S01 E24: How this firm owner partnered with other firm owners for shared success

Roman Villard  
All right, I am super excited to chat with two people. Today we got a bonus. So we’ve got Dave Kersting. And we’ve got Tonya Schulte here to talk to us about co-firming, what co-firming is, how to approach it, and ways that you could think about implementing co-firming in your business. Dave? Tonya, welcome.

Dave Kersting  
Excited to be here. 

Roman Villard  
Yeah, yeah! I’m so excited to have both of you guys on today. Real quick. Let’s go into your background. Just a quick high-level elevator pitch of who you are. Dave, you want to start us off?

Dave Kersting  
Sure. My name is Dave Kersting. And with Capovario we’re based out of Denver, Colorado. But as most of us aren’t, we are a national firm. Our focus is on bookkeeping. 75% of us are construction. The rest of it is really about contractors consulting, which kind of helps us stand out in the accounting arena.

Tonya Schulte  
Yeah. Thanks, Roman. Um, yeah, I’m Tonya Schulte. I founded The Profit Constructors almost eight years ago, which is super exciting that it’s been nearly that long ago. But my whole background has all been in construction, and accounting and started doing construction accounting in 1997. Yeah, I love this sector and serving this industry. And that’s all I’ve ever done. And it’s exciting, I think, because there’s so much new technology coming into this space. So I love it. 

Roman Villard  
Good. So if you have any job costing questions, Tonya’s your woman!

Tonya Schulte  
Yeah.

Roman Villard  
What a great niche to be in. I love that you’re hyper-focused. Tonya, could you give us a quick overview, like a definition of what co-firming is? 

Tonya Schulte  
Sure. I think for co-firming, a lot of people think it’s one of two things. So I’m going to start with what it’s not. A lot of people think it’s like collaboration, where two firms maybe share ideas and help each other and just like high-level ideas of like, here’s how we do things. Let me share with you some best practices. Some people think it’s subcontracting, right, like, here, I got a job. I want them to just do the job. I’m just gonna be the general contractor, and he’s gonna be the subcontractor. it’s kind of like subcontracting. But it’s more than that. Besides the fact that I’m parceling some parts of the work out to Dave and his team or some of the other co-firming partners that we have. We are also sharing the load of the work, there are times when our team will step in and do pieces of the work that are parts of the work. We’ve already parceled out to Dave’s team. But we’re also sharing team meetings, team training, and an overall team culture between all of our co-firming partners.

Roman Villard  
Okay, so it is far deeper than a traditional, like, subcontracting-type relationship. Dave, do you have anything to add to that?

Dave Kersting  
Well, I do. I mean, you do have to look at it as if we’re one big team, instead of being separated, and you’re in our client’s mind, the client understands there are two firms involved, but we act as one. And you know, when we say we’re shared on everything we’re talking about even the financial piece, the income coming in from the client is determined on who gets what based on the lift and load that is happening. But you know, there are key pieces to what Tonya’s firm does versus what my firm does, or some of the other firms that work with us, because there might be three of three firms involved instead of just two. And it just depends, again, what we’re bringing to this client is, we know somebody, we’re going to connect that dot, and we’re going to bring in this professional and it’s going to be a part of your team. And that team doesn’t mean I come in, and oh, I’m going to work on this one piece. Well, now I’m done. And I backed out. Now I’m still in it. And I’m there. So if there’s a question three months from now, I’m still able to answer and assist.

Roman Villard  
Yeah, boy, I have so many questions as it relates to internal operations, how it impacts the client, and how your team members interact. But let’s start, you know what the scenario of a traditional CAS practice is if it has practices starting to entertain the idea of co-firming? How do they get started with that? How do they determine what elements of their firm need to be co-firmed? Like where do you even start? Tonya, do you have any thoughts on that?

Tonya Schulte  
Yeah, I will say I’ve told this story a few times the way that Dave and I started doing it was out of sheer desperation on my own. And it was kind of cool because it was perfect timing for both Dave and me Right? Like, I had just signed one of the largest clients that our firm had ever signed. And at the same time, our operations manager at the time told me that he was leaving. Yeah, and so I was actually at my business coaches. office doing some year-end plans for next year’s strategy meetings. And we happen to share the same business coach. And he was like, Well, you know, I have a gentleman who wants to hire someone who has been trying to increase capacity in his firm, but he hasn’t quite found the right way to do that. This might be the best fit, right? He could go ahead and increase capacity for his firm to take on this client along with you, and you go for it. The reason that it sort of grew into co-firming for us was because there were some aspects of the job costing piece that Dave and his team didn’t quite know how to do yet. And so I said, Well, I’ll train you guys. And so instead of it just being a standard, let me just subcontract out the work. And you guys, you handle it all you do every bit of it. That training component was born in this. Honestly, I think that’s what’s made it so amazing and so valuable is that we started to figure out what we needed was the training and the teamwork alongside just the actual technical work getting done.

Dave Kersting  
And I think what you will see, as I say, the way that Tonya’s firm does it, you know, being one of the top construction experts.Tonya can sit and go through the work in progress reporting, and here’s the job costing and all these things. And then my team kind of comes in with the HR piece and the workman’s comp and the GL and, but also knowing that, hey, we know how to do the day-to-day, and we’re prepping and getting all your monthly stuff done, we’re helping put together and this is the most important piece, I have to say, processes, helping to get the client out of their way, so that we can focus on what is the plan for you and where you’re going to be. But now it’s not again, one firm or one person thinking it’s 10 people or 15 people working on one, one area to focus on.

Roman Villard  
Yeah, you’re able to amplify the impact that your team is capable of having alongside another firm that ultimately maximizes client experience because now they have access to a multitude of resources across the firms. 

Dave Kersting  
Correct.

Tonya Schulte  
To more specifically answer your original question Roman about how someone could get into this. One of the things to think about is, how are you currently really able to serve your clients well. And in what areas are your weaknesses? Look for firms that can fill in those spots where your firm is.

Roman Villard  
I like that a lot. Because if you’re familiar with, you know, Strength Finder’s different assessments, you know, they double down on your strengths, oftentimes, and identify places where you can almost subsidize the weaknesses via things like CO firming. And so, okay, we’ve identified our weaknesses, perhaps and, and I believe there are three different outcomes that a firm could approach they could buy a practice that does that, they could build it internally, or they could partner that last bit is here, what we’re talking about on the CO firming front. And so if I’ve identified my weaknesses, Now, where do I even go? Do I just call up my industry partners and say, Hey, do you want to co-firm? You know, how does that next step work? Then once you’ve identified, this could be an area in our business where we could look at co-firming.

Dave Kersting  
And I think that when we start to look at it, you know, as you said earlier, you know, search co-firming in and there’s, there’s still a multitude of things that come out of it, but it may not be answering the question you need. So Tonya and I are reaching out to the community, letting people know were heavily involved in the community called roundtable labs. And we’re trying to make sure that people in that group know and that they’re spreading the news on what we do and why we do it. Is it Oh, everybody come to us? And where are the co-firming and you know, where are we at? Now, there are a lot of people that already do co-firming, just may not be labeling co-firming, or, or making a business out of it. And trying to hone in that, you know, we want to share, share what we do with everybody, because there’s work for everyone.

Roman Villard  
And so, I’m hearing you talking about community and leaning into the community in terms of finding a potential partner that could support you in that is that are there other avenues that somebody can go through to identify Okay, I need X service and other firm needs of, you know, capable of providing service but it also capable of fulfilling why problem? Where do you go to identify those individuals that could support you and that problem?

Tonya Schulte  
I think the community is the number one spot right? There are a couple of things that Dave and I have talked about at length since we sort of started our experiment that has grown and grown and grown because now we have about four co-partner firms that all work together under one umbrella which happens to be right now the TPC (The Profit Constructors), umbrella. But one of the big things that we have talked about is that every one of the relationships that are a part of that co-firming partnership was born from the community. And they almost had to be because we had to first know one another and understand the shared values. One of the things I do not want to do is align our firm with a firm that doesn’t share our values and therefore not necessarily bringing the same level of service or those same values to our client relationship.

Dave Kersting  
Yeah, in part that also includes, you know, what is that level of commitment that the other firms bring in? What are their vision values? And you know, what level of their firm are they wanting to Cofer. So like, again, in my firm, we’re probably 30-40%, and CO firming and the rest is, is just here at Capovario. But the goal is for us to co-firm. But it’s also having that understanding that what Tony and I are trying to do also is position someone in our firms that is reviewing the work of these other firms, as we call it quality control, to ensure that what’s going to the client is exactly what is in our mission.

Roman Villard  
Yeah, I love that you brought that up. Particularly because when you’re evaluating partners, oftentimes when you’re getting into an arrangement with a vendor or a partner, or what have you, there’s always a deal, there’s a transaction occurring, and not all the time  And so you want to avoid the situations in which where there’s an imbalance and, and mission or values or even the monetary exchange. And so once you’ve identified a problem, you have a community and identified potential partners there, how do you start to negotiate an arrangement between firms?

Tonya Schulte  
One of the very first things that we were just again, fortunate to have and the scenario is our shared business coach who helped us do that. And ever since then, we have preached that as best practice, right, like have some third party person who’s not necessarily going to be a part of this arrangement help you negotiate the deal, because as our business coach put in at the time, we would have Dave and I would have just nice to each other to death. And just, oh, what can go wrong? We love each other. It’s all great, right? But he helped us to see and think through things like putting together a model and a contract that was going to work for all parties and asking us all the questions like, what if someone decides they don’t want to go for him anymore? What if a client decides they don’t like one of the COs for me, partners, all of these upfront questions that you’re going to need to work through and understand what your response is going to be to that before it happens? So having that third party negotiate that for you, I think is invaluable. 

Dave Kersting  
And I like to call it, you know, having the pre-map ready, or the divorce paperwork already filled out, you know, what is it going to look like if the worst happens? But you know, Tonya and I have experienced over the last two years, there have been situations where a client likes my firm or not her firm or vice versa, or they like a person in our firm, and not a person, somebody else in my firm. And how do we handle those situations? Or they’re going to turn? Yeah, because they’re complaining about somebody on my team, you know, who’s in charge? How are we making this decision together? But also, who is ultimately in charge? Who is going to make this decision? But what happens if the relationship that Tonya and I have in CO firming now brings on another client because of a referral? Well, where did that client come from? Well, it depends on where the original lead came from, if it came from Tonya’s experiment, don’t I owe her something for that no new client that may or may not be in confirming? So we got to put those things on paper, we got to help people understand. This is what our integrity says we shouldn’t be doing. And two together, we’re here to take care of each other’s teams, and each other’s pocketbooks, but also our clients, because you know The Profit Constructors is, you know, ride with the big dogs, you know, or run with the big dog, sorry. And then Capovario, we get you we got you, you know you put those together, we’re elevating your company to be with the big people in the big companies. Well, we understand who you are. And we’ve got your back. And I think that it just flows. 

Roman Villard  
Yeah, but it also sounds like there’s an increased level of administration and an increased level of kind of awareness and attention that needs to be paid between not only the co-firming resources but also the clients that are experiencing that service. And so do you have a process or a framework that you utilize, to communicate to manage like those referrals that you mentioned? You know, how do you guys establish that framework to make From the beginning that you’re setting off on the right track?

Tonya Schulte  
That’s part of what we’re talking about right now, right? Because originally, there was just sort of this idea, like, as clients come across TPCs channels, all of our lead channels will just sort of hand them out to the co-firming partners. But as you mentioned, Roman, one of the things that’s become quite apparent over the way that this has grown, is that there’s a higher level of administrative need. And a higher level of just an overarching understanding of how those leads flow through the code from the partners, right? So is it like any other growing concern? We’re, we’ve gone through some growing pains, and we’re going through that growing pain right now. So Dave mentioned that we actually at The Profit Constructors, hired a Quality Assurance Manager whose job it is to manage all confirmed relationships. And she deals with each one of the COs from partners in a little bit of a different way just because of how those go from partners work, right? Ultimately, her goal is to make sure that by the time information is flowing back to the client, it looks the same every time regardless of who’s doing the work. But because of that, we also now ended up increasing what we’re sort of charging the CO from partners. So where we hadn’t had any agreements in place, all the code from our partners agreed to this as well. But we have said, Okay, there’s an administrative fee almost now, that has to also come off of what is flowing back to you for this work. And they all agreed with that because they love the fact that they’re not having to do so much quality assurance anymore, right? Like it’s flowing through one organization, and they can just sort of trust that she’s doing her job and reviewing all the work. So it’s, again, it flows both ways. And all of the partners enjoy it and like it, but just like everything else in business, that Quality Assurance Manager comes at a cost.

Dave Kersting  
And I think that it not only costs but we also have to look at how we have a quality control manager or managers and stay consistent. How are we staying consistent in their world, like my firm uses XYZ apps to do my job? And Tonya’s firm uses a different group of apps, we had to decide, as co-firming groups, we had to decide, this is going to be what our apps are. So as you know, Tonya has been using it forever, Financial Cents, and Financial Cents became the core of our co-firming business, we all have Financial Cents, we might also have it for our firms, but we have it for the co-firming world. That is, we all have access to it, we all pay for it ourselves. And we all make sure that the templates are the same and that what we’re doing between one client and another is the same to make that quality control a little easier. So now think about the other 20,000 apps that could be connected to co-firming or your firm and doing the work. Again, that is the conversation where currently in our current structure, TPC holds all of that confirming information. And then we kind of all join in, you know, again, we’re hoping by the beginning of next year, we’re going to have this new excitement, and a company called APN. That will kind of help us take over and even expand more into this world of confirming. But right now, it’s like you said how do we? How do we identify our needs? How do we get through the growing pains? And how do we learn? You know, over the last two years, we’ve learned a lot by just being me and Tonya. And now bringing on these other firms over the last year was like holy cow, it worked for me. And Tonya, is not working for five more people, how do we streamline even more?

Roman Villard  
Okay, Dave, and Tonya, my brain is just spinning right now on co-firming. This is awesome. So two things that came out to me that I’d love to hit on. One, you mentioned the importance of having an aligned tech stack. And so that almost being a prerequisite of jumping into a co-firming relationship, ensuring that there’s alignment on what’s being utilized going forward to ensure consistency for the client. The other thing that’s jumping out is almost just a shared services model. Because it sounds like there’s almost been to some degree, a new firm, a new entity that sprung up of these shared resources that are now being allocated and managed almost independently. And so at what point does it just become a super firm supported by four independent firms?

Tonya Schulte  
That’s a good question. That’s what we’re trying to figure out as we speak about this right now. Because, yeah, and the other part of that Roman that we’re trying to sort of suss out and pull out of this amazing relationship is how do super firms interact with those firms? And how does each of those firms also remain autonomous? Each of the firms has the desire right now, as with all the firms we’re working with, they all have their desire to remain autonomous. One piece of it is that not every client comes with the right set of desirable things to be a co-firm client, right? So whether they don’t have high enough revenue, there’s not going to be enough skin in the game for all the CO from partners to get a little piece of that. Or maybe it’s just like in the current scenario, TPC (The Profit Constructors), is only taking on construction clients, right? So perhaps some of the other co-firm partner clients want something outside of construction. So that’s not going to run through the co-firming scenario, in the current situation. So part of that has just been saying, okay, all of these partner firms wish to maintain some autonomy and have their own set of clients. So they’re gonna get the first referrals from the super firm, right? So that’s a little piece. So there’s just all of these parts and pieces to how that’s going to work that we’re just now trying to put together.

Dave Kersting  
And I think you could add one more piece to that, you know, again, you know, not just talking about leads, because each firm has their own set of leads, but, and we each get to identify early, like, Hey, I have this lead, and I look at it as if I believe in construction is going to co-firming if all the other things work, if it doesn’t get that far, then hey, it’s gonna stay here, but I might reach out ad hoc, you know, or, you know, as an as collaborative environments that have co-firming until it needs to be. But more importantly, what is that super firm offering to all the CO firms? So all the what are they getting on it there besides leads and work, they’re also getting a lot of training. So like we talked about earlier, you know, Tonya is the expert in work in progress. She’s amazing at job costing and trying to figure out where things need to be. Now imagine a tiny firm solopreneur, or even a firm with five or six employees, you know, and they just aren’t the experts. TPC, APN, Capovario, we’re all going to get together, and we’re going to do a training course. And we’re going to continue that training course and teach more than what you might need. So again, another, shall we say, a version of a community that has a sub-community that understands what we are trying to do? And how do we involve other people that maybe we don’t have the lead to give to you yet? But hey, do you want to learn from us until we get to there? So I think that helps.

Tonya Schulte  
Not even just the training, I want to throw one other thing out there that every single one of the firm owners has found, again, completely invaluable. And this experience is the idea that we do what we call open office hours as an entire team of CO firm partners, and everybody can just come in, it’s for firm owners, it’s also for their team members. But firm owners especially have said what a relief it is to have other firm owners who are in their same shoes to not again to not just collaborate, it’s a strange and new idea that we’re actually like, leading our firms jointly and together. I don’t even know how to describe that Roman. But it’s been so freeing and helpful for all of us as firm owners.

Roman Villard  
Yeah. 

Dave Kersting  
And we could talk about more than just the co-firming jobs. So there have been times where I’m in this open office hours on my cap this client over here that none of you know, and this is my problem, how do I solve this? And so that’s collaborative, you know, but at the same time, confirming we’re all there from all the other firms, doesn’t mean that I’m working on the same clients they are. And so we get to bring this extra piece of excitement. Or like Tonya did, we had a client or she had a client on her side, that they just had like simple questions, workman’s comp, their workman’s comp insurance is renewing, I’m an expert in that, boom, we’re on Slack, we’re talking next thing, you know, here are some policies, here’s some ideas go and, you know, all happened within a four-day timeframe before their deadline. You know, like, how who has that access to do that? Not a lot of people have been like, I don’t know, let’s call somebody. Let’s figure that out.

Roman Villard  
What a massive benefit, to the team and the employees to like recruitment and retention of folks to have that resource available to them. That’s awesome. It also reminds me of one of my favorite phrases that I’m a massive evangelist for but it’s “build together, go further.” And genuinely when you are in the community when you’re building alongside others, it is far more powerful than just prompting ChatGPT of how to get something done more efficiently. Okay, with about five minutes left here. So I think we’re gonna have part two, by the way, because I want to keep going on this. But with about five minutes left here, I want to go through a scenario of, you know, a standard CAS practice of a firm owner who’s listening to this. Say they offer accounting, bookkeeping solutions, and solutions, but no, no tax. But they’re interested in potentially a co-fermion tax because their clients ask about it. They have some degree of community, what would be your recommendation to start that conversation with another firm?

Dave Kersting  
Well, I think that again, you know, right now, we don’t. Your tax and co-firming world doesn’t mean we can’t. It doesn’t mean it’s not going to be coming. But I think that what we have started so far, has been asking the CPA firm that does tax. What do you need from me? As a bookkeeping firm, accounting firm? What do you have a checklist of things that you’re going to ask me every time so that we can kind of help do that? And then they want to partner with them. And you know what, hey, I know it’s about opening a conversation. I know that you have bookkeeping work that you need to do. You’re swamped as a tax professional during these timeframes. I just happened to be a little slower during that time frame. With all this extra step I have, can we work in a co-firming world where maybe throughout the year, I can keep you where you need to be at staffing levels and flex as you need to flag this? And I think that’s kind of the first part again, community conversation.

Tonya Schulte  
Yeah, I’m just gonna throw out there that last year, Dave and I had a similar conversation at QuickBooks Connect, we were in a roundtable opportunity at QuickBooks Connect where we were talking about this, and a lady at the table where I was sitting said, Oh, I do this I co firm with a CPA practice in our town. But as we talked about it, really all that they did was they were like, the same share clients, right? So as we dove more into what co-firming was and how Dave and I do it, it opened up a whole new world for her. And she said, I would love to hear maybe I’ll see her again in QuickBooks Connect this year, but I would love to hear the rest of her story because she said, I’m gonna go back and talk to the CPA firm that I do this with, sort of, and talk to them about a more cohesive environment where we’re working together as a team, rather than just sharing some clients.

Dave Kersting  
That’s not a one-off, it’s not a one-off here. Let me just do this for this moment and give it back. And I’m going to be working with you the client a while CPA taxer was also working with claim a while the firm is working with, you know, with CPA firm, all year, so we’re strategizing together, we’re showing that my firm is showing up to the CPA meeting with the client to hear about what their tax exposure looks like, what are things that we can do to help? You know, how do we organize better for the client? Or what things do we need to red flag or call out to the CPA in February instead of in December, so that they can make some pivots or movements? That’s, that’s co-firming?

Roman Villard  
It’s powerful. It’s powerful, because you know, most firms out there have partners in the space referral partners that they send other work to, that maybe isn’t right down their alley. And those partners may be a great starting point or maybe starting to walk down the path of like, What could this look like if we were to expand the relationship? And then from there, identifying tech stack from there evaluating? How could this operate tactically with our clients? How is it managed? How’s it? How does quality assurance occur? Things like that. And so this is quite fascinating. Are there resources out there that exist? You know, I haven’t found much online that talks about core co-firming, but where should people go to research this and learn more? Any suggestions?

Tonya Schulte  
I can call us.

Dave Kersting  
Yeah, for sure Capovario email, as you get on our website, get on The Profit Constructors website, you know, connect with us, because we are talking, we will be at QuickBooks Connect and scaling new heights where we’re talking about co-firming a lot. And we would love for you to come to chat with us some more about it. You know, in addition, I’m sure you can ask anybody at Financial Cents about co-firming because as we said earlier, Financial Cents is our hub for what we do. And I think that once we made that decision, our relationship became easier. Because all that just tasks like stuff and deadlines and requests the client is done. Now we can focus on the real important things. 

Tonya Schulte  
And I know there’s at least one other CO for me in a partnership that does that make Financial Cents as well. So I think Financial Cents has a good handle on what we’re asking for and what our needs are.

Roman Villard  
Okay. Okay, so you heard it here. They said to reach out directly to Tonya and Dave on this matter if you’re interested in co-firming. If they wanted to do that. How would they reach you, Tonya?

Tonya Schulte  
They can just email me at [email protected]. I’m always down. I will say this. I had the greatest mentors and helpers and friends and partners when I started my firm. And I’m always here to pay that forward.

Roman Villard  
Perfect. How about you, Dave?

Dave Kersting  
Dave, you can do the same. You can email me or get on my website and send it in through the website, but it’s [email protected].

Roman Villard  
Perfect. You might hear from some folks on this because it piques my interest a lot. I know that a lot of people are interested in this subject. I hope that we can jump in on part two here soon because this is fascinating. It’s novel and when you build together you go further, right? So I thank you both very much for this conversation. Accounting flow is better because of it. So thank you guys very much.

Tonya Schulte  
Thank you.

Dave Kersting  
Thank you so much.