Leaping into Business Ownership: From Senior to Owner

Speaker 1: 0:00

Hey, ellie, question for you, mate.

Speaker 2: 0:02

Yes, Andrew.

Speaker 1: 0:03

What is the best way to make a small fortune in the stock market? Any ideas, any thoughts?

Speaker 2: 0:10

No, Buying and selling good stock.

Speaker 1: 0:13

Well, typically, the answer is probably you just need to start off with a big fortune, to make a small fortune, because you need a lot Bit like gambling. Well, you need a lot to actually get a return on.

Speaker 2: 0:26

Yeah.

Speaker 1: 0:28

I don't think that joke hit Did it hit.

Speaker 2: 0:31

Did it work? No, it didn't. I don't think somebody in the world might get it. Let's just keep going.

Speaker 1: 0:37

I tried Look, I tried to find a joke that was about investment, that was about growth and about those kind of things that we kind of jump into Good job, good job High five Thank you.

Speaker 2: 0:50

You're welcome.

Speaker 1: 0:51

Well, the other joke I did have lined up is a long term investment, is a short term investment. That failed.

Speaker 2: 0:58

That's true, because sometimes I hold for a long time.

Speaker 1: 1:01

Yeah right.

Speaker 2: 1:02

If I've made a loss, I don't want to realise that loss. Right, it's been a loss until it's realised.

Speaker 1: 1:07

So as always.

Speaker 2: 1:08

Why are we talking about that?

Speaker 1: 1:09

Yeah, there's a meaning behind the joke there, obviously, and it is today's episode. We're talking about the mindset of business development and we're talking about moving from being a manager to being an owner of a business. We're talking accounting firm. So we've gone junior to senior, we've gone from accountant to a manager and we're saying well, you're now choosing, or have the opportunity to move from not just managing something but getting physical ownership of that thing, whether it's an entirety or whether it's of just a minority amount.

Speaker 2: 1:44

So, ellie, you've had this transition.

Speaker 1: 1:46

I've had this transition many of our listeners have gone through that. Some of our listeners hope to go through that some don't want to go through it. What I want to start with, to begin this broad conversation, after David plays the intro theme tunes, because that's very important, so I'm going to let you think about this but what I want you to come back with in a second is why would someone choose to or not to move in this line? Because this is like we need to figure out why.

Speaker 1: 2:12

So David play the theme song, and when we come back we're going to start with. Why would I choose to move in investment or not from being a manager in an accounting firm? Let's go. Alright, mate, you've been thinking for at least 12 and a half seconds. I only need five.

Speaker 2: 2:40

I'm good, I'm good, you're good, you're good, can you?

Speaker 1: 2:43

please let me know. What is it? Why do you think someone would, would or would not want to move into the ownership element of an accounting firm?

Speaker 2: 2:53

Yeah, and I can only talk from my experience and for me it was just that I wanted a piece of the pie. I wanted something that was mine, my little baby, something that all of my time and effort and was put into so that I could actually get some reward for that. But I think there's, you know, to jump into that you have to have the right risk appetite and I think that's the difference where some people go no, I'm 100% not interested. So, for instance, my lethal lead right she had been brought up and involved in family businesses and she's like no, I don't want a bar of owning, but I'm super happy in like guiding, leading.

Speaker 1: 3:36

Whereas.

Speaker 2: 3:37

I was like no, I want a piece of this pie. I've been working for it for so long. It was something that I felt like I had in me, but I had to get to that right point where the risk, appetite and reward was right for me and my family.

Speaker 1: 3:50

So I don't like to stereotype accountants, but let's stereotype accountants for a moment. Do you think there?

Speaker 2: 3:56

is a Hang on. Hang on, let me just go get the box. Just go get the box, all the things out, we'll sit inside of it.

Speaker 1: 4:02

Do you think the stereotype of an accountant is that they would choose to have ownership of or not ownership of? Because I can see elements here of potentially not risk takers but, also understand the financial reward of things. There's this weird balance between what you would suggest. A stereotype within the accounting space would be.

Speaker 2: 4:24

And I'll preface this with I think ownership in an accounting firm has less risk than other industries and other businesses. Right, we work on annuity. We know once we get a client fairly sticky, they're going to stay with us for a little bit and we grow, grow, grow, grow. So I think, on the risk appetite scale, although we may generically say we're risk averse, I think when we look at the numbers and we look at what we can do and we look at our skillset, we back ourselves in and say no, I could definitely do that. I've got a client base behind me. It's annuity, it's low risk in relationship to other industries and other groups and I also believe it's a personality thing based upon your experiences as you're moving through business or your family. So I'm not. I think it's more personality based rather than generic accounting type based. What's your thoughts?

Speaker 1: 5:22

on that. Yeah, look, I think there's definitely elements of that too. Right, we know that there's not necessarily a stereotype that goes through here in its full completeness, but there are elements that always sneak into. You know, there's numbers and there's balance and there's order and of certain things. And I think it's interesting because obviously you said, you know, lethally doesn't want to people like you and I do want to.

Speaker 1: 5:43

I've got some team do want to. I probably got some team don't want to, and for varying different reasons, and I think there's always this assumption of, particularly when you're in, like public practice, accounting right, so we're not talking like internal accounting, at like a corporate yeah, yeah, yeah. That's the comment where you are developing relationships with clients and you have got all this, this thing and all of a sudden you kind of wake up one day and you go hold on a second. This is almost an asset of mine, Like.

Speaker 1: 6:12

I've worked to build these relationships, to build the trust, to have the annuity of those kinds of things and people get to the point, I guess, they go there's an asset sitting here and like if I'm capable of doing that, then surely I could have an ownership element, whether I start my own or whether I look to have an ownership point here. And I think I think it's interesting because I think there's a growing number of people in our industry that are not wanting to have ownership.

Speaker 2: 6:39

I don't know.

Speaker 1: 6:40

I just I feel like. I feel like we always hear from the people that are, you know, people that are fed up and started their own firm, or that you? Know, wanted to do more of this and so they did that, or you've got, you know, maybe, stories of you know large groups that are growing and growing and giving opportunity to their team to move into ownership of varying different things, because it helps them to grow and maybe making that really lucrative of an opportunity for them to do.

Speaker 1: 7:04

But I just feel like in the environment that we've exposed ourselves to over the last four or five years and what the future is going to continue to do, so I feel like there's less people that want the restriction that having ownership within a business can bring right, Because if you become an owner, your ability to exit and change what you do becomes much, much more restricted. Because you think about an employment contract versus a shareholder agreement.

Speaker 2: 7:31

Shareholder agreement.

Speaker 1: 7:32

you can enforce that motherfucker Employment contract only to a certain point, right you? Can't restrict someone's ability to put food on the table, and so I think people look at those elements and they go well. I've got more flexibility if I don't have ownership elements here and they might find ways to negotiate the reward to still come through whether it's like profit share arrangements and the like, but they don't necessarily want to have the equity, because if I want to leave, I can't leave, or they might be penalizing for me to leave or whatever that kind of looks like Nobody will take the equity.

Speaker 2: 8:04

And I think you kind of touched on it there and I was going to say you know, if you don't take equity, where is the capacity increase, where is the reward? But if you can negotiate that in other ways, then that kind of does resolve that. And I kind of thought when I looked at it. I looked at it like a bit of a long-term investment nest egg type thing. But I've heard a lot of commentary recently around is our equity model broken? And that kind of refers back to what you're saying Do people still want it?

Speaker 1: 8:31

Is it?

Speaker 2: 8:31

the mangy rotten vesty carrot. Everybody thinks you know it's a carrot at the carrot, but everyone's like, yeah, but I don't want that carrot.

Speaker 1: 8:40

Yeah, it doesn't. And is it even a carrot that I'm going to get access to too?

Speaker 2: 8:44

Yeah.

Speaker 1: 8:45

That's the story of why it keeps getting dangling and the rules keep changing and all that kind of stuff there. As well as I think, and I think there's elements of like the you know, if people are looking to move into investment and ownership we'll talk about this one in a moment too is like is it full control? Are you like, are you taking?

Speaker 2: 9:01

are you?

Speaker 1: 9:01

either buying a business in entirety, so you own 100%, or starting your own thus you own 100%. Or are you buying into a business, whether it's majority or potentially minority, and at what option do you actually have? And I guess it's certain businesses. At certain scales they go well. I can only get like 2% equity and whilst that has value, they may look at that and go. If I want to own more of the place that I work at, I want to have a bigger piece of the pie.

Speaker 1: 9:29

I want to have more opportunity, and thus I think that sometimes restricts people's ability because we have an environment that says you can go do your own thing, however you want to do that. And if they only own a percent or two. Maybe there's no true connection to that which I don't think is a bad thing.

Speaker 2: 9:47

Yeah, well, you know that that is to the point that there are different layers of equity and ownership. So you know, equity and ownership are big four versus a mid tier, versus a smaller firm, versus going out on your own, and I clearly made the choice that I wanted. For me, what was super important was, yes, that you know everything I was putting my hard earned effort into. I was going to get rewarded for, but I was super important to me to have control, to be able to guide and lead, because I was frustrated with how things were being done and I knew that they could be done better.

Speaker 1: 10:19

And I'm fairly certain we've done a previous episode from a couple of seasons ago where we talked a lot about equity and how we did things and I think like touching on what I shared before around like minority versus majority ownership and elements. What do you see there in terms of like we're talking transitioning so mindset, I'm a manager, I'm responsible for looking after certain things. I'm responsible for like blah, blah blah, and now I'm an investor.

Speaker 1: 10:45

I'm using the term for like, or an owner like like what changes at that point, and is it different if you're minority versus majority owner?

Speaker 2: 10:53

Yeah, and look, I think it from my perspective, that jump is most probably the biggest leap. It's like leaping off a cliff it's the unknown and you can't really. You can act as a manager and then become a manager. You can't really act as an owner and become an owner because the moment you become an owner and equity owner, your mindset shifts. It's a very different play and you look at everything differently and then you're in this leadership well, potentially in this leadership role, especially if you're in the majority or you're on your own, and that has a completely different skill set to being a minority owner or to being a manager or a director in a firm. And certainly it's the mindset shift. There's actually this big leap in understanding that you're going to be perceived differently. The language that you use is going to be heard differently, that you think differently. Like the things that you were like as an employee, you're like I want a public holiday. When you become a owner, you're like man, that's going to cost me a lot of money.

Speaker 1: 11:52

Yeah. Why is everyone taking all this bloody? Why is everyone sick all the time? Why do you want to go on a holiday?

Speaker 2: 11:57

And you don't, you can't prepare yourself for that. It's like saying I'm going to have a baby and I'm going to prepare myself, and then you have the baby like I was not prepared. Yeah, what's the reality of all these things?

Speaker 1: 12:05

starting to get revealed to you, and it's actually it's so interesting in terms of, like, you just don't know what you're going to experience and feel and all of a sudden, there it is.

Speaker 2: 12:13

And you're like, oh and like and now I understand how my boss was feeling and I was like getting really angry and he was like, no, it's fine, you know. Like you know, yeah, or now you.

Speaker 1: 12:22

All of a sudden, you have this appreciation for where you might have worked before and the boss, because maybe you were like, oh, why do they behave? Like that? Why do they think like that? And all of a sudden you're like oh, I mean my experience with my employers. I haven't had that experience of like, like.

Speaker 1: 12:38

Oh, now I understand, but I've definitely heard other people who've had a greater appreciation for and I think so talking about the minority and majority approach to so we what are effectively saying is take Illuminate for an example Illuminate for a number of years I had a business partner and then it was solely me. And then about, I want to say, about four years ago, maybe three years ago, some of my team, over the last kind of three or four years, have now bought in, but at minority levels. So Mick, shane, amanda and Kate, who I believe everyone is aware of, has minority ownership in the Illuminate space, whereas I have majority ownership and and that's something that I'm looking to continue to evolve I'm more than happy to, you know, transition and have less or less ownership and equity over a period of time. But I think there's also a different, there's a different headspace to be in when you're in those environments.

Speaker 2: 13:29

And it's.

Speaker 1: 13:30

I think it's really challenging because, particularly in a smaller business framework like ours, you know if you're not in a thousand person kind of business and it is what it is in a smaller environment. I my assumption from my experience in the others, as soon as equity is involved, there's a lot more desire to be included in things that maybe historically you haven't been, and that desire can be more emotion.

Speaker 2: 13:56

Yep, it's more emotive, more emotive more.

Speaker 1: 13:58

I want to be kept in the loop with certain stuff. Yeah, more I feel like I should have a say or I should be consulted and and and I'm not saying that's that's wrong or that shouldn't exist, but there's definitely that change from even when you go to minority and then when you go to majority. I think there's the burden of potentially I need to be pushing this thing that I have such a heavy ownership in this business that if?

Speaker 1: 14:26

I'm not pushing this thing. There's much more risk attached to the outcome of those activities for me now than it was when I was in minority. And and I've spoken a lot about this with my team and with some people who've kind of assisted and consulted us as well is the difference between your job and your ownership.

Speaker 1: 14:45

Because particularly when you're employed and then you have minority or majority ownership is like in a business like mine. We don't have a partnership model where it's like, great, you go, do your thing and you get your kind of partnership share. It's like, no, we have a, we have, we run a business I'm doing inverting columns. We have a business, you've chosen to invest in that and people within the business have roles and responsibilities to perform and what that means is person over there might make that decision.

Speaker 1: 15:07

Person over there might make that decision. Just because you now have equity does not mean you make the decision or you're even involved in making the decision. Or sometimes sometimes you might not even be told about the decision being made, because it doesn't impact what you do in your job, and nor is it something that you would report back to shareholders.

Speaker 2: 15:24

Do you've really got to be in check of yourself and your emotions and how you behave as a shareholder? Yep, at both levels. So as the majority shareholder.

Speaker 1: 15:35

You have to be really mindful that there are other people out there who are being impacted by decisions that you're making and so you need to make. First of all, is this a decision that, in my job at this business, it is my decision to make, or is it actually someone else's decision? Secondly, to other people need to be consulted into this, and has it changed now, because they have ownership of our elements? And then, lastly, do I need to start delegating or passing on some of these responsibilities because of certain elements like that? Because what I can appreciate that it's sometimes to be seen is like majority person does what majority person wants to do, because they're the majority. Like you don't like it.

Speaker 2: 16:14

Well, tough, which doesn't make people happy.

Speaker 1: 16:18

Doesn't make people happy and therefore you're not going to get great productivity, because you're also an employee and it's all interlinked. And sometimes I think there's like a perception that that's what's happening as opposed to the reality of what's happening, and it's really hard, I think, to sometimes decipher, when you're the minority or majority, that space and I think that's what's really important to have and that's for a lot of trust.

Speaker 2: 16:39

Legal agreements, communication, transparency, regular check-ins Like that all has to be documented and played.

Speaker 1: 16:47

Like we have an authority matrix that effectively says here's all the stuff that happens outside of normal operational stuff, you know, outside of lodging a tax return, outside of sending an email, when we have to do this or this or this, when decisions need to be made at this or this or this, who has the authority? And if all of a sudden it goes further than that, who then has the authority to do that?

Speaker 1: 17:07

Who needs to be included. So, for example, it could be paying a bonus to someone. So if it's within budget, the direct report has the ability to decide whether the bonus gets paid. They don't need to consult anybody and simply on a report when we go what the bonus is, that happens. If it's outside of bonus, who then is responsible for approving that? Because should majority shareholder have the ability to do that? Or is it assigned to the person whose job is to manage finance? Who actually does that? And that's really important. So that's my one tiny bit of advice.

Speaker 2: 17:38

So lots and lots of prep, right yeah, what is it that people are going to get?

Speaker 1: 17:43

exposed to and helping them to understand why they may or may not, but knowing that all the decisions are in the best interest of the business.

Speaker 2: 17:51

Yeah, yeah, I completely agree. Kind of like your baby right.

Speaker 1: 17:54

Got to put the baby first, right because if your majority owner, logically your decision you are thinking is in the best interest of the business, because you majority benefit from that right, so that logic theoretically should apply. Sometimes it doesn't. Sometimes it does, but it's something that's really important tonight.

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Speaker 2: 22:43

And look, that was a really conscious strategic decision for me. I'd sat around so many boardrooms where I'd had conversations where we're trying to get people to agree on the pathway forward, or remuneration or equity, that I was exhausted from that and I was like I just need a break from that. So I'm not saying well, I won't ever, but certainly in those first formational years and still today, I would be very hesitant to bring on minority because it does complicate things and, yeah, I'm sure I'd be able to manage it. But right now, because of what I've come from, I definitely want to be able to have the full gamut of lead and troll. You know, and that's super important for me and I know that that's different for absolutely everybody, based upon their experiences, and so you know what's right for me isn't right for somebody else and vice versa for you.

Speaker 2: 23:44

So this is where you really got to kind of look inside yourself and say what exactly is it Am I wanting from equity, if you're interested, what exactly is it that I'm wanting and how does that look and how will that play out short term, midterm, long term? And if you know you want other people in, who might that be? Do you do diligence, like you've got to be super, super careful. It's like choosing a relationship right, you've got to be super careful about the people that you bring in as investors or partners, because all of those things will have such an impact to your business and to your well being, and so let's assume that I'm the person who's moving into ownership, right?

Speaker 1: 24:23

So let's assume that I'm not going to go leave my job and start my own, so we're not starting a new thing.

Speaker 2: 24:28

I'm staying within the environment.

Speaker 1: 24:30

Now, whether I'm moving to minority or majority, let's ignore all of that. The transition right. So I'm now not just a manager, but I'm now an owner of this thing. What stuff do you think people should be preparing themselves for through that space? Is it just I wake up one day and now I'm an owner? Is it I need to spend three years to prepare? What would you look at there and the way to manage that transition from, I guess, the additional investment side at all?

Speaker 2: 24:59

Yeah, and look. My first point of call was to say well, I actually want to see your numbers, Because sometimes not every person shares their numbers with their team.

Speaker 2: 25:08

So you'd want to do a lot of due diligence on the numbers on the web, on, you know, leave all of those different types of things like you would just purchasing into any business. That's the first point to see whether you're actually even interested in that business. The second is what does your equity look like? What number is that going to be Then working with the partners, directors, whomever as to what are the solid agreements here, like your matrix, like your hierarchy, what is that going to look like? And once that's all sorted, then it's about okay. Well, I would be looking at leadership courses for me. How do I change that mindset from management director to leader to owner, talking with other people, mentoring, getting people behind you and to support you through that process, to bring some of the team, all of the team, on that journey through that open communication. Don't just dump it on everybody.

Speaker 2: 26:05

Actually have some really open communications around. Hey, this is what we're thinking of doing. This is what it might look like with feedback here. Not to say that they have a say, but you want to at least hear what their concerns are or what they're most excited about, because it's a big change for everybody in organization, because that person literally does change. It does change the relationships that you have with people. So it's super important that I think you're engaging with everybody and every stakeholder at that level.

