Going Solo

California CPA magazine: June 2008

Helpful Hints From Those Who’ve Done it

Going solo can be the most liberating—and most difficult—business decision a CPA chooses. Depending on your specialty, the minutiae of what’s required to make the transition to launch your own practice can vary widely. However, no matter your focus, there is some basic advice and tactics to consider when going solo.

The Decision
“I thought about what I wanted for myself and it boiled down to what my priorities were,” says Rob Seltzer, who owns and operates Robert Steven Seltzer CPA in Beverly Hills. “If I had sucked it up and stayed where I was, I know I’d be making a lot more money than I am now, but I wanted to have the independence of doing my own thing and calling my own shots without having to deal with office politics.”

Seltzer made that decision 15 years ago and, today, has the freedom that allows him to enjoy his hobbies in Lake Tahoe and elsewhere.

“When you decide to go into business for yourself, there are many administrative things to think of and take care of,” says Lynette Atchley, who went solo in 1999. “That’s one of the areas, as CPAs, we are well-prepared to advise clients about, but when we sit down to do it ourselves, it’s often more work than anticipated.”
Until her workload grew, Atchley handled things herself. After a while, she hired a part-time assistant to help her spend more time doing what she’s best at: working with clients.

“I fully encourage CPAs to start out on their own—if they have the personality to do it,” says Michael Eisenberg, who has been on his own for the last 30 years.

“I’ve worked with plenty of CPAs who are very comfortable working in a big office environment, but might not be able to go solo,” he says. “You need to make sure your personality is suited to being your own boss. You need to be a self-starter, self-motivator—be able to pat yourself on the shoulder when things go well and also be able to accept negative feedback constructively. We’re human, and we make mistakes, and you need to be prepared for the times when the client gets unhappy. You can’t let that drag you down.”

The Transition
Clientele, overhead, income and rent: these are all things that must be considered when hanging your own shingle.

“What matters is not what you make, but what you keep,” says Seltzer. “You have to realize, if your firm was billing you out at $150 hour, but only paying you $50 an hour, when you go solo, you only have to have one-third as much business to make as much as you were before.”

Seltzer recommends having your own book of business lined up before going out on your own, as starting from scratch can be near impossible. Along with that, he suggests keeping your expenses to a “bare bones minimum.”

“I remember someone telling me, ‘You need an office so you have credibility, etc.,’ which I think was a very misguided recommendation,” he explains. “If you’re limited by your income, you don’t want to be paying it to a landlord. You really don’t need to.”

When Seltzer began on his own, he says the tax processing fees were his biggest expense, but he managed to get by without an office and found time to market himself. Eventually, he moved into an office and did work for his landlord in exchange for rent. “Until I could bill myself out for more lucrative opportunities, that provided me a nice transition period.”

Eisenberg backs up Seltzer’s suggestions about money control.

“It’s critical that someone who’s first opening their shop understands their cash flow,” he says. “You have to have that budget and keep your overhead under control.”

Growing your business and landing more clients is also key to starting out, and the trick is to find time to do it, and realize what works in terms of marketing.

“The referral always seems to be the best resource for marketing,” says Atchley. “A happy client referring me to their friend, who is typically of the same nature, is always the best way to land clients. That said, I have a phone book ad, and have gained clients from that. Comparatively speaking, it’s much better for me if the client comes as a referral. As I grew in my business, I also developed a website and my own branding, complete with brochure.”

On a more practical level, making the transition is also about understanding the logistics of what you do and taking control of the details.

“What you need to go solo is practical knowledge, because it allows you to create systems and methodologies that allow your practice to move smoothly,” says Eisenberg. “And your routines and systems have to be well understood by everyone in your office, from the owner to the associates to the person that answers the phones. It gets crazy at times—like April 1—but you will manage if you have your own systems. It’s a step-by-step process that is refined each year.”
And, of course, in the craziness that can ensue, it’s important to keep yourself and your own happiness in mind.

“From the beginning, I would have spent more time on my business in addition to the time spent in my business. In our industry, it’s easy for us to focus on service to our clients, and we end up getting what’s left over of our time in the day for ourselves,” says Atchley. “It’s important to schedule that time in your day to better yourself and your business.”

Words of Advice
“Make sure you have a good business plan and understand where your income is coming from, and have your resources in place,” says Liz Flores, who went solo in 2002. “Understand all the things you will need to develop the practice: are you going to need staff, office space or financial commitments. And make sure you’re doing the work you like.”

“Realize that you have to wear all hats,” adds Seltzer. “You not only have to get the business, which requires strong interpersonal skills and being able to make people feel comfortable they’ve selected you as a CPA, but you have to service the work and be able to do things in a timely way.

“And realize what your strengths and weaknesses are,” he continues. “Just because someone comes through the door doesn’t mean you should accept that engagement. If it’s outside your area of expertise, you should pass. You’re just going to end up in problems.”

Atchley suggests that you figure out what you do best, and hire others to support you who can fill in the gaps. She also suggests that what you do best might give you a chance to specialize your practice, and focus on fewer areas of expertise.

“When you specialize, it may seem like you’re narrowing your field of expertise,” she says. “However, when you can focus on something and do it very well, you’re able to offer your clients a higher level of service. It also minimizes the area of continuing education needed and you can focus your practice in areas that you are truly interested in. It’s made it much easier for me, because I’m doing what I love and providing a good service to my clients and they seem to be happy enough to bring referrals to me as well.”

Atchely also recommends some outside the box thinking to accomplish things you may not be able to on your own.

“As a solo practitioner, I find it very difficult to keep up with the regulations,” she says. “What I’ve done is partnered with a larger company to provide the full amount of services in my area of expertise and still remain compliant. The larger company is my back office support team that handles all my compliance with federal and state agencies, and offers me a great deal of support in serving my clients.”

Don’t Forget CalCPA
CalCPA can be a solo practitioner’s best companion.

“Honestly, you cannot practice as a CPA unless CalCPA is working for you and the consumer,” says Eisenberg. “When I first started out, the way I utilized CalCPA was by just being a member and having access to the materials produced by the organization. At some point I began to feel it was time to get more involved with CalCPA and joined my Los Angeles Chapter board. That’s when things started to happen because it’s when you truly get involved with the profession—at the local, state or national level—that you really get to understand how the society can help you and your practice.”

Eisenberg specifically mentions the exposure he gets at CalCPA events, as well as the importance of CalCPA’s Sacramento office and the government relations work that goes on there. He says it helps him figure out what legislation might affect the profession and, in turn, him. “The vast majority of CPAs in the state, and around the country, don’t have the time to pay attention to that stuff as their life is too tied up in work, family.”

Another major benefit of being a member for solo practitioners is getting back that network they lost when they left the bigger firm.

“When you become a solo practitioner, you lose the ability to walk down the hall and talk with another CPA who specializes in an area you need information on. You lose that camaraderie,” says Atchley. “Through CalCPA, I’ve expanded my network beyond belief. I can pick up the phone and call any number of people, which is a valuable resource to me. In addition, when I do service for CalCPA I have been able to network with CPAs across the state. I’ve been introduced to CPA colleagues across the country, people who have been in this industry a lot longer than I have. Not to mention that the continuing education offered by the California CPA Education Foundation is always top notch.”

The Payoff
There are plenty of things to consider when going solo, much more than is mentioned here in broad terms. Depending on your expertise, the process, skills and resources required include a number of things. However, the payoff can make it all worth it.

“The fact that I am a sole proprietor, and able to do what I want when I want, gives me the flexibility that I wouldn’t have working for a firm,” says Seltzer. “I love to travel, and have a lot of hobbies, and wouldn’t be able to get away as much as I do if I didn’t have my own practice.”

“It’s exciting,” adds Eisenberg. “There’s nothing better than having your own shop.”

Want More?
If you’re thinking about setting up your own shop, check out these resources:
Business Management Tools : Everything from sample engagement letters to confidentiality agreements, and more.
Monster Pointers: From Monster.com, check out these aspects to consider before branching off on your own. www.monster.com , click “Career Advice” and enter CPA firm in search window.
Journal of Accountancy : This article discusses pricing, time commitments, marketing and other topics.