Thinking about starting your own accounting firm? For many solo accountants and accounting employees, it’s an exciting prospect. Starting out on your own lets you decide exactly who you want to work with and what types of niches you’d like to break into.

But managing a firm requires a whole new skill set. Not only do you need to be good at accounting, but you’ll also need to be able to run a business, hire new employees, delegate tasks, and find new clients.

Here, we’ll walk you through a few of the basic things you’ll need to consider when starting your own firm, plus a few of the common challenges new firm owners face when they strike out on their own.

A few basics you’ll need to consider

In order to start your firm, you’ll need to to consider:

Startup costs: Chances are, you’ll need some runway to get new clients and set up shop. Starting with your own savings is ideal, but it’s also worth considering whether you want to get a bank loan or whether you can find a co-founder to share the costs with.

Market niche: Who are your ideal clients? You may not be able to be choosy right away, but starting out with a niche in mind is a good way to structure your firm’s marketing, pricing, and services with an eye towards your ideal future.

Business plan: Will you be a sole proprietorship or an LLC? Given your market niche, what’s your total addressable market and the price points for your services? What tools, office equipment, and other things will you invest in? When will you make your first hire? 

Keep in mind that a plan is one thing, but as any accounting firm owner will tell you, it’s easier said than done. Here are some of the common problems new accounting firm owners face:

1. Time management challenges

Starting a firm means a much higher administrative workload. You’ll need to keep meeting deadlines while making time for business development, networking, marketing, and everything else that goes into creating a successful firm.

There’s a lot more admin work in the beginning as you set up. Once you have all your admin, marketing, and business development processes in place, you’ll be in a much better position to determine how much client work you can realistically take on – so it’s best to get your business organized first, rather than taking on a bunch of new clients right away.

2. Capacity planning with a limited budget

It’s tempting to invest in all the best equipment and latest tools to hit the ground running, especially if you have a large influx of cash from a loan or savings. But it’s such a common trap that 82% of small businesses fail due to cash flow problems. 

Part of the solution is to keep your budget conservative, but many accounting firms also undercharge for their services at first. This can put you on a treadmill of working with low-paying clients that don’t leave you enough of a budget for the extra costs of running your firm, so make sure to set a minimum service fee that helps you cover your costs appropriately.

3. Fluctuating workloads

If you’ve been in the industry for a while, you’ll probably understand why it’s not a good idea to start a firm during busy season. Yet slower periods can pose cash flow issues that can make it difficult to get up and running, especially if you’re trying to minimize startup costs.

For a lot of firms, their bread and butter clients are businesses that need services like bookkeeping and payroll throughout the year, so during slow periods, it can be a good idea to target those clients. This will help you create more opportunities to retain steady work and boost your profit margin.

4. Client acquisition and retention

That said getting new clients in the door can also pose a challenge: if your current network is small, it might be more difficult than you thought to attract new clients. That’s especially true if you’re shifting gears from working as an employee to being a business owner and you’ve never been responsible for drumming up new business.

Having a solid digital marketing strategy is a good start, but networking at industry events can also help you get your foot in the door. Keep in mind that the best clients will want someone who’s affable that they can work well with over the longer term – so getting to know you, even briefly, can be a huge differentiator.

5. Scaling your accounting firm

Finally, it can be tough to decide when and how to scale. You’ll have to strike a balance between taking on new work, knowing when to say no to new work, and hiring new accountants to keep up with demand.

Attracting top candidates is crucial, since your team is the lifeblood of your business. It’s also a good idea to hire proactively before you take on more than you can handle, and to give yourself (and your new hires) some downtime at the start for training and professional development. 

Once you have the ball rolling, you’ll need good capacity management strategies to ensure that your team can handle the projects you’re taking on.

Shifting gears from employee to owner

If there’s one way to sum up the challenges you’ll face as the new owner of an accounting firm, it’s this: shifting your mindset from employee to business owner. You’re no longer just in charge of making sure everything gets done – you’re also in charge of deciding how it gets done, and who does the job.

With ProCharted, you can have everything you need to manage deadlines, centralize workflows, track employee time and productivity, and create invoices all in one place. With our easy-to-use all-in-one software for accounting firms, you can:

• Track due dates effortlessly with ProCharted. You’ll see all the upcoming due dates for your firm right on your home screen.
• Get new team members up to speed faster with software that’s intuitive enough for new employees to pick up quickly.
• Keep an eye on your team’s productivity across all their projects with simple dashboards that show you exactly how much everyone has on their plate.

Want to learn more about how ProCharted can help? Start your free 30-day trial today and get your new firm up and running with less hassle.