This post is part of The 1, 2, 3 Practice Management Series from Added Value Corporation Pty Ltd
Assuming you are not buying into an existing accounting firm, there are 2 main ways to establish your own firm. You can either start from scratch and slowly build clients, or purchase fees.
Starting From Scratch
Accountants who start from scratch have usually begun to build a small fee base, whilst in full time employment. That becomes the basis for their own firm. Over time, fees are added to this, often starting with family and friends.
There is insufficient income in the initial stages, so accountants arrange other activities to produce income. Some continue to work as a contractor for a former employer, or for another accounting firm. Another option for some is to lecture at the local TAFE, or to work as part time internal accountant for a business.
These days it can be very difficult to find fees to purchase. This is especially so if you want to buy a small parcel of fees, such as $200,000. It is necessary to work through a sequence, stating with registering with the Practice Brokers, keeping an eye on ads running in the back of the professional journals and also checking the Saturday classified Businesses for Sale.
The best way of acquiring fees is usually through someone you know. Therefore ask fellow members of your discussion group, your mates from University, people with whom you did the CA Program, or a family member. Anyone may know someone who wants to sell some fees. It is important to get the message out there, that you have funds available and want to buy fees.
Interestingly, some accountants are not comfortable with management accounting work. In fact they generally don’t prepare even budgets for their clients, so are happy to pass this work onto another accountant. It is therefore a matter of developing contacts with accountants, in order to pick up these referrals.
2 Issues to Consider
Will you or won’t you take fees from your former employer?
If you have been working within another firm, it is very possible you will have good strong connections with clients. Indeed you may have referred clients to the firm. In the latter case, the arrangement with the firm may entitle you to take the clients with you. Sometimes it is possible to negotiate with the owners of the firm and pay to take other clients with you. Avoid “poaching” clients, it is best to avoid a legal battle with your former employer.
Avoid becoming the “needy” accountant.
It is suggested a clever entrepreneur can smell a “needy” practitioner from a mile away. If they know you are starting your business, they may expect you to be very keen to provide work, and then pressure you to provide considerable work, before an invoice is issued. After that, there is the matter of collection. When starting you own firm have a procedure for billing and collecting and stick with it. Where clients are unable to pay promptly, for example were you are required to prepare financial statements and tax returns for many years, arrange for the client to sign papers with one of the fee financing companies such as QuickFee or feeLink, so cash is provided to the firm.
© Thea Foster, Added Value Corporation Pty Ltd, www.addedvalue.com.au
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