-3-page-business-plan-format/&ei=-6aGUr35EsnEsATst4GYCg&psig=AFQjCNF5OjK5nFIOrJHE00HLq27htiJK6w&ust=1384641806944826


Marketing – Top Firm Challenges

• Client Accounting Services has not been adequately positioned and sold “within the firm” so is not positioned for success publicly.

• Limited resources and lack of year-round consistency• Strong reliance on passive word-of-mouth for sales• Focus on developing sales through new customers• Limited market intelligence and ongoing research• Lack of complete budgeting and ROI reporting to measure

results vs. expectations


Segmenting Your Market

• Firms who have successfully identified and built their marketing and services around industry verticals are able to get the most from each marketing dollar by specifically targeting WHO they need to reach and WHERE.

• In the CAS practice, clients expect us to know more than they know about how to win in THEIR industry in addition to ours. Firm marketing materials should demonstrate that we “get it.”


Types of Marketing Activities

Marketing Activities

Present at Industry Events

Georgia Restaurant Association

Webinars

Whitepapers

Client Testimonial

s

Case Studies

(Simple & Complex)

Interviews and Articles in Industry Publication

s

Connect with Restaurant Owners

• Speak to the chef, compliment food, decor, service

Establish a rapport

• Ask what systems they use, offer recommendations for issues, tell them you’re establishing a niche, get feedback

Give reviews and feedback

• Post comments on Yelp, Open Table, Food Spotter, Social Living. Tell them you are; tell them you did.

Attend Events

• At their restaurants, Taste of Atlanta, Dine America Gala, Georgia Restaurant Association, Culinary Colleges


Other Workshop Topics

• Engagement letter templates and service level agreements

• Key cloud based solution case studies to build the model

• How to build your business plan

• Key performance indicators (KPI’s) success factors

• Rich virtual toolbox of templates and documents to complement

• Collaborative engaged exercises to enhance learning

• Small facilitated group to enable shared learning amongst participants!


Join Us for the Next Workshop

Seats still available at our Atlanta Workshop!

October 22nd & 23rd

Six Concourse Parkway, Ste. 800Atlanta, GA

• Sign-up through CPA.com


Workshop Contest

• One lucky attendee will win a complimentary admission to the October workshop to be held in Atlanta (a $1,295 value)

• Winner will be notified by early next week


Questions & Comments

Slides available at: http://www.slideshare.net/CPAcom

Thank you!

1st Steps to Lucrative Virtual Controller & BPO service

Business

Transcript of 1st Steps to Lucrative Virtual Controller & BPO service