Doing It Over Again

If you had to start over again from square one, with what you know but without your current connections, how would you approach starting a business/firm?

Learn from other people's mistakes! I wish I had paid more attention to that when I was starting out.

Pricing. Definitely pricing. Never thought I'd say that, but there you go. The people who advocate higher prices to get rid of the riff-raff definitely have a point. The trick, I suppose, is to figure out what is fair and reasonable. I'm still learning that.

Prices.

#1 I should have charged high rates form the get go.

#2 is that I would no longer try to help every single person that asked for services.

Of course I made mistakes, didn't learn from them, and have a lot more to learn, and I have lots of other shortcomings - but starting with low fees and trying to provide services to all inquiries are my only major regrets. Well, those and not getting my CPA when I was younger (EA only).

is that I would no longer try to help every single person that asked for services.

That is a human nature and some people are very sensitive to that issue. My mentor was one such person. Every PITA in town came to him! In my early years I too did that to my detriment in many situations and then I changed when it started hurting my pocket book!

Prices.

#1 I should have charged high rates form the get go.

#2 is that I would no longer try to help every single person that asked for services.

Of course I made mistakes, didn't learn from them, and have a lot more to learn, and I have lots of other shortcomings - but starting with low fees and trying to provide services to all inquiries are my only major regrets. Well, those and not getting my CPA when I was younger (EA only).

X 100. I think I have a year or two in front of me of limited growth to get my life back and to scale a business going forward. Only bring in ideal clients and clear out all the low margin engagements from when I had more time than money.

One of my early mentors advised me to bill as high as is feasible under the circumstances because if you start low you will never catch up!

Great advice.

I don't want to derail and turn this into another "what does your fee increase letter" look like, and we've certainly beat on that horse a few times (for good reason - and I like those threads).

But I would like to say that raising prices is not easy - and sometimes, its awkward and unfavorable. When you start low, they will always see you as a discount preparer / alternative to Turbo Tax - and not an experienced professional/practitioner.

When you literally double or triple a client's price, sometimes that can turn them into a PITA because they start resenting you and ask you to do things like their dishes because the value they are getting does not feel the same to them.

If you aggressively "slide" their price up over time at a rate that significantly outpaces inflation - then you are sort of stringing them along and that's not fair to them or good business. They'll "feel" it and resent it.

So my point is, while it is fixable to an extent, it's huge mistake and hassle to fix down the road - which is back on topic.

As far as getting rid of clients you shouldn't have taken in the first place - that's easier to fix IMO.

When I have increased my billing I tell my client why. It is generally due to added complexity or a PITA factor.

After TCJA I had clients ask for a reduction because they started filing Std. deduction.

Selecting the market area.
Think long and hard about that one.

Pricing is often mentioned in response to this topic. It's probably the number one response.

In addition to what has already been mentioned regarding pricing, I learned to not just focus on my own input costs but rather on the value I provide to a client.

Example: A prospect comes to you, and his/her return is riddled with errors. He/she is upset with the current CPA due to communication delays, among other issues.

The current CPA charges $3,000 for compliance work. You crunch the numbers and come to $2,000 based on your input costs.

What do you charge in this situation? You're arguably going to deliver much more value than the predecessor. Food for thought...

Back to the OP, I would avoid/limit clients whose only engagement with you comes between Feb-Apr. That time is a premium.

Some folks are fine killing themselves during tax season and taking it easy the rest of the year. So this may not be appropriate.

For me, I want a year-round practice with full-time staff.

In regards to price, I would have forced myself to quote higher without fear that I will lose the prospect.

Lots of good advice here. Starting a business is about making contacts and working contacts.

First, I would suggest trying to develop a niche where you are perceived as an expert in that particular area of work. Maybe it's car dealerships, construction contractors, estate and trust tax, forensic accounting, or whatever it might be.

I'd look at doing speaking engagements in an area of knowledge you are comfortable with. I've personally known financial planners who started doing radio shows that weren't the sharpest knife in the drawer. They were not shy to talk to people and the audience immediately assumed they were an expert. Collaborate with attorneys, financial planners, and other professionals in this regard.

Contact local or regional news sources and offer to write a column weekly or monthly. It will help with name recognition and become a calling card of sorts. You might also introduce yourself to local bankers who could be in a position to refer clients to you.

