The Mr. R Show

0:00:05 Intro: Welcome to the Mr. R show, brought to you by the monthly recurring Revenue Institute. If you’re an accounting firm, owner or manager seeking harmony between work and life while optimizing profitability, you’re in the right place. Our goal? To empower you with the knowledge and tools necessary to enhance both your personal and financial well being. In every episode, we bring you insights from esteemed individuals in the field who share their valuable expertise and practical steps.

0:00:33 Intro: Join us on this journey as we collaborate to revolutionize your business and enrich your life.

0:00:43 John Tripolsky: Welcome back to the Mr. R show, brought to you, presented, edited and promoted in my promoter radio voice by the monthly Recurring Revenue Institute. So why are you on this episode? Right. Why are you listening to this right now? Likely, I’ll take a guess and say that you’re a tax professional. So if that is the case, excellent. You don’t want to miss this one. So we’re actually going to sit down in this recording here with Chase Berkey. Not going to tell you a whole lot about him. You’re about to hear a ton of fantastic information, not only based off of motivation, little bit of risk taking, but he’s a young guy.

0:01:24 John Tripolsky: This guy’s done it. This guy has literally gone into this industry, into this field as he’ll get into kind of on accident a little bit. Some great content here. So even if you’re a seasoned tax pro, you’ve been in it for a while. Or if you’re somebody looking to get into the space, Chase and his team have something fantastic to offer you. No, it’s not a coupon code. We are not going to do the tv infomercial. Buy now. Buy now. Buy now. There’s literally no sales in this. I say that because what they have created is built completely around supporting fellow tax professionals.

0:02:01 John Tripolsky: Let’s get into this one. Chase, Chris and myself are going to have a fantastic conversation. We are going to talk about how you scale a successful tax practice. So hopefully that piqued your interest just enough. Stop wasting time. Let’s get into it. Hey, Everybody, and welcome back to the Mr. R’s show here. Presented, produced. We’ll just say brought to you by the monthly recurring revenue Institute. So as you heard in the intro, today’s topic, we’re going to actually chat with somebody. Well, we’ll say chat. We’re going to pick his brain a little bit on how he became so successful in scaling a practice. So you’re going to hear from a tax pro.

0:02:42 John Tripolsky: We also got Chris Pakira on here with us. I don’t know why this guy keeps showing up. It’s almost like it’s his show or something. Hint, hint, it is. Chris, how’s it going, man? Welcome back to your own show.

0:02:53 Chris Picciurro: Well, thanks, John. I appreciate the welcome back and I hope you have dinner ready and the house cleaned for me.

0:03:01 John Tripolsky: But it’s good to be, you know, I try to keep things organized for you, at least a little. You know, it is what it is.

0:03:09 Chris Picciurro: Well, I am very excited to have chase on the show. Excuse me. Obviously we are going to dive in to a bunch of different topics and we really want to help out. And that’s really what MRR Institute is all about, really helping tax professionals strike that good work life balance to get to the point where they can run their business instead of their business running them. And really that involves scaling your business properly.

0:03:40 Chris Picciurro: I think most accountants out there, tax bros. Have scaled their business or have grown their business. But I want to talk about the difference between growing and scaling, because I could tell you the first ten years of my practice, as people that have listened to this podcast a bit know I didn’t do things in the most efficient way. And I. I grew a business and didn’t scale it. I grew it based on me running the business and not processes.

0:04:04 Chris Picciurro: And it was a very expensive from many different perspectives, not just financially lesson to learn. And over the last ten years, we’ve been able to scale our business and our practice and niche down to exactly what we want to do. So very excited to have chase on. And I met Chase in person at an intuit better together event in New York city. And all enjoyed meeting him, enjoyed talking sports as he is a big Oregon Duck fan.

0:04:37 Chris Picciurro: And there’s a lot to like about that organization, and the Mariners also, but also gives me hope as someone that’s. You and Chase are about the same age, I’m about ten years older than you guys, but gives me hope that there’s a lot of thought leaders in the tax and CPA world. So, Judith, thanks so much for joining us. We are truly honored to have you here today.

0:05:03 Chase Birky: Appreciate you having me here, Chris. I got to say, that note you’re talking about in terms of growing versus scaling, I could not agree with more. Chris.

0:05:13 John Tripolsky: That’s actually a great segue and a comparison between the two, right? Because a lot of people, I will say individuals in the world, especially in the startup world, right. One of the first things they hear, hey, how are you going to grow your business? Let me help you grow your business. Very rarely do you hear at least in most conversations I’m a part of, do people say, hey, I’m so and so? I’d love to help you scale your business.

0:05:36 John Tripolsky: So, Chase, actually starting on that point, first, give us a little bit of background on yourself, obviously, and then maybe kick off the conversation on how in the world did you actually get into this? It’s not like, you know, found an article one day probably, and said, hey, you know what? I think I’m going to become a CPA and have a very successful practice with that. Kind of walk us through your journey.

0:05:56 Chase Birky: Yeah, definitely. So the reason I’m an Oregon Ducks fan is because I grew up in Oregon, Salem specifically, which is not the same Salem as the witch trials. If you were curious, that happened a few years before Lewis and Clark made it out to Oregon. I did play the Oregon trail on the old Macintosh computers back in the day, though, that was a big thing. And apparently it wasn’t just in Oregon. I thought it was just an Oregon thing, but a lot of folks played that growing up.

0:06:30 John Tripolsky: That’s how I can tell that we’re in the same age group, because I remember sitting in my classes back in the day and so excited because we had computers, right? And it’s like, oh, man, I got malaria or whatever it was in the trailer. My oxen died or something. So I love it.

0:06:47 Chase Birky: I think it was a great life lesson to show kids that life doesn’t always work out the way you plan. And sometimes people die. Maybe a little depressing, but nonetheless a lesson in real life. But anyways, so I left the rainy Pacific Northwest for San Diego for college. I went down to point Loman Azraine in San Diego for baseball, actually. And baseball was something that I had spent a lot of time going after.

0:07:25 Chase Birky: And I eventually just burned myself out, if I’m being honest, by playing about two years straight without a break and sort of fell out of love with the game, but fell in love with the sunny weather of California and decided to stay. So got into accounting, I wouldn’t say by default, but something close to it went in as a business major, did well in my accounting courses, and then my professors kind of gave me that nudge to go towards accounting, and I graduated in 2009. So this was a time when the great Recession was unfolding, and it was pretty evident that the only way I was going to be able to get a job and not move back to the northwest with my parents was going to be to get a job in accounting.

0:08:20 Chase Birky: So started out at Deloitte in audit, I probably would have gone tax, but at that point, they were only hiring folks with master’s degrees in tax, and I wasn’t looking to do another year of school, so went into audit very quickly, realized that was not my cup of tea. It wasn’t really the sort of work that resonated for me, and I figured that out pretty early on. And so my main aim was to get my two years, get my license, but be planning that next step. So I didn’t get stuck from there.

0:09:02 Chase Birky: Went into a partnership with someone I knew from college, creating a firm that was more on the tax side as well as client accounting services, although that wasn’t a phrase or a term back then. It was just called bookkeeping. That partnership eventually dissolved, like a lot of partnerships tend to do. And at that point in my life, this was back in 2015, it happened rather abruptly. I didn’t really have a plan. I just knew that I had clients that needed to get their returns filed before the extended deadlines.

0:09:44 Chase Birky: And so that was really my focus, kind of with this idea that I would figure out the next step thereafter. And as most folks figure out, when they go out on their own, as long as they’re doing good work, you end up getting referrals, and that firm ends up growing a lot quicker than you might have initially thought it would. And, Chris, that note you had about growing versus scaling very much resonates for me, because in order to scale, there’s a lot of things you got to put into place.

0:10:20 Chase Birky: And when you’re first starting out, you don’t really know what those things are. And so you’re getting your pricing wrong, you’re getting your scoping wrong. You’re just working a lot of hours trying to figure out exactly who you want to work with over the long term and what you want to do for them. So most firms, I would say, just grow and don’t scale from the start, because a lot of the learnings you need to truly scale effectively come from mistakes, and I was no exception to that rule. So that growth journey was a lot of fun, but also a lot of work, a lot of stress, and had its own cost. From a personal, financial, and energy side, kind of back to your point of, you probably didn’t just wake up and decide to do this.

0:11:24 Chase Birky: It actually was a little bit that way. I never really looked at myself as an entrepreneur, even though I was in a partnership and creating a firm at a young age. I didn’t look at that as entrepreneurship, because it wasn’t just me, per se. So it’s interesting because I sort of feel like I fell into entrepreneurship, and I really didn’t think that that was me. When I looked at an entrepreneur, I was always like, that’s just not me.

0:12:01 Chase Birky: That’s not my skill set. But when I was in the thick of it, I realized, now, this is me. This really resonates, and this is something I love. So, fast forward to 2019. And we had grown, not scaled decently to that point, but it was pretty backbreaking to make that work. And so I had these ideas floating around in my head that there’s this experience of being in the position of starting a firm from scratch that is just really empowering. And the agency I felt over my life that I hadn’t had before was just transformational for me.

0:12:49 Chase Birky: And I wanted to provide that same platform for others, but do in a way that didn’t carry the level of cost and risk and absenteeism from your family while you’re building it. And probably more than anything, being able to translate the learnings that I had and that we had to folks, as they’re building their practice, so that they could build it the right way from the start and not have to rebuild the foundation later down the road.

0:13:20 Chase Birky: So that was kind of one unlock there, and then the other was really around the fact that there’s over 44,000 CPA firms out there, and even more if you count the non CPA accounting firms, and they’re all building their own wheel and spending a lot of time doing that, spending a lot of time running the business and wearing all the hats you have to as a business owner. And I knew that we could create a much better wheel that we could democratize and folks could leverage so that they could focus on what they do best, which is client service and developing a team.

0:13:58 Chase Birky: So it was really kind of those two unlocks that were the foundation for the pivot that we embarked on in the middle of 2019.

0:14:10 Chris Picciurro: Chase, you nailed it. And I want to dive into something. Sorry, John, I know I call you off, and I’m going to really geek out this episode, and I’m so excited to dive into some of these, because, Chase, I shared some information with you, but my first ten years of my practice, it was based on me running it, not processes and systems. And then the last decade plus, we’ve led with tax planning a strategy 100% subscription model focused on real estate investors and helping people not only do tax planning and strategy, but also do the implementation piece. And I think that’s what a lot of tax bros get tripped up on. That there’s a lot of revenue opportunities.

0:14:53 Chris Picciurro: That’s still a huge value add for your clients, for you. But Chase, you talked about client selection, and that’s something that when I first started, I would like to say I was bad at client selection. That would be giving me a compliment because I had absolutely no client selection process. If you came through my door and it was legal and you wanted me to prepare your tax return or my practice, I would do it if you paid.

