Better Every Day: Leadership, Culture, and Lean Processes with Bob Hahn

[00:07] Jeff McLarty
What does it actually take to build a business that lasts? Welcome to Owner’s Roundtable, where business leaders and industry experts pull up a chair, talk about all the ins and outs and ups and downs of running a business, and share their experience in entrepreneurship. Whether you’re just starting out, five years in, or scaling something bigger, you’ll find real insights you can use in your business. There’s always another problem to solve, and chances are someone at this table has lived it or built their career fixing it.

So if you’re looking for insight, inspiration, or entrepreneurial entertainment, there’s a chair at the Owner’s Roundtable waiting for you. Subscribe now on Apple, Spotify, or wherever you listen to podcasts. I’m Jeff McClarty, Business Trainer and Management Advisor, and this is the Owner’s Roundtable. Real stories, real expertise, real insight.

[00:57] Jeff McLarty
Hello and welcome to Owner’s Round Table. Today at the table we’ll be visiting with Bob Hahn of HLH Hahn Lukey Houle Charted Professional Accountants. We’ll hear some of Bob’s great insights gained over 44 years in accounting, where he was awarded the prestigious FCPA designation, which stands for Fellow of the Chartered Professional Accountants of Alberta, which demonstrated his leadership in the field. Bob will share some insights on building his own business, what he’s seen in others, and even what a man dancing alone in a field can tell us about leadership. So pull up a seat and join Bob and I here at the Owner’s Roundtable.

[01:29] Jeff McLarty
Hello and welcome back to Owner’s Roundtable. We’re here with HLH and Chartered Accountants, with Bob Hahn. Bob, welcome to the show. Looking forward to our conversation today.

[01:37] Bob Hahn
Fantastic. Thanks for having me.

01:39] Jeff McLarty
There’s lots of questions I’d love to ask you today, Bob. But the first thing I wanna ask is to give us a little bit of backstory of how you went from working at Grand Thornton, what made you wanna start your own accounting firm and what brought you through to today.

[01:53] Bob Hahn
I started HLH in 2004. The main reason for that was my interest is owner managed businesses, and I want to make a difference with every single client that I talk to. Sometimes in larger firms, they want to move to even larger clients and move you away from those owner managed discussions that I really enjoyed. And so rather than going the direction of large review or audit engagements, I wanted to make a difference with my owner-managed clients. That’s mainly the big reason. And I do want to make a difference. I want to take every conversation that we have beyond the financial statement piece and truly discover what makes a difference for a business owner, and make a difference that way.

[02:36] Jeff McLarty
So, when you started out, I’m assuming you left and you started on your own. Did you start with partners or did you start kind of by yourself?

[02:42] Bob Hahn
The start was rocky, like all businesses. I started with one other partner. That didn’t turn out really well. Within two months, I knew that that didn’t work. And then within three months, all the clients started coming. And so that’s one of the things that I learned the hard way. about what is the cost to actually start a business, turning work into cash and being able to pay those employees. Once the work started coming, within three or four months, I had a staff of three. And quickly figured out, well, I need a receptionist, so here we go. And the equipment, all that kind of stuff. So I did learn by immersion and learned a lot of lessons about turning work into cash very quickly.

[03:23] Jeff McLarty
I think that’s a lesson that a lot of people learn pretty quickly in business – is they start out and then find out all the things that they didn’t know.

[03:30] Bob Hahn
That lesson never stops. The growth of businesses is probably one of the toughest things that I find with clients. There are other tough things. One, exiting a business is even worse. But the growth of the business and really understanding what it takes to grow the business, not only in capital, but also EQ side. And there’s different levels, I believe. Harvard Business Review had an article about the different levels of business and when you get to certain levels, the HR problems just seem to multiply. It’s not a straight line. It’s definitely an interesting topic.

[04:04] Jeff McLarty
Starting with let’s say one, what’s the first big challenge that you think somebody encounters as they maybe grow to five people?

[04:13] Bob Hahn
A lot of times the processes that work with a small business, let’s say that two or three versus ten or twelve. The processes aren’t built to handle more people. And the leveraging of your time is also not there. So you gotta quickly figure out what you’re good at and stay with what you’re good at, and buy back your time from doing all the administrative things that otherwise you would do. I think that’s one of the key lessons to keep learning in business as you grow a business. There’s a book called Buy Back Your Time. I love the book. And the idea is, as an entrepreneur, you’ll always work far too much. But it’s what you do at that time and how you spend your time doing the most important things in your business. That’s the key. Other things where you can leverage, that’s great. And other people, frankly, will probably do them better than you. Now, if you have some of these other jobs where you find yourself still wishing I could do that or I have better ideas, well then, you have to reconsider whether those are the right team members that you’ve got in those slots.

[05:17] Jeff McLarty
I agree with that. I’m a bit of an evangelist for Buy Back Your Time. I think it’s a great book as well. It’s a good mindset on how to understand how to get your time back and grow the business, for sure.

[05:27] Bob Hahn
One of the key things that worked for me is that I had a business coach. Probably some of the best money I’ve ever spent was on a business coach. My first business coach was with me, frankly, before I left the big firm, but then with me afterwards for about 10 years. We built out all kinds of systems, including an HR manual, including all of these other things that I was used to because I was with a bigger organization. And for us to have systems like that and processes documented like that. It’s only because of my background, but I missed them. As much as I hated them at the time, I knew that the business would run better if we had them. So there’s a lot of investment and time in getting those things done. So once again, the business coach, and the money I spent on a business coach, was by far of the best money I’ve ever spent, and kept me from going wrong directions.

[06:17] Jeff McLarty
I think that willingness to ask for expertise that you recognize you don’t have is a key to growing a business. Something I see a lot is managers coming out of larger corporations deciding that they want to run their own business. What do they not know that they don’t know when they go from working at a company with two hundred employees to all of a sudden having to build out their own business?

[06:40] Bob Hahn
Well, just realizing the onus is on you to find those right decisions. Sometimes when you’re in larger organizations, you just know that there are other people around that are very gifted and smart. One of the other things that I believe is that it’s who you hang around. If you hang around entrepreneurs that are better and have lived what you’re trying to go through? Find those friends, find those entrepreneurs, find those people around you. Maybe we’ll call them friends, maybe they’re just associates, but find the best that you can find. Find people that are more successful or have done something even more significant than what you’re trying to do. And spend time with them. Buy them dinner, buy them a drink, whatever it takes. And be willing to listen. It’s not about you now, it’s about having them share some of their stories. Good people like that, they want to share their story. They want you to succeed. But you gotta go with the right mindset, knowing that I don’t know everything. And afterwards, you could say, well, I tried that. It doesn’t work for me, it’s not my style, whatever that happens to be. But at least you’re reminded of what you should be trying.

[07:47] Jeff McLarty
One of the reasons I started this podcast was when I was twenty-three, twenty-four, kind of just starting out in business. I used to have a regular – every couple of weeks – these guys would all go for dinner and some owned car dealerships and some owned consulting and chiropractors. There was about fifteen or twenty of them. And I didn’t say much, but I just sat around the table and listened to them tell stories about what running a business was like and learned a lot of things that I wouldn’t have learned otherwise, than just listening to that experience. That saved me a lot of pain and suffering.

[08:19] Bob Hahn
Absolutely. Once again, the growth of the business and finding the right people. The other key thing, I wasn’t a big reader back in the day. I figured out that, you know, you can wake up in the morning and watch a bunch of garbage on social media. But if you actually read a book that was meaningful, you don’t have to read a lot of pages per day. Or I use an app called Blinkist. You can get these abstracts of a book within seven minutes you save yourself reading the entire book. If it’s a really good Blinkist clip, then buy the book. But thinking about these bigger thoughts on the topic that’s concerning you right now is very key. You know, that takes fifteen minutes in the morning. And otherwise you’ve blown it watching something stupid. And you just blow half an hour. So, training yourself to do some of these key things in the morning, I think. As an entrepreneur, we’re wired to always think about our business regardless. Maybe some people don’t want to admit that, but we care so much that we just want it to succeed.

