Discussion:Starting a New Firm - Advice

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Discussion Forum Index --> Business Growth Community --> Starting a New Firm - Advice


Jlafber (talk|edits) said:

20 July 2013
I have been thinking of starting my own practice with a partner. We currently do not have a client base but have heard success stories from other sole proprietors and are excited to give it a try. How are most sole proprietors getting started; organic growth, acquisition, or anchor client. It's seams incredibly risky to start-up your own firm without enough working capital to get you through the first couple years. However my nest egg isn't that large and unlikely to become significant until I would reach partner within a firm.

I would be interesting in hearing how everyone else got their start.

AgwmTax (talk|edits) said:

20 July 2013
I started by acquiring about 50% (roughly 120 clients, all 1040) from a tax preparer who wanted to cut back because of health reasons. I used to help him with various duties during tax season on a part time basis. Cashed in a couple of old CDs and took 401(k) money to pay for working capital. Bank loans were impossible to get since I did NOT have any prior business experience.

I would say around 20% of the clients I acquired dropped me or I dropped them after one season for various reasons. I was underwater for a few seasons till things improved.

I started asking for referrals, walk in clients, advertising in the local rags to get new clients. Advertising was a total disappointment so I stopped that after 2 seasons. Now I am strictly referral.

My 2cents is to have a realistic expectation and another source of income to put food on the table in the early years.

Hgco (talk|edits) said:

22 July 2013
AgwmTax - Commendable advice!

AgwmTax (talk|edits) said:

22 July 2013
Thanks. It is a tough business to get started. If I had to start over again, I would buy a block of clients that had more Sch C, E, D etc. Just plain 1040 and Sch A will not get you a sustainable critical mass without EIC and a bank product in volumes.

Hgco (talk|edits) said:

23 July 2013
And who wants the EIC and bank product headaches?

JackTraffic (talk|edits) said:

23 July 2013
It's really important not only to grow your business but also to grow it by accepting the "right" clients... People who can pay prices in line with what it costs you to provide those services.

For the record, I believe I (and any other accountant) can tell you how to grow your business so you're easily doing, e.g., $200,000 next year. But you may want to kill yourself at the end of the tax season given how hard you've worked...

Joecpa38 (talk|edits) said:

24 July 2013
I started my own practice last year from scratch. I had very high overheads in the beginning due to some misleading information provided by a consulting firm, I had a sales team, at one point - 4 appointment setters and 2 sales person. The revenue brought in by the sales team was not able to cover all the operating costs or even half, on top of that, I have personal expenses such as mortgage payments, payments to personal line of credits, etc.

As Jack Traffic said, it is all about acquiring "right" clients. I focus on serving business clients only and I have determined personal tax returns are not profitable.

The first two years will be tough, as I am still trying to break even. Be Prepared to have sufficient funds to support these two years if you want to do this full time.

In terms of marketing, I have been trying 7 or 8 different marketing methods, my focus are on-line marketing and send newsletters/sales letters to clients/prospects.

Also, consider to barter your service... just my two cents good luck

Jlafber (talk|edits) said:

27 July 2013
Thanks for all the feedback.

AgwmTax (talk|edits) said:

27 July 2013
I knew another tax preparer who was a big believer in the barter system. He got his electrical, plumbing, landscaping work done by his tax prep clients in the business.

Joanmcq (talk|edits) said:

27 July 2013
I was growing slowly until I started target advertising within the GLBT community, which has since become a niche. I also have other skills in areas like audit representation which I've kept up on and will expand now that most SSMC returns will be less complicated.

I was 'lucky' that my first two years were spent on disability due to illness, AND I had a decent income working spouse, so I wasn't without income during the first few really lean years. Then when spouse left, I got a part time job to help while my client base was growing from 30-100+ clients. Not to mention having savings (now mostly gone :( ) and other streams of income from rentals, etc. And I barter-all reported income, mind you! I also opened up shop at home, and still work from home. I just keep converting bedrooms to offices, which is a benefit of being single, no kids in a 4 bedroom home.

AgwmTax (talk|edits) said:

28 July 2013
Niche marketing is an interesting concept and could be very successful given the right connections. We have a taxpreparer in our town that specializes in cops and firefighters exclusively.

