Outsourced Accounting Boom - Jennifer Barnes of Pro Back Office - Eversprint

Outsourced Accounting Boom – Jennifer Barnes of Pro Back Office

Jennifer Barnes, Co-Founder and former President of Pro Back Office

Jennifer Barnes, the Co-Founder and former President of Pro Back Office, grew her company’s revenue from $1.5m in 2014 to $5.5m in 2017, a 267% increase, and now they are on track to hit $6.7m this year.  

Pro Back Office provides accounting, finance and business consulting services to business owners.  

In this interview with Eversprint‘s Malcolm Lui, Jennifer shares how she and her team accelerated their high value sales by:  

  • Positioning and structuring her company to ride the fast growing trend to outsource accounting services.  
  • Generating referrals by doing a great job with their clients, especially with banks, CPA firms, and CEO coaches who then refer their clients back to them.  
  • Adding new clients and hiring of new team members at a measured pace that allows them to continue delivering high quality service.  
  • Providing an employee compensation structure that allows them to work flexible hours and allows the company to manage costs at the same time.  

Pro Back Office Interview - (computer generated transcript) (transcribed by Sonix)

Download the "Pro Back Office Interview - (computer generated transcript)" audio file directly from here. It was automatically transcribed by Sonix.ai below:

Malcolm Lui: Malcolm Lui here. Welcome to EverSprint.com. Today we're speaking with Jennifer Barnes, Co-Founder and President of Pro Back Office, a fast growing company that provides accounting, finance and business consulting services to business owners. Welcome to the call Jennifer.

Jennifer Barnes: Thank you. Thanks for having me.

Malcolm Lui: Jennifer, you grew your company's revenue from one point five million in 2014 to 5.5 million in 2017 a two hundred sixty seven percent increase and now you're on track to hit six point seven million in 2018. To achieve this rapid growth since 2014, what was your number one sales or marketing objective and what challenges did you overcome to get there?

Little marketing and no sales people. Generated referrals by doing great job with their clients, especially with banks, CPA firms, and CEO coaches who then refer their clients back to them.

Jennifer Barnes: We haven't done much marketing at all. To be honest we don't have any sales people and so we have grown the company purely on relationships and taking care of others. So one thing that has been very very important to us is happy staff hiring the very best people and retaining them. We also focus a lot on referrals so where can we refer our strategic partners and making sure that our clients are aligned with the right people that are gonna be able to support them. So focusing on the relationships and making sure that our clients are taken care of has really helped exponentially grow our company. We are constantly top of mind with banks and CPA firms and CEO coaches and they're always wanting to bring us into their clients because of such a great job that we have done in the past

Malcolm Lui: And ethic. Were there any challenges or what were the challenges to get the top of my presence with the banks and the CPA and the coaches out there.

To grow they focused on relationships, taking care of their clients, hiring the right people, and make sure they get paid on time for their work by their clients.

Jennifer Barnes: In terms of growing a business especially a fast growing businesses always going to always be challenges. We haven't had too many. We have focused on relationships taking care of other people hiring the right people and really focused on making sure we have enough cash. And so as you're growing quickly focusing on cash is key. And fortunately for us we've never had any debt. We've never had to put in the investor money in and we've been able to grow organically I think any challenge is finding the right talent and the right people. And we did make some hiring mistakes in the early years. So we continue to improve and refine our hiring process. We actually do IQ tests and we do verbal and written essays. We do an accounting exam a behavioral assessment and really make sure that people fit our culture before we bring them on.

Malcolm Lui: Okay now you mentioned before managing cash now and the nature of your business I guess the key issues is making sure you're not overstaffed because then you have an issue where you're bringing more cash than you are bringing in. Is that the key challenge is managing the work the jobs the work that you have with your with your with your staff with the capacity your staff has.

They pay people a lower than normal base, and a percentage of everything they bill. This allowed them to control cost, and allowed their team to have a flexible work week.

