Beyond the Numbers:
Benches Win Matches

Sufyan: Hello everyone, welcome to another episode of CPA Talk Series, the podcast series that we are conducting, meeting industry leaders, meeting thought leaders and bringing them on this platform so that we can learn a lot of things from them. We are going to call today’s podcast Beyond the Numbers because in this podcast we will be covering leadership topics. We’ll be covering tech and the modern CPA firm as a topic.

Everyone, I’m very excited to welcome our guest, Jay Tolsma, who is the Managing Partner at ELO CPAs and Advisors, a full-service accounting firm in South Dakota with over 30 years in public accounting. Jay brings seasoned leadership, practical insights and collaborative approach to firm growth. A graduate from Northwestern College in Orange City, Iowa, and a former basketball coach, Jay applies his coaching mindset to develop teams and building strong client relationships. A very warm welcome Jay.

Jay: Thank you. I’m glad to be here today as well. So hopefully, I can provide some help and some assistance and some insight that is helpful to others so.

Sufyan: Absolutely. Thank you so much for your time today. I’m sure it’s going to be a wonderful session wherein we’ll be getting a lot of insights from your side. And the first thing that comes in my mind when I talk about ELO CPA, I think we can start it with understanding about scaling a CPA firm without burning out the core team. My question to you my first question to you, Jay, would be with staffing challenges and workload spikes, how do you protect your team while still growing and? What has worked for your team and what has worked for your firm?

Jay: Well over the years, you know, I guess the number one principle that we try and do here is keep our team at the forefront of everything that we do. And so recognizing obviously their needs as well, and their expectations of what they have in the work, in a work environment, and in a workplace and then also communicating, you know, our side as well.

It’s a two way street of communication. We have expectations, we have needs for the firm itself to grow and to develop. So, I think you know, first and foremost is keeping them at the forefront of our thought process and then also, and you know communicating with them, keeping them involved in the decision making. So, its always with them every step of the way.

They understand, you know, what are the things that we are doing, what are the things we’re trying to accomplish and where are we trying to go? Why are we trying to do this? Because I think it’s important for them to understand the why as well. And then also, of course, how it does benefit them that this isn’t just, you know, whatever trajectory we take or whatever direction we go is also for their benefit as well.

And that’s really and we try and keep that at the forefront of the decision as well that we’re doing things that benefit you know our team as well as, if you want to say, our ownership and then with that, as we try and scale, and our growth process is to be very diligent. Very, very, very targeted and very intentional, so making sure that, you know, whatever clients we work with are those that are, you know, are ones that we want to work with, those who are, you know, maybe have the same culture, same values, same vision as that we do and do respect and honor, you know, the team that we work with because again, they’re really, you know, a part of part of that process, and a part of the clients team as well, in that regard.

And then also, you know, we try to be fairly strategic. You know again as we grow and maybe replace, and find those clients we wanna work with. Also, then you know in a strategic manner, I’ll take a call, and maybe find another, you know, accountant or another place for clients that, maybe, now don’t meet that same, you know, value proposition that we might have had, you know four or five or ten years ago and again but, treating them as well in a respectful manner, not just, you know, if you want to say, but trying to find them a place that really serves them as well and of course, we’re through all of this.

What we’re trying with our team is to upscale them, to develop them, get them, you know, with a higher skill set and increase their value, which of course, also then, helps them as well and their compensation model, their bonus structure, all of those things and hopefully provides them a more challenging, a more exciting, more fulfilling work environment as well.

So, and then you know, the fourth thing we probably do is also consistently, constantly and continually kind of reviewing our process, as also inviting input and feedback from our team on how we can do this in the most efficient manner.

So again, scaling doesn’t necessarily mean, or increased revenue doesn’t necessarily mean, that we have to work more and more hours, the thing that has changed in, you know, in the 30 years that I’ve been in this position is that, you know, expectation of number of hours to work has gone down, and so we have to find a way to increase our value as well, and then provide you know, provide the services in the most efficient manner, and of course through the years, technology is actually, you know , is obviously improved. You know, improve that as well, there’s no other option, and outsourcing and finding other, you know, kind of relationships as well so.

Sufyan: Makes sense, makes sense and I think you brought a beautiful point here. I remember early days of my professional journey. Back then, like I’m talking about 18 years back, we used to have that Mission and Vision section on the website, and I remember asking someone senior in my previous to previous organizations.

I asked them why do we have this section on our website. And his answer really, you know, got printed in my memory, its still there in my memory and I can quote, he said that it is the day you understand that why do we have this mission and vision section on the website and what does this mean – is the day when you will start growing. So, it’s very important that you understand what you are doing and why? What is the end goal you’re trying to achieve with everything that you’re doing in your working career?

Jay: Yeah, yeah, yeah. And like I said, just like you said, we try and keep that at the forefront, you know, of every meeting that we do, whether it’s a partner meeting, whether it’s a firm wide meeting, to keep that purpose statement in front of everybody, so.

Sufyan: Yeah, yeah. And then you also touched upon a point which is about scaling them up so that they can not only get better in what they are doing, but they get ready for the new role, they get ready for better revenue generating activities but still there is a big amount of work that goes on in the backseat in this bargain, which is about the repetitive data, the kind of a work that they had been doing so far.

So, then the only solution we have is to either delegate it to someone else within the team, someone who is comparatively a junior staff or to use outsourcing support wherein you get trained, qualified individuals, and there is a very thin line in between.

So what should firms consider when, when should they consider outsourcing as a strategy and not as a short cut. What kind of you know framework you have internally used to ensure that there are enough buy in. I mean a lot of time it does happen that the firm owner is ready to go for outsourcing as a support. But like you said, you take some inputs from your staff as well on any strategic decision, and there are some setbacks, they don’t want you to do it.

So, what is your internal frame of working?

Jay: So. So yeah. So what we do is we, you know we obviously look at, again like I said at the forefront is always the communication with our team, so again, we don’t want to say ‘hey, here’s what we’re going to do, we’re going to outsource it’ and because that could you know again as you as you touched on it can create some angst, that can create some uneasiness on the part of our staff members, because they might, they might say, ‘ohh they’re just, you know, there’s my role, it is gone in the firm. They’re just replacing me with a with another option or a cheaper option or a less expensive option.’

So, so again, we always want to make sure we communicate with and again, what we try and do, you know, here is, developed for everybody, is that every person here has a career development plan or has a talent development plan.

So, they are always upskilling, increasing their value, increasing their skill set, and, so, we’re training and showing them, you know, where they’re going to go, that their role isn’t going to be diminished, their role is actually going to be enhanced by this process.

And so, and on the same part of, you know, on the same side of that, or the other side of the coin, when we outsource and have used, you know, partners in that regard, what we’re trying to do is bring them as part of our team as well.

So it is, it’s, it’s not like they’re way out there, you know. You know again, whether that outsourcing is you know, within the United States, or it’s outside our borders, we always want to bring those members into our team as well.

So, they’re going to be a part of our meetings, they’re going to be part of our planning sessions, part of our strategy, part of our department meetings. So again they are, again, so, not only, do they know, our staff or our team, also, you know, sees them as a teammate, sees them as a partner, not as a, not as an opponent or our competition. And then also, they get to know them, they get to know them as a person. And it goes both ways and so they understand our culture, we understand them. And so it’s kind of a growing and a learning experience on both sides. And so again, that way, you know and hopefully, it builds trust between the two of them as well.

You know that they gained trust working with this individual or individuals and vice versa and again it just becomes, like I said, it becomes this – just making sure we’re always communicating and upfront with everything. And again, I think if we do that and we do it well, you know that’s when we’re going to find success and again also just you know the other thing that we have done when we’ve taken on outsourcing, especially when we’ve gone offshore is you know we don’t look at it as a low cost solution – that’s not what we’re looking for.

We’re looking at as you said it and when you framed the question, we’re looking for talented people as well that are you know talented, they are you know educated, they are very high quality people and that’s what we’ve had in our experience as well. Very high quality, very talented people who desire, you know, to grow and advance. And so again, it’s also making sure we provide that opportunity for those we are offshoring with too, that it’s and again, I don’t, it’s not really a shortcut, it’s really enhancing the service line, enhancing what we’re providing to our clients, and to our teams so.

Sufyan: Yeah. Yeah. No, I completely get that. And I’m sure the one of the reason why you’re able to do it because of the strong bench analogy you had been using in your basketball experiences coaching experiences in the past, so let me bring that on the table Jay drawing from your coaching experience.

Jay: Sure. Yeah.

Sufyan: No team, no team wins with five players. Similarly, outsourcing builds depth and lets you lets your starters, which is the your core team, let them stay focused on high impact plays.