EAinCA (talk|edits) said:

31 July 2013
I started my own firm in January and practically fell into a niche market. Being in Los Angeles, my first client was in the entertainment industry. He is the CEO of a production company, I have since acquired the COO, CFO, and two TV Managers as clients from referrals by the CEO. That particular circle of people know other people who have money and need tax help, so it was a great boost initially.

Also, my biggest concern was overhead. I worked for a firm that the overhead grew faster than the revenue and they ended up having money issues. When I started out, whatever I could do for free or low-cost, I did. For advertising, I setup a free business facebook page. I also wrote tax articles and contacted the editors of local papers to allow me to include my articles in their paper. I went to local Chamber of Commerce events and met with Real Estate agents, Bankers and small business owners, handed out my card and told them what I do. All in all, I think I spent a total of $10 for all of that and that was just for the food and drinks at the Chamber event. The fruits of those things are just now starting to pay off, so I was hustling for a few months, but now I am so busy that I don't really have time or have an urgent need to keep going on all of that.

LMCPA (talk|edits) said:

1 August 2013
What software did most of you start out with for tax preparation? I've tested Drake and I did not like it at all. I'm used to Ultra Tax but that is cost prohibitive for a small one person start-up.

Joanmcq (talk|edits) said:

2 August 2013
I've been using ATX. There were a lot of problems for a lot of people with it this year (2012 tax year), especially networks. I had minimal problems, or could do work-arounds, except for it being a system resource hog. I'm not networked, but am getting set up next week (barter with a client for bookkeeping set up yay!) so I hope CCH gets the bugs worked out.

I was just quoted $960/month cloud or $11k for hard software for Ultra Tax. So I really, really, hope ATX gets their s#$t together, because that's way too much for me.

ZL28 (talk|edits) said:

2 August 2013
I feel a great question to grow your business is to ask what would it take for you to recommend the services of another professional..ie a dentist, a real estaet agent etc....Superior service, getting back to emails and calls very promptly, being enthusiastic, good prices, friendly....all of these traits.


when was the last time you recommended someone to a friend...what impressed you about that person that you are referring them.....answer that question..duplicate it...and you should be getting some nice referrals.

also, i'm done with ATX after what transpired this year.


after spending a ton of time looking at programs, i've decided on Pro Series.

AgwmTax (talk|edits) said:

2 August 2013
Over the years I have found out that what bothers or irritates most people is a call back from their service provider.

Even during tax season, if I get a call and I am not with a client I will answer it or my assistant will. If she takes a message I will get back to them as soon as I am free. I may not be able to answer their question right away, but i will give them a time when I will call back with the answer.

I have made those calls as late as 11pm at night if the client says call me, I am up anyways.

Pistolmcaction (talk|edits) said:

17 August 2013
Call Frank Salman. His phone number is 760-953-6448. I think he is the best practice development consultant in the business. He has a 6 credit CPE course on Practice Development that is excellent and I know would welcome a phone call. He helped me tremendously and I know you would benefit from speaking to him.

PollyAdler (talk|edits) said:

17 August 2013
I offer my own marketing course right here, and it won't cost you a dime. The point is to round up the clients and get them in your door. I won't go so far as to say you treat them like cattle, but this video may serve as an analogy to cement the point:

https://www.youtube.com/watch?v=Tp0j8qQnmEs

Gazoo (talk|edits) said:

18 August 2013
I like your approach to client aquisition, Polly. Round them up and haul them in. The other side of the equation is employee control , also known as the subject of how to make them (them meaning the slackers) mind. I want to throw this suggestion out to the madding crowd here at TA: Eye tracking hardware and software.

Do you know what your employee is looking at while you are paying him? If you don't then you're a d*mn fool.

I'll have more to say about this later, but right now I only have time to post an article about it: http://www.businessweek.com/articles/2013-08-15/new-software-forces-you-to-pay-attention-during-company-training


Excellent idea, and I plan to implement it myself.

Kevinh5 (talk|edits) said:

18 August 2013
I'm thinking I need to block Facebook and ebay during work hours. And maybe a few other sites?

Kevinh5 (talk|edits) said:

18 August 2013
I've heard of people blocking porn sites so employees won't waste the employer's time, but how do you block them all? Someone said that 60% of the internet is porn. I don't know how they even counted it all.

