by Chris Williams | May 12, 2025 | Blog
There are so many different paths to buying a small business. How big do you buy? How long do you search? Do you raise capital for your search? Partner or go at it alone? How many investors?
Often, the most common choice is this – self funded vs. traditional search
Both have their pros and cons. You need to educate yourself, and do what’s best for you. That’s what this conversation will accomplish.
While many of his peers raised traditional search funds – targeting larger business with more security and 25% ownership, Chris Williams went down a different path. He self-funded his search, took out an SBA loan, and ultimately owned 70%+ of the business he acquired – System Six – an outsourced accounting firm he’s doubled in 4 years.
I recently sat down with Chris to discuss his journey from Stanford MBA to successful acquisition entrepreneur. For those considering the entrepreneurship through acquisition (ETA) route, his story offers practical wisdom on finding, purchasing, and growing a business while maintaining meaningful ownership.
Traditional vs. Self-Funded Search: Choosing Your Path
“There are a lot of different ways to go buy a small business,” Chris emphasized. “Take in a bunch of information and decide for yourself what’s best for you.”
When Chris graduated from Stanford Business School in 2018, he faced the same choice many aspiring acquisition entrepreneurs confront: raise a traditional search fund or pursue a self-funded approach. The differences proved significant:
Traditional Search
- Raise hundreds of thousands upfront to fund your search
- Target larger businesses ($2M+ EBITDA)
- Typically results in 25% ownership for the searcher
- More investor interactions
- Less personal financial risk (no personal guarantee)
Self-Funded Search
- Limited or no fundraising during search phase
- Target smaller businesses ($500K-$2M EBITDA)
- Can retain 70-90% ownership
- More control over decisions
- Requires personal guarantee on SBA loans
First, Chris chose to self-fund his search. Like many MBAs, he loved his optionality, and he knew self-funding gave allowed him the chance to look at the widest variety of deals. He could look at small and large deals, and ultimately use the capital structure that made the most sense for the deal he found. Chris focused on businesses that matched his background in finance, and ultimately used an SBA loan to finance most of his acquisition of System Six, allowing him to maintain maximum ownership and control.
Finding the Right Business Through Direct Outreach
Rather than relying solely on brokers, Chris built a systematic approach to contacting business owners directly. Using specialized databases and targeted email campaigns, he reached out to approximately 50 companies weekly. His process yielded a 20-30% response rate across email campaigns, with roughly 5-6 conversations per week.
“I was looking for high percentage of repeat, consistent revenue in a growing industry,” Chris noted. His cold email to System Six’s owner sparked a conversation that eventually led to acquisition.
The power of direct outreach? It allowed Chris to build relationship capital with the seller over months, creating trust that proved invaluable throughout the transaction.
Structuring the Deal: SBA Loans and Smart Equity
Chris structured his acquisition with:
- 75% SBA loan financing
- Seller note on standby (with no immediate payment requirements)
- 10% investor capital earning 8% preferred return, converting to 20% equity
This approach enabled him to maximize his ownership while satisfying the seller’s price expectations. His investors weren’t looking for immediate distributions—they sought long-term growth and provided valuable guidance along the way.
“I was very convinced that because I’ve never run a business before, I needed professional, small business-oriented, growth-minded investors around me. If that means I have to pay them a little bit more than if I had raised from friends or the stereotypical “doctors and lawyers”, I’ll do that all day,” Chris explained.
These relationships proved invaluable. His investors serve as board members, providing strategic guidance and helping Chris navigate complex decisions without pressuring him for quick returns.
Post-Acquisition Growth: Finding Your Niche
Since acquisition, Chris has doubled System Six’s revenue through two key strategies:
- Vertical specialization: “Finding a vertical that you have traction in and pounding that vertical.” For System Six, that meant focusing on serving other acquisition entrepreneurs who inherited messy financial operations.
- Service expansion: By expanding complementary services like payroll, bill pay, controllership and advanced financial reporting, System Six increased its average customer value while solving more problems for clients.
This growth didn’t happen by accident. Chris invested in management talent, creating a team structure that could scale beyond the CEO’s capacity. While this temporarily reduced profit margins, it positioned the business for sustainable growth, freeing up more of Chris’s time to focus on strategic growth and step away from the day to day.
Key Lessons for Searchers
Looking back on his journey, Chris offers this wisdom to fellow searchers:
- Industry quality trumps everything: “You can change everything in your business when you buy it, but you can’t change the industry you’re in.” Seek industries with consistent revenue and growth potential.
- Seller quality matters immensely: “Buy a business from someone that’s fundamentally decent who’s not going to try and screw you.”
- There’s no single “right” path: The choice between traditional and self-funded search depends on your personal circumstances, risk tolerance, and ownership goals. And the deals you find.
- Be realistic about SBA timelines: “Set expectations with your seller and don’t overpromise.” SBA deals almost always take longer than anticipated.
- Trust your due diligence: “If you do not feel more comfortable about the personal guarantee after diligence than you do now, walk away.”
For Chris, the journey from MBA to business owner has been transformative. “Search has changed my life,” he reflects. “I’m running and trying to grow a small business. Some days for the better, some days, you know, it might be nice to have that sort of cushy W2 life again—but search is a really interesting path for the long run, and I’ve never been this energized in my life.”
Whether you pursue a traditional search fund or choose the self-funded route, Chris’s experience shows that with proper preparation, direct outreach, and industry focus, acquisition entrepreneurship can offer both meaningful ownership and significant growth potential.
Want to connect with Chris? Find him on Twitter at @ctw_SMB or email him at chris@systemsix.com
by Chris Williams | Apr 25, 2025 | Blog
“I need to get back to you on that.” Putting her largest client on hold, Sarah’s voice felt tighter. They requested last quarter’s billing breakdown, and she had no clue where to find it. As she rifled through desk drawers and clicked through endless spreadsheets, her professional image was deteriorating by the second.
Twenty minutes later, she had the information, but the damage was done. Her client’s slight tone change told the story: this was not the clinical, polished expertise they had anticipated.
This vulnerable moment is not about disorder. It’s the natural consequence of operating a rapidly scaling consulting company on manual financial systems. When you’re great at solving client problems but still calculating your finances using methods more appropriate for a lemonade stand, something’s gotta give.
Switching to automated financial systems is not solely about efficiency—it’s about reconfiguring how you function and how you’re perceived as a professional. Let’s examine how to make this leap without killing the client work that keeps paying your bills.
The Hidden Cost of Financial Management in a Hotel
When consulting firm owners add upthe cost of manual financial processes, they tend to consider only the obvious: a few hours of bookkeeping a week. But the actual price is far more profound.
Consider time first. Financial administration takes up to 15-20 hours a month for most consulting firm owners – reconciling accounts, issuing invoices, classifying expenses, and gathering tax paperwork. Assuming standard consulting rates, thatmight represent between $3,000-5,000 in future revenue that could have been generated per month.
Then there’s accuracy. One environmental consulting firm found that it had under-billed clients by nearly $32,000 in one year after going through its manual tracking, which led to billing errors. “We were leaving money on the table on every single project,” the owner said. And we didn’t find out until we automated our systems.”
However, the most significant cost may be opportunity. As you manually match up transactions or search through piles of paperwork for missing receipts, your competitors study their highest-value customer segments, identify growth opportunities, and make informed decisions about hiring and expansion based on data.
“I was good at helping clients optimize how they operated,” admits Tom, a management consultant. “But I was treating my firm like it was 1995. I thought the irony was not lost on me — I didn’t have time to fix it.”
Automation, A Gift that Keeps on Giving
When consulting firms automate their financial systems, the benefits go way beyond saving time:
Financial visibility in real-time. You’re reading the right cash position, each outstanding invoice, the exact profitability of each project, and any tax obligations as soon as you open the laptop before a client meeting. This clarity changes the way you approach decision-making about taking on new projects, hiring staff, or investing in growth.
“Now I understand our numbers,” a System Six client says. “Now that I’m not wrestling with basic bookkeeping, I’m using financial insight to drive my decisions.”
Lower error rates and compliance risks. Automated systems capture duplicate entries, flag unusual transactions, and treat income and expenses consistently. You’ll significantly lower your risk of tax penalties and audit problems.
