026 New Revenue Streams for Accounting Firms

Today we're talking about how accounting firms are starting to look more like creator businesses. These businesses that influencers build online in order to kind of maximize the leverage and output that they have where they post on social and all that stuff. So we're going to run through what a creator business looks like in 2023, how they make money, and how an accounting firm could lean into those very same revenue streams. Let's do it. So a couple of weeks ago on the main YouTube channel, we roasted a firm that was someone who's kind of influential within a specific type of retail. And they're building a firm around this niche. And a lot of the discussion, because it was still early days for them in this firm, was around what is the best way to leverage that kind of really like influencer status within a space? Is it actually to build a traditional accounting firm? Or is there a better way to take that expertise that you have, convert that into products and stuff that just scales better than accounting and tax work? And if you look at some of the kind of leading firms these days, they are starting to do more things that look like a creator business, like selling digital products and courses and stuff like that. So let's do a little deep dive on some of the most successful creators out there and the various ways that they've built businesses around their influence. Because like it or not, we all have influence. You influence your team, your clients. It's not on this mega scale that we associate with like global celebrity influencers, but we have a tiny version of that that may actually change the way that we approach building a firm. So let's run through the different ways that creators make money. And then at the end, we're going to circle back and like put that through the lens of this other firm that we did a roast of to think through. How could they build these revenue lines into their practice? So, so interesting to me here is creators started like building businesses online from day one. Like it was the Internet that enabled the leverage that made a creator business profitable. Whereas accounting firms were fundamentally born of an age kind of pre Internet. And so a lot of what we do, I think is just coming from the inertia of how accounting firms always were and not necessarily leaning into the new, different stuff that the Internet enables. So on the one hand, you have creator businesses that are like completely pure built on the Internet. You have accounting firms, which honestly I think are kind of the opposite. Cause they largely haven't changed since the Internet's been around. So revenue streams for creators. First, most obvious is Digital products. And so one, I'll call them influencers. One person who's an example is Ms. Excel. She does Excel stuff on TikTok and on Instagram. You've probably seen her around. Pretty amazing story. She used to work full time at a consulting firm. She basically ran trainings around Microsoft products. She started posting some Excel tips online and people started asking for more content. Here's a quote I grabbed from an article where they interviewed her. She said a lot of people were asking for a course on Excel and it seemed like the logical next step to create one. For me, it's all about helping people. The short form videos are helping people, but what's the next step? How can I actually get in there and create the transformation in people's lives? The online course route was the obvious way to go. And I think it's interesting as we go through these, you're gonna see a lot of parallels to maybe not how you work with all of your clients, but your best client relationships, the ones where maybe there's an opportunity to do something, to go deeper. She put out her first course and it was a hit. She quit her day job two months after launching it. She put her courses on a platform called thinkific. I'll put links to all these people and the stuff we talk about in the show notes. If you're watching on YouTube, I'll pull this stuff up on screen. But her story is basically she started small, just posting Excel tips. And eventually of all of those people that followed her stuff, there was a subset of who it really resonated with and they wanted more. And I think we all have that in our client list. Not everybody's a perfect fit, but you do have people that are probably willing to go deeper. She made a bunch of headlines in 2021 when she had her first six figure day. She actually had several six figure days in 2021 where she sold over 100 grand in courses in a single day. Back then, her courses, most of them were under $100 and the course itself was under an hour. So not like a big lift sort of thing. I mean a course that you could build in under an hour. Like what do you know right now based on your expertise, the stuff that you've built up over time where you could take honestly two or three hours to put a course together that people would pay for. Let me pull her course up here. These days she has bigger ticket courses. She's actually got a whole bunch of courses, like 15 or so, and they generally come in between 100 and $500. Back then they were cheaper, though. Back then they were like a hundred or less. And I do think kind of a fallacy when we look at people like this is like, so she does the way the format of her content is. The top half or bottom half is like her dancing and the other half is like some sort of Excel hack. And I think we all look at that and we think, one, I'm not gonna dance on TikTok, and two, I'm never gonna get like millions and millions and millions of followers like these people have. And these are the stories that are out there, like the wild, very public success stories. But there's a whole lot of versions of success that are more humble than this. It's not like a binary. I'm either gonna be Kim Kardashian or I'm gonna be a potato sitting in an office doing accounting for the rest of my life. There's a whole lot of things in between that. And fundamentally the most helpful framing of this stuff for me is of all the things I could do today, where does this slot in relative to the value of the different services that I already offer to clients? If I can take two or three hours to build like a one hour course, that's an asset that I could sell for years. How many of those things do I need to sell at what price? I think the more you think about that, the more compelling this sort of stuff gets. Another guy that's out there that you may have seen, especially if you're on Twitter, guy named Justin Welsh, he's generating about $2 million a year off of two courses. So all he does, he posts on social every day. And he has two courses that he sells. One is a course about creating content for LinkedIn and the other is a more general, he calls it the Content Operating System course. And they're each $150 and I think they're under 90 minutes. I think it was Justin that was saying, like there is a, there's a threshold there. We, we like to, there's this notion that we have to like create a whole bunch of stuff in order for it to be valuable enough. So when we struggle with that imposter syndrome of why would somebody buy this thing from me? One of the reactions you have to that is then to build more and more and more into it, when in reality that actually creates friction in the buying process. And so something he talks about, I think it was Justin is part of that like compelling premise of a product that people will buy is to enable some sort of transformation in 90 minutes because it doesn't take a big like commitment from them. Right. The idea is that they can pay for that product and in the next couple of hours there's going to be some sort of transformation there that you've enabled. And it's not gonna be for everybody and it doesn't have to be. It's just for that subset of a subset of the small group of people out there who want to go deeper with you. And I think almost all of, I think almost all of us have these people in our client basis right now. Okay. Another different type of revenue stream. So those are examples of digital products. Another example of a potential revenue stream is cohort based courses. So these are generally like live workshop course series that you may do a couple few times a year. And a benefit of this is these are generally a little higher ticket because they're live and maybe there's a little more perceived value there. If there's a downside, it's that it's a little more of a commitment. Like if somebody's got a job, you somehow have to fit that stuff around people's schedules. Because it's one thing for you to sell a live course, it's another thing to like coordinate the logistics of, okay, I just sold this live thing to a hundred people. How do I do it at a time when they're all available? So like one thing you see with cohort based courses is oftentimes in a given cohort, they'll actually be running several of these cohorts in parallel at like different time zones to try to accommodate scheduling, which is kind of a pain. That being said, they're generally much bigger ticket items. So this is one example from a YouTuber named Ali Abdul. He's got what's called the part time YouTuber Academy. It's basically a, I think it's a, like a six to eight week cohort where you go through with, I want to say they've taken one or 200 people each cohort and they show you how to begin building a YouTube channel on a part time basis. The minimum price to get in the door is two grand. I think the top tier is like five grand where you get a little more access. Basically. The YouTuber guy, Ollie, he leads the teaching sessions, but then he's got a team that like runs kind of support around that and does more of the hand on stuff, hands on stuff with people and they've generated like just over $5 million in the last two years with this kind of cohort based Course approach. And there are a whole bunch of people that do cohort based courses. In fact, I think there's even a platform, is it called Maven that's just for cohort based courses? Yeah, here we go. Maven.com. it was launched kind of around the premise of live workshop based things. So one of the upsides to cohort based courses is actually the inherent urgency that comes with there being a cycle and when those things happen. So a downside with digital products is somebody may like the idea of it, but you don't just have to convince them of the value of it. You have to convince them of the value of doing it this very moment. Why would they do it now rather than, oh yeah, no, I love that thing, I totally gotta do it sometime. That's not a sale. A sale is somebody actually like pulling the trigger and doing it now. And so digital courses, oftentimes that's like coupon codes and stuff like that. But that can also kind of become a full time job just manufacturing this urgency to get people to buy it. That is one nice thing about cohort based courses is that's kind of built in because you're doing it on a cadence. The other thing that is specific to the types of businesses that we run is our businesses are seasonal. And so there's ways that you could build cohort based courses around the seasonality of, you know, tax filings and stuff like that. So let's say you're going to run a cohort based course in the fall and the premise is like, you know, ensure that you're just not going to be underpaid or like take the guesswork out of your tax result, you know, next spring or something like that. Is there like a, like a pain point that they've talked about where they're like the client, time after time has been like, why does this keep happening to me? Where you can offer the solution and it makes sense from a timing standpoint where you're going to capitalize on that at the time when it's going to be like most painful for them. So given that our businesses are kind of seasonal, I think that's probably another sort of factor in favor of cohort based courses. Okay, third revenue stream. And to be clear, I don't absolutely don't think you're gonna do all of these things. These are just different, interesting examples of what people are doing. Third revenue stream is communities. A couple examples. Sampar is one of the hosts of the My First Million podcast and he launched a paid community called Hampton and so it's basically a place where those people can get together. I'm pretty sure from what I can tell, all it is is they plug you into a monthly eight person talk and they give you access to a slack space with the whole community. So they kind of match make you into an eight person mastermind that meets once a month, get into the slack space. And I think that's it. But they've got like pretty locked down requirements around who they will allow into the community. So some prerequisites, you have to have raised at least 3 million in funding at some point you have to have built a company to a million dollars in revenue, previously sold a business for at least $5 million and then they'll still interview you. And they said there's something like an 8% acceptance rate of people into the community. And so they're enabling. Like they've created this very selective space so that if you can get in, it is very helpful and specific. They said they opened the doors to 700 people and then they said they would close the doors indefinitely. And there's kind of your built in urgency. The motivator to convince people to do that sooner than later costs 8,500 bucks a year. And from what I can tell, they've generated around $3 million in the first 18 months or so. One interesting thing about our firms, I've talked about this a bit, is we're kind of especially niche firms. We are like a hub for a specific type of individual. And that's really all they're doing here, is Sampar has an audience that has attracted a certain type of person. And he's creating a space where those people can get access not to him, but to each other. And there is a tremendous amount of value in that. So if you run a niche firm where you've got a hundred clients that do a very specific thing, there aren't that many places out there where you can go out and network with a hundred other people like that. And this is not the same as a Facebook group or like these kind of low commitment spaces where there's like no stakes and people can just come and go and there isn't really enough privacy to enable vulnerability. I think there is like there needs to be some sort of threshold there to make this great for a very specific type of person. And in the context of a firm, that very specific type of person probably ought to be like your dream client. Like how can you create the dream place to attract like your ideal client and then that community itself becomes a Revenue stream as well that can be honestly every bit as big as, like the actual revenue stream for the accounting work. Another example, somebody that's done this, Jay Clouse, he runs a community called the Lab. The premise is it's a space for, quote, unquote, professional creators. They opened it up to 200 members and they had that cap. In less than a year. It's generated just over a quarter million in revenue. They do monthly workshops with thought leaders and then like public sessions they call hot seats, where members kind of come on, they have to be transparent about a bunch of stuff and they kind of pick it apart and do kind of like a helpful sort of consulting session. Again, the specificity there is like professional creators. And so if this is your business, if this is what you're doing, you can even get more specific with that to say, like, professional creators that are generating over a million dollars a year or something like that. To have a space just to be able to interact with those other people, that's really valuable. All that Jay is doing is creating the space. He's the hub that's already attracted that type of person. And he's just creating the space to enable those people to exchange value with each other. Not even through Jay, necessarily. So those are communities. Fourth, and we got one more after this, fourth is partnership revenue. And we really don't think about this, but like, this is a big revenue stream for creators and people that put out content on a regular basis and all that. Like four different forms of that that I have got written down. Newsletter sponsorships. Holy geez. Do advertisers pay an outrageous amount of money to sponsor newsletters? Especially if they're very specific, very niche newsletters. So, like, I think people are paying one and a half thousand to sponsor on my accounting newsletter right now, which goes out to three and a half thousand people. Like not that many people. And that's. Those ads are bought out for like four or five months Now. Justin Welsh has a weekly newsletter and I want to say that one's like pushing 5 or 10k per each sponsorship. And so what would that look like through the lens of an accounting firm? It would just be having a weekly newsletter that is perfect for that type of person, that's your ideal client and letting people buy ads on it. Some of these things, like there's gonna be consider some considerations around, like, am I a CPA practice? Like, what do all these things mean to the type of business that I have set up? Is it gonna require like some other sort of secondary business that. That you run this stuff through. But as you are the hub of this type of person, there's a lot of other people that want access to that type of person too. So newsletter sponsorships, podcast ads, pretty much the same thing. YouTube ads, same thing. And then affiliate revenue, like, are there products that you love that your clients need where there's some sort of commission arrangement or something like that? And then fifth, and this is really interesting adjacent businesses. So what are the problems that this type of client has that you can be a solution for, not just through the lens of like accounting and tax, but through whatever the other pain points they have are that you have a deep understanding of? Some examples, Mitchell Baldrich, you know, he's the CPA that is active on Twitter, tweets for, not for accountants, but for usually like real estate owners, that sort of thing. And he now owns a cost seg business. And so he's got an audience on Twitter that attracts a certain type of person that has this need. And now they can have him do their cost seg studies for him. Blake Oliver and Earmark cpe. You know, Blake built cloud accounting podcasts, got a great audience from that. And a problem that a whole ton of his listeners have is continuing education, particularly that a lot of continuing education just kind of stinks. And like, isn't this sort of content that they want to consume? So Earmark CPE basically slaps CPE on the content he's already creating so that people can get continuing ed for the stuff they actually want to listen to. Hector Garcia is a great example of it too, with his Chrome extension right tool. I shared this in the video on my main channel last Sunday, but it's just basically a chrome extension for QuickBooks Online that is like all of the upgrades that he wants QBO to have built into a Chrome extension. And Hector's got, you know, he's like the OG YouTube QuickBooks trainer. And now he's got this other Chrome Extension for people that want to go deeper. And like, I, of course Hector's gonna know how to build that best, right? Like, that's just such a logical extension of his business. But that's now product revenue, not service revenue. So every time somebody buys that product, and I have no doubt, like, just since last Sunday when I was on the YouTube channel, I'm sure people have gone out and bought that product. And that didn't require any incremental effort from Hector. Like that didn't require him to lift a finger to sell that next license of the software. And that is to me the beauty of these alternative revenue streams and doing this stuff alongside all of the things that you would normally associate with running an accounting firm. So those are five different types of revenue streams. Now let's circle back to the firm that we roasted the week before Sunday on my YouTube channel. Guess that's about a week ago. Let's think about this firm and think about how they could apply each of these revenue streams to their firm. So a bit more about this firm that we roasted. They're doing about 200,000 a year in revenue. They do tax and accounting work and they only do it like they only do tax work for the people who they also do the accounting work for. So they're not doing like standalone tax work for anybody. Their only clients are retail stores would like a very specific type of retail where they do the bookkeeping for those stores and the tax, they're only doing tax returns for the store and the owners. So all of these clients have very specific issues. It's a virtual firm. So their clients are all across the country and they're in the early stages of building this firm. But are there higher leverage revenue streams that they could build alongside the accounting and tax work rather than just exclusively doing a accounting and tax work? So looking at those revenue streams. Digital products. How could you build digital products into a business like this? They've already done a very basic like level of this. So they have a PDF on their landing page that they give away. All you gotta do is provide an email address and you get a copy of this PDF, that's some sort of helpful thing. And they convert something like, you know, 4 or 6% of those people into clients eventually. But a digital product that you're putting out to actually like make money on and become like a revenue producing part of your business? Probably something that goes a little further than that. But because their client base is already so specific, this is absolutely something that would make sense for them. And so the way that I would probably frame this is you have, you know, you have a following and of that following, there's a subset of folks who are on your client list. I would probably develop start by developing digital products who grab kind of that larger group of like your larger following. Maybe it's the people that can't quite afford your services yet. What is a version of your expertise that they could buy through a digital product that's going to make you money, but also continue to build trust with that person so that they may ultimately become a client someday. But at the very least, in the meantime, they're gonna get value from you for this course that you've sold. And so that could be, honestly that could be $50 course, that could be a thousand dollar course. I do think, especially when you're starting out with digital products, keeping it under 90 minutes is important. You don't wanna build this big long anthology, which honestly is where our minds usually first go. But people generally don't wanna buy that. They want something that they can consume and get value from co quickly and the bigger it is, the more friction there is there in the buying process. And also the first time you ship a digital product, man, it's gonna suck like it's just not gonna be very good. So if you take oh like the ultimate, you know, build the ultimate encyclopedia of everything that you know and you put it out there like version one of that's just gonna stink. Nobody's gonna want to buy it. So focus on like more bite sized ways of getting started. Not only because I think that'll sell better, but also because you're gonna learn a lot about that in the process so that the next time you go to do it, you're gonna do a better job of it. What else? Cohort based courses. So they're a tax firm and I actually kind of love the idea of providing a solution for folks who you don't do tax planning for. Maybe they're not clients, but like you kick that cohort off in, I don't know, September, maybe October and it's like a six week thing or something like that where it walks them through. Here's how to get your books to a place where they're reliable. So there's like, maybe the first half is like a sort of managerial books review sort of thing and then the latter half is like, here's some high level tax planning that you can do and we'll give you some worksheets to help you with that. We're going to help you develop a better understanding of how tax even works so that you by the end have a high level estimate of what your tax outcome is going to be. And the pros and cons of, you know, paying that tax now versus waiting to pay the tax. Because the people that generally can't afford good professional help, their big stressor is I don't know what I'm going to owe, I don't know where my tax is going to come in. Am I going to have a big balance, am I going to have a big refund? And you can build a cohort based course to like capitalize on that, when that fear is really like building and when they're on that threshold of like, do I need to make a third quarter payment? Do I need to make a fourth quarter payment? This cohort based course can absolutely be the solution for that. And you can say, hey, we do these once a year. This is a way for you to get access to my expertise without even being on the client list. And going forward, you're gonna have a good idea of how to do this for yourself year over year if you want to, in a basic way. Obviously this is never gonna be like full blown tax planning, but it's a whole lot better than what they're doing right now, which is nothing. So when it comes to cohort based courses, think about, is there a way to build it into kind of the seasonality of your business communities? This is a really obvious one for them. Creating a community so that all of these retail store owners from around the country can come and hang out in a single space. And there's concerns with like, oh, how can you really be vulnerable of like sharing information with potential competitors and stuff like that. I do think there's ways around that. Stuff like Anonymous Q&As and stuff like that. But ultimately, if you can create a space that's for a very specific type of person, there's probably gotta be some sort of like business revenue threshold there or something like that, so that you can incentivize people to come in and be introduced to a whole bunch of their peers. And the value that they can glean from their peers, like that value that they exchanged with their peers, is ultimately attributed to you because you created the space for that to happen and you should not give that away. You've put a lot of effort into that. Like all of your thought leadership and all the stuff that has allowed you to build a niche like this is a realization of all of that value. So people will happily pay to be there and learn from those peers. That's a really cool opportunity for firms. Partnership revenue. I don't know. Do you have a killer newsletter, a killer podcast? It is worth like building relations, relationships with the other vendors in that space because they may want to get onto your platform, they may want to advertise, but also it's valuable for you to get on their platform. So like if they have a podcast, if they have a newsletter, you could guest write stuff like that. Building those relationships gives you the ability to get in front of their audience, which ultimately ought to grow your audience. And then fifth adjacent businesses. Yeah. What are the pain points that these problems that these companies have are there software opportunities that feels like the lowest hanging fruit right now. Kind of just comes back to trying to be helpful and not getting too hung up on. On the traditional accounting firm service offerings. Like, we kind of pigeonhole ourselves into what do accounting firms do. But then a lot of it is also that is kind of our identity. Like, we don't identify as the kind of person that would sell a digital product to a client, which is a totally arbitrary thing and has no bearing on whether or not you should. So really, like a lot of all of this is just about kind of thinking outside the box and how we build our firms. You know, we talk about a lot about resiliency and staffing and stuff like that. Most of these things are just fundamentally higher leverage revenue streams than sitting down and doing the work. Because in most cases there's no amount of incremental work required to sell another license of that thing, to sell another product, to have another person into a course that you're already going to run. I love this stuff. Obviously I'm biased because in many ways I do sort of run a creator business now. But whether you're a solo firm owner or whether you're even a partner in a more traditional structure where you've got a million dollar book of business and you've got a team that supports you with that book of business, either way, we're always looking for like, what is the highest leverage version of what I can do? And historically that was, oh, what's the work that will pay us better rates? Like, you know, can we get $300 an hour for advisory instead of $100 an hour for bookkeeping? That was kind of the old paradigm. These days you've got a whole bunch of things that you can do for people probably that aren't tied to time at all, where people can come in and buy that thing. That whole checkout process is automated. You don't have to lift a finger. Interesting. Tell me, what do you think about this stuff as you're building your firm? Are you thinking about like, oh, is there like a product that I could sell that could go alongside this sort of thing? Any other examples you've seen of this in the wild? I know Brandon hall did an interview that's on Earmark a while back where he talked about how in their firm they've grown their product revenue to, I think it was to a half million a year or something like that, which is awesome. Like, I don't think there's that many firms that are doing that stuff. But I totally think we should be thinking about it more. So that's it for today. Thanks for coming. Hanging. I'll see you tomorrow, Sa.