Maximizing Value in Your Niche

Today, our guest is Chris Farmand. Chris and I actually met a month ago or so, and had a great conversation, and thought it’d be a lot of fun to get on the show. Chris is founder and CEO of Small Batch Standard. Small Batch Standard is a, I guess, I’ll let him define what it is, but what they do is they work with craft breweries, distilleries, cider cideries. I think that might be the way to say it—he’ll tell me if I’m wrong. Alright. It is cideries. and overall, you know, helping those businesses to be more profitable. Chris, welcome to The Unique CPA.

Thank you, Randy. Happy to be here.

Well, happy to have you. So Small Batch Standard, not a typical CPA firm name. Do you consider yourself a CPA firm? Or how do you define Small Batch Standard?

Yeah. So great question. We are a financial agency for craft. 

Okay. 

And what that means is we are a group of CPAs, tax advisors, data analysis, accountants, all working toward one goal, which is to generate more profit for our brewery, distillery, craft manufacturing customers. And in the famous words of my buddy, and I think your buddy too, Chad Davis, we’re the last stop for a brewery or a craft manufacturer. When I heard him define their firm, “LiveCA is the last stop,” I was like, we’re the last stop too, buddy. That’s a great way to put it.

So, actually, and I do know Chad Davis and we are going to be getting him on the show at some point. He has not been on yet, but, he has committed. The last I talked to him, he needed to get through, I think, last month. I think in Canada, it’s April 30th, their tax deadline. I think I’m right there. So I need to reach back out. But can you define what he means by “last stop” or what you mean by “last stop?”

Yeah. So every sales call I get into, every discovery call that I get into, it is always begun with—most of the time—it’s begun with, hey, we love our CPA, we love our accountant, but they don’t understand our industry. They don’t know what the information—they can do our taxes, they do an amazing job. But when it comes to the advisory and the consulting and the planning, they just don’t know the industry. 

So we view ourselves as the last stop. They come to us and we’re able to do the outsourced accounting, all the tax compliance, year-end tax filing, and add this level of consulting and advisory that doesn’t really exist. I was telling someone the other day, I wish we had competition. I wish we had someone with the level of benchmarks and the level of data we have, because we’re blazing so far ahead that all we have is our customers to tell us if it works or it doesn’t work, it’s working or not working, or successful or unsuccessful. And, you know, every good industry, every good disruptor needs competition to up their game and and continue to to do it. 

So yeah, we have financial benchmarks that I am confident in saying nobody else has in the industry, and we share those with our customers. We also share it with a one-off assessment if people want to honeymoon with us and kinda see how we operate, before they go all-in. And it is really eye opening. I call it a shot of truth serum to their business.

Alright. Well let’s talk about the journey. Did you start out to become this niche? I mean, you are a niche industry, I mean, you could niche, you know, you could be niche service in this area. But is that where it was from the start, or how did it evolve that the brewing industry was where you went?

Yeah. Good question. I began October 1st 2010 as my name on the door, with the tagline “Premier Accounting Technology Firm of North Florida.”

Okay. 

That was a Monday, and on Thursday, I had a full blown panic attack. I almost called 911.

Really? Alright!

Yeah. I was sitting in an office by myself, and I realized that technology is just a tool. And looking back on it, I could have built a very successful practice on consulting on various technologies, implementation, troubleshooting, etc., etc., but it wasn’t a differentiator. It wasn’t the differentiator because in one year, I was having the Ron Bakers of the world and the Tim Williams of the world talk to me about value pricing and positioning on purpose and niching.

Right.

And then the other area, I was thinking I’ve gotta be successful. And so at the time we were working with a craft brewery, it was before this last decade of boom, right? It was right at the beginning of the last decade of boom. I saw the complexities. I saw the—I really saw the profit in the taproom. 

Yep. Oh, yeah.

I saw how much money they were making in their taproom by making it in the back and selling it in the front. Then I started just taking a look at the overall business and saying, who’s helping them? And this is complicated. Most of our businesses and most businesses you work with or any anybody works with one to two businesses under one roof, a brewery is 5.

Okay.

You have manufacturing, you have inventory, you have retail, wholesale. If you self distribute, you have logistics. Started looking at the profile—it was 2 dudes. And I’m like, there’s a major gap here. There’s a major gap here. Started showing up to conferences, started showing up to festivals, and asking, who is doing this stuff for you guys? This is complicated stuff. And I wasn’t waving, like, a fear mongering flag. I’d I was genuinely interested in who’s helping them? Crickets. You know? Just crickets. 

At the time, government agencies didn’t even know what to do with these. They knew they had excise requirements and involvement, but they just they just, like, it was all a buddy, honor system. So we began, we just put our head down and began marketing. I didn’t realize it was going to get as big as it did, and we’ve kinda come full circle on craft and where we are today, but buddy, from 2012 to 2018, there was some record, I mean, there needs to be a decade case study done on what happened to craft manufacturers in that span of six to eight years.

Right. I assume you followed that, kind of that boom as well because there were so many opportunities out there. Did you have to control growth at all?

So we grew slow. We grew very, very slow. If there was one thing that I understood early on was pricing, and I was never going to price myself at the lower end of the accounting and the tax. And at the same time—go back to that ownership profile, they didn’t know they needed a, like, industry-specific CPA.They didn’t know what they didn’t know. So I was educating. I was doing the accounting. I was writing the marketing. I was doing the taxes. I was reviewing the taxes. I was doing it all for about eight years. And we worked with the better of the breweries that were just, you know, in this growth mode that they put their hands up, and they’re like, “We don’t know what we want, but we know what we have isn’t working, and you sound like you know what you’re doing, so just help us.”

Right. But did you have problems? Because you said that on the pricing—did you have problems showing them the value of why they were going to pay you more than Tom and Sally CPA firm down the road.

Yep. That wasn’t even a conversation at that point. Right? The value conversation has really only come about in the last three years. The ROI, the dollars and cents, the comfort knowing you have someone that has a viewpoint around the corner has only come into conversation and integrated into our sales process in the last three years. Before that, it was like, you’re dealing with someone who doesn’t know what they’re talking about, and we know we’re talking about—let us help you. And there was a lot of friction, right, because it was like, our lead investor or dad or uncle who put in a lot of money here, set us up with this CPA. How are we going to go break this relationship. 

So it was slow growth. It was calculated growth. I think between 2012 and 2018, we got up to, let’s say, 23 breweries, and have added 50-ish since 2018.

Alright. So you kinda did the hockey stick. 

Yep.

You know, and we did a similar thing because we had to set the stage with what we do with specialty tax because we had to educate on just at the beginning, there was so much—people didn’t even realize that and R&D tax credits were an opportunity. That’s what we started our firm in. So a lot of it was just educating that this is a real opportunity rather than that people with almost as a too good to be true type thing, and then once we educated on that and add other services, boom, we did the same thing. It was slow and controlled. And now it’s, we’re probably on that that path that you are, which is pretty cool.

Yeah.

Let me ask a question before we move on to some other stuff, but let me ask a question about when you saw that one client that was the brewery and you started to get intrigued and passionate, did you have a passion for craft beer before this? Okay. So this is—I usually try to talk about If you can turn your passion into your business, boy, that’s a huge win. So let’s talk about your history with craft beer then in general, you personally.

So it wasn’t actually with beer, but it was with fermentation.

Oh, okay. Alright.

Yep. So years before, I had been brewing my own kombucha at home, I’d been making my own sourdough. I recently reinvigorated my sourdough, my love for sourdough, and and it’s never it’s never been better, the stuff that I’m baking now. So never really a home brewer, but certainly drank it. Loved it. Respected it.

Yep.

And what drove me to the craft brewing industry really was the relationships. And this is going to sound really weird, but I was never successful working with the attorneys, with the doctors. Sure, I had that group of clients. It wasn’t fulfilling. So our core pillar is to establish and maintain deep, successful relationships. That’s our core value. A core mission, maybe? I forget which word.

It’s a core of some way or another.

Right. 

I’ll look on your website while we’re talking.

And I was getting that fulfillment by working with this ownership profile. And they were curious, I was curious, they were forgiving, I was learning very fast and evolving very fast. So it was just, it just worked. It was just amazing, and it remains amazing.

Yeah. Alright. So that passion, you can still see the passion there and the excitement, which means you’re doing what you love, which is important. Extremely important. And so let’s talk about a little bit deeper on niche, then. Because as a niche expert for this specific industry, which, you know, there isn’t a whole like you, like you said, out there, you’re setting the stage or you’re creating the KPIs or whatever that it is that you’re measuring. How does servicing a craft industry help you as a business then too, or how does it help your clients? Because I assume you can show this expertise, and it probably, at this point, because we’ve had this hockey stick growth right now, people know you’re the go to now. They know you know what you’re doing. So what are the benefits of concentrating on one or two industries, to you?

Yeah. So I mean, I’m a guy—I’m not sure if you can tell or not, but I’m a guy who’s rarely satisfied with the status quo and what I have.

Yeah. You need to smile more.

My sales coach said the same thing, and I’m working on it. I’m working on it! 

Alright. So go ahead. Sorry.

So I’m really never satisfied. And back in, you know, 2013, 2014, I said, okay. We got the debits and credits. We got the tax down. What’s next? I’m always looking for next. And realized that there were no benchmarks for the brewing industry. So we just began taking our dataset and our datasets were growing, let’s say, two to three breweries a year. Really, really controlled growth. Leaders in markets, and a good test model. And over time, It’s forced us to say, okay, in addition to having accountants, in addition to having tax people, we also need consultants. We need data analysis consultants who can crunch the numbers, who can meet with the clients—because I can’t show up a 70 meetings a quarter or a month.

Right.

I can’t. Not even close. So it’s really forced us to step up and create that business, right? Not the firm. Create the business that says, I trust these individuals to check and vet the benchmarks, to expand on them, to relay them, to communicate to our customers. And our consulting team is really what closes the deal 9 times out of 10. I mean, our tax team is on fire. Our accounting team is extremely strong. But it’s that access to the consulting team to say, “you told me my production labor was this much last month. Where did you get this number? We think you’re full of it.” And we’re like, here’s the data, here’s what we got. So it’s causing us to evolve and continue to stay on top of our game.

Yep. Your knowledge shows through, obviously. And let’s talk about what you just said there, the consulting team, because you don’t lead with tax and accounting. You lead with, hey, we’re going to help you increase your profit. In fact, you’re wearing a hat right now that says “profit” on it. You know, so let’s look at that from a mindset. Compliance is a necessary there, you know, your tax and accounting. And it’s always going to be important, but your whole—I am putting words in your mouth now, you can correct me—but your whole thing is let’s increase the value of business, the profitability of this business. Let’s make this business, I assume, even self sustaining, you know, that you talked about, there was these two partners, and they were trying to do everything in this brewery. And if they expand, they can’t do everything, just like you can’t be in 70 meetings a month. So from the consulting side, you know, you intentionally have led with that, right? And how does that work for you?

It’s funny. I would say 50% of our onboarding when they exit onboarding and they go into the full rotation, they meet their accountant, they meet their associate, they meet the team, they always ask the question, wait, so you guys are doing our taxes also? And we laid it out in the proposal call, we’ve laid it out in the engagement agreement, we laid it out all along, but they’re really so hungry for that. They’re hungry for that assessment, right?

Right.

Leading with the consulting has been good. It’s been good, but once again, it’s keeping us on our toes. It’s keeping us at the top of our game, because we have our standard benchmarks that we’ve identified drive the bottom line for a craft producer. And we can say without a doubt, right? It’s checking and vetting those numbers, and then going through and saying, we’ve seen this increase in let’s say, keg deposits, or keg leasing. There’s been a there’s been a shortage in aluminum, and keg leasing has just gone through the roof. Do we need to break this guy out? Do we need to start looking, is this really impacting the bottom line now? Versus, keg leasing in the past was just dropped in SG&A, we have a benchmark for SG&A once we pull out our biggest offenders, and we just kinda go from there. 

So leading with the consulting is good. It keeps us thinking. The IRS keeps the keeps the tax team on its toes, and changes in tax laws keeps the tax team on their toes. Accounting is what it is. It’s that consulting team that keeps reinventing—or not reinventing—polishing what we identify.

Alright. And then so let’s pivot here for a minute. Let’s go into, again, around niche, I guess the importance of niche, but from a marketing standpoint then, or a business development standpoint, because before we went live, we just talked about, you were just speaking at the Craft Brewers Conference in Nashville, Tennessee this last week, I think. And so that’s obviously where you can show your knowledge in that as well. So how does the niche and how do you go about with the marketing business development with your thought leadership, I guess?

Yeah. It’s a good question. Some people know this about me, some people don’t—prior to being an accountant, I was in improv.

Oh!

I did improv in college, did a little bit of stand up comedy, and then I immediately exited that career and went into governmental, not-for-profit auditing.

Oh, a perfect segue, obviously! That makes complete sense.

This was 2004, and it was a grim, it was a dark time for me, buddy. It was dark.

I couldn’t do it! Oh, man.

It was dark. So my outlet has always been writing—writing or speaking. Speaking opportunities have only afforded themselves, like I said, in the last three to four years. Right now, we’re in very high demand to speak. Prior to that, I would just write. And that’s how I gained most my notoriety in the industry was a a newsletter, and I recommend this for anybody trying to build a niche. Anybody trying to build, from day one, as we learned, we just gave the knowledge away. 

Yep. 

We have a benchmark? We gave it away. We gave it away. We gave it away. And we don’t have anything behind the curtain because we understand the gap between information and execution—the gap is massive. 

Yes. 

So if they’re hearing this from us, they’re going to say, alright. Well, if this guy’s giving this gold away, what’s behind the curtain? What can we get if we actually pay him? And that was very—that was a slow adoption for most breweries. It’s, what I say is, we need to get breweries in our SBS ecosystem. If you’re on our newsletter, in our ecosystem, it’s only a matter of time before you show up on a discovery call and say, what is this guy talking about? Who is this? 

I have a really unique way of writing, and the way I would speak, and it comes very naturally to me. Super easy to read, super relatable, and that has been our biggest lead gen. We built a course. We’ve done the online marketing. We’ve done the sponsorships. Those are all okay. When anybody says, hey, do you want to sponsor this? Do you want to do this? I was like, how can you just add 200 people to our email list, or two people to our email list, three people, because I know once they get into that queue, they’re going to start reading it. And we have all the funnels on our website, right? In 2017, I went deep into the, I thought I was going to retire off one online course. You remember when everyone was building online courses?

Oh, yeah. Yep. 

Click funnels, here I come, baby. What a joke. That whole industry is such a scam. Anyway, another podcast, bring me on and talk about online courses and scams and things.

We’ll do that next, alright!

So we did it all. My partner, Tom Miller, is in a brilliant online marketing—that’s how we met, doing, building online marketing stuff. And he really has just moved into this—he’s actually the CEO now. I’m no longer even the CEO of the company. I’m founder and principal advisor.

Okay. So then from a business development, is it all inbound? I mean, it’s pretty much coming to you from that newsletter, or obviously speaking events, or being on The Unique CPA podcast, obviously, will be a huge generator for you.

So everything you mentioned—and as of late, we’ve gotten a bunch of leads from—each state has a brewers guild, and that guild is tasked with events, festivals, legislation, stuff like that. Each of them have an executive director. Most of the executive directors know about us, or we’ve spoken at a lot of the state guilds, so they’re sending us a lot now. And that dude, that was a tough slug, bro, because back in 2015, it was, oh, I would have a warm lead from a board member to that ED, and they’d be like, “CPA, become an allied member and go to the back of the line, we’ll get to you in 2027.” 

Right. Right. Yep.

And I’m like, wait a minute, no, you can’t afford not to have us speak in the next six months, because half of your breweries are going to shut down. They’d be like, “Back of the line. Thank you.” It’s changed over now, and so we’re getting a lot of support from those.

Yeah. It’s building the reputation, sharing your knowledge, you know, giving away—that’s my mantra too, is share your knowledge. That’s what I do all the time. And it back to you, for sure, and exactly the reason you said, because what else is behind there? He’s giving all this away? What else is behind there? What else can they do? And So, yeah, I completely agree. We’re on the same page there.

I love it.

Alright. So, you know, niche practice, you can show the value of what you’re doing. You have this expertise. People know you do this. You’re not going to bill, you know, hey. I’m going to bill you at, you know, $200 an hour, and we’re coming in and we’re going to do this. You’ve come up with a pricing model. What is the pricing structure you use?

Yeah. So as I mentioned, back in 2010, I drank the value pricing book, hung out with the Verisage folks, hung out with Ron Baker and that whole crew. 

I was on a—just as a side note, sorry. I cut you off there. Two days ago, I was on a panel with Ed Kless, you know, Ron’s partner. He and I were talking about the—what was the panel? The importance of advisory? It wasn’t that, but there was something about advisory. So, okay, so just as a side note, you just mentioned Ron Baker and Verisage—Ed Kless is part of that. Boom, back to you.

Ed is a mind—I mean, he is a brainiac when it comes to that stuff. He’s really good.

Oh, at one point, I was just like, Ed, you just blew my mind.

Yeah. He’s a lot. He’s a lot, but he really, he knows his stuff.

Yep.

So I knew that I was never going to go by the hour again, and the value pricing made sense, but it didn’t really click until we have a niche. We had something to kind of hang the value on. So I haven’t billed by the hour in 12 years. I don’t I’ve never filled out a timesheet in in 12 years. 

Yes!

I’ve been profitable for 10 years, which is good. Where it becomes lethal is where you, we’re we’re now to the point where we can throttle up and throttle down demand, and then we can throttle up and throttle down demand pricing with that demand. So we’ve got the marketing, we’ve got the content down, we’ve got the drops. We’re currently on a 90 day wait list, and we’ve jumped our pricing up—we do everything based off of a client load score. We have a number of factors which we assign to a brewery. Those translate to dollars, the dollars translate to monthly retainer. And it’s all-in. It’s your accounting, it’s your taxes, year-end taxes, and then either a monthly or quarterly huddle. It also includes a monthly bench—”Compass Report,” we call it—and that Compass Report shows you where you benchmark. It’s a beautiful PDF we send them.

