[IMGCAP(1)]Many dream of the day they can start their own business. For some CPAs, the leap to self-employment means a chance to set their own schedule and balance work and family on their own terms. For others, it’s about leaving a boss behind and taking the reins.
I started my first business about 20 years ago and have never looked back. For me, nothing is more fulfilling than building something from scratch. However, becoming an entrepreneur takes more than just accounting expertise. Some people can create a successful, sustainable solo career, even build their own firm, while other equally talented CPAs dabble in self-employment for a year before deciding to go back to the stability and perks of an established firm.
If you’re considering starting your own accounting firm, you should ask yourself these five questions to make sure you are truly ready to dive into self-employment:
Why do you want to work for yourself?
This may seem like a simple question, but you should think carefully about your motivation for going solo. Some people try to start a business just because they’re frustrated with their boss or the grueling commute to the office. You might be tired of working for someone else, and this is a perfectly reasonable motivation. However, running your own firm is an intense and emotionally challenging task. Make sure it’s what you really want to do and you’re not just trying to escape your current job.
How much risk can you tolerate?
Consider where you are in life right now. Can you give up the following: a steady paycheck, paid vacation and employer-paid health insurance? Most entrepreneurs will need to sacrifice these kinds of perks during the first few years of building a practice. You’ll be rewarded in other ways (such as self-fulfillment), but be prepared to handle both the financial and emotional stress of lean times.
One of the main reasons why a new business fails in its first few years is it doesn’t have enough capital at the beginning. This means you need to be realistic about your financing. The general rule of thumb is you should be able to support yourself for at least six months to a year while your business gets off the ground. This could be through your savings, a partner’s income or a part-time job.
Can you work without a boss?
I started my first business right out of law school, where I had always been told what to study, when to take an exam and what to do. When you start your own business, it’s entirely different. There’s no boss or professor to look over your shoulder and tell you what you need to do next.
For many, this probably sounds like a dream come true. But it can be hard to get started when there’s no set playbook to follow. To make it as an entrepreneur, you’re going to need the discipline and self-motivation to work hard even though no one is giving you a deadline or holding you accountable.
What will be your specialty?
Before you start your own firm, you should think about what type of clients you’d like to have and what type of work you want to do. It’s hard to build a brand if you’re marketing yourself as a Jack or Jill of all trades. Think about your specific set of strengths, decide what segment of the market you’d like to target, and build your brand around that.
Are you ready to wear many hats?
You may be brilliant at tax preparation or payroll, but working for yourself requires much more than those skills. First, you’ll need to deal with all the financial aspects of your business, from negotiations to contracts. You’ll need to be the marketing and sales pro to reel in new clients. You’ll need to determine the right business structure for your new business and set it up. And you’ll even have to be your own IT tech support when your printer stops working. In short, when you run a small business, you’ll need to wear a virtually endless number of hats—particularly in the beginning when you don’t have a big team to support you.
The bottom line is this: If you’re thinking about starting your own accounting firm, be sure to consult both your head and heart. Make sure the time is right and your motivation is clear. Then, get ready for an incredibly exciting and rewarding journey. As a business owner, your future is truly in your own hands.
Nellie Akalp is a passionate entrepreneur, small business advocate and mother of four. As CEO of CorpNet.com, a legal document preparation filing service, Nellie helps entrepreneurs start a business, incorporate, form an LLC, set up sole proprietorships and DBAs, and maintain a business in compliance with state filing requirements for a new or existing business.
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