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Episode 11: What makes a good accountant?

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All Xero In episodes

Hosted by Jeanne-Vida Douglas and Rob Stone

Your accountant should be one of the most reliable, supportive people in your network when it comes to building and running your small business. So what exactly makes a good accountant? And does such a thing exist?

In this episode of Xero In, Brett Kelly, senior client director at Kelly + Partners, drops by to chat to Rob Stone and Jeanne-Vida Douglas about how to know when, and why, you need an accountant. Brett also shares insights into the accounting needs of growing small businesses and what you should expect from your accountant beyond the expected norm.

“A great accountant is somebody who can help you get to where you want to get to, who can ask the questions that don’t occur to you,” Brett told Rob and JV. “If they don’t want the best for you and they don’t want to help you, you’ve got a big problem.”

Episode transcript

Participants: Jeanne-Vida Douglas [JVD], Rob Stone[RS], Brett Kelly [BK]

RS: Welcome back to Xero In. I’m your host, Rob Stone, along with JV Douglas and we are delighted to have Brett Kelly join us today.

JVD: Yeah, this is a really exciting interview. He’s such an inspiring person.

JVD: The thing I find really interesting about – about Brett is that he started out in accounting really, really early on and he’s – he’s just got so much confidence that when he was 18 he – he turned around and went, okay, here I am working for one of the most prestigious companies in Australia but I don’t actually want to do this, I want to do things differently. And he went and he pursued that. And that – that – it’s that kind of presence of mind that I find really inspirational.

RS: I agree and he’s such a deep thinker. He was in investment banking, stopped it and said “What am I going to do?” And he’s really delivered on that purpose

JVD: Yeah, absolutely and his core talent seems to be identifying first for himself how to succeed and how to move forward and then codifying that and sharing that with essentially his customers.

RS: Yeah, and you get the results.

JVD: And it’s not just financial success which is what we tend to focus in on so much. He – he actually talks about being a successful person which means creating an opportunity to have a happy family, to creating an opportunity to do exercise, to be engaged with the community, to actually take some time off and I mean I – one of the things I found really interesting is that he forces his clients to take a break.

RS: I love it. And that’s – that’s what I like about Brett. He’s sharing his own recipe for his own success…

JVD: Yeah, absolutely

RS: …with everyone else.

JVD: Let’s switch over to Brett now.

JVD: So we're here with Brett Kelly and we're going to find out a little bit not only about his own experience but also about how other small businesses, should maybe think about going about selecting partners and selecting the people that they work with.

RS: Yeah, in particular accountants so maybe why don't we kick off there and so, you know, Brett if you were out there as a small business owner and you want to find a good accountant first off what in your opinion do you think is a good accountant and, you know, what - what type of things should small businesses look for?

BK: It's a great question. We've built our whole business off the back off one question. I would meet everybody that I met and ask them "do you have a great accountant" and at the time I'd ask that question with a smirk. I still do.

A pretty simple question, do you have a great accountant? They'd look at me and sort of laugh and go "what's a great accountant?"

 

I would simply say to them, you know, "what a great accountant is is somebody who can help you get to where you want to get to, who can ask you the questions that don't occur to you. That's where they can add value. Who at heart has your best interests because if they don't want the best for you and they don't want to help you you've got a big problem. But it has to be more than that."

You see intentions are nice, you know, I love you, I want to make you better off. I hear this all the time. I have a really great relationship with my accountant. But when we do our review process we find that that accountant is costing these people 20, 30, 50, $500,000 a year. There's no point having a mate as your accountant. You want somebody that's your mate, that - that cares about you and you - you know, your family and your business's future. But you also want somebody that can show you that they have the expertise to help you get from where you are to where you want to be.

The four principles that we're running from is that we want to help people get organised. We want them to have a clear plan which they have in their head. We just want to reduce to a couple of pages.

That we want them to take action against that plan and be able to measure that plan against what we call financial scorecards. Now if you help somebody do that for the first time in many, many years they can breathe. They sit back and they go I feel organised. I feel on top of what we call their financial universe. They know where they are, where they've been and they know the steps to take to get somewhere. It's not very complicated. You know, we're not talking about curing cancer, putting a man on the moon or anything really complicated.

But what we're finding is when I say to somebody, you know, "do you have a great accountant" and they're not - you know, a little bit unsure. "Okay Brett oh that sounds great" I say "well let me ask it to you this way. When you look at this person as a person and as a business owner are they the type of person you want to be when you grow up? Are they getting the type of results that you want" and if they're not I say "well why don't you find somebody who is?" You know, many people in our industry are jaded, grey faced, overweight, three times divorced and miserable. They kind of hate themselves. They hate what they're doing. It's going to be difficult for them to, you know, put forward with any credibility that they have a passion for you and your business.

RS: That topic about passion and tying that in with a sense of direction for these business owners - I love that. So you make them accountable so down the line...

BK: Absolutely.

RS: You're growing with them.

BK: Yeah, correct. Well - so it's what we love about our business. You see if I help you grow your business you'll help me grow mine. So there's pure alignment and...

JVD: It sounds more like a personal trainer in some ways than [laughs]...

RS: It does.

BK: Bingo.

RS: Give me 20.

BK: We literally will say that this is really personal training for your finances. This is taking a personal interest in who this person is. Private businesses are funded from personal balance sheets and the banks. And saying to them, you know, if you don't get the person right you'll never get the business right. So you have to get the person right first.

So if we can get the person right, get their head straight and harness that passion it's great to be all passion and no meat right? That's not a great sandwich. But if we can get that passion and - and understand where they're trying to get to and help them structure the simple steps that they need to take in a focused way, we can really harness the energy because you do meet early stage businesses and they're full of passion. They're really excited. You know, well that's great but, you know, they're not quite sure of what are the concrete steps that they need to take.

So we will take them through a process. We have two proprietary processes. One's called a flight plan so it's a personal flight plan, who you are and where you want to get to. And the other one's called a plan to win.

Now we don't know people that win that don't have a plan and when you say what's your plan they typically can't show you so we give them a one page plan with simple steps and we start taking them through this process. It causes them to think principally about as a person who do they want to be when they grow up. As a business, what do they want to look like when they grow up? You know, what is success actually look like?

RS: So going back 10 years did you go through this process with yourself?

BK: That's exactly what I did Rob. I said you know what I don't want to have a business - I was sick of accountants. So I started working at Price Waterhouse at 18. I looked at them and I thought, you know, if I grow up and become like you I'll hate myself. So… I need to do something about this. And I had spent in my youth and sort of parallel career trying to understand, you know, what life was all about.

So I started at Price Waterhouse at 18, I did nearly five years there. I left there, I joined an investment bank. I lost that job. I didn't know what to do. I felt in losing that job I had this freedom that I hadn't experienced before to just do whatever I wanted. I felt like I'd done the path everyone else had told me to. And so what I did was I - my dad gave me two books. One was called Think and Grow Rich. Another one was called How to Win Friends and Influence People so...

RS: Dale Carnegie.

JVD: Yeah, yeah.

BK: Dale Carnegie. So I have an undergrad degree, a Masters degree, a CA qualification, I'm a tax agent, JP, I've got all sorts of stuff and none of those courses deal with how to deal well with people and Think and Grow Rich is really, you know, how do you achieve your goals? You know, what are your goals and how do you achieve them? What I took out of those two books was, you know, you need to be excellent at dealing with people. You can't achieve anything without people so you need to be great at working with them.

And then out of Think and Grow Rich they basically said if you want to be successful find people that have been successful and just ask them what they did and so I wrote to 80 prominent Australians. I interviewed 34 of them. I turned it into a book called Collective Wisdom which I self-published and became a number one national bestseller in Australia and off the back of that did many hundreds of professional speaking engagements before I got back into chartered accounting. But when I came back into chartered accounting I believe I came back into it for the right reasons.

Firstly I'd worked out that the point of life is to grow in wisdom and wisdom is deep understanding. So if as a person you don't know why you are breathing, why are you occupying the space that you are and occupying, you know, and consuming the world's resources and at night you can't go home and say to your partner, your significant other, why you bothered leaving the house today and what difference you made to the world then you're not going to be very effective at anything. And so if you haven't kind of worked that out and then you go into business well go - you've sort of gone into life without much hope of - of really enduring impact. And if you go into business you - you know, I don't think you've - you've got much chance of making an impact as well as lacking...

RS: It's quite a dangerous question though. I mean if you're a small business owner you've been doing something for a long time and then you are asked to pause and reflect why you're doing this, you know… Why are you breathing...

JVD: Well most of the time they'll say just don't have the time to do it anyway.

RS: Exactly.

JVD: Small business people are invariably run ragged already or feel that they are.

BK: Sure.

JVD: It's that classic of working in their business constantly rather than on themselves or on their business. How do you get people to stop and take the time to actually reflect?

BK: Good tools. What we've done, we've got more than 800 proprietary tools in the business that I've written right from the beginning to say okay I want to start a business that can be my best business card. So that I could say to you "look if your business was like mine would you be happy?" So we've grown on average at 42 per cent over the decade. I've had 16 weeks' holidays every year for the last four years. I have an eight year old, a 10 year old and a three year old and I make a lot more money than any other accountant in the country. So if you can put that forward and say hey, you know, it is possible and people are open-minded you can show them that by getting organised you can make a massive difference in your life.

I'll give you a story. When I was, you know, 22 years old I go to interview Bob Hawke at his office and I said to his PA, I said "what are all those diaries behind you" and she said "oh they're Mr Hawke's diaries" and I thought to myself what does he collect diaries?

It must be his like little thing. I said "well how come you have so many?" I thought they were maybe being sent out for Christmas or something. She goes "oh look we keep diaries five years ahead." In those days...

JVD: Wow.

BK: And this is '97. This is pre-iPhones and things. So you had to keep diaries five years ahead. You know, the Olympics are four years' time, you've been invited, you've got to do this, that and the other. So when you're a young person if you can change your paradigm I thought jeez. I thought I was busy.

Now I've met somebody who actually is busy. So when I meet a private business owner I say "oh so you're busy. You know, busy is like most bodily functions, sort of everyone does them but let's not talk about it."

