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Cool Careers in Accounting Ep. 17 - Charting a New Path as an Entrepreneur in Accounting with Ryan Watson
138 Plays1 day ago
Ryan Watson, a partner at Upsourced Accounting, joins host Spencer Payne to share his journey from starting as a CPA at a major firm to founding his own advisory practice. Watson discusses the challenges and rewards of entrepreneurship, highlighting his decision to leave a traditional career path for a fulfilling role as a strategic advisor. Learn from his unique experiences and success stories as he demonstrates the value created from providing strategic advisory services as an entrepreneur.
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Transcript
Introduction and Role at Upsourced Accounting
00:00:09
Speaker
Okay, Spencer Payne here with Becker and Cool Careers in Accounting today with Ryan Watson. And Ryan, can you share with the viewers who are finance accounting type folks, where in that big, broad world do you play? What's your niche? How do you introduce yourself to other folks who kind of, when they say you're in accounting, I'm in accounting too, where where do you go down of um explain yeah that world you play?
00:00:33
Speaker
Sure, cool. Well, so I'm a partner at Upsourced Accounting and Upsourced Accounting is a CFO advisory practice for marketing agencies. That's the simplest way for me to describe it.
00:00:45
Speaker
um That is very specific.
Career Journey and Entrepreneurial Drive
00:00:47
Speaker
How in the world did you find your way into that niche? What's what's the, what has been the path? How long have you been doing that? Well, I can answer the latter question a lot easier, which is I've been doing it for about 12 or 13 years.
00:00:59
Speaker
um The path has been pretty circuitous. I'll say it like I'll do it really briefly and then we can like dig into it because, again, I have had a very yeah circuitous career. um But like the short answer is um about 13 years ago, because I wasn't really finding what i wanted out in the open market, like with regard to jobs, I decided to start my own accounting firm. yeah um And um at the time, this was, you know, like it.
00:01:32
Speaker
I'll even back up a second, which is I'm a CPA. I started my career at Deloitte and I was in the audit practice. And to be honest with you, I was not like passionate about accounting as a small boy. Like I wasn't like, oh, I'm going to be an accountant and I don't have parents who are accountants. This wasn't like on my radar.
00:01:44
Speaker
be honest with you, like I needed to get a degree. I was going to go to law school. My dad was like, well, not going to help you pay for a degree that you can't use. So find something that's like marketable. I'm like, oh, well, I guess accounting will be that thing. Right.
00:01:55
Speaker
And I didn't choose that because I was passionate about accounting per se. I chose it because I've always been very passionate about entrepreneurship. and entrepreneurs and small business. And I always felt like, well, accounting is, you know, people say the language of business. This is like the way in which I can help entrepreneurs and small businesses understand the economics of their business and become successful. And so anyway, i went to work at Deloitte and I was an auditor and I had a large financial institution as my client. And I realized very quickly that like You know, that client did not hire me because they wanted me to be there because they valued my opinion or any of those things. Right. They hired us because like I had to be there.
00:02:31
Speaker
The SEC requires it. So I just kind of like was like, well, this isn't actually why I got into accounting. Like i'm not energized by compliances. I'm energized by helping small businesses and being strategic. So.
00:02:44
Speaker
I got to go somewhere else. This isn't it. um And I took a pit stop in consulting for but a brief minute because I thought, well, that's, you know, that's what consultants do. And I realized in the first four hours of that job, nope, that's not it either. And so I decided like, I'm going to create my own path because I can't find it out here.
00:03:03
Speaker
And can you help us play play but a ballpark? What age about how many years? Oh, yeah, sure. When you kind of like. youre Maybe you already have this this inclination for your first couple months, first couple of years, but like you jumped off at some point and said, this isn't actually what I want. Help us understand where you were in your career at that time. Well, that's a good question. So I spent ah about three and a half, four years at Deloitte. So I was an audit senior,
00:03:28
Speaker
you know i and manager and um that's when i decided like you know i'm sort of looking at and and by the way will talk about uh all these places i want to be very clear like i'm very happy with my experience at deloitte i don't mean you know i recruit from people from deloitte i think it's a great place to start your career i just knew looking at the partner track that's not for me like i don't envy these livelihoods i don't i'm not gonna aspire to them And so um so, yeah, it was about three and a half years
Transition to Entrepreneurship
00:03:56
Speaker
of Deloitte. I took a ah left turn in into consulting. i left. I went to another like mid-tier guide house group now, formerly Navigant. um And I was there all of 11 months. I don't exactly know, but I had to pay some of my signing bonus back. So I know it wasn't full year. yeah um
00:04:15
Speaker
and And like I said, I knew that wasn't going to be a great fan Unfortunately, I moved like I moved my wife and I out to D.C. like it was I moved towns and careers and it was like in four hours i like, oh, no, you just like my wife's coming out of here. Anyway, it was fine. It was I'm so glad that I did that, too, because it kind of forced me to like reckon with what was I going to actually do. OK.
00:04:38
Speaker
um So so and I do want to highlight this little moment here. Within four hours, you move your whole family to D.C. for a job that you think you're goingnna want. Within four hours, you know it's not it, but you stay there for 11 months. So like, what are you doing in that 11 months to, I guess, prepare yourself for whatever this thing was that you wanted to do next?
00:04:57
Speaker
Yeah. So um great. So I have... always, but like I had always been, again, passionate about entrepreneurship, right? Like, and I thought, well, I'm going to be supportive of entrepreneurs or whatever. and And then again, I realized I'm not, I'm not finding in the world. And I spent a long time on my way out of Deloitte saying, i don't think like a traditional CPA is what I want. Like, this isn't the thing for me. So I spent months, months, just like scouring LinkedIn to look for people who had backgrounds, like the one I wanted, right? Like, somebody who had started at deloitte or a big four or whatever in audit and had gone on to do something interesting that wasn't in audit right and i just kind of cold reached out to a bunch of people and you know okay tell me about your career and how did you get here and what do you like or whatever and so through all of that and interviewing at a variety of places pe investment banking none of whom wanted to take a chance on an auditor by the way which was very demoralizing but
00:05:59
Speaker
i But like I spent a lot of time trying to get away from audit and to do something else. like That was my whole thing. I just want to redefine mind. want to see something new.
