TikTok and taxes: the future of accounting firms with Envolta’s David DiNardo
David DiNardo, CEO of Envolta, joins Stuart McLeod on episode four of the Accounting Leaders Podcast to discuss how his accounting firm has pivoted in the wake of COVID-19 and why embracing change is the only path forward.
Now may be the time to scale, but be selective when considering an acquisition. Think about the change management involved for new clients and make sure the firm you acquire is a cultural fit.
When it comes to marketing, trust your instincts. You know your clients better than anyone else, like what kind of content that will speak to them. Don’t be afraid to try new strategies.
David DiNardo didn’t expect to end up running his own accounting business. It wasn’t until a brief stint at his dad’s traditional accounting firm that the idea for his brainchild, Envolta, began to grow.
Out of graduate school, David worked in consulting and hated it. He ended up at his father’s old-school pen-and-paper accounting firm that felt like it belonged in a different era. Confused about some of its old-fashioned practices, he asked his dad a lot of questions, like why he wasn’t using digital tools like G Suite. It wasn’t well-received.
David fondly laughs as he recounts the memory: “He goes to me, ‘I’ve been doing this for 15 years. Who the hell are you?’”
These observations ultimately inspired David to show his father the power of technological tools by starting his own firm that operated online from the get-go.
David shares this journey and discusses the changing landscape of the accounting field on episode four of the Accounting Leaders Podcast with host Stuart McLeod.
He also shares insight on scaling strategically, whether or not there’s value in niching as a firm, and how social media can add value to marketing initiatives for accountants.
The challenge with industry verticals in an unstable world
Before COVID-19, niching as an accounting firm was often regarded as best practice.
But depending on a firm’s vertical, having a niche either worked for or against them when the world turned upside down in 2020. Envolta, for instance, had many clients in the restaurant industry at the time—an industry hit especially hard by the COVID-19 pandemic.
David cautions firm owners deciding on a niche.
Be careful what vertical you go into because when all of your eggs are in one basket, you can find yourself in a situation that’s not good.
The pandemic didn’t completely discourage David, though. Thankfully, his company was sized to adapt quickly—his team quickly made back their lost revenue with new clients that needed Envolta’s skillset. But to avoid the negative consequences of focusing on one niche, David also purchased a cloud accounting company that serves lawyers.
What does David like about lawyers? “Their professional services are low transaction and high revenue,” he says. “When you’re doing a flat-fee model or fixed-value price, it’s a lot easier to forecast, predict, and price.”
Pivoting to support lawyers has proven to be a wise choice for David’s company, especially as he observes surging family law needs.
Scaling strategically: selectivity will make or break you when acquiring firms and clients
According to David, now is the time to scale.
But that doesn’t mean he’s looking to acquire just any old firm. It has to be the right fit. If it’s not, it’s not worth the effort.
The cloud accounting firm that he recently acquired, for example, was a very calculated choice. “They were on Hubdoc, GQO, Wagepoint—all the apps that we used,” explains David. “If you think of it as a real estate transaction, I was looking for a house within a neighborhood type of thing, right? I would only do it that way.”
By finding the right firm, Envolta was able to transition its new clients successfully—and a big part of that, David believes, was using the same tech platforms. The change management piece would’ve been too much to tackle otherwise; asking clients to switch software just isn’t a good strategy.
But it’s not only about acquiring a firm that uses the right apps. It’s about finding a firm with the right culture, so David looks for employees and clients who buy into Envolta’s mission and approach.
Social media in a historically anti-social industry
According to David, “68% of accountants don’t even have a social media account.” But that’s not stopping him from social media marketing.
Marketing is something David’s passionate about, and he’s embraced social media with gusto. His most recent experiment? TikTok.
“All I did was write a tax scenario on a piece of paper, and it blew up,” remarks David. His post got over 40,000 views.
For David, it’s been about a lot of trial and error. “Our space is still very referral-based. … [The challenge lies in figuring out] how you build content that’s relevant to those specific clients.”
He’s tried many avenues: inbound marketing, outbound marketing, Google Ads, and even outsourcing his marketing initiatives.
Recommended reading: Digital marketing for accountants [13 Proven Tactics]
Nobody knows your client base better than you do.
Outsourcing helped David to realize that he wanted to take on social media for his firm. “It was so generic,” he says, “Why am I spending thousands of dollars for this social media platform that’s not even working? What’s it doing? Just check the box?”
Since then, David’s found massive success using LinkedIn as a recruitment tool. First, he connects with top accountants in his area and then reaches out to them directly.
“Companies need to change,” he warns. “The younger generation is not going to work in a paper-based traditional way. They want the Karbons. They want automation. They don’t want to do task-level administration.”
David has embraced change—and as a result, he’s attracting top talent.
Culture is a team sport, even when it includes your family
Part of David’s desire to embrace change has to do with his leadership philosophy.
No Rules Rules: Netflix and the Culture of Reinvention by Reed Hastings and Erin Meyer has been a recent source of inspiration for David, helping him change his perspective on how he evaluates his team. He sees Envolta as a team sport, not a family, and values performance above time served.
“It has to be about performance,” David says on the podcast. “I want to be around the best people. … I want to grow.”
I don’t want to have a person just because they’ve been here for X amount of years and are underperforming. Because guess what: my high performers are going to leave because they’re compensating for that person.
At the end of the day, for David, it all comes back to culture. Whether he’s working to ensure that his culture remains intact in an acquisition or creating tailored marketing strategies to attract the right customers, David approaches everything he does with intention.
And while he is passionate about seeing his firm as a team and not a family, there’s still one family member who continues to make the cut.
“And so what about your dad?” asks Stuart. “The traditionalist? What does he think of all this?”
David laughs. “My dad? He works for me. … If I could change him, I could change anyone.”