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[Podcast] Ed Mendlowitz of Withum Explains How to Build a Highly Successful Outsourced Accounting Practice

Topic: Podcast

In this episode of the AI in Accounting Podcast, you will meet Ed Mendlowitz, an Emeritus Partner with Withum, a business advisory services firm based in East Brunswick, New Jersey.
In this engaging and information-rich episode, Ed Mendlowitz, who has written 29 books on accounting and writes a weekly column for Accounting Today, offers a wealth of information for those who are just starting out in client accounting services and want to build the best possible foundation for their practice:

[Podcast] Ed Mendlowitz of Withum Explains How to Build a Highly Successful Outsourced Accounting Practice

“A lot of people don’t start out with a goal. I call it a ‘business plan’. You don’t need to have a 40-page business plan, but I tell people that want to start a business, ‘Write down your goal. Where do you want to be five years from now? Who are your customers going to be?’ … What I suggest that accountants do is put down a list of all the clients they had last year, and what services they sold them, and what fees they get, and then project it out five years, and if they’re the same clients and the same services five years from now, they’re not going to succeed—no matter how good they’re doing. They got to have new services, and … new clients in the pipeline. … Even a sole practitioner could develop a business plan for added services. It makes no sense not to grow.”

Ed also shares his views on why outsourced accounting is here to stay:

“This is a perfect service to outsource. … Everywhere I go, everything is outsourced. The electrician is outsourced. The landscaping is outsourced. The guy who cuts the lawn is outsourced. … The roofer is outsourced. Every single thing that could be done in a house is outsourced. We’re in an outsourced world. People no longer do things for themselves. … We’re in an outsourced mindset, and I don’t see any reason why bookkeeping and client accounting services can’t be outsourced. … I don’t understand why every single business doesn’t outsource its accounting work. … There’s no reason for companies to acquire in-house expertise … when they can outsource it.”

Listen to the episode in full to learn more about the importance of:

  • Publishing content that educates and builds trust amongst your peers and attracts new clients,
  • Embracing change and innovation, instead of allowing yourself to become locked into your current practices and technology, and
  • Standing out from the crowd and standing the test of time by being consistently available, returning phone calls, responding to emails, and calling your clients before they call you when they have a problem.

All this and more is discussed in detail in this episode of the AI in Accounting Podcast. To learn more about Ed Mendlowitz and contact him with questions about business advisory services or CAS, you can check out his LinkedIn profile and visit his bio page. Additionally, Ed gives free CPE courses on the CPA Academy website.

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A lightly-edited transcript follows below:

Ed Mendlowitz:

By the time we finished doing it, it becomes a five-hour and $50 sale, but we got five clients out of it, where we generated $50K a year revenue from each of them that had nothing to do with the QuickBooks.

Speaker 2:

Welcome to the AI in Accounting podcast, which helps accounting, bookkeeping, and finance professionals prepare for the future of outsourced accounting and accounting technology. Plus, you'll learn how to use artificial intelligence (AI), automation, and machine learning to scale your accounting practice. Now, here's your host, Joshua Feinberg of vic.ai.

Joshua Feinberg:

Hi, it's Joshua Feinberg from the AI in Accounting podcast, and I'm being joined today by a very special guest. I have with me today Ed Mendlowitz, who is an Emeritus Partner with Withum out of their Central Jersey, East Brunswick, New Jersey office. Ed, thanks so much for joining me today.

Ed Mendlowitz:

Joshua, it's great to be here.

Journey to Outsourced Accounting

Joshua Feinberg:

Excellent. The first place I usually like to start out with these podcast interviews is to understand how you got to where you are in your career journey. What led you to originally get into accounting? I know you had a firm that was acquired by Withum, and then another firm before that. I know you're super active with the AICPA and Accounting Today. Can you fill our viewers and listeners in a little bit on how you got to where you are in your position?

Ed Mendlowitz:

Yeah, it's something I like to talk about. We can spend about three hours, and I don't even have to get my breath. I always wanted to be an accountant. My father was an accountant. I liked what I saw, and that was my goal, and I fulfilled my goal. I'm living my dream, so to speak. I still am.

