Recast Episode: This episode was originally published on September 27, 2018, but it’s a favorite among our Growing Your Firm Podcast community, so we’re bringing it back. Tag us in social to tell us if you’ve been listening to the podcast since the original airing of this episode.
Hannah Stricker always wanted to be her own boss after 25 years in the accounting field. Finally, she gave her notice and went off to start an accounting firm from scratch.
Within 12 months, she had banked 6-figures in revenues and she’s ready to show how she did it.
How She Got Started
With a background in accounting, bookkeeping, and taxation, Stricker set her sights on owning her own accounting firm. Prior to taking the plunge into entrepreneurship, she built up a healthy savings account that could cover 6 months of expenses, giving her several months to see if her business plan worked before having to start looking for another job.
With over 20 years of accounting experience, a willingness to put herself out there, and a drive to succeed, Stricker was able to hit the ground running. She had several signed contracts within the first six months of starting her practice.
Through hard work and determination, she was able to land clients and didn’t have to deplete her savings in the process of building her firm. Taking a dive off the deep end as Stricker did may not be for everyone but, in her case, the reward was well worth the risk.
How to Find Prospective Clients
Stricker found clients by networking through volunteering. She found that meeting people at her church events put her in contact with the right people. But even if you don’t have a ready-built network like a church, here are five simple ways to get started identifying new clients.
#1: Ask Friends and Family
There are so many small business owners out there that need help getting an accounting system set up. In 2021, a record number of people started a business, and it’s likely many do not have an accounting background and could use a Certified Public Accountant to help them set up their accounting operations properly.
#2: Find Local New Business Owner Meetups
They exist, although they might be virtual meetups these days. Since you’re starting your own accounting business, you’ll fit right in and have a pool of potential clients. It’s a win-win! Just be sure that you’re adding to the discussion about the trials and tribulations of starting a small business and not going for a constant sales pitch.
#3: Leverage Online Platforms
Online platforms like Upwork or Fiverr are great places to start building a client base. They allow you to build a reputation for quality work, meet clients from a wide geographic area, and set your own pricing.
Though it can be hard to get those first couple of sales because the competition can be fierce, once you have a few five-star ratings, you’ll see your client base and orders increase.
#4: Advertise in Your Community and Online
Create a website, post on Craigslist, sponsor a Little League, and ask for some advertising in return. Build a presence on Facebook and LinkedIn too — you can run paid ads on both of these platforms tailored to your target market, whether it’s startups, small businesses, or growing, larger organizations.
#5: Talk to Existing Clients
You need to tread carefully with this one, but are there clients that aren’t being properly serviced by your prior firm? While we’d never recommend stealing clients, they may need additional services that your prior company isn’t providing.
As a bonus, they already know you and your work which makes the sales pitch that much easier. Just make sure you’re not violating any non-compete agreements from a former employer.
How to Set Rates for Your Services
Though you may think that the best option is to set your rates based on each client, it’s best to have an idea of how you want to bill and how you value your time.
Stricker decided that she wanted to work with clients on a retainer, but that’s not the only option. You can charge by the project, by the billable hour, or charge a retainer. Each of these options has positives and negatives.
Option #1: Flat Fee
On a flat fee project, you quote the client a price for the project, and once they agree the price is set. These projects make your cash flow projections easier and, unless you lose a client, you’ll have a really good idea of where the money is coming from each month.
The downside is that you are taking all the risks if the project runs longer than expected. To offset this risk, you can include a maximum number of hours for the project so that the cost of project creep doesn’t fall entirely on you. On a truly flat fee project, you also get to skip tracing your time.
Option #2: Billable Hour
The billable hour has long been the scourge of lawyers who are often required to bill in six-minute increments. If you decide to bill by the hour, you figure out how much you want to make each year and the number of hours you are willing to work to determine your hourly rate.
If you are working with multiple people, you may want to bill differently depending on each team member’s experience or expertise. When billing by the hour, it’s important to keep records of time spent on various projects and provide your clients with itemized bills.
Option #3: Retainer
Clients are charged a regular weekly, monthly, or quarterly fee. Prior to commencing your work, you determine which services are covered under the retainer. Stricker provides all accounting services, payroll, and a tax return for a set monthly fee.
Prior to quoting a price, she meets with each client to determine the level of service that they need and how often she is expected to interact with the client’s books. Like the flat fee method of billing, this method means you’ll have to accurately assess the amount of work involved for a client.
Any of these billing methods can work and you may end up using a variety of billing methods depending on what various clients are comfortable with.
Note: Keep Profit Margin Targets in Mind
When setting your prices, you should also consider your profit margin. Stricker has been able to achieve an 85% profit margin on her first six figures of revenue. Unless you are paying other team members, the cost to provide accounting services is minimal, but you need to take into account the value of your time when setting your rates.
To maximize your profit margins, you need to make sure that you’re working efficiently. Even on hourly projects, clients want to see that you are billing a reasonable number of hours for the project.
You can increase the efficiency of your practice by implementing a standard workflow for each client. While you may decide to create your own workflow system using spreadsheets, companies such as Jetpack Workflow have created free workflow templates and online accounting software systems to help you get organized faster and streamline your CPA practice.
How to Set Client Expectations
The quickest way to disappoint your clients is not having clear expectations for your services. The initial quote you provide for your potential client should clearly lay out the services included in your quote, the expected time frame for completion, and the estimated cost (if hourly) or total cost if flat rate.
Having a client sign and return the quote ensures that everyone is on the same page if there are any questions later as to which services were included in the project scope.
Additionally, unless you want to be available to clients 24/7, you should provide standard operating hours. Stating when you are available or standard response times allows you and the client to come to an understanding about your availability.
Of course, if you want to be available to your clients at any time, you should highlight that feature in your sales pitch.
Which Accounting and Bookkeeping Services Should Your Firm Provide?
When starting an accounting or bookkeeping firm, you should determine which accounting services you want to provide. There are numerous options depending on your background and credentials.
The services that you offer may include any combination of the above services or additional financial data work requested by clients. It’s important to be seen as a valuable advisor with a breadth of knowledge in the financial field.
Ultimately, you will need to make the choices for services provided based on your own preferences. It’s important to keep in mind the difference in timing and seasonality of certain services.
If you have 20 regular bookkeeping clients and have also taken on a large number of tax clients, you may not be able to successfully navigate the work in the busy spring season.
How to Manage Multiple Projects
Once you have landed multiple clients, it’s important to ensure that you are not losing track of projects. Each client will have specific requirements and various deadlines. Having a solid system in place to track deadlines and allocate resources (and time!) will help you be successful as you launch your accounting business.
Though paper to-do lists can work for a while, as your firm expands, you will probably need to upgrade to a more robust tracking system — whether that’s a spreadsheet system or online systems like Jetpack Workflow.
By setting up your systems during the early days of your firm (when you have more time), you can make the use of your system a well-ingrained habit.
Get everything you need to manage projects and meet deadlines.
Checklist for Getting Started Launching Your Accounting Firm
#1: Have a Vision
Set your sights on where you want to be in 1, 5, and 10 years so you know if you’re meeting your revenue goals. Put a strategic plan in place to get there, but know you’ll have to be flexible and allow yourself to correct course depending on how things play out.
#2: Build a Cushion
As accountants, we work well under pressure, but in this case, it’s best to have some savings or safety net to help get you up and running.
One important note — running your company like a true business means doing many of the strategic things you’d advise a client to do, such as setting up an LLC to protect your personal assets, setting up a business bank account, and more.
Get legal advice on what makes the most sense for you given the stage of growth you’re at. Your business structure may change over time, but either way it’s important to get tailored advice in the early stages.
#3: Determine Your Service Offering
Before you go out and make a sale, you have to know what you are selling. Do you want to do tax work? Are you willing to be on call for your clients? How do you feel about handling their receivables?
Knowing the answers to these questions will allow you to speak confidently with clients when they’re asking about your business, and definitely before you begin to scope out an engagement.
#4: Find Your First Client
Networking, volunteering, and online job boards are all great ways to get started. You may have to try multiple avenues to get going, but keep putting yourself out there until you land that first gig.
Make sure you have a thorough understanding of their needs and current practices. Identify the areas where you can add value and alleviate headaches.
#5: Adopt a System for Tracking Projects and Clients
Provide excellent customer service by managing your clients’ work well and ensuring that nothing slips through the cracks. This can be done in a spreadsheet or using an online workflow management system like Jetpack Workflow.
It’s important to ensure that you are providing complete, accurate, and timely service for the first few clients to ensure retention and word of mouth advertising down the road.
Check out these 32 free accounting workflow templates and checklists if you need a good starting point.
#6: Ask for Referrals
Talk to people in various parts of your life and see if they know of anyone in need of your services. A personal recommendation can get you in front of the right people faster. Always have a business card ready in case a random conversation veers towards your services.
#7: Stick to It
Though Stricker reached six figures within a year, be patient and stick to it even if your own accounting practice grows slower. Perseverance counts for so much in this business. Since you built your strategic vision in step one, return to this and review and continue refining to keep your motivation going.