Scaling a National Bookkeeping and Tax Company by Giving Franchise Owners Actionable Insight Into Their Financials

FM 3 | Scaling A Bookkeeping Company

 

Here to share the secret to scaling his national bookkeeping and tax company is Ryland Beard, the Founder of Ledge. He sits down with host Dru Carpenito to share his entrepreneurial journey in building Ledge into a national firm managing the books and taxes of franchisees with some of the top brands in the country. Ryland has amassed massive success at such a young and today, he shares how he scaled and grew an emerging brand simply through word-of-mouth marketing and outstanding service. It all starts with building trust. Tune in to hear more of his incredible business growth and the inspiration behind his success.

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Scaling a National Bookkeeping and Tax Company by Giving Franchise Owners Actionable Insight Into Their Financials

Ryland Beard, the Founder of Ledge, joins us to talk about how he’s scaling his firm by focusing on helping franchise owners manage their financials.

Welcome to the show. I am here with Ryland Beard, the Founder of Ledge, which is an accounting, bookkeeping and finance firm and service for small business owners with a strong bend towards franchise owners. This is going to be fun because we’re going to talk about a topic that’s maybe not as fun or as sexy as some other topics in entrepreneurship but this is one of the most important things. It’s an important topic. We’re going to have fun with this one.

It’s a pleasure to be on. Thank you for having me.

I’m glad you’re here. You have an interesting story. You’re young and crushing it on the entrepreneurial side but that wasn’t your path to begin with. You were on the corporate side and had an idea and decided to go after it. Tell us a little about you.

This was pre-COVID. I’ll give you a nutshell version of how I started the company. I was in a very typical office job. I was at a fast-growing company, which was super cool. We had a couple of locations. It was in the restaurant food and beverage space. Over a couple of years, we grew it to 75 or 80 locations. It was awesome. My role was director of finance and moved up to the CFO role. That didn’t mean much when I started at two locations but it meant a little bit more as the company continued to grow.

My job was essentially helping to raise money, helping perfect the books and the accounting standards and make sure that the company was growing in a way that was sustainable but there was a huge problem and the problem was the accounting of our franchise owners. There were two issues. One, the franchise owners would do their own accounting. It’s not that they couldn’t. Anyone can take the time to study and learn how to do bookkeeping, accounting or even tax filings but it wasn’t worth their time. They could be focused on sales, income, hiring their teams or the culture. There are so many more things that are important than tedious bookkeeping. Even though bookkeeping is important, it doesn’t drive profit or sales. Naturally, they got a little bit disillusioned with that idea and their books were pretty disorganized.

The other 40% or 50% usually hired a local CPA and that person wasn’t familiar with franchise accounting, nor did they have a reasonable cost. Those are two bad options. They either do it themselves, struggle and waste a lot of time that’s precious or hire a local CPA and pay an arm or leg. When I was in my role, I looked for a company that I thought would be a good fit and I could not find any company that I trusted. There were some national bookkeeping firms but I didn’t feel like they had the relationship. The opportunity was there. I could sense it.

Around the same time, I met my girlfriend who lived in England. She’s Polish but she grew up in England. We wanted to see each other way more. I remember the first time we met. I flew over to England for the first time and we met in probably 24 to 48 hours. We had been talking for months but hadn’t been able to see each other. We immediately hit it off. I wanted to see her more and she was 4,000 miles away. With my 8 or 9 days of PTO, that was not an option. I had always wanted to start my own business and I felt like this was the catapult to let me do so. I felt like if there was ever a time, it was at that point.

I left that job with the business being an idea. I was not making any money. I don’t even think I had a website up and going yet. That was probably a pretty dumb and stubborn thing to do at the time but it lit a fire under me. My goal was nine clients and you alluded to this earlier but the idea of the business was to provide accounting, bookkeeping, sales, taxes and tax filings on a monthly retainer. Around $300 to $350 is our average price point per client. We oriented around franchise brands because you understand how to scale from there if you perfect and spend a lot of time with one.

Honestly, it was way tougher than I thought so I struggled for the first 4 or 5 months. I burned through my savings. It was not great. I quit eating for a little while. I was in a bad position. All I was doing was working around the clock and I could not find the solution to the problem. The more I dug into it, the more I struggled until I zoomed out for a second and thought about my message, my pitch, my delivery, my services, my price point and my audience. Ultimately, when I put all those things together, I realized what I was doing incorrectly and it all started with my message.