0:15:22 Chris Picciurro: Because I used the example recently. If you had a llama farm, and I never stepped foot on a llama farm in my life, I would take you as a client just because I figured I needed to grow my business, not scale it. And then I had to have a huge learning curve. Now I feel like with our practice now, and John’s kind of dove into this a little bit too. As far as seeing in action as we work with other tax pros and consult with them, I think our client selection process is a secret to our private CTA firm success.

0:15:57 Chris Picciurro: Almost every client headache could start by not them not being a client for first place. And Chase, I know you’re athlete. It’s kind of like in college football, right? When you’re looking at recruits, when you’re recruiting a player, when they’re a sophomore and they get in trouble and get kicked off the team or do something dumb, there was probably a red flag when they’re a recruit that you may have not uncovered or you chose to ignore.

0:16:24 Chris Picciurro: So you tell me about what do you do now at dark horse? And we’re going to dive into dark.

0:16:30 Chase Birky: Horse a little more.

0:16:31 Chris Picciurro: But what are some of the things that you guys do now that you didn’t do in the beginning? When it comes to client selection, where.

0:16:39 Chase Birky: Do I start there without just saying everything, hey, you’re already ahead of me.

0:16:45 Chris Picciurro: Because you actually had some type of process.

0:16:49 Chase Birky: I really came to find that if you don’t set expectations with clients, they’re going to run your practice for you. Right. And so there’s an element of, you kind of have to work with a number of different clients in different industries, different
service types to understand really what you find the most interest in, where you can provide the most value, where you think the opportunities are. So there is that element of whether you’re doing that at an existing firm, as an employer, whether you’re doing that to some extent when you’re starting out, you kind of have to figure out through just experience where you want to specialize in. Because your niche of real estate investors wasn’t something you picked out blindly out of a hat, it’s likely because you had some experience there and some successes there and figured, this is an area that I’m going to just double down it if I’m guessing as to how you got to where you are right. So I really believe wholeheartedly that everything bad in a practice, everything bad in public accounting that’s been well documented online and elsewhere, is stemming from getting the pricing wrong, getting the scoping wrong, not setting expectations, appropriate expectations with clients. If you get any one of those three areas wrong, it’s likely that you’re going to have problems in the other two areas.

0:18:31 Chase Birky: And so when you don’t get that pricing right, you actually end up underserving that client. So it’s like they might be paying half of what they should, but a lot of times you end up giving them a quarter of the service that they probably deserve because you get stretched so thin and you’re constantly putting out whatever fire is burning the hottest and also at the same time trying to direct your focus towards the clients that you can do the most for that are paying you the.

0:19:07 Chase Birky: I just, I truly believe know one of the values we can bring to the equation with our folks as they’re growing is making sure that they’re not signing business just to sign business. Chris, that comment you made, know someone came into you with, I think you said a llama farm, you would take them because there’s a scarcity mindset that’s implicit for a lot of folks when they’re starting a firm that they don’t know when that next potential client is coming.

0:19:40 Chase Birky: They know that their bills are going to recur either way. And so there’s this fear that if they don’t sign this client, that they might be in a pickle in the future because the revenue just isn’t there. And that’s, I think, a legitimate concern for a lot of folks. When you don’t have a nucleus of clients that are well aligned with you, that would make referrals, that would help grow your business, and you don’t have a sales funnel online or elsewhere, it is truly okay, when is this next prospect going to come my way? Right. So I think a lot of folks might make the concession that, yeah, this isn’t the right client or the right price or the right scope, but it’s better than nothing.

0:20:29 Chase Birky: And that ends up being very slippery slope because that sets a bit of a subconscious precedent. And then the next client that comes along, you make the same concession. Right. So getting clear on who you’re going to work with, what you’re going to do for them and how you’re going to do it is the most important thing you can set out for yourself in any practice.

0:20:55 Chris Picciurro: You touched on something, what we call scope creep, and we’re going to touch on that in a little bit. Great point on the client selection. I’ll argue that. Missing on a client. I’ve yet to meet a tax professional or tax pro that has missed on a client and gone out of business because of it. You make mistakes when you take on someone that in your heart you know you shouldn’t. And actually, it’s not fair to the client either. Like you said, even if someone’s underpaying, then you’re going to allocate less resources to that person.

0:21:34 Chris Picciurro: One of the pro tips we talk about is that you only have one chance to show your value to a client and that’s in the beginning of the relationship. That’s just reality. It’s hard to increase prices necessarily, but that first time when you can show value, that’s when you’re taking your chance at. That’s what you have to take advantage of. And I know you’re a baseball guy, so I think anyone listening has to understand that as a CTA, as a tax professional, enrolled agent right now, with the lack of workforce coming into our industry and the client needs.

0:22:16 Chris Picciurro: We’re going up to bat and we’re looking at a three one count right off the bat, right? It’s got to be a really good pitch. Now, if it’s right down the middle, slug it. But it’s okay to take it walk and get on first base. That’s my mentality. I might have a three one count right now just going into meeting with any prospective client. If it’s a good pitch, I’m going to swing at it, but I don’t have to, if that makes sense, right?

0:22:42 Chase Birky: I mean, I might even say it’s a 30 count, to be honest.

0:22:45 Chris Picciurro: Three. I know I wasn’t good enough hitter to get the green light on 30, though, Chase, you probably were.

0:22:49 Chase Birky: So I go three, one, and Chase.

0:22:53 John Tripolsky: Actually, if you can, before we get too far along too. I know we kind of hinted at it a few times. If you can give us a little bit of background on dark horse and what you guys actually do, because our audience is really split up, I’d say between two sides of the fence. We have some individuals looking to get into the industry or are newer in the industry, but then also I’d probably say the majority are, in a sense, seasoned tax pros that are always looking to scale. Or as Chris, as you had mentioned earlier on, as know your story specifically, I wouldn’t say you want to get out of it, but you really want to craft your business to scale without, you know, such a key component for its success. So, Chase, if you wouldn’t mind, give us a little background and kind of an elevator pitch, if you will.

0:23:41 Chase Birky: Yeah, definitely. So that pivot that I mentioned in 2019 was really going from what was mostly a traditional accounting firm, although we had a progressive brand, as well as more of a tech focused approach, we went from that traditional CPA firm to what we call a platform CPA firm. If you haven’t heard of that term, it’s because we invented it. So it’s its own category. Essentially, what we’re doing is creating all the infrastructure and resources and tools and administration that you need to build a practice from scratch or scale an existing one.

0:24:21 Chase Birky: As I mentioned before, a lot of folks struggle at certain points with their firm because they’re wearing all these hats. They’re spending time doing some version of HR, some payroll administration, maybe some peer review sort of thing, their own bookkeeping. There’s just a lot that it takes just to keep the business running on a day to day basis. And then there’s technology, when you talk about the tech stack, that you need to have to be relevant and efficient and effective and to retain talent, because they don’t want to be working with archaic technology themselves as they’re trying to advance their career.

0:25:07 Chase Birky: There’s just a lot that is required of someone running a firm, and it’s more than one person can do, right? So it’s then kind of this question of, okay, am I going to pay for this? In terms of paying an outsider? Am I going to bring someone in house to help through this? Am I competent to lead and direct those people in meaningful ways and continue to evolve this technology, these systems and processes, and keep up with the marketplace, serve clients well.

0:25:42 Chase Birky: Just keep all of these balls in the air. It’s a lot, and we’ve found that there’s a lot of firms that have a moderate level of success, but it’s usually running the owners pretty ragged to make it happen. And so those firm owners recognize they need to take some things off their plate. And that’s when a conversation with us makes a ton of sense, because we can help them take a lot of that off their plate and set them up for success, kind of reset them so that they can scale effectively going forward.

0:26:20 Chase Birky: Or if they don’t necessarily want to scale, but they just want to be in a better lifestyle standpoint than where they currently are. That’s certainly something we help them with as well. On the accelerator side of our business, we’re taking folks that are typically managers or senior managers, or maybe they just started their own firm and are realizing just how daunting of a task this is and pulling them into our accelerator program, growing them from scratch to six figures, typically in a couple of months, kind of holding their hand along the way in terms of how to have these sales conversations, how to do it in an authentic way, how to propose, how to price, how to scope, how to use our tech stack, start to finish, all the things that you need to be able to do to provide that level of client service that we hold ourselves to.

0:27:18 Chase Birky: So all that in a nutshell, to say if it supports a CPA and building their practice and building their team, we’ve got a heavy hand in it. And our goal really is for our folks to be able to focus on, again, being a practitioner, doing what they do best, developing that team, serving clients, and then not putting as much focus in the other elements of running a practice and allocating some of that time towards collaboration.

0:27:51 Chase Birky: And collaboration is really a huge core value that we have at dark horse, that when you talk about accounting and tax, you’re talking about so much subject matter that any one person can only know a fraction of it. And so we know that we’re better together. And I also know that it was very lonely when I started my own practice and was by myself, and the buck stopped with me to figure out any sort of technical issue that I wasn’t familiar with.

0:28:24 Chase Birky: And so we know that we can bring people together in meaningful ways so that when they encounter those issues, there’s someone to help them out and say, hey, dealt with the same client. Here’s the work paper, here’s the tax return. If you want to talk through this, just let me know. Right. So that’s a huge unlock and a huge contributor to folks success and something. There are communities out there that do that to some extent, but when it’s all under one roof, we’re all on the same team, and the expectation is set that you’re here to contribute first and consume second.

0:29:05 Chase Birky: There’s just so much more to go around and so much more up leveling that happens as a result.

0:29:11 Chris Picciurro: Well, I’m very impressed with a lot of things you’re doing with dark horse, and I love the idea that you’ve created the platform CPA firm we created teaching tax flow in our private CPA practice, which is a proprietary tax planning and strategy
process. But a couple of things that I want to dive into with you. First thing, it can be really lonely when you’re a solopreneur. When you’re on an island, especially, let’s say you live in a more rural area and you’re the only CPA, you’re the only tax pro in town that could be a lonely place.

0:29:49 Chris Picciurro: And I love that you have different opportunities because I’ve always argued, like, John’s heard this a million times, but it’s easier to turn a motorcycle around than an 18 wheeler. So I actually think that the challenge is harder when you’re a seasoned practitioner, that you’ve had a practice for a certain amount of years to change it, versus someone that just started, someone that’s just getting rolling.

0:30:12 Chris Picciurro: And one of our core things we believe in is collaboration over competition. And like I said, we’re all batting with a 30 for us that aren’t as good at batting. Three, one count. We need to band together. We talked about client selection already, and one of the things that I like that, and I would like you to just touch on a little bit with it, that I’m very impressed with dark horse. And I think a lot of accountants miss on this price transparency, where you do give some type of estimate, a rough estimate based on services selected. If someone goes to your website before they submit an inquiry, just kind of giving them an idea. And not only do you, a lot of times clients or prospective clients don’t know what they need. So you have a nice way to explain those different types of services.

0:31:04 Chris Picciurro: And also you have done a good job very tastefully, by the way, gatekeeping, the discovery meeting process. We call it discovery meeting, but I think it’s initial consultation where if someone’s not a good castle, when someone’s not a good fit, you just say, hey, you’re just not a good fit. We’re kind of trained to always say yes, but we have to learn to say no to be able to say yes. So can you tell us a little bit about that gatekeeping process? Maybe one or two tips you could.

0:31:34 Chase Birky: Give to someone.

0:31:38 Chris Picciurro: That’S tried to scale their business or bring in some best practices that dark horse has used?

0:31:45 Chase Birky: Yeah. And first, just as an aside on that comment about you got to be able to say no to say yes, a very powerful book in my life has been essentialism, which really is that concept of know knowing what your best yes is so you can say no to the things
that are not that. So you have the ability to say yes to those things. And it’s easier said than done, right. Because there’s this gray area between good and great and even, okay, good and great.

0:32:17 Chase Birky: That is not always easy to know unless you truly know yourself and where your time is best spent. We’re going back to your question about that level of transparency. That’s a huge part of how we operate, is internally and externally, we’re as transparent as we can be while protecting the privacy of those who might be impacted. But when it comes to pricing, when it comes to some of these questions about how we work and who we work with, and are you going to fit that mold?

0:32:59 Chase Birky: That’s really just about the idea of nobody wants to waste their time, right? We don’t want to waste our time with an unqualified prospect, and they don’t want to waste our time or waste their time interviewing us when it’s just not a fit. So I think the more that you can put out there that disqualifies the folks that are definitely unqualified or maybe somewhere on the fringe even is super powerful, because it means when people get through that funnel and send their inquiry, that there’s a high probability that this is a qualified prospect. Whether or not it’s someone you want to work with is always a different question. But I think our industry in general, for a lot of years, shunned this idea of getting clients from a website.

0:33:54 Chase Birky: And you see that in the websites that are out there for accounting firms that are either a glorified business card or just a bunch of stuff that doesn’t tell a cohesive narrative. And it’s more just about puffing their chest a lot of times. But for us, it really is about making sure that the prospects that we put in front of our accelerators and our principals are the highest quality possible, and that they come in at least with a realistic set of expectations, knowing generally what the ballpark range is for the services they’re looking for, how we work with clients, we don’t work in a paper based, in person environment.

0:34:44 Chase Birky: Some firms do do that. We just want to be clear that that’s not us and there’s a reason why. But again, we don’t need to waste anyone’s time here. And this idea of a 30 or three one count, I mean, there’s so much more demand in the marketplace than there is supply and also technology. And non CPA firms are coming into the fray in a way where some of these clients that we feel like we need to be able to serve, we actually don’t.

0:35:16 Chase Birky: There’s viable options for those folks. And if you are going to serve someone that’s maybe on the precipice of where you can add value and where the price makes sense, you do need to make sure that the price makes sense on your end, because that type of client that’s just kind of on that fringe probably isn’t a viable client. A couple of years, as technology and non CPA firms kind of marginalize the fees we can charge those clients.

0:35:44 Chris Picciurro: I agree with you. I feel like also one thing that you’ve done really nice job with dark horse, and this is one of mean. I’ve not seen another website better in the CPA world. So one thing I really like, and I’m going to talk about is we teach that one of the pillars of value pricing, or even subscription model pricing, is that even if you do subscription model pricing like we do, we have a lot of other revenue opportunities beyond the subscription amount. I think accountants get afraid, like, well, if I only have 100 subscriptions at x amount at $5,000 per subscription, then my revenue at most could be $500,000.

0:36:31 Chris Picciurro: Where I’m going with this is you’ve got a nice job bringing in a private wealth management division and also what we call with Mr. R show specialty tax services, which would be ERTC cost segregations, 1031 exchanges and those sort of things. Can you tell us about how those came about, what role they play in your practice? And then before we’re done, we’re obviously going to talk about tax pros that are kind of at a crossroads with.

0:37:07 Chase Birky: Those sort of things.

0:37:08 Chris Picciurro: But yeah, can you tell us about the private wealth management component and then some of the specialty tax services that you guys are engaging in? You might use strategic partners like we do in our practice for a lot of this, because a lot of listeners don’t understand how that works.

0:37:27 Chase Birky: Yeah, definitely. So on the private wealth front, we aren’t creating the blueprint on that. That’s something that other CPA firms do. Right. But we felt like we were uniquely positioned to do it better because of our business model, because of how it really ties in the CFP and the CPA into a meaningful collaborative relationship. There’s some revenue sharing that happens between those two professionals to, number one, provide an incentive to make the referral, but then, number two, to make sure that we’re delivering on our promise and we don’t try to claim that we can beat the market SEC wouldn’t allow us to do that anyways, but that’s not something we would imply, right? Because the market always catches up. Unless you’re a savant that is maybe one of ten people in the world.

0:38:31 Chase Birky: But what we know we can do is be transparent and very competitive from a pricing standpoint as well as be as tax efficient as possible. So your fees, your taxes, if you can get a handle on those, that’s how you’re going to create better long term returns over time, as opposed to trying to get cute and beat the market. So private wealth was something we knew that we wanted to do for a long time. It was more just a matter of finding the right person to lead that business, because I’m not a huge fan of trying to stretch thin and get that credential and try and launch that myself or with any of our existing folks who have a hand in the CPA world. So it was really just a matter of finding the right know that saw the vision of what we’re trying to build.

