Innovative CPA firm leader: ‘We never had a fear of trying’

Jody Grunden, CPA, the co-founder and CEO of Summit CPA Group, isn’t afraid to fail — he says he’s done it many times over the years. The firm, now part of Anders CPAs + Advisors thanks to a 2022 merger, is an innovator in several aspects of client billing and payment, from getting away from paper checks to escaping the “rat race” of hourly billing.

Grunden, the author of two books, explains on this episode of the Journal of Accountancy podcast some about Summit’s journey, why his co-founder at first was against a move to remote work, and why his approach to risk is more about developing a workaround than deciding to retreat.

What you’ll learn from this episode:

• Background on the firm that Grunden co-founded.
• Why he says that Monday is his favorite day of the week.
• The path Summit CPAs took to remote work, starting 10 years ago.
• The difference between hybrid, remote, and fully distributed work models.
• An assessment of how the cultures of Summit and Anders have meshed, about 10 months into their merger.

Play the episode below or read the edited transcript:

— To comment on this episode or to suggest an idea for another episode, contact Neil Amato at Neil.Amato@aicpa-cima.com.

Transcript

Neil Amato: Jody Grunden stands out as a CPA. I saw him speak during a live AICPA Town Hall Series event at Digital CPA in December, and it wasn’t just Grunden’s words that made him memorable. He was definitely not wearing the uniform of most speakers; he wore a casual shirt, definitely one that evoked more of a beach mood than a conference mood.

Grunden also stands out as a firm leader — he’s been a pioneer in the areas of remote and distributed work, subscription services, and more. And he joined me, the Journal of Accountancy’s Neil Amato, for this episode of the JofA podcast. Here’s that interview with Jody Grunden.

Jody, first, thanks for being here.

Jody Grunden: Yeah, thanks, Neil. Thanks for having me.

Amato: Really appreciate your time and want to get into some of the journey of your firm and how things have morphed into the services you’ve offered, but also the way you’ve gone about your firm business.

Grunden: That journey is pretty wild. Started off in 2002 as a traditional CPA firm. We did tax and write-up work, just the basic stuff. But we had the idea that we wanted to do things differently. My business partner, Adam Hale, and I, we started together, and we wanted to change the way that people thought about accounting. You think about that, that’s a pretty bold statement, change the way that people think about accounting. Can it even be done? Well, we want to try to do different things, and we never had a fear of trying. It was one of those things that, trying was something that if you fail you fail, you try again and you learn from it and you go on.

But we wanted to do things like the hourly bill rate. We started charging by the hour. We realized right away that that wasn’t going to work out. Not for us, not for the clients. Clients always bickered about the bill or they are ecstatic and you thought, well, I should have billed them more. We wanted to get out of that rat race completely, and so we took all of our tax during clients, and we converted them to flat fee. We just did it overnight, converted to flat fee, and here’s what it was going to be. Then we took the write-up clients and we said, you know what, we’re going to meet with these folks on a monthly basis. Let’s make this a monthly fee.

We created basically a pricing structure, a strategy, and we say, hey, we’re going to bill these clients monthly. What happened was we started getting these pretty big accounts receivable. Because we’re billing monthly, we’ve got tax from clients that we just created flat fees with, and we’re like, why are we being the bank here? We can’t be the bank. There’s no way we can be the bank because I have no money. I just bootstrap my company, and now we’re building this really big AR, and it was like, well, let’s quit doing that. We thought you know what, let’s just automatically debit their bank accounts every Monday.

We had the price, we had the amount we’re going to charge. We got the client’s consent. The clients thought that was a great idea because now they don’t have to cut a check. With that, it was nice because a lot of those monthly meetings, we were talking about cash flow. Cash flow over the next month, cash for the next few weeks. The client didn’t show up to the meetings when they’re behind on their payments to us because they were embarrassed. This took that equation completely out. We thought, well, hey, let’s do this monthly deal. With that, we started really focusing on our service levels because the clients loved it so much that they said, hey, can you provide more? Can you do a profit-sharing plan for us? Or maybe a phantom stock option? What are all these different things that we hear that the big guys are getting that we can possibly get? We thought we can do all of that. Let’s figure it out.

We created virtual CFO services in 2004. We called it virtual CFO services. We didn’t really know what it meant. I looked in at the source, picked the name out and that sounds good. We wanted to avoid outsourced. It was just one of those things. Hey, what are we going to call this service level that we’re providing? Because we wanted to make it all-encompassing. We didn’t want to nickel and dime a client for hey if they wanted the profit sharing or that’s going to be X amount of dollars. Or if they wanted us to call their bank and create a line of credit. We don’t want to add to that, so we really created that subscription. What happened was we went from hourly bill, to flat fee, to value-based bill because now we created value. We were able to bring the price based on what we were replacing. We could actually change the price structure.

Then we did the subscription-based, where we’re actually getting them or getting payments every single, not month, but every single week. Like I always tell people, Monday is my favorite day because that’s when we get all of our payments, and it was great. The problem was it didn’t take off as quick as I was hoping because really nobody knew what it meant. We didn’t even know really how to provide the service yet. We had the concept, the ideas, and it was working for a couple of clients. But how do you scale this thing? How do you market it when nobody knows what that service even is?

Amato: Sometimes a really good idea is like before its time and if people don’t truly understand it, they’re not going to buy into it. You’re saying that people actually didn’t know – what are virtual CFO services?

Grunden: Yeah. Is that even real? It was like, what does that even mean? Well, we had to explain what it meant, and it was very difficult going out and trying to convince the client that this is something they needed. It was a really slow go. We picked up maybe I’d say in the first four years, you’d probably picked up maybe four clients a year and we’re like, we thought this is going to be a great thing but it’s just not scaling the way that we wanted it to. With that, we kept focusing on it. We kept doing all the marketing towards it. We did a lot of content marketing. We tried to create that need and the want.

We did so well that even if you Google “virtual CFO” today, we come up No. 1 anywhere in the United States, which is cool because we are early adopters of it and really started pushing it. It wasn’t really until about, and I’m guessing the years well, I’m going to say 10 years ago, maybe 12, 15 years ago, that we actually started niching our practice. That’s when it really blew up. Because now we could actually go to the plate and say, we are virtual CFOs for creative agencies or dentists or whatever the niche was, but our niche was creative agencies. We were really targeting it down to not just marketing agencies but creative agencies, web design, web development companies, and with that, we became a thought leader in that industry.

That’s when the service really hit the high row. Because what happened was instead of picking up one to four clients a year, we’re picking up one to four clients a month. It was hugely scaling. It was scaling so big it was like, how do we keep up with that? Because we have to now have people. That’s when we decided that we’re going to do this remote thing. We’re going to do this virtual thing. We’re going to be a distributed company versus a brick-and-mortar company. We made that flip.

Amato: We’ll get into some of that remote early-adopter topic in a little bit. I want to go back to the CFO services. You said not only were the clients maybe not familiar with it, but you were entering a territory where you didn’t know that much. What I want to get to is you brought up something yesterday in your session about sometimes you can get a little too cocky about maybe services, maybe you’re not quite ready, but you’re trying to offer services. Just tell me about, one, that concept of being cocky or also being too tentative and just overthinking it never offering anything.

Grunden: It’s funny because we provide these services for other people. We teach people how to do it, and we provide the blueprint and then we find out half of them don’t even take that first step. With that, it’s important to understand that you’re not going to succeed at everything you do. But you’re not going to succeed at anything if you don’t at least try it. That’s what we did. It wasn’t like we were cocky and said, hey, all of our clients are going to be required now to do this. It was, let’s see if this works and get the client feedback. When we did the automatic debiting their accounts, it was like here’s how we’re going to do this going forward. We explained it to the client, we took that approach and the client responded. I’d say 50% of them said, that’s great.

Another 50% said, I just rather write a check. I’m OK with either one. We just eliminated 50% of our AR. Then over time when you’re introduced to a new client, this is how he did it. There was no option. If you want to work with us, here’s how we do the service, here’s how we provide the service, and here’s how we collect the money on the service. No pushback ever since we started it, and I say no pushback. We maybe in the last 20 years of doing this, we may have had three or four clients that said, you know what, I’d rather pay by check. That’s fine. We’ll pay by check.

But over time that they’re like, why am I paying by check? We give them incentives to not pay by check. I would say just as simple as that, I don’t think it’s a cockiness. I think it’s just simply a confidence or a confidence or just  [being] willing to fail. Believe me, I’ve failed many times over this journey. About went out of business many times because I couldn’t figure how to price products. I couldn’t figure out how to work with people. I couldn’t figure out how to delegate responsibilities. There’s a lot of things I couldn’t figure it out and fail over and over and over again until we finally figured it out.

