Nikole Mackenzie is a CPA residing in the San Francisco Bay Area with clients located all over the U.S. She has seen small business accounting from every perspective as a former tax and audit CPA who now runs her own scaling accounting firm. Nikole has led hundreds of owners to revitalize their accounting departments through her easygoing approach and contagious enthusiasm. She and her team help agency owners save money, increase revenue, stay compliant, save time, eliminate stress, and ultimately give them the freedom to scale their recurring revenue businesses to an eventual multimillion-dollar exit.
Here’s a glimpse of what you’ll learn:
- Nikole Mackenzie shares her entrepreneurial journey
- What is the value of creating an exceptional customer service experience?
- Nikole reflects on the change in options for accounting models available to small businesses
- The new wave of tools and resources available
- Nikole discusses how she got involved with EO San Francisco and the value she gets from it
In this episode…
When is it the right time to pursue something unstable? When should you choose stability instead? During your entrepreneurial journey you will be faced with taking a leap of faith or playing it safe. Your experiences and goals will affect how you make your decision.
For the longest time Nikole Mackenzie pursued the stable option throughout her career, but she knew she needed to take a risk to reach where she wanted to be. She now helps others navigate their entrepreneurial journey through her business Momentum Accounting and her involvement with the San Francisco chapter of Entrepreneurs’ Organization.
In this episode of Rising Entrepreneurs Podcast, host John Corcoran welcomes CEO and Founder of Momentum Accounting Nikole Mackenzie to the show. She shares stories from her past as a CPA and the lessons she learned that led her to found Momentum Accounting. Nikole discusses creating an exceptional customer service experience and building customer loyalty through that before talking about EO San Francisco and the value entrepreneurs from all stages of their career get from being involved.
Resources mentioned in this episode
- Nikole Mackenzie on LinkedIn
- Momentum Accounting
- John Corcoran on LinkedIn
- EO San Francisco
- Rise25
- Sons of CPAs Podcast
Sponsor for this episode…
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Co-founders Dr. Jeremy Weisz and John Corcoran credit podcasting as being the best thing they have ever done for their businesses. Podcasting connected them with the founders/CEOs of P90x, Atari, Einstein Bagels, Mattel, Rx Bars, YPO, EO, Lending Tree, Freshdesk, and many more.
The relationships you form through podcasting run deep. Jeremy and John became business partners through podcasting. They have even gone on family vacations and attended weddings of guests who have been on the podcast.
Podcast production has a lot of moving parts and is a big commitment on our end; we only want to work with people who are committed to their business and to cultivating amazing relationships.
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Episode Transcript
Intro 0:02
Welcome to the Rising Entrepreneurs Podcast where we feature top founders and entrepreneurs and their journey. Now let’s get started with the show.
John Corcoran 0:11
Hey, John Corcoran here, I’m the co-host of this show where we feature top entrepreneurs and business owners leaders sharing their stories. And I have Nikole Mackenzie here. She is the founder and CEO of Momentum Accounting, and we’re gonna get into her introduction in a moment.
But first before we get into that this episode is brought to you by EO San Francisco. And EO San Francisco is part of the larger Entrepreneurs Organization. It’s a global peer to peer network of more than 14,000 influential business owners with 198 chapters in 61 countries and if you are the founder, co-founder, owner or controlling shareholder of a company generating over $1 million a year in revenue, you want to connect with other like minded successful entrepreneurs then EO is for you. The EO San Francisco chapter enables leading entrepreneurs in the Bay Area to learn grow and achieve greater success. And the chapter was founded in 1991. Today, we have over 100 members in industries ranging from marketing to agriculture, tech and professional services. To learn more about how it works, or to come to a test drive. Come join us at EONetwork.org/SanFrancisco.
And this episode is also brought to you by my company Rise25, which helps provide B2B companies with done for you content marketing and podcast services. You can learn more at Rise25.
