Building an Accounting Firm from Scratch

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✋Welcome to The CAS Cache, a newsletter designed to help accounting firms grow their CAS offerings in five minutes or less.

Disclaimer: Some links below support my writing of this newsletter, and some give you a deal.

In the last issue, we discussed buying an accounting firm. In this issue, I will discuss building an accounting firm from scratch based on my experience. I will discuss how I might do it differently in the next issue.

I was fortunate to launch my firm with a handful of clients. In my first month, I earned around $6k and around $20k in month two. I also set aside six months of my salary in a savings account. Consider these two things when reading my thoughts on building from scratch.

Announcements 📣

Only a couple more spots are left in my How to Start Offering Advisory Services Cohort that starts at the end of May.

I will be speaking at Accounting Today’s Firm Growth Forum on May 21st. Let me know if you plan on attending because I’d love to meet some readers in person.

The Pros of Building an Accounting Firm from Scratch  

The beauty of building an accounting firm or consulting firm from scratch is that there are little to no upfront costs unless you need to purchase tax software. And you get to make it exactly how you want it. 

I am debt-adverse, so I did not love the idea of buying a firm. However, the fact that most deals in the accounting industry are structured to factor in attrition makes taking on debt a little easier. 

As I mentioned, I set money aside for a safety net. I was fortunate not to need it because my start-up capital was around $2k. My start-up capital was low because I built in software costs to my clients since it enhances their experience. 

Building Your Dream Accounting Firm

The biggest benefit of building an accounting firm from scratch is the ability to create precisely what you want. You can buy a firm, but change management is complex. 

Most people do not like change. I have found that to be especially true with accountants. On top of that, convincing clients to change habits they have done for years with the previous owner is no easy feat either.

Working in accounting firms for over a decade gave me the experience to know what type of work I wanted to do. That work was advisory only. Every firm I have looked at purchasing had an element of work I did not want to do, whether tax or audit, so paying for these clients didn’t make sense. 

You need to find your WHY before launching your firm. Starting a firm with work you hate is a direct path to burnout. I found my WHY through trial and error in accounting firms. And for a while, I thought accounting was not for me until I discovered advisory work. 

The Cons of Building an Accounting Firm from Scratch

The downside of building an accounting firm from scratch is the learning curve. I would not recommend someone newer to the profession building from scratch. My experience in different accounting services and industries within firms has made me who I am today.  

Building an accounting firm from scratch means you must be able to market, sell, implement, and maintain. Wearing multiple hats can be exhausting. I can do it all, but I am more passionate about the marketing and sales side than the ongoing work. 

This leads to the biggest downfall of building an accounting from scratch - slower growth. Slower growth means you, the owner, must spend more time in seats you do not fully love. For me, that is performing ongoing work. Being able to elevate and delegate more quickly than I would like is the main reason I would do it differently, and we will discuss how I would approach this in the next issue. 

Conclusion to Building an Accounting Firm from Scratch

Overall, I am happy that I started an accounting firm from scratch, as I get to do the advisory work I love. I want you to do what you love, so I recommend you dig into your WHY before starting a firm. Then, think about what seat you want to be in one year, three years, or five years from now. Those two exercises will give you a lot of clarity on buying vs. building an accounting firm. 

Thanks for reading, Luke Templin!

P.S. There are four ways I can help you grow your CAS offerings when you are ready: