How I Built My Firm - John Drawdy

Hello. Hello. This is Matt Banker. I'm the owner and founder of Benchmark Growth Marketing. We do marketing for accounting firms. And this is Marketing for Accounting Firms, the podcast. Today I'm talking with John Droughte, the owner of Paragon Accounting and Tax Solutions. This is part of our series where we talk with firms who have been awarded one of the Firm of the Year awards. So John's firm is part of the PASBA association and we're going to about how he built his firm. I hope you enjoy the episode. John Droughty, Paragon Accounting. Is it Accounting and Solutions? Is that the right name?

Accounting and tax Solutions.

Accounting and tax Solutions. So we're here at the PASPA conference. We're talking about your firm. And basically I'm just interested in the start and the evolution of you in this space. What was the inception? When did you start your firm? Did you buy from someone else or did you start it on your own? How did it happen?

I was working in public accounting for a good while and I was the number two guy at a relatively small firm in 2008. And I said, you know, I can do this myself. I've kind of figured it out. And I have good entrepreneurial spirit. That's pretty critical. I read a couple books. Robert Kiyosaki writes a book about whether you should be an owner or not, firm or entrepreneur. And I read that. I was like, oh, Yeah, I got 100 on that test. And so I decided to go out on my own. And I did not buy a practice at first and I did not take any clients because that's stealing.

Okay.

So I just went from scratch and went networking and things till I had a very small client base.

Okay.

How did you.

So networking. That was how you found your first couple of clients?

Yeah, and I was doing what we in password call afab, which is anything for a buck.

Okay.

Because I didn't know any better. You know, I come from firms and they just kind of whatever walked in the door, they figured out how to do the work. Right. So about a year and a half into it, I. I don't really enjoy doing the accounting and the tax.

Yeah.

So I decided to buy another firm. And it was really. I didn't really care about the revenue. I just wanted to buy somebody. I wanted to buy enough revenue to continue to pay somebody else to do the accounting and tax.

Got it. Was that your first hire was through that acquisition?

I had hired an admin before.

Okay. But your first kind of other accounting professional was through that acquisition. Have you grown primarily through Acquisition or through marketing? How has your firm grown over the years?

Well, I never did another acquisition because the manager who stayed behind in that one stole from me.

Okay.

She opened a firm up after about a year, opened a firm up about three miles away and took all the clients and left me with a note.

And you, as someone who had left a firm and refused to take any clients, that sounds a little on the nose, a little personal there.

It was. Matter of fact, one of the job interview questions I'll ask, like a new manager or something coming in. I'm like, how many clients can you bring with you? And a lot of people try to please me and tell me how many clients they can bring. But, like, my oldest manager's been there. Oldest is in tenure.

Yeah.

11 years. And she. When I asked her that question, she got offended.

Yeah.

And said, those aren't my clients, those are the firm's clients. I'm like, right answer.

Yeah.

So I'm very sensitive to that. So since then, it's been organic growth. I mean, I might have less than. Way less than 5% of my firm revenue. Way less that that came from that original acquisition.

Yeah.

But yeah, as far as marketing, I kept doing networking type things and referrals, and I wasn't growing super fast at that point. What really changed it for us is when we got a decent website, you know, that started making a big difference. And Google reviews have been huge.

Okay.

That's one of the main ways we get it. And now we're two and a half million in revenue and still get a lot from the Google reviews. And we're working on some SEO stuff. Some of it's pretty simple to do. It's just a matter of knowing you're supposed to do it. Because I went, I want a few years without knowing, like, oh, I need to put a meta tag that doesn't say just homepage.

Yeah, you learn some of that stuff, right?

Yeah.

It's not. You're an accountant, you know, that's not the. That's not your role exactly. Or your experience. But as an owner, you know, you end up learning all these random things about running a business that has nothing to do with the thing that you're good at when you started your business, Right?

That's right. Yep. But it's more fun than doing the accounting and taxes, so.

