443 How This Micro Niche Accounting Firm Grows At 100k+ Per Year!

Today, a real life accounting firm submitted a whole bunch of anonymous information to me so that we can go through it, pick it apart, see what they're doing well, see what they can do better. And it's a great example of a micro niche firm that honestly is doing a really, really good job. So whether you're interested in niching yourself, whether you're spooked by it, I think you're going to learn a couple things from how they work because they're just an example of it done really well, I think. So come on in. We're going to roast this firm. If you would like the chance to be anonymously roasted down in the show notes, I'll put a link to the intake form that I use for this. We've done this with over 20 accounting firms now just kind of sharing some practical advice for like very real life firms. And something funny happens when you are looking in somebody else's firm. You kind of put that different hat on, that coach hat and you're like, yeah, they should, they should obviously do that when oftentimes it's very hard to see kind of the same thing in your own firm. Right. But it kind of fires up a different part of our accounting firm, runner brain. So it's kind of fun. Okay, some context about this firm. They're in a or near a fairly good sized market, they say. We mainly do monthly services which used to be called virtual CFO but now we just call it outsourced controller services. By the way, I actually did the exact same thing. I increasingly called what we did controller ship because that's what it really was. It was like operational. It wasn't really CFO stuff because small businesses, they don't need a cfo, by and large. They say this includes monthly bookkeeping, quarterly tax estimates, tax returns and advisory. This is a, a firm in the US they also do the annual tax returns. They did 550k in revenue last year and are projected to do 650 this year. $100,000 bump, that's a good bump. Back back in my firm running days back in like an old school firm with a bunch of partners and I was just, I was just one of the big dogs, you know, one of the big dogs in the yard. That was a number they would throw around a lot. Like, oh yeah, we just get at 100 grand a year and then you're doing okay. There is no like right answer for what is cool growth or impressive growth. You could totally, you can blow that out of the water for sure. Do way more than 100 in a year. But there's also like a balance there of for a firm like this, which is actually a husband and wife firm, there's a threshold beyond which it like it gets really hard and sweaty and maybe not fun. A hundred grand a year to me is a pretty good balance. They have a website specifically for their niche client base, but they also have a generic website for their other clients. Their niche website, which serves the fitness niche, it operates in all states. Whereas their primary website that, that it was like the original website for the firm, it's more for local clients. So they got their start just serving people locally based on like personal connections. But that didn't stop them from creating a dedicated website for their niche. But like they use a single email address. It's not the branded email address, it's all just the name of the original firm. And oftentimes it's so funny the things that we get stuck on when we're like yeah, that's a good idea. And then your brain goes to like oh, then I'll have to switch my email address. Just like very trivial things where it's like nobody cares. Like that's not going to make that big of a difference. It's not going to be the thing that makes or breaks this new initiative. Just go do it. Their approach, they got two different websites, makes sense to me. Average price for their service is about 700amonth. But they say a good amount of clients are grandfathered into rates that are about half this. They also have a small handful of clients at a quote enterprise pricing of around $2,000 a month for how they find new clients. The old like the core firm website, not the niche website. It's mainly referrals and website inquiries for their niche website. Combination of referrals, website inquiries and Instagram connections. I mentioned this is a husband and wife. They competed in powerlifting for years and developed a bunch of connections from that. And so some of those folks are coming from Instagram. I love this, this is a great example of something you have a like really specific personal interest in. In fact was talking with someone in the, in my community the other day in a coaching session who's like super into running and, and like that was their whole life, I think it was through college. But now they just want to build a firm for like professional runners and they're so jacked about it cuz they're like I love this stuff. It's what I want to talk about and the people I want to hang with. Anyways, some of the. Some of the. Like, there's like Cal Newport and Alex Rosi talks about this. Sometimes the notion that following your passion is bad advice. And that's oftentimes through the lens of when there isn't an obvious path for someone when. Where there is something that they really, really enjoy. This was probably me. Like, I didn't have anything, any industry I was super, super into when I was running a firm. So I probably would have fallen into the category where what you will, what you will develop satisfaction and joy from is the thing that you become expert in. And so that's, that's the, the path where you say, no, don't follow your passion for this, for this reason, because what you master will become your passion. But then there's a lot of people that are like, no, I'm actually super into this thing. They have a passion. And some people will say, don't make your hobby your job because it will ruin it. Right? And that to me is just always seemed so flawed and empty for your best life advice to be. Here's, here's what I want you to do is actively avoid the things that you enjoy doing for your day job. I know that you went out and you started your own business and you have total control and you could do anything, but I still want you to actively avoid the things you enjoy. If you have that, like, if that's part of your fabric, don't run from it. It's a tremendous advantage compared to anybody else that tries to serve that space right, like, let alone a general firm who doesn't specialize in that at all. Like you did powerlifting, you got a bunch of friends that do it. You're on Instagram, you're visible. And how you do this, you have such an excellent advantage there. I should, I should put a big asterisk on that because most of us don't have that. Most of us are not powerlifters. We don't have that community. And oftentimes outwardly, when we look at that community, we're like, oh, geez, I could never do. I could never do that because I'm not an expert in xyz. But the bar for being a quote, unquote expert, unfortunately, is usually not, or at least being perceived. An expert is usually not a product of actual expertise, and it is a product of visibility. So the person who is up on stage and doing the podcast interviews and the person whose name comes to mind first for the expert on xyz. So for many of you, like, you know, running small firms, if you hang out online a lot. That might be me. Like when you think, who's the YouTuber for accounting firms? A lot of people probably think about me. And I like to think I have some expertise. But the main thing, the biggest thing is, is actually just visibility. And when it's in the domain of something that the client, client knows nothing about, they don't know anything about accounting or tax, the bar is very low. So like, you don't have to say very novel or technical things. In fact, the best version of that is usually not something that's very technical. So if you don't have that background of being a powerlifter or being super into that one community, that doesn't need to stop you from, from getting there. And the whole like the counter argument here of like, well, you're not actually an expert if you don't do that stuff. It's true. But you could say the exact same about general accounting firms who are serving one person in every industry under the sun. Those people aren't experts either, are they? But once you're out there, once you go to a couple trade shows, you have a few conversations like you are, you are very quickly more of an expert in that domain than anybody else is. All right, let's talk about this firm's team. Two owners, husband and wife, two employees. One is an accountant, one is a client relations relations manager, and then one offshore staff accountant. And they're planning to hire another at the end of the year. Interesting that they've got a client relationship manager this early in the journey. If you think about where most firms get stuck. So they've got, they got, basically got five people and they're hiring a six offshore. Think about where most five people firms are. The owners are like, usually at their limit, like fielding anything and everything from clients. It's a lot of work. They're like, how am I supposed to get all this work done when people are hounding me all the time? Great argument for having like a client relationship manager early on. That is, that is, I would say, unique about this firm. That's unusual to have a relationship manager that early in the journey, but it doesn't mean it's a bad idea for this org chart. A husband and wife and then one technical accountant onshore. They've got one offshore staff accountant and are hiring another. In my experience, the way I was building my firm, it was about a 3 to 1 ratio of the onshore accountant to three offshore accountants. The onshore accountant being usually the technical reviewer and the, the client facing person. But then we would also mix in onshore folks who were doing the same things that offshore folks were doing. There's a big misconception that hiring offshore and developing your own talent pipeline are mutually, mutually exclusive things. They' not. You can hire offshore people and still have juniors and still be bringing those people along. It does change a bit though, of what I look for in a junior. I look for a junior who can hang, who's. Who is a good hang, who can talk comfortably on the phone and, and have some interpersonal skills. That's more of what I'm looking for in that. That junior. As opposed to the old days where you needed the people who were sitting in the back of the office and would just crank on numbers. These days, most of those roles, they're going offshore and it's because the people will do the work for a quarter of the cost, oftentimes with a much greater level of excitement for that work than the onshore equivalent person has. But again, it doesn't need to torpedo your, your pipeline of the type of folks that you're still gonna need onshore. If you look around and all the other firms are doing it like you're kind of living on borrowed time. Patriotism is not a business strategy. The world's getting smaller every year. And like, if you haven't done it yet, like, we all have those ignorant questions that we just have to navigate and figure out. Absolutely everybody goes through that. There's no shortcutting it. So most interesting thing about to me about their team set up here. Besides running a husband wife firm, which is unbelievably common, I've actually, I've talked to so many firms lately who do that. Bless your heart. What does the dinner conversation look like, though? That has always been the thing that would really spook me about doing that is right now my family's. My family's kind of always been my escape from work. And that's not a perfect thing either, because I'm not very good at having those conversations, like, with my wife, like, because when I'm not working, I want to not work and not think about work. But then if you work with your spouse, that's. That's got to be doubly hard to then not have every free moment be like, talking about work. That being said, I also talk to people who are like, no, it's like my dream business partner. Like, we're totally aligned. We have complete trust. Like, it's, it's perfect. Hey, real quick. This episode is sponsored in part by the folks At Team Up. Team up, they help you find talented accountants in the Philippines. Team Up's got a killer PDF guide to how to do this stuff. They call it the 2025 salary guide, but it covers way more stuff than just salaries. And one of the things that digs into is I think the biggest misconception about hiring folks offshore is the difference between outsourcing versus hiring direct. A lot of folks that have had negative offshore hiring experiences, what they're actually doing is working with an outsourcing group where they're buying month end closes or buying tax returns. And it's up to that outsourcing group to manage how it gets done and the training of the team members and all that. That was not the model of offshoring that I did. I did what Team up does. Direct hiring. All it is, you're working with human beings in another country and they're capable of all of the things that my onshore people are. At the end of the day, it's up to me to, to train them and kind of develop them from A to Z. But there's no like middle person. Oftentimes in these outsourcing groups you're paying and I've. This was the case for me because I'd done both. You're paying that group pretty much the same amount as that person's salary. So like doubles the cost. I just want to work with person directly. Team up will help you do that. Check out their guide covers a lot of just like kind of the questions you're kind of too embarrassed to ask. You can download that one down in the show notes. Hey, real quick. This episode is sponsored in part by clienthub. Who's ready to turn your busy season into you ready for it. Into your wow. Wow season. Actually your whole year into your wow season. How are they going to do that? Jason, I'm glad you asked. Three bullet points. First, it's all about the client experience. Make it easy for your clients to communicate with you and half the battle is already won. 2. Simplicity Client Hub. It is not any harder than it needs to be in a lot of practice management systems these days. Let's just say it's getting a little sweaty. You step into Client Hub, you try it out, you're like, oh, this. This actually feels like a nice place to be. And number three, AI stands for artificial. What was it stands for? Artificial intelligence. You know, I like that ClientUp. It'll help you draft emails with AI. They got a new like automated book review thing that pulls in some. I say Goodbye to busy season, man. Make the commitment. We're not doing it again. They've got a limited time promo right now. 50 bucks off your first three months. They give you a personalized demo because you want it to go better next year, right? I want that for you. Make this the last stressful busy season you'll ever have with Client Hub. Link down in the show notes, tech and process for this firm. Nothing too far off the beaten path. Q4 they're doing tax projections, year end accounting and some 1099 filings. Q1 they're mainly getting tax stuff out. Q2 they're doing tax projections, implementing new software and Systems and developing SOPs. August to October is extension season so getting the rest of the tax turns out and then November, December, client onboarding and offboarding season and year end planning. So they are doing monthly books throughout, but that's kind of what they're doing. In addition to the monthly books, they're rolling QuickBooks online, CCH access and CCH Work Stream. I don't have a. I think most of the people using CCH for tax, they are folks who came from another firm and like had that muscle memory prepping tax returns on CCH stuff. I don't have a problem with that. If you were starting from scratch and were going to a premium tax prep platform, I'd probably go to Ultra Tax instead of Access Tax. But the bigger driver of your efficiency will just be that muscle memory Ultra Tax is not so much better than Access Tax that it like overcomes that. I do think Access Tax can be a bit more expensive. So they're using qbo, CCH Access, CH Workstream, Client Hub Ignition and Safe Send. No concerns there. Client Hub is actually a, it's a very good sort of all in one er for bookkeeping firms. I think they'll tell you it breaks down a little bit if you're doing a huge volume of tax and it's not really what it is designed for. Client. What Client Hub does really well is it's like a two sided task management system. So if you can get your clients into the portal and like manage their tasks the same way that you manage yours, which honestly these days ought to be like most people ought to be perfectly capable of that because they have their own task management systems in their work. They, they understand how all that goes. And the reality is unfortunately we still have to give our clients tasks to do stuff that we can't do ourselves. Client Hub does that pretty well. If I, if I were to change anything in the tech stack here. Safe Send Safe Send was acquired by Thompson Reuters. Makes you a little bit concerned about how that tool may or may not develop in the future. But if you're a CCH user, it potentially makes you doubly concerned about like long term ongoing support for the CCH integration with Safe Send. When is Thompson Reuters that own Safe Send? I they wouldn't turn it off because they're going to have a lot of paying Safe Send users who are on cch, but I definitely wouldn't expect that integration to get the same love and attention as Thompson Reuters integrations. Leading alternatives here to Safe Send would be Sorban or Stamford Tax Couple of notes on workflow for their monthly clients they say it's a pretty easy transition getting into tax season since they already have all the info for their seasonal clients. They reach out in January, but if they don't get you the goods in a pretty short turnaround that gets extended. And they've got some issues with folks like providing information on a timely basis. Last what they enjoy and what they don't enjoy. And then I'll share a few thoughts of like what are some small changes this firm could make that would give them maybe like out like outsized gains from these small, small changes, the pains they identified. Managing Capacity we're trying to leverage technology to increase capacity, but also recognize that hiring more offshore and onshore is a necessity. Managing expectations and communication we're doing our best to move clients to communicating exclusively in client hub, but it's difficult to phase out email and texts. They've got clients who just can't get their stuff together and are constantly falling behind on tax payments. They love meeting and speaking with clients, but can easily lose a whole day to advisory meetings. And then what do they enjoy? They love speaking with clients and helping them with their problems, but they also just super enjoy being in silence and working on tax returns. They say it can be a lot of fun when they just block out their calendar and put on music or podcasts and just crank. Most of us can relate to that, right? A few thoughts. This firm's doing great. Like this whole format's called Roast Affirm, but sometimes you got to look hard for things to improve. This firm is ahead of 90% of firms. They're doing something really cool and that they're serving a specific type of person that that they they enjoy working with. Like if this is my firm and I'm kind of zooming out and thinking what would I do next? A few thoughts. Those clients are still hanging on at Legacy rates. They said they've got a good number of clients that are still grandfathered in, paying about half of what their normal rates are. This is a perpetual drag on any accounting firm. And this is always happening. Like when we're in that moment where I'm charging 700amonth, but I got a whole bunch of people on 350amonth, I'm like, it's fine, like, I'll just help these people out because, like, we're still making some money on it. Not a big deal. But the reality is a year from now, you're going to be at 800amonth and then 900amonth and a thousand a month. And these people, like, they will, they will constantly kind of be a drain on your resources. And then over time, unless you have a better way of managing it, before long, today's 700amonth clients, they're your legacy clients, and now they are dragging on the business. So we let these things sort of amass sometimes and pile up and it becomes this big, dramatic, really hard thing thing. And you know, maybe the right combination of advice from your peers and, and rah rah videos gets you to the point where like, okay, I'm going to do the hard thing and rip my band aid off and send that really hard email. That's not the solution. Like, that may get you out of a pinch one time, but that's not the ongoing solution. So you have to probably rip the band aid off with some of this legacy stuff, but then also have a better system going forward for what is the norm or what is the plan for how we do graduate clients if we're no longer a great fit for them, and that may be building out your network a little more so that you have somebody that you can, you can refer that to who you know will take good care of them. But until you solve this problem of grandfathered rates, it will take what your firm could do in five years and make it only possible in 10 years. This goes for every single accounting firm. The more of your focus and attention that are going to folks that are not paying, paying the, the daily rate they should be, it is lengthening the, the journey to wherever you're trying to get to. And there's just no way around that. Usually it starts with making some hard calls up front, but then you have to really ask yourself, how do we systematize this? Never happening again. And to be clear, this is normal. It's completely normal and healthy to outgrow clients. If you are ambitious like you, if you're an entrepreneur. Like, you're ambitious and you're usually looking for growth and wanting to do new things and finding more premium clients. It's completely normal to graduate clients out. We don't have to treat clients as something that, where that's like a forever relationship. I think when we do that, we're kind of just lying to ourselves. Like the legacy notion of having these long term, sort of forever clients. The reality is you change, they change. Any version of a forever relationship is probably rife with compromise and not being realistic about the fact that there was a day when that was a great client for you, but that's no longer the case, so they're no longer getting your best. Now, I don't want to like, be totally cavalier about this. Like, you do build relationships that are like lifelong relationships and all that, but that can also exist independent of you doing someone's bookkeeping or tax return. Like, oftentimes people kind of combine those two things. They're like, that's awful. Like the notion that you can't be in business together forever and have that relationship. I can have the relationship. I would actually assign a completely different relationship to like, that person and my relationship with that person. Whether or not our businesses are compatible and the best fit for each other, that's a completely different thing. That's much more mechanical and business, not the personal relationship. And it's where those things get combined and messy. That's where all the drama comes from of like letting a client go is like you're dumping them and you're never going to talk with them again. But like, that personal relationship and the business relationship, those can be two different things. A few things that are maybe a signal of not having enough, like inbound good, really new, really good new work. Got a good number of clients that are just struggling to get their stuff together and not kind of delivering on the timeline they're supposed to. And then the folks who, they will sign the engagement letter but then not get anything in and then they immediately get extended. The solution for people like this is like, you give them a few chances and then you move on. And it like, it doesn't take cutting very many clients to massively improve your quality of life. Sometimes people turn it around. Usually they, they just don't. And wouldn't it be nice if you just worked with the people that had their stuff together? Like, that would just be really, really nice. Most of us don't have that level of control because we don't have enough inbound to be able to be that selective. So my like, big recommendation here would be how do you get out and be more visible? Like this is a space that has industry events where you can go out and like, what are the, what are the fitness events for? Like other fitness influencers. I don't know who specifically in the fitness space they serve, whether it's gym owners or who it is, but there's loads of trade shows for every type of avatar in the fitness space. Go hang out there, figure out who's writing the newsletters, who's running the podcasts. They've got a killer, really, really well done niche site. Like their website is really good. But by just being out there and being a little more visible, I think you totally change the optionality that you have when you're generating more inbound and can afford to be like, no, we're going to cut this person and cut that person. Also like, don't put too much pressure on yourself to continue growing. They've got five employees and are running around a half million in revenue. So it's, this isn't as profitable as it could be. But the way you make it profitable is by just by serving more premium clients. So if we, if we are able to cut the legacy people that are paying half price, someone paying half price compared to your full price client right now, full price being 700amonth, half price being 3,50amonth, in all likelihood that $700 a month client is 5 or 6 times as profitable as the $350 a month client. That's a tremendous trade off to add one new client and cut, you know, two to five old legacy clients. So don't feel the need necessarily to go out and hire more people when you've got some really easy moves you can do to drop some less profitable work or see if they'll pay more, oftentimes they will. And then use that time that you get back to go out and be a little bit more visible. And just know that like all it takes is adding a client or two a month, honestly at your new higher rates while letting the old ones go. And you will simultaneously make more money and get capacity back. And finding the better client, which is kind of the goal for all of us. We don't all need more clients, but we all need better clients. Finding the better client is a product of your visibility and you're making time of being out there and finding the, the version of being visible that that isn't draining for you. And so like maybe going to trade shows is extremely exhausting, but maybe you like writing blog posts or doing your own, like, newsletter or conversational, like, interview podcasts. Like, just find the version of that. That's the least exhausting for you because there's a tremendous amount of power to come from that optionality. When you have an abundance of clients and you can afford to be selective and be like, no, you kind of have to walk and behave this way in order for us to work with you, then your systems are like, twice as streamlined. And then that thing's really humming. That's. That's just like the ultimate way to run a firm. Good for this group. This is like, I love this. This is like everything great about running a little accounting firm. Like, it's not huge, small team of people. Like, basically a single pod. Everybody knows everybody else. There's not a whole management structure necessary here. And you're serving a very specific type of client. And it's like, this is the type of firm you can take a tremendous amount of pride in running too, because you're probably so freaking good for this very specific type of person compared to a general firm. Like, we, we as. As kind of technicians. Usually a lot of our pride comes in the quality of our work. That that's not just a product of our raw skills and raw knowledge. It's a product of how effectively can we apply it in this specific situation. And when you're. When you're an expert in that domain, like, your efficacy, the ability of you to. To apply technical knowledge is so much greater because you have that proximity to how those businesses work and how you can be as helpful as possible. Anything that you would add, drop it down in the comments. If you're interested in me potentially doing the same for your firm, check out the comments as well. Not the comments, the. The show notes. For a link to the little form that I do to collect this information. It's always fun, like, getting a peek into other firms and being like, no, you should do that. It's a lot easier than looking in the mirror. Right, gang, that's it for today. Thanks for coming and hanging and I'll see you in the next Sam.