Who's Really the BOSS?

There may be errors in spelling, grammar, and accuracy in this machine-generated transcript.

Rachel Dillon: This is Who's Really the Boss, a podcast for accounting firm leaders who want to grow with intention and lead with purpose. I'm Rachel Dolan, and along with my husband, Marcus Dolan, we share real stories from our accounting firm, practical firm growth strategies and the tools you need to lead your clients, your team, and your life well.

Rachel Dillon: Welcome back to another episode [00:00:30] of Who's Really the Boss podcast.

Marcus Dillon: Hey, thanks for having me back.

Rachel Dillon: We discussed the, um, we'll say 1.0 and 2.0 of Dylan business advisors on the previous episode. So that was really looking at kind of the first ten years we are coming up on our 15 year mark for Dylan business advisors. And so I think you mentioned that, you know, about every five years, we have kind of some major, we'll [00:01:00] say turning points or evolutions. Um, definitely reinventions will say as far as what's happening in the business. And so wanted to just recap what those first ten years were like. We'll pick up with 3.0. So the, the past five years, the most recent five years of what DBA looked like, what we were focused on, kind of how things were changing. And then also want to end with what are we [00:01:30] thinking about and looking forward to for the future of Dylan business advisors?

Marcus Dillon: Yeah. And it's really just also like, our story is so similar to a lot of our friends, right? And how they started their business and what they should be thinking about as well, because, um, it'll be good to share some of the conversations we're having, what I think is happening in the industry as a whole. And obviously that 1.0, 2.0 chapters of DBA, there were a lot of factors that [00:02:00] were impacting our business in the industry, but nothing like we've seen today with the external factors, with some of the M&A that are there. And then also just the advances in technology. We thought we were moving quick as a technology, you know, industry back then. But it's nothing compared to where we are today.

Rachel Dillon: Yeah, I know something that we ended our last conversation kind of around the COVID time, 2020, we had gone remote [00:02:30] and that was working really well. So many working parents within our team and so many kids that were then homeschooling for some amount of time, some just through the end of the school year and some for a whole additional year after that. And so that was really helpful to have the flexibility of working from anywhere. Um, at that time and some things that set us up for success and allowed us to pivot from a fully in-office brick and [00:03:00] mortar location to fully remote. Kind of like within a 2 or 3 day conversation. And then, hey, let's try it. But we had moved to, uh, a Microsoft environment. So what were like, describe some of those things that we had just done in order. Someday we could potentially have remote team members or a hybrid working environment, but there were some things that we put in place prior to 2020 [00:03:30] that really, really, really set us up for success.

Marcus Dillon: Yeah, we, um, we always kind of had a external IT provider that was giving us guidance. So that was part of it. That person is now on the team as our director of technology. Angel Sabino. Um, so angel owned the MSP that served DBA, uh, probably a lot of 1.0 and 2.0 and 3.0. So Angel and his team were in place back then as far as like the Microsoft setup, obviously having everything in line. But [00:04:00] we started off with just like slack communication, which is still out there. A lot of people still use slack. Um, but we eventually adopted and moved into teams. Um, but having that setup made communication a lot easier. Trying to get out of email as the primary communication internally or going down the hall to ask questions or calling, uh, one another on a phone. Um, we, we kind of made the move to go [00:04:30] more instant messenger, whether that was slack or now teams. Um, so that was a, that was a big shift. I think that led us to have success. Um, from a hardware perspective, we weren't buying desktops beginning in like 2017 or 2018. We started buying everybody laptops. And I had, you know, honestly tried to get people to go remote for a while, but they just pushed back because they saw the office as good boundaries to not have work spill over into personal life, which you [00:05:00] know. Then then 2020 happens and that's no longer an option.

Rachel Dillon: Yeah, you said they me, it was me that did not want to blur those lines. I appreciated for the majority of the year when I was working, I was at the office and when I wasn't at the office then I wasn't working. And so I really enjoyed that time period. But it didn't take long. I mean, just a few days. Working remotely with an actual effective setup, [00:05:30] I think was the big thing there, not just a one screen laptop and maybe no keyboard or mouse, but actually having monitors and a docking station and an external mouse and all of the things that you would have where you could, your home office or remote office would be identical to what you would go into an office with.

Marcus Dillon: Yeah, yeah. No, I think that was everything that we were up against. Right. And so, um, [00:06:00] we were trying to solve for that, I think going into the third chapter, right of, of DBA, we had just exited our audit practice. We were at, you know, 2.2.2, 2.1 around that time, um, we exited the audit practice had super strong margins. Uh, we also saw that as an opportunity to exit some maybe more complex, non-ideal QuickBooks desktop type clients that we just didn't want to serve. [00:06:30] And this whole time, like we are building and focused on MRI. And so 3.0, we were off to the races and we had, um, incentives in place to build out CAS and MRI. We were building a bonus pool for every new client that signed a monthly engagement and sharing that with the team, regardless if they worked on that client. But just to get everybody's mindset from annual touchpoints, get them excited about monthly recurring clients. [00:07:00] And then that's the team that we started to build out, you know, from people that just had this, you know, annual tax expertise to more of a, you know, monthly concierge for clients to help them do their accounting, help make sure everything was clean. That's where we started this 3.0 chapter, uh, because the audit practice was such a big exit, uh, revenue actually did go down, uh, in 2021 temporarily.

