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November 2006
It All Adds Up – Value + Growth
By Lisa Hoffmann

Walk through the offices of Daniel, Ratliff & Company lately and you’ll get a unique view – clear through to the other side of the building. In between elegantly appointed conference rooms, spacious executive offices and carefully laid out work stations there are gaping holes in the walls and thick plastic sheets serving as doors. Half the back wall in John Ratliff’s office is nothing but exposed steel beams. “It gets a little noisy in here sometimes,” he says with a chuckle. Daniel, Ratliff & Company, busting at the seams in its 3,500-square-foot office, is expanding to encompass half the fifth floor of the Cameron Brown Building uptown. The number of its employees has doubled in the past three years and its client base – what the shareholders refer to as “client families”– has swelled to more than 700. What’s at the core of this enviable growth? Something most people wouldn’t equate with accounting: passion.

 

Greater Than the Sum of Its Parts

The shareholders at Daniel, Ratliff & Company are passionate about supporting closely-held businesses, family-owned companies and new entrepreneurial endeavors. They’re more than just accountants; they are their clients’ business partners. In addition to the typical auditing, accounting and tax services offered by most CPA firms, Daniel, Ratliff & Company helps companies create business development strategies, build “human capital” and encourage team development. They also provide business start-up support. Smaller clients do sometimes require a lot of handholding and reassurance, but when asked whether that’s a source of irritation, everyone just smiles. “Not only don’t we mind offering extra support, we welcome it,” says Ratliff, the firm’s vice president and regional client service director in Charlotte. “We often wish some of our clients would ask for more advice so we can help them be more successful.” 

“We really care about our clients,” emphasizes Debbie Daniel, president of the firm. “We want to see them prosper and grow. That’s how we will grow – right a long with them. We’re very much focused on working in a consultative nature with our clients.”

Daniel, Ratliff & Company serves a highly diverse group of clients. In addition to many small companies, the firm consults with larger firms such as Monroe Hardware, FreemanWhite, a national healthcare architecture firm, and AgData, a database management and program fulfillment firm, which has been working with Daniel, Ratliff & Company since the firm’s inception in 1996. As they’ve grown, some of the firm’s smaller clients have become its biggest. The firm’s own growth parallels its clients’ growth, often putting the accountants in the unique position of being in the same shoes as their clients. They’ve faced and overcome the same challenges growing their own business that their clients are facing, giving them a depth of understanding and experience that an accountant from a larger firm may not have. “We can literally tell clients that we feel their pain,” Daniel says.  

Serving larger companies forces Daniel, Ratliff & Company to offer the array of services a larger client needs and allows them to offer that same array of services to smaller clients. “There are not many players out there that bring the depth of resources we do to that company that may only have five to 10 employees or may only be a two-person firm but has lots of growth potential,” Daniel says.

“We do financial studies, consulting work throughout the year, tax planning. We stay in tune with clients all year long,” explains Corriher, a vice president and regional client service director in Mooresville. “We do about 16 different compliance projects a year for a company in Hickory. We’re serving it almost weekly. That’s an example of how we partner with our clients.”

In the past five years Daniel, Ratliff & Company has pursued and completed three mergers that have lead to more high-level personnel to increase the management-to-employee ratio. Where most firms have 10 to 20 employees per partner, Daniel, Ratliff & Company has a partner for every six employees or so. When you count management as part of the upper level, the ratio changes even more favorably. This allows the accounting firm to offer the broad range of services only seasoned professionals can provide while bringing less experienced employees up the ranks. Two long-term employees, Martha Michael and Matthew Miller, became shareholders this year to help keep that ratio in check.

The partners’ focused plan is working beautifully so far. The firm has enjoyed 15 to 18 percent growth per year over the past few years and is projecting more than $3 million in revenue as it celebrates its 10-year anniversary this year. That’s a 250 percent increase from when the firm first began and right on the money for the partners’ steady growth plan.

 

One Plus Two Equals More

Before establishing Daniel, Ratliff & Company, Debbie Daniel would head in one direction each morning and her husband, John Ratliff, would head in another. Daniel was busy managing an accounting and tax practice offering a small range of services to small business owners and Ratliff was working for Daniel Professional Group (no relation to Debbie Daniel). Daniel and Ratliff had met years before when Daniel was a Daniel Professional Group (DPG) employee too. Corriher, a long-time friend and colleague, was managing Daniel Professional Group’s Mooresville office. Daniel regularly called upon DPG to fulfill auditing and compilation work for her clients. In turn, Ratliff consulted with Daniel regarding tax issues his clients faced.