Finally, always ask for referrals. I can't tell you the number of times existing clients, friends, or family asked me if I was taking on new clients. That should never happen and speaks to a lack of effective communcation on my part. Always be sure you let people know you are growing and looking for more work. Some of the best rainmakers I've seen in CPA firms were always asking for work. They'd go in for a haircut and come out with a client.

Good luck.

Back to the OP, I would avoid/limit clients whose only engagement with you comes between Feb-Apr. That time is a premium.

Some folks are fine killing themselves during tax season and taking it easy the rest of the year. So this may not be appropriate.

For me, I want a year-round practice with full-time staff.

In regards to price, I would have forced myself to quote higher without fear that I will lose the prospect.

Definitely limit the Feb thru April. Otherwise you would be killing yourselves.

Don't drive to clients. Make them come to you. When I started, I was moonlighting while working at a bank full-time. Then after I left the bank, I had gotten into the habit of "I'll come to you".

I agree and wish I did this earlier. After about 18 years in practice I started quoting new clients a 35-50% premium if they had to have their return done before 4/15. I call it surge-pricing. So far, many clients are good with either the sur-charge or being on my automatic extension list and my work is spreading out. As I get more clients accepting the surcharge, I will start moving current, low-priced clients into the May-Sep timeframe. But if you start your practice this way, it is easier.

Back to the OP, I would avoid/limit clients whose only engagement with you comes between Feb-Apr. That time is a premium.

Some folks are fine killing themselves during tax season and taking it easy the rest of the year. So this may not be appropriate.

For me, I want a year-round practice with full-time staff.

In regards to price, I would have forced myself to quote higher without fear that I will lose the prospect.

Here's another one for the thread...

I regret giving free consultation or tax advice of ANY kind to non-clients.



Doing this for free (thinking I would get a bunch of business) led to me giving out my absolute best stuff - to those that would mostly become the worst clients - if they came back at all.

And I paid to do it (overhead expenses). LESS than free.

And I provided free labor for shareholders of online DIY software corporations.

Many clients would come back to me several times because the tax preparer that they pay didn't have time for them, LOL. But at tax time guess where they went to do their taxes again?

I now charge $300+ for non-clients to be in the same room as me for an hour (an hour or so as needed - I dont watch the clock). But no free advice. Period.

I get MUCH better clients as a result.

I might be missing out on business - but a great portion of those who wont pay for advice turn out to be terrible clients.

If you want to have your own practice, you have to assess what you can bring to the table which is actually being a sales person. The problem with taxes and accounting is that it's not viewed upon as a valuable skill any longer. Why else would a new-bee CPA get paid 70K? I'm in CA and that's barely a living wage. There are many reasons for this, and not in the least Intuit, which pretends a tax return is just a commodity that can be done by a high schooler. Once people work with a knowledgeable accountant that image fades but it's still the advertising by Intuit, H and R Block and others, that does the damage to the profession. It's what many professions have to deal with. Unfortunately, IMHO the accounting profession is very vulnerable to this because of tax and accounting software. You have to know more than any lawyer, the rules change every year, and you get paid very little in comparison to a lawyer who does probate estates, for example. Having your own business will bring a lot more stress, you'll have to hire employees and be good at sales and be the big vision person (which does not go well with being detail-oriented which is needed for being a good accountant). A good accountant does in many cases not make a good business person. You'll charge too little, you cannot delegate, etc. So, if you're the sales person go for it. If not, you may be better of working for someone else who takes care of running a business, getting new clients and managing employees. Being a good accountant usually is not the same. The business of accounting is also not as profitable as it was 20 years ago.

Get a retainer for new clients with a lot of catchup work

Selecting the market area.
Think long and hard about that one.

Are there markets that are saturated to the point where practitioners can't find clients?

I thought that since it's so difficult to learn about taxes, set up a practice, and provide good service - that it is pretty much a "Field of Dreams" industry no matter where you set it up. (you build it and they will come).

Am I wrong in that perception of the industry? Am I just lucky to practice in a 50-mile area that is under-saturated with decent tax practitioners (there are plenty of them - but most can't handle what they take on and end up imploding in some way).