Gretchen Roberts, welcome to Acquiring Minds. Thank you, Will. It's great to be here. Gretchen, a few months ago you acquired a tax accounting and financial advisory firm. Yep. You are not an accountant or finance person yourself, but you did this to pivot out of a corporate career for the next chapter of your professional life. Let's start with some background on you, Gretchen. Tell us about your corporate career or however far back you want to go. Oh, well, I could go all the way back, but um let me start with this because I think this is a little bit interesting. I actually graduated with an English and chemistry degree and the original intent was to go to medical school. I actually had a full ride scholarship to medical school and I did a an internship one summer in college with a couple of doctors and they basically said this is the most boring job ever. And Being a doctor was boring. They said it's a lot of C Y A. Mhm. Yeah. Yeah. So, you know, a lot of charting, a lot of making notes, um just making sure that, you know, the insurance companies would would um just making sure the insurance companies were okay with everything they were doing. So, it's a lot of compliance, stuff like that. And I didn't really understand at the time why I decided not to go. I just knew that wasn't for me, right? And I think um since then what I've discovered about myself is I am really entrepreneurial. And so, you know, I went into corporate America, go figure, but when you graduate with an English degree and a chemistry minor, what do you what are you going to do with that, right? So, um I started out in corporate America and then I ended up having four children total and as my babies were little, I worked for myself. Um so, I wasn't running a company. It was if you think about Robert Kiyosaki's cash flow quadrant, I was on I was still on the left side of the quadrant. I was self-employed, right? And so, I had clients, I was doing work for them. I kind of learned how to run my little mini business, but I didn't have a team or payroll or anything like that. And what kind of business was this, Gretchen? Uh it was writing and marketing. So, I used to write food and wine articles for major national magazines like Better Homes and Gardens and Wine Enthusiast and things like that. Cooking Light. I did um Cooking Light wine pairings in several of their cookbooks. This sounds like you know the ideal possible job for a lot of people. Was it as good as it sounds? It was a lot of fun and we had a huge wine rack in the basement because I got tons and tons of free wine from PR firms. I got to take a lot of trips to, you know, Champagne, France and um Sonoma and things like that. So, it was a lot of fun, but again, I think this goes back to what I said in the beginning, why didn't I become a doctor? I think um I think it goes back to I'm a lifelong learner and I kind of hit a wall at some point there and I said, I've done this. I've been doing it. I'm tired of writing about red wine tasting like pencil shavings and going with, you know, steak. There's got to be more to life than this. So, at that point my kids were getting older or they were in school and so I felt like it was time to go back to work full-time. So, I ended up going into corporate America again and this time I went into marketing at technology firms. So, um that was that was a really fun ride, too, um in the sense that it's a very high level and I learned to play at a very high level. Um I really like the field of technology. It's an opportunity for endless learning. But, you know, once again I kind of hit a wall. Um this was this was in 2022. I I was kind of going, okay, I turned 45 and I'm like, what do I want to do for the rest of my life? You know, I've got maybe 20, 25 years left in my career at this point. And I asked myself, do I want to be um do I want to keep going up the ranks in corporate America? And at this point I was a senior director and my job basically consisted of um making PowerPoints to present to executives traveling and sitting on Zoom meetings. And then some budgeting here and there. And I thought, it's only going to get worse, you know, more travel, more PowerPoints, more Zoom meetings. Um I want more out of life. So, I decided to buy a business. So, that was my midlife crisis. Well, hopefully it wasn't a passing crisis because you bought it now and you're stuck with it. So, I hope Um And and just going back really quickly to your writing days, your self-employed days, how long was that stint and from what age to what age? Yeah, that was um I had my first baby when I was 25, so I did that for about 10 years. Okay. And so, you you go back to corporate at roughly 35, so then you do 10 10 years in corporate. Yep. So, I'm doing things in decades. This is my next decade is small business ownership. Yeah. And your um entrepreneurial itch, I haven't heard you say that was part of actually this most recent decision. You talked about how you have that strain in your character and how it, you know, showed itself when you were when you were at home uh with your four kids and being self-employed, but was there was this decision to buy a business now just uh defensive to get away from corporate or was there sort of an offense to it, too, where you were scratching an entrepreneurial itch that had been latent? That You know what? That is such a great question and um one of the things that I tell my team members when I'm coaching them is to never run away from something. Um you should always look at what do I really want and then make plans to step into something you actually want. So, I would characterize it that way and I actually I spent like a quarter doing some real soul-searching and um I had a coach and I was taking DISC profiles and I was journaling about what do I want to do next? And for a while I was a little bit all over the place. I didn't really know what I wanted and I wasn't willing to make a change, you know, to to escape. I wanted to do it because it I wanted it to be my next decade. And so, um the reason I ended up with business buying, so I do have some real estate. I've always loved real estate, but when you are a highly paid corporate America employee, it's really hard to replace that with real estate, you know, like a little $100 a month cash flow for each property. It's it just doesn't add up quick enough. And so, it's a great long-term play, but I realized again going back to the cash flow quadrant that the real move is to buy a business, grow the business, and then plug those, you know, plug your extra cash into real estate as a more longer-term investment. And so, that end up ended up becoming my play and the way I was going to not escape per se, but make a change that was great for me and for my family and um hopefully for the world as well. Mhm. Well, and let's just uh linger on the comparison to real estate quickly for for those who might not be as savvy. But basically what you're saying there is if you consider buying a a duplex, depending on how expensive your real estate market is, your first investment might be a duplex or it might just be a a one-bedroom condo or something. Right. And I mean, I I've always find myself living living in super expensive markets, so you might not cash flow anything, but let's say in kind of a a a middle-of-the-road market, you might cash flow. So, what you put in your pocket every month after all expenses is about 100 bucks. Right. So, you're a landlord uh and so, there, you know, it might not take much time, but often times it can take your time in the most inconvenient possible moment and you're just putting $100 a a month in your in your pocket. And you are building equity, so that's good. But your point is $100 you're you're also you're trying to to replace a salary. $100 a month ain't going to do that. I don't know what you were making, but if it was 150,000 or above, obviously $100 a month ain't going to get you there without owning an empire of real estate and that takes a huge amount of capital. Did I did I get your calculus right on that? Yeah, that's exactly right. And there is also an option in real estate to go into real estate as a a job, right? So, you could I could have bought a property management company. I could have um done management for short-term rentals. I could have become a real estate uh broker or realtor, right? But um you know, none of those were really very appealing to me. Um Okay. So, and when I thought about my transferable skill set, I think it it's just best suited to run a business. And um for more context, how many people how much management experience did you have after your 10 years in corporate? Um in fact, you know, and and you say management experience, but I actually really like to think about it as leadership. Um you know, I always think about, you know, what am I doing to empower my team and how can I make their work easier and more fulfilling and how can I coach them so they level up as leaders and um you know, they continue on. I don't really think there's such a thing as a corporate ladder. I think it's more of a jungle gym and that you should be able to um you know, go where you want and if if that means a lateral move or even a downward move because you want to learn a new skill set or a new area, then you should be able to do that. So, I that's actually one of my special passions is is coaching people on my team and even beyond that, you know, like in corporate America, I would always raise my hand to be one of the leadership mentors to younger people in their career and you know, almost always the the juncture that people hit is do I want to manage people or do I want to become a subject matter expert. Mhm. And so, that's a really fun to coach people through. And your own choice obviously was to become a manager. Yeah. Rather than and yeah. Well, this will this will be a theme that comes up again in our conversation. So, the options for what you do for the next 10 10 years that also need to check certain boxes financially, buying a business checks those boxes, but buying a business is still for many people kind of a out of left field possibility. How did it How did How did Did it get put on your radar? Um so, I'm going to say two things. And the first thing was I had a real mental block for a long time that I had to work through. And that was I was making a lot of money in corporate America and you know, overall, it's a pretty cushy place to be. Um it's not that it's not hard work because it is, but it you know, it feels cushy, honestly. And to to say, you know, in mid-life with kids in college that I'm just going to walk away from that. There was a part of me that felt like I was letting my family down or at least it was a greater potential to let them down. And so, I had to mentally and emotionally work through that in order to be able to do it, right? And so, it was right around the time that I'd I'd I'd worked through that and I was going to go for it, but I really had no idea what I was doing and I'd read a couple of books, but the books are um I didn't feel that they were enough to really put me on the right path. And I remember um I was This is during my constant travel season. I was sitting in an airport across the country waiting for a flight and just kind of slouching in my seat super tired after whatever I'd just been doing for work, knowing I was going to come home to my family and pay for it on that end, too, right? Because, you know, I got I got all the laundry and all the things going on at home that I missed out on and I get to catch up on when I get home. And I was scrolling Instagram and um this ad came up for this challenge. It was a 5-day challenge called the Epic Challenge by Roland Frasier. And it was just a free, you know, learn how to buy a business. And I'm like, oh, yeah, I'll sign up for that. And it actually ended up catapulting me into this space and and helping me helping enable me to actually pull the trigger and do it. Mhm. And you know, Roland Frasier is one of the sort of what how to call it gurus in in in the space. And I mean that both in kind of a neutral way, but also in negative way. I'm not I'm not casting any aspersions on on on Roland. I don't know him and never talked to him and have no reason to doubt him. But in the business buying world, there are gurus and sometimes people can feel skeptical about about them and and what they're saying, especially if they start telling you how you can buy a business with no money down. And that's something that people listening to this podcast probably won't believe and I'm very skeptical of myself. So, for forgive the preamble. But but he but he is a big name and it's interesting that more of my guests don't mention him. So, I want to I'm I'm glad that you brought brought him up and I want to hear a little bit more about how he was so influential. What did this epic What was it? 5-day challenge? What did What did the epic challenge What was it? So, it basically walked you through kind of kind of the surface level of how to buy a business. You know, what is your acquisition criteria? How do you hone that in? You know, it's it's it was very workshoppy. You know, I'd work I worksheets on my desk of what are my business buying criteria? Um how to go out and avoid working with brokers, generally speaking, and just do direct sourcing yourself. And so, I had I had a whole lead funnel. I'm a marketer and so, that part was easy for me to set up a lead funnel. And then I just met with people and I I set up super broad. I set up um you know, service companies in the Southeast. And I was just doing cold outreach. And so, I had My first call was with a waste management operator, which in retrospect, not my thing. Um and then I Nobody's thing, but a lot of people A lot of people have done really well with waste waste management, septic septic pumping businesses. You're You're talking to the right audience here. People love that sort of thing. Yeah, well, for sure. And I I think I think though and I had calls with landscapers and I had calls with all kinds of different service businesses. And every single time I had a call, I honed my criteria because I real you know, I get off the phone and go, I don't want this and here's why. And with the waste management, it was actually that the guy told me they have these geographical routes and you're kind of penned in. And they all all the guys cooperate with all the routes and so, you can't really grow or take over anybody's route. And I and you know, for me, I wanted a growth lever that was exponential or at least the the ability to do that. So, that was that was one example of a little rabbit hole I went down that helped me hone that criteria via the program I was in. Okay, a lot of follow-up questions there. First of all, very interesting observation about a route-based business like a septic pumping business and it how it has a route and how the competitors kind of respect each other's territory. Yeah. And so, it's going to require a lot of gumption or or more acquisition of your competitors to to grow in those markets. I mean, frankly, it sounds very mafia-esque. It's like you stay on your turf and I'll stay on my turf sort of thing. Unless you want to create a a turf war, like you better better you know, follow the rules sort of thing. Um Now, Gretchen, tell us about this proprietary outreach. This is something that comes up again and again on the podcast. Lots of also skeptics there, including yours truly. It always seems like a lot more work than it's worth. Um but also, I've also heard on this podcast countless stories of it working spectacularly. You seem to have gotten some pretty good results from it. So, elaborate on that process for us, please. Well, so to be clear, that the deal I ended up buying actually did come from a broker, but I was doing both. Um I'm not against brokers. I Some of the some of the gurus, as you mentioned, do teach to stay away from brokers completely because they don't get it what you're trying to do, but I was open to working with whoever was going to bring me a a good deal that fit my criteria. I wasn't going to box out brokers just for the sake of some kind of principle. But um so, so in terms of direct outreach, it's the same thing as it in real estate. You know, if you look at LoopNet is the commercial real estate platform. Everybody says LoopNet is LoopNet is where deals go to die. Mhm. And I'm not saying brokers are where deals go to die, but I think there's a lot of business owners out there who they know they need to get on the ball and they probably need to explore selling, but they haven't gotten around to it cuz they're too busy with the day-to-day and/or they just think they're going to live until they're 100 and run the business or, you know, various reasons. Um some of them don't want to pay the fee of a broker, which is understandable. And so, this is just like with real estate, if you do your own personal private outreach, you can catch people who are in that state of mind. And um and I actually So, I haven't acted on any of this yet cuz I'm still kind of neck-deep in in the current firm that I just purchased in June, but I have several leads that I talked to that came through my own private outreach that we're still in contact and we're discussing a down the road acquisition. So, I think it's a great way to to um yeah. And and were you using I don't want to spend too much on this time on this because we have so much more to talk about, but just give us a little bit of the anatomy of your outreach. Were you using scripts, for example, that Roland provided or did you write your own copy? And also, how did you build your list? So, I wrote my own copy because that's my trade. I'm a marketer. Um I don't I don't even recall if they had copy, but I did a a sequence. So, so as a marketer, I'm thinking about this putting myself in the person's shoes. This isn't an instantaneous decision by any means, right? And so, I think, you know, and the magic is always in the follow-up, always. You know, you may have to follow up with somebody 10, 12 times before you get an answer from them cuz the timing just wasn't right. And so, I set it up to go on a I think it was a six like the total cadence was six months and there may have been four or five touches in there. Um and in terms of the list, so again, I was at first just pull So, I and I can't remember the name of the program, but it's something that if you have a library card, every library has this database and you can pull um info from it and then I just went on Fiverr and I got somebody to get me all the email addresses. And then I plugged them into the software. It's called Lemlist. There's lots of them out there, but it's just a cold outreach software and it also does LinkedIn. And so, I was also connecting with people on LinkedIn. Um you know, again, cold outreach through Sales Navigator, just asking if they wanted to sell their business. And I got tons of responses. tons of responses, really? And and can you quantify that at all? Like how many individuals do you think you reached to and how many did you get some sort of warm response back from? Um so, I don't have my funnel numbers in front of me, but I'll give you some guesstimates. I probably reached out to maybe a thousand people over the course of four or five months. And I probably corresponded with 200 of those and I got on calls with probably about 50. Really? Yeah. It worked. So, so that's a 5% 5% email to actually getting on the phone ratio. That's a very strong Getting on the phone to getting an acquisition is a whole other story, right? That's that's like a a brand new funnel that gets incrementally smaller, obviously, cuz there has to be a good fit. And so, in in a lot of these cases, I was almost just sort of honing my skills, right? Understanding what questions to ask. I asked for everybody's financials. I I had my own NDA that I sent out. I would ask for their financials and then I started reading financials and trying to understand like what makes a good balance sheet, um, you know, what's great about this, where the opportunities, and just really doing that through the the financials. And so, by the time I actually got to purchasing a business, I was this this had been like a second full-time job for me for 4 or 5 months. Yeah. So, um, I was pretty well versed in what questions to ask, how to connect with the seller, how to read their financials quickly and understand if it was a good or a bad deal, et cetera. And through through the the pain of you having to learn the hard way by doing it, is are there any learnings there in terms of what message landed best with sellers, what you were saying wrong and that might have been off-putting to start, but over time you honed? I think the number one thing I heard from sellers over and over like a broken record is that they, um, their their biggest concern in selling was their team. They wanted their team to be taken care of. I heard that so many times. And so, um, I addressed myself to them as an individual buyer who really truly care This goes back to that the leadership thing we talked about earlier. Like, I really care about the team. I want to keep your team. I want to keep them in place. I want, you know, I want to continue your legacy. And so, that messaging really did resonate with people. Mhm. Yeah. Fantastic. Fascinating. Um, and and was that also we don't have time to go through all the the six or 12 touch points of your email cadence, but we was was the was your initial email, which of course is going to be probably the one you craft the most or maybe the first, second, and third you craft the most. Did they say do they basically contain a similar message? Yeah. That I'm an individual and okay. And here's my background because you have to establish some credibility, too. Of course, now I have way more credibility than I did then. Yeah. You know, these small business owners don't necessarily think there's a transferable skill set from corporate America, but um, Yeah. um, some of them, too, were were sort of wowed by my background. And they thought, well, why do you want to buy this small business? And I'm like, you have no idea. Um, and going back to the database the that you you built your list from, did you use any criteria, I know those databases are notoriously inaccurate, but they're the best we got, but did you use any criteria to filter that list either kind of try to try to triangulate a particular size, for example, or type of business, size of it, number of employees? Yeah, so at first I I went pretty wide, um, to service businesses in the Southeast, like in five states, right? Because I'm in Tennessee. Um, and then I ended up eventually landing on accounting firms through that process of narrowing down. And you know, it's what's interesting is I kind of had these two plays going. So, the first one was, let me buy something that's really small as a side hustle. And then the other one was I'm you know, that was me afraid to leave my corporate job and all the risk, right? And the second play was, I'm going all in, it's got to be bigger. Um, and what I realized finally with that first play of buying a small one is in the accounting space in particular, and this is probably true elsewhere as well. Like, if they're making somewhere between three to five hundred thousand dollars in revenue, it's one guy with all the all the relationships who does all the work and he has one assistant. And then he's trying to sell this and it's not really a transferable asset. And so, you know, buying something like that would just cause problems. It wouldn't fix them for me. And so, I I realized I need to go bigger. Um, and that's really what I'm made to do at this point in my career as well. Like, I really don't want to go in and, you know, run something and do I I can't even do taxes. Like, I'm not a CPA. So, I had no intention of actually doing the work. Um, so so eventually my list came to I was looking at, um, accounting firms over $1.5 million like between $1.5 and $3 million in revenue. Um, you know, on these lists you can't see the EBITDA or anything like that, but and then I was still looking in that geographic area. see revenue, they give you revenue or some approximation. Yeah, but to your point, once you get the financials, you can see how wildly off some of that is. Yep. Well, I think that your recognition that you couldn't go too small and needed to go bigger, um, while in your case it was specific to accounting firms, that's also something that's generalizable, uh, that you could have you could have said about many industries. If it's at a certain size, there's that much more risk, there's that much more it's it's a glorified one-man show, one-woman show, um, and you got to go up if you want to buy true business. Uh, the the the the level of revenue is an indication of if this is a real business or if this is just a a one-person a one-person show. Um, okay, well, that was great. And then circling back up, we keep going down a rabbit hole and then back stepping back up and back up to Epic now. The does Roland Frazier uh, pitch that you can buy a business with no money down? No. And um, he actually said to me specifically when I went out there for a conference in San Diego last, um, January, he said he said to me, you know, my marketing team wrote that on my book and I'm still mad about it and it went out. It's not mo- no money down, it's no money out of pocket. Um, so he's not a traditional SBA searcher kind of guy, right? Now, what what ended up happening for me is I actually ended up putting money down and getting an SBA loan, um, but what Roland did was open up my mind to how you can negotiate in different ways and creative ways of negotiating and that you don't necessarily have to show up with capital to buy a business. Um, learning that from that 10,000-foot view for me was super helpful because I I was kind of all over the place and I didn't really know what I wanted to do or how to do it. And I was like, maybe I need a partner, maybe, you know, I had a lot of stuff running through my head, not really understanding what I wanted and what that what that exercise taught me was there are a lot of different ways to do this. And every time I sit down to do a deal, I'm going to open that spreadsheet of all the different creative ways to finance it and I'm going to look through every single line item and see what applies to this deal because that's just the right way to do a deal, right? Is to to be really savvy about it. But, um, in the end for me, um, with the accounting firm, accounting firms aren't necessarily hard to sell, right? There's demand. So, because there's demand, you can't walk in like you could to, you know, a dilapidated painting business or something where the guy has no leverage whatsoever and probably will have to shut down and create this super creative deal that's all based on seller financing and a rev share and all this stuff, you know, whatever you want to do. Um, and I think that's the guru piece that you get out is, you know, creating those kinds of deals and they feel a little sleazy almost, right? And for me, what I really want and what I've always wanted is a win-win with the seller. And so, if we go to the accounting space where I landed, um, what made sense to me was to do the SBA loan. Um, the seller has a note as well, which is somewhat tied to the first year's outcome, right? So, we're in this together for the first year. And so, that was a win-win for both of us. Really interesting. You're actually the second person to brought up, um, Roland Frazier with me here in the in the last few weeks. Philip Blackett, who I'm going to have on the pod here in the next, uh, month or so, um, also, um, worked with Roland and said something very similar to what you said, which is it's it's not necessarily about buy, you know, no money down or not, it's it's it's opening your mind to the myriad ways that you can structure a deal. And what and just lingering on that point, what's interesting, um, to me about it and and where my skepticism is still kind of, um, raising its its head is first of two things. First of all, that in this in this world kind of the the search world, um, that I spend a lot of time in where people are some some of my guests come out of, you know, fancy MBA programs, that it still seems like so many of these people are still all kind of arriving at the same terms. I just wonder if this is such a viable way to approach deals down here in the lower middle market, why it's not taught in the canon, in Walker Diebel's book, in the HBR book, in the MBA programs. So, that's skeptic's point of skepticism number one. You don't have to actually answer for Roland Frazier, uh, aggression, but I do want to get your thoughts. But the the second thing is just it seems like the creative financing works, to your point, when when the seller is kind of has a weak hand, a particularly weak hand. And the seller probably has a weak hand because they have a weak business. And everything I feel like I've come away with, um, talking to so many people is that better to pay up for a solid business than buy a crappy business even if you can get it for a good price sort of thing. And so, yeah. So, so anyway. The my I'll I'll put my skepticism to the side. Now, if you want to answer any of that, you may. I I I do agree with you. I I think just to answer the the question about, you know, the MBA programs and how they how they structure things, I think it's a little bit of a McDonald's approach, right? You know, we know this thing works, let's do this. Um, and then the SBA, if you go that route, they also have a McDonald's approach. You know, there's not a lot of room there. Um, you there's some room, but for example, um, you can't use the word earnout in your contract if you're getting an SBA loan. They won't allow it. So, there's there's some things like that where you have to play by these very strict rules on the SBA side and on the the sort of search fund side, you know, you're in a lot of ways if you choose to take investors and you're not self-funded, you're playing by their rules. And if you are self-funded, then you probably just don't have the exposure to that kind of creativity and um, I'm not knocking MBAs by any stretch of the imagination, but I I think that what Roland teaches is a little bit more of the um, the art of negotiation, let's call it. So, it's a little bit more creative and and right-brained, right? But, um, the the thing you said about the, you know, distressed businesses, I actually have a Post-it note on my desk and this is from one of the Epic coaches and it it says, "I buy opportunities, not problems. I buy history, not potential. I buy profitability, not turnarounds." And I know some people like to buy turnarounds, but that's not my game, either. I I it's stressful enough buying a business that runs and that makes money. Right. Yeah, exactly. Like, it's hard enough even if you if you're lucky enough to get a good business, it's still going to be hard as hell. Yep. Right. 100%. Right. Yep. So, but that was actually that those words of wisdom were actually from an Epic somebody from the Epic team? Yes. Okay. Yep. Okay. Okay, fascinating, Gretchen. And then I want to rewind even further back to to um, you get you and I really want to hear this. You're the mental and emotional block that you had uh, because you needed to um, get comfortable with feeling responsible to your family and and was this some sort of an abandonment of your responsibilities? Um, so how did you get over that? What what you said there was a process to get over that. How did you do that? And also in that answer, why don't why don't you also um, if you could also answer a lot of people regardless of their familial responsibilities, how many kids they have, if they're in college or what have you, at mid-career, they're just they just feel like they don't have they might, you know, at 45 they might not have another what's the expression? Another whatever, another game in them or whatever, another trick up their sleeve. Um, they might not have the courage to start down an entirely another another path. Most of my play have had plenty of guests in their 40s, you and I are ba-basically the same age. Um, so I'm doing another path, so I get it. But, a lot of my guests are in their 30s and their earlier career rather than mid-career. So, um, so you also, regardless of your family, had to have the courage to just strike out on a new path, which is not courage that most people have. So, if you could answer all of that. So, regarding the mental block, I I I mentioned that I I had a coach for like 6 months and um, she had me take the DISC profile and on the DISC I ended up being a high D and a high S, which means I love to run my own show and I'm very entrepreneurial and I I like to be the boss and all that stuff. That's the high D. And the high S is I'm high security, which means, you know, I need to feel comfortable and my bank account has to have a certain balance in it or I I start freaking out, you know, things like that. And so, what she explained to me and which made a lot of sense is that these two sides of me were really at warfare. Yeah, I was going to say, it sounds like a bit of a contradiction there. Yeah. And so, what she coached me into was embracing both of them and using them. And so, for example, um, the way I deal with that now and the risk and uncertainty is I stay very, very close to my finances. I've got KPIs. I'm starting to open up all the books to the team, socializing where we are and just really helping make everybody responsible for the outcomes rather than just holding it in here, you know, going, you know, this isn't going well. And holding the stress in. So, um, so that's the first piece. And then in terms of how did I get over that barrier? It was definitely a process. Um, it was a lot of journaling. I'm not like somebody who spends an hour meditating and journaling every morning, but I did journal a lot about this because I had to just get it out there and I had to figure it out. And I think one of the things I hear about this all the time in real estate, like, "How did you get your spouse to do real estate with you?" And um, that was an issue I had for a while, too. It took me a long time to talk my husband into getting a dog and to investing in real estate. Um, you know, I'm always the one who wants to jump in and do crazy things and he he likes to run spreadsheets and amortize things. Um, so this was a big move for him, too, and we just had to have a lot of conversations about