00:06:10
Speaker
I want to be strategic. I want to be an advisor. And so, again, and um and so again i i In the very first, like I said, in the very first four hours, it was so funny. Like there was this other guy who also left the way Atlanta to come and we started on the same day and like literally halfway i at lunch, we both looked at each other and we're like, wait a minute.
00:06:31
Speaker
Did we just leave audit to join the world's biggest audit engagement ever? and And it was because like, and I won't go into all the details, but it was this big like compliance audit effectively back during like the mortgage crisis.
00:06:44
Speaker
yeah And we had like one of the mortgage servicers was like, God. So anyway, ah but I'd always kind of like been sort of like thinking, okay, i want to start a business.
Early Business Challenges and Learning
00:06:52
Speaker
It's funny, like I remember, i mean, I remember the moment, like it was seriously like it was yesterday because I had had started this job in whatever, October, and i was, again, immediately dissatisfied. Like, oh, no.
00:07:09
Speaker
And I was commuting from Ohio back just like five days a week with the expectation that was going to eventually move there. My wife and I were going to go like right after Christmas. yeah And so I'm home in my childhood home for Christmas, like to celebrate. And my parents have gone to bed and I'm the only one there and I'm laying on the couch and I'm like feeling sorry for myself.
00:07:31
Speaker
And I'm just like, what am I going to do? Like, what am I going to do? And I had always been really, I'd always wanted to start a business. I had a bunch of ideas, you know, like software startup ideas.
00:07:43
Speaker
And it just kind of always ran out of gas for all, all the reasons that people run out of gas, entrepreneurs run out of gas on on a business idea. And I had the the realization that like, if I'm going to stop doing this career and I'm going to go do this other thing, and this other thing is going to be entrepreneurial, like I just need to do something. Like I gotta to get off the couch and do something. I need to sell something for money, regardless of what it is. Like I just need to get a business going and rolling down hill. realization just hit you on the couch at Christmas.
00:08:15
Speaker
A thousand percent. Like just, it doesn't even matter what the business is. I just need to to start doing something because then I can iterate. Like I can figure it out from there, but I just need to get out of this situation into a new situation. And like, for whatever reason, the very first thing I thought to do is I'm going to make a logo and a business card.
00:08:32
Speaker
But the thing and and I did that. And it's it's ah but the yeah and and so my thought was like, well, I if I'm going to do something, I'm just to business tomorrow. Well, what would it be like? What can I what am I qualified to do? i was like, well, I'm an accountant.
00:08:47
Speaker
I'll just start an accounting business like that's what the business will be. Even though that was never my desire. I never actually desired to run an accounting business. I desired to run a software business. And I thought, well, I just need to get this thing going.
00:08:59
Speaker
And so so we did. and And I will try not to make this enormously long story. But what the original vision was like, okay, we're going to start an accounting firm. It'll be bookkeeping, right? We're going to work with small businesses. We're going to do bookkeeping. And our unique way is we're going to create bookkeeping at scale. Which, by the way, like...
00:09:18
Speaker
There are so many like ai driven bookkeeping and accounting firms today. Well, this is way pre-AI era, right? This is just like, how can we create a tech enabled service and introduce some software and automation to a traditionally service driven, you know, manual effort kind of business in a way that we create a little bit of scale, ah you know, more productized offering. We can serve more volume for slightly less cost. Like that was kind of the vision. and And Bench, you know, famously Bench, yeah which, you know, has the Bench was starting at this time. They were 10 sheets. They were going through Techstars New York. And that was kind of like, oh, that's our vision. Like, that's what we want to do.
00:09:56
Speaker
um and Long, long story short, we actually said, oh, well we need to build some software. So we decided to kind of like engage some engineers. We took this business through a startup accelerator and we raised some venture capital to support this software. We actually spun the software out as a separate business.
00:10:16
Speaker
We spent probably two or three years going down that path and we realized that. that whole model was not going to be sustainable or profitable. Like I the bench outcome, by the way, did not surprise me. Like, I think we realized that lesson really early on. And at that point, we said we need to pivot in the complete other direction and we need to go up market and provide a premium, very hands on service offering.
00:10:40
Speaker
And if we're going to do that, we need to select a very specific world to live in, a very specific niche to service. And I'd had experience in marketing agencies through friends. And when um in the early days of starting Upsource, I kind of moonlit as a controller for an agency. So we just said, that's what we are.
00:10:56
Speaker
We are going to be a premium CFO advisor for marketing agencies. It was like seven years ago. And that's what we've been doing ever since. Stakes that claim. yeah can you Can you help me understand a little bit more, too, of this? Just because this early this early time period of yeah leaving you know big company life, you've got this software company you're trying you're trying to spin up.
00:11:19
Speaker
yeah Three years sounds like you know two different businesses, it was spun out, so it sounds like had the bookkeeping piece, you also had the software piece, so you had multiple pieces kind of going on. like Can you just help us understand a little bit of like,
00:11:32
Speaker
What did that involve in terms of five years big company life now for three years? It seems like, like have you taken a massive pay cut? like like oh yeah What does life look like three years in as you're trying, you're now doing it, right? You have this inclination on the couch, you're out selling stuff, you're doing you're becoming the entrepreneur you wanna be.
00:11:51
Speaker
is life three years in? What's that look like? These are great questions, Spencer. So, well, let me first say that like, so I have this couch realization. And so realized like, okay, well I wanna start this, you know, tech enabled bookkeeping practice, to start with just like a regular bookkeeping practice and we'll figure out the automation later somehow.
