Tax Therapy Experience: Going Digital Ahead of Retirement & Sale of Practice

Meet Amber Gray-Fenner, owner of Tax Therapy, LLC. She’s not only an EA, but also a tax writer and a regular columnist for forbes.com and thinkoutsidethetaxbox.com.

Amber inherited her mother’s Nevada business in late 2010 and now, 11 years later, she’s on the retirement track herself. We asked Amber about her goals and discussed how a practitioner can sell a practice at a higher multiple while also increasing client retention afterwards by standardizing processes and adopting the right accounting practice management software.

Adding Consistency to Your Practice is Key

Every firm has different goals. Some owners want to grow their client base, others wish to grow revenue per client, and others have their sights on scaling their team and adding new business lines. Amber admits that Tax Therapy is not looking to add client volume, but to add consistency to the practice. Consistency is the key in setting up a firm with a predictable outcome. That’s where TaxDome initially came into play.

“I was looking for consistency, something for handling the client workflow processing the exact same way, every  time. As a solo person, much of my operational flow was in my head. We all have little quirks, but I realized I needed to add standardization, to do things the same way for every single client and I needed one organized system to  place to run my practice”.

Watch Amber Gray-Fenner describing the importance of consistency in business:

With TaxDome’s workflow automations, Tax Therapy was not only able to achieve their desired consistency, but also to visualize all their processes and have a centralized dashboard with statuses of their jobs and projects.

“We do both paper and electronic files. I used to have visual reminders — there was a lot in my drawer, but I don’t need those anymore. It’s all right there in front of me on the dashboard, which is just brilliant.”

Helping Elderly Clients to Deal with a New System

Another challenge many tax firms struggle with is automating client communication, being able to inform clients of what’s going on in the background to pre-empt them calling and asking, “Hi, can I get an update?” Tax Therapy is no exception, except that their clients are in their sixties and seventies.

“I was looking to automate my workflow from the client facing side — all ‘where’s my stuff’ situations. I have a client base that skews older. A few of them didn’t understand at first that the messages were automated. But once they got into it, they really liked it.”

Watch Amber talking about Tax Therapy’s clients’ reaction to the changes in the process: 

We also asked Amber what they’re looking to change the next tax season:

“Our clients loved getting feedback as their job moved through the pipeline. One of the refinements I’m going to do for next year is more written lists of the documents they need to upload. Just being able to assign the client a task with a bunch of sub tasks where they just check off the boxes and attach documents is huge.”

Adding Value to Your Practice Before Selling or Retiring

When Amber mentioned she was on the retirement track, we really got into the topic of selling an accounting firm. Multiples for accounting practices tend to be quite low (rule of thumb is 1x revenue as opposed to other service businesses that yield 1.5-2x and far higher for tech-enabled businesses). One of the main reasons is because these practices are dependent on an individual’s idiosyncrasies and papers as opposed to a repeatable, scalable process.

A growing number of practitioners never think about going digital because they intend on retiring in the next five years and don’t want to change their processes. They are often advised by brokers that the more they can standardize their process, the more valuable practice is and the more multiples go up. In order to retain clients in a transition, clients need to feel the value from the firm. By providing a great user experience to your clients and reducing firm overhead by automating administrative tasks, practitioners can focus on building relationships and advisory.

Amber suggested another reason for the low multiple:

“The retention is bad as everything is based on the individual personality. I get clients whose older practitioner retired and they didn’t like the kid. And that’s their opportunity to shop because every single interaction was human to human interaction. 

My clients get used to using TaxDome. If whoever I am selling clients to in the future is also using TaxDome, my clients are used to the interface, so it’s just a matter of getting used to the new practitioner. That process is going to be a lot easier because the new practitioner isn’t handling all this admin work, they can really take time to learn what’s going on with the client and the client’s tax situation.”

Digitizing a tax firm frees up so much more resources for the tax professional to handle the thing that can only be handled by a human.

Watch Amber Gray-Fenner and Ilya Radzinsky, co-founder of TaxDome, discussing how to sell a practice at a higher price:

Where to Start Building Your Processes

Amber is a former technical writer and had great things to say about TaxDome’s technical writing team and the help resources provided. We asked Amber to share tips on how others can  start automating their firm’s workflow.

“You absolutely need to understand your own work process of what you want to accomplish. Take time to look at the videos that explain the relationships between pipelines, jobs, tasks and how those things interact. Take time to understand the framework you’re working within and where to start automating — outline it somewhere, whether it’s on paper or in Excel or other. You need to have your framework and to understand the TaxDome framework, and then you need to understand your framework well enough to create a good problem to solve. TaxDome does make it easy to just throw code at a problem.”

Watch Amber Gray-Fenner discussing on where to start describing your internal processes: 

These simple steps helped Amber to set things up within TaxDome in a couple of months: Tax Therapy purchased TaxDome in October and had the automation set up by the end of the year. 

Amber Gray-Fenner on her TaxDome experience: