Growing a Self-Sustaining Accounting Practice

Are you running the business or is the business running you? Imagine leaving your practice to go on vacation for a couple weeks. Does the thought make you shudder? How would your business function without you? Would it function at all? While you may believe that having full control of your business is the best management approach, it doesn’t leave you with much freedom. Growing your business to become a self-sustaining accounting practice is an option worth considering. This requires you to start working “on” your business rather than “in” your business. It’s definitely a shift in perspective, but with it comes greater profitability and freedom.

This shift, however, also requires a major transition for your business, a transition Doug Tatum calls no man’s land. And Tatum should know after releasing a book of that same name: No Man’s Land: What to Do When Your Company is Too Big to Be Small but Too Small to Be Big. If you’ve considered growing your business beyond its current size and capacity, the following tips will help you better prepare for this tricky transition.

1. Realistically consider your business’s growth potential

Not all businesses must go global in order to achieve success. There’s value in running a small business out of your home and earning a comfortable living for you and your family. But if you’ve considered growing your practice to include a handful of partners and a considerable support staff, then you must stop and realistically consider your business’s growth potential. Tatum uses the example of a great chef attracting a large clientele to a fairly small restaurant. Will that chef’s value be diluted if the same restaurant were to open in three other cities? Does that restaurant truly have the ability to grow beyond that chef’s reach? The same applies to your practice. Does your business revolve around your unique abilities, or could you bring in partners and employees who could continue to offer those same valuable services to a larger client base? Before you consider crossing no man’s land you must have answered this important question.

2. Recognize signs you’ve entered no man’s land

If you’ve decided to move forward and take your business to the next level you must be able to recognize the signs that you’ve entered no man’s land. The biggest indicator is a reduction in revenue and a slowing of business. This means your business has grown beyond current capacity and changes must be made, and quickly, in order to see the business through this often difficult transition. Tatum also says businesses in transition encounter a capital gap where many must enter capital markets but are unsure how to proceed.

3. Appreciate your changing role

You can’t micromanage a self-sustaining business. Eventually you’ll be required to stop performing certain tasks in order to let the business become more independent. Stepping back a bit to let the company take care of itself may be difficult at first, but is necessary for those who want to enjoy the fruits and freedom a growing business provides.

4. Brace yourself for a change in the game plan

You can’t manage a big business the same way you manage a small business; the result would be a failing business. In order to successfully cross no man’s land you must change your game plan and consider infrastructure changes, new management, and the addition of employees with more specialized skills.

While crossing no man’s land may be difficult, it isn’t impossible. If you determine that is where you want to take your business, you’re certain to get there as long as you’re prepared.

If you would like to learn more about starting your own accounting practice, our Professional Bookkeeper Program is the perfect place to start in order to launch a successful business offering valuable services that are marketed effectively. To learn more, order our DVD “Intro to the Professional Bookkeeper Program.” It just may be the beginning of a lucrative future as your own boss.

Reference

Perman, Stacy. “No Man’s Land.” 1 August 2007 BusinessWeek.com

It’s amazing how much mileage you can get from a little confidence. As an accountant you’ve probably spent a lot of time determining your most valuable business assets and how to preserve them. But have you considered how to secure and improve the one asset around which everything else revolves? YOU. Without you, there would be no accounting practice. There would be no clients. There would be no income. It’s time you acknowledged your value in order to advance your business to the next level.

Trust your instincts

While your impressions may seem somewhat whimsical, remember that you have experience and training which informs your instincts, giving them great value. You need to learn how to trust them as you move forward and advance your business. This means attending to those impressions as you interact with clients, peers, and other professionals within your community. Start with the small impressions first. Once you gain confidence in your instincts you’ll be able to move on to bigger and better things.

Be yourself

Accountants are known for being reclusive and somewhat introverted. If this describes you, we’re guessing you may feel somewhat uncomfortable when interacting with clients and other professionals. But it’s important that you be yourself. Doing so may make you feel self-conscious, but you’ll come across as genuine and trustworthy, two traits greatly admired in business-more so than a good sense of humor and witty dialogue.

Value your own services

If you’re not charging what you are worth, you don’t value your own services. Without saying a word your clients will sense a lack of confidence and will devalue your work as a result. When you come to recognize just how much you’re worth, you will exude self-assurance and promote your practice with ease. You’ll find you don’t have to negotiate your fees as often and you will begin to attract clients willing to pay for quality work.

Talk yourself up

Don’t apologize for what you do or how much you charge to do it. Once you come to value your own services you’ll find this step becomes much easier. You’ll welcome opportunities to talk about what you do and how well you do it. You’ll recognize that you’re only providing potential clients with the opportunity to benefit from your services.

Invest in yourself

YOU are your most valuable asset. It makes sense that you would invest in yourself. Consider ways you can improve your skills and become even more valuable to clients. This may require that you receive additional training, earn credentials, and learn new skills.

Universal has a DVD 4-Pack designed to introduce you to all the valuable services we offer, each and every one of them intended to enhance your accounting career. This power pack includes:

Introduction to the Professional Bookkeeper Program. Learn how becoming a Professional Bookkeeper will improve your accounting skills, enabling you to expand your business and become a full-service financial provider.

Yes Sample Marketing CD. Learn how to introduce your services to a potential client. Use this either for role playing, watching it while meeting with your client or passing them out.

Start Today and Have Your Own Bookkeeping Service. Learn how to make over $80,000 per year working from home while getting more clients than you can handle. Know how to charge your client so you can afford to take that next vacation while they get such a great deal they will be telling all their friends about you.

The Art and Science of Getting Clients. Learn how to get more clients by using our proven methods.

Purchase the DVD 4-pack and add to your reference library while learning how you can enhance your best asset. Order now!

Ensuring Employee Retention

Hiring a support staff to help grow your business and better manage your workload is a defining moment in the life of an accounting practice. To help you work through this process, we’ve developed a three-part series on Hiring a Support Staff. The first week of this series we ran a quiz to help you determine whether or not you are ready to hire an employee to help with your workload. Last week we gave you guidelines in finding the perfect applicant for your business’s needs. This week we’re talking about how to avoid high employee-turnover in efforts to retain valuable employees.

1. Offer Health Benefits
This is an appealing draw for highly-qualified applicants. Many will not even consider an opening that doesn’t offer health coverage. Depending on the size of your business you should look into this and see if it’s a possibility. Click here to read more about your health care options.

2. Award special titles
If you can’t award insurance benefits you should look at other, more creative ways, of rewarding employees for their work. One way to do this is in rewarding deserving employees with a new title: payroll manager, office assistant, marketing specialist, etc. Not only does this provide your employees with a sense of achievement, but it gives them the opportunity to strengthen their resumes. Avoid creating meaningless or arbitrary titles; that will do more harm than good.

3. Reward employees with new and challenging projects
Like awarding titles, giving trustworthy employees new and challenging projects can provide them with a sense of achievement while also giving them the opportunity to strengthen their resumes. Nothing feels better than knowing your boss trusts you to manage a significant responsibility.

4. Give employees their own parking spaces
Depending on your situation, consider awarding employees their own parking spaces. If your office has a designated set of spaces, give choice employees a spot they can call their own. Or award one employee-of-th- month curbside parking.

5. Allow employees to earn paid time-off
Most large corporations provide employees with the benefits of paid time-off. This can be a great incentive that will not only retain employees, but motivate them to do their best work. For example, you can give four hours of paid time-off to the employee who shows consistent and error-free management of Client X’s account. If this motivates all employees to exhibit exemplary behavior, it will save you a lot more in the end than a few hours of paid leave. But Set high expectations so this doesn’t become an arbitrary reward that drains your budget.

6. Offer flexible work schedules
There are many qualified job candidates who would find your job offer more appealing if it came with a flexible work schedule. Whether the employee is able to enjoy more time at home with their children, go back to school, or recuperate from surgery, a flexible work schedule is greatly appreciated by those who need it to better balance their work and personal lives.

7. Give small gifts or rewards
For a low cost you can give deserving employees gift cards for restaurants, movie theaters, gas stations, book stores, etc. It may not seem like much, but this small gesture can do a lot to compliment your employees and boost morale.

8. Say thank you
This may seem too simple, but the truth is employees tend to stay where they feel appreciated. In fact, public praise is a great way to express thanks for a job well done. Highlight choice employees in a newsletter, company email, or even a staff meeting. You may choose to thank your employees privately as well; employee evaluations are a good time to note specific instances where an employee’s hard work and creative thinking have benefited you and your business.

Small business owners may think they don’t have much to offer those employees they hope to retain long-term, but that’s not always the case. With a little creative thinking and a lot of genuine appreciation you may be able to retain good employees longer than you may imagine.

New Offer From Universal

Canadian Residents Now Have Their Customized Professional Bookkeeper Course

This past summer Universal Accounting Center sent out a survey to all our newsletter subscribers, in attempts to see what your needs were. Many of our Canadian residents requested accounting tips specific to their country. Universal heard the call and has responded.