Advice for Getting Started in Client Accounting Services or Outsourced Accounting

Joshua Feinberg:

That's terrific. That's terrific. What advice would you give to someone that is just getting started in leading a client accounting services or outsourced accounting practice? And I'm very interested, too, because of your career trajectory, to get your feelings on just the client accounting services in general, and how it's morphed into that whole business model, but let's start from the beginning. Someone has asked you to take them under their wing as a mentee, and they're curious: “Ed, what should I do? What's super important to focus on in the first five or 10 years of building out a practice like this that focuses on small businesses?”

Ed Mendlowitz:

First of all, I get asked that a minimum of five times a week; a minimum of five times a week, people call me. The best model that I tell people to do in accounting is what you call “client accounting services”. When I started in accounting, I did write-ups, and I was embarrassed to tell people I did write-ups, so I would say other things. Today, everybody's doing write-ups. They're called “client accounting services”. People want to do forensic accounting; it's a lousy business model. You want to do audits? Audits is a good business model, but you've got to have critical mass. Client accounting services creates a repetitive, sustainable cash flow. Every month, you get a check. You do work for the client; you get paid. It doesn't matter how small the check is; you're going to get a check every month, and you're building an asset value because you have a practice that you could sell. It's also scalable because when I started, I did everything in pen and ink in these big ledgers. Today, they have robotics and artificial intelligence. It could be done halfway around the world, but I tell people to get started first; do the work yourself; see how it works, and when you start to grow, then you switch over to one of these fancy services, but I think that's the best model. Plus, individual tax returns is another good model. You don't get a check every month, but you get a check every year, and it's very hard to lose a tax client. People call me; they want to get started, and some of them walk away disappointed. They feel I would tell them the exciting world, all the jazzy stuff that accountants do, consulting services, all that stuff. That's important to do, but it's not a good business model. The good business model is checks every month, and that's what you get with the client accounting services—in my lingo, with the “write-ups”. Also, in today's economy, and the way business is set up today, businesses no longer need to hire an in-house bookkeeper, which becomes very expensive. Especially, a lot of businesses don't need a full-time bookkeeper. They need a part-time bookkeeper, or they need a 60%-time bookkeeper, and they're paying for 40% that they don't need, so they give the bookkeeper other work. This is a perfect service to outsource. In the summer—we're not in the summer now, but of course, I still do this—in the summer, I work around my neighborhood, and I work all over. Everywhere I go, everything is outsourced. The electrician is outsourced. The landscaping is outsourced. The guy who cuts the lawn is outsourced. People build wine cellars in people's houses. The roofer is outsourced. Every single thing that could be done in a house is outsourced. We're in an outsourced world. People no longer do things for themselves. Of course, we're not going to restaurants now, but when people ordered meals in a restaurant, they're ordering it today and bringing it in; they're outsourcing their cooking. We're in an outsourced mindset, and I don't see any reason why bookkeeping and client accounting services can't be outsourced. It's a great business model.

Joshua Feinberg:

Excellent.

Ed Mendlowitz:

I told you a little bit more than you wanted to hear.

Joshua Feinberg:

Yeah, no, that's terrific. What I'm curious about, also, I know Withum has the Partner Network, from what I understand, you were instrumental in getting going and growing over the years.

Ed Mendlowitz:

Yeah.

Building a Network to Help Smaller Accounting Firms

Joshua Feinberg:

What originally led you to want to build a network to help smaller accounting firms?

Ed Mendlowitz:

What happened was, I had a practice in Manhattan, and we had 50 people, two other partners, and we had 50 people in our firm. We started the firm. We didn't buy any clients. We grew the firm. It was all grown organically, and we started doing CPE for the staff. This is before CPE was mandatory. I left that practice in 1988, and I formed a practice with Peter Weitsen, and I used to do an elaborate pre-tax season we called “CPE”. I had a pre-tax season meeting, where I would let everybody know about our procedures, what to do, what to follow, what the updates were, and Peter and I, we had six people working for us, and we were going to put together this CPE program. I said, "For six people, it doesn't make sense. Let's invite some friends." So, we started inviting colleagues to come. Again, this is before you got the credit for it. We started inviting people; people started coming. They started asking if they could bring friends of theirs. We didn't do it this year, but we were having 150 people a year come to this free CPE the first Monday in February, which we were doing for CPAs. At some point, we made it into a business model, where we called it the Partners Network. By the way, when we started in June of 1989, we ran an enroll-based CPE program. We developed the conference idea where you have eight one-hour programs that are unrelated in a day. That did not exist in 1989. We invented that because I did not want to sit through eight hours of a CPE program on preferred income taxes. I figured the most I could take is an hour. We put together a program. We did some ourselves—Peter and I—and we had a college professor, and somebody else. We sold out the room. We had 95 people come. We put the program on in Manhattan, and we put it on at another time in New Jersey. We said, "We got something here. We're going to make a fortune." Of course, it didn't develop that way, because that was the year that they needed the credit, so everybody took it, but we made it to the Partners Network. We had accountants join. We don't make money on it, but it covers our costs, and we’re giving low-cost or free CPE. I don't know if you heard about Jim Burke. You know who Jim Burke is? He used to speak for free. I'd at least have a breakfast meeting, where Jim Burke spoke the first Thursday in November. We called it the “Power Breakfast”, and he would speak, and people would come, standing room, and we would offer this to these people. What happened from there was that these accountants started recommending business to us, and we started doing peer reviews. As a result, we started making money. We were getting referrals. We ended up with a marketing program for CPAs that would recommend business to us. We got hundreds of thousands of dollars a year of leads in business from other CPAs. What we gave for free came back in a big way for us.

Joshua Feinberg:

Yeah, it was brilliant. If you think about the peer groups that exist today and being so far ahead of the curve, starting this 30 years ago, when LinkedIn was still 15 years away, and no one was even going to be doing web or email for at least another five, six, seven years. Yeah, terrific.

Ed Mendlowitz:

We worked at it. I'll tell you what else we did. We looked at our practice as a business. I'll give you another thing we did. When QuickBooks started, I hated QuickBooks. Hated it because it wasn't as good as a DOS version of One-Write Plus. You could set up a general ledger without an account number. You could correct and error, and there was no trail. I hated it, and then one day, I realized this thing is great, and people started calling us, businesses to consult. We became the largest QuickBooks consultants in New Jersey. We were spending $40K a year advertising to get QuickBooks business—which, by the time we finished doing it, it became a five-hour $450 sale, but we got five clients out of it, where we generated $50K a year revenue from each of them that had nothing to do with the QuickBooks, but because of the QuickBooks sale, we got our foot in the door. We got this kind of business because we saw opportunities; we were able to fill it, and we jumped on it. You have a minute for a story?

Joshua Feinberg:

Absolutely.

Ed Mendlowitz:

We had got a lead from a client; a business in Manhattan wanted QuickBooks, and I'm telling you, it was a 450-buck sale. Peter said, “We got a lead; this guy wants to put in QuickBooks. Next time I'm in New York, I'll give him a call.” So, I called the guy, made an appointment for 1:00 the next day. I show up at 1:00. I walked out of his office at 5:00 in the afternoon with a $5000 retainer check to help him sell his business, and we generated, in about three or four months, $50K from him, and, of course, we consummated the sale. You can't make this stuff up, and he never did QuickBooks.

Joshua Feinberg:

That's great. Actually, when I talk to people that have outsourced accounting firms, non-traditional CPA firms that were born in the cloud, that spend a lot more, in pre-COVID, they were running remote before it was a necessary-type thing, and a lot of them were very interested in getting the logos for their bill.com affiliation, and their Gusto affiliation, and their ProAdvisor affiliation all over the footer of their website because they knew that was giving them credibility to attract a certain kind of client.

Ed Mendlowitz:

Yeah, talk about virtual work, and the COVID. I joined with them 16 years ago. For 16 years, I have been working virtually. When I was in my office, before the COVID close, I could be in my office, and there can be a woman in the next room, or the next office, that I wanted to send a file to or work with; I would email her the file, and she would email me the stuff back. We've been working virtually for 16 years. It's all virtual work. So, when we were closed, we didn't miss a beat. Most people already had second monitors. The staff has portable second monitors. Some of my partners have second monitors in their house. High-speed scanners, they gave us. Working virtual is part of life. People don't understand it, but I know a lot of small accounting firms, and I would call them at the beginning of this closing thing just to say hello and see how they're doing. Every single one of them adapted within a day. Everyone. Most of them were not paperless at all, did not work virtual. I'll give you an example. One guy called. They're a six-person firm. Called him up. "How are you doing?" I said, "How'd you work out with the virtual?" He said, "Well, it turns out that we do a lot of bookkeeping for clients, and we've been doing that online all along. We didn't know that was virtual work, and we didn't know that's the cloud, and we didn't know that's paperless. So, we didn't have a problem on anything." You see, you, me, all the fancy people call this “magic in the cloud”. Everybody that had internet was in the cloud. I got my first email address, I think, in 1996 or 1997. That was in the cloud, but we didn't call it that. By the way, I told you about that client that I helped him sell his business. This must have been around 1994. No, it must have been around the late 1990s because he wanted to email stuff to me, and I did not know how to do an attachment of a Word file. I had WordPerfect, and I had Lotus. He says, "Nope, you got to get Word, and you got to get Excel, and we're going to communicate that way." That client actually pushed me into getting rid of Lotus and WordPerfect and going into the cloud that way. We'd been doing that. It's just a normal way of life.

Joshua Feinberg:

Yeah. They would eventually catch up. I was doing contract work for Microsoft in the late '90s and early 2000s, and they still were seven or eight years away from thinking that. Google totally caught them off-guard with Google Apps originally—now, G-Suite—and it wasn't until 2008-2010 that all of that started becoming mainstream, around the same time as the iPhone, and the iPad. It changed everything.

Ed Mendlowitz:

Well, Microsoft, the Word and Excel, has become the standard, probably, starting in the mid-to-late 1990s.

Joshua Feinberg:

Yeah, desktop.

Ed Mendlowitz:

When I had my practice in New York, in 1980, we spent $50K on three word-processors, and a couple of printers. One of the printers had a six-foot-long carriage to do the long financial statements. That was in 1980. When I left in 1988, they were still using it. It was still functional, but I started a new firm, and we hired a guy to set us up. He set us up with WordPerfect and Lotus. So, I have a brand-new firm I just started that we were more steady technologically than my established firm that I left because we had old equipment that we spent a lot of money for that was working, so we were using it. I saw right then and there that you can't get locked into the systems that you got. You got to find out what's new, and you got to grab the stuff that's new. There's no such thing as making an investment. It's a cost. It's a soft cost. I was helping somebody buy a practice yesterday, and the broker put together a model. They put together a model of EBITDA, where they added back the depreciation. Meanwhile, this practice was spending $7000 a year for the last three years; their depreciation was $7000 a year, but basically, they were spending $7000 a year. So, I said to the buyers, to my client that's buying it, I said, "$7000 is a real expense. They're not spending $7000 if they don't have to spend it. It can't be added back to the profit. The profit is $7000 less."

Advice for Growing an Outsourced Accounting Practice

Joshua Feinberg:

Yeah, that makes a lot of sense. We talked a lot about the beginner, somebody that's relatively new to building a practice. What advice would you give to someone that's been trying to grow an outsourced accounting, outsourced CFO, CAAS practice? Maybe they're five or 10 years in, and they had a really rough year last year, and they're really starting to feel a sense of burnout. What advice would you offer to someone like that to help them get back on track?

Ed Mendlowitz:

I got a call from someone like that last week. The bottom line is, everybody I know—and I'm saying everybody I know; there probably is a couple of exceptions, but I can't think of it—everybody I know that started an accounting practice to do low-end work, to have small business clients, everyone, starting the first day of Year Three, was making a living. Now, I have a formula. They can't do per diem work. They have to be out every day, trying to get business. They have to do the work. Every one of them, at the end of two years, was able to make a living. You could advertise. You can knock on doors. Now, you can't knock on doors, but you can certainly advertise. Joshua, you must have sent me about five emails to do this interview, and I'll be honest with you; I ignored the first couple. I kept getting them, and then I saw your name on LinkedIn, and I looked at something on LinkedIn for you, and I said, "Oh, gee, this guy is a legitimate guy." Then the next time I got an email, I didn't go looking for the emails you send me, but I knew you'd send me another one. Next time you sent me an email, I responded, and now we're talking today. My firm, we have a partner in the firm named Nina Chmura. She became a partner three-and-a-half years ago. After she became a partner, she went into the firm management, and she had a business plan, and a budget, and she wanted to start an outsourced-bookkeeping division for Withum. They said, "Okay." Withum are the kind of people, you say you want to do something; you seem like you know what you're doing; you got your act together. Today, it's three-and-a-half years later. We have 50 people in our firm that are doing outsourced bookkeeping for clients located in offices in three states. This stuff is for real. I have a client I was trying to get. I knew the guy 20 years, trying to get him 20 years. I did some estate-planning consulting for him 10 years ago. He calls me up; he wants me to become his accountant now. He's ready. I said, "Fine." I had him meet Nina; Nina signed him up for the bookkeeping. He fired his bookkeeper and hired us. We're making four times the amount of money that I would have made if I would have got him as a client three years ago. All his bookkeeping, all his accounting work, and he's saving money. 

Joshua Feinberg:

In a lot of ways, it's interesting that being good at helping entrepreneurs requires being an entrepreneur itself to a certain degree within a traditional accounting firm. 

Ed Mendlowitz:

I got to tell you something. Every single partner in every firm—it could be a two-person firm; it could be a 2000-person firm—every single partner got his and her own practice. They got their own business, and they got to do the marketing. They got to do the staffing. Maybe they don't have to do the hiring, and all this other stuff. They don't have to order the paperclips for the office and make sure the IT is up to date, but they're responsible for managing their jobs. Each partner has their own business, and in the large firms, they got budgets of new business that they have to bring in every year. Everybody's an entrepreneur. Everybody's in their own business. The only people who probably aren't in their own business are the QC people because they are support, really, for the firm, but if you have estate-planning people; you have succession-planning people; you have business-valuation people; you have transfer-pricing people; you have to market yourself to your partners in your firm, so they can make their clients aware of the services. Just because you specialize in transfer pricing in a firm doesn't mean that every partner is going to be thinking about getting all their clients to use for the transfer pricing—especially when a lot of people need transfer pricing, and they don't know that they need it. They need it; it's essential; they must have it, and they don't know that they need it, and the partners may not know they need it. So, it's up to the partners to market themselves. So, everybody's an entrepreneur in a CPA firm.

Joshua Feinberg:

Yeah, no, that makes a lot of sense. 

Ed Mendlowitz:

I bet you didn't hear that stuff from anybody else.

Joshua Feinberg:

It's very interesting, too, in the course of doing podcasts, interviews, and hosting panel webinars, it's a lot more common for me to find CAAS leaders that are getting a lot more comfortable. I mean, prior to COVID, they were going out and giving talks with the Chamber of Commerce, and they were hosting breakfast seminars, hosting their own events. Now, it's very common that they're building up the skill of being good at hosting and presenting webinars and podcasts.

Ed Mendlowitz:

I'll tell you about the Zoom thing. I do succession planning and valuations. Previously, I would get a lead; I would get a client. I would meet with the client, look at his place, and then sign him up or decide if I want to do it. I'm getting clients from all over the country now, that I'm not meeting. It's all done on Zoom. I just finished a job at the end of the year with someone in California, never met him. I get paid up front. They send me the stuff; I do the work, but we have four or five meetings on Zoom, depending on what the situation is. I just got a very big letter of intent for a client. I'm helping him sell his business, never met the guy. We had three, four meetings with the buyers. I had to ask him, "What city are you in?" Just for some chit-chat. I don't know where you are. What city are you in?

Joshua Feinberg:

Just south of West Palm Beach, but I actually grew up in your area. No, I grew up in your area. Exit 135. Went to Rutgers. I was in Central Jersey until about 2000.

Ed Mendlowitz:

My grandchildren live with my son and daughter-in-law in Westfield.

Joshua Feinberg:

That's where I grew up, in Westfield, yeah.

Ed Mendlowitz:

Yeah, that's where they live now. That's Exit 135.

