A new communication strategy 13 Virtual 401(k) Audits

Virtual 401(k) Audits

When we started to gain traction in the Virtual CFO space, there were people who said we got lucky, that we were able to go against the grain and work remotely in that one specific niche because of the nature of the VCFO service. They said, “you can’t do 401(k) audits remotely. No one’s going to hire you to do that.” But we decided to find out whether we could get the VCFO model to work in other areas of accounting, and we bucked the system again.

It started with one audit, and it blew up into just under 200. Everyone in the industry said, “You can’t get 401(k) audits by doing them virtually, by having a national presence, or by doing podcasts and blogs. You get them with an outbound sales approach, traditionally through the Request For Proposal (RFP) process.” And that’s not how we did it, and we were very successful: 401(k) audits were a million dollar stream of income when we were a $10 million company. Our thought-leadership approach creates demand for this service, so we have clients who follow our podcasts and blogs—maybe for months—that call us up and initiate the sales process. With this kind of inbound marketing approach, our accountants don’t need to go out and make sales pitches. When we hire someone, they get handed a book of clients; they aren’t expected to land them, which is the industry standard. That means they have more time to spend on delivering expert service and not honing their sales skills. And, starting from their first meeting, they can approach their client as partners, not as salespeople. We got into audits through HUD audits for mortgagees. We found it to be a scalable business, because we didn’t have to be on-site; we could do it all throughout the United States. We started putting a lot of effort and marketing dollars, growing to 40 or 50 audits, and then the federal government decided to let the big banks swallow up the little mortgage companies and oversee them. The revenue center we were building

vanished—literally—overnight. BUT THEN WE GOT A PHONE CALL.

One of our earliest clients called us up and said, “Hey, I know you don’t need to do my HUD audit, but I really enjoyed working with you. I like your style. I like the fact that you don’t have to be in my backyard. Can you do our 401k audits?”

So we dug in, spent three times the amount of time we should have, and started to figure it out, with the help of consultants who reviewed our process. As we learned, we started putting out information, writing articles, and sharing what we were learning.

It turned out to be the perfect niche. Unlike HUD audits, 401(k) audit season doesn’t overlap with tax season, so we were able to distribute the workload more evenly throughout the year.

Companies are required to do 401(k) audits when they have 100-plus employees, so they’re established companies with systems, a payroll company, and high quality data—which makes them straightforward to conduct. It’s also a great market because when a company crosses that 100-employee threshold, they’re having to educate themselves about the 401(k) process for the first time. That means that when those clients would search, “Why do I need a 401(k) audit?” online, they’d find our articles and, even though we might have been halfway across the country, we could end up working together.

In our early stages, nobody did 401(k) audits virtually, so we had a big competitive advantage. Not only were we doing something unique, we were putting out a lot of content to educate clients, and we had a transparent billing model. People could go on our website, click a button, answer a few screening questions, and get a quote. They didn’t have to wait two to four weeks to hear what the quote might be.

-ADAM HALE

Once we figured out a price that wasn’t ridiculously low, we moved one step closer to where we wanted to be—in the clients’ corner, doing the work we do best, rather than hovering by the mailbox, waiting for the next check.”

VALUE-BASED BILLING

From the very beginning, we did things differently. But every game-changing idea we’ve implemented—from what we offer to how we deliver it—has to meet this standard: We provide a more valuable service to the client and improve our team’s experience. You don’t have to sacrifice one to get the other. In fact, that’s what makes a business great.

Take our decision to move away from the traditional hourly billing model to valuebased, weekly billing. Hourly billing felt like a lose-lose. We couldn’t predict our cash flow, wasted time chasing accounts receivable and risked compromising our relationship with the client every time we sent out a bill. Would they complain about every .25 hours? Would they laugh at how cheap we seemed? Instead of being able to have substantive conversations about pressing issues, we had to act as a project manager and bill collector. “Hey, I want to have this serious conversation with you, but first you owe me $30,000” is a sentence we were able to remove from our routine at Summit.

Once we figured out a price that wasn’t ridiculously low, we moved one step closer to where we wanted to be—in the clients’ corner, doing the work we do best, rather than hovering by the mailbox, waiting for the next check.

Growing Virtually

Our decision to become the first completely virtual CPA firm—fully distributed in 2013— was motivated by the same outcome: to help our clients grow their business even more efficiently and improve our work environment.

It took a little while to convince everyone to come along for the ride, but the switch to a fully distributed firm ended up being one of the best decisions we ever made. It was an opportunity to really live our values of employee empowerment and trust—to show our employees we don’t mind if they have to leave work for a few hours to coach a game or go to a personal appointment; we know they’ll get their work done. That’s what employees really want. And maybe that trust is there in a brick-and-mortar firm, but it’s hard to show it in the same way when everyone is required to be physically present.

We also saw major benefits in terms of growth. Going virtual allowed us to grow faster than our brick-and-mortar business ever would have allowed us to, by expanding our talent pool. When we were only getting a few local resumes per week, we often had to decide whether a partial fit was the best way to go. Another lose-lose. Soon, from a few resumes per week, we started receiving nearly 2,000 per year, allowing us to hire the exact perfect candidate without geographical limits. At the same time, since we were now investing in finding technological solutions to allow seamless online interactions, we were able to concentrate on attracting the kind of growth-oriented clients that make us excited to come to work.

We quickly saw the benefits of meeting remotely: We cut wasted commuting time, and we saw how easy it was to loop in new colleagues or members of the clients’ team at a moment’s notice. These benefits have become familiar to a large part of the global workforce since 2020. But well before the pandemic caused remote work to trend, we were figuring out how to leverage technology to make the best possible connections with our clients and within our team.