How I Built My Firm - Sarah Berry

Hello. Hello. Welcome back to another episode of Marketing for accounting Firms podcast. My name is Matt Benker, the owner and founder of Benchmark Growth and we do marketing for accounting firms. That's why we have this podcast. And today I have Sarah Barry as my guest. Here we are doing a series of PASBA firm. PASBA is an association of accounting firms, PASBA firm owners who have been awarded one of the best firm of the awards within that organization. We're just talking about how different folks have come about building their own firm. Sarah is here today to talk about her firm. Sarah, welcome to the show.

Thank you for having me. Appreciate it.

Where are you based out of and how did you get started with your firm?

Okay, so we are in Texarkana, Texas. We are two blocks away from the Arkansas side, so, so it's Texas and Arkansas line. My firm had got started in January of 2014. So this coming January will be. We're planning a big 10 year celebration. As you know, the first, the first year is crucial. First five years are crucial in a new business. 10 years feels like a major milestone. Like, okay, this thing may actually work. I'm super excited about it. So we're really excited about that 10 year celebration. So how did I decide to start my own firm? It wasn't anything that I ever thought I would do. So I worked in public accounting at a couple different local CPA firms and wanted to start my own firm. I left a local CPA firm and went to like a quasi governmental institution making good money, had a really good position. But I had a baby and my child was born with a genetic disorder. And so he had a hole in his heart and had to have open heart surgery at 2 months old. And so no one would keep him because he was at a very high risk. And so I had to quit my job. And so the one thing that I knew how to do and I knew how to make money at was do tax returns. So on January 31, 2014, I, my dad gave me $2,000 and said, here, go pay your first month's rent on a little bitty office space and bought my first computer. And off I went and just did tax returns that first tax season. And I, so I was meeting with clients during the day, working at night, taking care of a really sick baby at night. And I was like, okay, well when tax season's over, I'll get a job, you know, like a real job. And then when tax season was over, I was like, well, maybe I might can find something to do. And it just went from there.

Wow, that's. That's a pretty intense story. It sounds like it wasn't necessarily. You didn't have, like, an entrepreneurial drive at that time. Like, I definitely want to start a business. You kind of got pushed into it. Was it just that you found that you enjoyed running the business? Was the money because you. You obviously you didn't go back and get a job. What was it? Why not? Why did you stick with this?

Well, I would say I did have an entrepreneurial spirit. I was manager at the firm I was at for years, and, you know, I seen everything that was wrong and what I would change, but I didn't have the guts to go do it on my own. So this kind of forced me to do it for sure. And then I loved it. I love the relationship with my clients. I love being able to help my clients. I love the flexibility that was important to me as a mom. Some. Some careers are not as flexible, but being accounting accountant is very flexible. It's really a good career for a mom to have. So I was really excited about that, and that probably motivated me more than anything. It's funny, looking back on earnings over the past 10 years, you know, it's like 25,000, then doubled to 50,000, then, like, doubled to 100,000. You know, doubling. Doubling right now would be a really big deal, but looking back, it was comical. But you know what? It paid the bills and got to the point to where could eventually hire someone. I did just a practice in 2015, and so that really was a launching point for me and. And helped me be able to be a little more picky with the clients that I accepted because I first went out on my own. Like, I was. I'm embarrassed to even say this. I was like, doing tax return 1040s for $150, you know, but at that point, like, I knew how much my tax software cost me, and so I had it down to I need X amount of clients that pay me X amount. And then I pay off my tax software, and then my overhead was like, next to nothing. So then like, okay, once I get that tax software paid off, then I'm actually, like, making some money at that point. So. Yeah, well, a long ways.

Yeah. I mean, when you start those. Those little things add up, you really. You pay attention to that little stuff. Obviously, your firm has grown and evolved over the years. You mentioned you launched in 2014, you purchased another practice in 2015. Did you. Was that when you started hiring other people to be on your team? What. How did. How did your firm grow in terms of headcount?

So, gosh, I should be better prepared for that question. Oh, it was December of 15 whenever I purchased a practice that really kicked off in January of 16. So hired my first employee in December of 15, and then it went to probably two the next year. Now we are up at. At 10 years. We're up to 12 employees at this point.

So where. Going back just a little bit, who was your. Who was your first client or how did you find your very first. Your very first tax client?