00:12:11
Speaker
Yeah. um Well, I got to get it some clients. Like I can't just, quit i don't have money to like quit and just do this. i don't have any clients. And so it was a nights and weekends project. Like I would, my wife and I, we lived in DC. We would go to a new coffee shop. That's how we saw the city. And I would just like work all day, Saturday and Sunday on this other business.
00:12:28
Speaker
I would, you know, take calls while i was at my other job, like trying to sling bookkeeping, you know, and, and we tried to market in all the ways. Like I, I will say at that time I had two other clients,
00:12:42
Speaker
friends that I kind of joined up with as partners and they both were back in Columbus. They both had jobs, right? So we're all kind of trying to do this nights and weekends and figure it out. yeah um And by the, let's say nine month, 10 month, whatever it is, mark at the job, I had, I had been doing it for about that long, like nine months.
00:13:02
Speaker
I def, we had i eight clients, let's say. yeah And by the way, my, our first client was, Market 65, which isn't in business anymore, unfortunately, but it was a salad shop, like a like a fast casual salad restaurant yeah in Columbus, Ohio. We charged them twenty nine, twenty nine dollars a
Finding Joy in Entrepreneurship
00:13:21
Speaker
month. And of the twenty nine, we had to spend like twenty just to buy like the QuickBooks subscription. Yes.
00:13:27
Speaker
but it was just like i mean and they didn't need it but i was just like i just i mean i just needed you got you got to say right you gotta say i need a sale like i need to know what this even feels like you know and then our second one was like city folks farm shop for like 80 a month you just like embarrassingly silly but we just needed reps and so anyway we got to the point where like well on no way is this enough to fund my life um But it's enough to be like, I like it. I want to do it. So we move back from D.C.
00:13:58
Speaker
One of those three guys is like my childhood friend. He's also married. And we move my wife and I move in with him and we're like sleeping in their spare bed. And i mean, like i always joke when we talk about like the lore of Upsource, I I found out his wife was pregnant before he did, because like we lived there, you know, it's like.
00:14:19
Speaker
It was in. So we were there, you know, it was a classic, like I'm sleeping on couch and pagan, like basically no money. My wife is supporting us. She's a teacher. we all know. I mean, she's not like crushing it on salary, but we're just making it work three years. know? again, I'm sort of fast forwarding. There's so many different like things you do.
00:14:36
Speaker
Um, and, um, And, you know, eventually we're three years in and and we have more clients. But again, this firm is not making a ton of money. We have software that we're building and we did raise some venture like 750, 800 grand of of money. But of course, that has to go into hiring engineers and all sorts of things. So to answer your question, I'm making like 40 grand a year, like less than I started at Deloitte. And that's gross. And i have of course, I like self-employment tax and all that kind of stuff. yeah But let me just tell you,
00:15:06
Speaker
i I think maybe that was the happiest time my whole life. I mean, maybe with the exception of right now, like ah now is on the other side of all this. And it's actually starting to really feel comfortable at work and cash is starting accumulate. And that's really a nice feeling. But at the time it was like, who cares? You know what I mean? Like we just are, we, our lifestyle was very frugal and, ah and there was just the freedom of like I can wake up and i do what I want with my time. and I was working more hours than I probably ever did.
00:15:37
Speaker
and it was the best. like It totally was. it was totally the best. um and yeah but but yeah like um It took a very long time. I mean, by the way, if I did it all over again, we'd be able to do it faster. But it took a long time to be able to pay like a market-based salary.
00:15:55
Speaker
Out of curiosity, how how how long? So, you know, three years in, you're talking about living with friends, right? I mean, forty grand Like, five years, seven years? Five, probably five years to be at like six figures, let's say. i mean, there's three of us, right? So it's like...
00:16:09
Speaker
And we could have made again, we could have done it a little differently. again, we definitely didn't take the fastest, the shortest distance from start to where we are today, because, again, we went down this other rabbit hole. We thought, you know, ah a you know, we again, we thought we needed to be a different kind of business with a different vision. And it just wasn't the right strategy. And we we found that out. But.
00:16:29
Speaker
ah We learned an important, i mean, again, I think we learned an important lesson in all of this stuff, which is like, you know, you can read, you can listen to all the podcasts, you can read all the books about how do you go market a service and how do you build this offering and all this kind of stuff. But like, there's just no replacement for just trying things. And there's no blueprint, like what works for this business or that entrepreneur doesn't work for this business or that entrepreneur.
00:16:50
Speaker
And so we just tried a lot of stuff And we went down a few, pretty deep down a few rabbit holes that just were not the fit. And so we landed on this model at a time when the market was ready for this model, which wasn't true when we started. yeah and And now like this idea, like again, back then,
00:17:11
Speaker
Accounting firms provided compliance services, audit tax, that's it. Like, you know, you there were like bookkeepers, but there wasn't, you know, people weren't investing in a fractional finance resource to take their business to the next level. It's just not how you thought of, you know, that wasn't a resource that came to mind, finance or a CPA expert.
00:17:30
Speaker
And now it is. And so it took being patient and trying a bunch of things for the market to be ready for what we had. um Yeah, awesome. I just want to highlight the concept of like keeping your burn rate low and that sometimes that can be actually really fun like as a weird as a weird, funny challenge right of like how can I still have an enjoyable life while making 40 grand and like ah having living with my best friends in the same house where we're cooking breakfast together every Saturday morning. How I make this fun?
00:18:02
Speaker
And if you want to be an entrepreneur, I mean, yeah i cannot stress enough. It's the most important thing. It's the most important thing. I mean, even to this day, i have such a low burn rate because low burn rate equals freedom.
Embracing Innovation and Changing Roles
00:18:15
Speaker
yeah and And I have so many friends who have like, I would love to you know start something. And it's like, but I need two something a year to make it work. Well, forget about it. It's not practical. yeah Yeah. So, yeah. um So that was a lot of looking back. And thank you, because that's awesome. Right. Of sorry journey of two different of, you know, two different paths, software versus bookkeeping versus, you know, hard journeys. And maybe it took five years before you're finally making somewhat of a market salary. But even the whole time you're you're working more than you've ever worked, but you're having more fun. than you've ever had in your professional life to build it.
00:18:47
Speaker
yeah Now, as you as you're in a little bit of a different position, right? Like, any what what are you looking forward to over the next three, six, 12 months, right? Are there any projects ah that you're excited about? Are there any new new markets you're looking to play in? Or now you can start to play with bigger clients. yeah Like, what's what's got you energized about the next, you know three to 12 months? Pick your timeframe.
00:19:10
Speaker
it's a good question. um I would say there's probably two things um that are energizing, one of which, of course, is just like every industry ever is grappling with what does automation and AI look like for us? Like, what's the future of delivering service? um And.
00:19:31
Speaker
um A, I'm an opt. I mean, entrepreneurs are just optimists by their very nature. Like we have to be. we yeah We have to be. Exactly. except We have to believe that we are capable of like the top decile of outcomes. I'm the one who's going to make it. yeah Or else we would just get jobs because that's the smarter. i That's the that's how you maximize expected value. But anyway, we're optimists.
00:19:51
Speaker
So I um I'm an ai optimist, but I'm also like willing to admit, like, I just really don't have a good even where I sit today, like I am on perplexity or chat GPT or whatever it is like every day. And I still don't think I have a full grasp of like what is possible.
00:20:05
Speaker
So we just kind of created a little tech team among our, you know, ah a few of like a SWAT team among a few of our team members who are just interested in this to just like create skunkworks project. Just try a bunch of things both to like you know there's a lot to be made of a lot of the conversation it revolves around um you know ah making the work that we do as accountants more efficient and replacing man hours with bot hours and i think that's very interesting to me of course as a business owner looking to maximize margins i'm actually way more interested in like how can i provide better value to our client how can i charge more money yeah to be able to provide a better service offering or just you know like how do i create how do i onboard like we hire
00:20:50
Speaker
CPAs out of big four, generally. They're auditors, right? And they're very smart and they are good with ambiguity and learning new things and being thrown into the fire, but they don't know the first thing about how to run an agency. And quite frankly, that's what we get paid to do, teach business owners how to run agencies.
00:21:05
Speaker
And so we got to train them and we have created a bunch of our own frameworks for how to think about the different life cycles of agencies and whatever, whatever. And how can we use AI to like trying to be of ah to scale us as partners who have been doing this for 13 years to be a, you know, to be, you know, ah to train new folks or to just kind of be a resource for them.
00:21:26
Speaker
And so anyway, like these are the things that I haven't been excited about, like digging into the weeds on a topic and kind of a while, you know, like and so I'm so I'm pretty pumped about that.
00:21:39
Speaker
um And then I'll say the other thing that I'm pretty pumped about is we've hit the point in our life as a business. There's, um you know, 30 something of us um split between a couple offices, many of whom are remote that it's this really weird experience where, you know, comparing like the early days where I'm working a trillion hours and I'm making $40,000 a year and and I'm having a great time and I know and and I built my identity around that guy. And yeah and now The business doesn't need that guy.
00:22:08
Speaker
In fact, if the business needs that guy, um we're doing it wrong. You know, the business needs me to be somebody else. And that looks like maybe fewer hours or certainly fewer hours in different ways. But and it's it's crazy. It's jarring, to be honest with you. It's really hard, like sort of.
00:22:28
Speaker
read, did re figuring out who I am and what value I add and how I can support this organization. And so that's a combination of like I'm excited, but also like nervous about it because it's again just on a personal level, it's it's different.
00:22:41
Speaker
I mean, every phase of like a business journey is different and scary, and this is a new one. Yeah. i was on that note. I was, I'm curious, how do you, how do you, know, we just had a new year going into new year. That's typically a good time for performance reviews and goals and that kind of stuff.
00:22:56
Speaker
Right. Like I'm curious from your perspective, right. Flashback to you know, five years in and you're finally making a market salary. And how you won at that time was hustle, grind. I got to sign up a client, right? Like, I don't care if it's $235 a month, right? like stupid now Like, the definition of a successful year is very different of pride what what it is you're expecting of yourself, what you want to do than it was then.
00:23:22
Speaker
So yeah how do you judge for yourself? Like, what does a good year look like for me now? Like, how do I know I'm succeeding? Well, I mean, it's I think it's it's easy to to answer that question, ah which is you know, you i am succeeding when the organization hits its revenue targets and hits its gross margin targets.
00:23:46
Speaker
And we have we're able to, you know, we we put a lot of emphasis on CSATs like you've got this little helmet back here. This is a. So you're a Ohio guy originally, and so we have adopted a version of like the Buckeye Leaf.
00:23:59
Speaker
And so every time we get a 10 out of 10 CSAT, we put an up source sticker on our hard hats here to celebrate. And so, you know, we have goals for how many 10 out of 10 CSATs we get. And, you know, and and also I i have ah ah a Bench of future leaders in this organization and success looks like getting them to the point where I can promote them to, ah you know, roles and leadership where they can run the business in my place.
00:24:26
Speaker
So all those things are very clear. It's it's but at the same time, it's um It's still it doesn't it doesn't exactly feel like success for me as much. You know, i mean, like I have to know intuitively that if I do a good job, all these things happen. But it's not a direct one for one. You know what i mean? My job but is to enable the people who, quite frankly, are really running this business to be successful and remove obstacles and to support them.
