How To Sell Your Firm In Five Years (or Less!)
Some firm owners have a dream of selling their firm to a larger company to sit on the beach drinking margaritas. But how can you get there? In this week’s Grow Your Firm podcast, we’re talking with Ryan Lazanis. He was formerly the CEO of Zen Accounting, a customer-experience oriented cloud accounting firm, and is now the founder of Future Firm, a company that helps firm owners evolve their firms to the point they’ll be attractive for buyers.
We encountered him through his weekly newsletter and wanted to hear his story. You can listen to the podcast below or read our summary.
- How Zen Accounting got started
- Why he focused on creating better experiences rather than getting more clients
- Why this approach worked so well and caught the attention of buyers
- The state of cloud-based accounting and just how much more room there is to grow
Ryan’s site: https://futurefirm.co
The Future Firm Weekly Top Five: https://newsletter.futurefirm.co
From Zero To Sold In Five Years
Ryan’s story is a little unusual from many of our previous guests, as he didn’t have a dream of selling his own firm. But he did stumble upon a formula to make it happen. He started at a traditional CPA firm in Montreal. After six months, he realized what he really wanted to do was start his own business.
His passion wasn’t in accounting, but what he was passionate about was creating disruptive business models and using technology to solve problems. That was the focus of his former business, Zen Accounting, which was started in 2013.
At the time, the technology level of the accounting field was just getting off the ground. Businesses were still bringing in shoeboxes of receipts and losing a lot of time working with accountants. Instead of focusing on providing on improving the accounting side, he focused on how to improve the customer (his words) experience of working with an accountant. He also wanted to do the same for his employees.
Easy And Pain-Free
Ryan’s watchwords were to make the whole experience “easy” and “pain-free”. Everything else flowed from there. The easiest way to do this was through leveraging technology. He started by avoiding in-person meetings and using Skype for all client communications and experimenting with different cloud accounting tools. He didn’t have a lot of clients in the beginning, so he used his free time to try out different technologies and really dig into creating a better experience.
Another part of the experience he wanted to change was pricing. He points out in the interview that the problem with charging by the hour is that it’s hard to guess how long a job will take with a new client. Since the price point is unknown, potential clients get skittish. He recommends a subscription-based model where both the accountant and the client know the scope of work.
On the employee side, he found that a lot of his employees hated keeping up with timesheets and dealing with overtime. So he figured out a model for measuring capacity planning so that he could onboard people at the right time before things exploded into 80 hour work weeks.
To his credit, Ryan has a lot of good business instincts. He didn’t whiteboard his ideas or make a plan of attack for measuring capacity. It was something he developed in his brain by feel. Later, as the firm grew, he did have to start using tools for measuring things more accurately. He started by gauging how many hours his workers were splitting between administrative material and client work. Then, using a planning management system, he broke down that time into tasks and started to form estimates for how long a job would take depending on the person.
He says that knowing when to hire another person really depends on your business model. Firms that go all-in on internet marketing may have more leads than they know what to do with. Those who choose a more measured approach to choosing clients will need to hire less. For his business, he would start to advertise for a new position when he got to 80% capacity.
Where Cloud Accounting Stands Now
Some readers may think that Ryan got lucky focusing on a cloud-based approach. It’s just a case of the right mindset at the right time. But that’s not true. In Canada, only 10-15% of businesses use a cloud-based ledger. That’s a lot of potential business! The percentage of people doing off-line transactions is still very high as well. There is plenty of room to grow for firms to turn their attention toward a cloud-based system.
This is why Ryan founded his new company Future Firm, which helps firms transition to this type of accounting system to better serve their clients. But it’s not just a technology stack. The company also helps firms with marketing their business so they get more notice. For Zen Accounting, Ryan focused on good SEO and experimenting with different techniques to get noticed. He suggests a ready-fire-aim approach to marketing, jumping into things and adjusting along the way.
The core thing to remember is that all this technology isn’t meant to be impressive or showy. The purpose is to create better client experiences so that they’ll keep coming back for more. Firms that cannot do that will look for one that can. So if your process isn’t smooth (like if your workflows aren’t on point!) then you’ll run into problems.
Cloud-based accounting is process-driven and more scalable compared to traditional methods. While Ryan wasn’t looking to get acquired when he started the company, he thinks it was the superior processes and experiences he created that caught the attention of the firm that bought him out. It wasn’t that he had a large book of business. It was that his processes could be used to create one quickly.
We want to thank Ryan Lazanis for taking the time to talk with us. He has a weekly newsletter called The Future Firm Weekly Top Five where he talks about the top five things firms need to know about accounting technology for the week. You can look at past newsletters and sign up for the latest ones at the link in the resources.
1. How to Sell Your Accounting Firm for 7-Figures and Beyond