I was pretending to be this bigger company than I was. I was thinking I have to seem that way to get my first client because who’s going to go for this guy who has nothing, no references and no support from any kind? I made the mistake of trying to represent a bigger brand than I was and then very quickly, I realized that I just got to be honest with these people. Almost as soon as I started doing that, I got a little bit of interest. There were still noes but I got a little bit of interest. After that, the little bit of interest told me that if one person is interested then surely, there’s got to be more people out there. From that point, it became a numbers game. There were a lot of emails. I sent on average 600 emails a day for three months. It was unbelievable.

You’re grinding. That’s the grind. It takes us sometimes to go into the valley to be able to come out of it but you made it. There’s a lot we can unpack there and dig into but congratulations on making the jump. I know that it’s never an easy decision to walk away from the paycheck to follow an idea and the inspiration you have. I’m curious. Who was your first customer?

It was a guy. His name’s Mike. He’s from Ohio. I remember talking to him. I remember the moment. It was my 7th call. I had had about six noes before that but I felt like I was getting closer. I could feel it in my heart that maybe I can get one person. I called Mike and gave him a sweet deal. He agreed to sign up for a month with no contracts. I don’t do any contracts even now but that was a big point for him. He decided to give it a try.

My original goal was nine clients so if I had nine clients pay me on average $300 each, that’d be $2,700 a month. If I had $2,700 a month, that would cover my expenses if I lived on a shoestring budget, which I have no problem with. Fast forward to now, we’ve got 378 clients. It has been a rocket ship for sure. It has been a ton of fun and almost exclusively from just word of mouth.

Getting to know you, I think you have an amazing story coming from the company that you work for. Can I mention who it was? Is that okay?

 

The way to pay the least amount of taxes is to be extremely organized and diligent with your bookkeeping. Click To Tweet

 

Let’s keep it under wraps for now because there is some stuff going on. It’s not involving me but I would prefer not to say.

That’s all good. I figured that might be why you hadn’t mentioned it but it was in the franchise space. You knew franchise. You had worked with franchise owners. You understood the dynamic of how a lot of franchise owners are first-time business owners. If you don’t have any experience with accounting and bookkeeping, it can be intimidating.

A lot of people never deal with it and they end up running their business by their bank account or out of a shoebox and don’t get good information to be able to make the decisions they need to keep the business going or focus their time on things that are working well and doubling down. You have a unique perspective and a unique background coming from what you’ve done to what you’re doing now to hone in and specialize in small business owners and franchise owners. It’s a great thing. You needed to get that dialed in a little bit, embrace your story, go with it and get some leads.

It takes some time. Nothing’s overnight. There’s no such thing as easy. It wasn’t for me. It took a lot of silent nights thinking to myself, like, “What am I possibly doing wrong? If I could get nine clients, that’s all I need. Surely, there nine out of the millions of business owners that are in America who would say yes.” That was my goal. I started with a baby goal. It wasn’t like, “Let’s grow this multimillion-dollar company.” It was like, “Let’s survive and have enough money to see my then-girlfriend and now wife.” That was it. I feel like too many people start businesses and have this unrealistic goal without setting baby goals or baby steps. If you do that and if you focus on little at a time, it becomes doable and digestible to an extent.

Starting any kind of business, there’s a massive thing of delayed gratification from the financial perspective. Any business is going to take some time to ramp up to get to the point where it’s breaking even, cashflowing positively and then paying you, the owner. You need to find different baby steps or baby goals to get gratification to know that you’re on the right path. It’s building and growing. It’s not going to happen overnight but you’re headed in the right direction. If you keep going down the path, you’re going to get to where you want to go but you need to know where you want to go too.

Having that end goal and knowing what you’re marching towards but pulling gratification out of things that maybe you took for granted in the corporate world or whatever it may be is a really important thing to keep in the mindset focused and healthy as you’re building everything. Fast forward, you have 330-plus clients now from nine and you’re working with some of the biggest brand names in franchising. You’re exponentially working with Club Pilates and YogaSix. It’s not easy to get into the ecosystem of exponential so congratulations.

Thank you. I appreciate it. It’s good. You hit on this a little bit earlier but from an accounting, bookkeeping and financial reporting perspective, what these people want is a catered CFO-like service, which essentially tells them exactly what their performance is. Sometimes difficult to explain financial topics to them in a very easy-to-understand format. They want it for a reasonable cost and they want all of their accounting included. They want it to specialize not just in franchising but in their brand. It’s honing in on that specialty is what we’re the best at. The method to the madness is we get in, we learn one and then we give them an amazing service and then they tell all their other friends. That’s how it works from my end.

It’s the word of mouth. The proof’s in the pudding of what you built.

It’s also the cheapest form of advertising.

Well said but it’s also the most expensive to get to. Sometimes, you’ve got to buy your way to get there. I’m so tempted because with what you said about working with a lot of franchise owners of a particular brand, you get to know that business well too in terms of what the top performers are producing benchmark-wise, cost of goods sold, labor, profit margins and then what the not so top performers are doing. Maybe we’ll dive into a little bit of that without getting into specific brand names and specific numbers because I can’t get into numbers on this. We could talk about some benchmarks and percentages of what you see with your unique perspective on the different types of business and clients that you’re working with. Do you get into taxes as well? Do you mainly handle the bookkeeping?

We do. We started with just the bookkeeping because that was what I was most accustomed to and familiar with but we have dived into tax returns. We do business returns. We have a few personal returns. Out of our 370, about half use us for taxes. We do quite a few tax returns every year. We’re actively growing that part of the business. The idea for taxes is if we’re in there every single day or every single week looking at every transaction to make sure it’s all reconciled and accurate and we’re looking at the financials monthly, it makes sense. Why not add on the tax return because we’re the ones verifying throughout the entire year? We can do it for a great price too.

Tax planning as a small business owner, we all want to minimize our taxable income as possible. Have you been able to help franchise owners? Do you have any perspective around the tax planning piece of things and how you’re able to help people save maybe more on taxes than they would have thought by the perspective you have?

Quite a bit. When we have those conversations, normally, the cadence in which we do it is twice a year. We have two tax planning meetings per year per client. Everyone’s a little bit different but there are no secrets or loopholes. I feel like a lot of accountants try to glamorize taxes as if they have some secret knowledge that no one else has. The reality is the way to pay the least amount of taxes is to be extremely organized, be diligent with your bookkeeping, not pay for any business expenses off personal cards, know exactly what your depreciation is, maximize your depreciation and so on forth.

 

FM 3 | Scaling A Bookkeeping Company
Scaling A Bookkeeping Company: Too many people start business and have this unrealistic goal with setting mini goals and baby steps. If you focus on a little at a time, it becomes doable and digestible to an extent.

 

The way you can do that starts with bookkeeping. A lot of tax accountants fall into this trap of not paying attention to the bookkeeping, taking whatever they get and hoping for the best. That’s the reality of the industry but if you start from a different perspective and start from the perspective of bookkeeping first then when it comes to taxes, you know where you’re at and you can save the most amount of taxes and pay as little as possible. In my opinion, it always starts from being diligent, being organized and making sure that the I’s are dotted and the T’s are crossed.

That makes sense. You don’t have clients that are walking into their accountant’s office with a pile full of receipts and invoices from the previous year and saying, “It’s time to go through all this stuff to figure out what I owe in taxes.” You organize from the beginning, stay on it and help people. You are helping people with stuff they might not appreciate the value in because of what the other side of it could be if they don’t have somebody who understands the business that’s helping them stay on top of the numbers and stay on it every month.

As soon as you get behind on the books, it’s a nightmare to try to catch up. It ends up costing a heck of a lot more time and money than you probably think rather than staying focused and sending it up right from the beginning. Do you typically work with franchise owners from day one when they’re in training? Is there a certain time that you typically will engage a new franchise owner?

Yeah. Anytime. From day one is preferred on my end because of the reason you mentioned. You want to build up that foundation or base of accounting but a lot of people switch because they have problems. A lot of people come to me with terrible bookkeeping or inaccurate tax returns. They need this and that done and they know that it hasn’t been done properly or their accountant’s taking forever to get it done and it’s not being done by the first week of every month. We get a lot of clients who have messy books and that’s part of the business. Frankly, it’s a good thing for us because it gives us an opportunity to show them what good bookkeeping looks like and what amazing financials feel like when you’re receiving them on a frequent basis. It’s something that we’re used to. It’s part of the business.

What you do is very dynamic because you’re working with entrepreneurs. Some are very experienced entrepreneurs and some are first-time business owners but once you get into the rhythm of a particular franchise and brand, it makes helping the other franchise owners in that system so much easier because you can help them see if they’re missing an opportunity for certain deductions or whatever it may be. In other cases, if they’re getting a little too aggressive, you have those benchmarks in that perspective to help those owners.

The traditional accounting firm has 100 or 200 clients and every single one of them is different. There’s no sense of scale. They’re not thinking that way. They’re just taking whoever walks in their door. What that means for the clients is that they can’t specialize directly in the brand that they’re serving. They’re trying to have more of a generalist approach. That seems to work well, in first thought but in reality especially in this world, you need to be a specialist and you need to be specializing in a particular brand or niche of clients like franchise fitness. Club Pilates is an example that you alluded to.

A good accountant and a good financial partner on the bookkeeping side of things are worth their weight in gold. It’s one of those things that you can’t appreciate until you fully understand what it’s like on the other side of not having people and maybe not taking advantage of the write-offs and all that appreciation.