Jay: Sure. Well, it’s kind of interesting you asked that question. I don’t, you know I’m a basketball, like you said, I coach basketball and I’m still a basket basketball fan and it’s just really interesting. The NBA, of course, has finished up their you know, their season, and it was just kind of as just digesting and following up, is talk about depth and bench is that it’s what’s you know it’s kind of changed in the NBA world is that the two teams in the finals, the Oklahoma City Thunder and the Indiana Pacers were teams with a lot of depth.

You know they played a lot of players and so again so.

Sufyan: I see. OK. I wasn’t aware of this.

Jay: Yeah, so they played a lot of players in there and it’s kind of this, it’s now, it’s getting to be this kind of change in the NBA makeup and model probably driven by, you know, economics and things as well, but the old model is you grabbed together, you know, two or three really talented people and you built this, what they called the Super team but that didn’t generally have a lot of depth. It was you, you had this super team that could get through the playoffs. Well now it seems that has changed you know that. Now you’ve got to build a team with a lot of depth, that Super team model is not working in today’s environment.

Sufyan: Oh. OK.

Jay: And so it’s kind of interesting you bring that up, but yes, and I was, you know, there was there’s a there’s a quote from it was my old high school coach. And when the guy I coached with was going around and and talking to some of the top coaches in the area over history and asked, kind of getting their secrets, and you know, just trying to mine from them and that was one thing, you know, they asked.

He asked him and he said, well, what’s his secret is, and he says I try to put my, I always tried to put players in a place where they could succeed and so it’s trying to find, you know, what are their skill sets? What are their talents, what are their visions, what are their desires? And then and then getting them in a in a place where they could succeed and again nobody, you know, nobody succeeds on their own and that’s, you know, and that’s, you know, anybody who thinks so is probably just fooling themselves and, and again, when you hear top level, you know business people or leaders, you know they’ll talk about their team, and sometimes you know, and I think that’s really true and that’s, as you touched on, in the bench for, again, for our team to succeed, again, if we’re using the analogy.

Sufyan: Yes.

Jay: And using maybe outsourcing model is that for them to succeed, in other words, to advance in their career, to grow and to develop into the advisors and into you know the, true partners with our, you know, business owners, is really you have to have that team, that bench, you know, underneath you or below you, who are behind the scenes, that are really driving, you know, that workflow and then they’re providing, you know, top level service, top level information that can be used in, you know, by technology to analyze and can be used then to communicate you know, scorecards, communicate KPIs, communicate and identify what all areas are success areas, so again, as you touched on, you really need it.

It’s a full team effort. It takes everybody. yeah, to do you know, to play their role, to do it, you know, to do what they do and do it well, because if there’s , you know, if there’s a gap or if there’s a breakdown in any, any part of that, you know, it’s going to lead to a failure. So,so again, so everybody, you know again, it’s everybody, you know, plays a significant role.

And again, like I said, using the NBA analogy again, throughout the playoffs and throughout, the team, it was just, you know, these teams with these deep benches, you know, it wasn’t always, you know, if you want to say ,the superstar, you know, that that was the difference. A lot of times it was somebody from the bench, you know that rose to the occasion and contributed in significant ways so.

Sufyan: Yeah. Yeah. No, I completely get that and I advocate equally, so all the listeners, one loud and clear message from Jay, even the best basketball teams don’t keep the ball in one player’s hand the entire game – they pass, they strategize, they rely on specialists, whether it’s a sharpshooter, a strong defender or a playmaker.

Similarly, firms shouldn’t try to do everything in-house. Outsourcing is like bringing a three-point specialist. You are not weakening your core team, you are strengthening your game by focusing on what each player or each partner in that case does the best. All right. This brings us to the next section of this pod today, talking a little about technology and especially technology disruption.

I was surprised to see you as a tech master on your website. So we’ll talk about that as well a little. But along with that line, Jay technology description in accounting. Do you think it’s a threat or is it an opportunity with AI automation, cloud based tools changing the landscape? How do you see the modern CPA firm evolving? There’s outsourcing complement this shift by letting firms focus more on advisory than compliance. What’s your take on that?

Jay: Well, like I said, just overall, I mean I think we have to see it as an opportunity. You know again, is it going to change, or I shouldn’t say even is it going to, has it changed, you know how we do business? The answer is absolutely yes it has.

