Episode Transcript

Please note this transcript was generated by AI and contains errors including missing and misspelled words.

[00:00:00] Meryl Intro: Welcome to the Lifestyle Accountant Show. I'm Meryl Johnston, your host, and this podcast exists to help today's accounting firm owners build successful firms while also living a healthy, happy life without sacrificing sleep and weight loss. Your weekends or time with loved ones. On today's episode, I'm chatting with Andrew Vanderbeek about how to successfully navigate the end of a business partnership.

[00:00:35] Andrew [Intro Soundbyte]: He's not a greedy man, so he wasn't looking to try and get paid 120% of what it's worth and I've invested all this, you know, you know, when you hear those kind of partnership breakups and everyone's fighting and at the same time, I recognize And I'm comfortable to take risk on things that I think will work.

[00:00:51] Meryl Intro: Our guest for today is Andrew Vanderbeek, the founder of Illumin8. He's got a pretty awesome self introduction, so I'm going to read through that now.

“Although I dream of running my own whiskey bar, right now I'm an accountant, I guess. Founder of Illuminate, podcast host, co working space owner, coordinator of retreats, mentor of up and coming accountants, keynote speaker, and generally getting myself into interesting situations in the world of accounting.

I push the boundaries, it's the only way I can make the difference I want to make. I ask lots of questions. I listen to the answers and I'm not afraid to challenge what I hear. I believe in the potential of our industry, what you could do with a not so subtle push into the unknown.”

Great intro. Thanks, Andrew. I got to know Andrew when we were part of Xero's Partner Advisory Council together, probably three or four years ago. And I agree with how he describes himself in the intro. I remember him asking great and sometimes challenging questions. And I always appreciated that he wasn't afraid to speak his mind.

During today's episode, we start off with a bit of a chat about how Andrew's four months of paternity leave is going. And I think it's fantastic that he's structured things in his business so he could take that time off to be there for the birth of his third child, his son. We go into the back story briefly 26 years old.

And then what led to the circumstances of Andrew buying out his business partner, Jason, a few years later. They managed that buyout amicably and were able to negotiate the key terms in an afternoon. Andrew talks about some things to consider when valuing a growing business and also what to do if the partner that's leaving the firm.

Has some key client relationships. That's something that they navigated successfully. All that and more coming right up on the Lifestyle Accountant Show.

Meryl: Hey Andrew, great to have you here.

[00:03:49] Andrew: Thanks for having me, mate. What a time to be alive.

[00:03:53] Meryl: Before I hit record, we were having a chat about what your paternity leave has been like. How many months in are you now?

[00:03:59] Andrew: Um, I, I'm three and a half months in. Um, my, my son, my third child was born on the 18th of Feb. So, uh, yeah, it'll be four months come two weeks time from right today.

Meryl: And how's that been for you?

Andrew: It's been amazing. It hasn't been what I thought it would be. No. No. Uh, I've spoken to a few people and it's been talking before like I'm like, Oh yeah, I just like I'll wash a few dishes, take the kids to school and then I'll like just kick back and chill out and I'll be able to have all this relaxation and space and what it's really been is elements of that, absolutely.

But then also a realization of like, cool, just because I'm not working. 9 to 5 or 5 to 5 or whatever it is hours that I might pull it here and there doesn't mean there's not stuff that still needs to be done and there's not things that I'm getting distracted by. So it took me like weeks, 4 to 5 weeks to actually get to the point where I could be like, all right, I'm just going to let today come at me as opposed to try and structure a plan and make sure that I'm achieving something.

[00:05:00] Meryl: Yeah, I think it's that business owner mindset, that concept of achieve, achieve, achieve, wake up in the morning. What am I going to achieve today? And that can be work. It can be relationships. How did you find that shift of going from that go, go, go ambitious mindset into a slightly different role?

[00:05:19] Andrew: Yeah, look, I guess it's interesting because I'm actually now starting to come back into that mindset knowing that I've only got a few weeks before I'm back into work and going, oh shippers, I haven't, I haven't got anything lined up.

I haven't got anything prepared or planned for me. What am I going to do? I know, I look at it and I go, on a daily basis, work wise for me in a role as like a founder of a business that's grown is you kind of because you've been around everything It's hard for you to not pay attention to everything. So everything could be The advice that's being delivered to clients to the volume of the music that's in the office to the social media posts that were like everything because you're around that.

So, I think like you're almost deconstructing yourself to a point to go, okay, let's go back to what is most important. And for me, the decision around taking this time off was around family and that's what's most important. So, it was really deconstructing and removing all these other things that are important, um, but are not most important to get to that core of like, cool, all right, this is what I'm actually here to achieve and this is what I'm here to do.

I'm here to be. You know, uh, a better parent. I'm here to be a better partner. I'm here to care for a newborn son. And I'm here to probably look after myself a little bit after, you know, you know, 10 to 10 to 11 years of probably just slaughtering myself as a, as a small business owner and kind of taking a step back and going, Oh, what, what, what do I need to repair for a little bit before I kind of come back into the world of small business ownership again?

[00:06:42] Meryl: So pre taking this leave, what did Andrew's role at Illuminate look like? And then what's it going to look like? when you come back.

[00:06:50] Andrew: Yeah, so I always joked that my job was I did everything and nothing all at once in that, like I said, I, I was aware of it all and I was conscious, and I was paying attention to all and as a result would struggle to not get involved in things that I didn't need to be.

Um, but also knew that there were things where people would lean on me to be able to deliver. But if we, if we think about what my role looked like, um, I was responsible for, you know, mission, vision, direction. What are we, who, what do we stand for? Where are we going? How are we going about it? Um, I was still responsible for, I guess the overlooking of the financial elements of the business.

You know, what are the numbers look like, what should they look like, why should they look like that? All that kind of stuff. Um, so definitely, um, looking after those elements there. I would spend a lot of my time in advisory with clients. So, you know, talking about how their businesses are progressing or what they're looking to achieve.

Uh, I'd be involved heavily in HR, um, you know, team-based conversations, and also then a lot of leadership group conversations. So, we have a leadership group. Kind of level in a, in a, in a business and they're theoretically responsible for a lot elements of the business. I would say before I took this time off.

Um, I was probably more engaged than maybe I should have been on some things, but less engaged on things that maybe I should have been on other things. So it was still a busy Kind of set up and then outside of that, there's all the other things that kind of come when you know, opportunities come your way around, you know, technology and assessing what tech should we be using or, um, I'd spend a lot of time in leads and growth.

Who are we taking on? Why are we taking on? How do we go about doing that? All those kind of things. So, um. What I probably found is I spent a lot more time thinking and talking about stuff than actually doing stuff, which depending on where you're at, it's good or bad.

[00:08:37] Meryl: And out of interest, what were the things you were spending more time on or potentially too much time and what were the things you were spending not enough time on?

[00:08:43] Andrew: Way too much time in meetings talking about things that did not matter. And I, and I say that, I say that respectfully and politely to our broad team, but um, one of the things that we had struggled with, with implementing a leadership kind of team like we had, which was probably. theoretically earlier than you needed to until I realized that I had this kid and I wanted to take time off.

And that was probably perfect timing. Um, but what it meant is you had a lot of people that wanted to be involved in a lot of decision making or be kept in the loop, you know, whether you use the kind of the RACI kind of element, you know, responsible, um, uh, whatever, I can't even remember what that RACI stands for, R A C I kind of element, or whether you just go, hey, simply they want to know.

So we, I found myself. Spending a lot of time making sure people were happy about what we were doing. And I think some of that was like the transition from being, you know, the sole business owner to having other people in equity and other people in responsible going, okay, cool. I really need to make sure that I'm, I'm treading carefully and everyone's involved and everyone's included and, and make sure everything's good.

But sometimes I reckon I found myself. in way too many conversations about stuff that we could have dealt with in a more efficient manner if we'd approached it. But, uh, I'd also never personally been in that position before too. So I was kind of making it up as I was going.

[00:10:01] Meryl: And so what's it going to look like when, when you head back?

[00:10:03] Andrew: I mean, I've got a pretty decent understanding of what that will look like, but at the same time, once you step into it, it, it will change. Um, but the idea effectively is I'll play the role of the founder, right? So the founder, the person who understands where we're heading, where we've been, and what we're trying to achieve.

The vision and the mission and the values will still be a really core part of what I'm responsible for and communicating that both internally and externally. Um, and I'll also be responsible for growth. So, who do we take on? How do we take on? You know, how do we, you know, develop, um, the, the access to the potential clients that we want to work with as opposed to just taking on anybody that comes through.

And then the last element will be leadership support. So, as the team are leading and running their elements of the business, how do I make sure that I'm supporting them, encouraging them, and empowering them, but am I allowed to swear on this podcast? Yeah. Go for it. Getting the fuck out of their way. Like, and that, and it's, and like, I use that, I use.

I use the F bomb very specifically there is that it needs to be a violent recognition of you have to get out of their way. Because if I come back and it's like, Oh, hold on. Let me have a look at this. Oh, I'll do that for you. Or you know, you should do this. All of a sudden, I'm not actually releasing that, that thing.

So the things that I talked about what I used to do that I'm not doing now is I'm not really doing any client based conversation, which is a, uh, a. thing I love and potentially a risk because it's a, it's a good, you know, good money winner. Andrew's really good at delivering that stuff. Clients really appreciate that.

They might really want to work with me. So, the adjustment to working with someone else will be different. Um, I'm also not going to be involved in over, overlooking the finance side of the business, which to be honest, I probably should have let go a while ago. Uh, but being an accountant, um, by background, it's really hard to let go of something that you know really well.

So, I'm not going to be involved in that. HR, the majority of it won't be involved in that. Supporting the leaders to deliver that, but won't be involved in those kind of things there too. Um, and then just a bunch of the other operational stuff that happens. Unless it involves growth based opportunities, uh, and growth can be both for clients but also for us as individuals.

So the learning and development, how do we want to grow and that kind of element. Unless it involves that, I'm just going to be, um, supporting the team. and encouraging them and giving them some feedback, um, and allowing them to go on their way.  

[00:12:22] Meryl: I can hear some similarities between what you're talking about and my own experience.

I stepped out as CEO of B Ninjas in December of 2021 and some of those things like around hiring, so having people join the team where I haven't been involved in any of the recruitment process or even given the green light, I found that hard because... My, part of my role was team culture as well. And so who you bring into the team is critical.

One, one bad egg or someone that doesn't align with the culture can change everything. So that was letting go of that was something I found hard. Our finances, I've mostly let go of that, but I still haven't quite. And sometimes I found myself going back into Slack and we have a weekly debtors report. I mean, most people are on occurring first of the month, but there's still one-off projects.

So I just like to know. If someone's not paying us, I want to know, but really, I probably should have let that go a long time ago. There's other people taking care of that.

[00:13:19] Andrew: But for me, that's the idea of like, well, look, currently, and I say currently because I'm aware that that would change and very open to change, but currently, I am still the major shareholder and I still have a responsibility as a director.

Um, so there are things that I need to be aware of. So, yeah. Uh, what I'm trying to work on as I come back will be how do I, how do I ensure that I'm informed in a timely manner. Mm hmm. Because if I find stuff out that I haven't been told, that's where I'll lose my shit. That's where I'll get stressed.

That's where I'll start getting back in and in and in. So how do I ensure that in a timely manner, I'm aware of things that I care about, but also that I should be caring about. that I start to realize that I just need to let it go. Like, literally, I'm about to get a little tattoo on my arm that says, let it go.

Not because I like Disney, although it is the 10 year, 10 year this year of Disney, of, um, of Frozen, sorry. Um, but just a reminder of you just, just gotta let it go. That's okay. Like, the more you trust them, the more they'll show their true colors. And hopefully those true colors are beautiful and amazing.

And if they're not, you'll, you'll be able to call it pretty quickly because you've given the chance to step up and they will recognize that they haven't.

[00:14:24] Meryl: I had to have a talk to myself this year, so I've been out of that role for almost a year and a half now. And then April is always a time for us where we might lose some clients in the U.

S. after we've done their end of financial year. And that always hurts because we've got pretty low churn. Good retention, but we always lose some around then. And so I found myself in April, again, as the majority shareholder, so it does impact my personal finances and the dividends of feeling like, Oh, I need to come back in.

I'm putting my hand up. I can help do some projects here, but, but I realized I didn't have the context and the detail anymore to be that helpful. So I was getting in the way and then I had to realize I should have in hindsight, I was not really adding value. I think it was me coming to save the day and really I shouldn't have done anything.

The team knew what they needed to do. It was just a matter of following the plan and

[00:15:16] Andrew: executing. I mean, we have a similar thing like it's, it's, it's when like we, we, we had it, you know, 30 June, July, you know, Australian financial year end, our clients are kind of on those rolling packages kind of thing and, um, I would say that this last year we had more churn than we've ever had.

ever had. Um, and it was like all of a sudden you're like, oh, I need to get involved. I need to get involved. And I wasn't at the point where I was more removed that the team had a bit more understanding of it. But I think what it was and what I, how I approached that, you know, should those kind of things pop up, whether it's Um, and so, um, I'm to do I ensure that I'm creating a space for the right conversation by the right people as opposed to trying to insert my perspective and my will and my power to go, Hey, what the hell is going on here?

Why aren't you doing these things that you're supposed to be doing? Um, because I know that I can do that. I know that I can absolutely be like, this is not right. You need to do it this way, do it this way. And then people push back and don't do it because they don't like being told what to do.

And because of that, it was difficult for them to show an accurate gross profit and net profit figure when they were presenting their financials to get the loan. This was mainly because of the lumpy stock purchases. Moving over to A2X

[00:17:52] Andrew: Back in the day, oh golly. So I was a young whippersnapper. I was 26 years old and I was fed up with accounting. I thought it was boring.

Um, I probably didn't think it was boring. I think I just almost thought it was pointless. As in, all I'm doing is putting a number in a box and someone doesn't go to jail because of that. Is that all there is? Or is there more to it? And as I started unpacking that, like probably a lot of people who might be listening to this already know this, like it's like, oh, duh, Andrew.

But I was like, well, hold on a second. Behind every number in a box is a business. And behind every business is a business owner. And that business owner has friends, and family, and community, and clients, and suppliers that they're impacting. So if I can... structure the way that I deliver my services to support in a relational way that business and those people, then I'll be able to have far more impact and there'll be a lot more benefit from it.

So, I was like, I think that's good. I then looked at where I was working at the time and said, can I work here? Clearly, it was a no. This is not an environment where I think that what I want to do is going to work. Do I look to go and join someone else to do that? Um, and I was not even thinking of starting my own thing.

I had no intentions, no plans. Didn't, I never thought I would do it. Didn't want, actually almost didn't want to. And then I sought out, um, some kind of mentoring and support from someone. And a couple of people said, I'll go and talk to this guy called Jason. Jason, his name is. So, I catch up with Jason for like a, he had a coffee.

I'm a 12 year old. So, I had hot chocolate and a ham cheese toasty probably. After that meeting, we walked away going, holy crap. Like. He's been looking for someone like me to start to do business with and I'm almost looking for someone like him to support me as I go do this. And within a month, um, I'd quit my job and we started Illuminate, um, back then.

So I had a, I had a business partner, Jason Pater is his name, and he had a small, uh, book of clients. I had, I think one, maybe two clients, so I had nothing, nothing to bring over. I didn't have, it wasn't like I was that senior accountant who's been, oh man, I've been running this bloody place. I'll piss off and everybody will follow me.

I didn't have any of that. Nothing. I just was keen. Uh, and what was beautiful is that Jason had, uh, a small book of clients, but a network that as soon as people realize, Oh, you've got capacity, work just kept going through. And then collaboratively, the way we approach relationships meant that we continued to grow.