Universal’s Customized Professional Bookkeeper Course
UAC’s PB course is one of its most popular, training students in the day to day accounting of small businesses. And that’s an extremely valuable skill when you realize that over 80% of accounting opportunities are with the small business sector. Not only that, but accounting and bookkeeping jobs continue to grow at an amazing pace; the U.S. Bureau of Labor Statistics estimates that by 2008 accounting jobs will increase by 20%. They explain, “As the economy grows, the number of business establishments will increase, requiring more accountants and auditors to set up books, prepare taxes, and provide management advice.”

In effort to bolster its support of Canadian residents, Universal Accounting Center has customized its Professional Bookkeeper course to include a supplement highlighting Canadian payroll taxes. The supplement updates the PB program with verbiage and forms specific to payroll taxes in the country. In addition, UAC will begin presenting bookkeeping seminars in Canada in March, promoting programs nationwide.

To Incorporate or Not to Incorporate:

The Pros and Cons of Different Business Entities (Part I of II)

Have you ever wondered if being a sole proprietor is your best business option? Maybe you should create an LLC (limited liability company), an LP (limited partnership), or an S-Corporation. There’s no one right or wrong answer when matching your business to just the right business entity. And the business entity you choose depends largely on your personal situation and circumstances. But we don’t want you to imply that your decision isn’t a weighty one; the type of business entity you choose will affect your liability, your creditors’ access to your assets, and your tax obligations. So it is a decision that requires pertinent information and considerable thought. Sometimes just a little knowledge can ensure that you make the best choice for you.

Sole Proprietorship

A sole proprietorship is a business owned and operated by one person. This is the most popular business type for new, small business owners, especially if they work from home. Perhaps you already decided that a sole proprietorship is the perfect match for your business right now. While there are many benefits in having a sole proprietorship, the one drawback is that you have unlimited liability for any debts or obligations incurred by the business. The business is not an entity separate from its owner, and if the business is sued, all of the business owner’s personal assets are at risk. If the business becomes insolvent, the sole proprietor must declare personal bankruptcy to avoid business debts

However, that may not be a problem you expect to encounter. If you work from your home office, you’re probably not incurring much business debt. But if you’ve grown your business enough that it requires a rental property with staff that you manage, then you might want to look at other options.

Limited Liability Company

The business entity you choose can greatly affect your personal liability. When shareholders or owners of a business are not personally liable for any business debts or obligations, they enjoy “limited liability.” The last thing you want to do is create a bsuiness where the negligence of a partner, or even an employee, puts your personal assets at risk. This week we’ll discuss the limited liability of C-Corporations and S-Corporations.

Keep in mind that every state handles each type of a company differently in set up and even taxation on the state level. What we are going over is what these business types do and generally cover for the business owner or founder. Make sure that you know exactly what and how your resident state handles each kind of corporation. This is usually found with the state’s Department of Commerce.

Corporations - Owners of a corporation are issued shares of stock and are thus called shareholders. A corporation exists independent of its shareholders, and is viewed as a separate entity, which can generate income, incur debt, and be sued. Corporations are commonly classified according to their taxation status as either C-corporations or S-coroporations. Unless the corporation elects otherwise, its income will be taxed at the corporate level at corporate rates. The following are some of the pros and cons of C-corporations:

• Pros -
  • Limited liability.
  • Shareholders are not required to manage the corporation.
  • Continues to exist after a shareholder’s death, retirement, or bankruptcy.
• Cons -
  • Filing a corporation can be expensive.
  • Corporate formalities are required (shareholder and director meetings, corporate minutes book, employer identification number or EIN, etc.)
  • Because the corporation’s income is taxed, and the shareholder’s income is taxed, corporation experience “double taxation.”

S-Corporation. If a corporation meets certain requirements, it can elect to be taxed as an S-corporation, with the profits and losses passing through to the shareholders to be taxed at the shareholders’ rates. Unlike a C-corporation, the S-corporation itself is not taxed, although an informational return (IRS Form 1120S) must be filed with the IRS. And S-corporations are limited to one class of stock and cannot have more than 75 shareholders. An S-corporation enjoys the same limited liability as a C-corporation and has some of the following pros and cons:

• Pros -
  • Limited liability.
  • Shareholders are not required to manage the corporation.
  • Continues to exist after a shareholder’s death.
  • Only shareholder’s income is taxed.
• Cons -
  • Filing a corporation can be expensive.
  • Corporation formalities are required (shareholders and directors meetings, corporate minutes book, employer identification number or EIN, etc.)

