Success Story: Frank Gutta, CPA, Sunrise, FL
Retirement is a really important consideration that not enough people take into account early enough to matter. One needs to be prepared to live the comfortable life that they have become accustomed to once their ability to earn a living is diminished. In this month’s interview, I had the opportunity to speak with a man who is taking the right path to retirement and in the process, is making sure that the business and client base he has built up through hard work is going to be preserved and well taken care of once he rides off into the sunset.
That man is Frank Gutta, who has the distinction of attending NCI’s first Practice Development Seminar in 1987. He has managed to build a million-dollar accounting practice in the Florida market with help from NCI and our marketing programs. Frank recently turned 60 and has been thinking about retirement. He decided that he wanted to bring in a young, ambitious CPA to groom for takeover during a five-year transition period. Frank came to NCI for help in facilitating this buy-in because, after working with NCI on and off for over two decades, he knew that he could trust Bruce Clark with this incredibly important task. Within one month, he had the perfect fit for the position in place, along with a great financial deal that generated 80% of the cash up front for Frank. Read on to learn the details of this buy-in and also to get time-tested advice from a proven long-term success.
Frank, please tell me about your accounting background that led you into owning your own practice?
I graduated in 1974 and then went to work in an accounting firm. After that, I moved to South Florida and started working with Seidman BDO from about 1982 to 1986. In January of 1986, I started my own practice. I always wanted to be my own boss and do my own thing. I worked for a national CPA firm and I just didn’t like the politics. They also shunned small-business accounting and were focused on larger accounts and I enjoyed working with the “mom and pop” small-business owners. The national firm I worked for didn’t cater to those types of clients; they basically just got rid of them. So I thought: that’s a nice niche that I can get into, and I left and started my own practice.
Can you tell me about your experience with NCI over the years? What prompted you to go to NCI in the first place?
In 1987, I got a mailer from a company called Clients Unlimited with a picture of an accountant sitting by a phone waiting for new clients to call in. The phone was covered in cobwebs.
That’s right; New Clients, Inc. was originally called Clients Unlimited. That ad is one of my father’s favorites. He references it often.
When I called I spoke to your dad, he suggested I attend the Plan 1 Practice Development Seminar in New Jersey. At that time I was just starting out and didn’t have much money so I chose to attend the seminar. Then I hired an appointment setter and I did the selling myself and basically it was the best thing I ever did. I knew nothing about sales and I learned a lot on that topic at the seminar: about how to close deals and things like that. So it was very helpful.
Were you struggling to get accounts when you started the business?
Yes, before I went to the seminar I tried various things. I put an ad for my services in the paper. I went to various networking events to try and solicit business and like a typical accountant, I didn’t know how to sell myself. I would say, “Do you need an accountant? Do you need anyone to do your taxes?” [Laughs.] So I learned a lot from the seminar because I just didn’t know how to effectively sell my services back then.
So you used the NCI training to grow your business?
Yes, I picked up several new accounts. I had been in an executive suite when I got started and in 1988 I was able to move into a shared office with an attorney, which was helpful. At that point, I had an assistant who did bookkeeping and answered the phone. The attorney and I would also refer business to one another.
You eventually upgraded to a Plan 2 program, correct?
Yes, I did. NCI hired and trained a salesman and two appointment setters for me and that brought me additional business and worked out well.
What was your biggest concern before deciding to attend the seminar?
When I did the first one, I didn’t have much cash but I didn’t have much concern. I thought it was a reasonably priced seminar, I just couldn’t afford the Plan 2 at that time, otherwise I would have done it then.
That makes sense. The programs are really designed to work that way. Not everyone can afford the Plan 2 program but the idea is that they can attend the seminar and use that knowledge to grow to a point where they can afford to upgrade into a Plan 2, as you did. And today we have financing via Bank Of America that allows someone to get into the program with zero dollars down.
What were some of your challenges running the program?
I think that sometimes when you are cold calling you will come across people who are very resistant or very price conscious. It’s a more difficult sale to make but it’s a numbers game and it’s another method of constantly having a stream of clients coming into the firm.
That’s the whole goal. I also think that our clients often find and maybe you can attest to this that by doing constant marketing and putting the name of the firm out into the public arena a bit, it helps you in less tangible ways, like building that market presence and recognition. Just getting your name out is so important and without a big marketing and advertising budget, the best and most cost-effective way to achieve that is to pick up the phone and reach out.
I also found that it’s not one magic rule. You have to engage in a variety of marketing approaches.
Absolutely, you have to be diverse in your approach and you have to stay active with your marketing. We make that a point in our marketing program. It’s not just about the telephone; there is also email marketing, website marketing, search engine optimization, etc., that we have built into the program to keep up with current marketing trends that work.
What advice would you give to someone who is considering investing in an NCI marketing program?
Most accountants go to accounting school and they know nothing about sales. That was the huge difference maker for me after attending the seminar. I also think that we, as accountants, leave a lot of money on the table. There are a lot of additional services that we can provide and don’t. If you’re starting out and maybe coming from a bigger firm and you think that bookkeeping or payroll services are beneath you, think again. There are so many accountants out there making a fortune on that type of work. Just look at ADP, they focus exclusively on payroll and do an outrageous amount of business.
Do you have any advice for someone running the program?
I think the key thing I learned from Bruce is that if you have salesperson who is not producing, there is obviously something wrong. I was a little too easy about that and I would just let the salesperson hang around, despite their not generating enough results. The same goes for the appointment setters.
Another thing I want to mention is that I’ve got a tax manager and six other staff members. Most of the work is done by the staff. I’ve put systems and processes in place where the practice could essentially run without me there all the time. This is unlike most CPAs, who want to do everything themselves, but there are only so many hours in the day.
That’s very true. What if you hadn’t taken those precautions and something were to happen to you? You could lose everything very quickly, so that is something we advocate to our clients. Don’t make the whole firm rely on you in order to operate.
In sales and marketing, at the end of the day, it is about results. We tell our clients this all the time. It’s not easy to make a change, it’s not easy to fire someone or go through the hiring process again, but the results are paramount. If the results aren’t there you cannot justify the ongoing investment into the marketing.
NCI had recently helped you to find a partner for your firm. You were looking for someone to buy into your practice. Can you tell me about that process?
Last year I turned 60 and I always tell my clients about planning the transition of their business when they retire and not to wait until the last minute to figure that out. So I was thinking about that last year and I decided that the best way to go about it was to find someone who could buy into my practice. Then I can work with him for several years, have him get to know the clients and make it a smooth transition. Eventually, I’ll slow down and work less and then retire. I think 65 would be a good age to retire so that gives me five years to develop a good transition. So I called Bruce to get help in finding a good partner. Within a matter of days Bruce provided me with around 10 people who were interested.
Impressive, and this was no small buy-in.
Yeah; it’s a million dollar practice. So we narrowed the list down to three people who were very interested and had potential. Bruce was also very good personality-wise. I’ve known Bruce for many years and he knows me and my personality and he helped out with finding the type of person that would be a good fit for me. I think that worked out very well. So I met with a few people and ultimately selected a young CPA in his 30s who was looking to acquire a practice. We hit it off very well. It’s been excellent so far.
That’s excellent, it sounds like a great situation for all involved. When did this take place?
The new partner joined the firm effective January 1st of this year. I called Bruce in October and we closed on December 28th.
So it’s been about four months now. I know it’s not easy to sell a practice when you have relationships with your clients. This sounds like a really great way of doing it so that everyone is well taken care of and has time for the various adjustments that go along with that.
Is there anything else you’d like to add about NCI, the marketing programs, your relationship with Bruce over the years, and the recent partnership that he facilitated for you?
I’ve known Bruce for a long time. He’s a man of integrity and a man of his word and he’s always done right by me. He knows a lot of people in this business. There are other professional practice sales brokers who don’t know half the people Bruce does in this industry. A lot of them tell me that they know all these people, but they really don’t. Whereas with Bruce I made one phone call to him and within a week he had 10 people lined up. Plus he was able to provide financing for a big chunk of the deal. The bank Bruce works with, Bank of America, financed 70% with the buyer putting down 10% and the note was for the remaining 20%. I got 80% of funds up front.
That’s incredible for a practice that size. I’m sure you were happy.
I was very happy. It worked out very, very well. I also want to say that we worked with Justin Shafer at Bank of America. He was incredible and did an excellent job, as well.
Another thing I’d like to point out is that I think some people get discouraged because they are spending all this money on the marketing program. Even if the program works out slower than expected it still pays for itself. Say in the first year you spend $100,000 total on all of your marketing and you only got $60,000 worth of revenue. That $60,000 is recurring and you’re going to get referrals from that and those clients are going to grow, too. Even with a worst-case scenario where you break even after two years, everything after that is all gravy. People need to look at it that way.
That’s a good point. Sometimes people’s expectations get overblown. The program works, that has been proven consistently over the past 27 years but it requires hard work. Marketing takes time, effort and money to be successful. If you have a proven system in place, it does make it much easier in the long run, however.
Yes, and I think another thing that gets overlooked is, okay you’ve got the client, now you have to take care of the client and give them great service. That will also get you referrals. If your service is poor, you will lose the potential referral and the client.
That’s another great point. I also hear some salespeople who have to deal with this issue. They bring in clients and the work doesn’t get done in a timely manner and the CSR is left trying to explain what is going on to the new client. What kind of impression is that to start a business relationship on? Not a good one. That’s all I have for you today, Frank. We here at NCI certainly appreciate your time on the phone today and also your kind words and good advice. Good luck with your new partnership and eventual retirement and, as always, if we can be of further assistance, please call.