He literally bankrolled me because we had, I had no savings. I had a, uh, you know, recently I had a mortgage and my wife was, uh, um, at the time a beauty therapist, uh, which means not exactly highly paid. So he bankrolled me for the first. what was going to be six months and it turned out to be six weeks and then the business had funded myself by that point, which is pretty crazy.

[00:20:30] Meryl: And so what was his background? Was he more experienced than you and a little bit older and he was looking for someone young and keen to handle a lot of the work?

[00:20:39] Andrew: A little bit like that. I mean, he wasn't necessarily way older. He was only in his mid thirties. Okay. And I was in... So, he was 10 years older than me.

So, I was 26. He was 36. Um, he had, um, already done a lot of the stuff that I was about to go and do in terms of he'd been a partner in like a few years beforehand in an accounting firm, decided to pursue some more kind of quasi management. Accounting, CFO, board level style roles where he had like four or five clients he looked after.

And then he had, like I said, a small pass of like compliance base clients that he kind of looked after as a result of relationships he's driven over the time. But, he had a, he has a, a great skill set in. really embedding himself within a business to understand what they need to do, helping them to build that out and then getting out of the way so they can bring in the actual employees to look after it.

And then he effectively sits at like a, uh, almost a board level consulting level and kind of, you know, pops in every month, every quarter, you know, gets a phone call a couple times a year and kind of works with them on projects from time to time. So he had that. So what he was looking at me was like, Oh, great.

You can look after the stuff that I don't want to do, which was compliance. And what I went was like, holy shit, I'll get paid a few hundred bucks an hour to do this work now instead of the measly money I was on. That was literally, literally my decision. So I hadn't, didn't have any planning. I didn't, I would do this brand.

I was just, I wanted to make more impact and I knew I could get paid more money. Great. That sounds like a good plan.

[00:22:01] Meryl: Let's do it. And so where did things evolve over the next couple of years? So it sounds like within six weeks, you'd hit the ground running, you've got some clients. Where did that go in the next couple of years?

[00:22:12] Andrew: Yeah, it was interesting. So Jason and I ran Illuminate together for probably the first, let's call it four years. So it's about four years that we kind of did that together. We kept kind of growing, winning work. We started like we're early in the days with Xero. And if you kind of remember the days of Xero back here in Australia, when you'd be like, Oh, I'm using Xero.

And all of a sudden a million clients want to be yours because they're like, well, my accountant doesn't know Xero and I want to use it. So we grew quite quickly. Quickly because we had embraced the cloud. Um, and we would literally have people walk up our stairs at our office cuz they saw a zero sticker on the front window and thought that we were zero.

Oh, I use zero. Can you do my thing? So we kept growing really fast. We put on a few team members. Funnily enough, second and third ever employees still work here with us. Um, so one of them just celebrated their 10 years. And the other one actually just returned to work with us a month ago. Um, which is pretty cool.

So we had a few employees and we kind of ran from there. Like we didn't, even at that point, we didn't really have a plan. Which is such a, like, reflection wise for me is like, man, like, where we are now versus where we were then, we were just kind of running off what we felt was right. This feels right.

This looks good. This tastes fine. Let's do this. Let's do that. So we were just like every other suburban accounting firm, but we maybe had a bit more personality. We maybe were a bit more relational and caring and how we approach things and we had fully embraced Cloud based technology.

[00:23:34] Meryl: And so I believe at some point, Jason left the business and you became the sole owner of Illuminate.

I'd love to hear about that story and who brought it up. I want to get into all the details.

[00:23:46] Andrew: Honestly, it's such a crazy thing to think about and reflect on. So um, as. every business owner, business partners do is you have conflict. Um, and ours was a relatively healthy conflict. Jason was challenging me on what it means to be a mature adult.

Um, what it means to be a business owner to make decisions. And I was probably challenging him on what it means to be a more innovative business owner. What it means to, you know, approach things differently and kind of, you know, think outside the box on certain things. That was going well. Like we, we had our moments, but we were going relatively well.