Corporate customer communications. If a client inquires about their billing history or project costs, you can answer instantly and confidently. By acting quickly, you build a professional image and strengthen rapport with your client.
Improved cash flow. Invoices are automatically sent out on time, complete with follow-ups that don’t require your intervention. One consulting company was able to reduce its average payment time from 47 days to 23 days simply by automating its accounts receivable process.
Insights into project profit If you have the correct type of financial automation, you can clearly identify which projects and clients drive your actual profit—not just revenue. This realization can, of course, also create unexpected strategy newness.
“Our biggest client turned out to be our least profitable,” explains Kelly, a marketing consultant. “Without automation, we would’ve never seen the full scope of project costs.”
Transition Planning: A Step-by-Step Guide
Moving to automated financial systems requires some planning but can be done without being overwhelming. Follow these steps to be successful with this:
1. Identify your pain points. Identify what’s not working before seeking solutions. 9 9. Are you still having the most trouble tracking expenses? Invoicing delays? Tax compliance? Analysis of project profitability? Knowing your particularities gives you peace of mind about implementing the right solutions.
2. Set clear goals with metrics. Replace an unclear goal of wanting to “improve finances” with specific goals: “Reduce bookkeeping time to two hours from 20 hours a month” or “Cut average time to collect payment from 45 to 15 days.”
3. Select the appropriate technology stack. QuickBooks Online is a framework for automating the system for most consulting firms. More expense management, time tracking, and reporting tools can plug into this core. System Six usually prescribes platforms like Gusto for payroll or Ramp for expense management based on your firm’s specific needs.
4. Plan for data migration. Decide what historical data to carry over to the new system. Scrolling back to a specific date and starting fresh may be easier than attempting to recreate history exactly. Better to do a clean cutover than to attempt to reconcile years’ worth of manual records.
5. Develop a realistic timeline. The average overall transition will take 4-6 weeks, though most of the critical work will occur in the first two weeks. Schedule this change for a relatively calm period for your business.
6. Determine who will lead the transition. This project needs a project owner. If you do not have internal capacity, bring in someone on the outside who has done these many times. As one System Six client puts it, “Having experts manage our transition spared us weeks of trial and error.”
Addressing Common Challenges
Not even the best-laid plans go smoothly. Here’s how to get past the most common ones:
Learning curve concerns. Owners of many consulting firms fear they won’t be able to master new systems. Opt for concrete platforms and suitable training to rework challenges, The answer. Once the initial learning curve is crossed, most find modern financial systems easier to use than the manual processes that preceded them.
Data quality issues. Years of manual bookkeeping often lead to inconsistent data. Instead of perfecting records, concentrate on clean processes going forward. Make a specific transition date and make sure all new transactions go through the better system.
Team resistance. * Staff used to present systems could find it difficult to adapt. Engage them early in planning, stress how automation will ease their jobs, and give them enough training. As one office manager said to me, “At first I wasn’t convinced, but now, I would never want to go back to the old way.”
Cost concerns. When considering costs, weigh them against the cost of your time doing financial activities and the opportunity cost of lost billable hours. Most consulting firms are seeing a 3-6 month return on investment in the form of time savings, improved collections, and better decisions.
How to Get the Most Out of Your New System
Once you have your automated system in place, these strategies can help you get the most out of it:
Set periodic financial reviews. Schedule a monthly date with yourself to take note of important numbers or metrics and insights gleaned from your system. This is the discipline, and it ensures that you use the data to make better decisions.
Explore advanced reporting. Most consulting firms probably use only 20% of the financial system. Once you have the basics down, explore more advanced features such as custom reporting, forecasting, and scenario planning.
Refine your processes. To be clear, automation does not mean set and forget. As you gain insight into what is best for your business, seek ways to optimize workflows further.
“We saw the real value three months after the implementation,” recalls one System Six client. That’s when we began using our financial data strategically to decide what service lines to grow and what clients to target.
From Administrative Chore to Strategic Resource
When automated correctly, financial management transforms from a burden to an asset. Rather than dreading administrative tasks, you’ll reference real-time dashboards before making key business decisions.
Picture responding confidently to client inquiries about previous work and never needing to put anybody on hold. Now imagine knowing the exact types of projects that yield the most profit and using that knowledge to inform your firm’s future. Imagine being financially literate enough to hire based on insights and not intuition.
This isn’t just about freeing up time — and rest assured, those nights and weekends will come back to you — but about the degree of quality. It’s about growing your consulting firm from a practice into a real business.” It’s about bringing internal operations to an equal level of sophistication as delivering your services to clients.
The most successful owners of consulting firms realize that financial systems aren’t just about checking a box and keeping records. They’re the bedrock for growth, strategic decision-making, and peace of mind.
Are your financial systems in alignment with your professional expertise? The transition may be less jarring than you’d expect.
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About System Six
Founded in 2009, System Six is a Seattle bookkeeping and accounting services provider. As a provider of cloud-based accounting services for small- to mid-sized consulting firms, we have over 175 clients nationwide in the U.S. We employ a team of more than 35 seasoned individuals who provide bookkeeping, payroll processing, accounts payable, tax compliance support, and technology implementation services. We work off a fixed-fee model and bill weekly for recurring work depending on your firm needs and complexity. Our consulting clients tell us we’ve “transformed their accounting systems into reliable and credible practices,” enabling them to grow their businesses without concern for cash flow, payroll, or compliance problems. For details, visit www. systemsix. com.
by Chris Williams | Apr 22, 2025 | Blog
That feeling is when you see the IRS logo in the envelope in your mailbox. Your heart skips a beat. Your mouth goes dry. Before you even open it, your mind cycles through every tax decision you’ve made in the past year. Is it a routine notice? An audit request? A penalty assessment?
This pie-in-the-sky scenario is all too familiar for consulting firm owners. Yet, despite all the heavy lifting, tax compliance is a constant source of stress. And that worry is justifiable — the consequences of failing to comply can have serious consequences on your firm’s bottom line and reputation.
As one System Six client said, “I was great at servicing my consulting clients, but I was completely out of my depth with tax requirements. That disconnect cost me over $8,000 in penalties before I got appropriate help.”
Join us as we explore the most typical tax compliance missteps for consulting firms, what non-compliance is really costing, and actionable solutions your firm can implement.
Tax Compliance Mistakes Common to Consulting Businesses
10-50 Employees Small Consulting Firms How small consulting firms with 10-50 employees face unique tax challenges that corporations or other types of small businesses do not. These are the most common compliance issues:
Worker misclassification: This demarcation line between employees and contractors is especially blurry in consulting. Your project-based associate may act like a contractor to you, but the IRS might have a different view based on elements such as where a worker provides their services, which equipment they use/own, and which party controls the scheduling. As one environmental consulting firm learned the hard way, mischaracterizing a mere three team members led to back taxes, penalties, and interest over $42,000.
Mistakes on quarterly estimated tax: Consulting income commonly varies widely from one year to the next and even from quarter to quarter, complicating quarterly tax estimates. Overpaying locks up working capital that could be better used growing the business, and even a 10% underpayment can result in penalties.
State tax nexus confusion: And with remote work now the norm, your workers could be generating tax obligations in states where you’ve never even set foot. An unnamed management consultant whose team is spread across seven states learned she had five filing requirements — after receiving notices from three state tax agencies.
Documentation of expenses not done correctly: Client dinners, travel costs, and home office deductions demand rigorous documentation. “I had valid business expenses,” one System Six customer reported, “but without proper receipts or documentation, my deductions were disallowed in an audit.”
Ignoring self-employment tax: So, even if you make an LLC or S-Corporation for your consulting firm, you still have to pay self-employment taxes. This 15.3% tax liability surprises many.
The Genuine Price of Non-Complying
The actual price of tax non-compliance goes well beyond the direct penalties:
Fees make the penalties stack up quickly: For each month that a taxpayer fails to pay, the IRS typically assesses 0.5% of unpaid taxes, plus interest. Failure to file penalty fees can be as high as 25% of unpaid taxes. For a consulting firm with $2 million in annual revenue, even a relatively small compliance issue can lead to a penalty greater than $10,000.