[09:20] Jeff McLarty
It’s pretty hard to turn off, for sure.

[09:23] Bob Hahn
I’m kinda like the border collie. I have a border collie, her name’s Riatta. I’m just like my dog, I can’t turn it off. She’s in a pen on purpose because if if she’s running free on the farm, she’s working all the time and totally useless for me when I get home.

[09:36] Jeff McLarty
That was one thing I wanted to ask you about as well. What is something that’s having a ranch and working in a farming and ranching capacity that you’ve learned about business that they didn’t necessarily teach in business school? Is there an insight that you’ve drawn from that?

[09:48] Bob Hahn
You may know I run a meat market. Our meat shop is open nine till three every Saturday. My goal there is that every single cut of meat – last year we sold forty two animals through that meat shop, but everything: consistent quality is absolute. Like it’s gotta be so consistent that nobody would ever know that it’s not the same as last time, their last experience. Go back to my accounting practice, then, and say, every time I talk to that client, they know that I’ve found something that no other accountant’s going to talk about. And that’s the consistency piece that I’m really trying to drive home when I’m building this CPA firm. Everybody can provide a financial statement, income statement, balance sheet, blah, blah, blah. But what are those extra pieces of advice or what questions would we ask that no other CPA asks? Which marries right back to the farm. On the farm it’s gotta be consistent. Just no question. And we do that with various feeding programs and we have a regimen that everything has to be the same.

[10:52] Jeff McLarty
I fully appreciate having consistent feeding programs for cattle. How do you build the same systems to ensure consistency in your accounting practice?

[10:59] Bob Hahn
Okay, so unlike other CPA firms, we’ve been training ourselves on lean processes. If you have a process, part of that process, something that you do in that process bugs you, there’s probably some waste included in that process. The lean definition of waste is that if you’re doing something, an action or procedure that doesn’t add value to your customer at the end of the day, you need to get rid of that procedure. So as we build out a process, we say, well, which of these processes add value to our customer at the end of the day? Which of them do we have to do from a compliance point of view? Others though, which just makes a file look pretty, get rid of it. There’s no value to that. The client’s not going to pay you for that time. Rather, let’s spend our time thinking about those comments and the questions that we want to ask that will make a difference. So for example, if we know that the major shareholder is looking to exit at some point, it’s high time to start thinking about, what do we do to prep this company for sale? That should be happening years in advance. Cutting out processes, documenting processes, and making sure that we move forward all the time. A key thing in our practice: we have a daily meeting where we’d have everybody together and we would improve processes by identifying a waste, coming up with a change to the process. We didn’t take notes, we didn’t take minutes because nobody would read them. That’s a waste activity. But rather we would change the process and everybody would be on side with, here’s the new process. It didn’t work. Tomorrow morning we just change it again. Who cares? It doesn’t matter. Whereas when you’re in a large organization, it’s difficult to do that because sometimes head office tells you this is the way it has to be.

[12:42] Jeff McLarty
So as companies get larger and they reach the kind of the twenty-five to fifty, how do they balance needing that structured systemization with also stifling creativity as they grow through that phase?

[12:53] Bob Hahn
It’s interesting. When we were at let’s say twenty five people in the office, things to me seemed like it was very smooth. Soon as we jumped the extra ten, all of a sudden the number of HR needs, and all of these other things – there seemed to be a level there for me when we grew the business. So, whether it’s thirty-five or forty or whatever, certainly fifty if you double it, that’s a step. That article I was referring to earlier is not a progression of a smooth line. It’s – you crawl up the step and now you’re at this new plateau, and make sure you’re not falling off of that plateau. I think, from my experience, the processes and computer systems, that was probably easier. The human element is the more difficult one. Keeping the same culture, understanding my lean concepts that I was describing to you, having everybody buy in. It’s more difficult. At twenty people, you can say hi to everybody in the morning. At fifty, that’s more difficult.