Alright, as I mentioned, my guest here today, Nikole McKenzie. She is the founder and CEO of Momentum Accounting. Fun facts: She was a collegiate athlete and is also passionate about all kinds of obscure sports. The more obscure the better. She’s actually a five time national champion Australian rules football, and she also is the co-host, guest co-host on the Sons of CPA Podcast. And Nikole, thanks for being here today. And I want to ask about, you are actually an accidental entrepreneur, you were not the kind of kid who was out doing lemonade stands on your parents lawn. But, kinda like me in a sense I guess, you just kind of were working other jobs and didn’t like the way it was done and thought maybe I can make a go of this. And you were actually working in Europe when you had to make this decision on on vacation.
Nikole Mackenzie 2:17
Yeah, I like to say I’m a recovering CPA. So it was definitely had that CPA accountant mentality where in college, I just wanted the job that was the easiest to secure after I graduated. And accounting for me was that but once I started working in a CPA firm here in San Francisco, I found myself I remember having this moment where it was like the middle of tax season, and it was like nine o’clock at night and I looked and I was in a cube and right next to me was one of the partners offices, and he was still there. And I was like, okay, so even if I do this for 30 years, I still I’m gonna be gonna be one of the last people at the office. And it’s funny I have, you know, all your Facebook memories always come up. And every year around right after April 15, I always get all these funny memories that come up. And one of them recently was, I took a I took a personality test and it said I should be an accountant. Damn it, because I had these moments where I was ready to leave accounting and I felt lost. And I thought that I had chosen the wrong career. And I spent all this time getting my CPA license. And when I graduated from college, there really was only two paths. It was either you go auditor you go tax, but luckily at the firm I was at, they added on outsourced accounting and as an additional service line while I was there, so I switched from the tax department to the outsourced accounting department. An outsourced accounting is basically what I do now, but it’s much different than filing a tax return at the end of the year knowing tax law, it’s much more integrated with small businesses. So what I do now with Momentum is we support small businesses with their particularly agents, marketing agencies and other professional services businesses with their, we’re basically a replacement for a one or a one person accounting department.
John Corcoran 4:15
So you were saying you were working within this larger accounting firm, and they had an outsourced accounting department. And that’s kind of how you experienced how it could be better and better experience for you and for the clients.
Nikole Mackenzie 4:29
Exactly. Yes. So there was a so it was an analysis, we had an apartment, I liked the work much better, but it was definitely so structured like a traditional CPA firm. It was billed by the hour it was whether accounting software you’re on will take it and it was just a really bad client experience. And because my clients weren’t happy, it wasn’t really rewarding for me. So I ended up leaving that firm just quit. And then after that I went work for an ex-NFL player, Ronnie Lott. And I was at this point after I left the firm with no, with no job. And I remember being I went on a three week trip to Europe with my boyfriend at the time, they didn’t have a job. And I was trying to make a decision about what to do next. And I had a job offer for an in house role at a insurance agency and the accounting department there. And then I had this offer from Ronnie Lott. And so one path was very secure and stable. And then one was kind of a part time gig, not no structure, no stability. And so I was trying to make that decision on do I take the risk and go one way? Or do I go stability. And so I ended up making the best decision of my life and went and work for Ronnie Lott. And while I was working for him, I started Momentum. And I took on a couple other controller roles. And yeah, just kind of grew the business one client at a time.
John Corcoran 5:49
Yeah. So you said when you were in college, that you went for the most stable thing you could find. And then you get to this point where you can decide between stable job offer and the less reliable thing. What chose you to choose the the more riskier path those years later?
Nikole Mackenzie 6:10
I think it’s funny, because I’m super risky. Now, I think at that point in my life, I didn’t have the confidence. But it was just me really wanting to do something different and better when I think about, I didn’t know it at the time when I was in it. But traditional accounting firms are just so not my personality. And when I was in that work environment, I was that and then as I exited that, and started my own business, I started to build confidence. And I started to realize that there was a better way to provide an amazing client experience that accountants just weren’t doing and ways to be creative that accountants just weren’t doing. And so for me, it just represented a, a way to take more risk and a way to build something better, and not have to follow the way that things that always the way that things have always been done, because that’s the way that had been done. Because when I was at that firm, I was constantly always questioning things. And the partners will always stifle that creativity. And so I was just really, I think, wanted to do something different.
John Corcoran 7:14
You know, you mentioned the billable hour, which was something that I experienced when I was practicing law. That tension, not a lot of fun to have to bill, especially when you’re charging a lot for the hourly rate, because then the clients really, you know, look closely at what you’re charging. What I want to know is how much of your frustration was related to that. And how much of it was other things related to just kind of structurally the way that the, you know, old school accounting, function and operated was funny.
Nikole Mackenzie 7:49
So I just wrote a rap about this. I love LinkedIn. LinkedIn is like my playground, if you want to ever go to my profile, you can see all the stupid stuff that I spent many hours posting. But the rap that I wrote, it talks about how the billable hour is just a broken model and how that the problem with the billable hour is it doesn’t make you create value for your client. The client does not care how much time that you spent servicing them. They want to, they care about outcomes. And as funny I don’t know if you saw there was on Twitter, viral posts, about Chewy. Chewy is the dog food online. Yeah, for pets, right. And Chewy, I remember, was my cat’s birthday, and they sent a handwritten birthday card to my cat Louie. And so there’s a line in there about Chewy. And anyway, my point is with that is Chewy, retains their their churn is super, super low. And they have a recurring revenue business model, right. But what they’ve done is they’ve created this client experience that keeps people coming back. And they actually have people in house that do handwrite these birthday cards and they send paintings when people’s pets die and they send flowers when people’s pets die. And that creates this customer loyalty. And so I would say like with Momentum, V1 Momentum was very much about fulfilling a need in the market was which was this gap of good accounting for small businesses. But V2 is more about creating a really, really awesome customer experience. And that’s what I’m working on right now.
John Corcoran 9:35
That’s great. You know, you said that when you graduated from college, there wasn’t really this outsourced accounting option. It was kind of big for traditional CPA audit tax. You said those are kind of the areas where you could go into and now there’s this kind of this outsource accounting model that a lot of especially smaller businesses can leverage in order to get better understanding of their numbers. So talk a bit about what that change looks like and what the world is like for for, especially for small businesses now compared to the way it has been traditionally.
Nikole Mackenzie 10:11
Yeah. So the old way of doing your accounting as a small business owner was you had somebody come to your office, it was all desktop. Typically, they were just paying bills and sending out invoices. But at the end of the day, when you actually were looking at your financial statements, that data didn’t tell you anything to help you run your business. And typically, small business owners come to us when they reach that high six figures getting approaching 1 million in revenue. And before working with us, they’re either trying to do the accounting themselves, they have a bookkeeper, that’s maybe not super sophisticated, they have a spouse doing it, or they have their CPA doing the bookkeeping. And if you’re doing, you know, 500,000 or less in revenue, that works. But when you start hiring people, there’s this inflection point where you’re, you’re responsible for other people more than just yourself, right? And so what when businesses come to us, they’re at that inflection point where they’re wondering how much cash can I take out of the business? Can I take on this new project? Here’s what I have in the pipeline, can I service that revenue. And what I see a lot, especially with agencies, which is one of our niches, is they’re growing really fast. But they don’t have the data to know if they can actually successfully execute and service that revenue. And you can get into a lot of trouble if you’re taking on too much revenue, and you can’t service it. And so to give you an example, we have one client that we’re working with that is two business partners. So one partner wanted to hire us, the other one was looking at how much money they had in the bank account. And he was like, I don’t think we can afford to hire them. Now he tells us, they did end up hiring us. And he says that he wished he would have hired us sooner. But they were just so on one hand, we have one partner that’s looking at the bank account and making decisions based on what’s in the bank account today. And then on the other hand, account balance accounting, right, yeah, that’s the gas tank accounting method. Yes, tank account. And then and then the other guy, he’s making sales, you know, he’s so he’s so and he just closed a $20,000 a month deal. And he’s like, Well, we need to hire somebody. And so they had, the one partner that was in the finance function was paying the bills, was sending out invoices, was doing the data entry in QBO. But at the end of the day, when the other partner said, Hey, how are we doing financially? Can we do this? Can we hired this person? He didn’t have the answers for that. And so when we came on, and we started working with them, the first thing we did was we removed the one partner who was doing the accounting from the accounting function, and clean up a lot of the mess. And then what we did was we build a forecast for them. So now what we what I do is I have a monthly meeting with them. And we can talk about, hey, what do you have in the pipeline? Who do you think you’re going to close this month? Who do you have on your team who you’re planning on hiring, and then help them be much more confident in that growth? And they’ve just been able to grow much faster now? Because they’re not stifled by that? Oh, I don’t know if we can hire this person. And that insecurity because I can help them look forward and see what their cash flow is going to look like in 12 months? If they do XYZ.
John Corcoran 13:27
Yeah, yeah. And with the growth and outsource accounting, there’s so many more tools. Now it’s almost debilitating how many tools there are out there. But you know, things like, I know you’re a big advocate of some of these different tools, like Gusto and things like that. So talk a little bit about those sorts of like, you know, new new wave, SAS based, you know, hiring, recruiting, outsource payroll, that sort of thing, tools that are out there. Does everyone loves talking about tools, right?
Nikole Mackenzie 13:54
Yeah, yeah, no, I love, I’ve, um, I test out probably a new app every week, I love finding new tools. But I mean, our core app stack is really Zero or QuickBooks Online. And then those are the, that’s the GL. And then on top of that, there’s 1000s of apps in the marketplace more and more popping up every day that integrate with those. So for example, with this client that’s on QuickBooks Online, I’ve got QuickBooks Online, linked into Google Sheets through a tool called Live flow. And it’s a direct sync of all the data into Google Sheets. So if you ever want to do anything in Google Sheets, it’s pretty awesome. And then I take that Google Sheets data, and I use race reporting, which is a data visualization tool. And that connects to the live Google Sheet data. And then I can refresh that. So let’s say we’re talking about we’re up, you know, like I said, looking at the pipeline, and they want to add a new client that they just closed, then I just added in the Google sheet and then I refresh it in breach reporting, and then they get a nice dashboard because agency owners like dashboard or visual people, right, so it’s pretty because they can see, and they can see how that affects their gross profit margin and the net profit margin and their take home as the business owner. And then we can also mess around with how much cash is. One question that business owners always want to know is like, how much cash do I need to keep the business? How much cash and you can measure, can I take this out, you know, my wife’s bugging me and asked me if I can take more money out of the business, but my other business partner doesn’t want to. And that’s always hard when you have multiple partners, but what I can do is I can remove the emotion from that decision, and then to show them the facts and say, Hey, here’s, here’s a good number that will make you unless agree on a number that makes you feel good. And then we can take out anything beyond that. And I can actually show you what that looks like moving forward, here’s your GAAP cash balance target that we agreed on. And now you’re above that. So like starting in September, you guys can increase your distributions by $10,000 a month each. And that just gives them a little more clarity. I think in terms of being on the same page. Yeah, partners go.
John Corcoran 16:02
Amazing. When I, you know, I, I’ve been an entrepreneur for 11 years now, when I started my business, you know, I immediately outsourced bookkeeping, but I hired someone, I can’t remember the first person was, but I had a, I had a couple of people. But it was always like on there. There. There was virtual remote. And it was on their desktop version of QuickBooks. And they would send me reports like really, like once a quarter, maybe I didn’t even look at them. I didn’t even know you know, it was all bank account balance, you know, gas tank accounting, like you said.
