Compliance boom: Lancaster software firm sees rapid growth
Mike Montali was heading from Florida to Central Pennsylvania in 2011 to take a job as a law firm consultant when he responded to a Craigslist ad posted by Megan Danz, then an IT project manager with consulting firm Accenture.
Danz was looking to rent an extra room in her Lancaster County house. Montali was looking for a place to live.
Montali and Danz became roommates, then friends. They soon began talking about an idea for a company that would make it easier for businesses and nonprofits to navigate licensing rules and regulatory hurdles.
In 2012, the pair founded Harbor Compliance, which today is one of the region’s fastest-growing companies.
The Lancaster County-based software firm was No. 370 on this year’s Inc. 5000 list of fastest-growing companies — the highest rank among Central Pennsylvania firms. Harbor posted revenue growth over the last three years of 1,341 percent, with revenue last year of $4.3 million.
Danz, now 34, and Montali, 31, are anticipating the growth to continue. Harbor’s 40 employees recently moved into a 25,000-square-foot office building in the Greenfield Corporate Center in East Lampeter Township, a space that can hold up to 150 people.
A better way
When it opened six years ago in a one-room office, Harbor Compliance aimed to help budding entrepreneurs form businesses and register with state agencies, as well as to manage licenses for companies operating in multiple states.
Montali and Danz thought they could save organizations time and money if they could build a national database to track state-specific rules for licensing and compliance issues, including annual fees and reporting requirements.
“We started out with a mission and a belief that there was a better way to do compliance,” said Danz, who is Harbor’s chief information officer. Montali is the CEO.
They created software that automates much of the government paperwork process and tracks filing schedules so organizations don’t miss deadlines and get hit with fines.
The idea took off and the company now serves more than 20,000 clients in every state, including foreign firms doing business in the U.S.
Harbor offers a variety of service packages for businesses and nonprofits.
Trade groups and companies in regulated industries like construction and health care see compliance issues crop up nearly every week. For companies like contractors, a lapsed or missing state license might mean the loss of a contract or limited bidding opportunities.
“There is so much opportunity in those industries,” Montali said.
More than two months after the company’s move to its East Lampeter office, about two-thirds of the space is vacant, but Montali and Danz expect that will change over the next few years as the firm picks up business.
Harbor Compliance has already doubled the size of its staff this year and posts new jobs almost daily. Its workforce could reach 50 or 55 employees by the end of the year.
“We need people across all functions,” said Montali, who spends much of his time interviewing candidates.
The company’s biggest needs are for software developers, compliance specialists, sales executives and administrators.
More than 150,000 agencies in the U.S. impose licensing and registration requirements, and the rules change constantly.
Compliance work is normally handled by a general counsel or an organization’s CFO. Larger organizations may even have full-time people dedicated to researching laws to ensure they remain compliant in each state.
But smaller entities may struggle to keep up.
“In the past, we had fines because we were not registered in a state and someone gave us money,” said Antonio Marin-Dietens, human resources manager for the Washington, D.C.-based nonprofit Friends of the Global Fight Against AIDS, Tuberculosis and Malaria. “Fines can be paid, but it looks bad on audits and you can lose your nonprofit status.”
Marin-Dietens’ organization connected with Harbor about two years ago after its accounting firm recommended hiring a consultant for fundraising compliance. Harbor doesn’t offer legal or tax advice, but attorneys and accountants often recommend the firm as a supplemental service.
Marin-Dietens said he likes that he can log in to a custom portal through Harbor’s software program and see what compliance renewals are coming up. His nonprofit pays a flat rate for ongoing support.
Another client is Lancaster-based Assets, which employs 14 people.
Assets hired Harbor Compliance last year, also for help with fundraising compliance. The economic development nonprofit receives donations from people in different states.
“It’s not so much about time and money, it’s just knowing we have someone with the expertise to help us out,” said Tina Campbell, the organization’s co-executive director. “It’s a relief to have that and know that we’re compliant.”
Wisconsin-based engineering consulting firm MSA Professional Services Inc. turned to Harbor after it grew to 16 offices in six states and lost its corporate controller, said executive assistant Kerri Hanger.
The company wanted to make sure its registrations and employee licenses were up to date. The company has 325 employees, including about 200 with licenses that need to be renewed.
“We didn’t know how much time this would take,” said Hanger, who now considers Harbor’s staff an extension of her firm. “Each state is different; and to know all the ins and outs, there are a lot of moving pieces.”