Top 5 Mistakes Among Accounting Firm Startups

Accounting firms are routinely listed among the most promising, most potentially successful startups in existence—and it’s not hard to understand why. All companies need accounting work done, but not all of them can afford to do that accounting in-house. It’s too important a task to leave to freelancers, and thus the expertise of a professional accountant is always in high demand.

But just because there is a market for accounting firms does not mean that your accounting firm startup is a guaranteed success. As with any business, strategy is required in order for the startup to survive past infancy.

Errors That Can Sink Your Accounting Firm

This means avoiding some of the most common mistakes that plague accounting firm startups. We’ll list five of them here.

1. Insufficient startup capital. This one is hardly unique to accounting firms: Undercapitalization is really a common concern among startups everywhere. It is far too easy to miscalculate the amount of time it will take to start really bringing in billable clients and collecting on invoices—so make sure you have a decent chunk of change saved up before you open your doors.

2. Lack of marketing. The “if you build it, they will come” mentality has never really worked—and while there may be a market out there for your accounting services, you still have to let potential clients know who you are and why they should choose your services. No startup succeeds without proper marketing, so if you don’t have any marketing clout, you may need to hire an outside firm.

3. Poor invoicing and collections. You might be amazed at how tough it is to get businesses to pay you for your accounting services. This makes it imperative for you to establish a robust invoicing and collections process—because slow or delinquent payments can halt your cash flow and sink your startup!

4. Undercharging. It may seem smart to offer your services for below-market rates—but if you start off that way, you’ll have to continue that way, as all new clients will expect you to maintain those low fees. Better to price things reasonably than to gamble on rock bottom assessments.

5. Lack of support. Finally, remember that running any startup is grueling, and will require some tough decision-making—so if you don’t have a mentor or a support system of some kind, it’s imperative to get one right away.

Avoid these errors and you’ll be well on your way to accounting startup success!