it. And I think there there was this trigger point where um, he started to get excited about what I was doing and it really fueled my excitement and made me go, I can do this. I am not stuck, which was what I'd been telling myself. I'm stuck in I'm stuck in this job. You know, I can't find a way out. I make too much money. And so, that that helped propel me into this new way of thinking, which is I can do this and I have his support. And when you're when you're a business owner or an entrepreneur, there's nobody around you cheerleading you. You know, that's your job. You cheerlead everybody else. And so, to have somebody, you know, in your home, on your home team, saying, "I believe in you. You've got this." is is just like exponentially important. Yeah. That's great. Thank you. Thank you, Gretchen. you it was all me and I just went into my head and fixed it, but I really think it was my husband's support that got me over that hump. Yeah. Well, I mean, I think it was a it was a collaboration as any good partnership is. Um, For sure. I mean, it sounds like you had to do your fair share of persuading. You weren't waiting for him to come around. You were leaning on him. I um, I speak his love language, which is spreadsheets. So. Well, good. That gave you good practice to work with your new team, I guess. You got numbers people all around you. Yep. Now, uh, answer this or not, Gretchen, but but I'm going to ask uh, maybe you can give me a range. You've referred now to how much money you were making in corporate. Just to add a little bit of color, can you tell us what that number was? What the salary was that you had to replace, if not exactly a range? Yeah, um, so by the time you're a director in corporate America, they're throwing bonuses at you and um, stock grants and everything else. And so, all in, it can be, you know, depending on where you're at, can be anywhere between two and 500,000. Wow. So, it is a lot to walk away from. Yeah. I mean, it's a lot, but at the end of the day or at let's say at the end of 20 years, what do you have, right? Yeah. Not even a gold watch anymore. Yeah. And it on the other hand, if you if you buy a business and then you pay off your loan over 10 years, what you have an asset at the end of that, even if you don't grow it, you have an asset. Yeah, sure. And one that, you know, could very, very realistically be making this throwing off the same amount of money that you were taking home in salary, but also it's an asset that continues to to to generate money and be a saleable asset if you want to do that. Um, and of course, we both just said that assumes zero growth, but we all hope that that these businesses are grown, so it's it's um, it's very competitive uh, with even kind of the, you know, the richest sort of corporate salary. And and also just to you you as you said you're in Tennessee, I think you're in um, United you're not in Nashville. You're if you don't want to say you're not the Nashville area. So, two to 500 goes even further there than it does in where I am, for example, in Arlington and that that would be a lot of money here, too. So, that's Um, okay. Well, thank you for sharing that. All right. Okay. So, I think we left the plot. You had um, you've been you've been doing your proprietary outreach, but decided that that um, well, no, you hadn't decided that that wasn't going to work, but ultimately you also did other things, including talking to brokers and this came from a broker. One thing I want to talk about, you've already touched on it and from our pre-call we we spent some some time on it. How you were uh, narrowing down the criteria of industry that you'd work in. So, so, you know, you didn't want to do a uh, a crew business or a route business, but you also looked at you did look at some other uh, to talk about some of the other industries that that got your attention and that you ultimately dismissed. I think the the most obvious one for me was a marketing agency because, you know, I'm a marketer and I know how to do that. And so, I speak that language and it would have been pretty easy for me, but um, there I I actually got pretty far on this one deal and I'd met the guy in his office, I'd met his team. Um, we were in talks. I hadn't quite sent an LOI and I I remember sitting there with my husband and going, "Why does this give me a bad feeling in the pit of my stomach? I just can't figure it out. Is it the deal?" And I sort of had an epiphany that it's because it's marketing. Like, yes, that's my background and that's what I'm good at, but um, it goes back to the kind of I've been there, done that, right? I'm ready for a new challenge. And so, buying a business um, in in an industry I've been in most of my career, I there's nothing new to learn, right? Well, and that's not true. There's always something new to learn, but I'd kind of reached the end of my path there and I was ready for something different. So, um, I did come to this conclusion that I I talked to several, like I said, landscaping companies, different kind of blue collar companies. I know those are really popular with searchers and for a lot of good reasons. But knowing myself, um I think, you know, and going this goes back to like I love being a coach and a leader to my team. I just really don't feel that I'm the right person or that I have the right personality to manage blue collar workers. I just don't necessarily understand them and their intrinsic motivations and I would probably come across as really clueless to them, right? Um so, I think, you know, I can take my professional {slash} marketing background and I could pivot that into a different kind of professional services pretty easily and I know how those, you know, how that brain works and sort of the white collar worker at their computer, Yeah. you know, typing away and producing intellectual property, basically. Um I I knew that I could pivot into that and so, I kept narrowing that criteria down and eventually, I landed on accounting firms. You know, it's so interesting. I interview a a lot of people who buy blue collar businesses and I'm always asking they're almost always, not always, but almost always white collar people themselves, uh coming from a corporate background or otherwise and they and I and I always ask them this question about that adjustment because there invariably is an adjustment and some people handle it better than others. But it but but I yeah, I don't know why I don't ask the question more like, well, why didn't you just go for a white collar business to begin with and just avoid the whole the whole question. Um I don't know I don't know why white collar style services businesses don't come up more in search. Don't get me wrong. I've had some. I mean, you know, Patrick Dickter and and Chris Williams both also bought finance related businesses like yours and there there are other examples, but I wonder why I I'm just just wondering out loud. I wonder why I'm blue collar so so maybe because they're just they're more plentiful. I don't know. Anyway. That could be. Yeah. Yeah. I actually don't know either. Um Gretchen, your So, you had dialed in your criteria pretty tightly by the end. Do you actually have a really clear list? Could you share that with us? Do you recall that? I actually have it here. It's in my journal. So, um yeah, it this was January 9th, 2022 and my So, again, this is industry agnostic. It was just what what would I like to have all my If all my boxes were checked or the majority of them, right? So, the first one is essential even in a downturn. And I think we all understand that after COVID, right? Um margin for an operator so I can work above the business. I am not there yet, but um you know, that's we'll get there. Um the ability to control the margin. So, I don't want retail unless you also own the rest of the supply chain. So, you either have to have a vertically integrated business or it has to be where the margin's in your control, which kind of leads to services. Um control your customer base so you can align your mission and ideals. You know, as a marketer, I um I'm really big into creating customer avatars and then really going after them from a It's not to say you won't take on any other kind of customer or client, but you can really control who you go after on the marketing side if you have a good idea of who your ideal customer is. Um potential to modernize. So, this firm I bought was actually pretty modern in the cloud, um technology driven, but I've been interviewing candidates for um a couple of tax accounting roles and most of them come from these firms where they're using paper and Excel sheets and everything else. So, there's lots of potential in this industry to modernize. Um and that's both on the client side and also on the the team side, right? So, on the client side, you know, we still have some tax clients who actually physically bring their papers into the office. So, I want to fix that. Um recurring revenue, repeat customers was another one. A small person This one I love. A small percentage of the customer's operating expenses. And the reason there is that way they're not always reevaluating your prices, right? So, I've started to learn that if we take on startup businesses or really small businesses and with our pricing on tax and accounting, it's just a way too big a percentage of their overall operational expenses and then you know, they end up being the harder clients. And so, going back to who's our ideal customer base and who's my avatar, it's going to be somebody with, let's say, a million up in in business revenue because then they can afford us. Um and you know, this is the HBR idea of being enduringly profitable. I mean, unfortunately, the IRS is not going anywhere. And it just gets more complex and so does business finance. And so, I think um I think this industry will be around for a long time and that makes me Actually, that's not what excites me. What really excites me about the industry is I think a lot of accountants are just sort of churning work out and they're kind of reactive and this firm is really based on being proactive, helping clients not just get their taxes filed, but also how can we save you money? How can we plan for your future? Um we're we're also starting BCF services so we can be really proactive like, hey, let's help you do forecasts instead of just looking in the rearview mirror and stuff like that. So, there's a lot of really exciting potential to me for things that I personally as a small business owner want out of an accounting firm that I think we can do to modernize this space in general. Fan- fantastic, Gretchen. Well, let me couple follow-ups to that list. First on just a point on the being a small operating expense. This is This is a classic criteria you hear that from savvy private equity folks where, you know, the the best place to sit is strategically important to the to the clients or customers overall whatever initiative, but very low on their expense. So, they can't do without you and you're also So, they're never going to let you go and you're all they're also so you're also such a low expense that when cost cutting come time comes around for them and they're going line by line by line, you know, reverse they they've they're looking at all their expenses from biggest to smallest, you're way down the list. So, they're not going to get there for a while. You see this in manufacturing manufacturing a lot. I love that one. The um the What did you say control your margins? Yeah. And which is basically control