Many believe that businesses require a large number of shareholders in order to incorporate. But in most states you only need one shareholder and one director to from a corporation, and that shareholder and director can be the same person. And while that may be something you aspire to in the future, you may not feel either of these entities are the best match for your current business. That’s quite alright. Next week we will be covering more about other types of limited liability entities and how they may work for you. Keep an eye out for next week’s article about Limited Partnerships, Family Limited Partnerships, and the most common, Limited Liabilitiy Companies.

If you are considering taking the next step in the process of your bookkeeping or accounting business you have found the source that you need to have to not only gain the training crucial to accounting success, but also the training that will help you find how to grow your business. Don’t leave anything to chance by going anywhere else than Universal.

For over 25 years, Universal Accounting Center has helped people like you start their own accounting and tax practices. We recognize that 85% of the accounting opportunities are with small business so our curriculum is designed to help you learn small business accounting. Think back to our recommendation to increase your income by performing new services for new clients. When you learn small business accoutning you suddenly make yourself available to new clients whil increasing the number of services you can perform.

Become a Professional Bookkeeper today.

For the small business owner it is always a question of when to get something or when not to get something for the business. As an Accounting Business we may be more keenly aware on how our business is doing and if we can or cannot afford to move on a piece of equipment or some additional help around the office. When it comes to getting additional help you must be sure that the business is ready for it, so that you can make the new position pay for itself.

Planning is Key

As a business owner, on a limited budget and little or no access to working capital (especially in the first stages of your business) you need to be able to plan out how you would like to grow your business. By setting the goals, milestones, and criteria that is needed that would signify the achieving of the milestones and goals is an essential way you can avoid many of the growing pains you hear from other business owners. With proper planning you can go around the pitfalls, or missteps that plague those who fail to plan and move on someone or something before their business is ready for it. When you plan and work to accomplishing that plan, you can then clearly see the overall situation, and act accordingly. And when it comes to hiring and personnel this is invaluable in keeping your business profitable.

Pain & Necessity vs. Comfort & Luxury

There’s no doubt about it, having another hand around to be able to lighten your work load would be nice. Perhaps the fantasies and wishful thinking of that type of an expansion could get the best of us, who are in business for ourselves, and if we don’t plan out what / who we need when we need them. It can be very easy to get ahead of ourselves. I have seen it with many businesses that because they have landed a new account or “feel” like it’s time to move forward on acquiring personnel and equipment they over extend themselves and have to turn around and make the harder decisions later. The pain and necessity you feel now when you are diligently working to increase your business billable hours, clients and accounts and the hours you are spending to bring in the “bacon” needs to be measured against the comfort you would feel building your business with someone else helping to bear the work load and the luxury of being in that position. You have to gauge this Need vs. Luxury closely according to the plan you created before the need arose. Is it worth going another month, 3 months, 6 months etc. going full boar by yourself to build profits and capital? Or would you be able to better accomplish your goals and milestones for growth when you are freed to bring in the accounts and share in the write up duties?

A Side Note: Inaction on this is also a decision, when you fail to act on the need and do nothing about it you risk peaking out the business, the quality customer service you are providing and burn out becomes a real concern for both you and those clients you have. No matter how you do things, the day will come when you have to ask, “Am I at that point where the decision to bring someone on board needs to be made?” When you are able to follow the plan you set out, then those decisions will become easier to make.

So You’ve Decided to Hire

You have weighed the options, looked at your criteria and found that you’re ready to hire someone to help you. What else do you need to consider? best way of doing this is to take it from the perspective of the person you’ll hire. First of all, what is the job description? What am I expected to do? What do they need to perform the job? Questions like these will help you to transition smoothly the person you hire into the work flow you’ve already established. Consider and plan for the equipment this person will need to perform his/her duties. Will they need a computer? Will they need a printer? What else would they need?

What training are you going to need to perform with the new hire? Is it the case you hire someone just starting out and has a “clean slate” on how to do accounting and bookkeeping or do you hire someone with previous years of experience? (More on this later in the article.)

The support you will need to provide to your new employee. Not speaking about the health insurance, or 401K benefits - for most of us those things may be further down your Growth Road. What I’m talking about is the communication with the new hire on the accounts, the clientele, the procedures, and the issues of quality assurance so that the customers you have now will not feel the bumps of change within your company.

The Bootstrap Hire Process

More likely than not, when you put out the “For Hire” sign you won’t get former CFO’s and CPA’s knocking down your door for an interview. And frankly, you don’t want someone that demands more money than you to do the job. Because you don’t have many of the fringe benefits more established companies may have to offer, you need to get creative in the hiring process.

For instance, determine the level of experience you need for the position. Can you hire someone brand new to the industry and spend the time in training? Is it a question of getting someone experienced but only on a part time basis to start? When you are creative in the hiring process you’ll be able to find those people, the gems in the rough, that will make the positive effect on your accounting business.

Consider the aging population among us. Many who have done this type of work and have “retired” may be looking for a way to be able to gain that extra money they lost during the busts in their retirement plans. Or perhaps they can fill some time from the front porch rocker in assisting with the duties called for in the accounts you have. Truly, what we are doing is not digging ditches or running marathons, the older among us are a wonderful well-spring to tap for our open position.

Consider the student or the intern. Many universities and colleges are requiring their accounting students to do internships. They are an excellent way to be able to get those tasks done that may fall in the category of minutae, while giving them a worthwhile experience and improving the company’s bottom line. Those who are eager to learn can be the best for a business, so you can train them the right way of doing things in small business accounting.

Consider the disabled, military and their families, stay-at-home-moms, and your own teenagers. With the proper training anyone can be a good bookkeeper. And especially when you consider how much you are able to pay and the time it takes to do the books for each account, maybe a stay-at-home-mom who can dedicate 4 hours a day is the right solution for you.

When you are on a budget, creativity gets the extra “gold star on the forehead”. You need to consider the options of the hiring process and your readiness to bring another person on board. When you have, and its truly time to hire, don’t think the box is rectangular by any means, you can find the solution that best suits you, your accounting business, and the goals and growth you have set for it.

To get more principles on the Accounting business and to get you business set up right, click here to find out more of what’s involved in the Professional Bookkeeper’s Program.

A 7-Question Quiz to Help Determine Business Readiness

Most contract accountants encounter a time at which they must decide whether or not they are ready and willing to grow their business by hiring a support staff. Some are satisfied with their current workload and income. Others realize that an influx of clients means more demands on their already limited time. These accountants realize that by hiring even one employee they may be able to increase their capacity and their bottom line. But how do you know if your business can sustain one or more employees? Here are 7 questions you can ask to determine if your business is ready for a support staff:

1. Can current cash flow sustain a new employee?
Are you making enough money to actually pay an additional employee? Obviously you’re hoping that with some help you could earn even more money. But if your current cash flow doesn’t provide that wiggle room necessary to add someone to your payroll, you may consider increasing your clientele before you increase your staff.

2. Is your business stable enough to assume the risk?
You must look at more than just cash flow to determine whether or not your business can sustain a new employee. Weigh current debts against your income in order to determine whether or not your business is stable enough to assume the risk a new employee would bring.

3. Does your current work load require additional help?
The last thing you want to do is hire someone who doesn’t have enough work to keep them busy. If you or your current staff is collectively managing a workload that could keep another person busy than you should consider hiring additional help. Also, if your personal life is suffering as a result of overtime, you should consider lightening your own load by hiring someone to share that burden. Otherwise we suggest waiting until your workload justifies the additional help.

4. Is your current need for help long-term or temporary?
As you question your current need for help you should remember that a full-time, long-term employee will still be on your payroll when your practice hits a yearly slump or encounters a lull in business. Is a temporary employee more practical? It’s easier to make a temporary employee permanent than it is to make a permanent employee temporary.

5. Are your competitors hiring?
If your competitors are growing their businesses by hiring support staff you may consider joining them, especially if you want to maintain a competitive edge. And depending on the type of talent they’re looking for, the sooner you place that want-ad, the better. If hiring, you want to ensure you have the prime pick of the talent pool.

6. Can you pin-point exactly what type of help you need?
Before you begin the hiring process you must first determine the type of help you’ll need. An administrative assistant will come easier than an entry-level accountant. Assess your needs to determine exactly what type of position you’ll be “opening.” Also, list the specific tasks you’ll expect them to perform; this will better enable you to define the position and what skills will be required.

7. Is there a sufficient talent pool from which to draw applicants?
Now that you know what type of applicant you’ll be looking for, do a little research to determine whether or not your area has a sufficient talent pool from which you could find a qualified employee. Waiting (even a number of months) to hire just the right person is better than rushing to hire the wrong one.

Growing your business by hiring a support staff takes time and considerable forethought in order to ensure you’re taking the necessary precautions as you move forward. If you’ve decided that you do indeed need to hire a support staff, come back next week when we will be discussing how to ensure you pick the right applicant.