One of the biggest questions I get is around finances. When I’m helping people buy a franchise, they’re like, “Do you have a referral for a good accountant?” We’re getting to know each other so I’m probably going to have some more referrals for you and your business now but my advice is always, “Find a local accountant who is used to working with franchise owners because that’s who you want. I don’t have a direct referral for you.”

It validates the space that you’re filling with helping to specialize in brands and franchise owners and doing it in a very reasonable way. Your price point is attractive. I’m sitting here thinking about myself some of my businesses and some of my books that could probably use some help from Ledge. It’s cool. I’m going to have some referrals for you and some opportunities. What type of brands are you working with? Who are some of your bigger clients?

We specialize in brands but we don’t specialize in one particular sector. It seems strange to hear that but as an example, we work with a lot of fitness brands, like Club Pilates, StretchLab and YogaSix but we also do iPhone repair. We’re all over the map. uBreakiFix is one of our up-and-coming clients. They fix iPhones, iPads and TVs. We also do home restoration and roofing repair. Another one of our clients is a maintenance provider for swimming pools. Some of our clients are eCommerce brands doing millions of dollars per year. You name it. The secret for me doesn’t depend on the sector but what I like to do is understand the intricacies behind a brand.

If we do that, it carries over. This is like another separate business almost from Ledge. It’s our tax credit filing. I don’t know if you’ve heard of this. I think you’ll find it interesting. The ERC, Employee Retention Credit, was introduced during the time of COVID. It has been a huge deal. We’ve been able to help owners get probably on average $35,000 to $40,000 back from just the check from the IRS. It has been unbelievable. We can go into that if you want to.

Not everybody knows about it. That’s the surprising thing. Can you talk to us a little bit about what the credit is and anybody that’s a current franchise owner or a business owner out there that needs some things to think about?

Yeah. I’ll be happy to. ERC is an acronym. It stands for Employee Retention Credit. What that means is it’s a credit based on wages in the period when COVID affected your business. A lot of different franchise businesses qualify for this and they’re eligible to receive it but they don’t know how to go about getting it. It’s a credit based on wages. It factors in a few different things like PPP, how much you apply for the forgiveness period. There’s some serious math and accounting behind it but the reality is you can get back a significant check from the IRS if you kept employees on throughout 2020 and into 2021.

If the business was affected is there a qualification for determining if it qualifies?

 

It always starts from just being diligent, being organized, and making sure that the I's are dotted and the T's are crossed. Click To Tweet

I won’t get into too many details here but it varies based on the tax year. 2020’s eligibility criteria is different than 2021 but it’s a function of either a revenue decrease or where you’re located. More of the liberal states had significantly more regulation around COVID so they qualify for longer periods than Texas or Florida. It depends either on location or overall revenue decrease.

Even if you haven’t had the decrease but you have been in a state which prevented you from doing business in some capacity or another, you could qualify for it. It’s something really important to keep on the roadmap. I love helping our owners find this because it’s something that they probably would never even think to know about if we didn’t approach them.

It’s huge. Some of my friends that are entrepreneurs outside of the franchise world, their accountants have had different opinions about this whole thing and they’re getting some weird advice. The value of working with you and understanding not just working with a single type of business but multiple owners of the same business, you can understand the dynamics and the opportunities that are out there from something like this to be able to give them the information for them to be able to make a decision on what’s best for their business.

The ERC is such massive tax credit. I think it’s once in a lifetime. People have to take advantage of it while they still can. We’ve got about a year left to seize that opportunity. The unfortunate side to ERC is that all these accounting firms are charging insane rates for this. They charge 15% to 20% of the total credit so if you get back $40,000, you’re paying them $6,000. That’s not their money or credit. What we do is we charge a fixed fee per quarter that we file for. If you file for it and you get $1,000 back versus if someone else files forward and gets $100,000 back, it’s the same amount of work for me. Frankly, it doesn’t matter so we do a fixed fee schedule. It’s very reasonable. My ultimate goal is to introduce people to our accounting and bookkeeping services. It’s a lead to that.

I’m glad to hear you say that because some pirates are taking advantage of small business owners around this credit, free money or however you want to look at it. I have a good friend who I’ve helped buy a bunch of different franchises and I haven’t seen his books but the amount of money that he told me he was getting back from and he has 50 plus locations of a particular brand, was life-changing money that he’s getting back. For any business owner who fought through that stuff that we all had to go through, this is deserved earned money but it can also be insignificant.

It’s huge. It is what’s causing some inflation, that’s for sure.

What’s the most you’ve seen somebody get back?

