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A Case Study of Starting an Accounting Firm From Scratch

So here’s the thing about Eric, remember what I went back to at the beginning, and I talked about how you want to follow somebody that has believability. I think the special nature of Eric’s story is to look at the timeframe. When you look at all these stories, everybody’s successful, they’re going to do great. Whatever’s happened so far, doesn’t mean that won’t happen in the future, but the key is if someone’s doing something in a timeframe and it’s better than what somebody else would do in the timeframe, how can we learn from that and what are the differences?

At the end of the day, the success between each of their lives are pretty much the same in quality. Let’s be honest, if you’re making $70k a month or you’re making $200k a month. It really doesn’t even matter. At that point, no one’s crying for you. If you have problems with things like we all do, but all of these people have great situations, but I think what’s interesting about Eric’s is the timeframe. He also had a job. You put these other numbers here are related to…I think the income he’s getting from his job. He was starting an accounting firm from scratch. Eric, are you on, how old are you? I’m 33. And what services are you currently offering?

Yeah, so I currently do tax planning. That’s kind of our main service and then tax preparation as well. What happened when you first joined up with us? So it’s kind of an interesting story. I mean, as you can see, I was working full time as a VP of finance for a home builder. I was making just over $100k, base and bonus. That was cool. I thought,  “Hey, I made it, I’m making six figures.”

What else do I need? Then, they got acquired by a Japanese public company and I was working insane hours. I remember talking to my wife and we’re just like, I don’t know how much longer we can do this. This is just crazy. I remember Katie from your office. She reached out to me and I had seen your Facebook messages and LinkedIn, and all of that, I was so skeptical because I was an accountant, right?  I’m skeptical about everything. 

She talks to me, she caught me while I was walking to work, it’s a 10 minute walk. She was like, “Hey, do you want to chat for a little bit?” I was like, “I have 10 minutes.” At first when she said where she was from, I was like, “Oh, dang it. I thought I knew this number. And I knew not to answer this phone.” She kept me on the phone for like a half hour. She pitched me and I was thinking there’s no way I’m spending that much money. I told her let’s talk later.  I just kind of avoided it. So that was in October and then by December,  I just kind of had it with everything that was with my job. It was so stressful and I was just working crazy hours. I thought maybe it was time to go all in with starting an accounting firm. 

How much were you making at the job here? In December, I was making about just over a $100k. When did you get to the first $20,000 month? Was it by July?  I think so. That’s when I did about $20,000. What was the biggest thing that got you from leaving the job to here? What was the thing, because you tried to start your business before as well, right? Oh yeah. I had a business on the side for about five years before I quit my job. So, since 2013. Wow. That’s amazing. 

We’re looking at this timeframe, but obviously, 18 months plus five years. Right. It’s one of those things like overnight success, a decade later kind of thing. What was the biggest thing that was like, “Oh wow. I can.” How did you get to that first $20k?

It really started when I quit my job in March of 2019 and I had no choice because I had zero recurring revenue. So, that’s when the income here went down? Yeah, I just had tax work and so I really had no option, I had to just really focus and do everything that you told me to do basically like get the marketing down. I was crappy at sales. I sucked at sales and I had to listen to my calls. I run every morning. I listened to my calls while I was running in the morning. It was painful to hear myself, like, why am I doing that? Oh, shut up, stop talking. 

It was so helpful to listen to my calls and find out where I was. I was messing up. Then it spiked in July, that was a result of everything I was doing in March, April and May.  I was building up this pipeline and learning how to market and learning how to do sales. It kind of paid off in July and I closed some tax clients. So  that’s kind of what happened there.

This is another one of those stories where he breaks down again. It has a reduction in sales, boom, spike, reduction in sales, boom, spike. What happened at these downturns? Let’s look at this one in January 2020, what happened in January of this year?,

I remember exactly what happened. I was just exhausted. I remember I was so tired from pushing all year and I felt like, “it’s tax season and I’m exhausted, and I’m just starting tax season. I just need to take a break.” Mentally, I just wasn’t there. My sales went down. In February I hit $90k because of tax preparation, I was just preparing a ton of tax returns.

So, before we knew about any of the COVID stuff, that was like pretty much all tax returns. Then, you were having a record month before this and then it was just like, “Let’s throw a COVID on the tax season. Yeah, exactly. That’s that spike, it was pretty much all COVID?

We were still doing tax prep and, and then COVID happened and I was just hearing all these stories in the group, like, “Hey, I just sold another one, just sold another one.” Everybody’s doing crazy amounts of sales. So I told my sales agent, “this is like a great opportunity. Let’s just explode.” I opened my calendar again because she was really the only one taking calls at that point because I was just focusing on tax returns. I opened up my calendar. So the two of us, we had booked calendars every day for the entire month of March and we were just taking calls and it was crazy.

Love it. I guess now at this point, how big do you think the business can get? What do you want to do in the biggest year between now and 70? it’s kind of crazy to think I could go to $10 million. You did $90k here, but then you broke $100k, but in the same month you didn’t just break $100k, you broke $150k as well. What did that teach you about how much more you could do in a certain timeframe?

Yeah, it was just kind of literally unbelievable. It was surreal, right? Like, wow. I can’t believe that just happened. I’m capable of a lot more than I thought, and it helped a lot with my mindset. Even now  when I’m on a call or I’m talking to my agent or talking to employees, it’s like we can do this. We’ve done it before and it just helps my confidence a ton.

What do you think will be your biggest year between now and 70? I would like $10 million. I think that would be cool. I know it seems crazy, but I think you’ve said one time we overestimate what we can do in a week and we underestimate what we can do in 10 years. Starting an accounting firm to $10M. Yeah. I think it’s definitely possible. It takes about the same amount of work to get to a million as it does 10M, you still have the same number of days. It’s really a lot about the mental. What’s the number one problem with the business right now? A huge thing for me is hiring. I just don’t have enough employees. So I’m working a lot more hours than I would like to, and I don’t know if that’s sustainable.

I remember one time on the QA call in the middle of the month, he was like, “I don’t think there’s a possibility of fulfilling all of this given what’s happening.” You were staffed up for about $50,000 a month. Then in a 60 day period, you had a month where you did more than triple that. It was crazy that it must’ve been super stressful just in terms of volume of people and tasks.

So I hired a couple people and I had an interview yesterday and I just offered another. Now, what do you think you’ll do in terms of your salary net profit this year? Right now I’m super profitable because I don’t have a lot of employees. I think I’m like high seventies, but I think if I could be 70% in profitability, so let’s take that. Let’s take the math on that just so we can understand. These are just the interesting moments that a human being experiences, right?

My wife thought I was selling drugs or something. And what has got you to stay in the group because I know you were in Next Level Firms before and then you came over. Yeah. I started with next level firms. What’s the biggest thing to get out of the group?

As you can see, what I was doing before was just not working. I was doing that five years before that even. I feel like I can’t afford to not be in this group because of what I learned from other people in the group, what I learned from you and all of the coaches and everything. I would be afraid, especially now, I’d be afraid there’d be another COVID-19 and I would have no clue what to do. And so my business would just take and I think, I feel like you’re on top of things and it’s nice to have a good place to go for resources.

Love it, Mark. Two questions, Mark says, “What does your firm organization structure look like?”

That’s kind of sad right now. It’s just me. I literally have two part time admins and then I have a sales agent and I have a contractor that does tax returns.

You would hire more people, you just haven’t, it’s  just been so fast. Yeah, I’m bringing on hopefully in two weeks a tax manager. How much was tax prep vs COVID if you were to break it down broadly? Probably about 60% of that, little less than 60% was tax preparation. And then the rest of it was COVID, no tax planning that month I just dropped it. Love it, man. Congratulations on everything.

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