And so again, so you really have to look at it as an opportunity and I think you touched on it earlier, you know, just in kind of one of your questions, you know, when you touched on you know, the uses of AI or even outsourcing, whether it’s you know, but if, you know, speaking specifically of technology, whether it’s repetitive tasks, whether it’s, you know, data analyzing, you know, large sets of data, whether again, it’s just, you know, likely it’s, you know, is it repetitive data-driven tasks, you know, technology can do so much more and so much faster than, you know, than we can manually, and again, you know, I won’t bore just, just even the changes in my career in the 30 years, you know, from when I graduated from college, you know, and came here and did everything, you know by pen and or pencil and paper and erasers and the calculator to calculate everything that today, you know, and you know what it would have taken me to do for example, to do one update, 1 depreciation schedule for a business you know in less time than it would have taken me today. We can update you know you know 3 or 400 businesses and beyond you know just by the click of a button.

And so again that that provides, you know, a tremendous amount of opportunity because it frees up that you think about. All the time that was spent doing that, now we can utilize that time in other areas in other ways. Again, we’re seeing it just and you know just by way of example in our audit practice where you know we have an employee benefit plan and so again, plan audit practice and so again we’re again just you know touching into the AI you know, doing some approach and again, just being able to analyze -now we can analyze we can actually test really 100% of the payroll information and every transaction, if you will, that affects the employee benefit plan, and affects that employee.

And so again we’re able to uncover and identify anomalies that we may never have uncovered before, which then really leads to the ability to provide, you know, enhanced and more value to that business owner and to that benefit plan. And by, you know, by identifying, you know, are there issues, are there problems in the way they’re operating, managing their plan, are there ways for efficiencies, are there ways you know to improve the plan? And so again we’re, you know again we’re able to take that time that we would have spent going one way, you know testing if you will in detail.

You can take that time now and let the technology do the testing. And again it can test more than we did because we would only test a sample. This will test the 100% and then be able to bring them back same time, to bring the value, and it’s just the probably the uses are, you know, just what we can imagine really, I think, we are only limited by our imagination.

Again another example, I was at a conference visiting with, you know, somebody who does a little bit of you know, you know, a little bit of M&A activity and starts if he wasn’t and he was saying, you know, now he was using his ChatGPT. He’ll just type in, you know, the kind of the parameters of the contract and then it’ll, you know, it’ll print out the contract and then he sends it to his attorney to review, and I forgot to ask and you know, so what, you know, probably gain from the attorneys and what used to probably take him two or three hours or whatever he was billing him, you know, now he just takes, you know, maybe 1/2 hour and I forgot to ask him what his attorney bills him because he probably shouldn’t change his bill a whole lot because you know, because the typing up of the contract was probably, which was probably done by an administrative person at a small you know a lower rate of billing, but you know the real value is the attorney’s ability to analyze that contract.

And that’s the same. You know, I use that kind of as an analogy in a picture and that really doesn’t change for us. I mean, you know, that kind of, if you want to say the repetitive, the detail type work, you know, is really not,you know, of sufficient value.

Our real value has always been in our ability to advise, to analyze and to provide solutions and again, just a quote from the conference.

I was just here about a month and a half ago. You know it was a, a technology individual and a kind of a futurist and said you know 80% of what we do – this is speaking to accountants, 80% of what we do, you know, will be worth almost nothing, you know, and that’s that repetitive detail transactional type work, but that 20% that’s left over, that will be worth 10,000 times more than it is today.

So again, it’s so again, it is an opportunity because we’re able to really enhance our value to the clients because we’re able to spend more time on things that are of value and important to the client. And so, we can become, you know, better partners.

Sufyan: It is. It is. Yeah. Yeah.

Jay: Better advisors you know, and again and, for business is the same way, they’ll be able to use it in the same way. So again, I think it’s just you know it’s , you know, initially just like any change, it’s a little, it’s a little unnerving. Maybe it appears as a threat, but you’re really, really, it becomes a mindset. You have to look at it as an opportunity because it enables us to do so much more. So.

Sufyan: Yeah. Very well covered, Jay and I must include here. So whenever I used to speak with prospects and clients like you, I used to tell them that in order to grow your practice, you need to be on the drivers seat and drive the business. But now I have started including that you need to drive a manual car and shift the gears according to the speed requirement. And one of the shifts that we are seeing is about adapting new technology and being, well, well versed with that, and I can relate it to my childhood as well, because the place I live in is a small town called Bhiwandi, which is in the suburbs of Mumbai, which is the financial capital of India and our city, Bhiwandi is known globally for the power loom industry we have here very huge, I mean, trillions of business in the power loom- power loom is nothing but a machine that that is used for weaving the clothes.