Jennifer Barnes: No. Actually that's not at all a problem. And it's because in the very beginning I designed a compensation plan that put us at almost no risk and liability the way that we compensate our team is we pay everybody a base that's a little lower than they're going to actually make. So everyone who's on our salary plan which is about 60 people currently they get a percentage of everything they bill. And because we have about 70 percent female employees back office they don't always all want to work 40 hours a week because they have families kids and other things in their lives that are important to them. So they might work 20 hours a week 30 hours a week 35 hours in a week and it doesn't really matter because we're going to make the same margin on one of our employees whether they work 20 hours or 40 hours essentially because they're getting a percentage of everything they bill less their base. We're able to manage and maintain the costs without much effort. For example if somebody is on a 60 thousand dollar base we might be actually paying them ten thousand dollars for that particular month. They get five thousand dollars of it throughout the month and at the end of the month they get an additional five thousand dollars based on what they've billed. So it really helps us keep our costs under control.

Jennifer Barnes: I would say the most difficult thing with managing cash is not on my employees. It is on our client. So it's really making sure that we don't let a client get three four five six invoices behind in earlier years. Are a lot more lenient on people getting behind and now we have a pretty strict process.

Malcolm Lui: Right.

Jennifer Barnes: So if a client

Malcolm Lui: Okay.

Jennifer Barnes: Has four invoices outstanding right we want to make sure we collect. We were burned a bit in the beginning

Malcolm Lui: Yeah.

Jennifer Barnes: And had clients racked up 10 12 15 thousand dollars in invoices and then didn't pay. So

Malcolm Lui: Right.

Jennifer Barnes: That's been the complicated part of the collection. How do we make sure the clients are paying on time. And you think it's easy since we're the accounting department and we're paying our own bills but we also can't pay our bills first versus other vendors because there's a little bit of a conflict there. So we need to make sure that our clients are fiscally healthy that they have enough money in the bank to pay for all their operating expenses including being able to afford us. That's

Malcolm Lui: Right

Jennifer Barnes: More of a challenge.

Malcolm Lui: So before you mentioned how it wasn't ethical for for your clients to pay you first. So that means having a prepaid service. It's not something that can work. That would work then

Why they don't do pre-paid services or work on retainers

Jennifer Barnes: We don't do we don't do prepayments. Essentially my team we don't do fixed fees so our clients are charged every two weeks based on the actual hours that were worked at each level. So a staff accountant might be forty five dollars an hour maybe they're working 16 hours a week an accounting manager maybe eighty five dollars an hour maybe they're working six to 12 hours a week a controller is going to start anywhere from 1 10 to about 150 an hour and that might be two days a month. And then our CFO goes or anywhere from one eighty five to 250 an hour. And so it's making sure that we design a solution for each of our clients that is going to fit within their budget. That's going to add value and that we make sure they can afford our services or even engage.

Malcolm Lui: Ok but having like a retainer sort of arrangement where they put a retainer of five thousand dollars in advance and you draw from that. And then when it runs low they top it up. That's something that wouldn't work

Jennifer Barnes: Well what we do is we charge a deposit of anywhere from a thousand dollars to five thousand dollars and we apply that on usually the seventh invoice but it can be as far out as the 13th invoice. So in order for us to apply the deposit on their seventh invoice the first six invoices need to be paid on time. Once we see that they're paying on time and everything is going well then we apply the deposit. We don't keep anything on file and we just trust our own pace every two weeks.

Malcolm Lui: Right.

Jennifer Barnes: And we

Malcolm Lui: Ok

Jennifer Barnes: Actually have about 28 days outstanding right now which is really good. The less than 30 days outstanding on all of our invoices and we have 300 clients. So we've had to really procedural everything.

Malcolm Lui: Right. So back in 2014 how many clients did you have.

Jennifer Barnes: Good question. Back in 2014 we probably had 50 or 60 clients

Malcolm Lui: So

Their average invoice has increased from $1,200 to $2,800 per month since 2014.

Jennifer Barnes: The average invoice has gone up. So our average invoice used to be maybe twelve hundred dollars a month. Now our average invoice is about twenty eight hundred dollars a month.

Malcolm Lui: Okay.

Jennifer Barnes: So

Malcolm Lui: Fantastic.

For clients who can't afford $1,000 to $1,600 a month, they'll try to refer them to someone else.

Jennifer Barnes: We've kind of increased the the average client size that we're working with whereas in the very beginning you're so excited to be even running a business as you take on pretty much anybody. And now if a client can't spend at least a thousand dollars. Sixteen hundred dollars a month we generally try to refer them to somebody else

Malcolm Lui: Right. Okay. Yeah. Makes sense. So growing from 50 to 60 clients in 2014 to 300 clients today that all came from referrals or did you have other ways of acquiring new clients

Jennifer Barnes: In the last year we brought in about 10 clients strictly from Google. People have Googled us or found us online somehow and reached out to us via our Web site. Most of those are referrals. And then I bring in quite a few clients myself. I go to a lot of vestige events and executive forms and we do a lot of lunch and learns and I go to a lot of events in general. So I'm out in about meeting people and bringing clients and just making sure that we're at the right place to find the types of clients that we're looking for ultimately

Malcolm Lui: So since you bring it up who are the types of clients that you're looking for. Ultimately

The serve a wide range of businesses from startups to public companies, providing accounting to CFO to Sarbanes-Oxley services.

Jennifer Barnes: We have a pretty broad range on who we're looking for and we can service a client that has two people a dog in their garage and they're a startup company and they're taking off when they've got a great product or software service to sell and we start working with them in the beginning. The quick looks file get them all organized and then we love watching them grow. We've had clients who have grown from a million to 3 million to 10 million to 20 million and then they want to go public or they want to merge or sell. And so really an ideal client for us is going to be between 2 million and 40 million a year in revenue on the outsource accounting side. So this is going to be businesses that need anything from all the staff accounting accounting manager controller CFO work to businesses who might have an in-house team at the lower levels and we might just do comptroller and CFO work and or H.R. so outsourced H.R. makes up about 5 percent of our overall revenue. And these are businesses of all sizes you know from the start ups to one hundred million dollar business that might need some consulting type of work. We also serve as clients on the business advisory side that might need forensic accounting support internal audit and some strategic consulting services. So these are businesses that are 50 million to half a billion. We also serve as publicly traded companies. So we do Sarbanes-Oxley we just an SCC reporting. We do a lot of internal audit in helping a client with all the above from the from the accounting to the to the Sarbanes-Oxley type of work. I mean essentially it's the start startup company to a publicly traded business and everybody in between. So we can help. We can help and we can help anybody

Malcolm Lui: Yeah has a pretty wide range. Now you said before earlier that you're out there you're you know you're at the forums you're at the events you're meeting with this huge wide range of companies from from startups in the garage all the way up to publicly traded companies

Jennifer Barnes: Right. We're a part of groups such as visage and EO and sage executive group. We're also members of Rotary the Lincoln Club Social Venture Partners young executives counsel. I'm on numerous boards such as Junior Achievement Better Business Bureau. I'm in Toastmasters. I'm in some other networking groups. We're a part of ACG they go venture group and then I also do a lot of speaking at San Diego State. So I help by mentoring as part of the Latin program and then I go and get to speak with college classes and you know you never know where you're going to meet a client. I did a panel at San Diego State about a year ago and to the ladies on that panel that I was with are now clients of ours. And

Malcolm Lui: Fantastic

Jennifer Barnes: It was just hearing about WoW outsource accounting I didn't even know a service existed that you could factionalized out the accounting department and have everybody doing exactly what they're good at at every level. But only the hours that are needed. So you never want your CFO doing Staff Accountant work and you don't let your staff accountant bookkeeper even trying to do cash flow forecasting or budgeting or provide good financials and analytics because they're just they're not capable of it.