your like some sort of some sort of pricing um What's the word I'm looking for? Pricing Value pricing, probably. Okay. Va- value pricing um pricing power. Yeah, value pricing pricing power. Yeah. And you know, I would think that in that it would be hard to have much pricing power in a service like this, which is you know, there are a lot of you do have a lot of competition. So, how how do you see this as having you having kind of margin control in this business? So, I think that if I focus on hiring people who have um and I I actually just hired a new tax manager and I think he has this is real world business experience where they actually, you know, they aren't just an accountant pushing papers around. They they actually know what clients need and want, right? And so, it's less about like I checked your boxes and filed your taxes and it's more about I understand what you actually need from me, which is advice and counsel. And then it becomes a relationship, too, right? And so, they're coming to us because they've got things going on in their business. Um you know, maybe they're they're acquiring a business, maybe they're getting ready to sell. Since I'm on this podcast, that has happened quite a few times already. Um but it could be other things. We I just talked to somebody who's just starting her own She just left her law firm and she's starting her own firm. Um she's super excited about what all she's doing, right? So, you know, we get to be there for that. Um in terms of how that plays into pricing is when you get consultative and you can create exponential value, then you can price exponentially, right? So, maybe it took my my team member 1 hour to do something and so, we get charged maybe 300 bucks for it or something. But what if it saves them 50 grand? What are we going to charge for it, right? And so, we're not going to charge them a huge percentage of the 50 grand, but, you know, maybe that's a $5,000 job. So, to your point though, not everything's like that. They're like compliance work like taxes and bookkeeping, nobody wants to pay for that. Nobody cares about it. They have to have it. And so, to me, the exciting part and the value proposition is in selling the proactive, you know, so it's um you know, let's go beyond tax compliance and let's talk about your tax strategy. Let's go beyond accounting and bookkeeping and yeah, you get your reports that you don't even look at. Let's talk about how we can um forecast your head count for next year and your revenue. What are your What are the drivers for growth in your business? Let's have that discussion. That's what's exciting to me and that we can do value pricing on. And is there a precedent in the industry that you see elsewhere in the industry for the these sorts of services being the market being receptive to them? Mhm. Yeah, for sure. I think um I think you know, chief financial officer level is way out of reach for most businesses, right? So, there's this idea of fractional CFO or virtual CFO is another name for it, which is what we're calling it and it's really you plug that person in, you know, as a a fractional team member almost and they're they're giving all this financial value. And if you you probably know this, too, but large companies like the number two person in the company is the CFO, Yeah. Yeah. right? It's not the chief marketing officer, although I would like that. It's a CFO. And why is that? Because they they don't just hold the purse strings. Like they're doing, you know, the financial planning and analysis, all the forecasting. You know, they run all those numbers that make the company successful. And so, I I will say this. There are a ton of small business owners who don't understand it and don't want it. But there's a nice pool of those who do understand it and they understand the value and they do want it. Mhm. And then, the question for for everybody in your world that you probably answer every day, AI. Is AI not going to come eat the business? That's a good question. Um, I think for now it's not. Uh, the kinds of I'm I'm learning on the job, by the way. You know, I my previous experience with tax returns was, you know, dumping all the papers on the CPA and then signing some forms and hoping we get a big refund and don't owe a lot, right? Um, I'm now getting into how the sausage is made, so to speak. And it's really complex. Um, and it's not so complex with like a straightforward W-2 job, 1040, nothing else. But when you're a business owner and maybe have properties, maybe you've got a partnership, like things things escalate very quickly in terms of complexity. Yeah. So, on the tax side, I'm thinking not yet. Um, and on the bookkeeping accounting side, I think there is opportunity there for AI automation, let's call it. Um, I don't think anybody's quite figured out how it's going to work yet. And AI can't account for messy clients and missing documents. So, there's always going to be a people component. But the way I see it is, um, you know, I don't want to be I don't want my team to be on the bleeding edge of technology just for the sake of it. You know, I implement technology as required or as needed to boost their productivity. And I think this is a perfect example. So, we are um, moving to a new client management {slash} process management platform as we speak. And I made that decision not because I didn't because I wanted to disrupt the team, but because I want to make them more productive when the next tax season rolls around. And um, the software does have AI helper, but it's it's really for composing client emails. So, if these accountants aren't sure what to say, the AI can help them. And I think that's a great tool for now and that's how we can dip our toes into it for now. Mhm. Well, the other thing about you wanting to kind of offer upmarket services and more value-added services is that it's like you going in that direction anyway happens to be a nice hedge against AI cuz AI, if it comes after your business, it's going to start nibbling, you know, the lowest value stuff, the kind of the bookkeeping stuff first. And, you know, and and if you're, you know, a lot of your revenue is coming from much higher value services anyway, then maybe that won't be as threatening to you um, if and when it does come. That's totally right because I think and this is true of everybody, right? Is they want to be able to trust somebody. And and again, going back to like the business owner doesn't really have a lot of people they can confide in or trust. And if they're working with, you know, a virtual CFO or their tax person and that person knows their numbers, they can actually talk to them. And sometimes all a business owner wants is just somebody to bounce things off of, right? Yeah. Not an AI telling spitting out when their head count plan should fall into place. Yeah, I mean, I just and maybe this is me getting older. I mean, I I studied computer science and I I now find myself having an aversion to technology, but I am just not going to use chat GPT as a consultant. No matter how good it gets, I'm just not going to have a an intellectual conversation or back and forth with a robot. I mean, maybe maybe in 100 years they're so good, it's really indistinguishable. But like that it's just it's I just have an aversion to it even if anyway, I digress. People need people. At 55 minutes, we haven't even heard about the business that you bought. So, we got to start we got to pick up the pace here. I've had so many side questions for you. Tell us about what is now Red Bike, what was Adam Shay? Mhm. Tell tell us about Tell us the the broker, how the broker found it for you. And then tell us all about the business, please. Awesome. This is the best part. So, um, I again, I had, you know, my own personal outreach going. And then I also was outreaching with brokers. I think you heard this from other guests, but um, I got to the point where I realized there was most of the accounting specific brokers would not even speak to me because I don't have a CPA. And it was partly them and it was partly they what they felt their clients wanted. And, you know, once I found that out, I'm like, that's fair. I I don't want to talk to one of your clients who's selling who expects me to have a CPA cuz it's just going to be a non-starter for both of us. So, saved both of us time. It wasn't really a big deal to me. I wasn't bitter about it or anything. I just work with brokers who were more open. Um, which meant that their clients were more open. And so, I first heard about Adam Shay CPA, um, it was in October of 2022. And at the time, it I looked at it and then I just kind of moved on for various reasons. This was back when we didn't really cover this, but I was still in this frame of mind that I would need a partner who was a CPA or an EA. And I was This is back to the smaller business. Maybe I was going to have them run it and then I would be above the business and acquire more. And I eventually realized it wasn't the right thing. Um, so I didn't go after this one because the person I was going to partner with at the time thought it was too big. Um, so we ended up not doing a deal together, obviously. And around January, I saw that the listing was still up and so I called the broker again and he said, "Oh, yeah, you know, we've had some offers, but the way and I I don't know specifically about what had happened prior to this, but I can say more generally that a lot of CPA firm acquisitions by other CPA firms, like the bigger ones will swallow the smaller ones up, but then they require the sellers to kind of stick in with them and put their equity into the bigger firm. And if you want to be done, that's not necessarily a good choice. Um, it's a good choice for some people and not for others. So, for various reasons, um, you know, the the business was still on the market. And the first time I met Adam, um, we just did a Zoom call and we really clicked. Like really clicked. And it was obvious to both of us that we shared a lot of the same values and we thought about business the same way. And again, you know, going back to every seller I've ever heard of, they're just worried about their legacy. And I I'm sure Adam was worried about that, too, because he has built an incredible company, him and his his co-founder, Carolyn. And the culture there is absolutely amazing and they didn't want anything to happen to that. And so, this was So, again, this was in January. We clicked. I was actually looking at two other firms really seriously at the same time. They were all three in the Southeast US. And um, one of them ended up, you know, once we got down to the nitty-gritties, so to speak, it turned out the seller was really, you know, carrying the load of the work and the client relationships and it was just a non-starter because that's not very transferable for me. Um, and then the other one I was looking at, we couldn't agree on a price. Um, In accounting, Go ahead. the price is generally based on the revenue, not the EBITDA or the SDE, but that has to factor in, right? And so, it was the EBITDA was disproportionately small to the revenue and he wanted the revenue number and I said, "Absolutely not." So. Mhm. Yeah. Well, Gretchen, um, interesting it sounds like those other two deals were actually not very good deals. And even if you hadn't acquired Adam Shay, you probably wouldn't have acquired those other two anyway. But I am interested in the fact that you here you are somebody who's not a CPA. A lot of brokers are are giving giving you the hand. Like no, we're not going to even talk to you. Patrick Dichter talked about that a lot in his first interview with me way back in '21, I think it was. Or maybe early '22 that he had to that he had to do proprietary outreach cuz no brokers brokers of accounting firms, bookkeeping firms would talk to him. He's not a CPA. Um, and yet you were still able to have you know, have what seems like decent deal flow. That you had three businesses you were looking at in this space. So, it seems like you know, it it wasn't so hard to find targets even though you're not a CPA, even though brokers who work in this space didn't want to talk to you. I I really found it was a dichotomy. You know, they they owners were either willing to talk to me and open and actually interested in what I was doing or absolutely would not even talk to me. Okay. So. Okay. Yeah. It was pretty easy to weed out, you know, prospects that I would not be going after with those criteria. Mhm. Mhm. And one thing, Gretchen, so so you've given us all the reasons why you like accounting, financial services, financial advisory services businesses. But you are and we've also made clear that you're not a CPA. In fact, you joked with me on the on the pre-call that you're not even you're not even much of a numbers person. Apparently apparently the the husband is the numbers the numbers one of the two of you. Yep. Uh, but but still, you know, aren't you uncomfortable a little bit with that? What one of the things that comes up again and again on the podcast is that when a guest buys a business, which is more much more often than not, when they buy a business where they don't know the service that's being delivered, they this is something that they are uncomfortable with and they have to get comfortable doing and then expect to to get in there and learn and quick, you know, as much as much as they can as fast as they can to to overcome this knowledge deficit. How did you think about it? So, yes and no, right? I mean, everybody knew off the bat when I acquired the firm that I was not a CPA and that I was not ever going to be in the trenches, you know, doing tax returns or doing bookkeeping or we have a fraud and forensic accounting department. I certainly would never be appearing in court to, you know, testify about the financials of you know, a partnership blowout or something like that. But, um the way Adam and I positioned it is, you know, I can come in with my marketing and sales and operations background and I can basically enable you to do the work you're doing at a higher level, you know, with better clients um and really grow this firm in in in a sustainable way that preserves our culture. And so, that's how we positioned it to the team. Now, have I learned some hard lessons and made some mistakes? Yes. I think one of the biggest things that um that I did not really understand was to what level I need to leave the tax team alone during tax season. And so, I I haven't gone through a a real tax season, but we just went through extension season. And, you know, I'm in my little box here going, you know, we're moving softwares and I have questions for people and I'm writing, you know, onboarding templates for for um new clients because we've realized we kind of like we we have them sign the proposal and they just kind of drop into a bucket for a couple weeks, with no communication. I'm like, that has to change. So, um I'm asking the team to do things that are important to me, um but are not urgent for them. And so, that was one of the little lessons I learned is don't ask the tax team to do anything until after October 16th. Um and some of that was learned the hard way, you know, um people got upset. So, I had to backtrack and say, "Hey, I'm learning and I just I need you to tell me what the cadence is here and just tell me what I'm doing wrong so I understand for next year." Yeah. You You violated the cardinal the cardinal accounting rule. Yeah. Apparently. I I just had no idea. Well, who who would? I mean, you know, other than people who worked in the in the business. A completely innocent error. But, when you said you had to learn the hard way, I guess it was communicated to you that you just made a boo-boo. How was that communicated to you just out of curiosity? How how does how does a new team push back hard against the new boss? So, what's interesting with this team is that they're all really nice to my face and they're like, you know, and I'll say, "Well, this and this and that." They're like, "Yeah, that sounds great." And then they'll all talk amongst themselves and then one of them will become brave and call me and say, "You know what we're all really thinking?" Oh. Oh. Yeah. But, you know, for me I'm just I I try to be really humble about it and go, "You know, um I do bring a level of expertise in here that is new to this company, but I also am learning on the job and I'm counting on all of you to help me understand your work, your workflow, what are your pain points? And one of the things I actually did, which I think gave me a leg up, is that very first week I had hour-long one-on-ones with every single person on the team. Mhm. And it was partly get to know you, it was partly you get to know me, make you feel comfortable, but I also uncovered, you know, some of the opportunities that I felt that I could execute on in the business based on their feedback. Yeah, it's it's funny. I haven't heard that for a while. Um I used to ask that and maybe I I should return to about meeting with with the staff and and how some of my guests have yeah, gone around if if there's not too many people and had a meeting or a lunch with every single person on the team and how valuable that's been not been not only building rapport, but uncovering opportunities for for change, for improvement. Yep. The kind of nice to your face and then but then there are being grumblings among themselves and then somebody eventually, you know, backchannels it to you. Is that a dynamic that you had seen in corporate as well? Is that kind of a common dynamic or was that a new the new thing for you? This is a little bit new to me and I think it's particular to this culture um because the culture is really good here. Like people genuinely care about each other, they want to be helpful. And so, there's this I you know, they want to be when I'm asking for something they want to give it to me. Mhm. You know, and it's partly because I've asked and I'm on the team and it's partly because I'm their new boss. Probably there's some dynamic there, too, I'm sure. Mhm. Um and but they're like, "She doesn't get it. She doesn't understand how overwhelmed we are." You know, and I don't. And so, you know, that's the learning curve for me is to to understand what that is. And so, I do have a couple people in particular that I'll be like, "Hey, um you know what I said on the team call? Did that drop like a lead balloon or was it okay?" Mhm. Mhm. And I'll just kind of get some feedback from certain people around the team to to tell me what they think is is really going on so I can be a better leader. It's great, Gretchen. And and what about what about the point of So, not being a CPA, not being one of them, as it were, something that the vast majority of my guests also experience and the pitch is often by them during the transition, by the guest during the transition, that I may not be a plumber, I may not turn a wrench, but these this is the value that I bring to the organization. My my um what I can do for you is make your job easier, better, make us grow faster, you know, so I can do everything outside of the the technical work that you're the expert in. It's I consider my job to to improve and to help us all flourish as a team. And that seems to be a message that's often pretty well received. Um and and and compensates for the lack of maybe the initial lack of credibility that, you know, this person is an outsider. How how do you feel on this point of credibility that you're not a numbers person, you're not a CPA? Do did people overcome that particular piece of your resume or lacking of the part of your resume pretty quickly, do you think? So, to clarify on the numbers thing, I would say I'm not a numbers person in that um you know, I would never want to do my own bookkeeping and I'm very thankful to have a built-in team member to do that for me. I would never want to do my own taxes. Where I am a numbers person and this comes from my marketing background, I think um you know, 20 years ago you could be in marketing and just like write content, do brand stuff and everything was fine, but it's really evolved to where it's very KPI focused and very metrics focused. And so, I have actually brought that discipline into this accounting firm where they didn't really have it before um and applied, you know, benchmarks to different areas of the business. So, um for example, one of the things that I did was I, you know, um a lot of accounting firms will just put all all their labor in operations, but I separated it all out so I have labor by department and so, you can call it cost of goods, you can call it cost of service, but I wanted to really see what the gross margin was based on the labor. Mhm. And that was super revealing. Um it's it's way too high. And so, I showed the leadership team and I I said, you know, it's either cuz we're not not charging enough, which is not true. We're charging the right amount. Um I've done some research on that. Or it's because we um we're paying people too much, which they of course all disagreed with. Mhm. Or it's because we're not efficient. You know, those are the only three reasons your gross margin is not where it should be. Mhm. And so, you know, and then in having those deep interviews with people, it it became clear to me that it's an efficiency issue and it's a lot of manual work and trying to get around some of the software issues that we have and things like that, chasing clients for documents. And so, there's an opportunity to to eliminate some of that work and then automate some of it with new software and then delegate further down instead of these highly paid professionals chasing clients for documents. Like, let's get let's get an an EA or somebody to do that, an admin assistant, something like that. So, um that's the kind of numbers person I am and so, that is something I'm bringing in that they didn't necessarily have before, but um yeah, in terms of my credibility with am I doing my own bookkeeping, the way I addressed it with them is I said, "I am not going to sit down with you and have a discussion about, you know, S corp elections or, you know, where you you know, something about the chart of accounts, but um I am your business avatar. You know, I am a small business owner and I don't even necessarily care about any of that stuff just like our clients don't. Like, I want you to do it for me and I don't want to get any notices from the IRS, right? Um and what I really want from all of you is I want proactive financial planning, right? I want you to tell me what how can I save money on my taxes this year? What's a great strategy for me as a new business owner or, you know, um Adam who sold the company to me is now full-time as virtual CFO, our first one. Oh. And so, I told him, "I'm going to be your guinea pig, right? So, I'm your first client. Oh. work the processes out on Red Bike Advisors and then we'll take it out to the market. Yeah. Oh, well, really great. So, he wanted to remain in the business. Yeah, he um you know, I think like a lot So, he's not