Building a butterfly garden accounting firm with Chan & Naylor’s Ed Chan
Ed Chan, Co-Founder of Australia’s Chan & Naylor and Wize Mentoring, found success in focusing on two types of tasks: those that are urgent and important; and those that are not urgent but still important.
Ed advocates for bottom-up management, focusing on staff-to-client interaction as the heartbeat of an organization. He also finds the minder/grinder/finder framework helpful for putting people in the right roles.
Ed continues to help businesses thrive through Wize Mentoring, sharing the management best practices he’s picked up through his years with Chan & Naylor.
Ed Chan is no stranger to achievement, but one wouldn’t call him an overnight success. It was carefully cultivated over years of trial and error, mistakes, and grinding away on spreadsheets at his parents’ kitchen table.
Ed got his start in accounting by doing the grunt work of running the ledgers. He felt that he needed to understand the ins and outs of the work before he could lead successfully. Wanting to follow in his family’s entrepreneurial footsteps, he worked tirelessly to brush up on his skills.
“I was doing overtime for the firm I was working with, but I wasn't getting paid for it because I was just trying to get experience as quickly as I could,” Ed says. “I needed to have my own business—and I thought getting experience was a fast-tracked way of getting there.”
Clients eventually started asking Ed to do work for them independently, and he used his parents’ kitchen table as the launching point for that business. Once he outgrew that table—and had aggravated his parents enough—he tapped his colleague, David Naylor, to build Chan & Naylor, an Australian firm with multiple franchises.
In episode 33 of the Accounting Leaders Podcast, Karbon CEO Stuart McLeod speaks with Ed to find out his secrets to business growth as well as his philosophy for putting people in the right positions for success. Plus, Ed shares how he’s continuing to help today’s firms grow through Wize Mentoring.
From burnout to delegation
In the early years of Chan & Naylor, growth was explosive—at least 30% a year. Unfortunately, it came at a cost: Ed found himself suffering from intense burnout.
“It got to a point where I was working 100 hours a week, and I didn't have a life. I was married by then, working six or seven days a week,” Ed tells Stuart on the podcast.
This business that I'd created that was supposed to give me life was actually taking life from me.
He found himself at a crossroads—should he sell the firm or bring on more partners? Or change industries entirely? Ed then realized something pivotal: If he didn’t address why scaling was difficult, he’d run into the same problem in every other future business.
Ed credits Napoleon Hill’s book Think and Grow Rich and Stephen Covey’s The Seven Habits of Highly Effective People for his epiphany. He describes finding value in Hill’s theory that ‘the gold is in your backyard, just look for it,’ and Covey’s four quadrants of priority. Based on these readings, Ed chose to focus on the first two quadrants of Covey’s theory:
Things that are urgent and important
Things that are non-urgent but still important
Ed found that by focusing on these tasks, he could delegate some of the time-consuming grunt work to his staff, and also resolve client complaints before they arose.
How exactly? Ed realized that he’d be more confident delegating if he developed best practice checklists and training guides for his staff to use. Since he observed that most client complaints came from poor communication, he created an acknowledgment letter explaining the firm’s process and timelines for new clients. Once these expectations were managed, it was much easier to satisfy clients.
Catching butterflies or growing a butterfly garden?
As part of his recommendations to reduce burnout, Ed warns against becoming overly dependent on star employees (rather than processes). He draws a vivid analogy of this business model approach:
“The problem with that model is when the butterfly catcher leaves, then that's the end of your growth,” Ed explains. “I didn't think that was very good—being people-dependent, rather than systems-dependent. I believed in creating a garden that attracts butterflies. You own the garden; you don't own the people.”
Ed’s butterfly garden involves flipping the management model to be managed from the bottom up.
He applied this model as Chan & Naylor grew, using surveys and timesheets to gauge how things were going and to identify problems. If things were going well from the staff to client perspective, he theorized, then things were probably going well at a higher level.
Timesheets may not be necessary for smaller practices, though, Ed notes. But with a larger staff base, they become helpful tools for measuring productivity.
“When you get up to 160 staff, as I had across Australia, then you can't rely on you being there,” he says. “So you need to have a system that allows you to have your finger on the pulse so to speak. Because the larger you get, the further you are away from the pulse of your organization.”
Recommended reading: Think of your accounting firm as a McDonald’s store
Grinding, minding, and finding
In his conversation with Stuart, Ed focuses on the author and business expert David Maister’s theory of grinding, minding, and finding within a firm. In short, grinders are the worker bees, minders are management, and finders are salespeople.
“I have always believed that partnerships don't work. I'm not talking about the legal structure, I'm more talking about the management structure,” Ed explains. “All of a sudden, a person who was good at one particular thing becomes a partner and is now suddenly good at everything.”
According to Ed, everyone has a particular gift in business, and it generally falls into the minder, grinder, or finder category. As a business owner or partner, it’s important to be aware of which category makes the most sense for the individual, rather than forcing a fit.
Just because someone is happy and good at day-to-day accounting doesn’t mean they’d make a great manager of day-to-day accountants. Making sure people are in the right roles is critical to giving everyone a chance to shine.
“The person who is very good at communication—they are a people person. Others who are not people persons are more production people, they just like to sit down and do the work,” Ed observes. “Often I hear firms say they get frustrated because their staff won't do this or that, like they won't call the client to talk to them—it’s because they’re putting the person in the wrong position.”
Getting ‘wize’
Ed continues to share his management secrets, but not just to Chan & Naylor franchise owners. Along with Jamie Johns and Brenton Ward, he co-founded Wize Mentoring, provides business mentoring, tools and training to accounting and bookkeeping firm owners in 40+ countries.
Dubbed the ‘practice acceleration system’ for accountants, Wize Mentoring equips firm owners with the blueprint to quickly grow and have their business run without them. And with over 200 tools and strategies already in their 'Wize Vault', it's a service sure to help any accounting firm owner scale.
“We've also developed WizeTalent, which helps accounting firms recruit. In this process, we identify grinders, minders, and finders. The test that a grinder does is different from the test that a minder does. And so we recruit specifically for the deep and narrow team, the ideal team structure that we set up for each accounting firm,” Ed tells Stuart.
Building complementary teams for success
Reflecting on his career wins, Ed humbly acknowledges the major role his team has played in his professional success.
“I've got to give credit to the team. It's the team that does everything,” he says.
Ed also encourages other leaders to focus on recruiting diverse but complementary people: “You'll get that synergy that you need. Build these complementary teams. Don't build the same teams.”
Throughout Ed and Stuart’s conversation, placing people in the right role is a central theme. Whether it’s hiring people who have skills that he lacks or making sure he’s got grinders in grinder seats and finders out seeking leads, Ed is dedicated to setting up his workers for success.