0:39:31 Chase Birky: And we found that person in Matt Poole, who joined us last August. So we soft launched that offering earlier this year and had it public facing on our website as of a couple of months ago. And we’re already approaching a point where that revenue is going to represent almost 10% of our total firm revenue. So it’s been really cool to see that get off the ground. It’s been a huge value add for clients because they can now have a one stop shop that’s not someone who’s wearing both the CPA and CFP hat, but it’s separate professionals that are incentivized to work together in meaningful ways.

0:40:16 Chase Birky: When it comes to the specialty tax services, most of that is strategic partnerships, as you alluded to. And eventually that’ll probably come in house as we grow and we have the clientele to support a consistent lead flow for that. But as it is right now, we’ve identified some just really great partners in all those areas that we trust implicitly and that are a great representation of us to our clients.

0:40:46 Chase Birky: And we just got to make sure that we put these opportunities in front of our clients. Because your average general practitioner is not going to know how to do cost segregation because it’s very specialized. It’s a blend of engineering and accounting. Right, but the dangerous part is a lot of those practitioners aren’t always aware when they’re looking at something that is a great candidate for cost seg, for example.

0:41:16 Chase Birky: And so a big part of what we’re doing with our folks is getting those strategic partners in front of our people and creating internal processes to make sure that those opportunities are identified and how those leads are passed along to our strategic partners, and what it looks like to have kind of that joint venture with the client. So those strategic partnerships end up being really game changing for us and for our clients, because it allows us to be more than just the sum of our internal parts.

0:41:53 Chris Picciurro: And I think that. I know John’s got a couple of questions, but I think that I’ve been a licensed financial advisor for 18 years and just means I’m good at passing tests, but then I’ve worked with a strategic partner all that time. The point is, I think, as tax professionals, we have to understand that the tax pro CTA financial advisor relationship is essential. That client is building a team, and these are two very important people on that team.

0:42:23 Chris Picciurro: The other thing to consider is, Chase, you nailed it. When you want to talk about hitting with a 30 count, when you go to most of these big box financial advisors, what do they say? We do not provide tax advice. Ask your CPA. We refuse to look at your tax return, et cetera, et cetera. So when you have two people on the same team with complementary skill sets, and one is a tax professional, CPA enrolled agent that says, give me your tax return so I can look at it. Let me see who’s a good candidate for harvesting capital losses or doing roth conversions.

0:42:57 Chris Picciurro: And then it comes to the actual implementation of these strategies that could be monetized. That’s a very powerful position to be in.

0:43:07 Chase Birky: 100%. Yeah. Again, over time, our aim is to bring as much of that in house as possible. So that’s a very highly coordinated effort and something that exists within the same roof for our clients. Not to say that there’s anything bad about using an
external party in a strategic relationship, but there’s also that next level of white glove service you can bring to a client when that’s a division within the firm.

0:43:41 John Tripolsky: So, Chase, actually, if you can give us a little bit more detail on dark horse specifically, I know you mentioned a little bit earlier on all the services that you guys offer, but really, you guys being the back of the house, or should you say kind of on steroids for tax pros, what might be some of the trends that you guys are seeing? As far as for the pain points go, when a potential client comes to you or you’re onboarding a new client, are there maybe three or five things that you continually see popping up that are really just a pain in the, you know, what, for these individuals that you guys really offer the solutions for?

0:44:22 Chase Birky: Yeah, I mean, the first thing that comes to mind in terms of pdas, which is an acronym I think you can guess on, I love it, by the way.

0:44:30 John Tripolsky: I will support that. We actually use that a lot, so kudos to you for that one.

0:44:35 Chase Birky: Yes. One of those petas is the tax organizer process. So the collection of all of the information and documentation that you need to actually be able to prepare the return that historically was a really clunky process for us and really caused a ton of context switching and just a lot of wasted effort to get people through that process. And so having identified kind of the magnitude of that issue, we set out to find a solution and create one. Right. And so we found a company called Soriban, and that’s S-O-R-A-B-A-N for those listening, if you want to look them up.

0:45:26 Chase Birky: Founder went through Y combinator. He was a practitioner himself, so he understood the problem that he’s addressing in a way that a non practitioner wouldn’t. And so we had some conversations with them, tested out the product, and realized this was going to be game changing for us. And so what it allows us to do is create a smart organizer that’s in the language that we feel is most digestible by our clients while still being accurate in terms of what we need from them or what we’re asking for.

0:46:02 Chase Birky: And then it’s taken them through what’s almost more akin to turbotax than a 30 page PDF. It’s omitting sets of questions. If they’ve answered a certain way on previous questions, all that sort of stuff. But then also, and I think this might be one of the most impactful elements of it, is if they’re filling this out in March and they don’t have some k ones, let’s say that they’re not going to get one k one until may, and they’re not going to get the other one until August, the system is set up such that it will follow up with them on those dates and will continue to do so until that k one is provided into the system.

0:46:45 Chase Birky: And then we’ve got full visibility and transparency into that on our end. And then we know once we have everything and it’s a go, that we can start tax preparation and actually get it to completion without getting it 75% of the way, then putting it down for some number of weeks, and then trying to reeducate ourselves on where we left things off. And all the time and energy that gets wasted when you pick things up and put them down constantly.

0:47:15 Chris Picciurro: The data collection process is very challenging, and that’s one thing that we really focus on, actually. We score potential clients based on ease to obtain information. And one of the things we talk about is any prospective client really starts jumping through our. I shouldn’t say jumping through, but using the technology we use to set up a discovery meeting. And now they’re already familiar with it. And I like how you guys do that.

0:47:41 Chris Picciurro: I have a question for dark. As far as with dark horse, I know you’re working with other practitioners. They could be people looking to maybe sunset out of the business, people looking to get assistance with what we, in our practice, we call the kitchen. So that’s the back end. That’s the stuff that no one sees, but that’s really the challenging part of things. Or it could be someone just starting their practice. Can you tell us how CPAs or tax professionals and old agents partner with Dark horse?

0:48:16 Chris Picciurro: What type of tax professionals are you looking to work with? Right. In the next couple of years?

0:48:21 Chase Birky: Yeah, absolutely. So we’re not a franchise, which is why we use the word platform. You could think of us more as a franchise on steroids and then some. But the reason we’re not a franchise is because we’ve created a really great brand that has a
great reputation and a lot of significance and a lot of pride behind it, not just for the founding and leadership team, but also for our principals and the members of their teams.

0:48:53 Chase Birky: So we’ve got to make sure that we protect that brand as best as we can. And so there are certain things that you just need to have a certain level of control to make that happen. We don’t shy away from that. And there’s also certain things that we know because we have the data points in our principles, practices across the firm, that if you do a b is going to happen. Right. And it might be uncomfortable to do the corrective measure proactively.

0:49:25 Chase Birky: And if we’re at an arm’s length, it’s less likely that you’re going to do that uncomfortable thing when there’s no one there to force or ensure that that gets done. Right. So because of that, we’re a unique structure, right? So we’re a platform that has pieces of a franchise that has pieces of even a traditional partnership. But really, at the end of the day, our thing is our customer is the CPA. So that’s the entire orientation of our firm, is that we’re here to serve cpas.

0:50:02 Chase Birky: So there’s a bit of boiling the ocean that happens in that regard, because what cpas need as a group is a lot, which I think goes a long way to explain some of the ills of our profession is that we’re high functioning, high integrity, capable people, but we’ve been given a very difficult set of cards to play with in a lot of ways. And then there’s also some psychological elements of being people pleasers, of saying yes to everything that are just ingrained from kind of our earliest experiences in public accounting. So there’s just a lot of things that we just know from the data points of our own experience.

0:50:51 Chase Birky: Building the firm of the data points from our principals that push us into a place of this level of not being at an arm’s length, is really the best call. So we’re set up as a C corporation. Our principals are employee owners of the firm. There’s a stock option that goes to a principal at such point to become a principal, whether through our accelerator program or via merge in. And then there’s ongoing grants on an annual basis that are predicated on the profitability of their practice, as well as their contribution to the whole, how they’re helping up level their peers.

0:51:36 Chase Birky: So a lot of different areas I could go to in that regard, but we’re looking for great people. We’re looking for folks that have a desire to learn, that have something to bring to the table in terms of experience and expertise. In terms of who we hire as principals, those are typically folks that are cpas that have, on the tax side, at least seven tax seasons under their belt, if not more. Not to say that there’s not a position for folks who are unlicensed or don’t have the experience or some combination, but there’s a different road to become a principal of the firm than there is to work at the firm.

0:52:19 Chase Birky: But there’s a lot of really valuable experience you can get working for a principal and a growth plan we can set up for folks to be able to eventually wear that hat themselves.

0:52:31 Chris Picciurro: Well, I think it’s great that ultimately, collaboration over competition, trying to simplify someone’s life. I mean, we always say getting your information is a lot harder than actually preparing the return. But what you’ve created is, goes much beyond just a tax return. It’s a culture. It provides people with an opportunity, again, to have that platform firm, to take advantage of all of. It’s amazing, because again, I can imagine your roles change significantly where you’re really probably not very much client facing, but like you said, the cpas are your clients. But when you could take someone with all that client facing experience and put them behind the curtain and really work on how can I make these other people’s lives easier? Through technology, through relationships.

0:53:30 Chris Picciurro: That’s amazing. I want to ask one more question, and then we’ll leave you alone. But we’re talking a little bit about niches. I feel like dark horse is such on the cutting edge of everything in our industry. And one of the things you guys launched, I believe, was another cannabis division. Can you touch on that? Not so much the cannabis division a little bit, but also, what are things to consider if someone wants to jump into a new niche?

0:54:11 Chris Picciurro: Sometimes it’s better to create a whole separate division within an organization, name it something else. But can you touch on that? Then I’ll let John ask his final question.

0:54:25 Chase Birky: Yeah, so, I mean, the context that we operate in is obviously different than those of our listeners here. But what I will say is that the dark horse brand is transferable. Meaning it in and of itself doesn’t mean that we’re in the cannabis space. Right. But we created a brand that shows that we’re invested in the cannabis space in a way that’s more than just a web page. We created a brand with a marijuana leaf behind it.

0:55:00 Chase Birky: We’ve created specific gear for it where dark is crossed out and dank is written above it. A little bit tongue in cheek, obviously, there. But what it really goes to show is that we’re approachable, we’re human, and we also have a substantial investment in that space as represented by a brand, a domain name, a set of specific assets around that cannabis brand. And that’s really resonated for clients because they know that we’re not just dipping our toe in this space, that we’ve got a long term investment, or else we wouldn’t have gone to the length of establishing that level of marketing collateral.

0:55:44 Chase Birky: So from the standpoint of how we’re supporting our principles, that came about through conversation with the very first person that we hired into our accelerator program back in 2019. He really wanted to get into that space because he found that it was underserved. There’s a lot of value that can be provided and also the ability to pay those fees, because these are cash rich businesses, for obvious reasons.

