Are you thinking of beginning a CPA Firm? Or are you ready to re-invent the one you already have?
In any case, we’ve compiled a list of major emphasis areas to assist you in doing future planning.
This checklist can assist an aspiring sole practitioner or small company owner in addressing startup factors. These factors typically include establishing your target market, establishing a business plan, understanding your financial needs, and more.
So now, let’s check out the ultimate beginner’s checklist to starting a CPA firm.
Why You Should Start a CPA Firm
Not everyone is suited to run their own company. Starting a CPA company necessitates a diverse set of skills and abilities.
So it’s best to establish whether you are indeed cut out for the task ahead before committing precious time and energy.
Here’s a quick rundown of some factors that can indicate whether you’re ready to start a CPA firm:
- Sufficient public practice experience – Without this valuable experience, it would be unwise to start your own CPA Firm. As the saying goes: “don’t cut corners.”
- Loads of determination and motivation – To keep you on track for growth and knock-backs that you will encounter.
- Beneficial work habits – As a business owner, you must be efficient and hardworking, with a focus on results. Are you capable of completing tasks consistently? Even in a small CPA practice, effort alone will not suffice.
- Excellent communication skills – To work well with clients, prospective clients, and staff, you must express yourself effectively.
- A Positive Attitude – If you’re prone to being negative, you might not be cut out for starting a CPA Firm. There will be many inevitable times when you feel like things are getting hopeless. A positive attitude can keep you going in these challenging times.
So if you’ve read all the factors above and believe you fit the bill, it’s time to read on!
Create a Vision
It may seem that some of the most talented new entrepreneurs incline to skip the planning stage and get to work right away. And it is possible for these guys to be successful.
However, the reality is, things become more manageable when you prioritize planning. You will find that you require less effort, and you can be more profitable when you plan ahead effectively when owning you own accounting firm.
Those who have had to learn this lesson the hard way know how vital good planning is. And this may include those once young entrepreneurs who will look back and think how much easier things could have been if they had done so.
So it’s a good idea to begin by determining what you want to create. Here are some questions to help you focus on your objectives and see your future:
- What is the best way for me to describe my preferred practice model?
- What kind of work will I concentrate on?
- What am I not going to do?
- How long do I want to devote time to the practice?
- What are my revenue targets for the next five years?
- What would I say about my ideal potential client?
- What employee characteristics am I looking for?
Take some time to think about these questions and answer them in a detailed manner. Once you’ve done this, the clarity you’ll feel about what you need to do will start to form.
How Much Capital Will You Need?
Make a month-by-month budget for the first 24 months to calculate how much capital you will need.
Because CPA firms’ earnings are often seasonal, cash flow can be difficult to manage when they first start out. The cash flow estimates for the next 24 months will help you anticipate those troughs and control costs and expenditure.
Understand Your Landscape
The competitive landscape and the broader business environment are the most important things for business owners to comprehend.
It’s a lot easier to start a practice in an area where the economy is booming. You will have an easier job differentiating your services to attract new clients if you have a distinctive value in the marketplace.
So even if you have strong roots in a particular location, it’s very much worth considering moving on to fresher pastures.
Clearly Define Your Target Market
One of the most common mistakes we’ve seen accounting practice owners make as their organizations develop is trying to be everything to everyone.
Burnout, minimal profit, and long hours are things you should seriously contemplate happening. Therefore, it’s far better to be laser-focused and define precisely what you are aiming for.
To get started, you may need to be a bit of a generalist at first. However, the more explicit you can be about the firm’s target market throughout the planning, the better. It will have a significant impact on your marketing and sales strategies.
Here are a few thought-provoking questions to help you figure out your target market:
- What industries do you prefer to work in, and what are the most common accounting and tax service requirements?
- Which of your previous clients were perfect?
- Describe what caused them to be that way.
- What are the best ways for you to generate value? Is it creative accounting, estate planning, or business consulting?
Sales and Marketing
One of the essential criteria that distinguishes high-growth accounting firms from low-growth firms is the marketing strategy.
However, the quantity of money spent by a corporation does not always determine who wins and who loses. It’s how they decide to spend their marketing budget.
Large companies with multiple locations frequently have dedicated PR and marketing teams to manage their company development. Smaller businesses, on the other hand, must be strategic in their marketing efforts.
Most small accounting businesses will lack a marketing department to assist them in attracting clients.
To help you solve this difficulty, here is a list of marketing ideas for starting a CPA firm on a tight budget.
Develop Your Marketing Strategy
It may seem self-evident, but your marketing activities are likely to be haphazard if you don’t have a clear marketing strategy in place. You should include business goals for your CPA advertising.
Include it in your plan if you intend to appeal to clients who need tax assistance for small businesses, for example. In addition, set short-term and long-term goals to track your success.
Perform a SWOT analysis to figure out the strengths of your marketing plans. You can determine this by looking at information from existing client feedback or data analytics. Also, ask yourself if you can turn any flaws into assets?
Networking Is Key
There are various low-cost ways to get your business noticed at networking events such as seminars, workshops, and conferences.
However, following up with potential clients is more important than collecting business cards. Accounting businesses can offer to convey their knowledge or provide workshops if the event is particularly relevant. These events aren’t designed to close sales; rather, they’re designed to create your pipeline and introduce you to appropriate people.
Many high-growth accounting businesses have identified and targeted defined niches. And person-to-person networking will always be one of the most important marketing techniques to spur on that growth.
Follow up With Clients
After a given project is completed, don’t allow your previous clients to forget about you. Make it a habit to send pleasant remarks via email at least once a quarter to stay in touch.
Tell them how much you liked working with them and that you are available for any more assistance.
Another clever and impressive approach is to send birthday and anniversary greetings. You’d be shocked at how many of them were considering rehiring you or attempting to recollect your name and contact information.
Also, do a client survey and solicit comments to determine how you might improve the customer experience. Understanding your market might be aided by assessing your clientele.
Utilize Social Media
You can find most of your clientele on social media sites now, such as LinkedIn, Facebook, Twitter, and Instagram. And the trend now seems to be that the majority of your accounting firm’s clients will be found on LinkedIn.
People use these platforms not only to socialize but also to connect with a variety of businesses and services. So, using these platforms to submit posts about your services will help you gain a vast client base.
Client Experience at Your CPA Firm
The majority of clients are looking for someone competent and easy to get on with. Personalization is incredibly beneficial.
Step one is to create an excellent client experience if you’re serious about gaining top clients through referrals.
Aim to establish a great practice through word of mouth and referrals if you first give a service that is worthy of a recommendation. This is something that needs to be done on a regular basis.
Let’s face it, routing out an excellent salesperson is a lot tougher than finding a satisfied customer. Therefore, don’t underestimate the value of your customers, as word of mouth has proven to be very powerful.
Your customers, whether current or former, communicate with other businesses. Their endorsement of your firm will enhance your reputation and help you gain new clients.
It’s a common misconception that asking for referrals is impolite or demanding. They are your customers because they appreciate your knowledge and service. Proactively ask for referrals. Don’t rely on the idea of waiting and seeing what will happen.
The Culture Within Your Firm
You can develop your firm’s culture by determining the values by which you will guide your team. This is more vital than having set hours or a dress code, but both are factors to consider.
One of the top problems that CPA companies may have is attracting and maintaining talented professionals.
Arguably, building a solid team from the ground up requires a fun, productive workplace where people can learn and grow. Also, you should consider various incentives that can work well for you and potential team members, not just higher salaries.
Burnout is a genuine issue to be wary of. If you’re like most newcomers, you won’t mind working long hours. It won’t feel like work for quite some time, maybe. This is because your working days can be carried by a certain level of enthusiasm and adrenaline.
However, maintaining 70 plus hour work weeks over an extended period is unhealthy. It can genuinely harm not only your personal life but also the success of your business. Although it may seem counterintuitive to some, some of the most successful CPAs in practice take time off.
Other Practical Advice
Here are some of the more apparent considerations you should be thinking about when starting a CPA firm.
Yet, it’s important to mention them, so you have a well-rounded checklist here to refer to. These considerations include:
- Choosing an office – Depending on your business concept, office space may be very important or not at all. And given recent pandemic restrictions, many businesses have realized they can work well remotely.
- Deciding on technology – Various cloud-based bookkeeping and tax tools can serve clients from anywhere while improving the customer service experience. Also, IT outsourcing can take a lot of stress out of your enterprise.
- Make a pricing model – Generally, value pricing is a common way that accounting firms determine how much to charge. But it’s always good to explore your options.
- Developing a client selection method – Try to set criteria based on a number of key factors that you value in clients. These could be anything from how easy they are to do business with through to a client’s financial situation.
- How will you be paid – Collecting and pursuing money is frustrating, time-consuming, and not a good use of your time. If you must hold accounts receivable, devise a system for communicating with clients swiftly when you don’t receive payments on time.
Making a Business Plan
Once you’ve considered all that’s mentioned above, then it’s time to make your business plan.
Although you might not need a formal business plan for financing, the process of developing one is highly beneficial. You must be clear about how you will build and build your practice due to the required discipline. It allows you to make mistakes on paper rather than on the practice field.
Note that regulation has increased in several practice specialties; thus, double-check with state and national rule-making organizations. Also, check with professional groups such as state societies and the AICPA. This way, you can see whether requirements will apply to you or your accounting company.
Starting a CPA Firm the Right Way
One of the key takeaways here is understanding why you are starting a CPA firm in the first place. Also, what are you going to specialize in to make you stand out in a competitive market?
Of course, meticulous planning and preparation of all the practical factors we’ve mentioned above are essential too. Good luck, and thanks for reading. For more interesting reads, please check out our blog.