Um, but Jason doing what Jason does and getting involved in, you know, large scale clients and projects and those things. A couple of projects kind of came his way and one in particular he got heavily, heavily involved in. So him and a group of others were doing like effectively a development with like marina berths.

Um, side note, if you want to make money, don't sell houses. sell boat berths. You're literally selling the water underneath it. It's crazy. So he got involved in that and it went crazy gangbusters and he was loving it. He was loving it. He was enjoying it because not only was it that business, but that business had a really strong impact element connected to it.

You could almost label it kind of like a social enterprise because you'd look at what they were doing and decisions they were making with the money that they were making. And you were like, you guys are insane. Why are you giving all that away? So. He all of a sudden was spending more time there and he wanted to spend more time.

And we had this conversation around where Illuminate was at. You know, we were four years in. We were growing and I needed him. So it's like, well, I kind of need you here. Like if, if you, if you want to be here, I need you to be here. And then we kind of workshopped. Oh, well, what if you're just here, say, part time?

Let's just say you work two days a week. And we're like, oh, that could work. But like, if you're working two days a week. You're still going to get emails, you're still going to get phone calls, you're going to rock up on the Tuesday to 17, 000 Slack messages because everyone's going to behave like you're always here regardless.

And I don't personally have a huge amount that I can kind of pick up to kind of cover that. And so we kind of workshopped those through and I think we came to the decision of, um, I think that he needs to be fully in to this new business and we, we mutually agreed. So that means he can't be fully into Illuminate and where we're at right now, we need that full focus.

So we took a day, um, where we got a couple of consultants in to effectively create the conversation so we can decide how we might transition this thing. Um, and I had booked to go camping for a couple of nights, um, afterwards so I could just, you know, debrief, contemplate, and think about. What we talked about so then I can kind of start making decisions.

And it turns out by 2 p. m. that afternoon we had handshake and agreement on a price on a time frame on everything and I reckon I went and polished off a bottle of whiskey that night to be like, what the fuck have I just done? I now, I've just, I now fully own a business. I have a bunch of debt because I'm paying him half of what we've done and we've grown a pretty decent book.

I think it was a, I think I owed him like 300 grand at that point in time in like a few years of growing a business and I was like, man, I don't have that money. And now I'm, but now also this is my business, not our business. And that was a weird concept to have because I really enjoy doing things collaboratively with people.

And all of a sudden, I didn't necessarily have that collaborator anymore either.

[00:27:05] Meryl: I'm impressed with the 2 p.m. handshake agreement. That is fast. Do you think that related to having consultants in the room or was it because it wasn't as though one of you was just hating working with the other one? It was that he had a clear option of something else to do that he loved and you were okay taking on that responsibility of being the sole founder.

[00:27:25] Andrew: I think what it is, is like he, he, he's not a greedy man. So, he wasn't looking to try and get paid 120% of what it's worth and I've invested all this. You know, you know, when you hear those kind of partnership breakups and everyone's fighting and at the same time, I recognize. And I'm comfortable to take risk on things that I think will work.

So, whilst I might have looked at that and gone, Jeez, that's a lot of money. How are you going to afford that? I was like, well, I now have ultimate decision making power on these things. There's these things that I might want to do that collaboratively we've agreed not to that now I can do. And I believe in the future of where this business is going.

And as a result, I'm willing to take that. Like, to be honest, we probably could have had the handshake agreement by 10. Um, the first consultant we had kind of worked through a bunch of stuff in the afternoon consultant, which just came right to it. And literally within an hour of that, that guy kind of, you know, getting us to have a conversation was like, what is the number?

Write it on the board. What is the timeframe? Bang, bang, bang. And, and to just to show you the, the level of generosity I think Jason had on the buyout. It was, he said, I'll let you can, don't worry about going to a bank. I'll be your bank. It's interest. It's interest free. It's free. Pay me off over X number of years.

And I was like, okay. Oh, wow, like it was. So I think, I look at that and I go, like his generosity encouraged me to take further risks. But he knew at the same time he didn't need all that other stuff. He had plenty of stuff going on in his world. What, what benefit is there from getting an extra... 50 grand, literally, it would have created conflict and made it worse and lawyers would have won.

[00:29:03] Meryl: Yeah. That's an incredible story. And so listeners of the podcast will hear my business breakup story before listening to Andrew's, but mine was a little different. And then. there wasn't so it was a conversation between two founders who weren't happy working together and we didn't bring the consultants in maybe we should have in hindsight and so it took us a lot longer to figure out how do we actually split this up how to what do we agree on what's the time frame and all of that and I was lucky I had a my original co founder Ben was a was a great guy and an honest guy and so it took us some time to figure that out.

But he, I ended up buying him out, same thing, big risk with a business that's been around for a little while to buy out half of it. So I took a risk like that too and then he stuck around and helped me during a transition period. So I was lucky with how that went.

[00:29:54] Andrew: Which is funny like on the business buyout element like you look at valuing businesses like ours as well and theoretically an internal buyout depending on where you're at.

If you're in growth stage and you're spending a truckload of money and you're not making any nearest. anywhere near as much profit as you would be if you'd matured, well, is it actually worth what it is? Because externally, someone might just come by your clients and pay you a certain, you know, dollar per dollar of clients and you go, actually, I'd get more externally.

But then the person who's leaving goes, well, I want that kind of value because I've... driven that value. And I know that because I'm going through some of those conversations with my team is like, how do we balance the fact that there is immense value here, but you might not be getting it today. It might take a year or two before you actually get it, but you're going to get five times that value now.

[00:30:37] Meryl: That's interesting. And I'm looking forward to diving into that too because that's being on both sides of buying part of the business from someone else and then also allowing someone else to buy in. So, let's come back to that. Is there anything else about that transition with. Transcribed with Jason or any lessons learned about business partnerships generally, that you think would be useful for accountants listening to this.

If they're starting a partnership with somebody or they're in one and maybe it's not going as well as they'd hoped.

[00:31:05] Andrew: Yeah, absolutely. So, first things start with the end in mind. What are you actually trying to achieve here? Is this a, let's build a business and sell it? Is this a, I'm going to be here for the next 30 years?

You know, is, what do you want your role to look like as you progress through that? So have a really clear understanding and ensure you're aligned with that. Because Jason and I didn't do that in the early days. And whilst we kind of bluffed it and still did a good job, realistically, he was looking at me to build this and he would sit on the outside and just feed clients in.

I was thinking that we were building it together and he was going to be more involved in that. And that's where some of our conflict came because we didn't clearly articulate what we wanted from the beginning, which means we then didn't respect what each one wanted when it got to the point where there was maybe some challenges, right?

It wasn't, it wasn't like I'd be like, Oh, you never told me that if he actually told me that. So you got nothing to kind of go back on. So that's really, really interesting. I would absolutely be documenting down in the early days, having the conversation, writing it, you know, put it in your shareholder agreement, you know, or just literally have like a you know, a mission statement that is like, this is why we're starting this business and sign the damn thing, put it in a draw.

So, you can pull it out five years later when you're having some challenges to say, is this still what we're reflecting or do we need to revisit that? So, I think that's really important. Um, and then understanding roles and responsibilities because I think when you've got multiple business owners. You are financially benefited from the performance of the business and sometimes it's hard for you not to be involved in everything.

Who's going to be looking after the technology? Who's going to be looking after training the staff? Who's going to be looking after new clients? Who's going to look after marketing? Who's going to find it? You look at all those kind of things and when you've got multiple business partners, sometimes you find yourself collaboratively having to talk about it all together and it takes forever and you get into arguments, um, and you don't actually move things at the pace that you want to.

So, uh, conversely, you have some potential challenges when it's just you and you have to do it all yourself. And then you're, you know, in a spot of bother and all of a sudden, um, things aren't looking so good.

[00:33:04] Meryl: So, Andrew, before we move on to the topic of equity, I'm interested in how that transition with Jason leaving went in terms of your team and clients.

[00:33:13] Andrew: So we had a pretty small team then. I think we had like three or four team members and Jason, because of his role, wasn't in the office a huge amount. Um, but when he was, it was valuable and important. So the transition for the team probably wasn't, uh, a massive thing. They were already spending majority of their time with me.

I was probably leading the dynamic of like the office environment and, and those bits and pieces. And then, uh, we also were quite young as well. Like I was only like, I think I was not even 30 at the time that that happened. So they were all around my age, if not a little bit younger. I think one was maybe older, dynamically.

That was all fine. Uh, client-wise. Overall, I'd say it was positive. There was absolutely relationships that Jason had had for like 15 years of clients that joined us that... We had to juggle for a bit. So, one of our largest clients, um, I know, uh, we had a really good relationship with their internal accountant.

Really good relationship to the point where she called me up one day and said, Andrew, you need to catch up with this guy, a business owner, um, because he was talking some things which make me think that I don't get to work with you anymore and I want to keep working with you. And that was great because it meant that we were able to get in the front foot.

Oh, great. Let's work back on this and, and build those relationships. So, that was pretty good. One of the things I did pretty much immediately and it would have been within a month or so was hiring in a senior accountant slash manager and recognizing that, well, hey, if now it's just me and we have this scale of a business, I need someone to kind of look after the actual...

Um, you know, the engine room of the business, the production side, they're getting the work done element so that I can do the, what are we doing as a business. So that's where I brought in Mick who is still in, um, that was similar role today, still works with us and does a great job. And that was really important because he had a great personality, really good with clients and we were able to introduce that as like a, another, you know, kind of, you know, Just another element of what we do.

So it's all great. It's not just Andrew. There are more people here. And I think that was important because the transition from someone who's had a relationship for so long, you got to hand it over well. And even though I knew, I knew all of those clients because I've been working with them and looking after them for the last three or four years, but I wasn't the go to person all the time.

So Jason kind of hung around the fringes for probably a good

It's probably only been the last maybe three or four years that we haven't, um, had really anything to do with him other than I'll just give him a buzz every now and then and kind of chat about stuff that's going on in the world and, and if I need a bit of guidance or support. Um, but that was really helpful because it meant that was like, okay, cool, hey, this client has got this thing, what do you reckon?

And he'll be able to support or he'll go, hey, I just spoke to this client, um, I'm going to flick it your way so you guys can look after that. He was very much, I'm not doing compliance at all. I'm not doing compliance at all. I'm happy to do a little bit here and there but that's that like in terms of advisory or client stuff and that's it.

[00:36:19] Meryl Outro: Wow, what an epic conversation with Andrew. Some of the key takeaways for me around partnerships, having been through a partnership buyout myself. I was impressed with the way that Andrew and his business partner Jason were able to agree on the key terms of the buyout in an afternoon. That sounds very fast from my perspective and using two different consultants sounds like it was a big help there.

Andrew also mentioned that he took on I think it was something like 300, 000 of debt as part of this buyout and he was grateful that Jason provided an interest free loan, which helped. I think business is all about being rewarded for taking risks and taking smart risks. So good on you, Andrew, for backing yourself there.

I was also really interested to hear about Andrew stepping away from Illuminate and taking four months of paternity leave and what he needed to do to get things in place to take that leave. Thank you. Thank you. Thank you. Also how he's thinking about defining his role when he returns and that he's going to be focused on their vision, mission, and values, spending time really understanding their ideal client and making sure that they don't stray away from that and work with clients that don't fit that criteria and then mentoring and supporting the leadership team.

And they're getting out of their way so they can do their thing. If you'd like to find out more about Andrew Illuminate or his podcast, then we have links in the show notes and if you'd like to get in touch with us directly or find out more about the podcast, head on over to lifestyleaccountant. co. A small ask from me, if you've been enjoying the podcast, then I'd really appreciate it if you would leave a rating or review on iTunes.

Apparently, this can really help to increase the reach of the podcast. In the next episode, we have Andrew coming back to talk about how he's built his leadership team and the different way he's provided equity for team members within the leadership team.