How This Accountant Built a 100% Online Accounting Firm, Scaled and Sold it just within 5 years
- Hi, I am Ryan Lazanis a CPA, CA but not your typical accountant!
- Back in 2013, I founded Xen Accounting a completely cloud-based, 100% paperless Canadian Chartered Accountant firm that combines online accredited accountants with innovative software.
- We grew the firm and finally in 2018, it got acquired by 'Equiom'. (A European firm that serves international corporations and high-net-worth individuals.)
- What next? In 2019, I started Future Firm, to help other CA and Accounting firms do the same!
- Here is my story of how I built Canada’s First 100% Online Accounting Firm, Scaled and Sold it just within 5 years.
Choosing CPA as a path to becoming an entrepreneur
From a young age that I wanted to own a business, just like my dad! However, I also realized early on that when you’re a business owner, you can run into hard times.
I witnessed this first-hand with my father, who had some really good years in business, but also some really bad ones as well near the end of his career as digitization overtook paper and printing.
Having seen that, I knew I wanted to have a fall back plan in case my business ever didn’t work out!
I knew that having these 3 letters 'CPA' would never go to waste and thus decided to pursue CPA.
Did I love accounting? A big NO. But CPA is not only about accounting. It’s a lot more!
And here started my CPA journey!
Working as a conventional CPA and not enjoying the same!
After qualifying as a CPA, I worked at an Accounting firm for about 5 years. I wanted to get the necessary training and expertise required in order to start out on my own.
Then I followed the typical path that many CPAs follow. Yes, I went to work in the accounting department of a company!
However, I didn’t enjoy the routine that came with working in an accounting department as an Assistant Finance Controller.
I understood early on that I was not cut out for that kind of routine work!
Every night, on reaching home, I would Google search to research what kind of business I wanted to start.
Everything I was looking at was tied to accounting (and I hated accounting!).
So, what next?
Tumbling on the idea of starting an 'Online Accounting Firm'
One day during my google search, my eyes fell upon a 'UK firm called Crunch' that had created their own online accounting software.
I learned about how 'Crunch' offers their services online and that they had had the technology to automatically process transactions. This firm had teamed up with a team of accountants and was offering accounting service to other firms for a fixed monthly price!
This, to me, seemed like the future. No one in Canada was doing it, so I decided to start a similar concept here.
I had observed that accounting was just too painful for small business owners. I knew they hated it, so I wanted to make their process of accounting as easy as possible.
So, I decided to start a business, an Online Accounting Firm...and that's how 'Xen Accounting' was born!
Yes, I had started a business that had everything to do with Accounting, yes, a subject that I hated. I know it is ironic.
Luckily, my hate towards the subject helped me come with ways to make it simpler for my clients!
Quitting my job to start Canada's 'First' 100% Online Accounting Firm
Did I just quit my job to start my online accounting firm? Obviously, NO!
It took me around 3 months of planning before I quit my job and started out on my own.
I decided to start 'Xen Accounting' as a completely online firm from Day 1 to help make accounting easier for small business owners.
The plan was to provide services in a subscription model for a fixed monthly price, and our clients would know exactly what they were getting and what they’d be paying upfront for!
All the work would be handled 100% remotely by us. And I’d give them the apps necessary to provide me all the docs I needed, electronically and easily.
Basically, I looked at every customer interaction and curated a service, offering to eliminate as many of the points of friction as possible.
Finally, I started Xen Accounting in 2013 as a one-man show!
In a very short span of 5 years, we grew our business to great heights and finally sold it to a large European CA firm Equiom, in 2018!
Making it all worth it! And I did all this before I was even 35!
What Next? Moving to my next venture - Future Firm
In 2019, I started another venture, Future Firm to help other CA and Accounting firms grow a 100% cloud-based, online accounting firm and scale their business!
I observed that firms are very interested in moving their model into the future, but they have no plan in place.
As such, they just bounce around from project to project, with no clear path on where they’re going.
So, before you start modernizing your firm, you should have a strategic plan in place.
I help firms implement technology, automate processes, hire & manage a remote workforce, attract business through online channels and basically help them set up a scalable, modern accounting firm of their own.
The complete timeline 2013-2018: Starting, scaling & selling my business
Financing my business
- When I started Xen Accounting, I was definitely nervous as I was inexperienced and had to learn a lot of things on my own and on the go.
- I bootstrapped the company 100% on my own. I had an office and I hired some key people very early on.
- I was prepared to go without any revenues for at least 6 months. I was mentally preparing myself for that.
- The time was also right for me to take a risk as I didn’t have many responsibilities at that time either. If the business didn’t work out, I would just go back to looking for a job.
Starting Xen Accounting
- I started Xen Accounting from scratch. It was a one-man show with no clients and only an idea! As this was my first business, I had no clue what to expect.
- My first steps were to rent an office (the plan was to have teamwork from an office and provide 100% online accounting to clients), put a website up and then hit the streets at some local networking events to drum up business.
Getting our first clients
- When I first started, I had 0 clients, and I didn’t know how long it would take to land my first client.
- Since providing 'accounting services online' in Canada was unheard of some other CPAs thought it was a bad idea!
- Also, most people weren’t familiar with cloud accounting. And yes, it was tough to convince many businesses to move their accounting online. So, I wasn’t too busy at the beginning because I didn’t have any clients yet!
- Luckily, I attended my first networking event ever, and the very first person I spoke with was interested in online accounting! I went to his office the very next day and signed a deal. I knew I was on the road to success.
- Also, when we first started, my firm worked mostly with younger business owners who were mostly operating technology companies! At the time, those were the kinds of businesses that were comfortable working with their accountant online. So, I built a niche around 'tech startups' in the early days of the firm.
- Fast forward a few months… I started acquiring a bunch of clients and ended up hiring my first employee in 2014.
- As cloud accounting matured, more and more other kinds of client profiles became interested in the services offered by my firm.
- A year later, there were a few people on the team and my firm became one of Canada’s first Xero Gold partners, which signifies 100 clients.
- For about 2 years, I didn’t take any salary for myself, I just re-invested it into the business to help it grow. It was a bit scary at the time because I was bringing on resources and expenses in the business but not necessarily having a ton of security on my revenues.
- I didn’t have much experience with the business, so if I ended up losing clients, I’d be stuck with payroll to make, which is always stressful. I was basically working off of projections and hoping they’d come true. Luckily, it all worked out in the end.
Shifting to 100% remote working
- While we would work with all clients 100% remotely, the team was all centralized in an office in the beginning.
- The firm started to shift towards a remote model as we hired our first 100% remote employee on the other side of the country. But quickly enough, the entire team became all distributed.
- Gradually, by 2017, the firm was operating 100% remotely, with clients and team members across Canada.
- We also became a team of 10 people in 2017.
Growing the team and getting acquired
- Our team size grew to 15 employees. And we ended up being acquired by a large European corporate service firm that was interested in the way we do business.
- Why selling my firm? I had NOT started this business with the intention of selling it...I always thought that I would just start a business and maybe run it forever! But a good opportunity came along and I took it.
- For those considering an acquisition, I think it’s important to know upfront, very clearly, what you’re looking for and what you want to get out of the deal. If you can’t formulate that, you probably aren’t ready to sell yet.
- Following the acquisition, I helped transition the firm over to the buyers during most of 2019.
- Around the same time, I started my new venture, Future Firm - to help firm leaders modernize their accounting firms!
Running an accounting firm is 'tough' and I had to learn a lot of things the hard way.
I did hire the wrong kinds of people initially, implementing the wrong technology and a host of other things.
When I started my online accounting firm, I never actually thought about the goal of the business and how it would serve my lifestyle.
I JUST focused on growth for the sake of growth...adding more employees, adding more clients, more, more, more.
Instead, I should have been thinking about 'how big I want to make the firm', 'how it would serve my lifestyle and what income I would be happy with'.
Hence I started Future Firm to help other CA Firms grow a 100% cloud-based, online accounting firm and scale their business.
Future Firm provides mentoring to a select group of firms that are looking to modernize. I help firms with their technology, processes, business model and marketing. Basically, I’m leaning on my experience as a cloud accounting firm owner to help them succeed with theirs.
Ryan produces a lot of content online that firm leaders can read and listen to for free through his blog or podcast. His most recent post have been very popular. One is about the 147 best cloud accounting apps on the market and another is on the 51 best accounting news resources that firm leaders should follow.
Now It's Your Turn...
Does my story make you think about taking your firm to the future of online accounting and automation?
You can always approach me if you need my mentoring services.
Do comment on how you felt about my journey into entrepreneurship.
(Article edited by CA Uma Krishna and image by Ankit Lodhi)