Marcus Dillon: But at the same time, we had all this additional opportunity [00:07:30] with PGP and ERC consulting that we were doing for existing clients. We didn't do that for any external non-existing clients. We only took care of our own during that time. Uh, but that, that allowed us to kind of bounce back, um, in 2021 and 2022. So it was a great time. Uh, from a business owner perspective, I look back in parts of 2021 and 2022. I kind of miss, uh, especially the opportunity whenever you were having conversations with clients around some of those programs and you were showing [00:08:00] them, you know, the value of the relationship, how much they could actually receive and that you would help them go get. Um, those were great conversations to have. And, uh, the team did a lot of great, uh, for clients to help stabilize and, um, just get people, you know, on their feet and not worried about some of the different protocols that were in place. But we definitely took full advantage of the beginning of those years. Um, another thing that is a big part of our story and was figured out in 3.0 was [00:08:30] the team of three. And, uh, whenever we look back, we were starting to build out like we had really the CSM role, the bookkeeper, accountant, whatever you want to call that person in your firm, that person was in place.

Marcus Dillon: But between the CSM and that director level advisory, there was not the client controller tax manager role and it wasn't consistent. So that was something we had to solve for. We tried a variety of different things. We experimented, we screwed up, we scrapped different ideas, [00:09:00] but ultimately landed on what is now that team of three where it's consistent and it is an assigned team to that client throughout the year based on role, not based on person. And I would say looking back over the last 15 years, um, where we had made some mistakes was we tried to go recreate or clone a person and you just can't do that. So in 3.0, we really leaned into roles and we leaned into team structure. [00:09:30] And, um, that was a big aha moment for us because what we've seen over the last 15 years is nothing is forever anymore. Um, team members don't stay forever. Um, you know, even partners come and go and then, um, clients aren't forever either. So if you're building all of your decisions around taking care of the team you have today, I think that's kind of shortsighted [00:10:00] because things happen, people change, things evolve. You know, opportunities come and go. And, um, you know, I think that's just something that we've learned over, over our history.

Rachel Dillon: Yeah. Um, I think in talking with people, uh, clients and team members, but mostly team members, when we would talk with them initially, it was, you know, having a lot of conversations, uh, openly, candidly, even meeting sometimes [00:10:30] with spouses, um, of those prospective team members and just letting them know we want this to be long term. So that hasn't changed. Um, we still want team members to call this home, you know, for as long as they're able to work or wanting to work. However, again, just other opportunities come up and that's not realistic to think that every single person that you hire, I will say maybe I was jaded. Both [00:11:00] of my parents have really only worked for like my mom, I think worked for her employer for over 44 years. She, when once she got a full time job, that was the only place that she ever worked. Um, my dad worked at the same place as my mom. And then when they got married, I think he took a job somewhere else. And then he worked for that employer for almost the entirety of his career. And so just thinking that's not necessarily, uh, how people work anymore. So to expect someone to stay [00:11:30] 20, 30, 40 years, I think there are those people. And we definitely have long term team members that we love. Um, and would be devastated if they went anywhere. But at the same time, that's not the norm. That's not common anymore to choose one place to work and then work there for the rest of your working career.

Marcus Dillon: Yeah. And, and part of, I think what we had stumbled into building, we, you know, we hit 1.5 and then [00:12:00] hit 20, 2017 after the acquisition of Tom, we were over 2 million and we were kind of hovering from, you know, 2 million to 2.3 for about 5 to 6 years. And it was exiting clients, growing organically, exiting clients, growing organically, kind of this yo yo effect. Um, and as we were shifting the business from this annual touchpoint, annual compliance to more of a monthly recurring, [00:12:30] giving people advice throughout the year, the team was also changing because the team that we had that was able to do that annual compliance wasn't necessarily the team that's gifted in serving clients and giving advice throughout the year. So while we. We had hoped to, you know, to this conversation like we hoped all those people could get upskilled and changed and lean into this. That wasn't always the case. And [00:13:00] our business was moving that way, regardless if, if that team member was coming or not. And, um, and that's just, that's part of something that we realized. So it was really just this season of about six years during between 2.0 and 3.0 where we were figuring that out. But once we defined roles, once we kind of leaned into team structure, we had, we had done a lot of client cuts.

Marcus Dillon: Um, we were doing, [00:13:30] you know, one exit a year, pretty much for seven years, sometimes two exits in one year. Um, I think the very last exit we probably could have done without, um, because what we saw in that very last exit, Those were almost like when Tom merged in, like those were really good, solid relationships. Margins were high on those clients, even if they only were annual, only touch points. They were so easy. They had they had made it through multiple cuts before. They didn't know that. But still, it [00:14:00] was one of those that last 100,000 or so probably, you know, cut us a little bit too deep. And then when we looked up in 2024, we we had some excess capacity and we kind of got scared or I got scared. And that's whenever, uh, team of three was working, just like we thought it could, it had built up capacity. Um, team members were asking for work. They, you know, life was good as far as balance was concerned. They knew their clients, their clients knew them. [00:14:30] But as far as like the opportunity to add new CAS clients, we'd already filtered through all the annual clients and transition everybody that we possibly could.

Marcus Dillon: So we were totally reliant on organic growth leads. And about that time we had changed. At the end of 2022, we actually changed our name, changed our domain, dropped CPA from the name because CPA was just it was directing way too much tax traffic to us. And in that process, [00:15:00] in that rebrand, something happened. There's a disconnect between the old and the disconnect between the new. And we lost all of our credibility overnight from a SEO optimization, from a, um, you know, just recognition standpoint. And so it took us really 3 to 4 years to build that back. And if you're thinking about something like that in your firm, um, highly, highly, make sure that there are checks and balances in place. [00:15:30] Uh, we, we hired a consulting company to lead all of this and paid hundreds of thousands of dollars, which are crazy to say. And it still didn't go well. Um, so I would just say if that's in your future. Make sure you know that. Bring in a third party consultant to make sure everything's done right. I don't know any words of wisdom other than checks and balances. Make sure that people you know are held accountable. For sure.

Rachel Dillon: Yeah. The domain redirects are very, very important to maintain [00:16:00] your online credibility and authority. So at least at minimum, make sure somebody knows and is in charge of doing that. And don't take anyone's word for it when they say you just have to give it some time. Um, that's, that's definitely not the case. So definitely team of three helped build up capacity. Our teams were just getting so efficient at the work that they were doing. Um, we had, uh, clearly defined what the services [00:16:30] were. We had defined a service calendar of when things were supposed to happen. Um, so multiple things, creating that capacity And also we had exited some clients and then organic growth. I will say slowed down. I don't know that that's actually true. Um, from numbers, but we had to work a whole lot harder to get new organic clients once the [00:17:00] website, um, wasn't getting as much traffic as it had in the past. So previously a lot of our prospects came in from online, just regular Google searches, um, or just searches for like CPA near me. And that almost completely dropped off for more than a year. So just the traffic that we were used to getting and then able to convert those prospects was just not there. And [00:17:30] so really had to do a lot of different things during that time. Um, thankfully, really good referral sources within friends, family, clients, team members and then related professionals that were keeping us fed. We'll say because definitely our online presence or our domain was not.

Marcus Dillon: Yeah. No, that's that's fair. And we still were able to grow at about a, you know, 8 to 10% clip, which, you know, that's you can [00:18:00] do that through price increases alone if you, if you really are aggressive. But we were adding clients. Um, we weren't, we weren't growing by leaps and bounds by any means. But it was, it was sustainable. It was good. Um, the other side of that, as you already mentioned, is like we just started to notice excess capacity. And, um, with that, we had a couple of decisions to make. We could either do another restructure. We could kind of look at, you know, some cuts or we could go back into the market to supplement that organic growth. [00:18:30] And that's as a leadership team. That's what we chose to do. Um, another big part of 3.0 in addition to the team of three was building out the leadership team beyond just you and me. And so we had brought in our director of ops, Amy McCarty. At that point, Amy joined us in. At the end of 2023. And then Leslie Reeves actually joined us in 2020, uh, as a CSM. Uh, just kind of as her reentry into the workplace. Um, but Leslie's just, you know, so great of a leader [00:19:00] and so smart. Um, she just, she accelerated through the different levels of team and roles, um, to where, you know, now she's a leader and kind of leads the cast side.

Marcus Dillon: Director of accounting and advisory. So, um, but being able to share in decision making with them, um, was, was important. And especially as we entered in 2025 and, uh, did a couple of acquisitions that were strategic, um, one, you know, just [00:19:30] around the type of businesses that they were where it was heavier, Cass where it was bookkeeping and tax and advisory all together was what we looked at. So we did one of those, um, at the end of January of 2025 and then another 1st October first of 2025. And that brings us to where we're at today. Obviously, the season that we're in, within six months of that last acquisition, which was the very which was a larger acquisition, it's the largest one that we've done to date. It's assimilating [00:20:00] and, um, you know, integrating team, integrating clients. Um, that acquisition was about 25% from a revenue perspective. Um, and I think that was kind of our limit. We didn't want to add in anything higher than 25% because we wanted DBA culture, DBA processes, technology, everything like that to retain, be retained, um, and usually win out. But also that team brought over great, um, [00:20:30] suggestions and we're employing some of those things today. That's really where we're at. I don't want to downplay where 3.0 is before we get into 4.0. So what did I miss on that last chapter?

Rachel Dillon: Um, fully fully remote now. So we hire, um, going remote allowed us to not just hire locally, but to hire within any [00:21:00] of the US, even outsource. So even hiring outside of Texas, um, I believe our first introduction really was current team members that decided to leave, uh, the, the Houston area and go somewhere way better to Colorado. Um, two different team members two different times, but leaving outside of Texas and then really opened up. I mean, we could really hire anywhere, um, to even opening up to like offshoring. So team [00:21:30] members offshore. And so that that's been a huge, um, change. I will say in 3.0 having those CSM assistants. So having an assistant for those team of three pods or the team just again, to help build capacity and really help those team members have more leadership and, uh, more advisory conversations and other work is [00:22:00] just able to get done. So that has been pretty big also in 3.0 yeah.

Marcus Dillon: Um, so yeah, it didn't definitely didn't mean to downplay the remote aspect at all. And, you know, part of the things that helped us along the way were, uh, as team members really moved to Colorado. I think we saw this a few different times. Looking back, um, we would hire people that were no longer on their spouse's health insurance and we had to solve for that or their parent's health insurance. So then we had to offer benefits kind of grow [00:22:30] up, if you will, as a business. That was probably during 2.0 and then during 3.0, we really turned on like the retirement planning because that benefits owners quite a bit. So we expanded to a 401 (K) with profit sharing and cash balance, started that in 2020 and kind of have kept it up, but just allowed, you know, kind of some flexibility with tax planning. Obviously, you had a lot of tax pros and CPAs here, so they know what the benefits are of that. And then as as team members started [00:23:00] to move out of state, we had to solve for that. So that was when we looked at p e, o to kind of combine the benefits and everything. We we retained our own 401 (K) and retirement, but we had to solve for those other states. Um, and so that's, that's kind of where we're at. Um, you know, I'd say after, after the acquisitions, uh, you know, all in DBA is a $6 million plus, you know, revenue firm. Um, so with that, there's a lot of, uh, budget to hire great people. We've already mentioned angel. [00:23:30] He joined the team in 2025 as our director of technology. His first, you know, year was really getting things stable, getting all the single sign ons turned on, getting a safe, getting us.

Marcus Dillon: You know, just protected and kind of giving us tools. Now he's even entering into this next phase where he's actually experimenting with open APIs of software that we use, kind of connecting a variety of different softwares, canopy to HubSpot and HubSpot to a variety of different things. And, and he's doing that with AI and building. And part of that is [00:24:00] just we needed that. I think, um, that's a role that we don't want to lose. Um, the other director level team member that joined in 2025 was Aaron, who's our director of tax and financial planning. Um, really. Aaron is there to protect the quality of service on the tax side and the financial planning side and lead that team. And by him being there, it, it allows me to not step into that role, which is probably [00:24:30] the safest area for both clients and team for me not to be in that role because, um, we'll just leave it at that. So I think that's the, the main talking point there is we had to build budget for that. And uh, along the way, you know, Amy McCarthy and Leslie Reeves both are, uh, you know, phantom stock owners of DBA with us and they share in a lot of the decision making, um, just as, as owners would with you and I, and I think this next chapter, [00:25:00] uh, will, will be a good one. Um, and I think before we get into 4.0, I just want to make sure like 1.0, 2.0, 3.0, nothing that we missed to kind of think about what, what the future holds.

Rachel Dillon: I think one interesting thing, um, as far as just mentioning all of the changes with you being the only owner, um, of Dylan business advisors, your production hours in 1.02.03.0. [00:25:30] What were the changes there? What did that look like? Because we did finally achieve some kind of work life balance and where we weren't, you know, just killing ourselves and working every spare minute. So I think talk through that. I know we missed that for sure. Um, in each section.

Marcus Dillon: Yeah, I would say, um, every time we hired somebody or elevated somebody that was just better technically than me. And that probably happened [00:26:00] way sooner than I want to give credit for. Um, it like I didn't replace that time. Um, I actually, I was, I was fortunate enough like I've consulted with other firms, I've helped technology companies that are vendors do different things. Um, I've led, you know, different groups, um, industry wide. And that allowed me kind of the outlet to, to not take on more in the business because I had this free time. So I filled free [00:26:30] time with consulting with other firm owners, with technology company, um, conversations, all that fun stuff. And that's honestly like, you know, that gives me life. I love to do that. So that's what protected me. So in the business, we started to notice like my production hours drop. And then it was a goal to kind of continue to get those lower and lower every year. I still stay in it to be relevant to our friends and our peers who we serve, uh, on the consulting side. But [00:27:00] you know, it's, it's to the point now where the team, they don't, they don't need me on a daily basis.

Marcus Dillon: And I will likely move into more of a consulting role for clients where I don't, you know, I don't have, uh, I'm not a bottleneck anymore for the team. Uh, if I'm needed and I'm not there. And up until this point, it's been a balance. But you know, our, my owner hours continue to be anywhere from 200 to 300 for the last 2 to 3 years as far as the production role. So it's been a healthy balance. [00:27:30] Um, just like we have conversations with other clients who build a great team, the one thing you don't want to do is step back in and step on processes or step on team members that you've hired to do that role. Um, like that would just be a mistake. And so I had done that early on, like I would pull a pin and throw a grenade in it just to rebuild it and, you know, see what I could, could make better. Um, [00:28:00] but in doing that, you have collateral damage and you have harm and people get hurt and people leave because you don't allow them to do the job that you hired them for.

Rachel Dillon: Yeah, absolutely. Well, I think that that may pretty well can't really cover, you know, five years or 15 years in 20 minutes. But, um, let's talk through current Conversations. We now work almost separately. I can't even hear you in the day, even though we're in the same physical [00:28:30] location. So what are the conversations you're having now? And then let's also talk through as a leadership team, what we're thinking as far as looking forward the end of this year and future.

Marcus Dillon: Yeah, I would say like, um, you know, creating the leadership team and then having a leadership team retreat. We got away for a couple of days, uh, last year as part of one of the acquisitions. And we really dedicated time. We had a, um, kind of guide to work through [00:29:00] and some questions to ask as a leadership team. And I've had friends that have had succession events, had M&A activity, um, in their firms. And you know, it's just, you can't not pay attention to what's happening in our business. And while I'll just say like we haven't made a decision on what it, what it looks like to remain completely independent, we haven't made a decision to obviously merge in or do any of that. So we're not sharing. Like that's not the big share on this episode. It's not like some big announcement. But we are [00:29:30] paying attention to what's happening in the in the industry. And like, those are the conversations I'm having. Even beginning in 2024, we started having friends come to us and say, hey, I've gotten this phone call. I've gotten this email, actually took the call, here's what's going on. And so we started paying attention to that in 2024 and started helping friends like navigate that as just a independent, you know, talking point. You know, you can go to brokers and or people that are buyside, [00:30:00] um, merge in acquisition, all that fun stuff.

Marcus Dillon: But they've got incentive to, to kind of get you where they want you. And we don't, we don't have any incentive. We just want to see friends make really good decisions. So that's part of the joy of my day. And so I get to have a lot of those conversations with friends. And as part of that, I learned from it. I'm also having conversations with firms larger than us. Um, almost like interviewing. What would life look like if we were to grow to [00:30:30] 10 million? What would life look like if we were to grow to 35 million? What would life look like if we were part of a $250 million firm? And like, that's just, that's where a lot of my time has been spent, I would say in the last 3 to 4 months. And, um, it's just getting like, we're obviously in a new city. We spend a lot more time in Fort Worth, uh, than we do Fulshear and Katy these days. And it's just getting to know people. So a lot of my time has been spent asking people that are the next [00:31:00] size larger than us, what challenges they're working through, how are they thinking about the market? How are they thinking about technology? And that's helping drive some of the decisions and the investments that are being made in DBA.

Marcus Dillon: And then ultimately, what we choose to double down on what we choose to hold for another day. And ultimately, where we're going. Regardless if we remain independent, if we merge in, if we're backed. What all those different scenarios. And [00:31:30] like I said, none of those like. No, Lois, none of that crap, you know, is going on right now. So it's just one of those like. That's what we're thinking through because in my mind as a firm owner, succession is there. With every thought, um, you know, pretty much on a daily basis and succession and stewardship. In my mind, go hand in hand. So it's wanting to make that to where if I'm no longer the best. Single owner [00:32:00] of this business, what does that look like? And those are the conversations that a. $6 million firm is having. Those are the conversations that a $1 million firm is having a $100 million firm, like they are happening regardless of where you're at. And, um, I'll, I'll stop there because I know that you've got probably some questions and we can go into exact conversations and scenarios that are in my head and other people's heads as well.

Rachel Dillon: Yeah. [00:32:30] And I know even, even before you started looking at accounting firm deals, just our clients, because we are in the dental and the veterinary space, they had the boom ahead of the accounting industry with, um, kind of corporate backed and PE backed owners coming in and buying up single owner or small, um, dental, privately owned dental offices. And so you were reviewing what that looked like for them. And then also [00:33:00] getting to experience the transition and after the transition with those clients to see what does life really look like? Um, after a cell or after an acquisition. So taking some of those principles from outside of our industry and then also looking at ones that are happening in our industry and then having conversations with people. So I think most, I'm most interested to hear what are some of the challenges? And you can even hit like different size firms or different [00:33:30] stages of firms. But what are some of the challenges that people are kind of sharing with you?

Marcus Dillon: Um, I would say it's funny, I, I had breakfast with somebody who's the managing partner of a $35 million firm this morning and, uh, very gracious, uh, person, great firm, um, 24 partners, about 150 team members, um, very deep into healthcare consulting. Um, and that managing partner [00:34:00] still has the largest book in that $35 million firm. And so you compare conversations like that. And I've had conversations with key leaders, executive committee members of a $250 million firm that are still doing production work in a firm. And then I had a conversation with a friend who he and his wife own a $11.5 million firm in San Antonio. Great firm. They [00:34:30] have three people. The husband and wife are both partners. They have another partner who's like the director of operations. They are Non-charged partners. So they have zero, um, you know, billable production hours. And they help lead this firm of 60 to 65 people and do it well. And they're having a whole lot more fun than the people who are maintaining client client work. Um, and not all client work is bad. I think if you're uniquely wired to do that, [00:35:00] that's great. But in my mind, that's not a managing partner or an executive committee member of a larger firm. And, um, I've seen the shift in myself. Like we have friends, we have friends who are clients that listen to this podcast that I serve, you know, on a monthly basis, and I'll continue to serve them because they're more than just clients. And, you know, it's just one of those like those relationships, even when you think about like what Tom had, like, those are the clients you continue to spend time with regardless if you have an hour production [00:35:30] in that engagement or not.

Marcus Dillon: So, but those are the, those are the shifts. And in breakfast this morning, we were talking through this because it's really easy. I spend so much time with accounting firm leaders and owners that we can kind of get to really honest conversations and get really deep, really fast. And we talked about the two firms that are existing in today's market. So one is the firm that we all grew up in, the legacy firm where its [00:36:00] balance sheet is made up of humans. It is made up of the human relationships of the team and of the clients. And so that balance sheet is a snapshot in time of the relationships that exist in that practice. And while technology is kind of this ancillary thing that exists around the balance sheet, it's not not really fully integrated. So that firm, which are the firms that we were a part of and built for a while, they will continue to diminish [00:36:30] in value just because they're not going to be relevant in this next chapter. He said what he was sharing is they are on this. They are challenged right now as this large organization to move to a a business that focuses more on enterprise value versus this balance sheet made up of humans. And that can sound really maybe harsh and like negative if you want it to, but it's just the reality that we're in. [00:37:00] And private equity is not going away. Like alternative ownership structures are not going away.

Marcus Dillon: They are here to stay regardless if you like it or not. And so if you see people doubling down and saying, we're going to remain independent, we're going to retain this balance sheet feel and be considered a family and all this stuff. You're going to limit yourself on what, how, like how fast, how successful you can be in the future. [00:37:30] And not that that's wrong. It's just a decision to be made. And I think there's a happy balance for every leader, every owner of those businesses. But just realizing that the people, your peers and your competitors, however you see them in the market, are going to be different than you and will be able to respond differently. Whether it's better service, lower prices, faster service, whatever that [00:38:00] could be. And as long as you know what you're up against, go into that fully educated. That's great. I just and this is like a prediction, I guess you could say like, I just think it's going to be very hard to do business to, to have client service at such a high level and remain completely independent in the future. Like there, there will have to be some type of partnership through alliances, through [00:38:30] organizations or becoming a part of another organization to where you can continue to stay cutting edge from a technology perspective, because unless you have the budget to really invest in technology, whether it's AI, co-work, all that fun stuff that's happening in our business, you're going to fall behind like, and that's just, it's just where I think we're at.

Rachel Dillon: Yeah. And so we talked about this the other day, but how quickly do you [00:39:00] think AI is really coming into play on day to day getting work out as far as, let's say bookkeeping help, like just straight monthly accounting help.

Marcus Dillon: Yeah, it depends on who you talk to. And so I think Claude and Coworker are all the rage right now. Um, what, what we are seeing is I guess the other thing is we'll talk about this in a bit, but if you can use those tools and you feel comfortable using those tools, that is [00:39:30] one thing. But whenever you then feel comfortable enough for your team to use those tools with guardrails and deliver on those tools, that's a completely different thing. So right now, we're in this era of you can go out and experiment, you can go do things. It may not be completely safe for like some of the work that we could throw in there as far as like personal identifiable information, but it will come. And then that next step is someone needs to take that package [00:40:00] it and make it safe for teams and put in SOPs, put in a methodology and operating system, if you will, to where someone can actually take that technology and use it in a day to day basis, and you're able to achieve things through other people. And that's, that's the beauty of a team. And so what we've built over the last 15 years, what we will continue to build is an organization that has a team at the center of it. What you are now seeing in the marketplace [00:40:30] is you see some of these firms and they merge, they roll up, they get bigger, and they're part of a larger organization.

Marcus Dillon: Two things happen. Clients fall out of those firms because they're no longer a good fit. So then they go into smaller firms. And that's part of why I've been spending time with some of these larger firms, because I want their best clients to be a fit for DBA. If they continue to grow and they can't serve those clients because they need to focus on more complex things. So that's part of the reason why I've been visiting with some of these larger firms. So they keep us in mind as they refer, [00:41:00] work that doesn't fit for them. The other thing that happens in that is team members no longer fit inside that larger organization. They didn't sign up to be a part of this larger corporate organization or a PE backed firm. So they either go to smaller firms. If they if they still, you know, are around and have capacity and are growing, or they go start their own firm. And in that, you know, the, so there's a, a wave of solo firms that are now starting because [00:41:30] people don't want that life. They want more balance. And the way that they can solve for that is they can go create a 3 to $400,000 firm kind of operate solo, not have the, you know, everything that comes along with other humans on your team internally.

Marcus Dillon: And they can utilize technology. So if, if copilot or, um, co-work, whatever the new Co is, right, whatever the agent is, if that's your employee [00:42:00] and you can go get 300 to $400,000 worth, maybe even $1 million of work done in the very near future by being a solo firm owner and just having kind of agents and admin assistants helping you by all means, great. Like, and I think that that will come. But if you want to build something beyond yourself that has enterprise value and those are a lot of our friends, those are a lot of people that I hang out with that they went into business. They didn't go into [00:42:30] creating themselves a job. And whether or not they did that intentionally or just that happened because they continue to hire people and continue to delegate and all that fun stuff. So if people are there to build enterprise value of a business that they want to see live beyond themselves, whether that's through an M&A event, a succession event, an internal event, whatever that could be. That's that shift that needs to happen from like that balance sheet approach with the humans on that [00:43:00] balance sheet to something that does create enterprise value. And like, that's, that's just where we're at.

Rachel Dillon: So looking at kind of beyond that, we are going to see two very different types of firms, maybe three different types of firms going forward. Um, what else is there to share as far as looking to the future or thinking about the future for DBA?

Marcus Dillon: Yeah, I [00:43:30] would say so. Those are the conversations. Like it's all that culmination of what we're seeing over our 15 years of experience. Uh, what's unique in the market today given like the M&A, the where all the different types of owners are now a part of this conversation, whether they're CPA owners, whether they're private equity owners, whoever that could be. Um, and then the other piece is the technology, right? So you mentioned, uh, dentists and vets and [00:44:00] how we saw kind of this roll up strategy kind of this corporate thing evolve us. They were unique in the fact where they didn't have like this technology breathing down their neck like CPAs do. And that's part of almost like fear mongering that that is happening. So whenever you hear someone like me say, you've got to invest in AI, like you could take that to, to be however you want it to be. But that's what I feel [00:44:30] is if you're not paying attention to technology and asking yourself on a daily basis, am I adding enterprise value to this organization that I'm in charge of that I'm stewarding? Or what am I doing to create value? If and I have to ask myself that on on a daily basis, because there's tasks that I do that add no value to this business and should I still be doing them? Or should I be looking at ways to automate that to make [00:45:00] it a lot easier for somebody else to take that on. Because truthfully, like if you're not adding value, then what are you really doing? Like it's, you could just be having a better life, like taking time off, uh, or spending it in other ways. So that's probably going down a rabbit hole, uh, for another conversation. But like, that's how I'm thinking about things right now.

Rachel Dillon: Yeah. So if you had a crystal ball, where do you think DBA will be in [00:45:30] ten years?

Marcus Dillon: Ten years is hard. It's cloudy. And I think part of DBA will will retain. Um, I think we are we, we honestly we have conversations. We know a lot of, uh, the options that exist. We do that because we, if it's not right for us, it could be right for one of our friends. And so I'll always take the call. I'll always see who the buyers, the acquisition, like what that is. And then even from a multiple standpoint [00:46:00] or or valuation standpoint, we share that we're, we're preparing for, um, you know, this event in Mexico recharge. And part of that is, uh, you and I will share just like on what current options are and building a firm with optionality and just not, not to where you're backed into a corner to where you have to do one thing or another. And so that's where I spend a lot of my time, apparently, these days is just figuring out what options [00:46:30] are for DBA, what options are for other firms. And then, so to answer your question, I would say whatever we decide to do, the core of the 15 years that we built upon will still be a part of the DNA of wherever we're going. Um, you know, I think that's pretty important to us is, you know, the, the values and the faith that are weaved into both life and business will continue regardless of what DBA [00:47:00] and collective evolved do. And, um, you know, it's just, it's being there to help others and utilizing the technology and the tools as best we can. Um, in order to make sure that the people that we're serving are served at a high level that we feel comfortable with and that we can bring value for the monetary exchange that's occurring.

Marcus Dillon: And, um, you know, if that, if that happens, great. Um, if we continue to operate [00:47:30] in, in, you know, exist independently, what I'll say there is, um, just like I mentioned earlier, like independent doesn't mean existing alone, whether it's you partner up and, uh, like not even financially partner up, but you're doing life together, you're doing business together with a group of people or others that share similar things and you're bouncing ideas off of. Obviously we created collective to be a part of that. For others. And we [00:48:00] share a lot within that, um, of what DBA is doing from an SOP from an operating system standpoint with collective members. Um, maybe that is right. Maybe there's something else that's out there for you. So you really have to define what independence looks like for you. And even as some of our friends who lead very intentional conversations about what independence looks like with the evolution of the accounting industry, especially as technology comes full circle, as some of these, [00:48:30] some of these roll ups become more corporate, um, things change. And we mentioned that we mentioned dental. Uh, if you look at banking, for example, how independent banks to exist today, it's very hard and it has to be very intentional for them to exist. The same thing can be said for independent doctors, dentists and vets today. You have to be okay in that world that you're negotiating power. You're not going to get paid on as much on that [00:49:00] same exact procedure as maybe the partnership corporation down the street does.

Marcus Dillon: And as part of that, you may not be able to have the patient base that you want. You may not be able to hire and pay the team that you want, and that's just what you're up against. So I think we'll see so much of that culminate into our industry. And if I had to say, like every decision that we make as leaders, you, me, Leslie, Amy [00:49:30] and the rest of the team, um, that we're doing this, like the guidance that we're doing, it will be intentional. It will be prayed about. It will be very thoughtful of whatever we decide to do. Um, but we don't like, we are constantly evaluating options just to remain sure that we are being the best stewards of the resources and the business that we've been given. So I don't know that that answered your question. There's [00:50:00] no big, you know, hey, we're, we're merging into XYZ firm or anything like that. Um, just because at this point, I think there, there is value in, in discernment and making sure that you are making the best decision for you, your team, your clients, your family. And that's where we're at. And those are the reasons why I have conversations with the people [00:50:30] that I do. And not only do I like it and enjoy it and get to hang out with other fun accountant leaders, but it's just, it's, it's part of what I'm learning as well as being a firm leader and owner.