Outsourced Accounting Mistakes to Avoid

Joshua Feinberg:

Yep, 135, right in the heart of Union County, about 45 minutes outside the city. Awesome. Ed, also want to get your thoughts on mistakes that you see small businesses make. What do you see is the big one that you see across the board that small businesses make before they become a client with them?

Ed Mendlowitz:

Well, they don't get an accountant, or they get an accountant where they try to cut the fee and get cut-rate services. A good accountant is worth every penny that they get paid and more. I find that is a major mistake. I also find that too many people in business try to do too much work themselves. I'll give you an example of an accountant in business. You get an accountant that's starts his own accounting practice; he or she becomes their own bookkeeper. They should hire a bookkeeper to do the work. If I get a lawyer as a client, a guy starting a law practice, first person he hires is a bookkeeper, and now they're hiring a CAS person, but the bottom line is, the people that start a business don't think of themselves as being “in business”. They think of themselves as “having a business that they work in”, and they try to do all the work themselves, and they probably spend a 1/3-60% of their time on things that they could outsource and give to other people, and they don't concentrate on either growing their business, making their product better, making it more useful, finding the right markets for their product. So, they just fiddle away their time—which, they think they're saving money, which, they are saving money but in the long run, it's costing them a lot.

Joshua Feinberg:

That's interesting. I know you blog a lot, and I think about opportunity costs of how many entrepreneurs really understand—not that anyone should be billing by the hour much anymore—but at least understand what's the stuff that's worth hundreds or thousands of dollars an hour if they really focus on versus the things that are worth way less and can be much more safely and easily delegated.

Ed Mendlowitz:

Well, you get a guy; a guy has a business, so he's a good innovator. He might be a good conceptual guy, but he may not be a good marketer, or he might be a good marketer and might not be a good product guy, but instead of getting someone who knows those things, they try to do everything themselves, and they're not growing their business. Also, a lot of people don't start out with a goal. I call it a “business plan”. You don't need to have a 40-page business plan, but I tell people that want to start a business, "Write down your goal. Where do you want to be five years from now? Who are your customers going to be?" You can do a very short, one-page business plan, and I think it sets goals for people. I always had goals. I don't want to call it a “business plan”, but I always had a goal, where I wanted to be in five years. I don't have it anymore; I still want to be here talking to you. When I started out, I had goals where I wanted my practice to be, and then I went about making those things happen, and every goal that I had was exceeded in a faster time. Of course, they changed along the way, also. Your audience is going to be accountants. What I suggest that accountants do is put down a list of all the clients they had last year, and what services they sold them, and what fees they get, and then project it out five years, and if they're the same clients, and the same services five years from now, they're not going to succeed—no matter how good they're doing. They got to have new services, and you got to have new clients in the pipeline, and you got to work at developing new services. I started doing estate planning because my clients started getting older, so I started doing estate planning. Then I found out that better than estate planning is doing the valuation work because a lawyer is never going to recommend an accountant to do estate planning, but they will recommend the accountant for the valuation, so I started doing valuations. I taught it myself. I took courses. I got certified, and I got clients, and I wanted my assistant to do valuations, so I didn't have to do them as much. I went out, I low-balled. He needed to work on 10 jobs. I low-balled. I got 10 jobs for him. He studied, took the exam. He had broad shoulders, so he'd do what I told him, and he got certified and did valuations. Then I started doing peer reviews of other accounting firms, and I made him to do peer reviews, and then we made him a partner because he could sign off on the exit conference. You got to constantly grow and expand your services and build your services—both the type of clients you have, and what you do for your clients—and if you're not doing it, you're not running a business. You could say you have an accounting practice; you don't have an accounting business. The CAS stuff—Nina, when she suggested that—I don't know what the management thought of it. When I heard of it, I said, "Wow, that's a good idea," but I know Nina, when she started with the firm, I was at her wedding. I don't even know how long ago it was, but she had this idea. We have people in our firm that want to get involved in different areas. If it's something that we're doing, they fold in. If it's something that we're not doing, they present a plan. Even a sole practitioner could develop a business plan for added services. It makes no sense not to grow.