“One day we looked at each other and said ‘why are we doing this separately?” Daniel says. Daniel, Ratliff and Corriher sat down together and hammered out a business plan. In 1996 they purchased DPG’s Charlotte and Mooresville offices, merged in Daniel’s smaller practice and Daniel, Ratliff & Company was born. Today, Corriher manages the Mooresville office with Martha Michael and Daniel, Ratliff and Matt Miller concentrate their efforts in the Charlotte office. Ratliff brings more than 30 years of audit and review service experience to the table and Daniel’s been in accounting for more than two decades. Corriher, who has about 20 years’ experience as well, grew up in China Grove and is intimately familiar with the Mooresville area. Being a satellite office of sorts presents few challenges, he says.

“It goes right back to my relationship with John and Debbie,” he says. “We worked together for about 10 years before we started this company, we’re friends first and we’re all on the same page. We’re one firm. Our procedures and policies are the same and if I get a referral that’s better suited to the Charlotte office, then that’s where it’s handled.”

“Some professional firms operate on an ‘eat what you kill’ basis,” Ratliff adds. “Not us. It’s all about what’s best for the client and there’s not one of us who knows everything.”

Right from the start the partners sensed a need for more well rounded services for the small to medium enterprise (SME) market sector and continually fine-tunes its ability to offer clients a full range of services and superior quality. It is a member of RAN-ONE, a company specializing in the design and development of business solutions and training for accountants, consultants and business advisers. RAN-ONE offers the tools and training necessary for effective business consulting and strategic services. Daniel, Ratliff & Company is also part of Upstream Academy, whose mission is to “create a network whose members are recognized as the most professional and best run CPA firms in the world.”

The firm is also having an independent company conduct in-depth surveys with a select group of clients to determine whether they are providing the level of service they aspire to, whether the firm is offering the services clients need and what types of services clients see themselves needing in the future.

 

Multiplying the Talent Base

In order to ensure that everyone at Daniel, Ratliff & Company is just as passionate about meeting their clients’ needs as they are, the firm’s shareholders keep their fingers on the pulse of the corporate culture every step of the way. Their steady growth over the years presents a few challenges in this regard.

“When you have new people coming into an organization you have to really work hard at maintaining your culture,” Ratliff explains. “Sometimes you bring someone in who’s focused on what’s important to them and it’s our job to teach them to focus more on the big picture, on what’s important to everybody.”

Providing an exceptionally high level of service to clients, showing mutual respect for clients and colleagues and maintaining a unified focus are touchstones in the corporate culture at Daniel, Ratliff & Company. The partners offer an open-door policy to both clients and employees and never screen calls. Employees’ ideas are heard and responded to and part of the firm’s culture is keeping employees’ personal and business lives in balance. Every summer, the firm gives each employee eight days off to enjoy with their families in addition to regular vacation time. Respect flows in all directions. Although the customer is clearly king at Daniel, Ratliff & Company, there are lines even clients can’t cross. 

Last year, the partners had to release one of their larger clients because they treated Daniel and another high-level employee rudely and disrespectfully. “You can’t tolerate that sort of behavior – even from a client,” Ratliff says. “As strongly as we feel about our clients, that’s how we feel about our employees too.”

The partners clearly communicate their philosophy and expectations to employees right from the time they walk through the office door and find that new staff members respond favorably to the corporate culture. The firm has a very low turnover rate. The real challenge lies in finding the right people for the job.

It’s more difficult now than ever before to find qualified CPAs, according to Ratliff. Educational changes have increased the CPA course of study from four years to five, discouraging some students from entering the field. The Enron debacle and similar events tarnished the profession’s reputation and also caused large firms to increase hiring, leaving an even smaller candidate base for smaller firms. The profession’s reputation is turning around, though, and, in an ironic twist, more young people are being drawn to accounting in a quest to unearth fraudulent practices. Even so, Charlotte’s dynamic business environment still makes it difficult for Daniel, Ratliff & Company to find qualified candidates.

“We’re not just competing for candidates with other CPA firms, we’re up against banks and other thriving businesses that are looking for accountants,” Ratliff says. “The competition is very tight. Recruiting is an ongoing thing for us and a continual challenge.”

Once the construction team closes up the walls and hangs the doors, Daniel, Ratliff & Company will have added 1,300 square feet of office space including file storage space, two new management level offices, a small conference room and additional work stations. That’ll hold them for a while, but not forever.

“We’re working toward our big, hairy, audacious goal or ‘BHAG,’” Daniel says with a laugh. “We determined during our manager’s meeting in 2005 that we would shoot for 20 partners and $20 million in revenue in 20 years. That basically equates to 15 to 18 percent growth each year, which is more of a challenge as the numbers get higher.”

In a nod to their dedication to work-life balance, Daniel and Ratliff, avid hikers, are building a second home in Montana, near Yellowstone National Park. Part of their goal for the future is to be able to hand off more responsibilities to their colleagues so that the firm succeeds their involvement.  

“I can’t stress enough how much any success we have is a joint effort,” Daniel says. “We would not be able to pursue these goals without the exceptional people we’ve got. We’ve got a solid group of leaders and they all serve to unify and strengthen the whole firm.”

 

Lisa Hoffmann is a Charlotte-based freelance writer.
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