Surviving a commoditized market comes down to how you package your value – and never compromising on price.
March 20, 2020 5 min read
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When Dennis Najjar and Bill Gerber launched AccountingDepartment.com in 2004, they defied convention.
Najjar was the “unconventional accountant,” an entrepreneurial CPA living in New Jersey and dreaming of how he could utilize the internet and automated processes before automation was even a thing. Gerber wasn’t an accountant; he was a Connecticut business owner who went bankrupt because he didn’t have financial processes.
In a strange twist of fate, while Najjar was envisioning building a virtual accounting company, Gerber arrived in his office. Both had realized that most entrepreneurs didn’t want to see spreadsheets but still needed someone to deliver the right information to make better decisions in “business speak” instead of “accounting speak.”
Living two states apart, the fact that Najjar and Gerber found each other seems like destiny. After countless interstate meetings, a rough business plan, and a handshake between this unlikely pair, AccountingDepartment.com was born. Sixteen years later, the company has grown to 135 employees, with double-digit growth every year. Here are Najjar and Gerber’s six lessons for taking a start-up to scale-up.
1. Match your solution to your customers’ needs.
Instead of “accountants doing accountant work,” the co-founders prioritized the customer: What did they need? What information would help build a better business? How should that information be packaged so they could use it?
Gerber understood the frustrations entrepreneurs felt with their financials, and Najjar could communicate the numbers in a way that made sense.
The lesson: Figure out what your customers need and build your competencies around the solution.
2. Niche down.
Instead of becoming proficient in all accounting software, Najjar and Gerber strategically specialized in just one: QuickBooks. Specialization unlocks the deep functionality of a tool, which gave the co-founders’ customers unmatched visibility into their financials. It also allowed them to train their employees to become experts because they weren’t doing broad, basic training in all accounting software.
The lesson: Most businesses try to be everything to everyone. Specialization enables you to create comprehensive solutions over other basic offerings.
3. Prioritize your employees.
“We hire the best, train them well, and support them, so they don’t leave,” says Gerber.
“We even part ways with a client if they don’t treat our employees well,” adds Najjar. “It’s harder to replace an excellent team member than a client.”
To build their culture, Najjar and Gerber focused on finding an equal or better way to do everything that a physical office would offer, but virtually. They asked each new employee about their positive experiences in physical offices, finding a virtual equivalent that met the same needs and then encouraging employees to champion their causes.
“We have a team fitness club, fantasy leagues for every sport, a recipe club and paid volunteer time — and we listen to every new suggestion,” says Gerber.
The lesson: Money alone won’t retain the best employees; they need to feel like valued community members.
4. Don’t quit when challenges arise.
Gerber and Najjar self-funded the launch of AccountingDepartment.com. Finding the right technology was critical as a virtual business but challenging in the early 2000s. “We spent $80,000 in our first year on a server that didn’t do the job,” recalls Gerber. “We had to take money out of our houses and credit cards to fund it.”
It was a hard knock, but the co-founders believed in their vision. They found a new data center, and while that brought other challenges, they pushed through. “We knew that eventually, technology would catch up to what we needed — we just had to stay operational until it did,” says Najjar.
The lesson: All businesses have inevitable ups and downs. Stay true to the vision and find imperfect solutions to remain operational.
5. Be willing to fund your growth.
“I wanted to attend a trade show when we were starting, but it cost $30,000,” recalls Gerber. “Dennis agreed that I should go, as long as we saw a return on the investment.
“So, we worked out what I needed to get out of the show to achieve that,” he continues. “Now we attend 50 shows a year. If you want to succeed, take risks, and put your money where your mouth is. It’s that simple.”
The lesson: You can’t expect customers to invest in you if you aren’t willing to invest in yourself.
6. Shift with the market.
What works initially doesn’t always work later. “When we started as a virtual, outsourced business, no one even knew what the cloud was,” laughs Gerber. “Now anyone with a laptop can offer outsourced accounting services — and they’ll do it piecemeal for a low price.”
Instead of compromising, the co-founders changed their strategy. “We realized that if we could service a $1-million business, we could service a $10- or $100-million business,” says Gerber. “Freelancers aren’t playing at that level. We grew by creating a new market for ourselves.”
The lesson: Keep a pulse on your business landscape, and shift it to where your competitors aren’t playing.
Whether you’re running a physical office or virtual business, these lessons are universal. Ultimately, it comes down to a simple formula: Who is your customer, what do they need, and how are you delivering the solution and supporting the people who execute it for you?
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Article curated by RJ Shara from Source. RJ Shara is a Bay Area Radio Host (Radio Jockey) who talks about the startup ecosystem – entrepreneurs, investments, policies and more on her show The Silicon Dreams. The show streams on Radio Zindagi 1170AM on Mondays from 3.30 PM to 4 PM.