00:24:52
Speaker
And sometimes I'm doing the best job when I'm doing nothing. And that's really hard when you're like a type A person who, you know, it's hard to come to grasp with. Like it's, it's, it's people will even, I had a conversation with one of the senior controllers of our group who's like who said like, she's like, sometimes I have to give you guys little project. So you'll go do that stuff and you'll stay out of my stuff. Okay. Okay.
00:25:16
Speaker
Okay. That's fair. I'm free. I appreciate that. We have the relationship. You can tell me that. But, you know, yeah, it's just one of those things. It's just anyway. Quick clarifying question for those unfamiliar. Cease cease that like.
00:25:28
Speaker
but oh sorry. Yeah. Client satisfaction survey.
Client Success and Business Focus
00:25:30
Speaker
So, yeah, I mean, we. Yeah. Yeah. um Awesome. And ah do you have any favorite ah given, you know, you talked about wanting to add more value to your clients and making sure that, you know,
00:25:43
Speaker
You're successful when you're helping them run their agency, right? By doing this fractional executive, right? Do you have any any success stories that you're able to share or favorite successes that you have helped create for your clients? Whether it's, again, cashflow management, reducing expenses, yeah analyzing their data and realizing your customers are actually over here and you're realizing it yet. Like how like what's ah what's a favorite success story that you've had for one of your clients? Because correct me if I'm wrong, you now are in that business that you originally wanted to be in, which is helping small businesses as a trusted advisor.
00:26:15
Speaker
Well, you know, it's funny, I um i probably have a few um I can think of. So I'll give you i don't know if this is my favorite one, but it's the one that's at the top of my mind. um Yeah, I mean, it's a it's a client that started working with us, um you know, maybe 18 months ago and they had kind of like an in-house CFO and an in-house COO.
00:26:39
Speaker
um And they kind of had some challenges and as a as a combination of like, we got to, you know, we got to we've got to upgrade our sort of expertise here, but also we got to save some money.
00:26:51
Speaker
yeah They let some of those folks go and they hired us. And at the time, like a couple of things, obviously, they're they're they're not making any money. So this is by the way, it's like a pretty decent sized organization. I want to say six million in revenue, 30 something team members, um and been around for a little while, right? So like, this is not, i mean it's a small business, but not a micro business, like it's a real business.
00:27:11
Speaker
And so, but like, they're woefully unprofitable. I mean, we're talking like, and and this is an organization that kind of has historically grown pretty quickly and is just kind of assumed like, well, I'm just unprofitable because I'm hiring a head of growth. And At any point I could just sort of flip the switch and we could become profitable, right?
00:27:28
Speaker
Like, okay, well guess what? That moment for you to flip flip the switch is now because your sales have kind of declined and now you've got to get to like ah the the the size of business where your unit economically positive.
00:27:40
Speaker
And they couldn't. They realized that like they had sort of lied to themselves that like this our lack of profitability is our own doing. And the answer was they didn't actually know what the cause of their lack of profitability was. so this was an opportunity for us to be like hey this is what we do every day let's get into the weeds like let's really understand and i won't go through the wonkiness of how this all works but you know look an agency a service business it's all about gross margin and so it's a service business it's really just like when i'm selling projects am i making money on those projects or is it i uh i'm making money in my projects uh but i have too many people sitting around like i have a utilization problem like it's either project margin or it's a utilization problem
00:28:21
Speaker
And then you you peel back the onion and peel back the onion and you realize that um they have utilization problems, but they have this really funky problem where it's like everybody feels like they're busy, but on paper, they're not working enough.
00:28:32
Speaker
And it's because of how projects are, so it's really just, It's it's on average they're not working enough, but ah there are certain roles that have too few people in certain roles that have too many people. So on average, of course, they're overstaffed, but in pockets, they're understaffed and they had certain like yeah flight periods where like on the second week of the month, it's super busy. So we all feel like we don't have enough people, but in on average. And so, you know, again, none of these none of these problems require like rocket science to solve, but.
00:29:02
Speaker
If you don't know where to look and you don't have the information, you don't have the reporting structure to like get under the hood to say, well, here's, you know, here's the mark. Here's the utilization by role or here's the margin by project or type of project.
00:29:13
Speaker
Then you can't even ask the questions that you have to answer. So anyway, all that to say is just a classic thing. So we we had those conversations they had. You know, they were doing like a 2%, 3% net margin. They finished the year at like 18%, which is like a very fast turnaround. And the thing that I'm really the most happy about is the owner who was you know, and i argue, you know, admittedly very stressed and just kind of rough area because of the turnaround and because of this the pace, he has been wanting to relocate his family and to hand the reins of the business off to some new CEO.
00:29:45
Speaker
And he was able to do that. And that new CEO has taken over effective the beginning of the year and he's doing a great job and it's working like the business is working and this guy's able to take care of his family. And none of that stuff was going to be possible 12 months ago.
00:29:58
Speaker
um And, you know, look, it's a small win, but like that's that's life-changing for these human beings. And like, that's so why we do it. It's exciting. Like we love it. Yeah, that that just reminds me of like there's a visual in my head. i don't know if you ever played racquetball or squash.
00:30:12
Speaker
I have racquetball. ah Maybe both. I don't know, but definitely. very Very similar game is very similar to their strategic concepts. Right. and what I'm reminded of is, you know, I remember playing a college professor in squash when I was in college and I'm, you know, athlete. I'm I'm diving around the play. I've never played before, but I can run and jump and dive and do all these things. Right. but And in the meantime,
00:30:36
Speaker
He is, don't know, 60? I don't know, ballparker. he is not at all being athletic and running around and doing all this stuff. But when I hit a ball, he just has this casual little wrist flick.
00:30:51
Speaker
Boop. yeah And just perfectly places in a spot where I'm like, go I can't get that. horse yeah and So what I'm reminded of is you know sometimes we're out doing all this activity and we think we're being productive.
