Transcript: Interview With Ira Rosenbloom, CPA

In our latest Leading Forward podcast episode, Maureen talks with Ira Rosenbloom, CPA, CEO of Optimum Strategies, about developing talent and the need to start early with succession planning. Listen to the full podcast here, and now you can watch the podcast recording here. 

Maureen:
Welcome to Leading Forward. On today's episode, we're meeting with IRA Rosenbloom. He is the CEO of Optimum Strategies and he's a former practitioner, he has a lot of experience in the profession. And we're going to focus on one of his passions, which is succession planning. So welcome to the show. IRA.

Ira:
Thank you for having me. It's exciting to be able to spend quality time,

Maureen:
Right. Great. Yeah, we're both. You're commenting on the, the weather. We both have some sun, some window. Where, where are you today?

Ira:
We live in the Blue Bell, Pennsylvania. So we're about 25 miles Northwest of Philadelphia.

Maureen:
Yeah. Good, good, nice spring day. We both have. Yup, absolutely. Well, IRA. One of the things that I'd love to hear from you is how did you come to where you are today? How did you become CEO of optimum strategies? What's your leadership journey?

Ira:
So I wish I could tell you that I sat down one day and said, you know, IRA, now that you're ending your career in public accounting, this is what you should do. I didn't think it through that thoroughly, but I ended up where I am and I'm excited to be there. My partners and I had a thriving CPA firm in Northern New Jersey and in 2006, we made the decision to merge into a very significant national firm with headquarters in Northern New Jersey. We had certain strategic reasons for doing it. Part of which was driven by not having adequate succession in our audit practice. So we had a sizable practice. We were 45 people. We grew the firm, I became the managing partner. We were 20 people and we doubled the firm and took our volume from two to $10 million. We did a lot of right things.

Ira:
And we grew an audit practice and unfortunately the partner in charge of our audit practice had a devastating stroke. And we had some good people with that team, but nobody comfortable enough to step up and run that unit. And we needed to make some very strategic steps and we decided to merge with a very large firm. And I joined that firm along with my partners and our client retention was on the extremely high side. We had a very successful merger. And from my standpoint, while I was given many opportunities and enjoyed a lot of the opportunities, it's hard to go from the big fish to being a little fish and having managed a farm. I found it to be a difficult transition. So I decided that it was time for me to leave. And I said, what am I going to do?

Ira:
What do I know how to do? I know how to run CPA firms and I know how to engage with clients. So I created a consulting company that helps small and medium sized firms strategically advance. And that started in 2010. I stayed with the bigger firm for several years and then decided it wasn't the place for me. And we parted amicably. We have a great relationship and I started to engage with my competitors and take a road from Northern New Jersey all the way down to the border of North Carolina over this ten-year period and have built the practice, which focuses on making CPA firms stronger. Can you do that by building a better team, having better communication, having a better strategy, being more profitable, or can you enhance your firm and then need to do something else like merge or bring in other players along the way, because that's what it dictates.

Ira:
So my journey started by being just like so many of your members are very committed and dedicated client service partner who then became a managing partner. My focus was in the tax area, in the real estate area and branched out to running the CPA firm and, and understanding what it takes between having a firm administrator or a marketing person, technology people. And I use that as the backbone with which I engage with clients. So I have a lot of common ground with them. And we do a lot of fun and exciting things. And I, I like the fact that the firms of small and medium footprint can be so nimble. And when you're nimble, you can do a lot of exciting and creative things, right?

Maureen:
So you really lived what you are going out and talking to people about not having the plan, having to make choices. Sounds like a familiar story.

Ira:
Yes. And what I say is once I started my company, I say, I have the great privilege of continuing to provide managing partner services without any of the emotional distress that comes along when you really are the managing partner. So I get the best of both.

Maureen:
Right? Right. It sounds like it's like the grandparent you get, you get the good and then you get to walk away. So IRA, this topic is just so prevalent and it's such a need for our firms to talk about. And it seems like maybe it hasn't been embraced. Why is it so hard? I don't want to say it hasn't been embraced, but it's, it's really a struggle. It's, it's something that people really need. Why, why, why is this so hard for firms to get their arms around this topic?

Ira:
Well, I think there's one is that your prototypical superstar CPA slash owner of the CPA firm thrives on client service. And if they had the choice between working on a client or working on their practice, they're going to work on the client absolutely first before working on the practice. And that's been the roots of this particular profession. The great thing about it is so many accounting firms have great clients and they have wonderful challenges for their staff. The bad thing is they're not paying enough attention to what it takes to perpetuate the business. And I think this is where the significant attention has to come. If the owner of the firm views their practice as a practice, then it's all about taking care of clients. If they view it as a business, then it's all about the perpetuity and the success of the business.