Amato: Now you’re based in Fort Wayne, Indiana. But I wouldn’t say that that’s necessarily the true base of your firm. I’m getting into this journey that I think has many steps, many twists and turns. It’s like a thriller, it’s like a novel. It’s so good you wrote a book about it?

Grunden: Yeah, sure did actually. So, we’re super transparent. We have no problem answering any questions anybody has, it doesn’t make any difference. You name the question. We’d be happy to help out answer for them because we’ve failed many times. But the journey started back in Fort Wayne, Indiana, as brick-and-mortar in 2013 is when we started tiptoeing in the remote world, we had a client that was one of the first 25 clients ever to go fully remote in the world. We thought, hey, this is great. We can figure out what they’re doing right, what they’re doing wrong, and piggyback off of it. We thought in 2013 there, hey, let’s try this ourselves.

We had a person that moved to Texas and we thought, what a great opportunity? We figured out, hey, what’s working right? What’s going wrong with that person? Are they feeling connected? How can we make them more connected to the team? Then after a while, I came to the team, I can remember the meeting completely. We’re in an office. We had 18 folks at the time. Now we’re up to 70, so long time ago. With that we’re like, hey, I’m going to go remote because Ialways start my meetings off with jokes and stuff like that. I said, hey, we’re going to go fully remote now. Now we’ve got a client here, we’re going to go fully remote and it was a pin dropped. Everyone’s waiting for the punchline.

I was like, no, you’re going to do this. I’m super excited. Nobody was excited about it. You can imagine 18 accountants were like, no. No one’s ever done this before. We’re not doing this. There’s no way. I’ll find something different. All these different reasons why, internet, you name it, everything pre-pandemic was just coming out in hives. What we decided to do is I decide, well, hey, I’m not going to go remote. I’m actually going to just build on to the building. I figured eventually it will be 30 people or so. I gutted the entire building out, kicked them out for six weeks, made really cool office spaces for them, really neat conference rooms with TVs and all this. It was super neat. Within that six-week period, guess what? They figured out that they love this remote thing. It was one at a time, even my partner, Adam, he was like, no, I’m definitely not doing. I’ve got four kids. This isn’t happening.

He was like, Jody, I really like this remote thing. I don’t really want to come back to the office if that’s OK. I’m like, sure. It was like one after the other. All but four of them decided, hey, they’re going to be in a remote environment. I thought, wow, that’s different. I just spent 100 grand, remodeled the entire building for 30 people, and they all decide to work remote. I thought, well, let’s give this a chance. I didn’t just automatically say, hey, that’s what we’re going to do. I said let’s give this a chance. I kept the building available for the people, and I thought, well, let’s start hiring people outside of Indiana, and so we did. We start hiring people in Colorado, in California, in New York, in Florida, Michigan, you name it. We’ve got now we probably almost 30 states with people. With that, it was like, well, if we’re going to do this, let’s figure this out.

After a year or so having that be full, we ended up going fully remote. Those folks deciding, hey, I’m going to try this remote work thing. Then we became what we call fully distributed. There’s a huge difference between hybrid where you can actually come into an office, use the conference room, that sort of thing, meet with people and fully distributed where, in order to do that, that’d be tough because you’ve got people in New York, California, all over the place. We made that work. We figured that out. We went through again the issues that what was working, what didn’t work, and we just tweaked everything until we finally got to the point where, hey, this is something that we want to do. It was funny because it allowed us to grow past what we could have grown if we were in a brick-and-mortar because we’re figuring 30 people. That was all I was going to build this building for. You know when I get close to that, 28 people, I would start making financial decisions based on that building.

That building would have held me hostage on growth. With that, without that building, with the ability to hire anywhere in the United States and basically to bring in talent that I couldn’t bring in, in Fort Wayne, unless I was poaching everybody in the world to get it, which I didn’t. People started coming to us and started looking, hey, this remote thing is pretty cool. They wanted to come to work for us, and they wanted that opportunity. They didn’t want to commute two hours to work in Los Angeles or Denver or whatever. They wanted to take that and spend that time with their kids and family. It allowed us to really grow at the capacity. I know we couldn’t have grown. We couldn’t have doubled our size every three years since 2013 if it wasn’t for having a remote environment and working virtual with clients.