The Future of Outsourced Accounting 

Joshua Feinberg:

Yeah. Final area that I wanted to get your thoughts on today is what you think is next, coming in the next 24 months or so, for the outsourced accounting CAAS business model. What do you think we're seeing right now that's going to be the one big thing that changes everything in the next two years?

Ed Mendlowitz:

The first time I saw CAS in an article was something by Hitendra Patil. I called him up. I said, "What's CAS?" He said, "Client accounting services." I felt like a dope. I didn't know what it is. We're doing things today that we did not do in February, that we didn't do less than a year ago. What's going to be in two years? I don't know, but I could tell you one thing. There is a trend—because of the COVID and because of the lockdown and because of people not getting together—there is a trend to outsource nonessential services—essential but not core to your business—to reduce the office space that you have, to reduce the permanent staff that you have. So, there's a trend toward outsourcing everything. I don't understand why every single business doesn't outsource their accounting work, their back-office work. I noticed this in law firms; I don't even know how many years ago. Pitney Bowes and Xerox started outsourcing their print centers for law firms. Every law firm in New York had a print center—a copy center, whatever they call it—and then they started outsourcing it to Pitney Bowes and Xerox. I still own stock in those two companies. I said, "Gee, that looks like a good future." It didn't grow into those two companies the way I envisioned it would grow, but they're still doing it. There's no reason for companies to acquire in-house expertise—which the boss doesn't understand anyway—when they can outsource it, and then you got 24/7. I have a client that I'm responsible for that I've been paying all those bills for years. I have someone that works on it. He called me up. He had a question a couple months ago. I said, "Look, we don't work with you on a schedule. We get the bill; we pay it." I said, "There's no schedule. If we got the bill, we paid it. If we didn't pay, we didn't get the bill. It's as simple as that." It turns out we didn't get the bill. I said, "If we get the bill, we pay it. If I put you on a schedule, then we'll do it once a week, once every two days." In his case, with this client, it's easier for us to do it right away when we get it. He's an individual. It's like a family-office function. Everybody needs this work. Why do they have to learn to do it themselves? Why do they have to buy the damn software? Why do they have to figure it out? QuickBooks is now hustling them; now, you can't even buy the QuickBooks; you got to rent it from them. I think the future is great. The future is limited by people's imagination and by their desire to do marketing to get clients. Everybody needs it. We're selling something that everybody needs. When I was a kid, if people told me I would be spending more for water than I spend for gasoline, I'd tell you, “You're out of your mind.” Everybody's buying bottled water now. It's crazy. My wife and my son lives with us. They drink bottled water. I drink water out of the tap. We don't know what's coming, but you got to be prepared for changes. You got to be prepared for innovation. You got to know what's going on, and then you try a little bit to keep up to date. If you don't try at all, you're not going to keep up to date. You try a little bit, so you won't fall behind as much, and you might get lucky, like I stumbled into QuickBooks consulting, stumbled into it. It's a whole long story, which I'm not going to bore you with right now. I probably wrote about it, anyway.

Joshua Feinberg:

That's great, Ed. If somebody that's watching or listening wants to keep up with what you're up to, I know you've written 23, 24 books.

Ed Mendlowitz:

29.

Joshua Feinberg:

29 books. We'll have to have another session someday to talk about your favorite. I know you blog for Accounting Today. I know you blog for the Partner Network. I found you originally on LinkedIn.

Ed Mendlowitz:

Well, I'm very easy to get a hold of. If they have a practice management question, send me an email with a very brief description of the problem, or what the topic is, and include your phone number. Do you know that half of the people that send me emails will not include their phone number? Some people put in five paragraphs of explanations of stuff, and they don't put a phone there. They expect me to spend two hours writing them a memo. The first thing I do is just, “Send me your email,” but they're no longer at the top of my list, but if you send me a phone number, I'll call you. I'll try to help you. If I can't help you, I'll tell you, or I'll point you in the direction. I get about 35, 40 calls a month. I get 30-40 calls a month from accountants, and I would say that most of them, now, they tell me what the topic is; I send them an email with something I wrote, and I tell them if they have any questions to call me, and they don't call me, so I guess I answered their question. I do speak to a lot of people. One day, a couple weeks ago, I spoke to four people, four half-hour phone calls in a row. My wife said to me, "What are you doing? You're not getting paid for that stuff." I said, "Well, I like to help the people," but it's not every day, but just send me an email, and I'm reachable on LinkedIn. I'm on LinkedIn, but if you want to reach me, send me an email to my office. Very simple.