So we have a lot of textile business here in Bhiwandi and the powerloom industry here. I mean it used to be a major textile hub and its facing significant crisis largely due to technology disruption. While many regions have adopted advanced automated looms and digital systems to boost productivity and quality, the city, Bhiwandi continues to rely heavily on outdated machinery and traditional methods, and this technological lag has made the local units less competitive in terms of cost, efficiency, quality and everything, and which eventually led to reduced orders, shutdowns and mounting financial stress among small scale weavers and operators, and I think this applies in all the industries.

I also have a strong belief that technology knocks the door, I mean technology disruption knocks the door before it actually hits. And I could be wrong, but I think the kind of talent crunch that we are seeing in the accounting industry, especially in the United States, I think it is one of that knocks. One of that signs that you know something needs a change and a significant change.

Jay: Yep, I think you’re absolutely right. If we don’t adapt and we don’t embrace that as your examples is just spot on, you know those that do not will be left behind. You know, they won’t have the skill sets for the future and that’s the sad part. You know so.

Sufyan: Yeah. Yeah. No, I get that. And we are already in the 29th minute of the podcast, so I won’t eat up much of your time. I’m sure you have other stuff to take care of, but one last thing that I would definitely would love to hear from you is a is a quick message for all the young CPAs. And the reason I’m saying young is because apart from the talent crunch problem, what we are seeing is a lot of senior staff and the CPAs are retiring from their post. So, your message for the young CPA’s aiming for partnership or ownership, what key mindsets or habits do you believe will define success in the years ahead for them?

Jay: I’ll try and try and be brief and just, I identify about 3 or 4 qualities that I see and the first one is that this is a relationship business, you know. So, again it’s invest in those relationships whether that’s, you know, your team members, you know, and business owners and those, invest in those relationships because it is a relationship business.

And that’s the only way you can build trust – either with your teammates or with business owners is to develop those relationships so they know you, you know them, and you build trust.

You know, the second thing I would say is I use the term, you know, you could call it lifelong learning, but I use the term curiosity.

Sufyan: Wow.

Jay: Ask questions, you know, again, when you’re working with the business, you know they’re, you don’t learn about them, you know, understand them, you know, again, ask questions and, again, about topics that you know nothing about, you know, just even beyond your, you know, along with obviously, you know, just the area that you work in and stuff is to be curious and ask questions and to learn.

But to really just, you know again, just ask business owners what have they done, what were their success stories, what were the decision factors, you know, all of those things. Curious and ask questions, and again, what you’re gaining there by asking those questions is you’re gaining an idea of how to operate a business. And again, when you understand how to operate a business, you can be a better advisor.

So, I think that’s the kind of the third thing, is to gain that business acumen and understanding, you know, again, I touched on it. Listen to learn, listen to understand. I put the term read because I know just again not using technology but you know, because reading or the gathering of or the taking in of information has come from so many different sources today, you know, not just you know likes and not just books.

Could be podcasts. It could be just all different sources. And again, and listen and read and those things outside of, you know again obviously you have to know the markets you’re in and you know, in the accounting world, we have to understand that and some technical things, but learn, learn and listen and read and understand things outside. You know your kind of normal day-to-day operations again, just you know, you gain some, you know, emotional intelligence, you gain some business understanding. You can gain just, you know, some understanding of people. And then, of course, the final thing is to embrace change, you know, because that’s inevitable.

Sufyan: Bang on!

Jay: You know, like I said, I just, I won’t like I said in the 30 years, you know, it’s just, you know. You know, like I said, for just even the phone, just a dial phone to a cell phone and then you know it’s just kind of hard, you know, to believe. And Emily said one night, so I did not take any computer classes when I was in college. I graduated. I said Graduate from Northwestern because really there was, I wouldn’t say there was no such thing as a computer, but it just wasn’t part of, it wasn’t part of day-to-day life at that time, but just how quickly, you know, that when that when technology came into the workplace, just how quickly things changed and even we’re seeing that today, how fast you know, technology, artificial intelligence, those things are changing. So again, I think it’s really just to embrace change. And that’s part of that learning and curiosity, because that’s that’s going to, you know, enhance your career so.

Sufyan: Yeah, absolutely. Some golden words, Jay. It was really, truly a pleasure to have you on this podcast and listen to these insights and your past experiences. I’m sure our listeners will enjoy this equally. Thank you once again for your time today, Jay.

Jay: Thank you so much for having me. I really enjoyed it. Thank you.

Sufyan: Thank you. All right, listeners, this is all for today. Tune in once again, when you see another teaser for the next episode, and I can guarantee you that it’s not gonna be any time later, but very soon. Thank you.