Six mistakes to avoid when starting out

Missouri CPA Bert Doerhoff offers some reminders based on his experiences starting up on his own.

Owning your own accounting firm can be an incredibly rewarding experience, but before you make the jump there are six mistakes that can scupper your chances. Read on to find out what they are and how to avoid them.

Mistake 1 - Fail to market yourself If you’re working for a large accounting firm and are itching to go solo, remember that you will not be guaranteed a similar client base when you start out. 

Mistake 2 - Cut corners when preparing clients' taxes Accountants need to set an honorable example for their clients, particularly when dealing with tax affairs. When you hold yourself to high standards, your customers will do the same.

Mistake 3 - Do it for the wrong reasons Dun & Bradstreet found that 27% of people go into business because they're tired of working for others. This is an acceptable reason, but be sure that you aren't simply bitter toward an old boss or tired of your nine-to-five schedule. Running your own firm comes with challenges that shouldn't be overlooked.

Mistake 4 - Not selecting a target When you start your own firm, you need to decide what type of clients you want. Many accountants offer all of their specialities and services to anyone who will listen. By all means make clients aware of all your skills, but be sure to develop a speciality or set of strengths. 

Mistake 5 - Spurn the help of other advisers Accountants need their own set of advisers. Recruit advisers who can help steer your business in the right direction. Acknowledge areas where you are strong, and areas where you could use professional guidance - then seek out those resources. 

Mistake 6 - Not hiring the right team Employees are integral to the success or failure of your firm. They should share your goals and commitment to hard work and believe in the future of your firm. Be picky and look at candidates' CVs, personalities, clothing, communication skills and so on.

Further reading

About the author

Bert Doerhoff is a CPA who specialises in small business accounting and wealth management. He started his accounting firm Accubiz in Jefferson City, Missouri in 1978. Accubiz was chosen for the first-ever National Client Service Accounting Firm of the Year Award by the National Association of Small Business Accountants. 

Continued...

» Register now

The full article is available to registered AccountingWEB members only. To read the rest of this article you’ll need to login or register.

Registration is FREE and allows you to view all content, ask questions, comment and much more.

Comments

hmmm.....4.......

justsotax | | Permalink

not sure when you are starting out that you have any other concerns than paying the mortgage/putting food on the table etc, so 4 seems a little inhibiting although i see its value longterm as part of the 3-5 year plan. 

dbowleracca's picture

Not a very good article IMHO    2 thanks

dbowleracca | | Permalink

I don't think this is really worth publishing, if I'm honest.

There have been many better articles on starting up that actually have a chance to help you succeed.

The author says "be the lowest price option to build goodwill and referrals" (sort of) which is a sure way to overwork yourself and devalue yourself, whilst not earning much money.

He also says "don't advise your clients to pocket cash or do foreigners" well I can't think of anyone who would!

This needs to be expanded upon and given some more thought, to make it valuable to anyone reading who is considering starting on their own.

Hansa's picture

Don't do foreigners?

Hansa | | Permalink

dbowleracca wrote:
He also says "don't advise your clients to pocket cash or do foreigners"

Either I'm going blind or had one too many! but I cant find any reference to foreigners (directly or by implication).  With regard to 'pocketing cash', I think readers in the UK need to remember that accountants in the rest of the world have neither MLR or SOCA to contend with, and this, (re-written) probably does need saying for his US audience.

Apart from that I agree with both of the above posts.  The article reads a little like the preamble to a self improvement course ... both verbose and vacuous.  This may be simply American writing style, but I think it could have been edited to half it's length - and then expanded upon. 

In terms of content I think it gets it's priorities wrong.  ... No mention of where one's first clients might come from for example; and talking of recruiting is pie in the sky for most start ups.

My biggest criticism is the suggestion that start ups should engage in a "race to the bottom" in respect of fees.  Using the old 1/3 (for wages),1/3, (for house), 1/3 (profit), will give a base charge out rate and this is relatively easy to adjust to fixed fee work.  To go with this, detailed time records must be kept.  Unprofitable work can then be got rid of or repriced in line with experience.  

Psychology has a big role ... Some of my best paying clients always look for a "discount" and once identified this is easy to deal with by "fully" pricing and allowing a small discount to be taken.   To counter "the accountant round the corner is cheaper", there are many ripostes (quality is never cheap, you get what you pay for etc etc).  Opening gambits e.g. "1st hour's consultation free and without obligation" probably get more and better clients than "£399 for xxx" ever will. 

etc. etc.