Amato: You could recruit nationally? That’s one of many benefits to this. I think people are now coming around to it, the rest of the world. Coming up, it’s 10 years of remote [work]. One, what are some of your other reflections on it and, two, what do you think is the future for remote work?

Grunden: Yeah, that’s a great question. Reflections would be I’m glad we did it. I’m glad we took that risk because it was a big risk. Your risk is that you’re going to potentially lose your entire company because it’s not going to work out. That’s the risk. Now, we had a little fallback there because I kept the office building, I kept everything there for about a year just to make sure that, hey, this was going to work out. I didn’t terminate the lease and gone. I did keep it available. Once I realized that this is working and gaining momentum, then it was like, wow, why didn’t I do this years before?

Maybe the technology wouldn’t have been there. Maybe there are some things that wouldn’t have made it possible a long time ago that did allow me to do it in 2010. And Forbes came out and basically helped us out because how do you recruit nationally when you’re located in Fort Wayne, Indiana? Fort Wayne is a great city, but it’s hard to recruit for a larger group of folks. When Forbes came out with an article naming us one of the first 125 companies in the world to ever go to remote, you can imagine what the response was., We got flooded with résumés. It was unbelievable. We get 2,000 résumés in about a day and a half. It was like all these folks all across the United States heard about this and really wanted to really embrace this.

There’s no way we could even answer those résumés. It was impossible, and it was no way we could even open them all. So what it allowed us to do, because at the same time we are niching and we’re growing on the CFO side to we’re picking up five to 10 clients a month, and it leveled out after that and we thought how are we going to deal with this. It just happened when we went remote, it allowed us to be recognized nationally, and then it allowed us to attract a wider audience. It ended up being a godsend that we did it at the time that we did do it.

Amato: Now, with your merger, I guess with a firm that’s brick-and-mortar based in St. Louis, if you can truly say it’s “based,” that’s where it is. You’re not fully remote. You’re a hybrid model, I guess.

Grunden: Yeah. It’s funny the journey circling around, went from brick-and-mortar to hybrid, where we had some people in the office. Then went fully remote where I kicked everybody out of the office. Then we close the office, now we’re fully distributed, meaning no office space at all. We did that for 10 years, and now we’re back to hybrid. Because we merged with an accounting firm with 300-plus folks on there, including our team, 350 or so, top 100 accounting firm. They’re fully brick-and-mortar. Now they do have folks that are working from home because of COVID and everything. They’re getting through that issue where maybe folks are only coming in two days a week, a remote-working style, not a distributed style where they can’t come back, but a remote. Then we have our team coming in that is fully remote.

Now the issues are how do we coexist? How do we work there? The nice thing about it is the leadership, Anders really thought this in advance, conjunction with us, what we did is we kept our unit, our team as a division of Anders, and we basically are our own mini-company inside of a company. We’re not a separate entity but our own division. We have our own marketing division, our own HR, we have our own way of doing things, and it allowed us to maintain our culture. But then also introduced that to the Anders folks so that they can see, hey, here’s how we work remotely. Here’s why our culture is next to none, really top-notch culture. Their culture is great too, just the brick-and-mortar-type culture.

Ours is a remote culture. Here’s how we combine them. Over the past, it’s been about six months since the merger actually back in April of 2022. By the time this show [publishes], it would be almost a year. Going through this process, we’ve worked almost all of the kinks out, which is great. The hybrid model can work, which a lot of folks are out there [wondering], Can it work? Do you have to be one or the other? I truly believe it can work. I wouldn’t have done it if we didn’t believe that. Because again, that’s another big risk, hey, can we coexist with a larger firm, a larger firm that gives us a lot of opportunities to make our growth even bigger. The answer is yes.

Amato: Jody, this has been fun. I’ve learned a lot. What would you like to add in closing?

Grunden: The only thing to add is just don’t be afraid to take a risk. Risks aren’t always going to pan out, and accept that and go on. If someone asked me what the meaning of success was, and the success was just getting into the next step. I don’t think there would ever be a point where I would say, yeah, I hit success because, as you get there, the goals change. Outcomes change. No different than the risk. You take risks, obstacles hit you in the face. Well, that’s just part of that risk, and that’s just part of getting to that success that you’re looking for. Don’t look at it as, hey, it’s a barrier. Let’s go ahead and retreat. Let’s figure out how to work around that, how to make that, how to turn that into a positive and go forward.

Amato: Jody, thanks very much.

Grunden: Yeah, thanks for having me Neil.