Okay, I probably need a little more substance for a blog. To be clear, I’ve been in business for myself for five years. Over that time I’ve had an opportunity to talk to numerous accountants who have made the jump into their own business. I’ve collected their stories and weighed up why I think accountants make excellent entrepreneurs.
- Accountants are literate: If accounting is the language of business, then entrepreneurs without an accounting background are illiterate. This means that they are wholly and solely dependent on external (or internal) accountants to help navigate their way through business. Accountants are at a natural advantage in this respect.
- Accountants have broad experience: Unlike any other professions, accountants often have exposure to many facets of multiple businesses before they start their own. That was half of the reason I got into the profession in the first place. It was like an apprenticeship in small business. This exposure gives accountants an edge over the average entrepreneur going in cold.
- Most failures are cash related: Most reported business failures are due to poor recordkeeping and, off the back of that, poor cash flow management. Accountants are at a reduced risk in this respect.
Honestly, if I were an investor and I saw that the CEO was a reformed CPA, I would be more willing to part with my Benjamins (Or Dollarydoos considering I live in Australia).
Conversely, here’s what worries me about accountants-as-entrepreneurs.
- Micromanaging finances: I speak from experience here. It was extremely hard for me to let go of Accodex’s in-house finance function. I think that accountrapreneurs are more likely to do the finances themselves, probably for longer than they should. I also think they will be less likely to seek the external advice of other CPAs. Understandably so, but I think an extra set of eyes goes a long way.
- Lack of domain expertise: If accounting is the core competency, the accountapreneur may lack experience in the core function of the business. A CPA starting a cupcake shop that knows nothing about baking will struggle. Accountants going into business in something they do as a hobby or as a secondary skill will be more successful than those that do not. Just think about Caleb — he was writing well before he started GC.
- Lack of sales experience: Many entrepreneurs have stories of hustling money out of neighbors with lemonade stands. My favorite story was of Lauren who rented out imaginary friends at school (A practice the FTC would probably frown upon for grown-ups). Most accountants I have spoken to have not received any formal training in sales and many do not get much exposure in winning fees for the firm they’re working at. Sales is probably the most important skill every entrepreneur needs, regardless of the industry.
Here’s a few pointers from my own experience:
- What business do you want to go into? To be clear, I never planned on starting an accounting practice. I just got tired of waiting for a killer idea, and thought an accounting firm would be a good way to pass the time. Fortunately I was able to leverage the practice to create some cool technology in Accodex. Your best bet is to find something that have a talent and passion for and go into that business. It will make it easier working through the tough times.
- What skills are you missing? I realized after college how lacking I was in non-accounting skills. I spent two years reading every book I could find on sales, marketing, innovation, HR, technology, strategy, management and leadership. This meant I was a little more well-rounded going in. First do an assessment of what’s missing and then start loading up your shopping cart.
- How will you cover your risk? We’re accountants right? Naturally conservative. Before I made the jump I made sure I had enough cash to cover my startup costs, six months of operating and living costs. I also had a spouse earning enough to underwrite the first couple of years in business, which could afford me a little extra risk. If you’ve got kids or a mortgage your risk profile is going to be even higher and you should plan accordingly.
The number one resource I can recommend for anyone considering making the jump is "Lessons From My 20s" by Ryan Allis. It basically consolidated 100 books into one slide deck. Do the exercises and move accordingly.
See you on the other side.