Were you the odd one out in school who enjoyed numbers and weren’t depressed about having to do math?
Studying accounting was probably an obvious choice for you with your qualification in hand you were ready to start your life. But then the shocker: there is no work.
Don’t let go of your aspirations quite yet. Just slightly adjust your plan. Start your own accounting firm. Here’s how.
Step 1: Accept your new role
If your plan A was to work for an employer, you have to prepare for a change of mindset. Your role is going to be different now, changing from the numbers guy to business owner.
Your daily tasks will not be what you initially thought they would be. It’s entirely possible that you will be too busy running the show to do any actual accounting.
Focus on being positive about this. You are still following a passion. Only this time, you are building your own empire instead of working on someone else’s.
Step 2: Choose a name for your business
If you don’t consider yourself the creative type, you can leave this little task to modern technology and make use of a business name generator online.
Forbes offers the following tips for naming your business:
- Keep it simple and easy to spell. This will ensure that people remember you easier and find your website when they search for it.
- Try not to make it too specific. That way you can keep your name even if you expand and start offering more services.
- Hop online and make sure that someone else is not already using your chosen name.
- Your name should both be catchy and explain exactly what you do.
Step 3: Choose your operating premises
Are you going to hire staff? How many? Or will you work on your own until you have enough clients to justify hiring staff? The answers to these questions will help you to determine where the work will be done.
Depending on the above, you might need office space, which is especially convenient if you have to meet with clients.
However, the advent of covid-19 and lockdowns caused a considerable change in how people work.
Working from home and having meetings online has become the norm for many, and you can also consider that an option for your own business.
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These are the traits your potential clients are looking for:
1. You know your field and can answer your client’s questions. Someone who owns a small business, for example, will inquire about their accounting needs. You need to be ready with answers.
This means that you will do research and talk to peers in order to stay up to date with what is happening in the world of accounting.
2. A good accountant is willing to share their client’s risk tolerance.
3. Work on your communication skills if that is an area you struggle with.
Remember that many people find matters of accounting and tax rather complicated – that is why they are hiring you in the first place.
You need to be able to explain things clearly and in a manner that your client can understand – without too much jargon.
4. Be positive, approachable and excited about your client’s needs.
5. Registration with an official body that regulates activity in your field, such as The South African Institute of Professional Accountants, instantly adds to your reputation.
Step 4: Determine your set-up cost
Make a list of everything you will need to get going. Your list needs to be as comprehensive as possible, including everything from software to desks to a professional to set up your website.
Once you have an idea of how much your startup costs will be, you can start looking at ways to finance your business.
If you do not have sufficient capital to get started, you can consider a business partnership or approach your bank to invest in your business.
Don’t forget to also make a list of your monthly expenses. These can include rent, water, electricity, stationery, salaries, coffee, insurance, etc.
Now you can calculate how many clients you will need in order to make a profit. Which brings us to the next step.
Step 5: Compile your marketing plan
Clients won’t be queueing outside your doors just because you are there, especially if you are new. A carefully thought-out marketing plan is a must.
While there is nothing wrong with flyers, newspaper ads and business cards, it will be a smart move to invest in a course on online advertising if you are not yet familiar with it.
Online advertising is affordable and effective, allowing you to reach the exact group of people that you have identified as your potential clients – if you know what you are doing.
Paid advertising is flexible in terms of budget as you are in control of how much you spend, both on search engines and social media.
Your website is also a powerful marketing tool, and it’s worthwhile brushing up on your SEO (search engine optimisation) skills if you don’t know how this works.
Good SEO practices boost your online presence, making sure the clients who need you will find you.
Step 6: Determine your pricing structure
The amount you can charge will depend on various factors, such as the kind of services you offer and how much your competitors are charging.
Also investigate pricing strategies to see what will work best for your business. This info will also come in handy as your business grows, as you can adjust your pricing structure according to your changing needs.
These are a few pricing strategies:
- Price maximisation. This is a good strategy for startups who are looking to prioritise revenue growth as pricing decisions are made that generate the most revenue.
Calculating your fixed and variable costs and then trying to minimise these costs, aids in arriving at a profit-maximising output.
- Market penetration. This strategy sees you marketing your services at a lower price as your competitors, in order to attract a high volume of clients and find your place in the market.
Effective as this can be, you have to keep in mind that you could experience an initial income drop that is sometimes difficult to recover from.
- Price skimming. This technique involves introducing a product to the market at a premium price, and then gradually lowering the price over time to attract a larger customer base.
This method allows a company to generate large profits in the introductory phase of a product.
It works well for products that can be marketed to customers willing to pay up for the newest and best products, and is more relevant if you are offering a product instead of a service.
- Economy pricing. This is aimed at the price-conscious. The idea is to minimise business costs for the sake of selling services at a price lower than the market average.
This can be risky for smaller businesses, as their profitability relies almost entirely on volume of sales.
Psychological pricing. We are all very familiar with the technique of charging, for example, R199.99 instead of R200 as this creates the illusion of a more affordable product.
Another version of this technique is offering the client something free when they purchase your product.
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|Keep these money rules in the back of your mind:
Keep your personal and business finances separate.
Keep records of everything.
Set goals and targets.
Collect fees owed to you by clients on time.
Do not offer credit to clients.
Pay yourself a salary.
Step 7: Register your company
You have to decide which type of business you are going to run in order to ensure your admin is up to date.
Whether you are a sole trader or a Pty (Ltd) you will need to adhere to certain legislative requirements regarding the registration of your business with SARS.
Mistakes to avoid in your business
It’s almost a given that you will make a few mistakes. Be prepared for this and view mistakes as opportunities to learn.
Watch out for these common business blunders:
- We just talked about registering your company. If you are unsure what this involves, rather get professional advice so that you are fully aware of the financial and legal implications of each option.
- Be wary of underestimating how much money you will need to get through slow times. The accounting industry is cyclical, with tax time, for example, being busier.
After starting your business it might take a while to build up a large enough client base to ensure a constant flow of work.
Therefore you need to ensure that you have enough money to fall back on during those slower months.
- As mentioned before, your existence alone is not a guarantee that there will be clients. Take every single opportunity to be visible in your community.
- Do not fall behind on your admin and keep a record of everything that happens in your business.
When you look at the above steps, it becomes clear that it’s all about proper planning. The above factors, and more, will ultimately come together in a business plan.
Your accounting firm business plan is where it all starts. Do not neglect it, as this is your roadmap to success.