If you are an accountant and are ambitious, it’s never been a better time to own your own CPA practice. Sure, it is very tough striking out on your own, especially if you have cash flow issues. However, you should consider getting your house in order now that Sarbanes-Oxley and Arthur Andersen have yielded their big and busy accounting clients. The trickledown effect is surreal and is nourishing even the smallest CPA firms and sole practices with plenty of business. According to James Metzler, a rep for small CPA firm interests at the AICPA, it’s a jolly good time for professionals to join the business. In that regard, the following are five solid tips for running a successful CPA practice.
1. Focus on Profitability Rather Than Large Scale Business
One of the greatest disadvantages that CPA firms face is overly busy calendars. Busy CPA firms often turn away good business when they determine that they are simply too preoccupied to service newer clients. They confuse large revenue streams to profitability thus leading to their downward trajectory in customer and personal success. If you would like to keep your CPA practice successful, you must choose quality over quantity. You should focus on serving clients whose success takes less effort and brings more returns. A CPA practice isn’t a public service but a business. You should change your mentality to suit the financial health of your firm. Don’t mind about serving every client whose cases may be too murky to be worth the fees that you charge.
2. Perform Pareto Analyses as Frequently as Possible
Your accounting business should be your very first CPA client. You should conduct statistical analyses that help you to figure out what yields most effectiveness out of your expenses. Time is a heavy financial expense that should always be valued. Pareto analysis can quickly help you to identify businesses that yield more profitability than others. In fact, it is essential for eliminating all time wasting for your practice. All you have to do is generate a list of all the clients that the practice serves and determine the revenue that they bring, their costs and how much time your practice spends on them.
3. Always State your Charges Beforehand
Before you put in the time, effort and money into a client’s work, always determine how much you will charge. Always inform clients of your prices and even discuss pricing and payment options before dispensing the services. Since some other details always emerge from the dispensation of services, also make sure that the clients agree on hourly charges. If you aren’t careful enough to determine the scope of the work, you can find a huge disparity in the hourly rates for your clients. You may earn over 400 dollars an hour for some clients and scoop less than 50 fifty dollars for others. That is an indicator that your management should be improved.
4. Recruit Proactively
With a CPA, you simply can’t do everything by yourself. You need to be very specialized to offer top-notch services for your clients. However, the CPA industry requires different diverse skill sets, and specialization narrows down you to a limited number of niches. That is why you must work in partnership with differently specialized accountants. If not, you may always have to turn down very lucrative businesses with very generous payment offers. That is the main reason why firms hire diversified CPA talents. Furthermore, a brilliant CPA practice leader knows how to project growth. With proper marketing strategies in place and a good track record of service delivery, every CPA firm is set to grow in demand. That is why you should hire proactively. Instead of hiring when the business is already too busy to take in new business suitably, you should hire more qualified talents in time to find them already trained and oriented for the work.
5. Buy an Accounting Practice
If you choose to buy an accounting practice it should be a well-calculated business decision. In fact, it is most recommended for expansion purposes as opposed to starting out. When you want to buy an accounting practice, you must do as much homework on the targeted practice as you will sole search. You must know exactly what it is that you want and have an elaborate plan on how to get it. That way, you stand a chance of buying a practice that will suit your expansion needs. You must interrogate your strengths, weaknesses, finances, geo-location mobility and agreeable fee structures.
