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Starting your own CPA firm: Tips from 2 success stories

Heather Walker  

Heather Walker  

Now that tax season is in full swing for many practitioners, you may find yourself questioning if this is the right time to break off and explore starting your own CPA firm.

In this next chapter of Small Talk with Heather Walker, I am once again joined by Linda Forde, CPA and owner of The Forde Firm, and Nina Tross, Executive Director of the National Society of Tax Professionals (NSTP). Together, we discuss career paths and the best advice for those looking to rise to individual success within the tax and accounting profession.

Starting your own CPA Firm: Don’t be afraid of a niche

From French class to Firm Owner, or a coupon to Executive Director – the path you take in the tax and accounting profession isn’t always common.

Linde Forde was sitting in high school French class when she realized her calling was in accounting. Learning the language was complex, but numbers came easy. She joined the military to pay for her education, started in a low-level accounts payable job, and worked her way up.

From there, Linda purchased an unique book of business to launch her own firm.

“I really wanted to get back into public accounting,” notes Linda. “I’d been at a large regional CPA firm for most of a decade. We moved for my husband’s job, and I horribly missed my clients. It’s so important to have a connection with them, and I really missed that.”

The Forde Firm now has 7 employees, and about 75% of their business is working with non-profits.

“We’ve got a real special niche between the non-profits and Homeowner Associations in Florida, which are also a type of non-profit,” says Linda. “We specialize in their needs because they do have very special financial statements. It gives us a competitive advantage because other people just dabble in it.”

Although her firm is a full-service CPA firm, Linda encourages new firms looking to build their practice not to shy away from becoming “boutique”.

“There is a lot of CARES Act money out there now, and my clients have no clue what they need to do,” adds Linda. “I do, and I can help them with that. So, my advice to you would be, if you are good at something or passionate about something, focus on it. It’s okay to have a niche. You don’t have to please everybody every day, because there are plenty of people that are going to pick up the tax returns. There’s plenty of work to go around.”

Referrals are your best tools

Nina Tross got her start in accounting thanks to a $50 off coupon for a H&R Block class. After taking the class and working for a CPA for a couple of years, she started her own practice.

“I started in 1999, and I built up the practice from 3 clients to over 700 in that time period,” says Nina. “I had six employees, then I eventually sold the firm and now I do about 70 returns, just what I can do on my own.”

From her time running her firm, she learned valuable advice for those starting their own practice – now using that experience to educate tax and accounting professionals as Executive Director for the NSTP.

“Referrals from your current clients are your best resources for those who are looking to build their practice. Build that relationship. I am against coupons or incentives. I am against saying: I’ll reduce your bill $100 if you bring in 3 clients. I feel that as professionals, if we are capable of providing a service, and they are being rewarded by our service, that should be enough.”

Nina adds jokingly, “Be careful of the flip side of that. One of my best clients told me she never wanted to refer me because she didn’t want me to get too busy!”

Remember to take small steps

When starting your own firm, be conscious of the fact that it may not happen in one confident leap.

“For me, I was in a bad situation with the CPA firm I was working with,” says Nina. “It was a definite relief for me when I started my own firm. But when I started, I had 3 clients and I was working 3 jobs. Then, as I built the firm up and started to get some regular revenue coming in, I was able to slowly divest myself from the other 2 jobs. I can remember, right at the beginning, my goal was to bill $500 a day. Now I laugh about that, but that was my goal. I figured I could make that work.

“You’re going to be thinking, why isn’t the phone ringing? You’re doing your marketing, talking to groups, and thinking, how come? You’re going to go through the whole cycle of feelings, but I was ready. I was very excited. I was doing everything I could to build my practice, bring in clients, and pay my bills.”

Linda, on the other hand, looked to purchase that book of business to accelerate the progress.

“I purchased so that I could start off with an established client base,” say Linda. “But I’ll tell you that first year with clients…they have relationships with the previous folks, and they don’t have the confidence in you or the knowledge about who you are. It’s terrifying when a client leaves, and you think, I just paid for this book of business. Don’t you go anywhere.

“But you know what, the phone does ring as you get out there and you get known. You get the reputation and the clients will come. It’s the referrals, like Nina said. It’s that word of mouth from your current clients saying: you need this done? I know who can help you.”

Maintaining your mental health

To be honest, there will be challenges as your start your own CPA firm. How do you keep yourself positive mentally during those early days?

“I had a very supportive husband,” answers Nina. “Having that supportive person in your life is the key to the success of your business. During that first year, you do have to monitor yourself with a strong support system. He listened to my frustrations, and I think if I hadn’t had that, it would have made it very hard to succeed.”

Linda agrees strongly with finding your support system.

“For me it was also my husband, but I’ve got this phenomenal group of women around me in the community here,” adds Linda. “We play golf (most of us very badly), we drink wine, and we support each other by talking very openly and real.”

It is also important to appreciate the small, early wins.

“Getting my sign with my name on it was a big deal,” says Linda. “The guy was hanging the sign in the Florida heat, and I was out there excited with my camera taking pictures.”

Walking the small business tightrope

Starting a small business can feel like walking a tightrope. You may need staff, but you must have the revenue there before you can build a team. You may want to be in a niche market, but you can’t afford to be selective yet with your clients. You don’t have the budgets that the big firms have, so you need a strategy.

Nina, being a risk taker, attracted that same sort of client base. After selling her practice and working with a friend who wasn’t willing to take risks, she noticed he attracted a conservative client base.

“When you start your practice, you take everybody that picks up the phone because you’re trying to build your practice,” says Nina. “As your practice matures, and you can be more selective, you’ll find your clients mirror your values, and that is how you’re able to interact. I think by recognizing how you work, what your risk tolerance is, what type of person you want to work with, and how much you’re willing to put up with, you’ll recognize the type of business you want to be in. It will be a much easier road for you.”

“I think that’s exactly it,” adds Linda. “Make sure you’re aligned on values. It’s hard because you don’t want to lose a client, but you must make those choices. You’ll be a happier person for it, and your employees will thank you.”

So as continue on this tax season and look forward to the next, if you’re thinking of breaking off from your firm and starting your own business, it’s important to remember you are not alone on this path.

“Do not undersell yourself,” says Nina. “Charge a fair price for whatever it is you’re doing. Make sure that you recognize that they are your clients, not your drinking buddies. You need to be honest with them. You need to provide a good service and treat them on a professional level.”

“My best advice to those who are thinking about starting their own business is: if the door is open, walk through it,” says Linda. “Don’t stop there and question or hesitate. Walk through it.”

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Heather Walker is the General Manager of Emerging Accounts within the Tax & Accounting Professionals segment, focused specifically on firms who prepare fewer than 250 tax returns per year.

You may be a small firm, but you are not alone. Add Thomson Reuters to your staff with solutions and resources tailored specifically to the small firm. View some of these now and check in for more tips, guidance, and small firm stories in the Small Talk with Heather Walker blog series.