Sunday, September 23, 2007

Thomas DeMott, Partner of DeMott & Smith

Thomas J. DeMott:
We Also Teach Life Lessons

Arranged and Edited by Joseph W. Norman

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Enjoy the read about...Tom DeMott...below! Thanks for your readership!

Tom DeMott is one of the most caring and generous individuals I have ever had the opportunity to meet. He is the founding partner of DeMott & Smith, PC, an accounting firm in Rochester, New York. Tom and his partner Stephen struck out together to create their firm in 1988 to better meet the needs of their clientele. A native of Rochester, Tom has been making his unique impact on the greater Rochester area his entire life. As the founding father of the Student Managed Investment Fund at SUNY Geneseo, I have had the pleasure of getting to know Tom. The following are excerpts from a lunch Tom and I had at one of his favorite eateries during tax time, TGI Fridays, located right next door to his office. He says that during the busy season, he does a client lunch everyday. I was fortunate to catch him on a beautiful, relaxing day in the off season. Without further adieu…

Joseph (JWN): Where are most of your clients, here in Rochester?

Tom: We have clients literally all over the world. A lot of our clients build relationships with me while work primarily here in Monroe County. Then they’ll transfer out to different states and because of our relationship we do business with them in other states, nations, and so on. So I have clients in all fifty of the states and several foreign countries now. Our business is a personal relationships one. We don’t just do tax returns, we establish relationships. Now, with email and faxing, we can be in touch quite easily. They can be anywhere in the world, but they’re still right here. I love it.

While speaking about the speed of society and the different ways to communicate, Tom began to discuss the new trends in communication and accountants and their writing abilities.

Tom: In terms of writing skills, accountants are notorious for being horrible with language and writing. Traditionally, accountants are terrible writers. Now, unfortunately, with text messaging and all of the emails, nobody can spell anymore. Everybody is using this new language. I get these emails from clients and I’m like, “What are they saying!?!” It is like a whole language. What happened out there? Everybody is moving so fast.

Regardless of what you do, you’ll always have to be able to communicate. You could be a great portfolio manager, but if you cannot communicate with your clients you limit the value you can add.

JWN: I’m curious, what is the short story?

Tom: I grew up in Rochester and graduated from St. John Fisher College in 1971. In those years you had to have two years experience before you could sit for the CPA. I was married in my senior year of college. It was a little bit different from young people today. When I graduated from college, I interviewed with many of the big eight national firms. I had this anxiety of getting stuck on the Xerox audit or the Eastman Kodak audit. But, my personality is such that that is not an environment I would thrive in.

When I interviewed, there was a firm in Rochester called J.K. Lasser which is now gone. It was a Rochester office of a national firm. So you had the blend of a national firm with the personal touch. I’m all about the personal touch. That’s who I am.

I did have offers from national firms, which I rejected. For me, it was a good choice. I have other friends who went to work for the big national firms, but the work they were doing was too impersonal for me. You’re dealing with an audit committee. You’re dealing with boards of directors and shareholders. It’s just the environment is not the personal environment. This firm (J.K. Lasser) gave me the opportunity to blend both. I excel at the personal relationship part.

JWN: Do you think these skills, technical and personal, developed as you were growing up?

Tom: It was probably just dumb luck. People ask me, “Why did you go into public accounting?” I say, well, I loved money. I had a passion for money. It was probably dumb luck. I really enjoyed accounting. It made sense to me. I liked the concept of working with individuals. Although, I didn’t really fully understand what public accounting was all about. So, it was probably 50% knowledge and 50% dumb luck.

Young people today focus on how much time they are going to get off, what their salary is going to be, etcetera. They are more focused on, “What am I going to receive?” In my opinion, they are more “me” oriented. Whereas when I started, I was the exact opposite. I didn’t really care what my salary was. I didn’t really care what my benefits were. I was a workhorse. I wanted to learn. I wanted to learn everything I possibly could about the industry.

There was a professor I had at Fisher who said to me, “Work as hard as you can, learn everything you can, be a sponge, and the money will come later. Never focus on the money aspect of it.” So, that’s what I did. I focused on building relationships and working very hard – I put in long hours. For me, it paid off. I learned everything I could possibly learn and I advanced very quickly. I was able to achieve, if you will, financial success and partnership status at an early age because of my work ethic.

I was at J.K. Lasser for two years and then one of the partners left for another local firm and said, “Why don’t you come with me?” It was a twelve to fifteen person firm, so I said, “Ok, I’ll do it.” I was there for fifteen years. It was at that firm where I really began to grow professionally and develop. In 1988 we (Stephen and Tom) left, to start our own firm.

JWN: So, Stephen worked with you at the other firm?

Tom: That was where we met. We met in 1975 when he began there. So, Steve and I have been together for 32 years. That’s a long time. But, if you were to look at our client base, you will see that our clients have been with me since I graduated from college. Now, if you think about that. These are clients that I had when I was at the former firm. They are clients that stayed with me through the merger with the other local firm. And, clients that stayed with me in ’88 when I left to go on my own. So, if you want to look at our client base and draw some conclusions you might ask, “Why would somebody stay with Tom from 1971 to 2007? That’s a long time.”

If you look at the age of these people, it will also tell you that they are now grandfathers whose children and grandchildren are my clients. It’s a powerful thing. It’s really more about establishing relationships where clients trust you and have a sense that you care about them as people. I mean that is what it is really all about. When you have that relationship, why would they leave you? They’re not going to leave.

If you think about it financially, most people think about an accounting firm as generating revenue and earning a living. But, if you really think about it, it is an annuity. If you have a client that pays you $10,000 a year, and they are your client for thirty years, then it is an annuity. And then there is inflation built in on that. So you’ve got this thirty year relationship where you are expanding the fees and expanding the client services. The value of a client is not $10,000 per year, the value of that client could be a half million or a million dollars. That is the goal and the clients pick up on that. They understand what we are all about.

Tom moved into his thoughts on business ownership, hard work and risk taking…

People get to where they get to and some people say, “Oh, he’s just a lucky guy.” But really, it’s all about hard work. The other key, especially to owning a business, is the ability to take risks. If you’re not a risk taker, there is no way you will ever succeed because you will be so focused on making a mistake and failing that you will never grow. You have to be willing to go into something which you know nothing about, take a risk, manage that risk, and grow. You are going to make mistakes. It is inevitable. But, you have to be a risk taker. If you’re cautious and conservative, you will never make it as an owner of a business. You’ll always be an employee.

JWN: What led you two to strike out on your own?

Tom: A passion to offer people something that they weren’t getting. The philosophy of how you practice is different from firm to firm. When young people are looking at colleges, I always say to them, “What is the culture?” Each school has a culture, and once you understand the culture, you will understand whether or not that is an environment you will do well in.

Well, every business has a culture too. The culture at my former firm wasn’t a culture that I felt was right for me and was right for the clients. So, I you have two choices in this situation. Choice A is you change the culture within. Or choice B is you leave and establish your own culture. They weren’t willing to change to what I wanted, so I left and created my own. And, it was probably the best decision I ever made.

Was it risky? Absolutely. You’re married; you’ve got children, mortgages, and all kinds of commitments. And, all the sudden you go from making a substantial salary to zero. It is like, “Oh God, what did I do?”

If I wasn’t a risk taker I would have backed away. But, the key is, you also have to manage the risk. You need to be able to sit down and figure out what the risk is and what you can do to manage it and minimize it as much as possible. So, you do that. Like I said, you put your head down, you work as hard as you can, you try to be honest and develop relationships with clients and the people you deal with and everything else will come.

On this note, Tom delved into his thoughts on friendliness and how he lives his life…

Tom: At this restaurant, it doesn’t take that much more effort to take a minute and greet the people that work here. Most people come to a restaurant, they sit down and want to be served. They eat and they leave. I take an extra minute to talk to the people here. I get to know them. I say, “Hello” and “How are you doing?”

It takes an extra minute or two out of your day to make a friend. There is no ulterior motive. It is just something that I enjoy doing. I enjoy making friends. So, I come in here today and Barb, (our hostess), says, “Hey, where have you been? I haven’t seen you.” That is because I take the time to establish a relationship with her. She’s not a business client, but she’s a person, so why not treat her with dignity and respect just like you want to be treated?

Some people have it backwards, they will be nice to people they have to be nice to because they want something from them. As opposed to, just be nice to everybody.

JWN: Please, tell me a little bit about your family.

Tom: I have five children. The youngest is 21 and the oldest is 31. You should read The Birth Order Book by Kevin Leman. It is fascinating. It is an analysis of personalities and profiles if you are first born, middle, or last. It goes through this whole analysis and defines your personality based on this. And, when you’re reading it, generally it is not wrong. Sometimes if mom and dad have two children and the third one comes along ten years later, then there might be some deviations. But, if it is a traditional family and the kids are a year, two, three or four years apart, then it usually fits the mold.

Middle children typically are pleasers. Older children are typically less risk takers. They tend to be more focused on the sure thing. And, the last born are usually a little more care free and comedic. You know, have a good time, life is good, type of attitude. I don’t know how you fit into that…

I’m a middle child. But, there is a little difference with me because my brother is a couple years older, but my sister is nine years younger. So my case has a few tweaks to it.

JWN: What are some of your favorite foods?

Tom: I like all food. I mean if someone says, “What’s your favorite? That’s difficult because I basically like food.

JWN: Favorite candy bar?

Tom: I’m not big on candy, so I would say not really. Some people are compulsive; they have a book that they love, an artist that they follow, a food that they crave, or a favorite beer or drink. I’m probably the exact opposite of that. I don’t have a favorite artist, food, or candy bar. I don’t know why. It’s just not my thing. Maybe I’m unique in that way because I like to try different things. Maybe I’m a little more adventuresome.

We do a lot of traveling and we typically won’t go to the same place twice because I want to experience different parts of the world as opposed to constantly going back to the same place.

JWN: What are some of the interesting places you have traveled to?

Tom: Well this year we just got back from a trip. We went to seven countries; Russia, Poland, Astonia, Norway, Finland, Sweden, and Denmark. What I love is learning about the culture of the people, the food, and obviously the sites.

Now, my wife, who is a first born, when she goes into a restaurant she wants to order something she knows that is safe. Every restaurant I go into, I say to the waiter or waitress, “What is a typical food that the Danish people would eat for lunch or dinner?” And, they will bring me something I have never seen before. Now, in the Scandanavian countries their diet is focused around a lot of fish – a lot of herring and salmon – and potatoes. That is very popular.

When you go to the countries and you ask for what the locals eat, you see things on your plate that are unrecognizable. But, that is what I enjoy. I want to experience the culture of the people.

It is one thing to read about Russia; the culture and the people. There are countless books that you can read. But, then to go there and experience it…

There are a lot of places in our own country that I haven’t been to yet. So, my wife and I, we do maybe a couple trips a year. But, we try to blend seeing things in America, as well as Europe and elsewhere.

I am Italian. Both sides of my parents were all Italians, so if there was a favorite country or place that I feel most at home, it would be Italy. It is hard to describe it, but when I am in Italy, it feels like, “These are my people, this is my food, this is my culture, and this is where I came from.” When I go to Italy, I feel like I’m home. I don’t know why. I can’t describe it.

JWN: Do you have relatives in Italy?

I have some relatives; my father’s side was from south of Rome. We haven’t found any living
relatives there. My mother was from Sicily and we do have relatives in Sicily. Our next trip will probably be Sicily. We’re talking about a family trip to Sicily next year. Get my brother and sister – you know fifteen, twenty people – rent a villa and experience Sicily.

After discussing my planned trip to Ghana in October, Tom discussed his travel some more…

Tom: So far all of the places we’ve traveled to I haven’t had to take any crazy precautions. In all of our travels, we’ve never been to a country where I had to be concerned of health issues, or the food. And – knock on wood – we’ve never been to a culture where we’ve had any problems. Generally, if we go to a foreign country, we drink bottled water, just as a precaution. Nonetheless, I try to have “once-in-a-lifetime” opportunities every year. That is what I enjoy.

Tom next moved into his outlook on life…

It’s funny. My kids, often refer to me as the Jolly Italian, because my focus on life is to have fun.

When you’re working there is a serious side of life; where you’ve got to do whatever it is you need to do in whatever business you’re in. And, that requires a certain amount of diligence and hard work. I do focus on that, but I try to the best I can, whether it is in the office or at home, to have an upbeat attitude and to go into something and say, “Look it, let’s make this a fun experience.”

A lot of times clients will come out of my office, new clients especially, and say, “I thought that was going to be a horrible experience, but that was fun. I enjoyed that.”

If a client comes in with a horrible problem, you can say to them, “The world is coming to an end. This is a terrible problem.” Or, you can say, “You know something, I’ve seen this before and this is not cancer. This is something we can fix. Yeah, you can take a financial hit or whatever the situation might entail, but we can cure this. We can get to the other side of it and we’ll do it together.” It is an attitude of how you react.

If a child is on the floor and a toy or something falls and hits them on the head or they slip and fall, the first thing the child will do is look to the parents for a reaction. If the parents go nuts, they’ll start crying. Or, if the parents kind of ignore it, they’ll think, ”Gee, mom and dad aren’t reacting so I must be okay.”

When our kids were small, we used to spend our summers on Canisius Lake. And I remember one time, one of my sons slipped off the dock and fell into the water and was beginning to panic. I was next to him, and instead of panicking I walked away from him. It was Mark, and he was about four or five at the time. He had a life jacket on because they had to wear lifejackets. All the sudden he realized that dad was walking away from him and he was wondering, “What is going on here?” Then he realized that he could stand up because he was in about two feet of water, so he was really fine.

It’s all about how you react to situations. Some people tend to react negatively. I tend to react a little more positively. It puts the client at ease and it makes the situation bearable. The client leaves thinking, “Oh, that wasn’t so bad. Maybe I was worrying more than I should have been worrying.” Nobody functions well when they are in panic mode. You function best when you are relaxed.

I’m sure you have people you know that whenever you talk to them it is always like, “Ohhhhh.” They always have this negativeness. So it is like, I don’t want to talk to you. And there are other people that when you pick up the phone or you greet them, they’re happy and smiling. So, you want to be with them.

Positive people live positive lives. It doesn’t mean that in life there isn’t a certain amount of problems. You’re always going to encounter problems in life. You can’t avoid them; whether it is in business, in your personal life, or with your children. Something negative is always going to happen. But it is about how you react to the situation. I like to say, “Let’s look at it and figure out what is it we need to do to go from where we are to where we need to be. Let’s focus our energy there because it doesn’t do us any good to focus energy on fretting about it.”

JWN: Do you have any other tips on coping with negative experiences?

Tom: The other thing I try to do is a mechanism I call stuffing. Some people say compartmentalizing. If there is a situation that is out of my control…for example, I have a brother-in-law that is going through a horrible battle with cancer right now. My sister is dealing with this and my sister is traumatized and her children are traumatized. It is a very difficult situation. When I’m talking to my sister it is very emotional for me and it is very difficult. But, after I’m finished talking with her, I can still have a good day because I can’t control his cancer. I can pray for him and I can support the family, but I can’t cure him, so I don’t let it affect my day.

You may have parents, relatives or friends that have something difficult going on in their lives. These are people close to you that are in some ways threatened. You can still help them and learn how to stuff it. You don’t let it take you down with it.

That is how I live my life. To the extent I can, I try to look at the negative things in life and say, “Is there anything I can do to make it better?” If there is, I do it. And, if there isn’t, I say, “There is nothing I can do about it, so I’m not going to let it take me down.”

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Thomas J. DeMott
CPA & Partner
DeMott & Smith, PC
100 White Spruce Boulevard
Rochester, New York 14623
Phone: 585.272.9880