Joshua Feinberg:

Yeah.

Ed Mendlowitz:

I give free CPE on the CPA Academy, and they can log onto CPA Academy. I gave programs yesterday and today. Between the two programs, I had over 3000 people attend. Now, I got 150 questions I want to try to answer and respond to. I'm not going to answer everyone, and a lot of them are the same, but I welcome the calls; I'm glad to talk to other accountants. 

Joshua Feinberg:

With your stockpile of blog posts, it's like you're running a tech company with a knowledge base.

Ed Mendlowitz:

I got news for you. On Accounting Today, I've posted over 350 columns, weekly columns. On my Partners Network in Withum, I've been doing two a week for over nine years.

Joshua Feinberg:

Someone needs an “Ask Ed” search engine.

Ed Mendlowitz:

Yeah. It's starting to take me longer. I used to search it easier, but the keywords, now, it's getting harder. I've got so much stuff; it's getting harder for me to find, but I can locate the stuff. Also, Rick Telberg from CPA Trendlines published at least three books that made my blogs and columns into three books that he sells.

Joshua Feinberg:

That's Part Two, where it's only just giving back; you're being a fabulous role model for what accounting leaders and CAS practice leaders need to be thinking about themselves in the coming years of publishing content that educates and builds trust and attracts clients, too.

Ed Mendlowitz:

I'll tell your listeners right now, if they want to write an article and get published, to call me, and I'll help them write an article and get published. I've helped probably 150 people get published—many of whom I have never met—and I've helped plenty of people.

Joshua Feinberg:

Content opens doors.

Ed Mendlowitz:

I just did it today. I was sent an email by someone, asked if they could write something. I forward it to somebody that tells me she wants to get published, and I hooked her up with the editor.

Joshua Feinberg:

Content opens doors. It opens doors in places all around the country—potentially, all around the world. I found that writing leads to more writing, speaking leads to more speaking.

Ed Mendlowitz:

It also adds credibility. If you get two people that are equally competent, every accountant is equally competent with the other accountants, so how do you make yourself stand out? By showing, you're an expert in something or showing that you're a thought leader or well-regarded, or the biggest, by being available, returning phone calls, responding to emails, and calling the clients before they call you when they have a problem.

Joshua Feinberg:

80% of success in life is just showing up, right?

Ed Mendlowitz:

That's right. That's right. I once got a $50K client because I was the first one to show up, and it grew to about $135K in 15 years, and I got the client because I was the first one who showed up, believe it or not.

Joshua Feinberg:

It's a ton of sales consultancies, and sales software that have made a very substantial deal over the last 10 or 20 years of benchmarking the average minutes to increase the likelihood of reaching someone, and response time, almost always, is the dictator of who gets the business.

Ed Mendlowitz:

Yeah. This guy, they wanted to get a new accountant. The guy wrote a letter emailed to the AICPA for a list of accountants in the area. They sent him the PCPS directory. He took every accountant in a half-hour radius from his office, and he wrote them a letter. The minute I got the letter, I called him up, made the appointment, went off that afternoon, and I got the client, 50 grand. There was another accountant that actually never showed up that he would have used; he told me because I used them for my peer review, so he figured they must be better than me, but they never showed up. I also stopped using someone local for my peer reviews. 

Joshua Feinberg:

The world has changed. Ed, this has been terrific. Thank you for sharing so generously of your time and expertise today. I know it's going to be hugely helpful to people that are watching and listening and reading the blog about this. Thank you so much.

Ed Mendlowitz:

Thanks for the opportunity. Again, I'm welcome to anybody that wants to get into their own practice or has trouble in their practice or has any kind of practice-management problems.

Joshua Feinberg:

Awesome. Thanks so much, Ed.

Ed Mendlowitz:

Thanks, Joshua. Thank you.

 

What's your favorite outsourced accounting tip? And what did you find most valuable from this podcast interview with Ed Mendlowitz? Let us know in the Comments section below.

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