It's not hard to find tax clients. It's not hard at all. What was harder was finding the bookkeeping clients, you know, so all it takes is word of mouth, like, hey, and then obviously my rates were so cheap. I was a CPA doing 1040s for 150 bucks. I mean, still of a deal. So I was just beating the clients away, you know, so that. That was not a problem at all. What was harder was trying to find those bookkeeping clients and that recurring revenue. So whenever a tax client would come in, you know, I didn't even have a marketing plan or strategy or anything like that at the time. Looking back, man, this thing could be so different. In fact, I had that in place at the time. But a task client would come in. It might come up in conversation of, oh, do you some bookkeeping or payroll? Well, at first I didn't do any of that because it was just me.

Yeah.

You know, but I was like, okay, like, if it's going to be just me, I'm going to be very limited. I'm going to have to hire somebody so I don't have to work 24 7. I can actually be making money when I'm not working. So that's an evolution in and of itself. Hiring that first employee. I remember being freaked out. Like, it's one thing if my family's depending on my income, but there's another family depending on the income that I'm bringing in. That's a huge responsibility. Not going to say it still doesn't bother me to some point. Like, Now I have 12 families depending on the income coming in. That's a serious. That's a serious commitment there.

It comes with a level of responsibility, you know, wisdom. It's not just about being profitable because you want to have a great business. It's that if you're not profitable, if you're not running a great business, it really affects a lot of other people you care for. You have this, this loyalty to.

That's exactly right.

As You've grown. My understanding is you've shifted away from primarily tax to the bookkeeping. How I know within the PASBA world there's kind of the pure PASBA clients and most people are trying to get rid of their, their tax practices. Are you mostly those bookkeeping business clients at this point?

We are still working on it. The so back when the Trump tax cuts come through, I think that was at 18 was when the standard deduction doubled like from 12 to 24 or what. So that was a really great year for me to let go of a lot of year end. Only 1040s. I had realized at that point the 1040s were killing me. All the work from January through April was just sucking the life out of me and my team. It was causing turnover and stress and there was a better way. So I let probably 80 to 100 clients. I'd have to go back and look now, but a lot of clients, I let them go with a letter of hey, you can do the same thing and get the Same results on TurboTax because your standard deduction, I mean you're not going to be itemized anymore. You're going to get the standard deduction. I'm actually doing you a favor and saving you money. Just go do it yourself. So it was hard, you know, the clients that started off with you to let them go. But that's a, some a step I had to take in order to grow the business. So that was one step in the right direction. We're still gradually getting some of our year end only clients converted over to monthly packages. Still got probably 10 we're converting this year. This will probably be the last step that we have to take to move our clients from year end only or tax only into the monthly packages. It's just such a benefit. Whenever we're looking at clients data and transactions on a monthly basis, we're able to advise them better. We're able to, we know their numbers inside and out. We know if they're commingling. We can advise them of the concerns with that. If they're missing deduction, there's just we can provide so much more value and clients really want it. We're able to do tax planning for them. They get a huge value out of it. It just took me so long to have that light bulb go off.

Yeah. Has that been as your firm has grown, there's always this tension between your current the clients that you have and the firm that you want to build. Right. And so there's pricing questions as you raise your Fees, there's good, you know, good fit, bad fit, questions about, you know, the services that you want to provide that are good for you, good for your team, work, life balance, all of that. And then you know, what your clients need. Has that been, have you found that to be a challenge and how have you kind of overcome client resistance, I guess is the question.

Yeah, yeah. So you know, when it was just me working it and even after I had a receptionist, I would still take all of the inbound calls. And so if, if a client calls like, hey, I want to get a tax return done, the receptionist bugs me. Hey, you got a, somebody on line one wanting to get a tax return done. 1. I never should have talked to them on the phone. That was a, a bad decision. A lot of times I would give free advice over the phone without thinking it would just come out because they would pull at your heartstrings and then you would just start saying stuff which was very dumb because you don't know the whole situation. You get, you know, 30 seconds of information and you're trying to give them some tax advice. That was completely ignorant looking back. But now I have a good gatekeeper there and we have a process in place. She has learned our ideal client profile. We talk about that very regular amongst our team. So we're looking for small business owners with X amount of income. They're looking for not only year end taxes, but they're looking for monthly bookkeeping, preferably payroll. So they're looking for monthly bookkeeping, accounting, payroll, year end tax returns, and most of the time they have a tax problem. The number. Well, one of the very important things that we look for is do they have the income to be able to afford us? Because I don't want them to come in and talk to me and they're like, oh, our monthly Packages start at $500 a month. And they're like, okay, so my gross is 20,000 a year. Well, wrong fit. Sorry for wasting your time because it's.

Not good for them either, obviously.

No, it's a waste of time for both of us. So we, when a potential client calls now, I never speak to them. And a lot of times my receptionist has gotten to the point where she can weed them out verbally, but if they pass her verbal, then she sends them a new client potential questionnaire with like five questions that they answer. Questions like, what was your income last year? Have you ever used a CPA before? If so, who was it? Because if it's a local CPA that I'm friends with like, I want to know why things didn't work out with them. So I'm identifying a potential problem. What complex areas are there on your tax return? Are you looking for year end only tax or accounting payroll, blah, blah. What's your sense of urgency? Like how quickly do you feel like you need to talk to me? So if they say today they're probably going to be a client who's like running around putting out fires and going to be urgent and demanding and that's probably not a client that's a good fit for our firm, you know, so we have those qualifying questions and then she sends it to the client, the client sends it back and then if they make it through all that, then we have an initial consultation where we sit down and get information from them and provide them with a quote. Most of the time, if they've made it to that point, it's probably going to be a sale.

You know, common wisdom would say you want to reduce as much friction for possible clients as you can, right? You want to make it easy for people to buy from you. But more and more, at least in the accounting space, we actually see the opposite where the most beneficial thing often that you can do is to add friction to the process in order to make sure that when you do have those conversations, it's a person who's a good fit for you and you're a good fit for them and you're not wasting so much time on the front end trying to figure this stuff out. You can do so much of it through forms and you know, like you said, you're having your, your admin person screen them out and that, that's actually, and we're just seeing that across the board actually in other marketing tactics as well. You know, you know, if you're running Google Ads, you want to make sure that there's a lot of friction so that you're not driving a ton of like 1040 tax clients to your, your business. Because that's actually more of a problem for most firms than like not having enough leads is talking to too many of the wrong leads.

So ironically that's exactly right.

You know, that's, that's thing that you can be doing in, in a marketing sense actually is to make it harder for people to talk to you, which counterintuitive that it's working.

Yeah, no, it's, that's very true. And there's such a need for really good accountants and there's so many small businesses needing us that in the light bulb finally went off for Me, like, my clients need me, and I need to be able to focus on the clients that really need me, that are willing to pay for our services. They see value. They, they work well with us. And so I don't, I'm not starving anymore. I don't have to do those $150 1040s anymore. So I have the right to be a little picky.

Yeah.

Which is a good feeling.

Right? Well, when you're picky, also, the assumption is that you, you're only picking the clients that, you know, you can really deliver for as well. Right?

That's exactly right. Exactly right. We used to do what I call afib. You know, anything for a buck. You know, you come and I would do your tax return. I might even wash your car for 150 bucks. I was just desperate at that point. But it's not that way anymore.

So just thinking through that process, did you feel like that was something that you just had to go through? And in a sense, does everybody have to go through that phase to get to where you are, or would you go back and tell yourself to do things differently? Could you have done things differently? And I, in a sense.

Yeah, I, I, if I had to go back and redo it, I would do things differently. I definitely would not have started off with those 150, 1,040s, you know, $150, 1040s, because that set the bar so low, and those are some legacy clients that still are below market on a lot of those. So it's hurt year after year. So I, I definitely would not go back and do everything exactly the same. For sure. I, I think the most important thing is realizing the value, realizing the worth and the value that you're providing to clients and billing what you need to.

Bill from where you sit today. What are you most proud of when it comes to your firm and the thing that you've built?

I think our firm is, has finally got a local reputation of being a wonderful place to work. So to me, that means a lot. That's more than the money. It means that we're able to attract the, the talent that we need. Now, of course, you have to have the money to be able to pay the, the salaries that are, that you need to have your people there. But it's, I feel like locally, like if one of our employees are seen in public. Oh, you work for Sarah Berry. That's awesome. I heard their firm is doing amazing things, and that's such an opportunity, you know, that means so much to me to know Our team is taken care of and it's a, it's a great place to work. That would probably be my number one accomplishment. And clients, you know, the reputation that I feel like we've built with clients as well because we do have such a gatekeeper that clients, you know, our clients were like, well, if you can get in with Sarah, she's hard to get in with. But if you could get in with that firm, I promise you, you will love them. They do. They run their business completely different than anybody else in town. You will absolutely love it. So it's almost like a, the scarcity feel makes you really want it.

Yeah, it's very. An exclusive opportunity to work with Sarah and her team.

Yeah. Yeah.

So you were recognized as, I think it was the mid sized firm of the year. Was that 2022, I think, or 23? Yeah, 2022.

20. No, it's 23. 23.

Why do you think your peers recognized you in that way?

So I've thought about that before and I haven't asked them but I would think it would be because probably I'm there and available to help my peers. I don't think it's because I have the most profitable accounting firm in the mid sized practice by far, but it's the trying to do things differently, trying to help other PASBA owners. I'm very involved with pasba, so I think that's one criteria that's definitely taken into account when you're looking at getting that award. It's not always like how efficient is that firm, how plasma oriented is that firm? But it's, it's a lot of time has to do with the giving back, the helping help with a lot of the lunch and learns and been on the board, am on the board and, and stuff like that. So I think that contributed to it a lot.

Yeah. When, when did you find PASPA and what made you decide to join the association?

So I joined in May of 2019 is when it was and I had found an online group and somehow between the connections had met John Droughty. And John invited me to come to the, I think it was Clearwater Florida conference in May of 2019. And to be honest with you, I was like, oh, tax season has sucked this year so it'd be nice to go someplace beautiful after tax season's over. And he's like, you should just come as a guest. And so I took my husband and my kids and we went down there. And I'm not someone that drinks the Kool Aid immediately. I'm Just I'm not that person. I have to think about it. I have to think about it a while. And so I left there going, this is, this is different. Like I don't, I don't know, I was, I just wasn't sold on it. But the more I was connected to the forums and I was like, okay, like, you know, it's not a big cost to buy into it, the membership. And so I was like, you know, I can do it, we'll see. And it was very, very life changing. The most life changing thing that my firm has experienced or I've experienced from a business standpoint for sure. If I hadn't had PASMA going through Covid, I don't know how we would have survived. Just the collaboration, the sharing, not just the sharing of information, but sharing of documents, sharing of erc, ppp, all the ins and outs. Like I've never been in an association that is as open and caring and sharing. We just, we steal, we steal a lot of stuff from each other and nobody cares.

Yeah, it's a very, it's a very collaborative and generous community. You know, my, my experience is, is from I guess a little bit on the outside, but I'm also part of a marketing community that I think also is very generous. And it's been such a benefit to my business that when I started, when I went to a PASBA conference as a vendor and then got to know more of the firms in there, I felt like there was a lot of alignment just from a values perspective where I think a lot of folks have this attitude of, you know, you give generously and, and you don't know how it's going to benefit you, but it will. Right. Like it comes back to you in ways that you may not recognize or expect. But you, you can really get a lot, you get a lot more out of something by, by contributing than by trying to just see what you can get out of it. It's a, it's like a roundabout way to do it. You get by giving. Right?

So true. Very, very true. Very good way to sum up pasba. You know, it's a lot easier to walk through life with your hand open. You know, you openly give and you openly receive. If you walk around closed fisted, you don't give anything. You also can't get anything. So yeah, the more you give, the more you get. Definitely with Passbin.

Yeah. Well, before we hit record, we talked a little bit about how the, the face of the accounting industry is changing a little bit. There are more and more women Practice owners. And, you know, obviously you're. You're one of them. Do you have anything in terms of advice that you'd give to other. Other women owners or folks who are. Who are, especially, I guess, anyone who's. Who's starting out or wants to do things different?

I would say, as a woman, you can do it. I think for so many years that it has been personified that business owners are men. And maybe the women work for the men, but business owners are men. That is not true. I think we are seeing more women go into accounting now than we ever have more women than men going into accounting. And it may seem like traditionally a woman is stuck in a bookkeeper role working for a man, but that is not the case. I think women bring a unique value as business owners where we are able to empathize with clients, we're able to empathize with our employees. We. I think. I think accounting is made for working moms. I really do. That's what our firm is made up of, working moms. We offer a flexible schedule here. We don't do remote work. I know a lot of PASBA firms. Accounting firms do remote work, and we do not. But we offer a flexible schedule, and that means so much to our employees, knowing that if. If I wake up and my kid is sick and puking, like, I can work from home that day, or I can rearrange my schedule and come in on another day. So it just being a mom, a working mom and a business owner, you bring so much skills to the job. The ability to multitask. You know, as a mom of young kids, we do it all. We do it all at the same time. You know, we juggle the mom duties, we're teacher, we're doing homework, we're wife duties, we're running the business, we're doing the laundry. We're managing all this stuff. You take those same skills and abilities and move them over to a business owner. We make really good business owners. So just do it. Just go for it. That's my advice.

That's great. And I mean, my other piece of advice would be follow your example and build a business that isn't like 70 or 80 hours a week during tax season and build something.

Oh, absolutely. Absolutely. Results focused, not hours focused. I've worked at CPA firms before, and it was like not. Not focused on getting your work done. But I'm sure in their mind they wanted the work done. But that's not the communication that come out of their mouth. It was, you have a minimum requirement of 55 hours this week. Your minimum requirement is 60 hours this week. You know, and it wasn't like if you do all these tax returns, then you're free to go home.

Right.

Instead it was everybody riding the clock and it was really worried about getting those hours in instead of getting the work done. So shifting that focus is huge.

That seems to be such a, such a big part of the conversation right now. You know, there's a CPA shortage in America. And so, you know, you all are in control of the situation, I think, or you can take control and build businesses, set expectations, do all this stuff to build the business that works, you know, for your, for your schedule. You're like you said, you're not taking on tax clients, but obviously all of your clients need taxes as well. Right. But you can set it up in a way that, that works for you and isn't based on these kind of arbitrary things. I love the idea of, you know, performance pay. I think in general, just at a, at an incentive level, it doesn't make sense to incentivize people to fill up time because they don't have that incentive then to get better at their job or more efficient. But it also make sense for them to get more efficient if there's nothing in it for them, if there's not a benefit for them either in terms of flexibility of time or making more money. And so this hours based thing is something we really in a lot of places want to get away from.

Absolutely, absolutely. Hours based, when you think about it, is counterintuitive to what the business owner wants to accomplish.

Yeah. And you have to, it takes trust. Right. You have to trust your team, train your team, set up the right, you know, incentives and benefits and all that to make it work.

Right, right. You have to have accountability, you have to have controls, you have to have quality control. There are upsides and downsides to the incentive compensation for sure. I mean, you don't want to incentivize someone so much to get their work done that you're sacrificing quality. That's always a conversation, you know, that we have to have. But there's parameters there that in consequences for poor quality as well.

So that's great.

It's very feasible, very doable.

So where you're 10 years in to your, to your firm now, where, where do you see yourself in 10 years from now?

So I love to dream. When I first started out, I was like, I'm just going to stay small. I'm never going to have an employee and Then that happened, and then it was like, well, I'm never going to have more than four employees. And then that happened. Now I've just stopped saying I'm never. And I'm just going for it. So we just purchased a lot a piece of land down the road from us. We will be building a firm. Building. I'm super excited about that. Growing. We want to. We are starting the first locally owned payroll company here in Texarkana. Really excited about that. The office building that we're building is around 6,000 square feet. 6,500, something like that. So we're having accounting on the bottom and payroll on top. I'm looking to double within the next 10 years. I. I want. I want to have the capacity there to double. So, yeah, super excited about it.

Very, very cool. Well, I think we can probably kind of bring this conversation to a close. Is there. Is there anything just that you want to share that you're really excited about your firm that we didn't. That we didn't get to talk about today?

I think we talked about everything that's important. I have an amazing team. I have amazing clients. We have a great work environment that I just love. And I hope everybody here loves coming to work. And I feel like they do. We try to make accounting fun. We do make accounting fun. We feel appreciated by our clients and our clients feel appreciated by us all around. We're getting our firm to where it needs to go. I will say this before we go. EOS implementation has been wonderful for our firm. We hired an EOS coach consultant to help us implement that, and it has drastically changed our firm within the last 18 months or so. We have scorecards. We have regular meetings. A lot more. I'm not running the firm blind anymore. We have a leadership team set up. And as a business owner, it can be lonely at the top if you don't have your team around you. I don't feel lonely anymore that you have. I have a couple people on the leadership team that it can be completely transparent with. So that has drastically changed the way we've run the firm. So, all in all, I'm super excited. 2023 was great, and 2024 is going to be even better.

Yeah, that's great. Well, Sarah, thank you so much for being on the show. I think we'll leave it there. Again, my name is Matt Banker. This has been marketing for accounting firms, the podcast, and Sarah Berry, you can. You can probably find her. I don't know. Are you active on any social medias? Is that a thing.

Yeah. Facebook and Instagram. I'm not on LinkedIn. I'm still working on that.

Well, I'll just say, you know, if you're an accounting firm owner, Sarah's a person. I, I would, I would say you should, you should look to and look up to as far as how she's building her firm. She's, she's, she's got a great firm there in Texarkana. And. Yeah. Thank you so much for being on the 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@benchmarkgrowthmarketing.com Connect with me, Matt Benker on LinkedIn.