00:31:03
Speaker
yeah I thought my athleticism could help me play squash or racquetball. It was actually a massive liability against someone who knew like, no, i need I need to spend my time here, here, and here strategically. And I can work one-tenth as much as Spencer is diving all over the court.
00:31:21
Speaker
And I'm going to beat the crap out of him because I know where thousand percent. Of course, a thousand percent. Yeah, this is we we have this. We talk about this all the time, by the way. This is like the number one ah for especially for like new entrepreneurs or small business owners. It's this concept of a playing business, which is the idea of like you're doing a bunch of things that feel like business. Look at me. I'm a business owner. I created a business plan. I have three year projections like I don't have I mean, I don't I i don't have a dollar of revenue, but I have three year projections and I'm. And I don't mean that like derogatorily. We all do it. I played so much business and because I because the A, sometimes we don't even know what to do. But also sometimes like the thing that I need to do in this moment is hard and it's scary. It's putting myself in front of a client and getting a no after a no. And sometimes it's a lot of easier to retreat to things that feel warm and comfortable and they feel productive.
00:32:10
Speaker
But you can't be fooled by the feeling of productivity in a business context. Sometimes it's just it's just playing
Legal Challenges and Communication
00:32:18
Speaker
business. Yeah, 100%. And sometimes you got to play sometimes you do have to play a little bit to before you learn. like Those seven actions were all playing, but that one thing I did- This one is real. That was real. I need to do more of that. Well, you're right. You're right. Yeah, sometimes it's not obvious.
00:32:32
Speaker
Yeah. um As you look, again, we've like I'm still curious to look back on some of these. like Are there any- wildest, craziest stories in business that you can share, maybe things you look back on and you're like, I still look back and I can't believe that happened or that person said that in that context, like anything, anything strike you looking back. That's just one of those that when you're 80, you're still going to look back and be like, I can't believe that happened. That was insane. Well, yeah, I mean, gosh, um probably a couple. I don't know how wild this is. By the way, I'll I need to give like 90 seconds of my career is even more circuitous than the one.
00:33:06
Speaker
The 90 seconds of background is um there was a period of time where I took a hiatus from running the firm for about three years. We had a client. They were a sort of tech enabled marketing agency. They needed full time finance and operations leadership.
00:33:19
Speaker
We thought we would help. hire somebody and I was like, you know what? I think this would be best for me and the firm if I did this. this but This business ultimately wants to sell. That's an experience that would be very valuable for me and us to lead them through a sale. So I did that. So I joined and I was the COO of Ahology, which was a venture backed marketing firm.
00:33:36
Speaker
Anyway. A couple of things that are are very wild about that experience looking back, and this, again, maybe maybe not like headline wild, but just things that were like crazy to me. I'd say a a learning that I had just in like in business um is that um you can sue anybody for anything.
00:33:56
Speaker
yeah It actually does not matter if it's right or wrong. It can just be anti-competitive. And honestly, that never really, I had a naive sense of justice.
00:34:07
Speaker
And so I'll tell you an experience that we had is we hired a seller from a comp a competitor. Now I will tell you that this seller had a non-compete. We reviewed the non-compete. but Interestingly enough, the non-compete had a number of firms that says, you can't go work for these firms.
00:34:20
Speaker
We weren't on there. We feel like. Great. We're we're we're smooth sailing. Well, in after having hired this person and we've she's been working with us for, I don't know, six months, eight months, whatever the time is to you're not compete.
00:34:33
Speaker
Anyway, in the in the sort of subsequent months, we now are in an LOI to sell the business. yeah And we're negotiating the deal. And then we get this hand delivered packets one Friday and we open it up and it's lawsuit.
00:34:47
Speaker
And it's lawsuit from the former employer because they're they're they're suing her and naming us for violent trade secrets and non-competes and whatever else. Right. And of course, at that moment, I'm thinking,
00:34:59
Speaker
Oh, no, like this is going to kill the whole deal. Like this is everything we've worked for is now down because of this BS. um And they were much larger than we were. We were, you know, eight million in revenue. They were, I don't know, two hundred and fifty million in revenue or something much larger. I have no idea. Like David Goliath, you know, and in a war of attrition, they're going to win.
00:35:19
Speaker
Of course. Right. And so fortunately for us, the folks who were engaged by us were like, happens all the time. No big deal. We got your back. Thank God.
00:35:30
Speaker
Yeah. so we end up getting through the um we end up getting through the sale and we're all the while we're sort of litigating this thing. And it probably took, I don't know, 18 months to.
00:35:42
Speaker
The thing that I thought was the craziest was we eventually settled. And by the way, they weren't interested and they weren't interested in settling right away because it was just anti-competitive. like It wasn't about that. It was just about forcing us to spend money we didn't have that they did have.
00:35:56
Speaker
yeah And so by the end of this thing, we ended up spending, I want to say like 250 or 300 grand in legal costs to defend this thing. And the settlement was like $5,000. Yeah.
00:36:07
Speaker
ah but Yeah, welcome. Welcome. Welcome as a microcosm to many things that happen in the U.S. legal system where the legal costs are dwarf the cost of the system. Turns out you can just do that.
00:36:19
Speaker
Turns out you can just do that. ah And that was a real learning for me. Yeah. Oh, man. ah Sorry, that's a painful one, but not... We were okay. Fortunately, it was a small fraction of what the sale price was. just kind of came out of the escrow. We all moved on, and now we have a story to tell. But yeah, man, it's just how it goes.
00:36:39
Speaker
Yeah. um Yeah. Well, ah maybe one more one more good nugget on okay um things that you have consistently maybe done in your career that seem to work really well for you that you're surprised other people don't do more of.
00:36:57
Speaker
does Does anything stick out for you?
00:37:00
Speaker
Yes, um which could be controversial, especially like certain, many anyway. um Well, they're all in the same, but I, if you send me an email, Spencer, if you send me an email, I am going to reply to you in like 18 minutes.
00:37:15
Speaker
Like I'm going to reply to you right away. I may not give you like a long, you know, it's not going to be a paragraph, dear Spencer, thank you for your email, et cetera, et cetera. Like I'm on my phone, but if you, especially if, I mean, if you send me an email that's not very, you don't need a response, then I won't. But if you are asking something of me, I am going to let you know immediately that you are heard and I am on it.
00:37:39
Speaker
That is my brand. Like that's my brand. And it comes at a cost, of course, right? Because I have my phone on me at all times. And at times it's a little bit harder for me to go heads down for hours and hours and hours if I'm gonna be that responsive.
00:37:54
Speaker
But for me, it has been worth it because a thing that I have now learned having hired so many people and worked with a bunch of clients is rare.
00:38:04
Speaker
And you know especially when I'm competing with other service providers or whatever else, and they're they're out there setting SLAs about like, we'll respond to you in 24 hours or 36 hours. and And they wanna automate their communication.
00:38:17
Speaker
I don't want to do that. I want you to know that you have me and I am going to get back to you right away. And when I see people who do that, which there are a few that are like, wow, that person, I know if I send you an email, I'm going get a response in like an hour.
00:38:34
Speaker
there's There's just like, there's nothing more. I don't know. Like I don't, nothing engenders trust more than like, okay, I can count on this human being.
00:38:45
Speaker
And, and that brand for me, I feel like has opened up more doors both early and late. um And it's just a small
Career Advice and Skills
00:38:56
Speaker
thing. Like it's just like, there's a lot of hard things that we all have to do in our career, but there is nothing hard about being responsive. There is just nothing hard about being reliable in that way.
00:39:05
Speaker
And so, yeah, anyway but the other like ah a sister to that is like and this is a generational thing that people just like hate to pick up the phone and like have a conversation with somebody and like um be responsive and just pick up the phone like just pick up the phone and have a hard conversation with like yeah but anyway like those sorts of things um i think that's i think that sets like a players apart from b players really fast Yeah.
00:39:30
Speaker
Awesome. um And a couple more quick hitter kind of questions for you as we wrap up here. So ah regarding the CPA, I'm curious, when did you knock out your CPA? Like, were you still working? Did you do it before you started working? And ultimately, knowing what you know now, like, what would you recommend to folks who are maybe thinking about that CPA their seniors? Like, how would how would you recommend that they approach that today?
00:39:54
Speaker
Yeah, you know I mean, I basically treated, you know, i like like a lot of people at Big Four, you start like in the fall or whatever, I started in September. And so I treated my job that summer yeah as studying for the CPA. So yeah every day for however many hours, six hours whatever, I was studying. And so I knocked out maybe two parts before I i actually officially started, and then I knocked out the other two parts.
00:40:16
Speaker
before christmas or whatever yeah and like you know look it just is all done before the first busy season all done before busy season and we had a number of people i don't actually know you know probably better than i did but back in my day there was this thing where you could like because you couldn't sit i don't think in ohio before you graduated i think you can now maybe but anyway back then you couldn't but in alaska you could so like had a bunch of classmates who would like sit for the alaska a CPA and then transfer it over to Ohio so that they could get it knocked out early. um Again, I don't know if that's the thing you can do anymore, but I appreciate like the faster you can get it done, the better.
00:40:50
Speaker
Like you'll never have more time than when you're a student or you're waiting to work. Like you go work at a, you know, a real accounting firm. It's going to get harder. Just get it knocked out. Just get it knocked out. ah Sorry, I just got to share another one on the note of loopholes in Alaska. This has nothing to do with CPA, but in my early consulting career, um i know somebody who right before the year end, right before the the airline status is about to change over, right? They were okay were a flight short.
00:41:16
Speaker
Okay. They literally took a flight, like they needed like a long, they took a flight to Alaska, spent like, I don't know, 12 hours there or something and flew back. And flew back. And they changed their status.
00:41:29
Speaker
It's just the kind of stuff people in consulting are going to do. Like, you know what I mean? Just play, just play, just playing games, just playing games. um i mean If you go back to that time period again, maybe that that late college first year in in kind of new career, any advice that you'd give to to folks who are in that position now? Or, you know, maybe it's the same, maybe it's not. Any advice you'd go back and give yourself at that time?
00:41:51
Speaker
Well, yeah, I mean, i guess there's maybe two things. One is like, I wish I had but done more like side hustles, different things like in college. Like it doesn't matter if it was ever going to be the business that but like you just there's a skill to learning how to sell a thing.
00:42:05
Speaker
Yeah. And it's not intuitive. And like we we we started by putting like a flyers, business cards in Panera and flyers in laundry mats because it was like, well, this is how I see people do this like. Yeah. This must work. People do must work. Like, of course that doesn't work, right? Like, so you don't know. You just try, like, I wish I would have.
00:42:21
Speaker
You just, oh my gosh, you have so much free time when you're in school. Like, ah, I wish I would have taken better advantage of that. And I wish I would have done it more as an early career person. And then the other advice i would I would give folks is that, like, every place for the most part, especially Big Four and every place,
00:42:36
Speaker
You can treat it like a sit down restaurant or you can treat it like a buffet, right? Like and so many people just kind of sit, treat it like a sit down restaurant. Like you're going to deliver to me my opportunities and you're going to deliver to me my promotions. And and that's fine if you want a very linear career path. But you don't have to do that. Like there's always the end around. You can always zig when other people are zagging. And it just takes a little initiative and raising your hand and saying, I want this. It's just surprising how far you can get by just expressing interest. yeah Because so few people do.
