How to Add Profit Centers to Your Firm: The Mike Bark Interview
Mike Bark, Partner at EdgeAdvise, has created a firm with many arms and he’s ready to show you how to add profit centers in multiple arenas.
You’d be surprised how far you can stretch, including into marketing and mergers and acquisitions (M&A)
In this episode of the Growing Your Firm Podcast, David Cristello and Mike Bark cover:
- How Mike was able to start his first accounting firm through purchasing his existing clients from his employer
- How to find (and recruit) the *right* partner to help you add profit centers that are new
- How to determine which profit center to launch, and the timeframe to expect breakeven points
- Mike’s direct line: 414 – 759 – 9629
- Mike (AT) EdgeAdvise . com
- Mike’s website: http://www.edgeadvise.com/
- LINKEDIN – Mike Bark
- The secret to a Million Dollar firm (interview)
How to Build an Accounting Firm Without Finding New Clients
Mike Bark of EdgeAdvise, started out like many in a large accounting firm. I met him as he’s a user of Jetpack. He says at this large firm he had reached the ceiling. He was a manager and the partners didn’t want to bring in any new partners. On top of that, they were a pretty ‘old school’ firm. They used old style timesheets, got clients the old-fashioned way, and didn’t want to expand much.
Mike wasn’t going to twiddle his thumbs, so he approached the partners and asked to purchase his client list and bring it with him to his own firm. The niche was medical, but Mike wanted to expand outside of just one niche. To start his expansion, he began working with an outside professional (Andy) who worked in M&A. They weren’t competitors but they complemented each other’s businesses.
That’s when the light bulb went off. What if they created a one-stop-shop service for small businesses including M&A, tax, wealth, even niche consulting (like hygiene business consults).
For many, they worry about starting new ‘partner agreements’ for fear they will be locked in for life. But, Mike advises that you don’t have to set anything in stone if you don’t want to. It might just be a joint venture or a yearly agreement. Mike and Andy’s partner agreement was essentially “we will respect and trust one another not to go into competing businesses.” Now, since 2012, they have 23 people on payroll so their method has worked.
DAVID’S TIP: It pays dividends to have service people you can rely on for the long haul. They are also the best people to tap into with new employment opportunities.
Because their respected businesses complemented each other, Mike was able to open up doors to Andy’s clients and vice versa. They were able to reach different platforms that they couldn’t by themselves.
Mike realized he was referring out a lot of business to other outside contractors but was seeing little to no referrals back. That’s when he realized “why am I giving away all this money?”
Are you giving away a lot of money to other businesses and not seeing the dividends? It’s not selfish to want to keep that business to yourself. Add profit centers to test out some of your ideas.
How to Start to Add Profit Centers to Your Accounting Firm
Mike says he doesn’t do much direct marketing, but rather spends time speaking at conferences, meeting with influencers and really developing himself as an expert for referral purposes. Mike positions himself as the “niche” solution. Right now, there are a lot of consolidations in the accounting industry. For Mike’s niche, he’s a better solution than the big houses. But, he admits, sometimes it’s better to go with the big houses for things his firm doesn’t do and niches they don’t work with.
When it comes to getting your added profit center started, you don’t want to begin investing in people and resources right off the bat. It’s best to take a high-level view first. It all starts with the conversations you have with your current clients. Many just talk to clients about taxes and balance sheets.
Instead, you should be looking analytically at each piece. “Why are the revenue numbers dropping?” is a good jumping off point. Maybe then the client starts talking about marketing and sales troubles. These are the points where a new profit center can crop up.
One arm Mike added at his firm was a marketing person. We’re not talking about a full-blown ad agency, but someone who can help set up websites and perhaps design some marketing pieces. This came about after clients asked about Mike’s website and they really liked it. Mike was hiring a guy at an agency. Mike saw the opportunity and pitched his marketing guy to come work for him and essentially be on a fast track to partner in the firm. His contractor agreed.
What then made it an easy sell was they had now the resource for the client to implement easily. It’s so easy for them as you are already their accountant for them to say “yes” to getting on board with your new marketing profit center. You’re making the next step easy for them.
What You Should Know About These New Profit Centers
We’re all impatient people. You have to understand when you add profit centers, they aren’t going to be booming successes overnight. Nothing works like that, unfortunately.
For Mike, he knew his wealth management arm was going to take a good 2-3 threes before it turned profitable. As accountants are conservative, it’s tempting after 1-3 months to pull the plug on something that doesn’t turn on the cashflow machine. There is no magic profit button for a profit center.
If you don’t have realistic expectations when you start…you’ll probably quit.
That’s why you need to lay the foundation early. Like we mentioned before, just because you dream up a new profit center doesn’t mean you start investing in the resources and people just yet.
First, send out a letter to your current clients. Say “Hey, we are thinking of adding a wealth management piece to our firm. If we did that, are you onboard?”
Mike recommends waiting for a good, positive consensus from your clients. He says if he suddenly got dozens of “No, please don’t” emails, he’d rethink the whole thing.
Point is: plan!
For his wealth management piece, it took 3-6 months to even get it off the ground due to regulation. Patience is key.
What if my clients aren’t all receptive to my new profit center?
Everyone isn’t going to sign up the same day. Give it time, but make sure you drop hints in your newsletters, send print materials to them, encourage your team to get published talking about topics in your new profit center.
Once the time is right, they will be ready to jump aboard!
What new profit center have you thought about for your firm?