Practice Profile: Democratizing the CPA firm

Cecilia Nysing

Chase Birky drew on his past experience as an auditor at a Big Four firm when he established his own practice — largely in terms of how he didn’t want it to operate.

Birky watched partners work long and unpredictable hours that kept them away from their families, deterring some of his colleagues from the partner track, the firm, and sometimes the profession entirely.

Birky eventually also left the Big Four firm, but stayed in public accounting, with a growing desire to change it from the inside out. Rather than the differentiation many firms seek around niche practices or client experience, Birky aspired for his practice, California-based Dark Horse CPAs, to create a new approach to workforce strategy, with a flat organizational model (with only him and co-founder and director Max Fritz at the top) that promoted independent business development and entrepreneurship. The firm was also cloud-based and fully remote pre-pandemic.

“I like to say we’re the democratized CPA firm, only we create an alternative to the practice of public accounting,” said Birky, who also serves as CEO. “The partnership model has been a certain way for a long time. It doesn’t work for a lot of people, the leadership expectations, what life looks like, and it’s not going away.”

Dark Horse CPAs, founded in 2015 and incorporated in October 2017, is essentially a network of CPAs, all in the role of principal, relying on the firm’s resources, technology and marketing efforts to pursue their own small-business clients and grow their books of business. The firm recently added a Principal Accelerator Program that onboards select CPAs that don’t yet have their own practices into the firm by giving them access to Dark Horse clients and resources while training them to be effective business owners. Those that come to Dark Horse with a pre-existing book of business over $100,000 skip the program and join the firm as principals.

Dark Horse co-founder and CEO Chase Birky (left) and co-founder and director Max Fritz

Birky analogizes the firm’s model to a franchise structure, though he hesitates at a full comparison, as “we are way more active with our CPAs and principals than H&R Block, where they are just paying for the name.”

“Our model is we’re all employees with the ability to buy in via [nonqualified stock options],” he continued. “In a lot of ways, it’s traditional in that the partnership still buys into equity, in a similar way, to be able to come into our system.”

Those being considered for the accelerator program “have to meet intangible character-based criteria,” Birky shared. “Someone of high integrity … who is willing to grind. The accelerator program is an awesome opportunity, but comes with its share of work.”

Buying into the brand

Once admitted into the program, participants are responsible for new inquiries the firm receives from its targeted marketing strategy. Dark Horse’s branding was a top priority for Birky and Fritz from its inception, and one of the perks of joining the team.

“When we started off, we were trying to be a different firm, have branding that spoke about the relatability our CPAs have,” Birky explained. “We really feel strongly, from the stories we get from clients, that CPAs are some of the worst customer service people out there — a combination of introversion, defensiveness, and not knowing how to talk on your clients’ level. CPAs are not always approachable. We wanted to create an approachable brand. And on top of that, we really connected a huge need for small businesses to get tax planning and advisory services that they are not getting in large part.”

Dark Horse principals and accelerator participants benefit from the firm’s burgeoning online presence and search-engine optimization savvy, relying on the five-star Google and Yelp reviews they encourage from clients. The firm also maintains a tax planning blog and Birky co-hosts the “Taxes Made Simple” podcast with Justin Kurn, a Dark Horse consultant and director of sales operations at Friedman Learning Group, which deciphers the latest tax developments into digestible segments.

“Ninety-nine percent of accountants have no formal sales training; whatever they had is what the partners do, what works for them,” Birky said. “They may be best practices, but maybe not. To have sales training instills lots of confidence on how to navigate that process. Lots of accountants get paralyzed by the expectation that they should know everything. Accounting and tax is too vast to know everything.”

Dark Horse CPAs currently has 15 employees and four people in the Principal Accelerator Program. The firm’s first crop of accelerators grew their business “too quickly without the right resources below them,” Birky shared, so now all participants are assigned an outsourced, full-time support staff member in the Philippines to assist them. The firm also provides “a compensation structure draw component, where they borrow against future earnings. The accelerator [earns] 50 percent of gross receipts, and once principal, 70 percent of net income based on P&L. They are still able to have the draw the whole time, to stabilize income and live comfortably — not live paycheck to paycheck.”

The necessary tools

In earning their places as principals, accelerator participants receive the kind of sales training Birky believes CPAs are often lacking.

“Justin Kurn works directly with them, preparing them for the conversation and giving them everything they need to know.” Birky explained. “They are also doing one-on-one coaching on a recurring basis.”

The training is so personalized that Kurn builds specialized playbooks within CRM software HubSpot and will play back program participants’ calls with prospects, recorded over the cloud-based phone system, to analyze their performance.

“He will listen to one of their calls, go over the Xs and Os — ’At one point, the client is asking this; where can you move the conversation?’ Almost like a basketball coach, with Xs and Os and highlight tape. It’s a real tangible conversation of how to improve.”

These kinds of exercises also extend across the firm as part of its larger learning efforts, conducted virtually, which Birky plans to keep expanding and make more sophisticated with the help of new technology.

“From a learning standpoint, we are endeavoring upon creating a full learning system,” he explained. “The training is very structured — responding to questions, demonstrating learning before moving on … a digitized training experience. Outside training, we are building the tech stack for it to automate whatever can be automated, to create as few points of intervention as necessary.”

Besides HubSpot, Dark Horse uses other cloud-based tax and workflow management tools, and has incorporated bots into certain processes, like the 1,500 to 1,600 returns the firm files for clients annually.

“Layering in robotic processes automates bots into whatever you’re doing — it sits on the front end and back end … If you look at it, it allows us to get a lot of blocking and tackling that otherwise consumes a lot of time. It’s a way to institutionalize knowledge so the same things happen on repeat. We created a bot to do a second-level review, and used the logic of how I would review a tax return, looking for the same areas of the return and creating review notes in XCM, which we use for workflow … . We program the things I naturally look for into the bot so the bot is doing it the same way, every single time.”

Dark Horse was always designed as a virtual firm, which attracts sole practitioners across the country with entrepreneurial aspirations to join the team and connect with each other over video calls and messaging apps. But the COVID-19 pandemic accelerated this transition for any clients lagging on the technology front to be less resistant to Zoom engagements and meetings, and has only bolstered business, Birky reports.

Looking to the future, he said, “There is no ceiling to how much we want to grow. As long as we have the right people, and the ability to give leads allows them to be successful — as long as we find the right people, we’re always hiring.”

“Our goal is to totally change the industry, especially as it relates to sole practitioners,” he continued. “The technology makes it easier to go off on your own, but it’s a double-edged sword. Once you do, there’s so much to balance all at once between technology that allows you to go off on your own, but that’s always changing, so you could head to a place where it’s irrelevant. And that has you focusing on the technology, not focusing on what makes you a trusted advisor.”

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