Escaping the Drift with John Gafford - Matt Bontrager's Path to Building a $4 Million Firm

Starting point is 00:00:00 Hey, it's John Gafford from the Escaping the Drift podcast. And big news, my new book, Escaping the Drift is coming out. November the 11th, you can pre-order it right now at thejongafford.com. There are tons of bonuses, tons of giveaways. Get the book. If you are somebody that feels like you might be drifting along, this is for you. If you know somebody that feels like they might be drifting along, this is for you. Available everywhere, all bookstores, everywhere, Amazon, Barnes & Noble's, the whole nine yards.

Starting point is 00:00:28 but pick your copy up right now at the john gaffer.com and get a bunch of the awesome bonuses I've thrown out because I promise you I put my heart and soul into this thing I want it to help you change your life pick it up everywhere so you went to you went to college you said UNLV yeah you and LV yep okay and you graduate from you NLV you get a good job at Deloitte which we talked about that super proud about that was that's a good company yeah it was good got me really good reputation out of school how did you so how did you pull that off And now, escaping the drift, the show designed to get you from where you are to where you want to be. I'm John Gafford, and I have a knack for getting extraordinary achievers to drop their secrets to help you on a path to greatness.

Starting point is 00:01:13 So stop drifting along, escape the drift, and it's time to start right now. Back again, back again for another episode of Like It Says in the opening man, the show that gets you from where you are to where you want to be. And today, live in the studio, people, you've got a guy that is, man, I love this because this dude is still kind of, I'll call it level six where we're at, right? If zero is an idea and 10 is the exit on a very successful business, this cat's at like level six and doing incredibly well. He started his career early at Deloitte, where he cut his professional teeth there. He has a CPA by trade, and he has started his own unique.

Starting point is 00:01:56 week, kind of niched down business for real estate investors doing their taxes. I know it sounds super boring, but it is a necessity that we all need. But this is not about taxes today. So don't think, man, I don't want to do talk about taxes because we might, but I don't think so. What we're going to get into is how he built this now burgeoning incredibly successful business called TrueBooks. Ladies and gentlemen, welcome to the program.

Starting point is 00:02:23 This is Matt Bondrager. Matt. Thank you. How are you, buddy? I'm good. I'm good. Thank you for having me. Good intro, good intro, better than I could have done for sure.

Starting point is 00:02:31 Well, you know, you do this once or twice. Yeah. And you pick up some things along the way, if you will. For sure. So, dude, you know, when I say you've got this, it's not like you're selling crafts at the fair. I mean, this is a business that'll do, what, $4 million this year? About $4, yeah. Do $4 million, which is great.

Starting point is 00:02:47 And you started this what year? When did you start? 2020. Okay. Quit my, yeah, I was a W2 employee, quit Q3, 2019, started January, Jan, 2020. So let's talk about that, right? So you went to college, you said UNLV, yeah? UNLV, yep.

Starting point is 00:03:01 Okay. And you graduate from UNLV, you get a good job at Deloitte, which we talked about. Super proud about that. Yeah, that's a good company. Yeah, it was good. Got me really good reputation out of school. How did you, so how did you pull that off? And that was more of a pull off because I wasn't a GPA guy going through school.

Starting point is 00:03:18 I wasn't flexing a GPA. I was a network or talker showing up in a suit to all the events and just trying to show that I was eager to get a good job. I was an okay student. I just wasn't like a straight-A student. And I think just networked and showed that I was really interested and would have been a good staff. I would have been a good employee and landed it. And I started at an odd time too.

Starting point is 00:03:35 I started in the fall. Usually you graduate spring and then you kind of have a sort of like fall to like sort of cut your teeth. I graduated in fall. So I went right into busy season in January. So it was fun. But yeah. Let me ask you this question.

Starting point is 00:03:48 This is just something I just thought of. We're in a fraternity at you and Lovie? No. You were not. Lived at home. Yeah. Because the reason I ask is, read an interesting stat yesterday which said if you are in a fraternity in college it is almost

Starting point is 00:04:01 to guarantee you a lower your GPA by a quarter of a point I don't doubt it but it also at five years you have a 36% higher return oh I'm sure for the network for the network so when I hear you say networking yeah is that so where did that skill come from I mean have you always been a people person somebody can shake a bunch of hands yeah I think it's my mom my mom's a talker my mom's a talker and just kind of like that yeah just like you put me in a room and And I'll make friends or I'll talk to someone to just and that's now. I mean, we can get in. This is a huge topic for me too of just. Yeah, let's go. But yes, I've always been into, you know, just at least being kind and friendly and not avoiding people, right? So we'd go to events like a career fair. You see now, I've got to go to those events as a firm now looking for staff. And kids are so nervous nowadays. They can't walk up and shake hands and look somebody in the eye. And so I was lucky to have that trait in school, I think. And it was just kind of hopefully shine through a little bit. Did I tell my kids that are school age now. I tell them all the time. I say, listen. The best skill that you can have in life is going to be the ability to look at another human being and connect with them. All these kids.

Starting point is 00:05:01 I've got 117 and 115. Oh, goodies. And they're just head down and their phones all the time. Yeah. I mean, luckily, they're great kids. I have nothing to complain about with my children. But yeah, it's going to be a skill that I'm trying to ingrain in them. And it's just, it's so rare.

Starting point is 00:05:17 It's going to be so rare 20 years from now. Agreed. And I look at now running a firm with staff, we make money by maintaining good relationships. and I need staff to obviously drive that revenue and I have some staff that are not good to talking to people and I have some staff that are. So I now as a business owner see the value of somebody that has the technical skills but can also talk to people. I had a when I was in tech industry for a while and we had a saying at our tech firm, which is you never let the geek pitch. Yeah. That's a good term. And I always look back at that and there was a scene in the

Starting point is 00:05:51 movie office space when when the bobs are interviewing the guys for the layoffs and they're like interviewing the one guy is freaking out. They're like, well, what do you do? And he's like, well, I take the information from the software people, but I take to the customers. And they're like, why couldn't the software people just take the information directly to them? And you're like, bro, if you've ever worked in tech, you understand why that can't happen

Starting point is 00:06:11 because the guys that are really good at Ripping Code should never talk to a client ever. Well, no, they just, they don't have the ability to slow down fast enough to explain something in a way that is empathetic at all to somebody else. And yeah, yeah, you never let the geeks pitch. But that's fine. I totally agree with that. I totally agree. I mean, we're all geeks in accounting for sure. But when you, that's what I've started to realize is, and why I've, I'm 33, I feel like I've really sunk my heels into this profession, love the profession. And I'm trying to, like you said, level six, I like it. I would probably gauge myself around there. Okay. That was a guess. No, that's good. That's good. Because I feel like, hey, I'm

Starting point is 00:06:49 sort of in the middle now. And I'm approaching my highest earning potential. And I like, now that I've realized if you're in the accounting space, I love the field. It's really good opportunity. There's so many different doors you can open. But if you have that door or have that trait where you can talk to people, way more doors open because now you're more of a partner level. You can sell the work and do the work. You're not just stuck to doing the work. So yeah, yeah. Well, let's go back to your city, you're working at Deloitte. Yeah. And you're thinking to yourself, walk me through that thought process of jumping out on your own. Because that's something that that's one of those moments that it's a defining moment that a lot of people just don't

Starting point is 00:07:25 have the intestinal fortitude for that. So walk me through that. Yeah. Yeah, it was a big sort of scary decision too, because I would say as an accountant, I'm typical in the sense of pretty risk adverse, right? Us accountants would go to school, get a good degree that leads right to a good job, good salary. Like when I signed with Deloitte, I got to buy a house with my offer letter. I didn't even have a paycheck yet. So it just felt very secure. But the way it works in accounting most of the time is I started to land a tax return here or there on the side. And I slowly built a book of, you know, business that was around 40, 50 grand. And then I landed a client who about 2,200 bucks a month, I did his bookkeeping, Ryan. And then we started that firm together. And so I basically

Starting point is 00:08:03 came to him and was like, hey, I'm on a W2 right now for about 75 grand. I have about 40 to 50 grand of side business moonlight work. I landed him at 2,200 a month. And so made a comment to him like, hey, you are an influencer. You have a, you have an audience. You drive the work. I'll do the work. And let's beautiful partnership. Yeah, the Ryan, we're talking about as Ryan Paneda for those you. Yeah, 2020. But the lesson in here, if you're listening to this, right, and you're in a position where you had that W2 job and you're thinking to yourself, I want something more. I want to take a risk. This is the way to do it. Essentially what he did was created a side hustle that not only the purpose of the side hustle wasn't just to generate $50,000, not just to increase the

Starting point is 00:08:47 income. He was proofing the market. He was saying, okay, can I build this business on my own without this? So being risk adverse, which, you know, most accountants are, that's not really risk. You were just transferring focus at that point. Yeah. Not a lot of risk. That's a smart way to do it. So many people, you know, they have an idea or they come up with a concept or product. and then they just want to go to build it and then try to sell it. I mean, this is why they have Kickstarter. Yeah, right. Because for those of you listen, Kickstarter is not to raise money.

Starting point is 00:09:20 That's not the point of Kickstarter. Kickstarter is to prove a market. Make sure you have a market for whatever you're trying to do. So, smart, smart stuff. Okay, so you got that going. You get this going with Ryan. And so obviously, tell me, take me from there. Yeah.

Starting point is 00:09:35 So this is 2020, COVID year. I had my first son in May of 2019. My wife's in finance. has a good W-2. So it was like the stars were aligning for me to say like, okay, this is a good opportunity. Quit my job as an accounting manager, start this in 2020, takes off like a rocket. I do all the work myself for the first about year and a half, some contract work here and there. And for the numbers-wise, first year, we did a buck 20 to the top line. Second year in 2021, we did 860. Third year, we did 2.6. Fourth year, we did 2.4 and 3.4 and 3.6.

Starting point is 00:10:11 let's back up. Walk me through the business plan. Walk me through the structure if I work. So the business plan up front was partner A, partner B was I was going to crunch the work and hire staff to actually facilitate it, but Ryan was able to drive the business at a really good amount, right? He was in certain pockets and, you know, social media space where we just got a lot of exposure. When he would go do speeches and talks, it was, hey, this is true books is what we do. And we do, Ryan and I both come from a real estate background in the sense of I was focused on that kind of work. I'm an investor in the sense of I have some, long-term rentals. He was doing stuff in the real estate space. So we really came at that market

Starting point is 00:10:46 and also really realized that these people are good, you know, real estate investors are good at finding deals and they're good at making and creative deals. But the product, they're terrible at bookkeeping. They're terrible at tax work when also from a tax perspective, they're sitting on some of the biggest gold mines that the tax code affords. And so that was the market we attacked. It worked really well where it split. So Ryan, so I bought Ryan out. Hang on. Hey on. Oh, yeah. Okay. Because dude, jump in. I'm jumping. No, but all those like, because see, here's the thing. you know when you go through it man right when you when you're the guy that does it there's so much that you just kind of skip by because you're like oh that just happened just

Starting point is 00:11:18 happened but what you just laid out was like okay why did you choose ryan as a partner because he had something you did not have he had the ability to go drive the sales and he had the ability to be that side of the business to get started yeah so many people get into business with partners and do the exact same thing they have and have the exact same skill set basically just because they're too scared to go out to it by themselves you didn't make that mistake you found a very complimentary piece to what you were able to do. Secondly, you very clearly laid out responsibilities for what he was responsible for and what you were responsible for.

Starting point is 00:11:50 It was very clear to both sides. There was never any ambiguity of who's got to do this lift. It's like, bro, you're responsible. Like, where's the sales? Or why aren't we getting this stuff out fast enough? Yes. Very clear, well-defined roles. And then the last part I would say is once you got it going, it began to scale.

Starting point is 00:12:08 and you were able to then hire to that point. Now, the first thing I'm going to say is, my question is you said that first year, you almost all the work yourself. So at what point did you break? I'd say probably 10 months into where we started to get some contracting work, which at that point was reviewing tax returns. I was preparing it all,

Starting point is 00:12:26 doing all the bookkeeping. But yeah, I'd say about 10 months in, it started to get really stressful. So even though the top line, because you have solopreneurs that are running $200,000 books of business. But with the influx of what they're not doing,

Starting point is 00:12:37 they grow those books of businesses very slow. We had such an influx of sales and new prospects, which as you know, running sales and taking prospect calls, you're going to talk to 10 land two type, you know, kind of thing. But at the same time, I'm trying to crank tax returns out and service the work. And just like we kind of talked on a big service guy. I don't want a bad name. I don't want people speaking ill of the firm that I'm trying to run. So I wanted a good service. And I think about 10 months in is where I just started to feel real stressed. Looking back now in, in retrospect, should you have scaled faster? Should you have brought more people? on quicker? Or did you think you did it right at the same? The right? Perfect. Not at that time,

Starting point is 00:13:11 but in 2022, we made that mistake bad. I was on bigger, which we can get to that, but I was on bigger pockets. And we had, it was like taking burger orders and it killed us. Q4, 2022 into 2020, killed us. It's that, but you just never know what's going to be that thing. Never. And it was for context, we'll sell right now eight to 15 units a month of, hey, you want TrueBooks to do your tax planning. This is the engagement. We sold almost 60 throughout those queue per month. in Q4 of 2020, just for being on a podcast. So, okay, here's the problem that a lot of business owners have, when they have a hockey stick like that in sales,

Starting point is 00:13:46 is how do you hire, how do you maintain the integrity of hiring the right people and getting them in the right seats when you're trying to do it very quickly? And that's where, luckily with accounting, you're hiring for a very specialized role. So almost up front,

Starting point is 00:14:02 if you know your stuff, you can vet them out and just really ask them certain questions to, hey, show me the workload that you've handled before. How would you do this? X, Y, Z? And so, luckily, the talent that I've been able to find, I've had some bad hires here and there, but most of our talent has been really solid from the jump. And so our first hire in that March, March of 2021, she started to run our accounting department and then admin and then tax. So it started to build out from there. But I guess it is a little easier when you're hiring people that have to have passed a certain, you know,

Starting point is 00:14:28 some of them are licensed. Yeah. Yeah. Like real estate, man, it's way too easy to get a state license. That weeds no one out. Nobody. I was going to say it out. Yes. I mean, I know people in this business that I don't know if they can even speak English and somehow they pass that test, which is in English. I'm not even sure, which is fine. But with you passing that CPA exam, that's tough test. So that was very hard. I guess you can kind of filter a little easier that way. And I'm not even hiring all CPAs. We have CPAs at the firm. But even then, if you have experience as a bookkeeper, you give me 30 minutes with you. I'm going to be able to really tell how good of a bookkeeper you are. So luckily, hiring the talent has been somewhat easy. And we had cool

Starting point is 00:15:05 perks, you know, during 2020, everybody started to go, they went from cubicles to, oh, cool, I get to work from home now. And so the stuff that we were offering as far as being a remote firm, competitive pay, people loved. And so I think that's also how we've got to grow like a good talent pool, too. Dude, that's an interesting question because, you know, Simon Sinek says the magic's in the hallways. So running a remote workforce like that, how do you keep the culture high? It's hard. So this is where results. So everybody goes, how do you know they're working? Well, we The biggest thing that we've done is we don't track time. And coming up at Deloitte and any other tax firm in accounting and tax as an accountant, you track time. You have to be billable hours to certain

Starting point is 00:15:40 clients. We trap pure productivity. If I'm paying somebody 80 grand, we ideally, there's a metric. I need to make three times a salary. So I just really will track dollars and what you're putting out the door. But I think how we keep a good culture is we're still fairly a small firm. There's 25 to 30 of us. So it's not too corporate yet. We have things like, flexible time off. So like my wife works at MGM. They have flexible time off in the sense of you can have as much time off as you want as long as your manager's okay with it and approves of it. And it makes sense for the business. If you need to take a week here, a week there, and it ends up being more than what you would normally get allotted at another firm.

Starting point is 00:16:16 Great. But as long as the production is there and it makes sense. So things like that, competitive salary. We just rolled out 401K. So we do not have things that other firms do. But yeah, I don't know. I don't know. And that's, I don't know. But that's where I have trouble, like me saying, I don't know, I have trouble saying, oh, I've done a good job at this, because I don't fucking know, really, if I do it. I don't know. It's really worked. And I, there's got, there's, there's attention to it throughout, but you're right. I can't say I made that call. Yeah. Oh, I think, I think your turnover rate speaks for if you're sure, a good enough job. True. Which if it's that low, you do it a good enough job. Yeah, we've only had,

Starting point is 00:16:48 you know, I've had, I was just talking to someone last night. I had one guy come in and work for us. And my thing was, I wore a black hat. And when I started to do social, because that's when it started to make sense for me to buy Ryan out was when social, I started to do some of the social myself. And so I had one staff that I hired and immediately could tell. He was someone that was not younger guy, never worked from home. So was not ready for this like he loved the thought of this work life balance and being able to run his own schedule. He didn't have the experience to do it. And then two weeks later found him online posting videos because he went out to do his own thing. So I almost took it as like, hey, I can't knock it. I just did the same thing. Yeah. But I started to

Starting point is 00:17:21 realize that, hey, there are there are people that are not cut out for this work from home life and you need to find more experienced people. Well, that's, that's an interesting point, dude, because I think so many people like you want to train your people and I think there's two schools of thought I have people that are like I'm going to teach these people just enough get them just to the point and then there's people that just understand you are potentially training your future competitor especially if you hire well yeah and I think which philosophy do you think is is which you you would subscribe to I think as to like is the question as to should you lean in and still train to the max with the risk of them going out on the house

Starting point is 00:17:59 for me it's a I would lean in and train that person like I have one guy now Jerry and he'll watch this maybe and he's our senior tax manager and like I love how I take a lot of pride and how transparent just him and I are with this where I've told him the biggest risk to both of our careers is leaving each other because what we have going right now is really well or is going really well and so we've talked that there's always a ton of opportunity if we stay together but as soon as things get contentious and we're not truthful with one another he goes and I go and then we lose each other's skill sets that is working so well right now as a partnership. But if you ask me, what I think about what I'm doing now in practice is, I'm going to lean into that person because if it does work out or for the time period that it does work out, it should be great.

Starting point is 00:18:39 But you, I mean, that's something that I've yet, I haven't experienced it yet at a high level where someone like him leaves. Yeah, I think, well, you will. Yeah, exactly. Exactly. But here's the thing. You know, what people don't realize is the success of others that come through your system, that come through your company. that come through your company, if they go on to great things at other places, that becomes a hallmark of your place.

Starting point is 00:19:02 That's why people want to come work for you because they see this as, okay, cool, I can just stay for the rest of my life and be happy. But if I want to make that leap to the next level, they're going to prepare me to do that. And I think you have to invest in all businesses. It's what we do here. I mean, there's been so many people, I've been doing this, you know, 20 years, what I've been at here. And there's been so many people that have come through here that have gone on to have very

Starting point is 00:19:25 large real estate teams open companies i mean all kinds of stuff so it's an ode to you yeah i think it's like the coaching tree you know there was talking about the coaching tree in college football with that guys from this guy's coaching tree he came up under him it's the same thing and i think people talk about legacy and business and i think there's no better legacy than leaving a trail of people that have you know not just succeeded under you but succeeded around you because of what you're the information you're yeah no i would agree that yeah that's a good point and that's where again like lean into your people because now that I think about it, I look at business so different in the sense of when like the way my kids go to school, the way I buy my groceries are because of the hard

Starting point is 00:20:01 work that my team does. I don't think that people really view it that way when there may be a solo producer or they just simply don't run a team. When you see the economies of how the dollars, as an account, I always think dollars. So it's the way that the dollars trickle from the customer ultimately to the owner, but through the employees and through the different expenses that it takes to run the business is you have to be very grateful for the team that you have, but then also the team has to be very grateful for the client that's paying you. So, yeah. Well, I would say, let's talk about this because I'm a big believer in personality test and I love them.

Starting point is 00:20:32 We can ignore people and I'm sure you've probably taken one or two at your time. I'm guessing from your, you know, elite level experience with numbers, you're probably high D, high C, which means you have high dominance. Yeah, high D, I C. How do you over-c, so, but it's obviously too, you love your people and you love your customer. So how do you overcompensate for your personality weakness? is and make up for that in an empathetic treatment of your people.

Starting point is 00:20:57 That's a really good question because I don't think I've necessarily thought, because I would say, if somebody asked me about myself, I would say that, yes, very high D. And I was just going to ask like, what's the predictive index? What I found very fascinating was when I joined with Ryan, my predictive index was one thing. And then when we split, it was opposite. I'm like, whoa, so watching myself shift through that being this visionary.

Starting point is 00:21:20 I was kind of like at that word, but I'm like, Oh, wow, that's a real role. But back to that question of being high D, but also being empathetic for the clients, is I think I just try to lean into the truth of it. Like now, I used to look at calling an angry client or calling somebody that's, you know, there's potential conflict with with very much anxiousness and, you know, how am I going to navigate my way through this? Now you ask anybody on my team, immediately, if someone's mad, I'll call them without any

Starting point is 00:21:47 notes, anything. Because I just know that if honesty leads and I talk to, hey, Jim, Jim's always the name I use. Hey, Jim, what's going on? I talked to so and so, and it sounded like you were upset. Talk to me about this. What's going on? You know, and those always end successful. Even if they're still mad when they get off the phone, we're on the same page as to what went wrong and where you could place blame. So I think my trying answer to my trying to that question would be if you're leading with honesty and trying to find a common ground, how can it go bad? Yeah. If you're being truthful. Yeah. And so that I think has gotten me really far because now like I make a joke. If I have a good client call, I walk out of the office and I'm like, no one's a good on the phones as me. Like, I'm just, I can take somebody and deescalate them because I just feel like I'm being truthful and I'm trying to be. And I always lead to another thing I thought I'm rambling now, but I used to think, uh, core values were like mush and I'm like, these are and uh, and now I'm like, oh my gosh, these are definitions of like what you're going to war with these people and you want them to share these same values. And so our first core value is being

Starting point is 00:22:43 helpful. And I think if you're leading with being helpful to someone, how can they be mad? How can it go wrong? And so, uh, I think I just lean really heavily into that and it's worked really well. It hasn't slapped me in the face yet. No. Well, it just, when you become a successful entrepreneur, it's really hard sometimes because you're looking at balance sheets. You're looking at P&Ls. You're looking at KPIs. It's hard to forget the people in there sometimes. Yeah. And I think that can be a challenge at any level of scale. When you start to, the bigger you get, the harder is to remember that. So I think having that in your core values is probably going to serve you very well, especially if it's the first one. Just being helpful. And that's it, right? To your team,

Starting point is 00:23:19 if your team needs something to get back to a client or if the client needs something, it's they're paying you for access. They're paying you for knowledge. And so if they, like just this morning, someone's upset because their tax return took longer than it, you know, should have, then they think it should have. So my first question of the team was cool. When did he first send the documents in? Because that tells me, hey, if you got me your stuff now, you're not going to get done by Monday. You just sent me your stuff. I've been asking it, you know, I've been asking you since February for it. Yeah. So when I call this person and, you know, eventually when I do, hey, when did you send me docs? Oh, well, oh, I can see where you sent me

Starting point is 00:23:48 most of them, but then we took a month to get back on this email. And we find a common ground to where it's really most of the time, both parties that have something at fault. And, um, and again, I just think leading with truthfulness, walking through the facts and circumstances of what happened, apologizing and saying, hey, I'm going to make it right and actually shut like, I knock people's fees down if they have a bad experience. That's if we have a bad experience and you deserve a refund, I give you a refund. Yeah. My engagement letter says you do not get a refund because the type of work we do, I give you your money back. That's good business. That's what I would want if I was a consumer. And it comes back. Yeah, it comes back. And so.

Starting point is 00:24:18 because my thing is you can't ever say that I did you dirty. So many people, man, just they forget about the dollar tomorrow to try to protect the quarter to debt. Oh, and yeah. I see in real estate, unfortunately, I see it all the time, right? Like it's like, because now since they switched over, you know, since they switched over the NAR settlement, we have to have buyer broker agreements on all of our clients.

Starting point is 00:24:40 Yeah. You know, you have situations where maybe it gets negotiated less than what's in the contract. And it's like, I see these people like, well, I want this buyer to pay this extra amount and I'm like how much you make it and I'm like 50 grand and I'm like and you're going to go crazy over four like let it go crazy crazy let let it go and let them it's not worth your brand it's like and that's well and that's a great thing you just brought up because I did want to ask this question this is a little outside of what we're talking about but obviously yesterday in America there was a tragedy that happened and it seems like social media got flooded

Starting point is 00:25:13 with some vile stuff yesterday. So what is your policy? Do you have one? Where are you with what your people post? Oh, like if somebody on my Instagram, or if somebody on the TrueBooks team were to post something related to that? Yeah.

Starting point is 00:25:32 That's nope, I don't think that we have a policy. We have a handbook, but I don't think that there's a policy specific to that. And thinking an honest answer to that question now, because I posted something yesterday. And I posted something simple in the sense of like, man, I hope kindness finds a way to creep back in. Sure. But then my slide after that was like, hey, if you laughed at this or congratulated it or, you know, whatever the word was, celebrated it was the word.

Starting point is 00:25:54 Yes. Hey, like, forget you knew me because that's where I have a big thing. I just cannot stand rude people. Because again, if you're leading with truth and trying to find a common ground, don't let being rude to one another because then it just gets nasty. Yeah. And so if I think about if somebody were to, let's just say on the crazy end of the spectrum, post a celebrate Tory post about that. I think I would directly, they would have got a call for me this morning. We, you know, because I just, at that point, like, that's, that to me, that's bad

Starting point is 00:26:20 human. Dude, like, that's bad stuff. In the, in the, in the, in the age of social media, man, we, we had to put a policy in ours because we have 585. Oh, yeah. Oh, yeah. And they're using that to grow their own, yeah, you have a such different model. We do, but we, we have had to part ways with people, some of, some of which probably on election day would vote the same way I do. Yeah. Over some crazy things that they've said. So we've had to do that. And yesterday, man, we had an episode happened that's still kind of playing out, I guess. But a dude that just became like a director in our local board, just got a like literally the election came in yesterday. And this guy had won. And he wrote some incredibly vile stuff. What do you mean local board? The real

Starting point is 00:27:01 realtor board. Oh, wow. The local, director for the local relative board. He wrote some incredibly vile stuff. And I saw it. And it was multiple posts. Knowing that you're a bigger player, in the space, does something like that typically come from someone like a you, right, like a broker owner and like, that's buy like that? No,

Starting point is 00:27:19 no, no, I'm saying, does one of you go to him and now approach him with that? No, no, okay, says what happened.

Starting point is 00:27:24 He does not work for me. Doesn't work. Yeah, right? And it's been kind of a circus on our local board the last couple of years. So I called, I called the guy up.

Starting point is 00:27:30 And I said, Hey, man, this was before the results had been announced that he won, but he works at a very large company. So I figured he would get the vote of all of those people. And I figured he'd probably win. So call him up and I said,

Starting point is 00:27:40 Hey, man, you know, look, I'm not here to debate. I'm coming under the white flag. I'm just saying, look, our board has been kind of a circus the last couple of years and maybe would you reconsider posting some of that stuff that is really going to trigger a lot of people? I mean, this is just, it's going to be triggering. And just maybe in the thought of the board, would it be a good idea for you not to post that? After he had already posted it.

Starting point is 00:28:06 Oh, yeah, it's already up. I saw it. And I just knew what was going to happen. I was going to be a shit stuff. on. So I was like, and this dude, you know, starts railing at me about his personal views about what Charlie Kirk said, and I wasn't calling a debate. I said, I'm not calling debate yet. I'm just saying this is going to trigger a lot of people and it's not going to be good. Would you consider take it down? And he said that his personal opinion was, he had the right to his political beliefs

Starting point is 00:28:30 and his personal opinion was more important than anything else. And it was fine. So I said, okay, cool. Have a great day. See you later. And within, dude, hours. Hours. the shit got picked up by like national press 500,000 views on certain things that he posted. And it was bad. And the dude like completely ruined his life over social media posts. That's wild. Right. And dude, his brokerage did the right thing this morning, did what I would have done.

Starting point is 00:28:58 You can't be damaged because they're tagged in all of this stuff that's going everywhere and had to let him go. But that's, oh, yeah, this morning. And I don't know what's going to happen with, you know, him being elected as a director at the board yet. but I can't believe it's going to turn out good for them. And it's like, dude, I tell our people all the time. It's like, the reason we have this policy is to protect the 580, like, if there's 585 people here, if you're making a post, I got to, I'm not worried about you. I'm worried about the 585 other people that work here.

Starting point is 00:29:27 Yep. So I've got to protect them with everything that you write. And if you don't understand where the line and the sand of good taste is, don't take the first step towards it. Just stop. Exactly. Just stop. Find another outlet or something because that's, that would be my thoughts as to like is, what's the purpose of posting it? Is it to, is it to. That's the thing. It's like, yeah. It's a very, yeah, I don't know. It's such a. And I never thought about that because I've never had that. As somebody at our firm, I'm the one that posts on social. And so like, you know, sometimes is, you know, they'll see stuff and they'll send it to me because I'm an accountant that's dancing online trying to. That's how we get clients. It's working for us. And so I don't really have anybody on my team that is that is that active on social. but yeah, I don't know. They definitely get a call for me.

Starting point is 00:30:11 This is where I'm like, I don't know the legal ramifications of if they post something that I simply don't like, can I fire them? I don't know. Well, I think it's a matter of, it's for us, they're all independent contractor,

Starting point is 00:30:20 so it's a little bit different. Oh, yeah, I can do whatever I want. Cancel a contract. But at the same time, it's like, I think there's a, I think it's okay to have a morality clause

Starting point is 00:30:28 that says that you can't do anything. If pictures surface of you with, in a ditty party with, you know, four hookers and cocaine on a table, I should have the right to let you go. Yeah, you're wearing a t-shirt and says true books.

Starting point is 00:30:40 I think I should have a right to fire you. Yeah, I know. So, yeah, I don't know, man. Maybe talk to, maybe look into that. I don't know, because it's one of those things where the first time it happened to us, we were like, we don't have a policy for this and what are we going to do? And it was equally as vile rhetoric, but on the other side of the aisle, right? From somebody here.

Starting point is 00:31:00 And we were like, no. And ever since then, we put it into our contracts that, like, you understand that, you're representing our brand in all places. You don't get the luxury of having a personal persona and a professional persona. You don't get that luxury. Well, yeah, because they are, right? And that's kind of what you, it's a double-edged sword. You want them to be active on social and have a good presence,

Starting point is 00:31:20 but then it is a risk that you take where, hey, they're not necessarily going to do everything that you agree with. But you're right. They carry your brand. And that's where that, that, I wish people viewed their, uh, their person as a brand sometimes a little bit more and what other people think about. you and how you carry yourself and because that then they would understand a little bit more to someone like you who's like you're right i don't have to worry about you i have to worry about 500 plus more

Starting point is 00:31:45 other people for what you're doing and i think well our little less than our people especially during election cycle because we have the same talk as soon as election cycle come do you have a meeting about it and oh yeah oh yeah because we're like here it comes right here yeah here yeah and if you're in business or like if you want to be safe on social media here's a safe way to do it right if you want to have a political i'm not saying don't have an opinion because that makes you that makes you that makes you vanilla right have an opinion that's fine but be supportive of the things you support instead of negative about the things you're trying to tear down yep so for example if bob is a republican and he's running for president and kim is a democrat and she's running

Starting point is 00:32:24 for president if you're republican rather than say a bunch of nasty stuff about kim just say what you like about bob yep right you don't need yeah you don't need to like in so many people people, it's shocking to me how much time they spend online, just sucked into this. Just it consumes them with, with, and it's both sides. It's not, it's both sides that like, I can remember when, you know, Barack Obama was in office and like, like, these people are just obsessed with everything that guy did and just couldn't wait to get to the keyboards and do it. And it's just, it's crazy. It's the same thing. It's nuts. It is. And that's where it's hard. Like, that's what's crazy to is the news cycle of new news is so fast that you like, yes, this was a huge tragedy. I'm like, how long, like,

Starting point is 00:33:09 it's in two weeks. Something else is going to happen. Something's going to happen. Something's going to happen. So, yeah. Speaking of that, cutting through the noise, you run an incredibly boring business. Super boring. Super boring. I mean, it is. But I like what you said earlier. You said needed. And that's where I'm like, it's, yeah. Thank God. Yeah. What scares me is units, selling units of something. And it's like, you know, growing a book of business. Luckily, it's a business where it's needed and then they come back your rear BS. It's, is boring, super boring. It's incredibly boring. So here's the thing, though. How do you, how do you make something that's so boring, interesting when you sell it? What's worked for me is

Starting point is 00:33:46 back to that just, I mean, for the 20 minutes we've been talking, I'm not a normal accountant. And so I would say that that's, I've leaned heavily into that. But luckily, when I say lean in, I'm trying to be myself in the sense of I'm candid. I'm not the most professional speaker. But again, leading what that truth is, I'm a little bit more eccentric and outlandish, but I'm an accountant. And so, like, I make the joke when I meet somebody, within five minutes, I want to know how much money you make and what you do. Yeah. Because coming up as somebody that didn't have a lot of money, I've always been enamored with money. I worked at the bank and that was my first taste to seeing people with money and without money and now doing taxes. I see that on an even bigger scale. So I just think that it, by not making it boring is just me being, luckily, my personal self, which is a boring topic. But the way I talk about it and, you know, can kind of break things down. to where they're a little bit more simpler because I would just like to you and to people is like sometimes tax is like black magic to people. They just don't understand it. It's just like a hidden box and I'm like trying to break down some of these concepts sometimes helps to people. And when you're leading with, hey, I'm going to save you some cashier, then people are more tuned to listen for sure.

Starting point is 00:34:49 Well, I think too. Are you still heavily real estate niche? Oh yeah. Okay, cool. So I think that's smart. And if you're looking for a market and there's just a business lesson from my listening. If you're listening looking for a market, the reason that this is such a smart. niche is because most people that, I know this might offend some people, but it's true, most people that flip homes, wholesale, do these things, work in real estate, make those investments, probably not the best students in school, probably not educated about the tax code whatsoever, probably not that educated, but they just got either got mentored or bought a course or something else. And, hey, man, this worked the first time. Let's do it again. Let's

Starting point is 00:35:31 keep going. Let's keep going. Let's keep going. Let's keep going. So you're picking a niche that is not educated so much about what you do. Never thought about that. But that is, I would 100% agree. That's what we see. Yeah. There's great deal makers. They're not good at finance. Because they've never learned it. They've never had a reason to. And most of these people take quantum leaps in an income. Oh, huge. They go from, well, you know, I was, I was a plumber. I was a truck driver. I was this. And now I've got, you know, I watch Pace Morby and now I've got 22 sub two rental units. Shout to Pace. Yeah. Shout up. Exactly. You got that's a credit to Pace. That was not a shot. Yeah. No, that's as a, oh, no, no. Yeah. Like, shout out to Pace, what I said. But yeah. But yeah, that's what's funny. Like the joke I make is like, yeah, we're talking every other day on a sales call. You're meeting with a 24 year old that has 30 rentals in their portfolio. And I'm like, geez. Like, yeah, they're very creative and they're grinders. And so, yeah, it luckily that's an industry that we can see. treats that grit really well. If you're going to grind it out, call people, try to make the

Starting point is 00:36:34 deals show up, then you can do really well. You know that. How many people are calling you before they get the one massive tax bill and how many are calling you after the first massive tax bill? It's always after. It's always after. It's two out of ten. Two out of ten actually take the time to really, hey, I think I'm going to be coming into this windfall or hey, this is trending really well, but it's always after. Are you recasting financials and trying to go back or no? Oh, always. Right. So part of our process is if you come in for tax planning, we're always to look at the prior years and if there's something we can snatch and grab we will for sure because if you mess something up and we are still within a limitation to go back and do it,

Starting point is 00:37:06 we will. But most of the time it's, hey, sorry, kiss a goodbye and you got to move forward and learn from that. Yeah, that was an expensive education. Yeah, I love that. They think college is stupid, yet they'll pay $300,000 in taxes because they didn't bother to ask the right people. Yep, exactly. What's, what do you think, speaking of that? What do you think the biggest mistake that investors make when it comes to taxes? What's the biggest mistake? Bookkeeping. Yeah? bookkeeping and I would say it's but so when you say biggest are dollar wise no I'm talking I'm not talking about leaking money I'm talking about when you got a write a check to the U.S.

Starting point is 00:37:40 government is it entity structure is it cost segging is it what do you see where you're like that's a major problem there for a non-investor it's entity structure and just some simple tax planning and for somebody with a portfolio of properties the cost seg and really hey how do I sit down and maximize the real estate against what I'm making? Because the best way that I like to explain it is every, right, and this is what our firm specializes in. Every dollar someone makes is on the left side or right side. It's non-passive or passive.

Starting point is 00:38:14 Rental real estate, so people that are growing these portfolios, that's all on the right side, passive. And then the money that they're making wholesaling, flipping, doing deals, commissions is all on the left side. For the people that are investors that have portfolios, they don't sit down with somebody and say, hey, how do I maximize the real estate portfolio that I've just grown to offset the income that I'm

Starting point is 00:38:32 making? And that's exactly what our firm really specializing because they're sitting on a gold mine of tax strategy. And that's the biggest mistake for sure. You have people that have paid hundreds of thousands of thousands. And this sounds. And I hate saying it because it sounds so whatever. But you have people that have paid hundreds of thousands of dollars that I'm like, I look at their tax term. I'm like, dang, with a couple click boxes and two hours worth of talking, you would have not paid anything. And it kills me. So, but that's where, hey, as a sales guy in my space, I'm like, let me show you what we can do next. So, yeah, it's just good, it's good tax planning.

Starting point is 00:39:00 You need to sit with somebody. Oh, man. And for those of you listening, FOMO, a very powerful tool when selling any product. Oh, holy shit. What am I do? What am I done to myself? This is just stupid. And I would say tax is one of those spaces where I like the saying, like, you don't know what

Starting point is 00:39:14 you don't know. And in tax, it hurts you because what you don't know, if you're not going to go seek that information from someone else and pay a professional and you're flying blind doing it on TurboTax, I love TurboTax. As a CPA, I used to do my own tax return on TurboTax. But once you are intricate and you have a portfolio and you run a business, you need to, you can't be doing turbo tax. Let me ask you this next question. Let's switch. The president right now is talking about, you know, he loves to float on on his social media that he would like to get rid of income tax.

Starting point is 00:39:40 Income tax and do the tariffs, yeah. Yeah, so good one to tariffs. What would you do? That would be a panic for our business for sure. What I'd have to lean into immediately my brain tells me is accounting. But then you make me think, well, why do you need accounting if there's no income tax? And I would probably do more transactional work. So I'd find businesses that are looking to exit or bring on partners that still need good accounting. And that's where you'll see, like when you had asked you're like, oh, what's the biggest problem? And I said bookkeeping and accounting in accounting. I started my career before I did taxes in accounting and audit. So I would walk around and I'd be, hey, show up with a clipboard and say, what's going on here?

Starting point is 00:40:14 Let's dive into this. People hated that. No one likes the auditor. Then I started to realize, oh, shit, I like to talk to people and I like to sell. People love the tax guy because now I'm here to save you money, not necessarily to be. breathe down your back. And so I would lean more into the accounting space because that's, that's also why I think I'm a good tax accountant is I have a good sense of financial statements. You can show me a balance sheet. And in 30 seconds, I'll tell you the health of a company because we know how to read these statements now. So if he abolished tax, it would be a major concern. Because just to show you of our business, let's say we do four million two and a half, let's call it almost three million comes from tax. And a million, let's say

Starting point is 00:40:50 comes from accounting. But I would say if you're listening to this, get it. Hopefully you are listening to this. You're listening to this. The main lesson there is when I asked him about a doomsday scenario to his business that is hypothetical, the response wasn't, I don't know. He's, if you're going to run a successful business, you have to be thinking about all angles. You have to be watching the news and they're saying, okay, if this happened, I pivoted to this. Or if this happened, we would go this route. You know, you're going to be surprised in business, but you should never be shocked. That's a good saying. That's a really good saying. Yeah. And that's what we tell. That's a good. That translates to what we talked to. That translates to what we talked to. people about their tax bill. That's why I'm like, right now we do tax planning. So I'm telling people what their bill is next April so that when next April comes, they're not like, oh my gosh, you're just telling me now for the first time. So, yeah, that's a good, that's a good saying. So what's the plan for true books? We're at level six now. Yeah. Let's move it up the ladder. What's so plan? So that's where back to when we had split. So Ryan and I, Ryan's, uh, Ryan's idea was a little

Starting point is 00:41:46 bit different. Right. He was in a different spot as a partner driving the business. He had a, he already had a portfolio of businesses. He wanted to exit sooner than I wanted to. For me, I'm like, dude, I'm an accountant. What else am I going to do here? I'm not some big, I don't consider myself a big entrepreneur yet. I'm leaning into my one industry. So bought him out in 2023. I solely own the firm. My next goal. We talk about that? Yeah, for sure. Yeah. So, so you're buying a partner out. Did you guys buy a sell agreement or what'd you do? Yeah, it took a long time. Took about eight months. Eight months on that. So for those you don't, so when two partners split, normally when you, and I'm going to give advice this, did you do this

Starting point is 00:42:20 when you guys gotten involved? Did you plan your exit? No. Okay. Yeah, that's a mistake. No. And you've learned that. Would you ever do that again? No. No. Okay. Yeah.

Starting point is 00:42:27 So if you're going to become partners with somebody, as important is that operating agreement where you lay out the responsibility of everybody and what they're supposed to do, you need to have, it's like a pre-nump. You need to have, okay, if this, we break this up, what does it look like? Who gets what? How do we deviate the money? What's the buyout look like? How do we value the company?

Starting point is 00:42:48 What is the standard we're going to use? Do that going into it. Yep. And then you will never have a problem. That's what took us eight months. It did. So you guys know. negotiated that for eight months.

Starting point is 00:42:56 Do you have to buy the multiple? Yeah. Oh, yeah. For sure. Yeah. Because right at that point, the firm was a, it was a firm. It wasn't just like we started it in a garage and like we had three staff. We had.

Starting point is 00:43:05 And it's financial services too. Yeah. We had almost 20 employees. You have a client. You have like a book of business at that point. The brand. I've tried to really, hey, this isn't a Matt Bontrager CPA firm. This is true books.

Starting point is 00:43:15 This is a brand. I don't want to be the one stop shot. Everybody wants to work with me. I'm building a team here. Yeah. So yeah. So that happened in 2023. Took us about eight months.

Starting point is 00:43:23 still on good terms, which is nice. But that's where I'd say, I love my story because I learned so much from it in a sense of it was a beautiful, it was exactly what a partnership should have been. It was a yin and a yang. He brought what I didn't have and I brought what he didn't have. But then over time, I started to post some videos on social and I'm like,

Starting point is 00:43:39 hey, I can got some good traction here. And then I just started to realize like, hey, maybe this is a segment where we don't need a partner to do this coupled with he wanted to exit. And I didn't want to exit yet. So that made sense for us to split. And so my goal now is I want to get it to $10 million and look up. and see what's going on here. We've already gotten a ton.

Starting point is 00:43:56 These firms are being bought up left and right. What's the current multiple for this? You can get, for our size now, you can get six, which is why. Five to seven is what I was. Yes.

Starting point is 00:44:04 That's what. A few years ago, I would have said one. If you would ask me that question a few years ago, I would have said one to two. Because we have financial services companies, too, through escrow and title.

Starting point is 00:44:13 And the number's always come in at five to seven. Yep. So that's where. And once you hit a, I think once you can make 10 million and gross, or let's just say 10 million to the top and you net, you show a good margin. of 25 points. I think you're getting 8 to 10. Yeah. So that's where my goal is. I'm leaning in.

Starting point is 00:44:28 I want to get to 10 million and look up and see what it's like. And now I'm very- Is anybody rolling up CPA firms? Oh my God. That's what I want to do. Yeah. That's what I'm dying to do. I just talked to a woman the other day. She runs a book of business about 400,000 would love to buy her great little small acquisition to start. Because right now, client acquisition for us is, I post a video on Instagram. They DM me. Someone on my team gets it. We, we facilitate the sell that way. It's all organic. Or even now we're kicking off a page. campaign, but I'd rather start growing through acquisition way faster. Well, because it's, it seems like, you know, that model of rolling up home services and then, and then take them

Starting point is 00:45:01 public through a SPAC, you know, this is tax preparation, man. This is something ain't going away either. So, and they say that, uh, 70% of CPAs are set to retire in 10 years. The industry is a shortage. Oh, dying in the sense of there's not enough students going, they're making the CPA exam so easy to get now, which also pisses me out because I'm like, I struggled so hard to get that. And I'm like, but hey, it's a new generation. Bring a calculator. Yeah. So for me, I'm, I'm going to get to 10 million.

Starting point is 00:45:27 That team will probably be 80 to 100 people overseas and onshore and look up. And by then I'll probably have, you know, a partner or two, who knows. But it'll be service partners now. Partners that can pick up a tax turn, call a client. They wouldn't just be branding partners. And that was what I learned early on was that was the price for what it took for me to start the firm. I needed somebody to drive business. So, yeah, that's my goal.

Starting point is 00:45:49 I'm leaning heavily into this. This is every day for me. That's where I have a, because like you said, like, I have so much respect for serial entrepreneurs who have multiple businesses and I have a banker friend really successful works with really high net worth people. And he's just always like, Matt, shut up and do tax returns. Because he sees these other people that have amassed this wealth and even see them kind of take big tumbles because they divert their attention. And just like, we're talking about. That's my toxic. And I'm like, I can't. I don't want to fall for that. So I'll talk to. He's like, shut up and do tax turns. And so that's what I'm doing. I'm shutting up and do tax turns. How do you think AI is going to affect your business the next 3 to 5? That's been a big question. And, man, if anything, it's fueled our business and helped us so much. I have Chad GPT up running when someone asked me a tax question because it's better than our tax research software. It gives me enough to start talking to the client immediately about it without saying, hey, I'll talk to you in two days.

Starting point is 00:46:36 I have to go do some research. So it's great. It's just helping the accountants that are going to, we spent a lot of money on trying to leverage bigger tools and integrate them together. So I think we're investing in AI a little bit more than other firms, but it's helped our industry tremendously. I don't think it's going to take us out, period. You need someone to talk about it.

Starting point is 00:46:50 Yeah. The bot's not going to talk to you. I think it's going to be, it's definitely where those industries where you're going to see it working side by side. Exactly. People with, co-pilot is what they're not.

Starting point is 00:47:01 Yes. Yeah, there go co-pilot. Exactly. And so right, it's not taken over, but they're definitely there to help. Cool.

Starting point is 00:47:05 Well, dude, I'm rooting for you, man. I hope you get you, 10 million, get a massive exit. Thanks. Yeah.

Starting point is 00:47:08 Then come back here. We'll sell you a bigger house. Oh, I love it. That's what we'll do. All right. Well, if they want to find you, Matt, how do they find you?

Starting point is 00:47:15 Our website or Instagram. Just my Instagram's Matt Bontrager and our website, TrueBooksCPA.com. Cool. Well, dude, listen, man, if you are out there and you're thinking about taking the leap, you're thinking about doing something. I think you've got a lot out of today's podcast from how to find out if there's a market, how to find a right partner, how to structure that partnership,

Starting point is 00:47:33 so it's not an eight-month siege when you get out of it. You know, and sometimes the boring stuff is where the money is. Dude, you got to take a chance. We'll see you next week. Hey, it's John Gafford from the Escaping the Drift podcast. And big news, my new book, escaping the drift is coming out. November the 11th, you can pre-order it right now at thejohngaffer.com. There are tons of bonuses, tons of giveaways.

Starting point is 00:47:58 Get the book. If you are somebody that feels like you might be drifting along, this is for you. If you know somebody that feels like they might be drifting along, this is for you. Available everywhere, all bookstores, everywhere, Amazon, Barnes & Noble's, the whole nine yards. But pick your copy up right now at thejohngaffer.com. a bunch of the awesome bonuses I've thrown out because I promise you, I put my heart and soul into this thing, I want it

Starting point is 00:48:21 to help you change your life. Pick it up everywhere. What's up, everybody? Thanks for joining us for another episode of Escaping the Drift. Hope you got a bunch out of it or at least as much as I did out of it. Anyway, if you want to learn more about the show,

Starting point is 00:48:37 you can always go over to escapingthrift.com. You can join our mailing list. But do me a favor. If you wouldn't mind, throw up that five-star review. Give us a share. something man we're here for you hopefully you'll be here for us but anyway in the meantime we will see you at the next episode

Escaping the Drift with John Gafford - Matt Bontrager's Path to Building a $4 Million Firm

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