You know, everyone's busy right? Unless you're dead you're going to be busy. So the question is busy doing what? And so if you can sit someone down and say "what time do you wake up, what time do you go to bed and how do you account for the time that's between those things."

Do you have any real clarity around what your actual goals are and have you put any time in your - in your actual diary if you actually have one to actually work on those actual goals?

And the answer mostly is I'm busy but I still watch the football. I'm busy but I still watch The Bachelor. I'm busy but I'm up to date with all the things that don't matter. And I don't have the time to do things that do matter. Instead of making a little bit of sacrifice upfront in your business, to really get organised, systemise what you're doing so that later you get a time - what I call a time dividend. You know, you get no financial dividend out of your business and you sure as hell don't get a time one.

And so in setting up Kelly Partners I said what I want to show small business owners is they could work with an accountant who actually knows how to run a business, and has built tools that prove that we know how to run a business. So instead of me saying "I'm an expert, listen to me" I go look don't listen to me, have a look at this, this and this, I can show you things that - you're a smart person, you know we're going to help you. So when they see our tools they go sugar yeah that would make a difference. My guy, he doesn't have anything like that and I go "well why is that? You know why that is? Because most accountants are small business owners and they're busy."

JVD: They're doing the same things.

BK: They're doing the same thing and then they go out and say hey I'm a business owner, I can make you better off and the number one thing we find that a small business owner wants. They don't want more money. Many of them have got enough money.

They want more control and they want more time. So we start upfront and say "hey let's just get you organised and give - give you control. Let's get real clarity about what you say this plan is."

Do you want 50 million bucks or five million, one million or five? What do you want, you know? Oh yeah, yeah, I want this. Okay. You can't get what you don't know you're trying to get. And then say "right let's" - for example one of the things we do in our flight plan process is I ask our clients to book their holidays a year in advance.

It's very personal and it's very simple. When are the school holidays? You have children. Would you like to occasionally see them? Yes. Let's book the holidays. What do you mean by book? I don't mean scratch in your diary that you might go if something else doesn't come up. I mean physically book, pay for the tickets, pay for the accommodation, tell your wife you're going, give her the stuff, and commit to your children, yourself and others that you are going away. You have to take holidays right? You have to.

And you have to commit to learning. So one of the other things that we - we plan out a year in advance is well what learning are you going to do this year? You know, we don't know any leaders that aren't readers. We don't know - we do know that learning leads to earning. They've been saying it forever. It's as obvious as anything. I've never seen a growing business that isn't led by a growing person.

RS: On that note how do you carve out and prioritise your time for your own learning? I mean you're incredibly busy.

BK: I'm not busy. I'm relaxed.

RS: You're relaxed.

RS: Love it.

BK: I wake up early. I go to bed late and I work on the basis that time is limited and death is certain so...

RS: With taxes.

BK: With taxes as a bonus.

BK: So if you work out in your small business - now we do another exercise with clients. We say okay your revenue's $100 so that's good fun. Then your cost of sales is $40, so you've got $60 gross profit. You've got $20 overhead. You've got $40 over. You've got $20 of profits. Excellent. So if you convert that into days on, say 45 work weeks, 48 days. You'll pay 30 per cent of that to the Tax Office. Thirty days, 32 days. Right. So you're working the whole year for 32 days.

RS: That's a real paradigm shift, looking at it that way.

BK: So how do you want to spend your days? Because you don't have that many and I also don't work on the basis that I'm going to live to 400 because I'm not. We have so many clients with more than 7000 businesses in New South Wales and the great news about that is that we're very in touch with the human experience. We know people get married. We know people die when they're not planning. We know that they get divorced when they weren't thinking about it and that they'll - you know, lots of good things happen too. There are births, deaths, marriages and there's just all the things that happen in life. But because of the broad human experience we're seeing I certainly don't take time or life for granted and so I want to get out of bed because I am excited by what I'm doing. I want to stay up late because I want to make a difference in the lives of the people around me and my own life.

And so, you know, we talk about well how are the people we work with? They're the people that want to get out of bed. They get up early. They stay up late. Business is their primary hobby if you like. They don't view it as work. They enjoy what they're doing. And to your question before JV about, you know, how do you pause and work out that why, it's pretty simple. If you were in business for any other reason than to serve other people, go and get into another business.

So work out that you want to help people. And then work out the unique skills and opportunities that you have to help people and then get busy helping people and if you get a clear financial model and you're helping a lot of people you'll make a lot of money.

RS: I love it. I'm pumped up.

JVD: So much inspiration. Thanks for coming on Brett.

BK: Anytime.

JVD: Cheers.

RS: Thanks Brett.

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RS: Wow, I got so much from that chat with Brett.

JVD: I feel all exhausted and inspired at once.

RS: Yeah.

JVD: You know we’ve got so much good stuff out of our – our conversation with Brett that we’ve actually – divided it into two episodes.

RS: What a great idea.

JV: But you’ve got to stay tuned for the next instalment.

RS: Great, can’t wait to hear it.

JVD: Looking forward to it, thanks Rob.

RS: Thanks JV.

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