Start Your Own Firm
Ten tips for the entrepreneur in you. Are you fired of working for someone who can't operate a pencil sharpener let alone run a CPA firm? You want to be your own boss and do it right? It's tempting, but hanging out that shingle takes preparation as well as moxie. There are thousands of CPAs whose entrepreneurial spirit compels them to put professional experience on the line and open a practice of their own. They come from all corners of the profession--the Big Five, regional or small accounting firms, government, academia and business and industry. Most are seasoned enough to know that starting any business is risky. The financial aspects of starting a practice are important, but so are several intangibles. Evaluate your market savvy, networks and service niches as carefully as you would a business plan and budget. They cannot substitute for technical skill, integrity, tenacity or hard work, but attention to these areas can help you avoid common start-up mistakes, develop business skills and improve your chances for success. If you are planning to establish your own CPA firm, take the following steps ahead of time to ensure that you start off on the right foot. 1 WORK IN A SMALL PRACTICE FIRST A small practice is not a miniature large practice. Most of the thousands of CPAs who leave large accounting firms every year to start their own practices are ill equipped to manage a small firm. CPAs who work for large firms may get little experience working closely with small business clients. And small firms do not have in house industry specialists or research departments to help check the work. Pay your dues. Take a job with a small firm. Learn that side of the profession, sharpen your skills, and carry your weight in the small practice environment. Satisfy clients and develop new business for your employer. In a few years you'll have a better idea of what it takes to start your own firm. Public accounting can be a tough business, so don't be surprised if you change your mind along the way. A lot of good people have. 2 SELL 1,000 HOURS OF NEW BUSINESS BEFORE YOU LEAVE The key survival skill in public practice is selling professional services face-to-face, a facet of public accounting many CPAs in large firms and in private industry never experience. Until you have sold services successfully, chances are you don't know how, won't be able to learn or won't like it. Learn to sell while you are drawing a paycheck. One thousand hours of annual billable time can barely support you, a small office, a part-time secretary and an intern to help during tax season. If you can't sell 1,000 hours with the resources and reputation of an established firm behind you, you probably will fail to do so on your own. 3 START SMALL A friend of mine has a placard in his office that reads: Happiness is positive cash flow. If more money comes in than goes out, your firm can survive. Resist the temptation to rent expensive office space and fill it with pricey furniture. Your first-year, out-or-pocket overhead should be as close to zero as your ingenuity can make it. Be creative. Work out of your home; barter a few hours of service every week for space in another practitioner's office; set up an office in one of your clients' buildings in a quid pro quo for work. Don't mistake image for reputation. Reputation based on competence and integrity is important to current and prospective clients; image and style are much less so. In fact, many successful practices have grown from humble beginnings. Low overhead permits a fledgling practice to survive long enough to attract a clientele and it can be a key to success. Clients want a prudent professional to handle their affairs, and they will understand the need to start small. 4 GROW SLOWLY Rapid growth can destroy a new practice. The wisest way to grow a professional practice is to control it rather than be a slave to it. …