[13:57] Jeff McLarty
You mentioned culture there. At what point did it go from culture’s something big companies do, to this is something I actually need to think about and how do we maintain that?

[14:06] Bob Hahn
You know, I thought about that very specifically when I started off my firm. I talked about culture a lot and I could never understand the culture that other firms have. So I believe in talking about culture right from day one. And that was respecting people’s time. We have overtime policies, all those kinds of things rather than an annual salary and then burn people out. It just doesn’t make any sense to me. I believe culture is right from the grassroots. You can never stop. And building this lean culture within the firm, that’s not easy to do. I remember back when we started talking about lean and waste and we start these morning meetings. We’re now beyond that. But to begin with, the people that were around just wanted to kill this thing off. They refused to talk. They would just on purpose not say anything. My partner and I at that point, we would carry the meetings every day. We’d look at each other afterwards, saying, are we gonna stop? No, we’re not gonna stop. So sooner or later, some people weeded themselves out, frankly. They did not enjoy it at all. One of our deals was that we actually rotate the chair around. That’s probably what really got them upset, the team at that point, because they knew they were gonna have to lead this meeting at some point. Well, we just didn’t stop that either. It’s great training and it’s part of the culture now that this is what happens. And even as a new co-op student, yeah, you get to hang around for a month or two, you’re gonna lead a meeting yourself too. So this is kind of what we do. You can’t ever stop. As the leader, you’ve got to be committed to doing it and then give it your best.

[15:46] Jeff McLarty
That’s great insight. This is a great place to ask you about the video on your website, the topless dancing man. Do you want to tell me what that’s about and what you can learn from that?

[15:55] Bob Hahn
Well, it’s actually a great segue. I love that video. The quality of that video on the website is terrible. It doesn’t matter about the quality of the video. The message, though, is that as the lone dancer, as long as you’re committed to the cause that you’re really after, sooner or later there will be one follower. You keep going, then soon there’s another and another. And on the video, you’ve got to watch this video, everybody. At the time, you know, you think of here in Edmonton the Folkfest, and you can imagine having a lone dancer on that hill going up. And the video would demonstrate that you could have the entire hillside dancing by the time you’re done. But the leader never stopped. If you watch that video, the leader keeps going, and the leader’s committed to the cause. He doesn’t really even look around to what everybody else is doing. And they will follow.

[16:46] Jeff McLarty
I thought it was a really interesting video. I’ll put the link to the video in the show notes, but there’s just this crazy looking guy out dancing in a field by himself and he looks like he’s maybe not quite right, but all of a sudden somebody starts dancing with him. And then another person starts dancing with him. And then all of a sudden half the hillside’s dancing with him. And I think it goes back to what you were talking about, that consistency of leadership. Well, they may not like it initially, but if you keep at it and keep setting that example, pretty soon everybody’s dancing on the hill with you.

[17:13] Bob Hahn
A lot more fun once they’re dancing with you. It’s not so fun to begin with, I tell you that. But you’ve got to have that commitment and the belief that you are making a difference, and that it’s worth doing.

[17:25] Jeff McLarty
100%, no, I appreciate that. So let’s say you go through all this, you build yourself a good business, and then you start to have one eye on the sandy beach and the golf course. What do you think owners should be thinking about in terms of, you know, five years from now, I think I might want to sell this place? What do you think catches people by surprise when they don’t plan ahead? When they just decide, somebody wants to buy this, let’s sell it six months from now. What do you think they miss in terms of tax and overall structure and getting the company ready?

