Henry Bloch Credits Luck For Origins of H&R Block’s Tax Business

Jul 8, 2015

Like many entrepreneurs, Henry Bloch’s first business idea wasn’t the one that took off.

Henry and his brother, Richard Bloch, opened a small, bookkeeping office at Westport Road and Main Street in Kansas City. In 1955, they had decided to stop preparing tax returns, but an ad salesman for the Kansas City Star had a different idea.

The brothers took a chance on an ad to do tax returns for $5. They were rewarded with customers lining up out the door. H& R Block quickly grew from a fledgling tax preparation business into a household name.

Bloch told KCUR’s Brian Ellison he didn’t try to be an innovator. “I’ve tried to do the right thing, and if it turned out as innovation, that’s fine,” Bloch said.

‘You’ll probably fail’

Bloch: While I was at Harvard, I happened to see a little pamphlet which was a speech given by a professor at Harvard named Sumner Slichter. He said both big business and labor are very powerful, but small business has no one to turn to. And you know, that kind of rang a bell. 

My brothers and I were corresponding trying to find a business. We thought of a whole lot of businesses—nothing very sexy. When I told them about this, they thought it was a good idea, too, to help little companies. So the three of us drew up a business plan.

I went to see Mr. Slichter, and I said, “I read your speech and that’s a great idea to try to help a small businesses.” He said, “That is a great idea, but it probably won’t work and you’ll probably fail.”

And he was right.

All we can lose is $200

Bloch: We were doing bookkeeping work for $15 a month. One of the customers we had, who worked for the Kansas City Star, he handled our advertising. He was a fellow named John White. So he came up one day to see Dick and me to do his income taxes.

By then we had gone out of the tax business, but he came back the next day with an ad. Instead of saying “$15 a month for bookkeeping,” it said, “$5 for your tax return.”

I asked him, “How much is this ad going to cost us?”

He said, “$100.”

“We’d have to do 20 returns to get our money back.”

John said, “No, you’d need to run at least two ads.”

Dick said, “Let’s take a chance! All we can lose is $200.”

An office full of people

Bloch: This is luck again. The ad appeared at exactly the right day when W-2s had come out. If it had been a week earlier or a week later, it probably would have failed. I was going around picking up books for our bookkeeping clients, and I had gotten to a seat cover business. They said, “By the way, you are supposed to call your brother.” And I called Dick, and he said, “Get back as quickly as you can! We’ve got an office full of people.”

The women are so much better than the men

Bloch: One day, a woman was there. She was from northern Missouri, where they filled out mainly farm returns, which file early. She said, “I filed all my clients' returns. Now, I’d like to work for you for the rest of the tax season.”

I told the people I was with, “I’ll be right back. I’ll ask her a few questions and get rid of her.” So I asked her a few questions, she answered every one perfectly. I always say that was the beginning of the end.

We now must have 80 to 90% women. And the women are so much better than the men. We’re very seasonal. The women would come back every year. They loved it.

This interview was part of Innovation KC, a new series of conversations about innovation and innovators in Kansas City. To suggest Kansas City innovators for future interviews, send us an email, tweet us, or find us on Facebook.