Everyone Wants To Be A Service Bureau

Baldeep: [00:00:00] All right. Welcome everyone to another episode of the Service Bureau Accelerator Podcast. I’m here with Ross, Daddy Ross, Uncle Ross, whatever the ladies in the group call.

Ross: Daddy and uncle.

Baldeep: Today, we have an interesting topic. Title of the podcast is Everyone Wants to be a Service Bureau. Sorry. Ross, if you want to dive into why we decided to name it this podcast and then we’ll go into the episode.

Ross: For sure. This is something we’ve heard a lot. Actually, I didn’t mention this to you Baldeep before actually, but I texted someone because she was in our program, she had some complications happening. And it was a long story short, she’s not like currently with us. And I sent her a text message. I was like, Hey, when are you going to jump back in and strap your service bureau again? And she’s, seems like everyone wants to be a service bureau these days.

And we definitely hear that a lot. And realistically, it’s because the reason why we also added sorry is because it is our fault why everyone wants to be a service bureau these days.

Back when we first launched this program 3, [00:01:00] 4 years ago, now at this point, no one really knew what a service bureau was. Pretty much no one knew what the service bureau was. When we started doing marketing, we started doing webinars. The biggest hurdle that we had to overcome was actually explaining to people what a service bureau is because no one understood it.

Everyone was paying fees that everyone saw those line items in their software on the bank product returns, but no one actually understood what a service bureau really is, what they actually do, and what that business model is. And so that was the breakthrough in the industry that happened when we came in; guns a blazing and just really started doing a lot of marketing and promoting and educating the industry on what a service bureau is.

There’s a lot of people in the industry that were making a lot of money for a long time off the backs of EROs who are growing their tax businesses and growing their businesses, but their taxpayers were the ones paying out all these fees that were really just going to the service bureau when all they did was provide the ER with a software license and that’s it.

And so [00:02:00] since then, obviously, with our program, with our marketing, with all of our members in the service bureau accelerated as well, it’s become a lot more popular. A lot more people are talking about it. A lot more people are discussing what it is to be a service bureau. A lot of conversations happen in groups that some people think they know what a service bureau is, but they still don’t quite know yet, and so the question gets brought up a lot because they hear about it more often.

And so just with that alone, depending on what groups you’re hanging out in, whether you’re on Facebook groups, different tax groups, and things like that, you’re going to hear it a lot more because it’s just a term that is more commonly known now, and it’s just getting bounced around a lot more often.

The other thing too, is the topic of everyone wanting to be a service bureau. So we’re going to break down a lot of reasons on this episode, but one of the most common things that we see is that not everyone wants to necessarily be a service bureau, they just want to stop paying those service bureau fees.

Baldeep: Just want that money.

Ross: Yeah, they just want the money

Baldeep: Right, cause when we went and educated the market on that, they’re now starting to look at that and saying, and it’s [00:03:00] what we train our service bureaus like, you can’t just slap your logo on a software and mark it up and expect to keep customers. That’s just not how it’s going to work.

And then the EROs start thinking and start looking, wait, why am I paying this $99 service bureau fee? Why am I paying this $60 service bureau fee? And the service bureau doesn’t really do anything for me, right? They’re not helping me with anything.

Ross: And I already paid for the software license, so what’s all this extra stuff?

Baldeep: Right. Or the other thing, you’ll see people do low ticket software or free software. And then the questions come up, how much are you charging the backend? Now there’s some companies that don’t charge a lot on the backend or anything at all additional. And there’s others that use that as a way to just try and mark up everything possible, so it’s really just understanding what kind of deal you’re getting into, which we’ll talk more about here soon as well.

But in that whole aspect of everyone wants to be a service, people always make that comment to us. I speak to people and they’re like, yeah, it seems like everyone wants to. It’s not true. A lot of the time, they just want the fee. And you know [00:04:00] what we see is then there’s people that go and set up a service bureau and really, they didn’t want to sell software, like you could tell they don’t want to sell software because the only office they have is their own.

Really, a lot of the time, just about the fee. We always look at it as we turn away a lot of business when we figure out, Oh, you really just want the fee yourself? No, our program is really designed to help you sell software. If that’s not something you want to do, it’s probably not a good fit. If you want just the fee, yeah, we could set you up with software and you could keep all the fees, like we don’t care.

We’ll look at it that way, but we still see plenty of EROs that are not interested in being a service bureau at all. And they still go through our stuff, just really trying to just get the fee.

Ross: This is another thing too that I hear a lot with everyone wants to be a service bureau, we actually hear it even from our own group as well, where a lot of people; they’ll join the service bureau accelerator and we’re, maybe we’re on like a group coaching call or something like that, or we’re just doing like a one on one extra little kind of strategy call with someone.

And we’ll get that every now and then. And I always come back to, I’m [00:05:00] like, it’s always breaking down why it’s not true, but it always starts with the reason why you think that is because it’s just what you’re hearing more. Especially with our members in our group, there’s so many positives of the group, there’s always some negatives.

One of the negatives is that you’re seeing all these other people that are service bureaus, and now you’re in that echo chamber and you’re thinking that everyone’s a service bureau because you’re spending more and more time with a bunch of service bureaus. So you’re obviously going to think that more people are being service bureaus these days, but it’s just your perception is changing based on your environment, and that’s it, that’s the only real difference. At the end of the day, there are still hundreds of thousands of EROs.

As part of our program, we actually launched a new upgrade for a lot of our members for them to basically a couple of clicks they can launch ads to sell their software. And so we did a couple of calls on that. It’s going extremely well. But it’s like proof and point where our members are getting leads for five bucks and their EROs who are looking to buy software. And they can just run this marketing all day long. We have hundreds of leads coming [00:06:00] in through into our service bureaus that are running advertisements for tax software. And they’re getting leads for dirt cheap because there’s so many people that are still looking for software. And there’s so much, so many EROs that are out there.

And there’s a lot of EROs that are still out there today under service bureaus who are jacking up the fees and they’re looking for alternatives. So there’s still so much opportunity. Yes, the industry has definitely shifted a little bit. Obviously, that’s why we have, sorry, at the end of this title.

For sure, there’s more people that are service bureaus today than there were probably 4 years ago. And a lot of that has to do with us and how much we’ve really blown up this kind of what used to be a very hush, quiet part of the tax industry, and we’ve just really made it public. So now it’s a lot more open for discussion.

But again, it just really boils down to, do you really want to be a service bureau? Do you really want to sell tax software? Is that really where you want to focus? Or do you want to continue working on your tax business and acquiring more tax customers and growing your team, recruiting more preparers, opening up that second or [00:07:00] third office, right?

There’s a lot of people that are in the industry where they’re like selling software is cool, but I’m still focused on my business, and that’s the only thing that I want to focus on. And I think for the most part, for a lot of people, that is a better choice. As long as they have a good software deal, keep focusing on your business.

We also see a lot of people who want to be a service bureau because they heard about a service bureau, but they’re like second year in the industry. They only do 50 returns and they’re like, Oh, they think it’s a good thing to go and be a service bureau because it’s the next level.

Being a service bureau is about, the first word is service. What kind of service do you offer your customers? And that’s a big thing that we teach. It’s not just selling software and tech support. What else can you provide? That’s a value that you can actually serve your customers.

And if you’re really brand new in the industry, you may struggle to understand the industry, to understand what problems EROs have.

Baldeep: There’s exceptions to the rule that we have,

Ross: For sure, there’s exceptions.

Baldeep: Shalimar,

Ross: Yeah. Shalimar crushes it. Yeah.

Baldeep: And her whole thing, like she didn’t have a huge office. So there’s [00:08:00] exceptions to the rule. It’s just, know yourself, right? Know where your skillset lies.

Ross: Yeah. I was going to make an example on that where it’s, if you’ve never had a physical office, if you’ve never really had a team, it’s going to be a longer learning curve for you to understand, what are the pain points and the problems of that type of an ERO that has hundreds of bank products and multi-office location, your ability to go in and talk to them about their business and how you can serve them when you never done more than 50 returns in a season yourself, there’s going to be that disconnect.

Now you can learn it over time, of course, and that’s a lot that we teach about is how to find those things, how to find those pain points, and how to be able to solve them, but you’re going to be a little bit on the back foot. But that doesn’t mean you still can’t be successful at it. If it was really something that you want to do, then, hey, go for it, but just understand that not everyone wants to be a service bureau.

And a lot of people have started assuming that everyone does because they hear it more often. So a lot of people say, oh, I should add that as another thing that I can sell. And so now we see, not only do we see a lot of people talking about service bureaus, [00:09:00] but now we see more and more people.

For anyone who’s watching this in video format, I’m doing the rabbit ears who are selling service bureaus. And I’m doing the rabbit ears because

Baldeep: It’s air quotes for the American.

Ross: Yeah. Air quotes, rabbit ears, whatever. Selling service bureaus, when they’re not actually even selling a real service bureau. And that’s a whole other side is, what exactly is a service bureau?

We’ve seen all over the place from a service bureau or calling someone a service bureau. There’s even a new vernacular that we created internally, which is a sub-service bureau because we simply needed a term to call our members in service bureau accelerator. They are our service bureaus. When someone joins our program, we set them up, we give them a service bureau. But they also have the ability to sell a service bureau to someone else, to have their own customer as a service bureau.

And so we needed a term to call that so that we knew, is it a service bureau like our customer? Or is it a service bureau under our [00:10:00] customer, therefore a subservice bureau? And I think you said, that was one of our podcasts.

Baldeep: There was a comment on our YouTube video. And the question, I actually have it open from Grant. Shout out to Grant. Can you go into an episode of the difference between co-branding and sub-service bureau or software reseller? And I was like, I don’t know if this is a whole topic, but let me just break it down. I just responded back in the comment.

But Grant, I’ll reply back to that and let you know to check out this video. So realistically, there’s a lot of confusion with the terminology. The way we look at it as a subservice bureau in our eyes is just, Hey, it’s just a service bureau that essentially gets their service bureau from another service bureau. There’s nothing wrong with that.

There’s nothing wrong with where you get your service bureau from. It could be from direct from the software, which typically we had episodes on how those deals work. And realistically, we speak to a lot of transmitters. If you’re not doing five or 10,000 products, they don’t even really consider you a service bureau. It’s more of a headache on their support.

Ross: [00:11:00] Just the terminology plug transmitter is like the actual software provider. Yeah.

Baldeep: But either which way, they’ll sell it to you. Some actually won’t, some will require minimums or won’t let you do certain things until you hit minimums. But either which way, it’s usually not the best deal. But it doesn’t matter, right?

You’ll get a better deal typically from a provider like us, or maybe another competitor that could give you a deal like that. Not everyone will, and we can talk about that later too.

So essentially, even if you’re a sub-service bureau, technically, in the way we would phrase it, that doesn’t mean you’re not a service bureau. It just depends on where you get your deal from. Co-branding, we typically use internally with our group is just like a location branding, just one location on the software, which I get the appeal of it, but I just don’t understand why people fucking want it all the time because nobody sees it. Like it’s just for your office.

Ross: To clarify as well, co-branding, it’s like with a location, we mean, so say if you’re a service bureau, you’ve got your software, and you go and talk to an ERO, you’re talking to another tax office and you sell them a software license. Maybe that [00:12:00] ERO, they’re like, Hey, I want it to show Ross’s master tax. That’s a brand I use in our training all the time. But I want it to the software to reflect my tax office brand. Sure, no problem. It’s going to cost you an extra, whatever, boom, you can basically apply their logo on the software. So that’s what co-branding is, it’s usually for that one office so that they have their own tax office brand of software.

Reason why it’s ridiculous though, is because no one sees it. You only using tax software internally. It’s only you, the ERO, and your tax repairs, they’re going to be the ones that’s going to see that brand on the software.

Mobile apps can always be branded to the office. That’s easy enough. That’s the only thing that’s really customer-facing. Other than that, co-branding, it’s just a vanity thing, right? Everyone likes to have their own logo on stuff. And so it’s like, all right, that’s fine. But I will say this, as a service bureau, strategically, it is a good sticking point if you do sell someone branding, if they want it, sell them it. Because then they have in their eyes, their own software.

Even though, one of the main brands or one of the big transmitters, but as soon as someone gets their own logo on it, they feel like they have more possession. [00:13:00] It’s their software because they have their logo on it. So it is a great retention tool. But anyways, that’s co-branding.

And then I think the next one, Baldeep, was a reseller, right? Yeah. You want to break that down?

Cat of worms. Do you want to, do you want to take it?

Baldeep: All right. Look, everyone’s reselling essentially another person’s software. You’re reselling whoever developed the software, but you’re reselling it under your own name as a service bureau. You could consider yourself a software reseller if you’re a service bureau.

The way we usually use it is if one of our service bureaus creating a bunch of an affiliate program, essentially, or having people resell their software. Instead of having internal sales reps, they may have like affiliates or resellers of the software. That’s usually how we use it. It’s a very interchangeable.

Look, at the end of the day, none of the stuff the terminology matters. Really what matters is, how your deal is structured. And we’ve seen a lot of bad deals. We’re bringing over a lot of people this year that have branded software, and think they’re service bureaus, but they just don’t have the right deal or the access. And we’re like, we’ve got to go get a whole new brand redone for you, cause you don’t even have access to do shit. [00:14:00] And even if it’s the same software. So we’re doing a lot of that, just more work for us because they went and got a deal somewhere else. That was not good. And now we have to go in, give them a proper deal and a proper setup. And then usually the comments are always like in the ticketing. They’re like, Oh, wow, there’s a lot of stuff you guys have.

Ross: Yeah, I want to dig into that a little bit more just on the access level. So we talked about a subservice bureau, where basically, you’re getting your service bureau from a service bureau, that’s it. The reseller, where you could just be reselling anyone’s software.

But what it means to actually be a service bureau is, and this is the biggest telltale; if you do not have the ability to go into your software on the back end and actually set up an ERO and issue a software license, if you’re not the one doing that, meaning, you’re going in the back end of the software, you’re adding all their information in, you’re setting the service bureau fees, you’re setting the add on fees, you’re creating their office, you’re making their prepare credentials, you’re giving all of that to your customer.

If whenever you sell a license, [00:15:00] you have to go in open a ticket with whoever you’re getting your “service bureau” from. Or if you have to fill out a form and send it to someone else and then they build it and they send it back to you, if you are not the one manually doing that yourself, sorry to tell you this, but you’re not a real service bureau. You are simply a glorified service bureau.

Maybe your software brand is all set up separately, but if you don’t have full control, you’re not the actual service bureau. Someone else is the real service bureau and they’re just letting you sell your own software versus you actually being the one in the driver’s seat and being in full control over everything. So that’s the biggest differentiator is, first off on the access level, if you don’t have the ability to go and issue a license yourself manually, whenever you want, you’re not a real service bureau.

Baldeep: That’s one of the major ones we see. And obviously, there’s other things too. And I think we’ll do a whole other episode on the fee breakdowns and calculators and stuff like that. But the other telltale signs, is well, if you don’t know what base fees are versus markups and [00:16:00] you’re just going into the numbers of the deal points, then you could be have access to do things, but you’re not really set up.

You’re not really getting the best deal possible, which is fine. You don’t need to have the best deal. If you do, if you have 500 bank products, you’re not going to get a great deal. Typically going somewhere, they’re not going to take you seriously. So just keep that in mind.

Another thing, I don’t know if I want to save this for another episode, but we speak to a lot of people and we’ll go into details on another episode because we have an idea to do one with a calculator and all that stuff. So just visually show you, but I was having a conversation with somebody not too long ago, and all of their fees were going to their service bureau, even though they told me, Hey, I’ve been a service bureau for years.

And then when I would do the numbers, I’m like, all right, cool. I’m not going to give specific numbers right now, because I don’t want to confuse people, but when I looked at the total number, I’m like, all right, how much of that are you getting? They’re like, oh, I don’t get any of this. I only get the service bureau fee. And they weren’t even getting it in real-time. I’m like, so you’re not really a service bureau because you’re [00:17:00] sure you’re getting the service bureau fee, but you’re not getting any of the markup. You should be getting that, you’re the service bureau. And they’re like, oh, no, but that’s where they make their money. And I’m like, you’re the service bureau. So that’s actually, you should be your money.

The way we do it is that’s your money, so you just don’t have a good deal. And then they said, I’m talking to this other person and this is the other deal that I got. And then as I’m doing the numbers, I’m like, it’s the same damn thing. You’re just changing the number from 1 to another, but it’s still the same principle. You’re not really getting a service bureau deal.

People just don’t understand how to ask those questions, or really what it should be. So we bring over a lot of people that are coming to us and they’re like, yeah, I’ve been a service bureau for years. And our standard deal is a better deal than anything they’ve ever seen. Just things like that to keep in mind, if you’re really interested in having a proper setup.

Ross: Yeah. And we see that far too often. And I think, even just like wrap this episode, maybe a little bit in a certain capacity. Again, everyone wants to be a service bureau, there’s definitely a lot more interest in it. Not everyone wants to be a service [00:18:00] bureau, still a lot of EROs who are service bureaus.

But just a word to the wise, if you’re in the position where you are selling service bureaus or you’re trying to market things, if you’re selling someone a service bureau, make sure you’re actually selling a proper service bureau.

This is something that we discussed internally with our group where it actually was at our convention when we brought that up, where it’s, look, if you’re selling a service bureau, make sure you’re actually setting someone up as a real service bureau because at some point in time, everyone’s going to find out what it actually needs to be a service bureau, whether you’re watching this podcast or you’re seeing marketing or whatever, you’re going to realize what it actually is, and that person is going to leave very quickly.

And so for everyone else, if you are looking at being a service bureau, we’ve got plenty of episodes and content that we’ve discussed on this stuff. You can even just reach out to us and check out one of our webinars, book a call, and just really understand what those fees look like. Because that’s something that we do a lot of times on the phone call with anyone who books a call with us, whether you sign up for a program or not, maybe it’s a great fit.

Maybe it’s just not the great timing, whatever it may [00:19:00] be. One thing that we’ll do virtually all the time with people on the phone is go over numbers with you. Just so you can be educated and informed, what does that look like? What is a real service bureau deal going to look like? And how do those numbers work for my business?

So that’s a really important thing that we do with everyone because 9x out of 10, here’s literally thousands of dollars that you can just put back into your pocket by you becoming the service bureau. And that’s usually enough that’s very attractive for a lot of people.

Again, that’s typically why people want to be a service bureau because they want control. They want all those fees paid back, but it doesn’t necessarily mean they’re going to go out and sell software and actually run a service bureau business. So always keep that in mind as well, if you just want a really good deal on software, that’s a little bit different than actually having to be a service bureau.

And there’s a lot more responsibilities that you have as well, as a service bureau.

Baldeep: Yeah. Just know what you want to do. There’s been a handful of people this year that were just like, you don’t want to sell. We’ll just set you up with software. You’ll get the deal as if you were a service bureau, but you don’t need to do all the management of doing all the setup.

There’s a [00:20:00] lot of opportunity out there, really just coming down to, as you’re speaking to people, if you’re selling service bureaus, for example, do the actual proper call and find out what their goals are. There’s no point in selling a service bureau if the person doesn’t want to actually be a service bureau.

Ross: But yeah, for sure. Flew by when you’re having fun. Everyone, again, there’s plenty of opportunity out there. If you guys are service bureaus currently and you’re just listening to our podcast for training, welcome. I’d love to have everyone listening in.

But again, just keep that in mind. Not everyone wants to be a service bureau. There are thousands of EROs. And the great thing too is that there are so many people who run tax academies, who run all kinds of different training programs to introduce new people to the industry every year, just like how there’s a new supply of taxpayers, joining, coming, having to pay taxes every single year, there’s new supplies of Preparers and EROs joining the tax industry every single year.

So there’s plenty of plenty opportunity out there. Not everyone wants to be a service Bureau. A lot of people just hear it, they’re trying it, they’re doing research, they’re hearing in some of the groups, and they’re trying to figure out what exactly does this mean.

But by and large, it’s [00:21:00] something that we always have to get our members as well to understand. It’s just because you’re in a group with service bureaus, doesn’t mean everyone is a service bureau. We’re just in a very small group compared to the actual size of the market and how many EROs there are out there are looking for software every single tax season.

So plenty of opportunity out there.

Baldeep: All right. Awesome. That’s the podcast. We’ll catch you on the next one.

Ross: Buh bye.