[17:52] Bob Hahn
I think sometimes business owners are in la la land believing that they know the value of their business and how the business is valued. So just understanding the cash flow side of this and multiples of cash flow, valuators call it evida and blah blah blah. It doesn’t matter, but the true value of the business and having the business owner understands those concepts about what the business value is. So to get ready for that, you need to think about what are some of those expenditures? Back to my waste example, are some of those expenditures that customers are not going to be willing to pay for? And let’s demonstrate that the cash flow from this business is truly what we want it to be, times the multiple, to come up with a true value that we can justify. You know, I think of two bad experiences, one great experience. So one great experience was, we’ve been working at getting this business ready for sale for about three years, had a valuation, found the buyer, and the valuation went extremely smoothly. All the due diligence that the buyer did, they’re not finding any other normalization adjustments, all that kind stuff. There’s no surprises. In that particular one, we started at the right time, rather than saying, okay, well I’ve been thinking about selling my business for five years. Now’s the time. I’m gonna sell it right now. But truly the financial side, the records, and the processes aren’t there to maximize your value. I think that’s one. Is trying to maximize the value for your business, and being that number that you kind of think it should be worth.

[19:32] Jeff McLarty
In terms of structuring, is there things that you think people should be looking at to minimize their tax on the back end?

[19:38] Bob Hahn
Oh, absolutely. Talking to your advisors, making sure that your corporate structure, your organization structure, in terms of who owns the shares, is absolutely critical. And know, if you’re maybe looking for a longer way out, there are ways of using family trusts and all those kinds of things, or creditor protecting your business. Lots of great discussion points there to keep in mind. ‘Course we all want to get the capital gain exemption, but there’s certain things that have to happen and certain criteria have to meet to get there. And starting early is absolutely critical. I have to smile for a second though, because I’ve had clients sell their businesses. These guys are entrepreneurs. This is not an easy topic. I’ve got half of them that went right back into business, or their son went right back into business. So getting rid of this entrepreneurial bug is a curse, I guess. I view it as something that my dad, my parents drilled into me when I was raised on the farm, we just never stopped working. Sounds bad, I guess. But I’m proud of working hard. People ask me when I’m gonna retire. Screw that. I really don’t have any plans right now. I’ll do something different. Right now we’re building out our advisory side and that’s a lot of fun. So, I might do something different, but for me, staying active, keeping my mind active is important.

[20:58] Jeff McLarty
I think you raise an important part, is when somebody’s done and ready to move on from a business, because that entrepreneurial bug, like you say, is pretty hard to shake, I think can cause a lot of stress. People that have been very successful find themselves in a really tough spot if they haven’t made a plan for what happens the day after they sell their business and the phone stops ringing with all constant stream of challenges.

[21:19] Bob Hahn
Your spouse may not be used to having you around all the time either. Just saying.

[21:24] Jeff McLarty
That’s a totally fair point. It was sure an adjustment period for my wife when I sold the last business, I can confirm.

[21:31] Bob Hahn
Fortunate for me, I started my hobby, which has become a business as well. But it certainly takes a lot of effort, but it also does not necessarily give me the same challenges that I enjoy with the CPA firm. The questions that we’re talking about and getting ready for this, this is fun for me. I truly enjoy this. And having conversations with clients about tough topics, you know? Tell me that I can’t do it and I will find a way, whether it’s building a meat shop, or finding a way out to exit your business. It may not be everybody’s desire to think about tough things like that. But once again, tell me I can’t do it. We’ll find a way. There is a way. And there’d be a great way to do it rather than just letting the chips fall where they fall.

[22:18] Jeff McLarty
Doing what you do, you have a very interesting wide angle lens on business. What do you think – like what are those hard nuts that people are trying to crack that you repeatedly come across when you’re dealing with clients and trying to help them?

[22:31] Bob Hahn
With the competitiveness of business right now, and everybody is trying to keep their margins. It’s difficult when your competitors are perhaps thinking lean and driving waste out of their processes. If you’re not doing that and everybody else is, you’re going down. It’s a race to the bottom. So if your competitors are able to sell quality services or quality products and they are expanding or they’re making money or whatever, maybe they’re not, but let’s assume they are. They’ve got something figured out. So as a business owner, we’ve got to figure out those same things, adapt, change, find those processes that don’t add value and get rid of them. We sometimes say – your clients say – well, you know, how do I make more money? Well, every accountant can say, well, raise your price, change your margins, and you’ll make more money. Well, that doesn’t work. If you’re hampered by the selling price, we’d gotta do something different. And that’s why we went down this lean path, is to say, well, within our processes, how do we get rid of waste and all of the processes that don’t add value? It’s not fun because change is difficult. So changing our process, say, well, why do we have to do that? And without adapting and without looking for those major changes like that. Yeah. You know, just in the CPA world, our software is getting better and better and better. AI is coming at us.

[23:58] Jeff McLarty
Right.

[23:58] Bob Hahn
And a lot of things that we do five years ago or whatever, or that we’re gonna do two or three years from now, it’s gonna change. Data that comes to us is gonna be much cleaner, etc. We gotta figure out well, what else do we provide as a service and how do we change with AI affecting us? I think AI is very exciting and it’s gonna make a change and it’s gonna be fantastic. But now it gives us time to actually provide services that really matter. And that’s how we’re preparing ourselves for changes with AI and things like that.

[24:29] Jeff McLarty
How do you think – with the drive towards efficiency and the advent of AI – what do you think the company landscape looks like five years from now? Do you think it’s smaller companies powered by AI, like smaller headcount companies with more work being done by AI? Do you think it’s the same, just enhanced productivity? What do you think that looks like?

[24:51] Bob Hahn
Well certainly the number of people that we would have within firms would maybe not grow as fast, because AI will certainly help us perform some of these duties much more quickly. I was mentioning to you before we got going here, that you know, developing our website and creating copy for our new website. Well, there are tools out there that certainly scrub all of the data that we’ve got on our current website, and rather than going out into the general internet. We want to use some of that stuff. You know, previously we could have had somebody working on it for two or three months probably. We now get answers within minutes, so I think we can become more sophisticated, we can become better equipped to provide better services. And so I think the numbers will probably stabilize. But no AI that I know of so far can read my clients’ real issues and talk about what keeps them awake at night. And knowing some of them for as many years as I do and knowing some of the background and what their key triggers are. That is critical. That relationship piece, that’s not gonna go away. In fact, it’s probably even more important now.

[26:01] Jeff McLarty
Yeah, I would agree with you on that for sure. My favorite last question is building a business right now, what’s the best advice you can give them to scale without running into long term problems as they grow?

[26:15] Bob Hahn
I think having incorrect data, insufficient data, is critical. Make sure that your processes are tight. And I think, overall, surround yourself with a coach, with friends that have gone through this experience before, and listen. We’ve talked about this before, but I can’t stress enough. Find individuals that are smarter than you. There are people smarter than you. They have lived this, they’ve gone through this before. I do remember one of my favorite mentors, his name was Gary Davitch. We would go to client meetings. I was a young CA at the time, and he would say there was no talking about golf or bullshit. Everything was about that client. What are we gonna talk about? What are those key things? What did you learn going through that file? What questions do you have? And then we get to the client meeting and he would ask these questions that really made a difference. And on the way back, we would once again debrief about what we gave to that client. And what else could we have done differently to provide even more service? So finding that mentor, that’s my point. Find that mentor that can really push you to be your ultimate best. So if your driver in the business is the marketing side, find that marketing mentor to drive that and then look for other people to fill the other holes, whether it’s the technical side, the IT side. I can’t stand IT. We find IT people that will protect the firm, et cetera, et cetera. Stay in your lane. Perfect your lane. Just know that you can always get better. Get better every single day.

[27:48] Jeff McLarty
Those are all great pieces of advice. And if you’re looking for a little bit of mentorship, you can listen to Bob on this podcast. That’s a good start for getting some insights into your business. Really appreciate you coming on the owner’s round table and sharing some of your insights, Bob. It’s been a great conversation and thanks for your wisdom from all your years in business.

[28:06] Bob Hahn
Thanks, Jeff. any time.

[28:10] Jeff McLarty
That’s all for us here at the Owner’s Roundtable. If you’re looking for more support for your business, or on your own ownership journey, you can contact us at focalpointedmonton.com. Thanks for pulling up a chair and don’t forget to like and subscribe, so you don’t miss out on more great conversations and great ideas from real business owners and industry experts.