Malcolm Lui: Yeah

Jennifer Barnes: So

Malcolm Lui: Yeah it makes

Jennifer Barnes: Our

Malcolm Lui: Sense

They help their client do what they are best at

Jennifer Barnes: Model really allows everybody to do exactly what they're good at and then it can scale up and down and we can move positions around and if outgrows the staff accounting role will help them hire a staff accountant and then usually the last person standing is the CFO. So we might hire replacements for ourselves all the way down the line. And then the CFO is the last fractional you know 20 hours a week and eventually the business is 20 30 50 100 million and then they need to hire their own full time person

Malcolm Lui: Right. So right now this year you're on track to do six point seven million in 2018. What's what's your objective over next few years how big do you want to bring the company to take the company

Jennifer Barnes: In order to scale human capital business. You have to be pretty strategic and very careful with your hiring. I'm of the mindset that a million to two million dollars a year in revenue growth is sustainable. And we've done it in the past. We could continue to do it. And so if I can stay at a million and a half two million a year and grow even if it's just a million or half we're good we're providing jobs we're helping businesses and we're not going to fast you can make

Malcolm Lui: Ok

Jennifer Barnes: Really bad hiring decisions if you're trying to hire you know grow 3 4 or 5 million dollars a year in revenue in this type of a face because you have to hire rapid fire. I mean we already hired 20 plus people this fiscal year. We hired 28 last year and that's a lot. Two people a month. So for me I'm comfortable hiring between 20 and 30 people a year and bringing on one to two million dollars a year in revenue any more than that. We're we're not in a position to do more than that unless we had some private equity funds or you additional managers and that's not something that we're interested in at this point.

Malcolm Lui: Ok. So what are your challenges to achieve your one to two million a year growth. You mentioned one of them hiring the right people. What other challenges are there what about finding clients who are who will actually pay you the 1 to 2 million is that a challenge.

Outsourced accounting is a fast growing market.

Jennifer Barnes: It's not you know we're in one of those industries that is at the very forefront of exploding Southern California is one of the few states and cities that have really embraced outsourced accounting and it's just kind of it's at the forefront of the very beginning of this type of a service. So I mean just in September alone we brought on 14 clients and we've hardly tried. I mean I hate to sound like overly confident but we have brought in so much business historically with with very little effort. I mean I just sit in front of my computer sometimes and we'd just pile on in and to this day it amazes me that we get as much business as we do with very little effort no sales people no business development. I mean we other than myself my partner and some key people at the firm who go out meet others really has really been it's it's been without too many challenges getting new clients

Malcolm Lui: So the 14 new clients came on board in September were they. I mean were they like just ready to sign on. They said yes. They said Hey jennifer I need your help. Let's get started right now. And that's it. Or was there a bit of selling involved to get them onboard to get them convinced to say yeah let's do it

Jennifer Barnes: I would say it's a good mix. So clients come to us. Usually when they have been thinking about accounting and fixing their financials for quite some time and they call us and they want us to start yesterday they want us to start within the next couple of days. Sometimes a client makes us go through a bit of a process and it takes two or three weeks to get signed on. But generally speaking when people are ready for our services they're ready for our services. We don't have to do a lot of soul selling. Most clients they talk to me on the phone for 20 30 minutes they're ready to meet my team and pending I put the right team in front of them they're ready to sign papers and move forward. We as a firm brought on one hundred and twenty clients so far this fiscal year

Malcolm Lui: And did that would you say that's that. That was taxing the capacity of your team. It was at your maximum or could you have done a lot more

Jennifer Barnes: Is about right. Last year we brought on one hundred and twenty five clients total. And this Drew already at one hundred and twenty and we're in September. So we will probably bring in another 30 clients through the rest of this year maybe more. So we're looking at one hundred and fifty new clients this year. Could we have doubled that no. Could I have brought in 300 clients this year. No. That would be way too much. That would just be we would potentially sacrifice on quality control and not hiring the right people. So we have a process with each client that we bring on. We have a client acceptance checklist. We ask them various questions we really get to understand who are they. What do they need. And how can we help them. How are we going to add value to their company. And so we do turn down at least five to 10 clients a month and we refer them to somebody else. So I think as long as we're strategic and we continue to be strategic we'll have no problem bringing on 10 to 20 clients every single month. And yes it's a lot of extra work. So you bring it on 15 to 20 clients one month certainly keeps me on my toes and it keeps my partner on his toes. And now we've just brought on a third person to help us run the company. So a lady named Fran who is also our V.P. of accounting is now helping Mike and I grow and scale the organization and then we also have some other key players at the company who are continuing to promote and make sure that we have the right people in place for them for the long haul

Malcolm Lui: Right so that you're in when a client signs on board you know how many of them stay with you forever and you know how many lead after x number of years

80% retention rate for their ongoing services like accounting

Jennifer Barnes: Well we've only been in business for six years and we have quite a few clients who have been with us for four or five six years probably. I mean if I had to throw a number out it's probably about 80 percent retention on the client side for clients that actually want the ongoing service. Now we do consulting and we do outsource H.R. and we do a bunch of projects and then we can also do a little bit of temp and interim work so some clients have only chosen to work with us because they need a solution for the next couple of months or they were referred to us by somebody who knows that we do work and they only plan on being a client for a month or for a project.

Malcolm Lui: Right.

Jennifer Barnes: But on the ongoing side we're pretty we're pretty great. I mean we don't have a lot of turnover in in-house at all. My team and we have a really high retention and then consistency is key. I mean clients don't want five different accountants over a two year period. It's not the same team of people. And for as long as we can keep our team happy in treating our clients well the goal is for all of our clients to be with us long term

Malcolm Lui: Right. So just from what you share with me so far this I think you're the really the biggest challenge you face is hiring the right people. I see

Biggest challenge is finding and retaining the right people for their team.

Jennifer Barnes: Finding and retaining

Malcolm Lui: As you come

Jennifer Barnes: In line the way people right now and keeping our clients keeping them happy but also making sure that they can pay us on time. If they start falling behind you know as much as we want to help and be generous and kind. We also have to be a little bit tough when people fall behind and

Malcolm Lui: Of

Jennifer Barnes: Kind

Malcolm Lui: Course

Jennifer Barnes: Of make sure it's fair. You know we don't want to stop work that is disruptive but it's really making sure that we keep our accounts receivable under control.

Malcolm Lui: Right. So can you recap to me again who your ideal clients are and also share the best way for them to contact you.

Jennifer Barnes: Sure our ideal clients are a company in any industry. We service every single industry. And these are clients from the one million dollar mark to the 50 or 60 million dollar size on the outsource accounting for the outsourced accounting team. And then on the business advisory services side this can be all five of the businesses so they can be startups all the way to 500 million. These are companies that need strategic consulting. They need internal audit. They need friends accounting. And then finally we've got Sarbanes-Oxley as a service offering. So we've got about a dozen publicly traded businesses that we do their SOX work for. So our range is pretty broad of who we can service. It just depends on the life cycle of where they're at and what they need at that current moment in time

Malcolm Lui: Ok. And what's the best way for them to get in touch with you and your team.

Jennifer Barnes: Oh sure. The best way for them to get in touch with us is to either go on our Web site we've got a really great info forum on our Web site that people can put information down those actually go directly to my email and my partners and we are very quick to respond. So I would say the best way is to go online go online go to our Web site or they can also call our office if they want to speak to somebody. So our office is 8 5 8 6 2 2 1 6 8 1 in generally some he's going to answer or we have an answering service that will catch it straight through to my cell phone as long as somebody says I'm a potential new client. I'd like to talk to Jennifer or Mike but put them through.

Malcolm Lui: You also share your website address.

Jennifer Barnes: Sure. Our website is w w w dot Pro Back Office dot com

Malcolm Lui: Great. Thanks so much for joining us today Jennifer and sharing how you grew your company so fast.

Jennifer Barnes: Thank you I appreciate the questions. Thanks for having me.

Malcolm Lui: We've been speaking with Jennifer Barnes, the Co-Founder and President of Pro Back Office about her company's rapid growth. For interviews with other fast growing companies, or to learn how we can increase your firm's high ticket sales through automation, visit Eversprint.com.

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