I recently connected with someone online who wants to start her bookkeeping business in the future, but still needs to build some skills. I also had a request a while back from someone in my DMs about covering the topic of contracting with other firms, CPAs, or bookkeepers. So in today’s episode, I’m going to cover just that: the upsides and the downsides, but also…. what you need to know about starting a Bookkeeping Business in 2022.
So if you find yourself wondering should I contract with a more established firm to gain experience or even just to supplement revenue, keep on listening. This one is for you.
In this episode you’ll hear:
Links Mentioned:
Thanks for listening. If this episode inspired you in some way, take a screenshot of you listening on your device and post it to your Instagram Stories and tag me, @ambitiousbookkeeper
For more information about the Ambitious Bookkeeper Podcast or interest in our programs or mentoring visit our resources below:
Visit our website: ambitiousbookkeeper.com
Follow the Blog: ambitiousbookkeeper.com/blog
Connect on Instagram: instagram.com/ambitiousbookkeeper
Connect on LinkedIn: Linkedin.com/in/SerenaShoup
Connect of Facebook: Facebook.com/serenashoupcpa
Thank you for your support of our show. If you haven’t left a review yet it’s super simple. Please go to: https://www.ambitiousbookkeeper.com/podcast and leave your review.
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This episode is sponsored by: LiveFlow
Receive 20% off your first 3 months by using code AMBITION at checkout:
http://www.liveflow.io/partnerships/ambition
I recently connected with someone online who wants to start her bookkeeping business in the future, but still needs to build some skills. I also had a request a while back from someone in my DMs about covering the topic of contracting with other firms, CPAs, or bookkeepers. So in today’s episode, I’m going to cover just that: the upsides and the downsides, but also…. what you need to know about starting a Bookkeeping Business in 2022.
So if you find yourself wondering should I contract with a more established firm to gain experience or even just to supplement revenue, keep on listening. This one is for you.
In this episode you’ll hear:
Links Mentioned:
Thanks for listening. If this episode inspired you in some way, take a screenshot of you listening on your device and post it to your Instagram Stories and tag me, @ambitiousbookkeeper
For more information about the Ambitious Bookkeeper Podcast or interest in our programs or mentoring visit our resources below:
Visit our website: ambitiousbookkeeper.com
Follow the Blog: ambitiousbookkeeper.com/blog
Connect on Instagram: instagram.com/ambitiousbookkeeper
Connect on LinkedIn: Linkedin.com/in/SerenaShoup
Connect of Facebook: Facebook.com/serenashoupcpa
Thank you for your support of our show. If you haven’t left a review yet it’s super simple. Please go to: https://www.ambitiousbookkeeper.com/podcast and leave your review.
Podcast Publishing Tools
This episode is sponsored by: LiveFlow
Receive 20% off your first 3 months by using code AMBITION at checkout:
http://www.liveflow.io/partnerships/ambition
[00:00:00] So I recently connected with someone online who wants to start her own bookkeeping business in the future, But she still needs to build some skills. I also had a request a while back from someone in my DMS about covering the topic of contracting with other firms CPAs or bookkeepers. So in today's episode, I'm gonna cover just that. The upsides and the downsides, but also what you need to know about starting a bookkeeping business in 2022. So if you find yourself wondering, should I contract with a more established firm to gain experience, or even just to supplement revenue, keep on listening. This one is for you.
[00:00:43]
[00:01:12] If you came from a corporate background, working as an internal bookkeeper for a company, you might be wondering what all is involved in going out on your own. Yes, there is a lot to think about, but you don't have to recreate the wheel. I've already done that for you. And that's why I created the bookkeeping business accelerator: for folks just like you, who already have the foundations of accounting, you just need help translating that to working with small business clients. And of course the whole building a business part.
[00:01:43] Side note, if you are listening to this in August, 2022, BBA is actually on sale for $497 off the regular price now through the end of August, just use code BACKTOSCHOOL. All one word, all caps at check out when you go to ambitiousbookkeeper.com/bba I'll also link this in the show notes.
[00:02:06] Now, if I had to do it all over again, here's what I would do. I would start by selecting a niche right away or a niche. It does seem kind of counterintuitive when you want to get experience and work with lots of different businesses. But it is way easier than firing people down the road.
[00:02:26] There is less that you have to learn, you're not stretched as thin having to learn all these different nuances about different industries, you can focus your marketing efforts. I believe this is like the biggest, biggest thing. And it's really smart if you do work with a niche, even if you don't, (but this is way more effective if you do work with a niche) is to write or publish specific content for that niche. So I'm thinking and talking about YouTube videos, podcasts, blogs, especially if you're a local business. Doing blogs with local keywords and even posting on social media, Instagram, using local hashtags, highly, highly effective. I have found so many new small businesses in our area just by following the Prescott, Arizona hashtag. So now, you know, where I live.
[00:03:18] I highly recommend if you are just starting out to just go all in, on an industry or a sub niche of an industry, even so like a broad industry would be the trades. So that would include painters and HVAC and carpet cleaning, things like that, construction, but you could narrow in even further by working with cleaning companies or painting companies or just HVAC companies. And then you can start to create content that is specifically tailored to that industry. And that's where you're gonna be able to pick up traffic on the internet, either in YouTube, your podcast or blogs, with the keywords that you're talking about. So if you start talking about KPIs for HVAC businesses, you will start ranking for that type of content, depending on how much competition is out there. But especially if you're using local hashtags and you want to work with local businesses, it's gonna be highly effective.
[00:04:17] So that's the first thing I would do is I would start by selecting a niche right away. I did not do that. It took me years to narrow down on the one that we currently have. And it makes things go a lot slower because even once we decided on the niche, we had to then figure out what are we gonna do with all these existing clients and how are we going to change our marketing and our voice to attract new clients in this new niche?
[00:04:41] The second thing I would do is decide on the services that I want to offer right away and don't sway on these. So what I mean by this is, for instance when you're first starting out, because I did this, I know you because I was you, I basically wanted to help every small business that came my way. So if they needed sales tax, I would say, yes, I can do that. If they needed payables accounts payable, I would say, yes, I can do that. If they needed payroll, I would say, yes, I can do that. And not only that, but I would say yes to offering all of these things, even if I didn't already have a system set up for it, even if they were doing it in different systems, which we'll talk about here in a second. And. It just stretched me so thin on learning all these different systems, having these different pay periods, having to create an accounts payable system for clients. It was just, it was insane. The amount of work that went into this and how exhausting it was. And at the end of the day, I wasn't charging enough for it. And so my realization rate was very, very low .
[00:05:48] So the second thing I would do if I started all over again, was decide exactly which services I wanted to be doing. and stick to it and tell people I don't offer this, this and this, but I do offer this and I can connect you with someone who offers this other thing that I don't offer. So nowadays we don't offer accounts payable. We ask our clients to handle that in-house. So for the most part, that works really well with our niche because they're all online businesses. People tend to have everything on auto pay or do things with their credit card and they pay for things up front. So there's not really an accounts payable process and we don't have to worry about it. So if that's something that sounds interesting to you where you're like, yeah, I don't wanna deal with accounts payable. Think about the type of businesses that aren't gonna need, accounts payable and let that help you figure out what niche you want to be in.
[00:06:43] The third thing that I would do is I would decide on one software stack to specialize in. And what I mean by this is one payroll service provider, one bookkeeping software, one receipt capture software. If you're going to offer something like sales tax or bill pay, using one software across all your clients to do this, it makes a huge difference to not be jumping from software to software and having to create processes for each individual software. So for us, that tech stack looks like Gusto for payroll, xero for bookkeeping, Hub Doc for receipt capture and Tax Jar for sales tax. If we were going to be doing bill pay, I would probably just require all those clients to be set up in Relay Bank and manage the bill pay through there.
[00:07:36] So this is something, and I recognize this, it's really hard when you're first starting out to put your stake in the ground and say, I only work in these softwares because you feel like you're turning away clients and you will be turning away clients, especially if you are nicheing down into an industry and specializing in software, you will be turning around away a lot of clients, but on the flip side of that, there's gonna be some clients that are so grateful that you've taken all the guesswork out and you've figured out exactly what softwares they need to accomplish the backend business processes. And they're gonna be ecstatic to just lean into and join what you have already created. And they don't have to think about it. Because they are coming to you as the expert, even if you don't feel like it yet.
[00:08:22]
[00:10:28] Okay. So those are the three things I would do differently. If I was starting all over from scratch. Number one, start with selecting a niche, number two, decide on the services I wanted to offer right away and not sway, and number three, decide on one software stack. And you can even look to see what softwares are typical among the industry or the niche that you're going to be working in.
[00:10:53] For instance, we used to have an HVAC client. That's not our niche. So we no longer work with those types of clients. But one of the softwares that HVAC companies use is called House Call Pro. So if I were to be going into that niche, I would say, "I'm only gonna take you on if you're on House Call Pro" if I really liked that software just as an example.
[00:11:16] So all of these things I cover actually inside of the bookkeeping business accelerator, and I can help you nail down your niche, your service offerings and your pricing and your specialization. Now, if you aren't as experienced in accounting or bookkeeping, but you're currently taking a course like Bookkeeper Launch or Become a Bookkeeper, I will link both of these in the show notes, or you're finishing up an accounting degree in college and, you know, eventually that you wanna start your own thing and choosing a niche sounds scary because you're not quite sure you know enough about accounting or business in general contracting with another bookkeeper or an agency might be the way to go. So let's chat about that now.