0:56:13 Chase Birky: And so our aim with him was to say, okay, well, how can we support you? And that started with him going to conferences and trade shows, renting booths, just getting the brand the name out and specifically himself out to start building these relationships. And over the course of a little over a year, that materialized into clients into this brand that we created in collaboration with him. And we’re here to do that really in any niche that folks at our firm want to build out when it comes to selecting that niche, because that was part of your question.

0:57:01 Chase Birky: I think you really got to look at a couple of things. You got to look at how big is this market? How vulnerable are they to macroeconomic changes or changes in regulation and cannabis. To be honest, there’s a risk there, right? If it’s totally legalized federally in all the states. There’s an element of, okay, more players are going to get into the game and that’s going to drive away some of the pricing power and some of the demand as a result.

0:57:38 Chase Birky: But on the same hand, we’re still in a position where we know that there’s always, for the foreseeable future anyways, going to be more demand than there is supply for CPA services. So we’re not as concerned about that. But if something could go away overnight, that’s a consideration that you definitely want to be mindful of. Or maybe hedge your bets and have two niches. So if one of those niches goes away or is substantially harmed as a result of macro events or regulation changes, that you’re not all eggs in one basket and trying to start from scratch.

0:58:19 Chase Birky: So you want to be able to get confident with who these people are, what they need, what you can uniquely do for them. I think one of the great things about niching is that it takes what’s otherwise a blank canvas and makes it more of a coloring book because you know what your ICP is, you know who you’re dealing with, you know what you’re doing for them, you know when you’re doing it, how you’re doing it, and you can train your staff accordingly. And it’s not just DIY adventure for every new client that has some unique industry regulations they have to comply with and things we’ve got to learn on the fly.

0:59:00 Chase Birky: Being a generalist is fun and a lot of learning, but it’s harder to provide value as a generalist to an individual client than it is if you know that client’s needs inside and out.

0:59:12 John Tripolsky: And Chase, thanks again for jumping through all this with us. And kind of on the note of really starting that cannabis effort right there, I think speaks volumes to just what you had mentioned, right? Like y’all’s approachability. You know, you’re real people. You’re providing the support system for other tax pros. I’m really impressed, man. And coming having a background in marketing for as long as I have. I love seeing individuals in specific industries that just don’t conform to the, you know, as we wrap up here, I think it would be very well suited that we add in a couple more acronyms, right? Because we obviously threw out PETA earlier, which I absolutely love. But then almost taking everything you mentioned here, going from a DIY to a GSD. So if you don’t know what GSD means, there’s another one related to PETA.

1:00:02 John Tripolsky: It’s get blank done. Maybe write that one down for our listeners and write it down and reach out to somebody, either chase or anybody like him, and really just get the information that’s out there. Chase, you guys at Dark Horse provide such a great, just a valuable resource to support know, as Chris had mentioned earlier and you has mentioned, and I think I probably did it as well earlier on, it’s just taking what is a royal pain in the, you know what, and really scaling with it and really drawing the line in the sand between growth and scaling, I think is fantastic. So we can’t thank you enough for joining us on the show, man.

1:00:41 Chase Birky: I appreciate you guys having me. This was awesome. And look forward to future conversations. Absolutely.

1:00:47 John Tripolsky: I’m sure we could talk for hours and days on little bits and pieces. So as I like to always wrap it up on the teaching tax Flow podcast, we will see everybody back here, same time, same place, next time. Hey, everyone, thanks for hanging out with us here on the Mr. R show. As always, great guest. Chase. You’re awesome, man. You’re just your knowledge. The story on how you got into the industry, what you guys are offering other tax professionals is incredible.

1:01:22 John Tripolsky: So I know, Chris, we had a couple laughs in this just based off sports, obviously. Chase, baseball guy. Chris, baseball guy. I’m over here sitting in the corner as a hockey guy. It didn’t really say a whole lot there. I didn’t want to pigeonhole myself, but this conversation was awesome. Thank you, gentlemen, so much. Thank you, everybody, for chiming in on this one, sending us questions. Prior to this, we had a couple of them come through.

1:01:45 John Tripolsky: This is a topic, obviously, I would bet that nobody gets into any business saying, you know, I really don’t want to be successful at that. So, that being said, obviously some great notes in here to hopefully steer you to success, regardless of the stage that you are in in your professional career in the tax space. So we look forward to speaking with Chase again here after the new year. Chris, myself, and Chase, I think we have some great ideas. We were going to throw out and discuss about some other content we can get out there to tax bros. We look forward to that. As always, and as I always mention on every show, any question, feel free to contact us. We are here to help. That is our sole purpose for existing on the web or wherever you’re listening to this podcast.

1:02:36 John Tripolsky: We are here for you, to support you, to help you grow, as is Jason, his team. So send us any questions you may have, ideas, thoughts, comments. We love them regardless. And don’t forget, get on Facebook. Join that tax Pro 2.0 private Facebook group. There’s your personal invite. I also made it really easy on you. It’s okay. You can cheat on this test. Click the link below in the show notes. Take it directly there. So, as always, thank you for joining us here on the Mr. R show. We will see you again very soon.

1:03:10 Disclaimer: The content of this podcast does not constitute an offer of securities. Offerings can only be made through an offering memorandum, and you should carefully examine the risk factors and other information contained in the memorandum. Random the content provided is for educational purposes only. We encourage you to seek personalized investment advice from your financial professional. For all tax and legal advice, please consult your CPA or attorney. Investment advisory services are offered through Cabin Advisors, a registered investment advisor. Securities are offered through cabin Securities, a registered broker dealer.