Well, as a person who would never want to do accounting and taxes, that. That makes a lot of sense to me. But, you know, as I've grown, you know, my agency as well, there. There are a lot of things that I'm good at that I don't. I don't do anymore or I don't enjoy doing as much because they're more tactical, you know, on the ground. And I like to be at. At the higher kind of strategic level, thinking through those sorts of things. What have been the biggest catalysts for growth for your firm over the years?

Like I said, getting a good website. That looks. Because your website is your lobby. You know, when somebody walks into your firm, you want everything to be clean. It was same thing with the website. They're judging you. You know, the first 10 seconds are on there. Now, I keep hearing from Maria, my marketing person, and she's taking your course right now, Ed. And you had a web expert on there, and they ganged up on our website and beat it up pretty well. So, you know, it was really good five or six years ago, but now it's like we, okay, we gotta, we gotta upgrade this thing so that, that's something we're gonna do. But. But that was one of the starting catalysts, is getting found and people seeing your website and then the Google reviews. Yeah, that is huge. I think we have 111 now.

Yeah.

So when somebody, Google's accounting near me, whatever, you know, the next person has maybe 48.

Right. 48's a lot.

Yeah. But 111 is a lot more.

It's a lot more.

They're probably going to look at both of us.

Yes.

You know, but if I only had 20 and you know, I might not be one of the people they look at.

Right. Are you. Is that built into your process, asking for those reviews? How do you do that?

Absolutely. I give rewards to our team. So if you request a referral and you get it, you get a $25 gift card. And then as a thank you. We don't bribe people to do it. We don't. But as a thank you, we send them a $25 gift card.

Yeah.

After that, we wait about a week and we call them back, say, hey, can we put that, what you said in the Google review? Do you mind if we put it as a testimonial on our website? And by the way, can we have a headshot? So now we kind of bribed them with the $25 gift card, but the relationship. But then the person who requested that gets $50 worth of gift cards.

Okay.

So, yeah.

And so the incentives piece, that's part of it. But I, you know, I've talked to a lot of firms who have tried to do incentives, and they still Struggle. So I assume you've also built it into your culture that this is a part of it.

It's expected.

Right.

We have a firm KPI sheet. Every year we've got eight things on there we're measuring, and a lot of them stay the same. Some of them once, once it becomes a part of the culture, we might drop it off and add something else that's not. So asking for the Google reviews was not becoming a part of the culture. So now we have a little part point system. And that whole KPI spreadsheet at the end of the year determines everybody's annual bonus.

Yeah.

You know, it can be anywhere from 0% of their W2 to 20 of their W2, depending on performance on these certain areas. So now everybody's focusing on those things.

Yeah.

So measure what you, you know, manage what you want, whatever it is, what you want it done, you got to measure it.

Yeah, you got to measure it. Now you, you and your firm, Profit First Professionals as well. And, and my understanding is that that's not just you're not doing Profit first as a lead gen source, but it's something that you actually think is good for your clients.

Yes.

Talk to me about that. How has that impacted your firm and how you deliver your services?

Oh, yeah, I love Profit First. Absolutely not.

A lot of accountants, not or not all accountants do, right?

No, most don't.

What, as you know, as a firm owner, what do you like about it? Like, why, why do you say that?

So this is what happened. I'd never heard of it. I had one of our clients say, hey, do you want us to find a new accountant? I'm like, why would you want to do that? Well, we started doing Profit first and he talks about how you probably might need to get a Profit first accountant in the book. So. And the author, Mike, he does say in the book because a lot of CPAs are very black and white, rigid. This is the way it's supposed to be. We do gap accounting and you know, here's the balance sheet. That's all you need to see, you know, and clients, small business owners, they don't think like that.

Yeah.

And, but I'm pretty open minded. So I said, well, what is this thing? And so I said, oh, let me read the book.

Right.

I read the book. I was like, oh, that's really cool. And what it. I hate to simplify it, but it's basically Dave Ramsey's envelope system for small businesses, more or less. But so I said, hey, no problem. We can do that. And I said, matter of fact, I think I want to do this for my firm, you know, and so I started doing it and I said, you know, I think our clients could benefit from this because it does simplify things into a way that works for a non accountant small business owner. And that's what I'm, I'm here for. Our mission statement is we make small business owners wealthy or wealthier. Right, Right. So. And Profit first doesn't. We've had, I mean, our clients have had huge, huge success on it and they, I mean we have built these relationships where they're not going anywhere.

Yeah, Yeah. I think to a lot of accountants, they read Profit first or they hear about it and they think, well, can't we just all do this, can't we do this all like in, in the spreadsheets? Or, you know, we can plan it behind the scenes. But I think as a business owner who's not an accountant, and like you said, Dave Ramsey, you know, I'm a big story brand guy. These, these frameworks and ways of thinking about it, a lot of times it's, it's just simplifying it to, to the level that it just makes immediate sense and then people can grab onto it. Even if there's like a, we'll say a quote unquote better way to do it. Right. If you're doing Dave Ramsey thing, the better math might be, you know, pay off the, the highest interest rate. But it's not about math, it's about psychology and.

Yes.

And it's the plan that you can do and you will do that is way better than the best plan that you never get around to executing.

Right. It's funny because we'll have, we, we actually have gotten three or four monthly accounting clients who found us because we were profit first and they, they were looking for that it. But like three of them didn't, didn't get our Profit first coaching service. They just said, well, we can do it ourselves. What's funny, those, those ones are not doing it as well as the ones that never heard of it that we coach. It's like having, you know, I don't go to the gym unless I have to meet my trainer. I really don't. So. So it's kind of the same thing. You keep putting it off. It's like Eos. We've been wanting to do Eos for like a year and a half and guess what we haven't done. Oh, we could do it ourselves, right?

Yeah.

You gotta get that implementer to come in and help you then you'll do it, right?

Yeah. I gotta write that check now, John.

You do not compete on price with your competitors, but you have an attitude like a point of view as a firm that you're not just there to do the tasks and the compliance and that kind of stuff. You said you want to make business owners wealthy or wealthier. I imagine that allows you a lot of space. Then because you're on the same side, they're not thinking and comparing you at a price level because you're on the same team about making them money. So then it turns around it's easier to charge higher fees. Is that a fair way to think about it?

Extremely fair. And why do we charge higher fees? Because now I can afford to pay the biggest, best people to work for me.

Yeah.

Right. And I can be selective about who I hire. I'm never hiring out of desperation because I can pay them enough. I don't have turnover.

Right.

I can send them to all kind of education. They go home after 40 hours a week during busy season. Right. So they're not burnt out making mistakes on tax returns or rushing through things. So it's a much higher quality service. And the amount of money we make are coming clients. Like let's say for example, we charge a client $5,000 a month.

Yeah.

And it's profit first and whatever. Well, I've got, I hate to throw out numbers because some of them are too big and unbelievable. But we've got. One of them is we've improved their profit $350,000 a year.

Yeah.

And okay. They don't mind paying $60,000.

Right, right.

That's it.

It's just the profit first. It's, it's like so simple.

Yeah.

One of the things that I like about profit first and frameworks in general is it's hard to be an advisory type firm if you don't have frameworks that you're applying. Because usually you've got accountants at the like manager level. They're client facing. But they're not business owners, you know, otherwise they would go out and start their own thing. They're working for you.

Right.

That means, I think that a lot of firm owners feel pretty comfortable in that advisory seat, but they don't feel real comfortable putting their team in an advisory seat because they don't know what advice they're going to give or what kind of experience or even that entrepreneurial drive a business owner is going to want. But when you have a framework like profit first.

Exactly.

They can do that without having to have all of that other kind of business y mindset that comes naturally to some people, Right?

Yeah. And what I'm finding is that a lot of them are surprising themselves, though. They get in this framework and, okay, we're in part of profit first is, okay, now we're going to increase our money. We're putting into the profit account this month, and then they have to look at the numbers. And that's what we get. We get the numbers and we say, wow, this doesn't look right. Now we're taking the time to look at the numbers because we've got a goal of getting that profit number. Right?

Yeah.

And then we say, well, why is this? And then we have a conversation and. And one of them was this Amco transmission shop. His guy was discounting everything 15, 20% every time because he wanted to be the nice guy, whatever. And so we're like, look how much money this is costing you. And so this isn't really an expense reduction, which is. People think about profit first as expense reduction is a revenue increase, but it's not one. You're like sales, having to get a sales team. So he had to talk to that guy and talk to him, and he wouldn't do it. So he. He fired him. And. Because we forced him to.

Right.

We kind of did. Because profit first system forced him to make that decision. And now, you know, his profits are up like a quarter million dollars a year.

Yeah, yeah. And you got to get the right. You have to have a team buy in. Right. And so that's another thing. I think that your reputation, you know, in this community is that you. Who you hire, you know, how you compensate and pay, like everybody's rowing in the same direction. And that you've really communicated that very clearly to the team. So everybody's on board.

Yeah, we try to pay more than anybody else does, and we do it based on billings, percentage of billings, kind of a hunt what you kill thing.

Yeah.

So when you get somebody on profit first, it takes less time to make more money because it's a premium service. My whole team benefits from that. And the. Just the utter joy. It's one thing to say, oh, I saved somebody $5,000 in taxes. Right. That's great. But when you're sitting down at profit first and somebody says, man, I've always just lived paycheck to paycheck, but now I was able to put new siding in my house, we built a new fence, and for the first time ever, I'm not worried about making my tax payment. You guys have changed our lives.

Yeah.

When. When your tax manager or county man, whatever, here's. You guys. Have changed our lives. Do you know how easy it is for them to wake up excited to come into work the next day? Yeah, it's great.

That is the great thing, I think, about working for, you know, a smaller local accounting firm. You're working with real businesses. You're talking to real business owners. You're making impact that you can actually see in the community and the people that you're working with. Whereas, you know, in, you know, the big four, you know, the top hundred even, you're layers and layers deep. You know, you don't get to see that direct impact. It's more satisfying that way.

But, you know, everything about that company's depreciation.

Yeah.

That's all you know.

Right. Well, what is the. What's the goal? Where are you going with your firm? You know, you've got. You've got to this point. What's next?

Just keep on going. You know, like I said, our mission statement is to make small business owners wealthier. Wealthier. The more we can do that, the better off this whole country is.

Yeah.

I believe. You know, I firmly believe small business is the backbone of the country. I'm trying to help them fight against the irs. I'm helping them fight against big corporate.

Yeah.

You know, that, that's. That's the battle, you know, because I want. I want the money to stay local.

Yeah.

You know, not go to these other places.

Yeah.

And you've got to have. I mean, you got to have good. A good plan of action. You know, from our side, we're always talking about marketing. You got to. Yeah. And sales, marketing. It's just revenue generation. You got to bring. You got to bring leads in. There's a lot of different ways to grow a firm. It sounds like reputation. Google Reviews has been a huge part about growing your firm. And. And when you. When you have a reputation, not just for getting the books done or doing the taxes, but actually turning around businesses because of their accountant, you know, that's. That's a pretty good. That's a pretty good pitch, I think.

Think.

Yeah, I think so. You don't hear that very often, right?

No, you don't. And I think a lot of firms get stuck in this. You know, there's two. There's two paths. You can. You can either take stuff off the plate, and it's like. Well, the. Yeah, you can take stuff off the plate, or you can help a business grow and be more profitable. You got to start with you, you got to get the stuff done, but really the, the vision you're selling and, and the goal that you have is not just to, you know, make your life easier so you can go figure out how to run your business, but we're going to help you figure out how to run the business so that you can grow and your accountant can be a big part of that in an advisory, you know, task and advisory sort of role. Yeah, that's good.

You know. You know, it's funny, Matt, is we're sitting here and the conversation we're having, we didn't prep any of this. You knew the exact questions, you understood the exact things that I needed to know. I appreciate that. And I appreciate that you, your level of knowledge of what's important in the accounting industry.

Yeah, it's, it's been very interesting. You know, you have a niche, right? I have a niche too. Mine's more of a market niche, which is, you know, specifically we work with accounting firms, but you have a unique approach and the difference between a niche and a favorite market is that it's defensible. You know, people can't get what they're getting from your firm. If they go down the street, it makes them very sticky. You know, you have an approach that helps them in a way that they can't get everywhere else. And you've really developed something that's very durable, I guess, in that way. I imagine your clients stick around for a long time. I guess the biggest worry would be that they'd outgrow, they'd become so self sufficient and successful that they don't need you anymore.

But I don't know, I've thought about that. It might turn out that the clients get the profit first thing down and maybe, you know, because eventually you're just doing kind of quarterly meetings with it and they might not need that for the price and. But then we'll just kind of reduce their fee and handle the compliance piece and we'll still be there in the tax planning and you know, I know they'll ask us some questions, but I don't. They're not going to leave us and.

They'Re going to be a great referral source.

They're going to be a great referral source. You got it.

What would you. To a newer firm owner, what's the advice that you've got for them?

Oh, yeah, that definitely is. I tell people that, you know, I'm pretty successful if, you know, compared to the peer group. I only do three things really well. I Hire extremely well. If you knew my team, you've met several of them. Yeah, they are cream of the crop. 2. I delegate extremely well because I'm lazy. I don't want to do it. So that's the second thing. And the third thing is I copy success. So it's not like I'm this smart guy going out and figuring. I just find somebody else who's done it. They do a really good job and they say, they tell me something, John, you need to do xyz. Well, that doesn't make any sense at all. And I'm like, john, shut your. Yes. Quit talking to yourself in your head because look where they are. Look where you are. Just do the thing.

Yeah.

Your second point. I heard a quote one time that was, if you have a really difficult problem, don't hire a hard working person to do it, hire a lazy person to do it. Because the hard worker, they're just gonna like grind away at it till it's done. The lazy person's gonna find the easy way to do it, it's gonna be more creative, and they're gonna figure it out. It sounds like there's some of that you figured out. The hard way to do it is to do it yourself. The better way to do it is to find. Find ways to delegate effectively and get the right people.

Yeah, that's. That's the number one delegate to delegating to the right people. And you know Michael Gerber's E Myth book?

Yeah.

You know, it's so funny. It's like I really don't like the book and the writing style and all that. I didn't really enjoy it. But everything he says is absolutely spot on.

Yeah, yeah.

There's a few books like that for me too. The concepts are right. Oh, but the.

You gave me a great one. The one page marketing plan. Oh, yeah, yeah, yeah. I read that. I've got a lot of notes. We've been implementing a lot of those things.

Yeah. What I like about that book is it has a more holistic view of marketing. A lot of people think of marketing as lead gen, but really it goes everything from, you know, the positioning of your company through. Through that lead gen sales process. But then you got to think about lifetime value, customer experience and referrals. All of those things, you know, play together to grow the business. Because at the end of the day, marketing only matters to the degree that it's helping to bring in more business. And when we say more business, you know, another way of saying that is sales. You know, marketing Is one of it. Referrals, all of those things. It's all the same stuff. And. And that. Yeah, it's a great. It's a great framework for that. I love frameworks. That's.

Yeah, well, that's. That's a great way to run businesses, is using frameworks.

Don't reinvent the wheel. Adopt something, like you said, chase. Chase success. You know, look for something that's working elsewhere. Very good, John. Thank you so much for this conversation. This is great. And I think other firm owners, it's just so helpful to hear the stories of what's working for other people and how they got there and, you know, set your aspirational, like, where. Where you want to be someday. I'm sure there's a lot of folks that are looking at your firm and thinking, yeah, I want to be. I want to be John. I want to be Paragon.

The great thing is, like, if they are and when they get there, there's gonna be so many other firms that, like, I look up to, oh, I want to chase that guy now.

Yeah. Well, and it's. I think it's so important to be doing both when you can, like, reaching forward, reaching back, because you actually learn a lot about your own firm by helping other people. You clarify your own thinking, and then you always have someone else or another. Another firm that you're looking up to. You know, find yourself in a community where you got both those things.

Good point. Very good point.

All right, well, thanks, John. We'll leave it there. And thanks for being on the show.

Oh, you're welcome, Matt.

This podcast, marketing for accounting firms, is brought to you by Benchmark Growth Marketing, a marketing agency that helps accounting firms get more calls booked through their website. You can find us at Benchmark Growth Marketing.com Connect with me, Matt Benker on link.