Speaker 1: 26:36

Have I missed something. No, it's good and I think it's that challenge of like. There's an element of like I don't want to share too much too early, depending on where it goes, but like we also need to be open and transparent about that. So it's not all of a sudden like oh, holy shit, like what? That's crazy, that's weird. That's not what we thought it would be.

Speaker 2: 26:52

Yeah, and I'll give an example here. I was brought into a smallish mid tier firm and none of the team actually knew I was arriving, I was going to act as a director and obviously looking to go to equity. The team didn't know. I literally just rolled up one day, set myself in an office and I was like what? Like no one knows, and then all of these conspiracy theories came up about I'm taking that person's job and this person's job and this and that and this and that.

Speaker 1: 27:20

That's dangerous.

Speaker 2: 27:20

So if you, that's right, if you and I we went back to this in one of our communication episodes if you don't tell your story, they'll make it up.

Speaker 2: 27:27

Yeah so this is where I know it's uncomfortable, and I know that sometimes you don't want to give them everything, but there's certainly ways that you can communicate the bulk of the information so that people aren't making up their own stories because it's such an important step and it's one that should be celebrated, and the other person shouldn't be like, oh gosh, what have I done? Like why am I the beast here? And so you know these things can go wildly wrong and you don't want that as your first start really into equity or ownership.

Speaker 1: 27:59

Yeah, it's, it's, yeah, it's such a. I mean, communication is key everywhere, right? Like whatever you're doing, however, it works. You know you want to be. You got to be careful you don't communicate too early, you don't communicate too late. You got to be careful you don't overshare.

Speaker 1: 28:13

You got to be careful you don't undershare and like, because at the end of the day, like in a situation like this where you might be deciding to move into equity ownership, you need to decide that you want to before you're probably going to be telling other people about it, right? So you need to understand what is it going to look like, when is it going to happen, how is it going to blah, blah, blah, blah blah. So then you're going to go great, hey, now we're happy to share that. This is something that we've been working on and we're excited. And more often than not, more often than not, if it's not an external person joining that's you know if it's an internal one, people will be like oh yeah, obviously, obviously like this dude unless they're not well liked.

Speaker 1: 28:48

Yeah, this person, this person's awesome. They've obviously deserved it. Yeah, unless they're not well liked or unless there is an assumption that someone else might have had that opportunity.

Speaker 2: 28:58

But didn't take it, and that's probably where it's important.

Speaker 1: 29:01

If that person did have the opportunity but chose not to that, you probably need to collectively share that, not just go. Hey, andrew's stepping into equity and everyone's like what about Ellie?

Speaker 2: 29:12

Is it just because she's a?

Speaker 1: 29:13

woman that she's not getting it, and I was like, hey, we had a conversation with Andrew and Allie and we presented and, and Allie, you might, I've decided. I don't want to do that as much as I love it, love this place. I'm dedicated, I'm going to be a lethal Lee and I'm going to smash the shit out of it. It's going to be great and Andrew's decided he wants to punt his life savings, cross his finger and hope so that it works.

Speaker 2: 29:31

Exactly right, and I think that that's such an important point. If that's the only thing that you get from this, communicate that you've gone through plan ABCD. Communicate that you've gone to all of these people and this is where we've landed, and that because they'll be thinking but did you consider that? Well, of course you did, but you just didn't verbally state it. So I think that you know having a communication strategy around anybody entering equity, internally or externally, is super important, Do you?

Speaker 1: 30:01

think, once you're in that space of ownership so I was a manager and now I have an element of ownership is there more responsibility or more accountability, and is it different depending on how it's done?

Speaker 2: 30:16

I think personally you would most probably take on or feel more responsibility and accountability and it's all new territory so you must probably feeling a bit like imposter syndrome type stuff. So I think you know, trying to just back yourself in, getting the mentor communicating your way through that is like super important. And I think there's also and I see this a lot in like the bigger firms where new partners come in and they're old partners and there's this dynamic power struggle between them because some are new and some are old and the old ones like to say, well, that's not how it's done, and the new ones want to bring change, like it actually brings this kind of paradigm shift. And it depends how many new and old and you know there can be these real political battles which I've seen have to play out over many, many occasions. So that's another thing to kind of factor in here, if you are going into a multi equity firm, that there are different layers of responsibility, different layers of accountability, different layers of politics you kind of have to be aware of.

Speaker 2: 31:26

So watching a lot, because this may be the first time you've actually entered the boardroom with these types of discussions Don't just go gung ho, collect your thoughts, watch, work out what's going on, where you can contribute, where you shouldn't contribute.

Speaker 1: 31:42

You've got to have your wits about you, I think, in those and I think as well it's probably important to understand before you step into.

Speaker 1: 31:50

There is like hey, like assuming you're buying in and assuming that you're not buying into majority, let's just set that as an expectation. You're not. You're not buying 100%. You're not buying 80%. Let's assume you're getting somewhere between 49.9% or less, right, so you're not in theoretical overall control. Understand before you step into there. Hey, will you have different expectations of me Now that I have equity? So is and and and. That should be a bit of a decision before you even decide to like, are you expecting me, now that I have equity, that I will do other things, or is this simply an opportunity for me to invest into this business?

Speaker 1: 32:30

or To allow you to cash out an element of your, of your investment in this business. And now I think that's a really important thing, because I don't think I've done that overly well here at illuminate, because I probably didn't think about it, it was probably just an assumed everything all at once. It's like, oh yes, absolutely, I want you to be more involved and more connected and more bits and pieces, but also, fuck off, don't, why do you have to be so on top of like Didn't have enough probably enough thought. And and I remember when like so it's a Mick and Shane were the first people I started having the conversation with. Technically, kate had equity in illuminate before Mick and Shane did, because of the way we kind of were doing bits and pieces. And then Amanda's more recently, kind of joined the team now too, which is awesome. But I remember with Mick and Shane, we talked about, we caught it the three P's, or I caught it the tree P's because it was thought it's kill people, purpose and process, and we kind of looked at that when we were moving into. Great, you guys are about to join me.

Speaker 1: 33:30

I'm still got significant majority. But hey, let's look at the roles that we play within this business and Andrew is purpose, mick will be people, shane will be process and let's come and run from there. And we kind of did a little bit of work around defining what those responsibilities and Accountabilities were. But, if I'm completely honest, I had a significant majority of this business and I was almost saying, yeah, now I want you to be responsible for a significant proportion of this business, but you're not gonna get. I mean, you might get paid a little bit more, but you're not gonna get paid like a lot more. It's not like overnight your salary is doubled. It's not like you know all of a sudden getting 50% of the profits of this business. So I probably didn't think that element through of like hey, like how much? How much skin in the game Do you actually have?

Speaker 1: 34:11

here You've looked at the skillsets and separated based on that and yeah, and so from a role thing, that was probably really good, but it was brought on maybe because of the ownership in the investment side of things as opposed to no, that's actually separate. That's separate, and so I think I think managing that, the expectation of like, what do I actually, what do I personally feel it should look like? But also, what do you want it to look like? Do you want to have more like, what are the things that you want to be involved in? What do you want to hear about? What do you want to have say in? What do you want to be kept in the loop on? Or do you just simply trust that what has been done beforehand has been right and it will continue to go forward? But it is a guarantee a guarantee if you're the person moving into minority ownership, you will Very, very quickly start questioning a lot of things you never question before.

Speaker 1: 34:58

And if you're the person that's in majority that now has that minority person around. All of a sudden, you'll be doing, theoretically, exactly the same thing that you've been doing, but you feel like there's way more expectation in our balls on you. So it is a shift.

Speaker 2: 35:12

It is a 100% shift, and this kind of takes me back to how many years of experience Do I think or you think people need before they've got the skill set to move into equity? Because I've seen people move really early and just not even understand the basic, fundamental components of how to run an accounting business, versus people that have the experience and just fly. I actually do think that there needs to be a certain element of experience Within a business, sitting in a management role for a period of time before you even have the conceptual ability to Run lead an accounting business. What are your thoughts on that?

Speaker 1: 35:52

Well, I guess once again are we talking about someone investing in or something moving into ownership, and I think this that is like I use investment ownership is different, because I I also use a bit of language here at Luminate. I don't know if I've shared this on a previous one. I talk about having a business owner mindset, and the difference between a business owner mindset and a manager mindset is different. We'll go there in a moment. But if you're simply investing in, I Don't think you need to have a single scaric of that, because you have chosen, for whatever reason, that your money is best suited In this situation, assuming you're paying for it. Obviously you're paying for something and in return it's a good quality investment and there's no rules or regulations that restrict you from doing it and there's no additional expectations of doing it. If it's simply an investment, don't have a problem with it.

Speaker 2: 36:39

If it's, yeah, what if it's?

Speaker 1: 36:41

only for your owning one, I think you really need to look at. So if you're on that I'm the person who owns the business and someone's gonna buy in, I Really need to look at and saying why would I allow this person to be buying into my business? What are they bringing other than money? And if they're not bringing anything out of the money, I need to say are they an investor or are they an owner? And if they want to come in as an owner and have that ownership kind of approach to it, what are you actually bringing to the table?

Speaker 1: 37:09

Are you simply taking Responsibility to stress off my shoulders that could be actually quite valuable, or are you bringing something different? You know, do you have a certain skill set that I'm don't, and thus it would be great to have you to invest more of your focus into that area or is it simply that you just have money and I need money? And I reckon. I reckon there's been a lot of occasions with people who might be Later in their career, who are looking at it and going holy crap, how do I, how do I sell this thing?