retirement age or anything, but I think like a lot of people who run their own business for a long time, they just get really tired of you know, getting calls all the time because like the IT isn't working or um just having to fix all the stuff all the time. It's It can be pretty mind-numbing and exhausting. Yeah. And then he constantly was getting pulled into tax. So, he was definitely open to staying and starting up virtual CFO for me because he's wanted to really do that for a long time, but he's never quite had the time to really carve it out as a line of business. So, this isn't this is a good opportunity for him and I get him to stick around when I like I said, we get along really well and so it's it's a win-win for both of us. Fascinating. Great. The And then going going back to not being a CPA By the way, I that that was I find out so compelling the way you have positioned this as as you are you are the avatar for your team to kind of imagine when when they're um thinking about how to deliver value. That was really something. You had also said something something to me on the pre-call about how this was also you could see your lack of being a CPA not as just a liability, but as an asset cuz it created a hard boundary where it wouldn't allow you to get into the weeds. So, it would it would force you to only invest your energy where it's best put to use, which is working on the business, not in the business, right? Can you elaborate on that? Yeah, so going back to when I first decided I wanted to buy a business and I was looking at marketing firms, I think that's why I had that bad feeling in the pit of my stomach, right? It's cuz I knew that I would just get sucked into this campaign or that campaign or this emergency or you know, that's that's just the way it goes when you're a leader and you have the skill set. Yeah. And so with accounting like nobody's calling me on deadline filing day asking me to do anything. Which is awesome. And it's not that I want to slough work off on other people. I have but I I do have my own work to do here, right? Like I said, I I feel like my job here is to I'm actively looking for ways to make my team more efficient, more profitable, have more fun at their jobs. Um so, for example, we just had a a retrospective after um this tax season this deadline season was over and I told him, you know, let's And this is this is a corporate America trick. Like nobody in accounting firms do retrospectives, right? But the team loves it. Because we talk about what went well. We give kudos to other people. We talk about what didn't go well. Um we talk about clients that we want to at least consider put on the table that we're going to fire these clients, Oh. Um and they they that's really to them obviously cuz there are some clients that are just very difficult for different reasons. And so, you know, we talk them through like, well, could this make it better or um you know, this is a big chunk of the revenue. It's going to take this amount of time to work to replace that. And but they know I'm listening to them, right? And I'm not just making them you know, stick around with bad clients. And so, we actually did get quite a few action items out of that that I I will execute on and they know they can count on me to execute on those. So, um I don't think they even want to pull me into, you know, accounting and bookkeeping stuff because I'm doing other stuff that makes their lives better. Yeah. Yeah. Well, one of the the ways that I that I so often hear also that um the the new leader the new owner of the business can for lack of a better word ingratiate themselves. That's not the right word, but earn the respect and loyalty of their of their new team is by listening when there's a when there is a change that they've decided strategically makes sense to make. Don't make changes too soon, of course. Uh and then executing on that change. Something that the team has said that they want and then you deliver. That can be that can really kind of close the loop on on kind of earning earning the trust of the team. So, sounds like that's in process. It's a work in process, yes. A work in process. Yeah. Gretchen, what can you share? You had mentioned the that um a partner that you considered buying an earlier another practice with or that you were talking about doing that with this person. Um when you saw this Adam Shea the first time around, they had said it was too big. So, how big was it? What can you share about the numbers of this business? So, it's a little over 2 million in revenue. Okay. Which is big enough to, you know, have some scale in terms of, you know, one person dropping out, for example, wouldn't ruin the company like a $300,000 firm would. Mhm. And how many people? Uh we have 16 people today, two new hires coming on in a couple weeks. So, we'll have 18 total by the end of the year. And can you share what the SDE is was when you bought it? Um no, I I did speak to Adam and he said he wasn't comfortable with that. Okay. And the margins roughly in an industry like or you know, in your exact case or in this industry broadly are what's the range? Can you give us that? Yeah, so I think um we have to think in terms of SDE because almost always the accounting firm owner owners or partners and they also work in the business, right? So, it's almost never going to be EBITDA this size range, but um essentially, you know, when you look at an accounting firm um that's probably under a million dollars, it's going to be a really high SDE. It's going to be like 40%. Sometimes even higher. And that's because the partners doing most of the work themselves. They're billing all the high stuff and they have like one or two admin who help them push papers around. Um but again, that person is it's really hard to replace. And so, you can say, oh, that's such a great margin, but it's also super risky. And then when you get on the other end where you have a more established business, more infrastructure because you have more admins helping out. You maybe you've got HR technology or marketing or something like that, it will get more closer to 20%, right? So, I think it's anywhere from 20 to 40, but that's also that also tells you a lot about the size of the business and how um stable it is and how much the owner really has to do. Yeah. Yeah. Yeah. Well, I think um and I think that again is is pretty generalizable. The bigger a business gets in terms of revenue, usually that there's margin compression as it gets bigger. Um but 20 to 40 great. Um okay. The And can you give us the the any anything about the deal itself? What what you paid, what you know, all the all the terms of the deal? So, uh the way accounting firms work like I mentioned is they basically start with as a baseline one X of revenue. Um I don't know why this industry does revenue, but they do. You know, most businesses do off multiple of SDE. Right. And then it'll go down from there if, you know, there's client concentration or some other kind of risk or that you know, the seller has too many of the relationships, it'll go down. Um it'll go up if you're in the cloud, if you're virtual, if you have everybody on monthly ACH drafts, you know, so some of the optimization things that Adam either had in place or I knew I could easily implement were the case here. So, so for me it was it was about one X of revenue um that I ended up paying. Mhm. And in terms of the deal, you know, I did an SBA deal and um I think it was 70% SBA loan, 20% seller note and 10% me. So, Gretchen, your salary, this full salary that you were earning in corporate, have you did this business replace it? Like you had kind of that had been one of your criteria or directionally? Yeah. I I think I'll get there. Um right now I'm not paying myself very much because you know, I I want to make sure the business is stable. You know, this is like flying the plane while building it and you need to keep it off the ground, right? And so, for me cash flow is a big priority right now um because there's a lot of initial operating expenses that are, you know, prepaid and things like that. Um there are, you know, some people do leave when there's a transition. So, we got to make up some of those client revenues. We had two new people hired right when I uh bought the company. And so, there's a little dip there. So, that's like a, you know, a head count investment that will pay off, but you know, it's a little dip in the beginning. So, um my goal for the next year is to stabilize and operationalize and um just really work on the efficiency. And then it you know, and I that's that's probably a three to six-month goal. Um and then I really want to turn to marketing. And I have dual marketing funnels. So, one is clients, which is not really super difficult. I think the difficult marketing funnel is uh hiring. So, my next step after I get everything stabilized, I get our software um where I want it to be and the team's humming along is I want to put those funnels into place to start growing. And so, once I start growing, then I'll probably get back to my corporate America salary. Mhm. So, you're leaving the cash in the business. You know, one one thing or reinvesting and however you want to put it. One thing that I thought was interesting about how you thought about this in the pre-call. You said that your I guess in theory you could take out your full salary if you wanted, but instead you're taking out less and leaving another piece that this other cash in the business to do all the things you just said. And you compared that to your corporate salary where you didn't need all all the the salary you were making. So, you were taking a chunk of your corporate salary and putting it into some investment. Mhm. So, take take the ball from there and elaborate on this. Yeah, so, you know, at some point you can only spend so much money living in Eastern Tennessee. Um so, you know, we were taking you know, when I would get a stock grant for example and it would vest, we would you know, buy a piece of real estate or something like that. And so, this is the equivalent of that for me is, you know, I'm reinvesting in the business and um you know, when people say their business is their baby, I didn't really understand that and now I have a business and you know, I have four kids and I'm like I feel like I'd do anything for this business. Mhm. And it's this weird emotion I never expected, but part of that reinvestment, you know, becomes really important when you're running something that you feel like you'd do anything for, you know, so I don't want to just keep keep the plane off the ground just for the sake of having the right amount of cash flow and keeping it it flying, but I I want to soar, you know, I want to grow it. Mhm. Yeah. Great. And going to your your your future plans, the dual funnel um you mentioned one funnel is for generating new sales, new clients. The other is for recruiting. Let's take both of those in turn. The new clients I've heard on our pre-call, I've heard from Patrick Dick Drive, heard from Chris Williams that getting new clients in this world is actually not that difficult. There's a bajillion small business owners and there's a lot of poor quality your competition. There are a lot of not great service providers out there. Elaborate on that, please. Yeah, it's I say it's like shooting fish in a barrel, you know. Um there there really are a lot of people in need of a great proactive accounting firm. So, that's not the hard piece at all. Um what I want to do though is I really want