Nikole Mackenzie 16:31
Yeah, and that’s and that’s, I mean, when you’re small, that’s works fine. If you want to have your CPA do it, but they’re going to be doing the bookkeeping in a way that makes it easy for them to file the taxes. A cash basis, bookkeeping is a lot different than true accrual basis, which is matching your revenue with your expenses so that you can actually pull out those, you know, what is my gross profit margin? What should my gross profit margin be, and, and then look at that trend over time, and it’s okay, if it dips, or you know, is higher or lower than you anticipated, but you need as the CEO, you need to be able to explain why that is. And as an example, we had a client that $10 million business and they had some family drama, and one family was member was stealing from the business. So there was some turnover here in ownership. And they let their accounting go for a year in when we finally recreated the financials are looking at the gross profit margin, and it’s just like declining, declining, declining, declining, like what happened. So we started digging into some of the costs. And we realized that they had not off boarded, they had no HR like competent HR person. And so when the employees were leaving, nobody was taking them off of the health insurance. They had like two years, $15,000 a month or two years are paying people that no longer like people that were dead, that didn’t work at the company. And because they didn’t have financial statements where you’re if you’re tracking your gross profit margin, you can see that declining and then then the financials are really there to tell a story about your business. And then it’s up to you as a CEO to say, “Why is this happening?” and then go figure it out, correct it. And so it’s really a guiding light a beacon of light to guide you in the right direction so that you can adjust. And if your financial statements aren’t giving you that information, then it could be that you’re not working with the right person. You’re gonna ask him the right questions.
John Corcoran 18:24
Yeah, that’s a great overview. Thank you. I want to ask you about your involvement with EO. So we were joking beforehand, I asked if there was like, a lot of times EOers mentioned that there’s some big breaking point or drama or crisis or something that brings them to you. For you. It wasn’t anything like that. It was Lael Sturm who is, we both know, is an EO accelerator member and a big advocate for EO. And he told me about it.
Nikole Mackenzie 18:51
Yeah, him and then some other person was telling you about I kept hearing about it, you know, once you hear about something, and then you hear about it everywhere. So Lael was just raving about it. And for me, as a small business owner that works with other small business owner as my job I just love entrepreneurship and small businesses. So in my mind, I was like, oh, it’s cool. I get to hang out with other business owners and like learn from each other. So that sounded interesting to me. I ended up joining EO directly rather than doing the accelerator because I was right at that million dollar mark, when, when I joined, but actually now John, and I think I might go back and do accelerator because I missed that more, I guess more, because EO is more about self development, where if like, EO accelerator is more about being in the trenches as a business owner and being with other people that are also in the trenches and learning from each other. So I kind of feel like I missed that fun part of it. So I might go back and do that.
John Corcoran 19:51
Well, I’m a huge advocate of both accelerator. I did it for about three years. It’s an amazing program. I think every EO member should go through it. To because it is just such a great foundational curriculum. I call it like the MBA that I never got. But it’s yes, it’s so such a great program.
Nikole Mackenzie 20:09
I was also thinking that it would be a good, there’s some good frameworks. And then when I did the EO learning day, pulled out some things that I could actually use with my clients, like the org structure and the culture and the values when we onboard it. We do also do payroll, right. So we are looking at people and org structure. So it’d be really easy just to template that out and have that be something that we do during as part of our consulting.
John Corcoran 20:33
Yeah, yes. Super valuable. Yeah. Nikole, this has been great. Where can people go to learn more about you, connect with you, and ask you any follow up questions?
Nikole Mackenzie 20:39
Yeah, the best place to find me is on LinkedIn. Nikole, N-I-K-O-L-E Mackenzie.
John Corcoran 20:44
Excellent. Alright.
Outro 20:45
Thanks so much. Thanks for listening to the rising entrepreneurs podcast. This episode is powered by Rise25. Please subscribe and check out future episodes.