Speaker 1: 37:41

How do I sell this thing?

Speaker 2: 37:42

Oh, I'll give it to this person and I know that.

Speaker 1: 37:45

I know of a firm. I was talking to someone who was involved in the firm, not involved in the more. I know of a firm where a guy just wanted to get out and he was trying to sell it to anyone within the firm and this person got approached and she she wasn't a tax agent, wasn't a bass agent, wasn't even a child. I don't think she was a talented accountant or a CPA. No, you don't have to be, you don't have to be, you don't have to be.

Speaker 2: 38:06

But like, but it was like. She clearly was like.

Speaker 1: 38:11

She told me like I felt like I was way in over my head in these conversations and, from what I interpret from it, yeah, the person just wanted to get paid he they just wanted to buy by him, get get bought out and they in event they did. They get they bought out. Someone else bought them out and, from what I've heard, the person has bought them out hasn't done a great job, because they don't know what they're doing when it comes to business. They're good at accounting, but business not so good.

Speaker 2: 38:36

Yeah, and they are very different skill sets because, you kind of alluded to it, there's the difference between being an accountant and being a business owner. They are, you know, yeah, there are some skills that that Cross both, but it is a very different mindset. Yep, and Can you tell me, like your top things, of what you think the differences are In my, if I think?

Speaker 1: 38:59

about business owner mindset. I what I'm doing is I'm ignoring opera like standard daily operational stuff. So whilst if your role requires that a business owner isn't necessarily going how did you do the tax return isn't necessarily looking at slowest kind of things A business owner walks into a business and goes. Man, that bin's overflowing, I should empty that. A business owner walks in and goes. I just noticed that that person seems to be sitting by themselves a lot. A business owner walks in and goes oh, like I'm so stoked about this business. I think it's awesome, I wanna go and have a like. They look for opportunity, they're proud of the thing they do, they invest themselves into that, but they notice things differently and they notice things that I think some people might think is trivial and pointless. But in the scheme of things, those trivial and pointless things actually become a massive, massive thing and so.

Speaker 1: 40:02

I think what it is is that business owner mindset is it's not. It's not being involved in a decision, it's not having a say in something, it's understanding what decision needs to be made. So that's the difference thing. It's like what actually do we need to be?

Speaker 2: 40:16

thinking about.

Speaker 1: 40:17

And what do we need to be talking about and what actions do we need to be debating over? Not what do you think about. Should it be blue or red, that's you have to make the ultimate decision. Yeah, you have to make this, but you have to decide. Should we be thinking about whether it's blue or red, or should we be thinking about whether it's left or right? What conversation should we be having now and how do we utilize the limited resource that we have to leverage that? And I think that's that business owner mindset where it's you're really thinking beyond the thing that you do and you think about why you do it. Yeah, why are we doing this? And I know whenever we talk with our leadership team here on strategy and planning, there's huge conversations around how we get to a point of like oh, what do we want this business to look like in this period of time?

Speaker 1: 40:58

And the way that I think about what it looks like versus others is different, because we all think differently, but it's. How do we encourage people to think about that from a business owner perspective? What is this business here to achieve and what do we want that to look like?

Speaker 2: 41:11

Yeah, and I think the other thing just adding to that is, yes, I agree with you that jump from same manager to owner. I think your mindset becomes less transactional and more holistic, so you are definitely having to look at everything around you and everything kind of lands at you. Like, you are the, for me the only owner.

Speaker 2: 41:33

I'm the majority decision maker, like I have to make every decision, all the risk kind of lands in my bucket. And when the risk lands in your bucket and you have to make the ultimate decision, you do think differently. So your risk appetite might be lower or higher depending upon who you are, but it definitely when everything lands at you, you have a very different way of thinking, through different scenarios, different problems and how to manage things. And also, like you're not being told what to do, you don't, you're not, there's no metrics, there's no job description, because you're creating it and you have to have that ability to kind of be a bit more strategic, a bit more holistic, rather than looking at each individual detail and meeting a KPI or meeting a lodgement deadline or training a team member. It's so much bigger than that.

Speaker 1: 42:23

And I think as well and this is not to say people who are, you know, junior, senior manager don't think like this, but like that business owner mindset, the business owner environment, that space you find in it, it means you're more than likely thinking about stuff all the time, all the time. Yes, it doesn't stop. Whether you like it or not, you're thinking about the stuff that you do and you're thinking about the stuff that you think you should be doing. You're thinking about stuff that you don't wanna be doing. You're thinking about the stuff that that person over there, like you, are finding that your mind constantly wraps around the business and everything that's going on and everything you want to do, like opportunities.

Speaker 1: 42:58

You see, sit there and, like I know it'd be like in the shower or sitting on the toilet or in bed at night or whatever it is, and you'd just be going through, all right, how we solve that, how we do that, and, like Ivana, my wife would be like what are you doing? Oh my God, just Thinking, Just thinking. What do you think about? Can't really explain it, Because what I also find is and this might just be an Andrew thing, could be I can't communicate to other people what I'm thinking about when I'm in business owner mindset mode.

Speaker 2: 43:28

Right.

Speaker 1: 43:29

Because the way I communicate it is like oh, I was thinking about, like the people, if we could there, and then that thing, and it's like all you're doing is you're saying and then and there, and that they're not using the words that they actually need to hear. You're using the gap words instead, you're all building a thought process.

Speaker 2: 43:47

Because you're getting all those little pieces of the puzzle and you're trying to pull them together.

Speaker 1: 43:52

So you know.

Speaker 2: 43:52

The one thing I remember is my relatability to my business clients like improved overnight.

Speaker 1: 43:59

Yeah.

Speaker 2: 44:00

Because when you're having to pay a BAS or pay the tax or you're having good days and bad days and it's a bit like a roller coaster, Like the relatability to the ownership factor with a business owner improves overnight and it made me a better advisor because I can relate. There's a relatability that I really didn't have as a director. I kind of understood it like analytically and logically but the feeling, the emotion connected me in a way deeper level.

Speaker 1: 44:32

And that. And look, that is actually a fantastic spot for us to probably start wrapping this up is when you do move into that element your relatability with your clients. If you're working with business clients, you start understanding it because you think about everything from the beginning and to the end of your business. You now get exposed to marketing and HR and finance and operations and legal and all of a sudden you start understanding those things that maybe you struggle to because you're like, oh, I'm really good at the finance and the number stuff, but now you're exposed to it. You might not be good at it, but you're exposed to it. And now you appreciate and understand what other people are going through.

Speaker 2: 45:05

Yeah, the mental load increases driven enormously overnight.

Speaker 1: 45:08

Now I think, ali, we're gonna run with some tips. We've just been talking nonstop. David is so good at this. David is so good at this that he will more than likely found, about 10 to 15 minutes ago, a point where I breathed and put in some sponsor promos. So thank you to the sponsors who David injected in there.

Speaker 1: 45:28

We can't do what we do without I mean, we can do what we do without it, but we appreciate the fact that you are supporting us in doing that. But the tip that I feel like we've left on this, this little theme of episodes we've done junior to senior, senior manager, now manager is the number one tip is find someone who has gone through it before, appreciates and understands what you're going through, and ask them to help to support and guide you through that process so you make good quality decisions. Many people have done it before. Many people will do it again. You don't have to see them if you don't want to, but I tell you what. It will help you to make better decisions and feel more comfortable with those decisions you're making as you progress through it.

Speaker 2: 46:09

Yeah, and you know, my top tip here is don't rush in. Do you do diligence?

Speaker 1: 46:13

Yeah.

Speaker 2: 46:14

And that involves, as you said, speaking with other people. That is so important. Don't get too excited that you're signing on the dotted line before you know what you're signing. You've actually got to understand what's going on and do all have all those awkward conversations before you kind of put the ring on the finger, you know.

Speaker 1: 46:32

Absolutely. And with communication, communication, communication, make sure you're like what are you expecting of me and what am I expecting of you before it be, this is like a big fucking deal. This is a life-changing decision. This is a family-old-faring decision. This is a business-changing. This is your peers, this is your clients. Whilst this decision might just feel like it's for you and theoretically it is, the impact is so much broader than that. So make sure you do like I said take your time and make sure you're aware of what you're hoping to get out of it, and then people know that. Be transparent and have an absolutely freaking amazing time doing it. I love it. It is being in ownership of something that you get to work within and benefiting from the actions that you do on every single day is one of the most rewarding things that I've experienced in my life, and I hope that more of you out there get to experience that and you can share back to me how to do it better.

Speaker 2: 47:29

Absolutely. What a lovely way to end. We're going to leave everyone now, so we hope you have great days and we'll catch you next time.

Speaker 1: 47:35

Bye friends, bye Hooey. Wasn't that a fun adventure, my friends. Thank you so much, so incredibly much, for hanging out with us today. Allie, You've been amazing. Andrew, you've been all right. How good is it to be able to have adventures together.

Speaker 2: 47:58

It so is, and you know what. Keep following us. We are all over the socials at Accounting Adventures. Check us out on the website. Give us a bit of a like. You know how much we love that stuff.

Speaker 1: 48:09

The best thing about the adventure is the people that we do it with. So thank you so much for listening, thank you so much for hanging out with us, and please bring all the ideas keep becoming becoming. We can't wait to share more cool adventures with you.

Speaker 2: 48:22

We love you guys.