Two Roads Inc.: A Future Firm Story

Nov 20th 2015
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In our second in a series of case studies that highlight the experiences of practitioners and their firms as they explored the world of business advisory services for their clients, we found ourselves a unique situation in Two Roads Inc.

To reiterate, whether you or your firm are on the path toward becoming more of a business advisor or you are considering the option, we hope that these stories will be useful to you. Below we hear from Chad Ridner, co-founder of Two Roads, a Knoxville, Tennessee-based bookkeeping and tax services firm – but only on the surface. What Two Roads does is so much more than what its signage will tell.

One unique factor is that Ridner is not a CPA or even an accountant or licensed bookkeeper, but rather an entrepreneur who is well-versed in the struggles of small businesses and their need for a deeper relationship with their accountant. This is one key reason why he started Two Roads – to form a partnership with clients and deliver quality tax and back-office services to allow them to successfully run their businesses.

“We don't want to engage someone once a year. Entrepreneurs have questions about running a business more often than that, and I remember I was always intimidated that the answer [from a CPA] would be over my head or I'd get billed every time we talked,” said Ridner. “We want to be the first call, not the last. We may not always know the answer, but we want to be asked. We don't want our clients – our partners – to go to Google first.”

After four years and several stumbles along the way, Two Roads is now a growing business advisory firm, which also performs core tax and bookkeeping work through a team of accountants and CPAs that utilize some of the latest apps to maintain the partnership with their clients.

Two Roads also recently received a Firm of the Future award from Intuit, one of the key technology service companies the firm regularly utilizes. This is the story of how the firm arrived at its current status, as well as its plans for the future.

The Past
Chad Ridner always saw himself as an entrepreneur. He started his first business in the '90s and became passionate about starting other businesses as well. It was this experience that prepared him for what was to come. Through the process he learned QuickBooks, as well as the importance good bookkeeping and accounting were to a growing business. And like most business owners, he wasn't entirely comfortable with the bookkeeping process and ultimately hired a CPA to do the work. 
Some years later, a longtime friend, who happened to be a CFO for a family retail business, pitched the idea of offering accounting services to small businesses. As his friend's business began to slow down, they discussed the idea of working together.

This was in January 2011, ultimately giving birth to the idea that would become Two Roads.

“Having been a small business owner, I knew I could relate and he saw a good partner in me. We came up with the name over dinner and drinks,” said Ridner. “We wanted to stand out and differentiate ourselves from other firms, so we took the internal team from his family business and had two bookkeepers right away.”

The Challenge
Rather than being a traditional accounting firm, Two Roads decided to put itself out in the market as a service provider, focused on small, growing businesses. Ridner knew the differentiating factor had to be about the level of service the firm could provide, preferably in real time. Being virtual also became an issue early on as the firm outgrew its physical space. They were also faced with the issue of hiring people based on merit and “good feelings” versus experience. The learning curve for newer technology to work more virtually and in real time was also a challenge.

The Journey
In 2011, Two Roads began offering bookkeeping services to area small businesses, utilizing Peachtree (now Sage 50) and QuickBooks on desktop. The firm had employed people either Ridner knew or his partner knew from his previous business, primarily based on “how well they seemed to work with people.” This worked for a little while, but as the firm began to grow, they saw they were about to outgrow their physical office space and the need for connectivity between bookkeepers and clients, without the need for a physical office, became more evident.

Ridner knew a company that could host QuickBooks and co-opted that method for Two Roads. This, he says, was his first step into the cloud. Another challenge was the administrative burden on a growing firm, as Two Roads was cutting and mailing checks “in multitudes” every day.

It was about this time that was recommended to Ridner, who found it simple for he and his staff to work with and allowed them to severely reduce the check writing and mailing of invoices.

“When we discovered, that changed things; that was a huge administrative burden that was removed. Scanners were also introduced to the office, as were the use of mobile devices so that staff could scan or take photos of necessary documents and share through a portal or use in,” said Ridner.

Over the past two years, Two Roads has been utilizing QuickBooks Online to serve clients and currently all but two clients working in the cloud accounting system, both of whom are on a hosted version of QuickBooks desktop.

The firm has also added ZenDesk, which works as a practice management system offering a robust ticketing system that allows the firm to deliver on all of its work. It also highlights how fast a staffer is responding to a client when a request comes in via email.

Another key component added to the firm's makeup has more to do with philosophy than technology. While some similar firms will refer to their businesses as either customers or clients, Two Roads addresses them all as partners in an effort to further reflect the type of relationship it wishes to have with them.

One of the most pointed lessons learned in starting a new firm is staffing. Because Ridner wanted to focus so much on the customer service aspect of a tax and bookkeeping business, he had initially hired staff that he and his partner felt were personable above all. Ridner learned a difficult lesson that they needed technically competent people who want to see businesses succeed and can work well with people.

Essentially, he thought that even if some were not necessarily bookkeepers or accountants by trade, they could train them. The result was some difficulty with client interactions or work not being done the right way. In one case, Two Roads lost some business. This caused the firm to become more diligent about hiring, and the firm now has an established 11-step hiring process. Two Roads is also building a more positive reputation and is partnering with other service professionals to source referral business.

Through its current staff of 15 employees – one of whom works out of state, the rest are in an office or in the area – Two Roads serves approximately 80 clients, the majority of which range from $300,000 to $2 million businesses, though a couple are $7 million to $8 million companies. The staff are also very active posting blogs on LinkedIn and Twitter, where the firm is hoping much of its future prospective business comes from.

“Growing this practice has allowed us to spend more time in the books and take extra time to see what has happened historically and help [businesses] plan for their future,” said Ridner. “Most small businesses have ‘business by bank account' disease. They log in to a bank account and check the balance, they do it at lunch or at the end of day, and that's not showing how the business is doing. We go further.”

As such, Two Roads recently implemented what it calls a “two-minute touch point,” so when staffers close the books at the end of the month, the firm takes a couple of minutes to reach out and provide its partners with new insights. This is done via a simple email or phone call each month.

“When you are a business owner, grinding out each day and you have someone come along and provide this kind of information to you that you wouldn't get otherwise or as timely, that's a gold mine,” said Ridner.

The current snapshot of Two Roads:

  • A growing practice serving clients with QuickBooks Online, web-based tools, and add-ons.
  • Helps clients make better business decisions and grow their businesses.
  • A regularly connected, service-oriented firm.

Next Steps
Ridner claims he's always anticipated Two Roads being a nationwide company, and he believes it will happen sooner than later. Secondarily, he always felt Two Roads could specialize more, and it is slowly finding what that specialty is. Finally, the firm would like to be more analytical in its client work and plans to use analytic tools to assist businesses in their growth.


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