Hundreds of thousands of dollars. Part of me is extremely happy to help my clients but it’s unbelievable when I think about the global effect that things like this are causing from the government side. When you look at the fact that in inflation-adjusted dollars, we spent more on COVID than on World War II. It’s shocking. This is a very small part of the total spin for COVID so I don’t mean to overemphasize that at all and I do think that a lot of business owners deserve it and they need it but the reality is a lot of business owners didn’t deserve it too.

Some of them were failing before COVID and then COVID propped them up. It kept alive companies that should have been passed on to future people sold or ended. I’m beyond blessed to have the opportunity to help our clients succeed but it’s a little alarming when you zoom out and think about the sheer number of businesses taking advantage of it and some of them shouldn’t be.

It has been some wild times with all the government assistance. Even for finance and accounting professionals too, it has been a massive learning curve for you guys to get up to speed on all these changes and all the nuances of the relief stuff, let alone every year, there are always these changes in the tax code and other stuff like that.

Looking at a partner like yourself is not as a cost but is truly an investment that to spend a few thousand bucks with you a year, most folks are probably receiving a multiple of that back in terms of savings, efficiencies and maybe taxes but it goes to show that finding the right advisor to help guide you as a business owner into making the best decisions for yourself and your business is invaluable and it’s easier said than done to find the right advisors.

It’s very tough especially for a reasonable fee. A lot of good people charge a ton of money, which excludes them from working with people who are small business owners and that’s fine but our goal is a bit different. Our goal is to scale. We want to make as many people happy as we possibly can and the only way to do that is by a reasonable price point, incredible services, relying on word-of-mouth marketing and a 99% retention rate. The only time we lose clients is when they sell their businesses. There’s not much we can do about that or when we cut the tile on our end. That happens from time to time but it has been great.

You’re working with some of the most reputable franchise systems out there. You have some very talented and successful franchise owners and it is not their first rodeo. There are a lot of data points that speak to a lot about what you’re building, what you have built and the way you’re growing. That’s awesome. I’m dying to be nosy. You have a unique vantage point into the books of a lot of different types of businesses.

 

FM 3 | Scaling A Bookkeeping Company
Scaling A Bookkeeping Company: Our goal is to scale. We want to make as many people happy as we possibly can. The only way to do that is by a reasonable price point, incredible services, relying on word-of-mouth marketing, and a 99% retention rate.

 

We won’t talk brand specific. I don’t want to make it awkward for you but I am curious. I was talking to somebody about the different businesses and how different businesses make money and how much money certain businesses can make. A lot of people, when you look at it from the customer’s perspective, might dismiss it like a disaster restoration business or a Pilates studio.

Some of the most successful franchises out there are these overlooked, surprising and maybe mundane types of businesses but if you peel back the onion and you look at what’s possible in terms of what the margins are and how the business is set up, they can be great businesses to get into. I am curious. With your vantage point from a financial perspective, what are some of your favorite types of businesses that you see?

I’m happy to give you specifics here but let me preface the answer with it all depends on the owner. If you’re an owner who is buying the franchise to sit on the sidelines and hope it makes money and not be very active, you’re probably in the wrong industry. The best owners that I see, even if they’re 10 or 20-unit owners, meaning they own 10 or 20 locations, they’re still there. They’re active. They’re managing effectively. They’re true leaders for their organization and the culture they’re building, even within a franchise system. It does depend on the work that you do as a franchise owner. With that said, let me answer your question. Usually, the less glamorous businesses are the most profitable because there’s less competition.

Not as many people want to get into them.

I’m thinking of specifics. There’s a franchise called Puroclean. It’s a restoration business. It’s extremely good. They bill insurance companies to repair anything from homes to roofs and other basic restoration services. Club Pilates is another great brand. They’re more known. It’s a heavy branding B2C model but there are a lot of specifics as to why the Pilates studios do really well. Think of cultish following, great community and amazing people that go to them. It usually caters to a more affluent crowd, which has the money to spend on something like boutique fitness, which helps them in the long run.

Another great one is ASP, America’s Swimming Pools. What they do is they have routes and they essentially make sure that pools are safe to be in and are clean. They do residential and commercial pools. They also do construction for pools. That’s a great model. Another great one is Homewatch CareGivers. I love them. I think they’re a very recession-proof model. What they do is they provide care to the elderly so that’s something that no matter if there’s a recession or the economy tanks, they’re still a high demand for that and that’s not something that’s going to go away anytime soon. Those are a few specifics. I could go on for longer but I think those four businesses are great.

