Editor’s note: This article is the first in a series about starting or buying a firm.
Many CPAs dream of starting their own public accounting firm, their name displayed proudly outside a welcoming office. They envision being their own boss, choosing their clients, and having greater freedom to do the type of accounting work that truly inspires them.
To turn this dream into a reality, though, CPAs need certain entrepreneurial skills as well as solid accounting knowledge. In this article, four accountants, all of whom launched or bought their own firms by the age of 35, talk about the qualities needed to be a CPA-turned-business owner.
For starters, you have to be willing to work long hours to drum up clients and build the practice, said Micah Fraim, CPA, who founded his Roanoke, Va., firm in 2013, when he was 23 years old.
“You need to figure out each client's issues, and set up a plan from an empathetic state of mind,” added Evan Hutcheson, CPA, who founded Evan Hutcheson CPA LLC in Nashville in 2012, at age 28. “But you must also have a business-oriented mind, and scale your business for growth.” Hutcheson started his firm from the ground up, and now has about 200 individual and business clients.
Starting one’s own firm “isn’t for the faint of heart,” said Renee Prince, CPA, CGMA, founder of Renee Prince, CPA PC in Granbury, Texas. She launched her firm in 2012 from scratch, after working six years in public accounting, and works in a home-based office.
“I started in the middle of one of the worst recessions in history, and everything about that was a challenge,” reflected Dallas-based Chris Gummer, CPA. After more than a dozen years working in public accounting and industry, he founded The Gummer Group LLC in 2009 when he bought a small practice from a retiring CPA. Gummer was 35 at the time.
These four firm owners offer the following advice about what you should do to run a successful practice:
Know how to network. Whether or not you’re a “people person,” you’ll need to step up your networking efforts before and after launching your firm. Speak with potential clients, with other professionals such as bankers or attorneys, and with other CPAs for guidance or to help grow your business.
Fraim attended networking events, even though he felt “awkward” at first, he said. Gummer, who previously worked for Arthur Andersen, got counsel from mentors and partners he knew at the Big Four firms and became more involved in professional organizations, such as the Texas Society of CPAs (TXCPA), Success North Dallas, and the TXCPA Dallas chapter. Hutcheson became a member of a community called Thriveal where entrepreneurs exchange ideas.
And Prince drove 342 miles to Lubbock, Texas, prior to starting her practice to tap the expertise of a former colleague. Networking can result in new opportunities and introduce you to “people in your life who can give you insight on how to be better as a firm owner,” she said.
Learn how to market your firm. Clients don’t automatically come knocking, so you must market your business — with some pizazz. For instance, Fraim bolstered his website, spent hours on LinkedIn searching for potential business, and did email marketing. He also studied search engine optimization techniques to gain higher visibility and researched what marketing firms were doing to create buzz for clients, he said.
He also wrote a blog every two weeks, addressing accounting, tax, and finance matters, to help draw attention to his website. “I was trying to establish my fledgling brand and make sure that people thought of me specifically for taxes,” he added.
Have a plan. Don’t dive in headfirst without a road map. (The AICPA PCPS “Starting Your CPA Practice” planning checklist is one place to start.) Create a financial/business plan for your firm prior to opening your door. Write down your aspirations and short- and long-term goals.
“You’ve got to be able to do a budget,” Gummer said. “Build your financial model and take it to your mentors, and see what they think about it. Ask them, ‘What am I missing?’” Employ time-management skills to plan each day, and use electronic tools like calendars to keep you on track, he advised.
Assess your risk tolerance, advised Fraim. “Planning always gives you a much clearer idea of the reality you are dealing with, and then you can adjust and tweak accordingly,” he said.
Screen prospective clients. You may be desperate for business early on, but don’t accept every client that comes along, said Prince, who admittedly took on clients she didn’t really want in her early days as a firm owner. In addition, she billed some clients at too low a rate because she was worried they would walk away. “What I’ve learned is, that’s not true,” she added. “Somebody else will always come along.”
If you have difficult or less desirable clients, let them go sooner rather than later. “It was a good year before I fired my first client, who probably needed to be fired a couple months in,” said Prince.
PCPS members can use the PCPS Good Fit Client Tool and the PCPS Client Evaluation Tool to assess whether clients are the right fit, and download a sample client disengagement letter.
Cultivate people skills. Conflict may surface with some clients, so learn how to handle discord professionally. “If you want to be the face of the firm, and are the one bringing business in and retaining the clients and managing the relationships, you really have to know how to deal with people,” Fraim said. “You have to be able to shift your mindset and learn not to take things personally.”
Be a good listener, Prince noted, as the ability to listen to mentors, clients, and employees can be instrumental to your success.
Know how to lead and delegate. Watch effective managers and partners and adopt their positive behaviors, Gummer advised.
Also, know how to interact with your staff, even if their work styles differ from your own. “What I’ve learned is that everybody works differently, and nobody will work exactly like me,” said Hutcheson, who manages two employees.
Finally, entrust employees to handle some tasks so you can work on the ones that are key to the business. Advised Prince: “Successful entrepreneurs delegate tasks to others so they can focus on the things only they can handle.”
Cheryl Meyer is a California-based freelance writer. To comment on this article or to suggest an idea for another article, contact Courtney Vien, a JofA senior editor, at Courtney.Vien@aicpa-cima.com.