Rachel Dillon: Yeah. Um, a few years back, back in, I think it was 2020, 2021, we put our kind of five year or future direction in place because even that amount of time, five years with how rapidly things change and evolve. Even [00:51:00] looking five years is very difficult because there's no we don't even know what the next six months, 12 months, 18 months like it, things will look completely different in that amount of time because of the rapid pace of change. And so, I mean, we really don't, as a leadership team, really spend a lot of time talking about ten years down the road or really even five years down the road. We kind of break it into one, two and three year chunks and really focus on [00:51:30] what are we doing now, again, to set us up for options when we get two years, three years, four years, five. What are we doing now that we can make quick pivots if ever necessary, like we did when Covid happened, and we're able to pivot very quickly to a remote work environment, um, which was beneficial to You team and clients to be able to serve them, um, without any hiccups. So definitely that is [00:52:00] more of the direction, more of the actual what's happening in leadership team meetings within DBA. Not really any big reveals for um, today or ten years down the road.

Marcus Dillon: Yeah. And what I would say, um, what we're working on, what we're fine tuning and what I would recommend to people who lead accounting firms focus on team structure. And like we hit on that. Obviously, we have the team of three that has guided us. Team of 3rd May not be right for [00:52:30] your business depending on your client makeup, but that's what's right for DBA in the business that we build. Um, once you have that team structure and that's achieving great client service, it's allowing you to scale and allowing you to have balance in your life at the same time. The next thing I would focus on, especially if technology really if we're really going to wake up one day and copilot co-work are going to be able to do the roles of [00:53:00] a CSM assistant, and then they're going to do the roles of a CSM and they're going to do the roles. And it's just going to it's going to go from the bottom up. What you can be doing today is upskilling your team and investing in your team that you currently have. And so like, that's, that was a goal of ours that we started in 2025. And regardless if those skills are always learned and used at DBA or if they start learning skills and then they [00:53:30] move on in their career and in their life and they use those skills somewhere else, you can't worry about that. You can't not train somebody because you're worried that they're going to outgrow you and leave. I think whenever you have, it's kind of like Pac-Man. I think if you've got technology that's coming for you and eventually you're just standing there and waiting for this person to come get you this technology to come take your job, and you're just petrified to move, then yeah, game over.

Marcus Dillon: You're gonna [00:54:00] die, right? Like there's no stopping that coming towards you. But if you're able to continue learning and growing and kind of avoiding, you know, being eaten by the, the technology Pac-Man game, then then great. Like, you know, that's just life and that's the journey that we're on. And I don't think it's so much about us anymore. I think it's about the team that we, you know, serve and that we kind of help shepherd that part of what we're focused on as leaders is how do we upskill [00:54:30] them for that next chapter as well? And I was at the big 12 swim meet. I was talking to our friend Brandon, who he's in a larger law firm and he's a partner in a large law firm. And we were talking about what technology and AI is doing to them. And it was very, very similar. He said, you know, our firm, there are attorneys and then there's everybody else. That technology is coming for everybody else. And so we as leadership have to solve for how [00:55:00] do we upskill that team? How do we make sure headcount remains good to where we as attorneys can do what we are paid to do and work within the best technology, plus others to get that job done? And it's no different. Like I think CPAs will see the same thing, like billing rates, if you will, will go up for the top of the pyramid, and then you'll have to figure out [00:55:30] what the other is for you and who you want to, who you want to do life with, who you want to do business with.

Rachel Dillon: Yeah, that's really good. Well, this has been a fun conversation. You've shared a lot, and I'm thankful that you were open and transparent about conversations that you are having. Um, anything else before we go?

Marcus Dillon: No. If, um, you know, if anybody hears of anything, if anybody wants to correct me, please reach out. But if anybody hears of anything cool, like, um, you know, somebody [00:56:00] wanting to buy firms at 20 x EBITDA and all that, being out there like, hey, just remember me whenever you get that offer. So we can kind of help celebrate together. Um, but I think it is, uh, it's the friends that have gone before us and, you know, I think that's where we're learning from as well. Like we've had friends have successful, you know, succession events and next, next chapters. We've also had friends that haven't gone as well as others. And [00:56:30] so we're learning from both. And I think that's where it's just there's not a, there's not a bad thing in discerning and pausing and praying and waiting for your decision to be the right one for you and at the right time, because other friends are doing deals, don't feel pressure to do your own and do a bad one. And that's just that. That's the encouragement and the challenge that I would leave folks with, because that's the encouragement and challenge that I need to hear a lot of times, because you get in this cycle [00:57:00] of fear and you're like, oh, well, crap, maybe tomorrow it's all going to be worth less. But that's typically not the case. And so whether that's just me saying it to myself or me saying to somebody else, keep that in mind.

Rachel Dillon: All right. Well, thank you for sharing and I will see you on the next.

Marcus Dillon: All right. Thanks so much.

Rachel Dillon: Thanks for listening to this episode. If you enjoyed the conversation and want to learn more, be sure to visit collective. You [00:57:30] can schedule a meeting directly with me, Rachel, by clicking on the Contact Us page. Be sure to subscribe, like, and share so you don't miss any future episodes. We look forward to connecting with you soon.