Pilates, disaster restoration, senior care and swimming pool maintenance service and repair are a diverse set of different types of businesses but it’s one of these things that unless you’re tied in and looking at things from the pure entrepreneurial perspective, a lot of times, that’s why these certain types of franchises can be good businesses if you operate them correctly. You made a great distinction there about the franchise is the franchise but it does come down to the owner 1,000% in terms of how they operate. That’s always the biggest inconsistency in franchising. It is typically the franchise owners and how they operate the business. It’s not necessarily the brand itself. It’s how people are operating at a local level. That’s good stuff. Is there anything going around in your mind that you want to talk about?

I’m an open book. We can talk about anything. We could talk about the services, the entrepreneurial side, how to scale a business, more tax credit stuff, ways to save on taxes or the social media side of the business. You name it.

You mentioned the scaling piece. I’d love to dig in a little bit on that. What were you thinking?

What jumps out to me is the rate at which Ledge has grown without marketing. From the first year, the first five months were brutal because of being an early business and trying to figure everything out. I don’t even count those, which gives us two and a half years. In the first year, my goal was to be straightforward, to travel with my girlfriend. I was more focused on giving a great service, of course but less on the growth of the business so that’s a year off. Truly, it’s been a year and a half and in that year and a half, COVID happened and the after-effects of that. We went from zero clients to over 370. We represent 40 states.

We’ve been able to grow by hiring amazing people, first and foremost but it’s also figuring out how to develop the business around processes. How do we type out 370 emails to be sent on the first week of every month, have every line in the emails, be a perfect performance summary of the actual performance of the businesses, the P&L, the balance sheet, how do we explain those topics in one email and how do we make every single email tailored not for a brand but for an individual. Everyone’s different in their approach.

The way we’ve been able to do that is by automating certain processes. If I showed you our tech stack of the software we use, it’s probably 60-plus software pieces that all work together in this perfect way to deliver not only the financials, of course but the performance summaries and trend analysis. There’s so much that goes into it and that’s been a cool way that we’ve been able to grow quickly.

Did the business start to take off and grow at the hockey stick level where you were like, “We got to figure some stuff out,” or were you intentionally taking it one step at a time and you knew what the infrastructure would have to look like as you started to hit certain growth points? What was that like for you?

 

The less glamorous businesses are the most profitable, because there's less competition. Click To Tweet

 

It was more so linear at a steep slope. Once we’ve figured it out, we started growing pretty quickly. I didn’t focus on the software at first. It came with scale and what I realized is that when you’re growing a business super quickly, you want to always look for software first. You want to look at how to automate first, not after you hire your employees. You want your employees to utilize the software tools, not see them as competition, which is a really important point because if you look for ways to improve before hiring, you teach someone how to use that tool to be able to scale further and if you hire someone first and then try to automate their tasks, be careful. That’s dangerous. If I were that employee, I’d be frustrated because I’d say, “You’re trying to automate me out of a job? That’s not fair.” That is an important distinction and something that we did very well. It all comes down to thinking through it and the people.

To automate first as the business is growing is a very wise thing. From an entrepreneur perspective, are you tied in with other masterminds or any groups or are you rolling this thing solo and with these great guiding principles and figuring it out as you go?

I’ve got a super smart team. That is the number one thought that my mind goes to. My first employee, Bruce is a CPA. He’s been a CPA for 25 years. He took a major risk. He took probably a 50% pay cut to join the company and gain more of an autonomous role. He saw the future. He’s that guiding CPA with a ton of knowledge. My second employee, Derek is the smartest person I’ve ever seen work Excel. I thought I was good. I thought I was pretty solid at my programming and Excel skills but I’m nothing compared to him.

It starts with having a great team but I also love to read. The first book that I got when I started this company was The 4-Hour Workweek by Tim Ferriss. It’s a common read but I took away so much from that. I love the way he digested the ways to figure out how to automate a business. It’s tough when you have a service-based business because it’s much easier to automate a product-based business. There are ways to do it. It just takes a lot of time.

The challenging part is you want to keep that relationship up. You want to have an amazing relationship that’s oriented around trust because we are looking at someone’s bank statements, accounting and financial records. Having a confidential relationship built solely on trust is what made the difference. The second book, which I started reading is DotCom Secrets by Russell Brunson. I’ve enjoyed this. I got about three-quarters of the way through it. I learned a lot about the value ladder approach to doing business. I found that particularly helpful.

Not to get personal but it sounds like the lifestyle piece was a big part of why you decided to do what you’re doing originally and as you’ve grown it too. That’s the best part of being a business owner. It’s this idea of lifestyle creation. You can have a lifestyle that you can’t have working for somebody else. As long as you’re wise and you can build a good business or deliver good service, you don’t have to be chained to your desk from 9:00 AM to 5:00 PM.

When I started this business, it was at the beginning of 2019 so this was before COVID and the idea of working remotely and working from any country around the world was taboo a little bit at that point because no one was doing it. Everyone was tied into their offices but when I read that book and a friend of mine gave me that book right after I started the company, it opened my eyes. I felt like I could do this from anywhere. We’re so blessed to live in an age where the internet allows us to command this autonomy to start a business, to deliver and to have the most amazing customer service period while being in Italy sipping from a latte with my girlfriend. It’s stuff that I would dream about a couple of years ago so the ability to do that is special.

Do you have any big travel plans lined up?

I’ve taken a little bit of time off because of COVID. We went to Dubai. We’re going to Costa Rica next for about a week. Before that, we spent some time in England and Scotland and then during COVID, we traveled around the states quite a bit. We didn’t even have a home when I first started the company. We were going from country to country. It got tiring. After eight months, I was tapping out. What I learned the hard way is that structure is so necessary and if you’re worried about where you’re going to sleep the next night or what Airbnb you’re staying at, there is no sense of structure and you can’t operate or at least I could not operate to my full potential.

What I needed was a home. I needed to be able to wake up at 6:00 AM on the dot, have my clothes laid out, go get a workout in, go to Whole Foods for their breakfast burrito and go back to the office after that. I’ve got six hours of quiet time and then I take all my meetings. That’s how I was able to grow my business. Traveling around is great. I’m a big advocate of temporary vacations. My wife and I like to get out at least four days a month and go somewhere new so we don’t fall in our comfort zone too much. It was a lot heavier traveling in the beginning than it is now.

There’s so much self-awareness in what you said too. You knew something wasn’t feeling right and being able to look at yourself and at the issue is sometimes that’s hard as we’re in the grind or in the weeds sometimes to be able to take a step back and say, “I need to try something a little bit different. Let’s try it this way and see if it works better,” and pay attention to the results. If it keeps working then you keep doing it. It’s rinsing and repeating and then getting it going and then you can have the fun.

Another thing about scaling a business very quickly is knowing when you are working in the business rather than on the business. That’s a common topic in a lot of these books similar to this. It’s easy to read that and it’s easy to say, “I get it,” but it’s a lot harder to do that in practice. Frankly, to share a little bit more into my day-to-day schedule, I love customer service. I love helping people. I love picking up the phone on a whim and saying, “Let me help you with this filing,” or whatever it is and guide them through it. I don’t even care whether it’s in our scope or out of our scope, I don’t even care. I don’t fill hourly. I don’t do anything like that. I love it but the reality is that’s not growing Ledge. It is to an extent with the word of mouth advertising, there’s no denying that but when I zoom out and focus on the business as a whole, where are we going to take this, what are we going to do and how are we going to get there, it’s different.

You got to scratch the itch sometimes if it brings you joy and energy because that’s part of keeping your energy positive and going so that it keeps you fresh and inspired around figuring out the next step as you continue to scale and grow. It’s a balance. The moral of working in versus working on is finding a balance that works for you personally.

 

FM 3 | Scaling A Bookkeeping Company
Scaling A Bookkeeping Company: When you’re growing a business super quickly, you want to look for a software and how to automate first, and not after you hire your employees. You want your employees to utilize the software tools, not see them as competition.

 

I tip in favor of working in the business rather than on the business because that’s my go-to. I slap open my laptop and get started in calling people. It’s interesting to think about it from both perspectives too. What I’ve learned is that with Ledge and I’d be curious to hear your thoughts on this with your business experience in the show too, it’s almost like a game. It’s like a gamified approach to doing business where the things I do are very serious with accounting and tax-related but it’s all a function of the process. It’s a function of service and ultimately getting the word out in the form of word-of-mouth marketing for me.

What I’ve learned is if I put more effort into any of those categories, the result is higher and the beautiful thing about being an entrepreneur is that there is no ceiling attached to it so the more you do, the better the result is and if you do it in a logical approach, you’ve got a plan structured behind and the purpose is built-in, the sky’s the limit. It’s unbelievable. If you had said I would be at 370, I wouldn’t have believed it. My goal was nine.

It sounds like you’ve done a good job of figuring out what’s most important to focus on in your business to keep moving the needle. As you said, the word of mouth advertising and providing a great service focusing on those kinds of things is the 80/20 rule. It is when you focus on the 80% that moves the needle and not necessarily spend the rest of your time trying to gain that incremental 20%. Figuring out what the 20% is is hard. It’s not easy to then because you end up spending a lot of time doing other things to get to that few vital things but it sounds like you’re honed in and you know what’s moving the needle in your business and you’ve got a formula that you can keep rinsing and repeating.

Speaking of the 80/20 principle from the other side, what I learned and this was about a year and a half into the business, was that a small fraction of my clients took up all of my time. It’s probably 70% to 80% of my time. It was so hard to make the decision to cancel the agreement with them. It was tough because a few months earlier, I had no success and I was just asking for one person to come along but the reality is you’ve got to recognize that a small fraction always takes up the majority and do something about that. I’m saying this to help any other entrepreneurs out there. I was in a position where I struggled with having to say, “I’m sorry. This isn’t going to work out,” because it was extra money on the table and I didn’t have that. I was broke before starting this business. It took me way too long to make the decision to cut it but once I did, we doubled very quickly because it freed up 80% of my time.

What was it that got you over the hump of making the decision to cancel the agreements or fire those customers?

It was The 4-Hour Workweek by Tim Ferriss. That was it. I read it and it made total sense to me. I feel that sometimes, you have to read it before you process your own situation. You have to understand other people go through this. He went through it. I even think in the book it says, “Think about where you spend all your time. Where are your 20% of the clients costing you 80% of your time?” Once I saw that, it became so clear to me. It was frankly a conversation that I was a little bit worried about because I felt blessed for the growth of Ledge and I felt like I was going against a blessing to say no and cut that but I realized after thinking about it for a little while that it was the right thing to do.

I know that wasn’t easy. You’re an interesting cat. A lot of the wisdom and a lot of the success that you’ve had, you attested to The 4-Hour Workweek.

I love it.

You opened it up and read it as you’re going through the journey of building the business. That’s amazing.

I’ve read it three times now.

You read it and you do something about it. You pick out a nugget or two and it sounds like you take action and implement. That’s awesome. There are so many different resources for people to turn to to get advice or whatever it may be. Some people choose to join masterminds like Vistage or whatever it may be but you found the book that you can turn to that gets the wheels turning to work through figuring out things in your business as you continue to grow.

That’s one of the books. There are others. What I look for in a book is not necessarily direct wisdom. What I look for is it to make me creative to figure out my own problems. I’m not looking for answers. I’m looking for a book to make me think a different way or make me think about something else that’s happening and then when I do that, it’s like, “I didn’t think about that. What if we did this? What if we did that? What if we automated this approach? I bet that could work really well.” Sure enough, books play a role in increasing creativity.

The 4-Hour Workweek, if you haven’t read it, you should read it. You also like Russell Brunson’s DotCom Secrets.

 

Whether you're a chiropractor or an accountant or any business, there's an opportunity to just think through what you are doing. What product or service are you offering, and how can you better that and ultimately make your customers happier? Click To Tweet

 

DotCom Secrets is a great book because it shows you a different way of thinking about pulling in people. His big thing is ClickFunnels or the ability to put something out there online that people are attracted to. Maybe they get a free sample, come into your funnel and become a client after a while. You get their email and you send them a newsletter. Ultimately, it trickles down to a client and then their approach with this concept of the value ladder.

The first product or service that you do is probably not the most expensive that you’re offering that person but then once you gain their relationship, their trust or the things we talked about earlier, you can sell them on a higher-cost product that you’re going to deliver more value for. He talks about in his book where his first one is the book. It’s a $10 book but then his most expensive product or service on his value ladder is $250,000 a year for this private inner circle club.

Whether you’re a chiropractor, an accountant or in any business, there’s an opportunity to think through what you are doing, what product or service you are offering, how you can better that and ultimately, make your customers happier. It appeals to everybody but the goal is what can you do? Be creative. That’s what a Russell Brunson was trying to accomplish.

A good book gets the wheels turning. It gets you thinking about applying some of the different principles to your business, fixing some things, making some things better and keeping growing it. That’s great advice. I appreciated it. Thank you for the time and congratulations on your success and your growth. I’m very happy for you. I look forward to watching you continue to do amazing things with Ledge. If anybody’s reading and is interested in getting in touch with you or your company to learn about your services, where can they find you?

Visit our website. It’s YourLedge.com. From there, you can book a meeting. We’ll have a conversation, diagnose your needs and then go from there.

Check it out. I appreciate it.

Congratulations on this show. I’m excited and very happy to be one of your guests. It has been a lot of fun.

I’m glad you could come on.

Take care.

 

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About Ryland Beard

FM 3 | Scaling A Bookkeeping CompanyRyland Beard is the founder of Ledge. Ledge is an accounting firm, offering subscription-based accounting and financial reporting with a specialization in franchise businesses.

Ledge’s services include bookkeeping, reconciliations, tax work, and financial reporting, verified only by CPAs.