[00:12:03] So this is where someone had sent me a DM a while back, wanting me to talk about this on the podcast, because she has had experience contracting with a CPA, as the CPA has basically made her a subcontractor and he's bringing in, or he or she is bringing in clients and, and doing all the client facing stuff. And she's just doing the bookkeeping on the, in the background. So the upside for her that she wanted to bring up was not having to deal with being client facing. This is a really great option if you are newer to running a business and you're still trying to get really good at your craft and figure out what systems are good and figure out what niche you wanna be in, and not have to worry about dealing with the client communication. So that was an upside. Another upside of that was that her name wasn't on anything. So ultimately the responsibility is on the CPA that is engaging with these clients and having her do the work on the back end. And the CPA handles all of the expenses of the software and the tools that she needs.
[00:13:05] So the downside of this was that she's only getting a percentage of the revenue instead of all of it. Although I would say when I put my CEO hat on, the way I've run my business from the very beginning, this is essentially how it is anyway, because you have overhead to run your business. So you don't get to take a hundred percent of the revenue home. From the beginning, I have invested in software and team. And so I've only been taking home 50% of the revenue. So that's a good baseline to set and expectation to set in your mind if you're new at this. And you do know that you wanna invest in software to automate things and team to get things done so you're not on the hook for everything. Then keep in mind. You're not gonna be taking home a hundred percent of what you're charging your clients. And 50% is a really good profit margin as well if you control your costs really well.
[00:13:58] So for every dollar you charge your clients, remember you'll probably only take 50% home. So if this bookkeeper that, that was messaging me about the upsides and the downsides of working for a CPA, if she's getting 30-50% of the revenue share of that, It's actually pretty equal to what she would be doing if she were running her own firm, if she had a team and some overhead, right. It's a little different if you're doing things solo and you're doing all the work, but it really just has to do with what your vision is and your end goal.
[00:14:32] And then the other downside for her was that she actually wanted to interact with some of the clients and have her own processes and software stack that she incorporated her clients onto. So that part was actually a downside for her. That could be an upside for you, if you just really aren't sure what the process should be yet, you're not sure what kind of software you should use. So really there's no black and white answer here. I know we accountants like to have a black and white answer for everything, but it's, again, it really just depends on what you need, what stage you're at in your journey and what your vision is.
[00:15:08] Now the other option is working as a referral partner. So once you are starting to establish your own client base, it is really good to work with other bookkeepers and accountants and CPAs as referral partners. It. And this could include giving them a revenue share or a commission or a referral fee, but it doesn't have to, it could be a genuine, just like I wanna make sure that my clients are taken care of, so if they need a CPA, I'm gonna send them to you. If they need a bookkeeper, I'm gonna send them to you.
[00:15:40] So there doesn't have to be a monetary exchange here. I refer people all the time in my groups to students like I'm sharing referrals all the time because we have a specific niche and a specific software we work in. And so if people don't fit into that and they're not willing to switch to the softwares that we use, we refer them out. And luckily for me, I have a ton of students to pull from. And we actually keep a spreadsheet in our group that people can add to, and they can list what software they specialize in the industries they specialize in. And so when I do get a referral, I go straight to that spreadsheet. And I find the ones that do have a software specialization and an industry. And that's how I figure out who I want to refer to. So that's another benefit of choosing a niche especially if you're in my group.
[00:16:28] So when you are working more in a referral partnership capacity, you get more control over the clients you're taking on. You potentially get more of the revenue depending on what that revenue share agreement is. However, you do have more risk because ultimately everything is on your shoulders as the business owner. And you might have less support or guidance if you so need it. And this is when it is more important to be part of a community that you could trust and lean on. Maybe a biz bestie, a mastermind or a close knit cohort of a program. Like I said, I'm constantly sharing referrals inside of my student groups when clients aren't within our niche or software specialization and they don't want to switch.
[00:17:13] So if any of this resonated with you today I will link some links in the show notes for my program and my community. Some other programs that I talked about that would be good for you if you're kind of new and you're trying to gain skills and just keep in mind that we are running a sale for the Bookkeeping Business Accelerator through the end of August. And I would love to have you in that group so I can support you.
[00:17:40] All right. Thanks for listening to today's episode. If you found it useful or had any big ahas, I would love for you to share on Instagram and tag me. I'm at ambitious, ambitious bookkeeper. I'm also on LinkedIn, Serena shup and on Facebook. I would love, love, love if you rated and reviewed this podcast. And if you know of someone who has been talking about starting a bookkeeping business, send this episode to them. All right. We'll talk to you next week.
[00:18:09]