We come in typically at 3 to 5 times a standard CPA firm, I would say we come in. Here what I will say: If we’re taking regional business and we’re anywhere close to what they’re paying now, we immediately raise price. So we want to be at 2 to 3x regional firms per year. And it all hinges on the consulting, right? The benchmarks, the helping them see what’s around the corner. Is it perfect, is it a science? No. Do we have a conversation with our lowest paying customers each year? Absolutely. Do we help them transition to a more affordable solution? Absolutely, if they don’t want to, you know, come up. Because we have a lot of loyalty. That the hardest part of the year for me is when my CEO comes to me and is like, here’s the kill list. Are you ready? I’m like, I’m never ready. Are you kidding me?

No, I know. It’s tough but necessary.

It is necessary, and some say, whatever you want, just bring us up. We don’t want any disruption in what you guys do for us. Others are out the door, and we transition them, we transition them and everyone seems happy. We don’t—we should probably do a little follow-up. No, no we shouldn’t. Because we know exactly what’s happening, but we don’t want to—

—So I have a friend who, her, the way she says this is, I invite them to be successful elsewhere.

Yes. 

And I love that. But it sounds like you even help in the process of them being successful elsewhere. At least the the introduction maybe to someone else, is that the plan?

Absolutely.

Okay. So just a little bit more on pricing then. Is it one size fits all, or are you different for each client?

It’s all custom, and it’s based on an intake that they fill out, and on the discovery call. So there’s a range that they get that is calculated for the discovery call, and when I’m in that 30 minutes, if they ask about price, I’ll give them that range. But I’m also listening in that discovery call—do I need to tweak this up? Do I need to tweak this down? They said they’re in two states, but they’re, are they really in seven states? How many investors do they have? Do they have a board? How many people are going to show up to the monthly or quarterly huddles? So I’m listening for items where the pricing may get tweaked, pre-proposal, but it’s definitely not a one size fits all.

Okay. I assumed that. So alright. Well, I mean, I think that just from a niche standpoint in general gives us a lot of information that people can translate. You know, maybe their passion—you had a passion for fermentation, for breweries. You know, maybe they have a passion for, you know, restaurants. They can take that same knowledge that you just shared, and just, you know, transition to wherever their passion or their niche is. Any final thoughts on that whole discussion we just had before we wrap up with a couple things?

I would love to come back and just talk about niche, because, I’ll leave the listeners with this. The night before we launched the brewery business blueprint, I went to Tom, my now partner, and I said, look. I want to scrap this. I want to build the course. I’m going to build a course that we’re going to market to CPAs on how to build an edge. And he’s like, you haven’t built **** yet. Can I say that here? 

We’ll bleep it! It’s okay.

Okay. Because you haven’t built anything! And, well, he was joking. He’s like, we you need some more you need some more proof before you can build a—so I would I I’d love to come back, do a total deep dive into my thoughts on how to develop, build, market, execute a niche, because I have so many ideas.

Okay! We’re going to put in the outline together, and we’re going to schedule the next one, and we’re going to talk, because niche, I’m a huge passion talking about niche, and so that’d be a lot of fun. So, alright, we’ll do that. So before we close out, a question, and I may have told you this before. I think you’ve said you listened to the show, so you may know what’s coming. But from an outside of work standpoint, what are your passions, what do you enjoy doing, where do you have fun when you’re not helping the craft breweries, distilleries, or cideries?

Sure. So I have three children who take up a ton of my time. I do gym. I do swimming. We’re here in Florida. We do beach. We’re in North Carolina twice a year. We love hiking. It’s funny—you put my kids on a horse trail, and they will scream from the first five steps. But you send them five miles up a mountain, and they just fly. So whole family’s all about hiking and being out in nature. We do boating, really anything outdoors. And, so that’s what we do with our time off.

Active family. Alright, nice. And then if anybody wants to hear more or hear get more information about you, about the business, about niching, anything at all, where would they find more information?

So Small Batch Standard is the company name. The website is SBStandard.com. You can reach me there. I’m on LinkedIn. I’m on Instagram, even though I don’t do a whole lot social media wise on Instagram. But LinkedIn and the website are the two biggest places you can get more information about me and the business.

Alright. Well, awesome. Well, Chris, it was fun. A great knowledge you were able to share, and I appreciate you being on the show.

Thank you so much, Randy. I’ve been looking forward to this for weeks now.

Awesome. 

Thank you.