Audit costs sap resources: Beyond penalties, the effort and expense of responding to an audit brings substantial opportunity costs. One firm owner told me it took over 60 billable hours to deal with an IRS audit, which cost them $18,000 of revenue.
The reputational damage lasts: In the consulting world, where no one will hire you if they don’t really trust you, tax woes can hurt your professional reputation. If they become known, tax problems can raise questions about your attention to detail or your financial stability among clients and partners.
“Post compliance, I spent more energy worrying about taxes, rather than actually how to serve client strategy better,” said a strategy consultant. “The mental toll was a cost of creative energy that I could invest into my clients.”
Guide to Tax Compliance for Consultants
These practical strategies will significantly minimize your tax compliance risks:
Move your accounting systems to the cloud:Today’s financial management systems auto-populate your transactions with predefined categories, track your project-level profitability over time, and alert you to potential compliance issues before they become costly mistakes. “System Six changed our entire accounting system to accurate and on-time processing,” says one client. “I used to look up data before it was time between my client meetings.
Establish a tax calendar with some buffer time: The majority of penalties arise from missed deadlines. The full calendar must contain the filing date and the milestones to track you as you prepare for every deadline (2–3 weeks ahead of it). Including this buffer is essential to avoid last-minute scrambles that result in mistakes.
Record business expenses in real-time for those who work on a need-to-know basis. Capture receipts as they come using receipt-capturing apps that mix with your accounting system. This practice avoids the end-of-quarter rush of finding supporting documentation and ensures you can prove a deduction if questioned.
Create a strategy for state tax compliance: If your team is dispersed in multiple states, develop a proactive compliance strategy alongside a tax professional. Identify where you have nexus (tax presence) and set up systems to monitor and meet multi-state obligations.
Set quarterly tax planning meetings: Instead of just remitting estimated taxes, make each quarter a time to assess your firm’s overall tax position. This regular checkpoint enables you to reform your strategies in real-time as the business evolves.
When and How to Seek Professional Help
Although it may seem cost-effective to manage your taxes, most successful consulting firms understand that with great responsibility comes an ever-greater need for experts when necessary:
When you may want professional support:
– More than 5 hours a month spent on tax tasks
– Get any notices from tax authorities
– (Branching out into new states or service lines)
– Growing beyond 10 employees
– Uncertainty around tax decisions
When choosing financial support, seek a partner who:
– Has experience specific to consulting businesses your size
– Test – Provides cloud-based, real-time financial visibility
– Advises you proactively rather than waiting for you to ask just to be compliant
– Nestable with your current systems
“A System Six has done wonders for my stress level,” says an owner of a consulting firm. “They’ve built automated systems that monitor every deadline and requirement. I leave compliance to the cloud; I never need to worry about it; it’s all done automatically.
Making Tax Compliance a Strategic Advantage Instead of a Burden
Tax compliance doesn’t have to terrorize consulting firm owners. Proper systems, expertise, and a mindset can make it all but invisible—ticking over in the background as you devote your energy to growing your business and serving clients.
Imagine opening mail from the IRS with confidence, not dread. Imagine seeing your tax position live and in real-time at any one point. Imagine all the mental energy spent worrying about compliance migrating to strategic growth instead.
This isn’t merely about dodging penalties – it’s about changing how you think about your firm’s finances. Leverage the Power of Tax Compliance: With clarity and confidence in your tax compliance, you can focus on Delivering Value to your Clients.
Does it need to be time to reassess your path to tax compliance? A professional review of your current systems may also help you identify risks and opportunities you haven’t considered yet.
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About System Six
Founded in 2009, System Six is a Seattle-based bookkeeping and accounting services provider. We are a cloud accounting firm serving 175+ clients coast to coast in the U.S., with a niche focus on the small to mid-sized business and nonprofit sectors. We are a team of 35+ expert specialists providing services in bookkeeping, payroll processing, accounts payable, tax compliance support, technology implementation, and more. We’re on a fixed-fee basis, charging against weekly recurring work ranging from around $400 to $800, depending on the work complexity. Our clients describe us as having “revolutionized their accounting systems to become correct and reliable means,” enabling them to spend time growing their business rather than worrying about cash flow, payroll, or compliance nightmares. For further details, click on www. systemsix. com.
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