Ira:
And the more that the ownership looks at their firm as a business, the more they're going to have success in building a succession plan because they take the time to say, how will this firm continue? All good businesses? Can't be tied to one particular person or several people. It's gotta be tied to the business. And they learn that by working with their own clients and they counsel their clients in that direction. And unfortunately they don't take that medicine for themselves. So it's, it's very, well-intended people who see their priority is taking care of their clients, which is certainly really important, but you can't put the, the importance of the business into the background and more and more firms are recognizing that their practice is a business. They really would not like to align with another firm because it's unsettling. It could be confrontational, which is another thing that CPAs don't like is confrontation.

Ira:
So if we can keep our own home, what do we need to do to keep our own home? And, and, and sometimes people are very late in the game to doing that, which is why so much of the survey information when firms are surveyed, you know, a significant number of them will tell you we're grappling with it now, but we know pretty much our current ownership is all going to turn over in the next 10 years. Well, you, you blink an eye and at least five years disappears. So you've gotta be able to have the recognition that you have a business, right? And if you do that, then every person that joins your organization has to be oriented towards your business philosophy and the priority of perpetuating the business, not the priority of individual egos and individual silos, which again, in smaller firms, this tends to be an unfortunate, you know, set of realities that people are very proprietary to their own client base, but that is not going to be the way to perpetuate your business. You've got to make it that the only ego that counts is the businesses you go, not a person,

Maureen:
Right? So, you know, you, sometimes I've heard some firms are a collection of sole proprietors. They just share, share a building. And that's, it sounds like what you're saying is this is, this is very everything but that and, and it's all about working on the business, not necessarily in the business.

Ira:
Exactly. And, and believe me, we all know that there are certain people who would be best focused by working on the clients and not on the business. So if it's a multi partner firms, three to five partners, every partner should view the farm as a business, but certainly one or two of them are going to be the best business professionals. It's unusual to have all five of them as being the, the principle type of quintessential entrepreneur. But, you know, getting that type of concentrated effort from a couple of people and then having it spread to the entire team, what we're, what I'm seeing is that the millennials who are now, you know, the majority of the workforce in so many CPA firms are pushing the ownership group to treat the firm like a business. That is exactly what their friends see in their jobs.

Ira:
Right. And it, and it provides a sense of flexibility and stimulation and pro pro perpetuity that can happen if you look at it in that way. So the beauty of having it come from the bottom up and no insult intended, but from the, from the team up will also facilitate a healthier succession process because the people you're going to rely on as an owner, they believe in it, if they don't believe in it, and the owners only believe in it, that's a problem. So you've got the potential believing in it, but how do you make it attainable? How do you make it seem fun and interesting and not overwhelming mean you and I are talking and it's, and it's April the second. Well, you know, this is the, normally these next 10 days are the most brutalizing part of tax season. So typically the younger people are looking to see the work more levelized because they don't want to have this type of a significant abundance of work in a period of time.

Ira:
Are we open to that? And we open to putting things on extension, are we open to being more selective about our client base? Because the correlation between work-life balance is a bearing meaningful component for your potential successor. They see the world differently. So if you're going to want to make ownership compelling and appealing, you have to set the stage for it to be realistic in, in this opportunity for them not to have the same type of work hours for them to be able to work on less projects, but still be able to make as much money. Can we do more for less clients? Is it the idea of we do everything? Sure. We can do anything versus sure. We can do a lot of things, but this is where we really like to be. And that culture and that mentality helps to create solid succession.

Ira:
Do you, do you flip a switch and does it happen? The answer is absolutely not. It takes a lot of discipline for that to happen and, and recognition that, you know, we will need to succeed and, and, and have people in multitudes of positions. So, you know, what about our former administrator is our former administrator going to be here forever, not likely. So what do we need to do? What about our marketing people? What about our technology people? So succession, isn't just about the ownership group. It's about the brain trust. It's about the entirety and, and not having the brain drain, but having the brains continue to spread and influence and, and perpetual.

Maureen:
Yeah. We, you know, what I found interesting that you were saying is that it sounds like it's just not the will of the partners, even though they might say, yeah, we want to have succession, but that, that millennial underpinning of a new business, a new way to have a firm that may be the partners personally. They wouldn't change it if they had the choice, but it's not going to be about them. It's going to be about another set of owners and other set of feature owners. And how can they keep that great talent in the firm. So they have that even possibility of a succession,

Ira:
Right! And I think that, you know, there's people of different demographics and different walks of life that are in leadership of CPA firms. And more and more, you're finding the common ground amongst all of these different people that it's about keeping our team together. We don't want turn over. We understand that we, as owners are going to need to do things differently, but every tax season, they have to do something different. They they're confronting new tax laws. So dealing with change, even though accountants will tell you, they despise it, they may despise it, but they have to be great at. So it's a matter of owning where that strength is. And recognizing that change is not just unique to the internal revenue code or to some of the financial accounting standards. It's something aligned with the day to day. And the more that an owner can say, you know what?