00:43:07
Speaker
yeah um So anyway, those are. Awesome. And on the note of of selling, that doesn't necessarily have to even be like, please go go please go spend $49 on this thing I'm trying to sell. Right. So here's an example. Like I waited tables in college and i I had this fear of like, well, I'm just I'm just there to take people's orders. Right. Like I'm not there to yeah push. Like there's a, you know, there's a, you know, ah a bonus whoever sells the most wine tonight like i'm not trying to do that like know whatever over time i kind of tried things right and it was amazing the reaction sometimes is when i'm i'm actually not trying to sell somebody something i'm trying to give them an experience right so instead of
00:43:52
Speaker
hey, welcome, what what looks good you tonight? I'm like, hey, I'd like to highlight something on the menu that maybe you haven't tried before that highlights blah blah, blah, blah, blah. If you're interested, it's one of my favorites, like if not, no worries, right? And like, that's a way that you can almost back into like, hey, how do how do I work that little speech? Like how many people, you know, it's not about how many people can I get to buy that thing, but it's more just like, I'm trying to show people an experience.
00:44:17
Speaker
And they actually appreciate that, which is a reframe from, oh I'm just trying to sell people and they're immediately going to you know put their guard up. Like that's a simple way to just practice this this little bit of a skill.
00:44:28
Speaker
We'll also, and we could go down a rabbit hole about sales and we won't do that. But again, I think most people are really afraid and hate sales because they have the wrong idea of sales in their mind. They're thinking of bad salesmen and not good salesmen. But good salesmen are just authentic human beings. Like you said, or we're like, hey, I have a thing that you might need.
00:44:43
Speaker
I'd love to give it to you. If you don't, that's no big deal. right Good salesmen don't want to sell people things that they can't use and don't want. They want the other person to be successful. it's supposed to be a win-win. Exactly. Exactly. Yeah. um Just a couple more real quick ones. You did mention earlier and the Skunk Works team. How, if at all, are you like really using that in in your work today?
00:45:06
Speaker
um Is there anything that is that is actually there's actually live functioning that you or your team are are doing with it? Yeah, we do. I mean, we so as a friend, since like I have um we record all of our meetings, these are advisory meetings. Right. And I've created this framework of like the anatomy of a great presentation. What does it mean to be good at delivering financial information? It's all about storytelling. Right.
00:45:26
Speaker
Like, how do I give them the headline and the story and not like linearly read through a P&L because they can do that for themselves? I've created a custom GPT that allows me to feed in the transcript from a call and say, hey, score this meeting against my rubric, the anatomy of a great presentation, right? And tell me what went well and what didn't go well, right?
00:45:45
Speaker
It's very simple, very easy, but it allows me, it scales my time, so I don't have to watch every meeting and give people feedback. I know this went pretty well, so I've spent a lot of time here. There's an opportunity area. It is actually shocking, by the way, how good.
00:45:57
Speaker
ChatTBT is like I have this phrase reading the news and it'll like, oh yeah, this person's reading the news, which is just reading linearly the thing. and it's like, oh yeah, that's exactly what's happening. Great job. um So we use it for that. We use it for research.
00:46:10
Speaker
I keep trying to automate specific workflows like between Zapier this and take this and do this. It's just i I just keep getting 95 percent there on my workflow. And then I hit a snag. That's like, well, that last five percent, I just can't close yet. And I know it's coming.
00:46:24
Speaker
But I just I we just haven't. So, you know, I again, I think that the promise is and the opportunity is very huge. But I do think like it there are a lot of limitations presently that are preventing my ability to just kind of like turn it loose.
00:46:39
Speaker
Yeah. we'll see. Last two really quick ones. yes Anything yeah that you. actually knowing what you know now, right? Going down this CPA, studying accounting path, especially because you didn't have parents going through it and that wasn't like necessarily like kind of backed into it because you wanted to be ah more of a business advisor, right?
00:46:59
Speaker
Would you still recommend that path to would you still it for yourself? Yeah, a thousand percent. thousand percent. Yeah, totally. Thousand percent. Yeah. i mean, no no question about it. It gives you a skill. Like, yeah you know, it it doesn't it doesn't like. ah Yeah. Most degrees kind of expose interest like you have interest in marketing, you have interest in finance or whatever. Accounting is a concrete skill. The CPA is a concrete license that you can always use and leverage even if you don't intend to.
00:47:26
Speaker
um Yeah. No question. I would do it again. Anything that you want to share with the audience that you feel like hasn't come across yet, or maybe even anything that was shared that you're like, that's so important. I'm going re-highlight that because I want to make sure that that importance of that gets gets double double underlined.
00:47:45
Speaker
Um, yeah and no, other than like, um, again, other than, you know, as CPAs, the the flip side of why a CPA is great is that because it's such a concrete thing, it is very easy to just fall into ah the path.
00:47:59
Speaker
Right. And if that's what you want, by the way, great. Like what a wonderful opportunity, but. Don't be fooled into thinking that you are because you're a CPA. These are just the two ways you can go out of tax, FP&A, whatever. It doesn't have to be that way. I've met so many CPAs who have completely left accounting in the rear view and are doing a completely different thing.
00:48:21
Speaker
Just like anything, you have to it's got it. You to treat like a buffet. So again, it's it is out there, um but you have to go it. Yeah, got to go take it. Anything you need to the audience? Are you hiring any expertise? I am hiring. I am hiring. Look, if anything that it sounds like we are doing is interesting. I always, I believe that this is the best place of the world to work because we have all the benefits of a, of a public firm that like, it's exciting and it's fast paced you're always learning, but we don't have busy season. We don't work 55 hours a week, right? You get to work with clients in an advisory context. So if any of that stuff sounds cool, I would very much appreciate you coming to work with me and you can find us at UpsourcesAccounting.com.
00:48:58
Speaker
Upsourcedaccounting.com. Awesome. Ryan Watson, most definitely a windy road and a cool career in accounting for sure. Thanks so much for joining us today. Thanks, Spencer. It's been blast. You got it.