10 Ways to Start Your Own Bookkeeping and Accounting Business
If you’re an experienced accountant, or even just someone who has an interest in the field, you may be considering starting your own business. With approximately 500,000 accountants in the United States alone, it’s no surprise that more people than ever are choosing to run their own businesses and work from home as bookkeepers and accountants. Here are 10 tips on how to start your own accounting business from the ground up.
1) Have you found your niche?
If you haven’t yet, take some time to think about what makes your business unique. This will help you figure out where you can set yourself apart from your competition. Is it a specialized service? The ability to travel? Top-notch customer service? Offering more than what other similar businesses do? You should also consider how your customers prefer to be reached: email, phone or in person? How are they most comfortable paying you (cash or check)? What services do they value most (and least)? And how much are they willing to pay for those services? While there may not be one right answer for all of these questions, taking time to really get inside your customers’ heads is key in creating a successful business.
2) Is your business idea scalable?
If it’s not scalable, it’s not a good business idea. It might make you a little money in the short term, but there are only so many hours in each day—or days in each week or month. Any job with low margins will eventually force you to slow down your growth, which is never fun if you’re an entrepreneur who thrives on being on top of things. In addition, scaling up requires capital. So how do you know if your business idea can be scaled? Ask yourself these questions: Do I have at least $1 million in sales potential? Can I grow my revenue by at least 20 percent per year for five years? If yes, then you have a great scalable business model!
3) Can you network with professionals in the industry?
Your networking efforts should begin with your accountant, who can tell you how common it is for new businesses in your area to hire their own bookkeepers. If most of them contract their work out, you’ll know where to focus your job-seeking efforts. You should also reach out to other entrepreneurs in a similar field—their perspective will be invaluable when it comes time for you to identify what kind of service you want to offer and how much you’re going to charge for it. Can you do all of your work yourself?: Many business owners find that they have to wear many hats at first, especially if they don’t have any employees yet. But there are some tasks that are best left to specialists: accounting is one example. Even if you have an MBA or CPA on staff now, it might make sense to hire someone else as soon as possible because bookkeeping isn’t just a skill; it’s a whole profession unto itself.
4) Do you have a clear advantage over competitors?
If you don’t have an advantage over competitors, you won’t stay in business long. If you can’t find any advantages, look again! Do you have more experience than competitors? Do you offer more skills? It is better to specialize in one area that requires a high skill level than trying to be everything for everyone. For example, if you are a bookkeeper with 10 years of experience and great reviews, it might make sense to start your own accounting firm instead of looking for work as an employee. In fact, many accountants who are unhappy at their jobs decide to do just that; they start their own firms so they can have more control over their careers.
5) Where do you want to get financial support from?
When planning your bookkeeping business, you will need a steady source of financial support. As we know, capital is hard to come by; that’s why you have to figure out where you’re going to get money from before jumping into planning your bookkeeping business. Do you plan on getting financing through personal savings or through friends and family? If so, how much are they willing to give? Or are you planning on getting financing from banks or other loan providers?
6) Will you be able to find startup capital quickly?
You may have a great idea but if you can’t find startup capital quickly, you won’t be able to start your business. Use proven methods of finding startup capital that can help you get started. You may also want to check out angel investors or venture capitalists who are willing to fund startups in exchange for equity ownership.
7) What are the average returns on investment?
If you’re trying to decide whether or not it’s financially worthwhile for you to start your own bookkeeping and accounting business, consider these simple numbers: The typical return on investment for owning a business is in excess of 400% per year. So if you’re willing to work hard enough to make $1,000,000 per year after taxes (more on that in a moment), then it would take less than 5 years before your initial outlay was paid back.
8) Can you service customers remotely?
For most small businesses, success comes down to attracting new customers. A key question is whether you will be able to handle those customers remotely. To start a business, it’s often not necessary to open a physical location or office; instead, you can offer your services by serving clients online or through a phone line. If your service isn’t location-specific—for example, as a bookkeeper—you may be able to work remotely with little or no startup costs.
9) Are you willing to work long hours?
Working long hours as a bookkeeper isn’t always necessary. For example, if you’re starting a business in a rural area where there are few other options for professional accountants, then you may need to put in more time than someone starting their own practice in downtown Chicago. If you love accounting, have experience with small businesses, and don’t mind working long hours—then go for it!
10) What are your exit strategies?
Any business needs an exit strategy, whether it’s when you want to sell your company or when you want to retire. Knowing how you plan on exiting your business can save yourself a lot of hassle down the road. A few questions you should ask yourself: What value am I bringing my customers? Can I reduce that cost in any way? How can I make it easier for my clients so they don’t have to use me at all? Is there anyone who could replace me?