Ira:
This is not my skillset. I know we need to develop talent and we need to have career paths. I get that intellectually. I'm just not the right person. If they go out and hire somebody, even if it's a small firm and the small front says, look, I can't keep somebody busy. Full-Time well, then hire that person part-time or engage with an independent contractor to develop a career progress process. So people don't even entertain leaving. And that certainly is something that has to be the goal. How do you bring in resources to keep the firm growing? Not just the accounting resources, but the operational resources and the ancillary stimulants that keep people happy. Money is important. And everybody enjoys the ability to spend money when they want to. But the difference between farms is generally not how much they're paying people, because they all know the standard, the differences, what kind of motivation, what kind of freedom?

Ira:
What kind of responsibility? What kind of quality of life do we have? And the more ownership can focus on that as being a priority. And it takes time. This is not something, as I say, it's not the flip of the switch. You have to be doing this 360 days a year. Now that doesn't mean every day, you're out there saying how's our succession plan going, but it means that you've created the culture to keep people motivated and excited. And then creatively throughout the year, you're checking in and saying, well, these are the top three things we wanted to get accomplished this quarter or this six months, how do we do with it?

Maureen:
Right. Right. So when people are starting on a journey, maybe they've decided whether it's early in the early in the business's life cycle or later in the business life cycle, when they start on this journey, what surprises them about this process that maybe they didn't anticipate whether it's it's hard or whether it's just like, gosh, that was not on my radar. Well, I

Ira:
Think number one, what surprises them is that that the young people have an interest in having responsibility, but their definition of responsibility is different. Many of the owner groups have said, Oh yeah, I have nobody interested. And you know, why should I even try training them? I I'm just going to work this. And then one day I'll sell it, et cetera, et cetera. And yet when you tell them that you've had a retreat with their staff and people are inclined to move forward, if such and such were the case, how do you know that? Well, I just spoke to the person. Do you ever speak to these people? You ask them, or do you just tell them this is a job that has to be done? And I think that that's the first surprise that there are people that really would like to come forward, but not in the way that you came forward.

Ira:
That's the first thing. The second thing is the amount of transparency that's required. Many owners are very guarded and, you know, confidentiality and propriety is, is really very important. And that's not to say that each owner needs to say to a potential future partner. Well, I just want you to know that my partner makes this and that partner makes that that's not the level, but to let them know that in a form like this partners could make X amount of dollars is something that's very uncomfortable for owners to do. But yet that data is available. There are surveys all over the place that people could look at. Transparency is something that doesn't come easily. As it relates to this kind of information, you have to get them comfortable in small stages in revealing why the data of the firm will be compelling to somebody else. No different than if I were interested in buying a restaurant, I would want to understand the traffic, the revenue and the profitability, just because a book says, this is what a restaurant should go for. It doesn't mean that's what your restaurant should go for. And, and that's where it's comfort of inviting somebody in to what I'll call sacred space, which is, you know, our financial platform is very, very challenging and provoking to the ownership group. That that is a huge place for owners to go to in terms of getting comfortable. Yeah.

Maureen:
I've heard some owners or partners, leaders of firms talk about the fact that they say their staff or their, their team just doesn't understand how the business works. And some of the responses I've heard you're right. They don't understand. So how do you teach them? This is, this is how this business works. It ties into the financial aspect that you talked about, but just how, how the firm is successful is maybe elusive to some.

Ira:
Well, here's the thing I, you know, I believe that once a person joins a firm, let's say anybody with zero to three years experience a year later, you have to begin to get them going on a partner mindset. And that means access to significant parts of the time and time management and the billing management of the firm. They need to understand what realization means. They need to understand what profit margins are supposed to be. They need to understand what budgets are and too many accounting firms do not make that process happen. The fact of the matter is my experience has been, if you do that, when that junior becomes a senior or a manager, they run the jobs better than the partner ever imagined. The partner could run that job and let's face it. There are many partners who believe that they can do a better job than anybody else.

