Working for the Big 4 or working as a staff accountant in an accounting practice, most accountants will establish expertise in tax preparation, auditing, management accounting or financial advisory services. A few years down the line, most will feel the urge to hang out their shingle and start their own accountancy practice.
It could simply be a desire ‘to be your own boss’ or it could be a reaction to boredom and frustration at the current workplace. For a few clear-headed souls, taking the plunge is simply the culmination of a career plan they put into practice while they were at university.
Irrespective of your motivation, there’s a lot of risk in leaving the security of a job and investing your savings, time and energy in setting up a practice of your own. Here’s are the key ingredients you need to bring together to lay the foundation for a successful accountancy practice.
1) Gain experience and expertise
Holding practising certificate and putting in the required years of post-qualification experience is not enough to ensure success. In addition to technical expertise for the areas, you also need to build business management skills.
As an entrepreneur, simply being good at accounting won’t cut the ice – you will need to wear a number of different hats. For instance, many start-up accountants we have spoken to are astonished at the sheer amount of work and effort that is required to tackle non-accounting related issues.
In addition, it is essential that you ensure financial stability – unless you are entering into practice with a reliable stable of clients, it may be some time before you begin to generate significant revenues. You will need capital to start the business and you will need money for the day-to-day running of the business.
Appointing an alternate could be a good idea in case you are planning to work as a solo practitioner – the alternate can help with the management of your practice in case you are unable to work owing to illness or any other issues.
2) Ensure compliance with regulations
Based on your professional qualification – ACA, ACCA or ICAEW – you will need to fulfil specific requirements before you can start your accounting practice. So, the first step is to ensure that you are fully licensed to take on the kind of work you are looking for.
In addition to the standards set by these bodies, your accountancy practice will have to comply with the standards and regulations set by other relevant industry bodies. Your practice may also need to get the minimum level of professional indemnity insurance. When you begin building a team, your practice will be required to comply with a host of laws pertaining to health, safety, fire regulations, etc.
3) Create a clear business plan
“Give me six hours to chop down a tree and I spend the first four sharpening the axe.” – Abraham Lincoln.
Starting out on your own is tremendously exciting, but the enthusiasm needs to be tempered with cold planning. You will need to gain complete clarity on the below questions before you get the ball rolling:
- What need will your practice satisfy? Are you targeting a niche service or a specific sector or industry? Perhaps, you are planning to be the best accounting firm in a certain location?
- What are the key goals of your business for the next five years? What steps will enable you to achieve these goals?
- What is the difference between your accountant practice and the competition?
- What type of structure will your firm have? Will you be a solo practitioner with no staff? Do you plan be a ‘sole’ practitioner with staff? Are you planning to partner with other accountants?
- What is the size of the market that you are entering? Does it offer enough scope for the kind of growth that you are aiming for?
- What will be your pricing structure be, which revenue streams are you banking on, what are the expenses that you foresee?
- How much money does your firm need to earn in order to breakeven or become profitable?
4) Develop the ability to win clients – network and market
Unless you are starting your firm with a strong stable of clients, the biggest challenge you will face going it alone is getting new business. Many of the accountants that we have worked with say that they severely underestimated the number of clients they would need to keep the lights on. In order to get new business, you will need to network a lot more and invest in marketing your business. Some of the most fruitful avenues of getting new business are:
- Referrals from existing clients, ex-colleagues, family and friends
- Upselling services to existing clients
- Business from organisations that you are a members of
- Digital marketing – this can be a game changer
- Networking at trade shows, industry events, etc.
- Seminars, webinars, or other speaking engagements
- Cold calling and visits to potential clients
5. Leverage the right type of technology
As your accountancy practice blossoms and you establish your reputation in the market, you are likely to receive more and more work.
At this level, it becomes essential to put in place systems and processes that ensure consistently high quality of output from your team. It’s also important to invest in the right kinds of accounting technology. With financing software like Intuit's QuickBooks accounting, Xero, Sage 50, etc. you can digitise or automate certain activities and work more efficiently.
6. Build a team you can rely on
Let’s say you hit the mark with all of the above. Now your firm is growing and you need more people to assist you. In order to hire the right staff, it is essential to get the below points right:
- Invest in a professional office space
- Have a structured hiring process
- Identify the cost of hiring staff vs. output
- Consider hiring full-time vs part-time
- Figure out what training the staff will require and who will train them
- Clearly specify what the job entails
- Ensure that the new employees do not dilute the quality of client care
- Foster a positive environment and chart out career growth possibilities
Hiring and retaining staff can sometimes be a troublesome and costly process. Many of the staff accountants, especially the good ones, may want to start their own practice at some points, or may simply leave for greener pastures. In such a situation, you can consider outsourcing your work to a reliable company – if done correctly, this can not only free you up to focus on more strategic aspects for he business, but also save you a significant amount of money.
For help starting a discussion on how outsourcing can help you, contact us.
For other related articles, check out: