Patrick Dichter·February 9, 2023

How I Achieved 60% Growth in My Bookkeeping Business |Patrick Dichter

Patrick Dichter, a former digital marketing sales leader and small business advisor with no accounting background, acquired Apple Tree Business Services — a bookkeeping and tax firm — at the end of 2021 for $1.2m in revenue and $330k SDE, retaining 100% ownership without outside investors. This episode, recorded roughly 13 months post-close, is a follow-up to his original February 2022 appearance and focuses on how the business has performed. Patrick grew Apple Tree from $1.2m to ~$2m in revenue in a single year — 60% growth — through a combination of price increases, organic new client wins driven by his sales background and nationwide geographic expansion, a dedicated onboarding hire, and two tuck-in acquisitions (a $150k firm that came inbound and a Denver-based CFO/bookkeeping firm found via online listing). He offers strong opinions on firm selection: buy smaller and modern over larger and old-school, never attempt to roll up firms with mismatched tech stacks or billing models, and expect change management across staff, clients, and technology to be the hardest part of ownership. He targets $5m in revenue within five years, primarily through organic growth, and views the bookkeeping client base as a long-term source of deal flow for future acquisitions in other industries.

Deal facts

sde ebitda: SDE $330k
revenue: $1.2m at acquisition
notes: Closed December 31, 2021. By end of 2022, revenue had grown to ~$2m. Also completed two add-on acquisitions during 2022: one ~$150k revenue firm (inbound from owner in same association), and one Denver-based CFO services / bookkeeping firm found via online listing. No outside investors taken; 100% owner-retained.

Why this business

Patrick had spent three years at a small business advisory and coaching firm where they constantly referred out bookkeeping services and he saw how transformational clean books were for clients. He went looking for a business to acquire with that context and found Apple Tree Business Services — a well-run bookkeeping and tax firm with strong recurring revenue and a solid team not dependent on the owner.

What's working

Raised prices in July 2022, contributing to revenue growth alongside organic client wins and add-on acquisitions.
Averaged four new clients per month versus a goal of one or two, driven partly by personal sales skills stronger than the prior owner's.
Hired a dedicated onboarding specialist, which removed a bottleneck and enabled faster client intake.
Expanded service geography from a few New England states to nationwide, widening the addressable market.
Leveraged LinkedIn and Twitter presence to generate inbound leads and new clients.
Industry has strong demand tailwinds: many accountants retiring, fewer students entering the field, and widespread client dissatisfaction with incumbents.
Tax work (30-40% of revenue) acts as a client acquisition channel, with bookkeeping added as clients onboard.
Two tuck-in acquisitions were integration-friendly because they closely matched Apple Tree's tech stack, billing model, and client profile.
Building bookkeeping client relationships seen as a long-term source of proprietary deal flow for future acquisitions in other industries.

What's hard

Talent supply is severely constrained — fewer students entering accounting, heavy burnout among practitioners, and accountants resistant to change.
Offshoring proved much harder than anticipated due to the complexity of U.S. tax code and state-level intricacies.
Not having an accounting or CPA background created tension with staff when scoping new client engagements incorrectly or pushing growth during busy season.
Closed on December 31 instead of the target November 1, leaving almost no runway before busy season to learn the business and hire.
Originally envisioned a large roll-up strategy but found integration extremely difficult given differences in tech stack, billing, and pay structures across firms.
Cross-selling consulting services to bookkeeping clients did not materialize as planned.
Change management across three layers — staff behavior, client behavior, and technology — is brutal; moving a 3/10 modern firm to a 9/10 is described as nearly impossible.

Notable quotes

I'm so happy for this path and you know just it's been a ton of work but just seeing where the farm is at now and in this season of life I think it's the right move you know I'm working more than I ever have but for good reason and for good upside and I don't have any regret.

So many people don't like their accountant. There's a lot of demand out there that if you do a half decent job with marketing you're going to get leads. It's a matter of like are they the good leads that you want and like are you appropriately staffed to be able to take them on.

Imagine two firms — one is modern, it's only 700k in revenue and it's 150k in SDE, there's another one that's a little bit more old school and it's like three million top line and like 800k SDE. Most search books and everything would tell you to buy the bigger firm with 800k SDE and I tell them buy the smaller modern one every damn day of the week.

There's like three layers of change management: you have staff behavior, you have client behavior, and you have technology. And it's just brutal to try to take all those on and change it over.