Ira:
And that competence is really great. Unfortunately, it's not always well-placed, but if you didn't empower and teach the people early on, they're not going to be good partners for you eight years down the road, got to start with them at that point, in terms of access of information and as well as how does a partner think? So if you're having a difficult conversation with a client, whether it be on a, an accounting method, whether it be on a bill, whether it be upon a transaction that there the client is gung ho on. And you're seeing all the reasons not to be that person, once they have one year's worth of experience with your prom needs to be in that environment, they need to be exposed. They need to keep a log and register what they learned and what they didn't understand, so that you can groom them for the next eight years.

Ira:
You can't just take somebody with eight years of high quality client service experience and say, okay, you know, next year, we're going to make you a partner. Isn't that great. And, and there's going to be a lot of worry on behalf. If that person is worried, I'm gonna warp it a lot. Cause what kind of background? So you've got to start with these people very, very early to get them oriented and to give them the opportunity to begin to think like a partner, will everybody be a partner? Of course not. Right. But the idea is to keep this thing growing independently, or bring in resources to supplement. I mean, look in certain ways, there are areas of expertise and you may not have enough of that expertise. If you want to do valuation work, we may have only one person can do valuation, but we have high demand and we could do a lot more. So you do have to add from the outside, but how is it going to be controlled by headquarters by the central component? These are all business questions and they're exciting things to have happen. But, but it starts early out. You can't just wait and say, well, they're not ready. That's not true. They are ready. They're just not given the opportunity. And that's a big change that you have to ask management to do what's right. Right.

Maureen:
Has the pandemic and the COVID world changed your thinking or firms thinking about succession planning for better or worse?

Ira:
I would say that it's actually made succession planning more tenable because the concept that, you know, millennials have a different preference for work in, in many cases, it's that millennials and, and people, you know, near that generation feel that it's good to be able to work from outside the office. And it's good to be able to have staggered hours as long as you can do quality productivity. So before the pandemic, there was no open-minded well now you have the pandemic. They had no choice, but to be open-minded. So I think it sets the stage for moving into that different, uncomfortable place that was uncomfortable, that now is becoming more normal and the pendulum is going to come closer to the middle. Right. Well, also seen is that some of the older practitioners are thinking about their succession now earlier, because this has been very, very trying on them to have to manage all this.

Ira:
These were places of change that they weren't necessarily comfortable with. They did a great job with what they're basically saying is a lot of tension. So I don't know that I'm prepared to sell out, but I need to change my routine. And that means I need to empower other people and I may need to have different kinds of, so typically a sole practitioner doesn't have partners, but I may be able to develop a management group and then create a group of partners thereafter so that I can keep this thing moving. And I think that's, and know that that is now becoming much more realistic that the pandemic has stressed. Many of the sole practitioners, stress, many of the small firms and it's made their open-mindedness and their curiosity much more valuable.

Maureen:
Yeah. So just like many things that COVID has done is it's pushed those things that we needed to talk about and think about just light years ahead. So it sounds like that this is goes right along with that.

Ira:
Yeah. I think that they recognize more so what they do well and what they don't do well, and now they're trying to say, okay, how do we find the people who can do it well, which is, you know, do we outsource the HR? Do we outsource marketing? What about operations? I don't need a full-time form administrator. I do need a firm full-time quorum administrator. These are the things that are very, very current in terms of the focus. And I think coming out of this busy season, even more so, so succession planning has definitely become that much more of a, of a real process to engage in versus a conversation they've talked about it forever. Now it's really a process that's being engaged in. And you know, I, I have a lot of optimism about it because as I say, I think accountants are really good with change when they have to be right. And this is something they realize they have to

Maureen:
All right, well, IRA, they're there. I know that we could probably go on for the rest of the afternoon. There, there's lots of great meat into, in what you're talking about. It's really awesome. But I do have one more question before we wrap up what are you, what do you do for fun when you're not helping firms think about their future?

Ira:
Well, I like to, I live on a golf course community. We live in a golf course community, so certainly that's part of what we like to do. And I love spending time with my family. I'm blessed to have a wonderful wife and three great children and one daughter-in-law and a future son-in-law and maybe one behind him. So that's where I love to spend my quality.

Maureen:
Yeah. That's, that's awesome. So glad to hear that hopefully the opening up of the world and the spring time will make that even more possible with different, different options for you.

Ira:
Well, love to be able to get back down to Virginia because it's a gorgeous part of this country.

Maureen:
Yeah, well, we, we would love to, we'd love to see you in person. Well, IRA, thank you so much. And all of our listeners should be on the lookout for an article that you have coming out in our magazine disclosures over the summer. So I appreciate all that. You've done to support the society and to support our members. So thanks a lot. Have a great day.

Ira:
Thank you. It's been a pleasure. Thank you.