Gazoo (talk|edits) said:

18 August 2013
Get the Eyetracker. If you can hold out another 3 months, the Eyetracker II should be out, and all the kinks should be smoothed out of Eye I. Right now, if someone looks up to heaven to say a quick prayer, the Eye I records a "slack event". More than four such slacks a day will have the employee in the slacker column. It uses a moving average, like QB inventory.

I am as religious as anybody else, but if you are going to pray, do it on God's time, not mine. Eye II will also feature the "eyeball mirror". Eyeball mirror not only tracks what direction the eyes are looking in, but it records the screen reflected on the surface of the eyeball. They are trying to get it to recognize sex activity viewing, but right now it is only able to pick up the erect penis, and even then it's hit or miss below 5 inches erect. It does ok on big swinging breasts, but again, there are gliches on the A cup. Something has got to be big and swingin' around for it to pick it up at this point, but these are relatively minor glitches for the modern software engineer to fix.

Once they get the Heat-trakker option fully implemented, it should be able to pick up all the bodily "hot zones" as well. So it will be a sex motion and temperature detector for the office.

Eye II can also track employees looking at each other or looking out the window or whatever. If it's hot, big or swingin' around, you got 'em tagged. It's terrible that the world has gotten to this point, but what is good for the NSA is good for my bottom line.

Kevinh5 (talk|edits) said:

18 August 2013
My eyes often look up, not to pray, but to try to figure out where my clients are seeing all of these numbers they give me when I'm doing their taxes. "What were your charitable contributions last year?" Looking up, the man says "5,385".

It must be written up there or maybe projected like a holograph. I did put a Prism on my window sill, and a pretty rainbow appears on my wall. Always schedule your appointments with your gay and lesbian clients in the morning when the sun is shining through the prism. don't waste the pretty colors on the straight clients, they don't appreciate refractive light.

Gazoo (talk|edits) said:

18 August 2013
You'll probably get a slack for looking up, even to do client work; but don't worry, the boss can erase and scramble his own slacks.

(Eye II uses the clever term "slack" in place of demerit.)

Kevinh5 (talk|edits) said:

18 August 2013
http://www.sciplus.com/p/2-POLISHED-GLASS-EQUILATERAL-PRISMS_1079

I bought mine at American Science and Surplus.

You don't have to ask for the gay or lesbian prism, they'll know what you want.

Gazoo (talk|edits) said:

18 August 2013
It's a pity that as soon as the human race starts having fun, someone has to come along and invent something to destroy the fun. BUT, as an American it's Money, god, car, dog, sports, kids, shopping for stuff I like, and wife; and in that order. Not that I don't love my wife, but I can't never forget that she's the one putting all the pressure on me to make the money. She's killing me.

Things are tight, friends, and unfortunately this looks like the year I'll finally have to crack down on the "hot zones" in my office environment. I will be a buyer of the Eye II System with the Heat-trakker option to better monitor my employees' behavior.

My office policy will be four slacks and you're out, however, the boss can set the slack limit to whatever he wants. I'll probably "up" the slack limit in the spring since its natural for all of nature to become more sexual during the spring. After all, I want my employees to be good, but I don't expect them to be saints during springtime.

H.D. Freifunk (talk|edits) said:

19 August 2013
prism

I think here that tax court lawyer "5" is referring to an internal NSA codename for a program involing collection of data from major internet companies, done under an (illegal) interpretation of the FISA Amerndments Act. Of course this went right over dummkopf Gazoo's head. My hat is off to "5" for rigging up his own Prism system to use for local surveillance operations at a fraction of the cost incurred by the taxpayers for the NSA Prism program..

Gazoo (talk|edits) said:

20 August 2013
>>>>>> BREAKING <<<<<<<<<

Exciting breakthrough for the new age American employer (known in the past as the hard *ss boss).

Computers can now directly read the brain. It's hard to believe it, but it's true. Computers can now directly read off letters that brains are thinking. I don't need to tell you that letters make up words.

http://www.sciencedaily.com/releases/2013/08/130819141641.htm

It is in the realm of possibility that this feature will be offered with the Eye V employee monitor, however, right now employers will have to content themselves with the Eye II system plus Heat-trakker. Eye V could be some 10 years down the road, but you never know.

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