One Leading Entrepreneur’s Keys to Establishing a Thriving CPA Firm

First Republic Bank
January 25, 2022

  • Starting and building a CPA firm requires both business and accounting savvy.  
  • Steve Mayer — Founder and Managing Partner of SD Mayer & Associates — is an expert on growing a ‘one-stop-shop’ CPA firm.  
  • Keeping an ‘equal triangle’ (infrastructure, service lines and people) helps a CPA firm succeed.   

Starting and growing a successful business of any kind isn’t easy. More specifically, launching and growing a successful CPA firm is about being both a capable business owner and a trusted provider of services that people and companies need.  

For insights into building a successful CPA firm, First Republic turned to Steve Mayer. Mayer is both a CPA and an entrepreneur who has not only been involved in starting over 18 different businesses, including two thriving Bay Area accounting firms, but has also published three books

Mayer has been the Founder and Managing Partner of SD Mayer & Associates since 2013 and has 40 years of experience working with individuals and public and private businesses. 

Mayer became an entrepreneur early in life and brought his learnings into the accounting field. As a kid, he sold newspapers, ran a casino from his dorm room in college and dabbled in many businesses  — including restaurants, a bookstore chain and some ventures in the real estate space — in addition to becoming a CPA by trade.

“[Those experiences] gave me an idea of not only tax and audit, but also how to negotiate a lease, how to handle litigation, how to do bank loans and the difference between credit lines and term debt and an understanding of HR and technology,” says Mayer.

Having worked in so many areas of professional services himself, it “just seemed natural” to him that CPAs should be helping businesses “do all that stuff.” As such, Mayer built his firms with a “one-stop-shopping,” full-service approach — offering things like outsourced accounting, wealth management, and business consulting in addition to traditional tax and audit services.

Mayer spoke to First Republic about the keys to establishing a successful CPA firm and the role that a Managing Partner plays in helping their firms grow and thrive.  

How would you describe your approach to working with clients?

Steve Mayer: My mentor, Mike Heys, at my first CPA employer, Coopers & Lybrand (now PwC), told me early on that if you take care of your people and you take care of your customers, you’ll have no trouble making money.

He also told me that you don’t start any conversation with a client with the idea in mind that you need to make sure you get paid. The conversation is all about how we can help [the client] succeed.

At a CPA firm, the usual request is that a client needs someone who can help them save money on taxes, or they need an audit or a review for the bank. Most CPAs try to begin the relationship with a free quote on those services. We seldom do this. Instead, we focus on getting to understand the client’s business, their family, their plan for retirement, their people in the business, their banking relationships, their investments and so much more. This is what creates a “full-service” approach and enables us to do so much more for a client other than taxes.

How do you approach business development and revenue growth?

Steve Mayer: I’ve always been a growth guy. I’ve always felt that if you can grow revenue on a consistent basis, you don’t really need to worry about being profitable from day one. You can figure out how to run the company and control the cost, but you have to get the revenue first — then pretty soon, you kind of grow into the profit.

In my over 40 years of running CPA firms, including overseeing the EBS department at Coopers & Lybrand, we have grown revenue every year. This may seem unusual, but we budget the revenue three ways every year and then closely watch it:

  1. We ask all the business leaders to forecast their expected revenue for next year by looking at their existing clients and what new business they expect.
  2. We look at the people in the firm, estimate their billable hours, multiply by an expected billing rate, and factor in some hiring.
  3. We then list every client and the expected revenue by client by project for the year and then add a ‘fudge factor’ for new business. 

We then track #1 and #2 on a quarterly basis and #3 monthly. It works.

What role does the managing partner play in a successful CPA firm? 

Steve Mayer: As a managing partner, you have to be a strong leader — and you have to wake up in the morning and agree that your job is to take care of the firm. I can honestly say that in my 35 years of running accounting firms, I don’t think I’ve ever made a decision based on how it affects me. It’s always how it affects the firm, how it affects the customers and the employees.

You also have to be likable. You have to be smart. You have to be aggressive. You have to be involved in the community. People have to like you, they have to fear you, they have to respect you and they have to have competence in your ability to lead the firm.

Making quick decisions is also really important. You’re never going to have all the right facts and all the right information [as a managing partner], so you have to do a lot of stuff from your gut. When something’s not working, you’ve got to pull the plug. 

Who has had the greatest influence on your approach to running a business?

Steve Mayer: I have been blessed with some fantastic people who took an interest in my career and offered me advice that I eagerly took, including Mike Heys (who I mentioned earlier), Art Gensler (a client and friend who built the largest architecture firm in the world), Stan McGinnis (a Navy Seal who taught me incredible focus), Dan Gellar (a real estate investor and great guy who showed me the effect of ‘doing good in business is about the people’), Warren Helman, (who showed me the power of investing in the community) and finally my dad, David Mayer; when he passed, I wrote a book of short stories to honor his legacy.

How does mentoring play into your leadership and management strategy?

Steve Mayer: Mentoring people is incredible, and you mentor people by giving them a leash and letting them go hunt. I’ve told hires when they start “don't ask for permission, ask for forgiveness later.”

I really believe in hiring young people who are smart, who know how to use technology and who are self-starters. I believe in throwing them in, putting them to work and getting out of their way. Our COO at SD Mayer, in fact, is a young guy who took that role when he was 26 years old, then an engineer with no accounting experience, and he has done a great job with processes and organization.

A small postscript to mentorship happened just before Christmas when I reached out to an old employee who is quite successful and he told me that he was recently asked what led to a lot of his success and he replied, “watching Steve Mayer and trying to do the same.” Wow, that hit me like a ton of bricks and brought back one of the things Mike Heys told me to do: “Plant palm trees. They take a long time to grow and though you will probably never sit under the one you plant, someone else will.”

Are there other ways you help facilitate employees’ success?

Steve Mayer: Yes. I am a big fan of Jim Collins who wrote several books including ‘Good to Great.’ This book is my bible and I reread it often. The part about Level 5 leadership and getting the right people on the bus in the right seats is incredible. I really think the “partnership” model in CPA firms is an old and outdated model. Most firms divide their employees into four groups: partners, managers, staff and admin. Then each group is treated differently with regards to compensation and knowledge about the firm’s finances and business plans. Also, in some firms, the admin staff is treated like second-class citizens.

After 45 years in the business, this makes no sense to me. At SD Mayer we have these levels but everyone is treated as an owner and all employees share in the firm’s profits to a very high degree. We are like an ESOP, and I find sharing profits and communicating the financial results of the firm every month to all employees builds a sense of trust, reduces turnover, creates a solid team and provides the clients with people who act like owners throughout the firm. I realize this is an unusual approach to running a CPA firm; when I explain what we do to managing partners at other firms, they think we are nuts. However, at a lot of these managing partner meetings, most of our conversations on running the firm are complaining about partner compensation, partner performance, employee turnover and people not taking an ownership approach. At SD Mayer, we are far from perfect but we don’t have these problems.

What are the foundational components of your business?  

Steve Mayer: I call it a triangle. On one side of the triangle is all of your infrastructure and how things work — from your accounting system to your billing, your technology, your phones and your marketing. You have to understand it all and not be cheap on it, as you need to invest in it for a long time.

On another side [of the triangle], you have your service lines. Are you going to just do non-profits? Are you just going to do real estate? Are you going to do SEC work? At both SD Mayer and my previous firm, Burr Pilger Mayer, we built integrated service lines that lead to the natural expansion of services. Our goal was to try to do as many things for one client as possible. So, we have many clients [for whom] we not only do tax and assurance but lots of consulting, wealth management, investments, insurance, family office and outsourced accounting. When you have three, four or five capable professionals all working together to help a client in different areas, the trust factor between the client and the firm is incredible.

You have to figure out the service lines, and then you have to get the people. So the infrastructure, service lines and people make up a nice triangle. And that triangle just gets bigger and bigger as you grow.

However, it’s important that all sides of the triangle grow together because letting one side grow much faster or greater can send things out of whack. Keeping an “equal triangle” helps a firm stay agile. There are some managing partners who just focus on the infrastructure, and everything works great, but they never make any money. Then there are others who try to provide too many services, and they can’t do them all.

For Mayer, the agility of an “equal triangle” has helped SD Mayer & Associates succeed. 

For information on how First Republic can help your CPA firm, contact us

This interview has been edited and condensed.
The views of the interviewee of this article do not necessarily represent the views of First Republic Bank. This information is governed by our Terms and Conditions of Use.