to dial in our avatar and so that's something we're working on together as a team. I want to involve the team in this and not just make the decision myself, but um it may be industry specific and it may not be. It may be more like this is um you know, some of the psychographic factors for the tax team for example might be they're easy to work with. They get their paperwork in on time, right? And then for me, you know, thinking about marketing and sales, I want a certain threshold of a business income so that we are not a big you know, expense on their on their budget. Yeah. Um and it and we're probably looking at something more like professional services versus you know, retail or manufacturing with really complex inventory. That's just a different skill set and I think we're probably more comfortable on the first side. Yeah. Great. So, the bottleneck though is recruiting new accountants. This is something that anybody I've talked to in this world uh says is a real challenge and in fact, there's just a diminishing supply. There are are less accountant or less people graduating as accountants, less people being educated in the field. So, how do you see addressing that over the next 10 years? So, the first thing I'll say is that I do not need to hire 10,000 accountants, right? I mean, probably best case scenario, I need to hire like a hundred. Right? Something like that. Even if it was a thousand, it's a much smaller number than you know, when we talk about this entire field, right? So, I'm not worried about finding the ones I need um for the time that I run this business. But, the way that I'm planning to do that because I don't want to just hire anybody cuz I'm desperate because we have a shortage, I want to hire the best people. So, how do we do that? Um I have a theory and this goes back to the time I spent where I was raising my kids and working part-time myself. I think accounting for a lot of firms is you're either all in and you're working 70-hour weeks during tax season or you just opt out. That's it. And there's nothing in between. And so, my plan is to offer part-time roles to people who want to keep their hand into an intellectually stimulating profession. You know, I've I've heard many people um who are in tax say it's like putting a puzzle together and they love it. Um so, I I want to give them the opportunity to do that, but not make that huge commitment, right? So, part-time work, we also offer remote, we offer flexible hours. You know, I I tell the team like I manage by KPIs and culture. I don't care if your Slack light is on, right? Mhm. Um if you're doing the production and the clients love you and you your quality is up, that's all I really care about. Mhm. So, I think those things make they differentiate our firm from a lot of the more traditional ones that require you to be in the office and to bill by the hour and log all these you know, some of them actually require 70 hours a week during tax season. And so, I just want to carve a different path for my team and for my business that eventually leads to people seeking us out. So, we actually have a queue of people who want to come in and work for us rather than us going out to recruit. It sounds like great strategy. You know, part-time work for uh for accountants. Why do you think it's something that hasn't yet occurred? It it it just makes so much sense. It makes sense to you and me probably, but it does not make sense for the business model of most accounting firms. And there is you know, to to be frank, there's extra paperwork, right? You've got extra hires, more people you're paying, things like that, but if you just decide to work through that, um my personal opinion is if you get somebody for 20 hours a week, they're putting in more of a percentage of that 20 hours than the people who work 40. Yeah. And so, I think it makes up for it on the back end. Yeah. Yeah. Great. You did one big change that you made early on was as we've already um alluded to, but not addressed directly, the name of the business. So, it's now Redbike Advisors. Um was that your marketing person? So, you were probably um you know, rubbing your hands together to get that get that going. Did any anything to say to that or is it just you were just what I just said? Well, it's been obviously I couldn't keep the name because it was the seller's name and it had CPA in it and there's some rules around that, right? Um so, I had to change it regardless and then the question is should I change it to Gretchen Roberts Accounting or Roberts Accounting or something like that and I just I never wanted a business named after me and I wanted to actually put my stake in the ground in this old industry and say we're fresh, we're new, we're different. And so, I think Redbike does that and the tagline is break away from the pack. And the idea there is, you know, you want proactive finance services that will help you break away from your competition. Mhm. And so, that's kind of the the brand story so to speak. I will say I get a lot of compliments on it, you know, from prospects and clients and people I'm interviewing. They're like, "Oh, I love your brand. It's so fresh." Totally. "I've never seen an accounting firm like this." Totally. And I go, "Yeah, that's because I'm a marketer." It's so good. Yeah. It's so good. It's It's a beautiful website. I love the the the color scheme, the the image of you know, the the logo being a a mental image you can I mean, Redbike is just one of those things you just don't forget it. So, you have a red bike over your shoulder there there at home. Um it's really strong. Um really really neat. Last question for you before we just catch anything we didn't um talk about. Management for for a lot of people is a challenge. We we touched on it at the beginning, you know, buying a blue-collar business and the culture uh mix mismatch there that can occur between somebody buying a business coming from a white-collar environment buying a blue-collar uh business. Um and you didn't do that. You you you know, you bought a white-collar business. Um but still for a lot of my listeners or people who buy business for the first time, being being an owner or being the boss of so many people or having all eyes on them, like the people issues around that is very challenging regardless of white-collar, blue-collar. Yeah. Uh how has it been for you? And and yeah, has that been fine or you said you like management, that probably helps. What what can you say to that? You know, I think my corporate America experience really has served me well there. Um and I've I've really spent time learning how to be a good leader and um so, that has not been hard for me. Um and I I believe the team has accepted me. Mhm. Um you know, whatever that means, but you know, I think for the most part people are are happy with the transition. Um you know, Adam and Caroline are still around, which helps, so there's stability. Mhm. Um I am making changes, but I'm trying not to go too fast and I'm trying to um position the changes as helpful to them. So, even though good change is hard, they they seem to be game to make the changes with me. Yeah. So, I don't think I don't think that transition has been hard for me. Um as much as some of the other transitions. Any things that have been hard for you? I tend to be a little bit of a workaholic and I one of the reasons I wanted to buy a business was because I was working too much and traveling too much in corporate America. And the saying that you work just as hard or more harder for yourself than you ever did for anybody else is certainly true. And so, I I have to make myself stop because I have so much that I want to do and it's exciting to me, you know, but I need to balance that out with my real life and my family and the things that I bought a business so that I could have more of. Gretchen, on this point about about management, um one of the other you know, you you're an experienced manager, you feel at home being a manager, you've you've invested a lot of years in becoming a better manager, something you really focus on in yourself. One of the things that is going on in this shift in the world to remote culture is that I think some of the value of being a really good manager is lost over the wires of the internet. It's easier to be if you're a really good manager, it's easier for that that value to kind of manifest in in one face-to-face than over Zoom or over Slack. And for you, somebody who's so good at that, do you feel what what do you feel about remote culture now that you're the one you're the boss, you're the owner, you're the one who you know, if remote culture isn't isn't the best thing for work culture in general, you're the one who's going to suffer the consequences. That's that's a really interesting question because you know, I managed a lot of global teams in corporate America, so everybody was remote all the time and so I I think I I cut my you know, my teeth on that so to speak and it is more difficult to build culture and I think one of the biggest things that you can do is have at least once a year an in-person gathering. And it can't just be to do work. You just have to let people get to know each other and develop relationships because they take those back to their home offices, you know. And so then the next time somebody needs something from somebody else and and this guy is never you know, been in person with anybody before and it's just like a computer box asking for a favor, but once they've met and talked about their dogs and their kids, you know, you know that other person's going to do that favor. And so to me, I think that's probably the biggest thing is to cultivate in-person relationships at least once a year. I'm having our leadership team meet quarterly in person. Um but I will say accountants are at least my accountants um when when Adam sold the business to me, he called everybody in for lunch and he said, oh hey, like let's do lunch and then we'll do our team meeting and there was a rumor going around that he was going to make them go back to the office and they were all like really upset about it. They did not want to go back to the office. And so it was almost like, oh, he's just selling the business. Do we get to stay home? Do we have to go back to the office? Okay, we're fine then. So um There's a lesson there for for the transition the announcement everybody's day one announcement. Start a rumor of some bad thing happening and then when you come in as new owner, it'll seem you know, like good news by comparison. It was pretty funny. Yeah, so um so yeah, I think I think the majority of people really do want to work from home. We do have an office, but nobody really goes in. And um so I guess I in in that respect because I have a remote team, I'm glad that they all enjoy that and view it as a benefit. This was fantastic. Um really a really neat acquisition. I love the energy you're bringing to it that and the kind of fresh eyes cuz you're kind of a marketing person, a data-driven marketing person uh coming to a an industry that seems pretty stuck in its ways. Uh it seems like there there's a lot of potential for for um unlock there with your particular skill set. So be eager to see how it goes. Thank you very much, Gretchen. Thanks for coming on. Thank you. I hope you enjoyed that interview. Make sure you subscribe to the Acquiring Minds channel below. We are now publishing twice a week. So tons of new interviews and stories to come. Stories that will help you along your own path to acquiring a business.