On your own: practical advice for starting your business.

Many CPAs dream of being their own boss, reaping the direct benefit of their hard work, free from the constraints of employer-related structure and expectations. Yet taking the leap into business ownership carries with it an ever-present fear of the risks involved.

It may be true that we fail by failing to start or that the only thing to fear is fear itself. But there are defined steps to take when starting your own business that will quell your fear and improve your chances for success.

THE BUSINESS PLAN

First and foremost is to write a business plan that includes:

* Your business purpose;

* Operational and administrative processes; and

* A financial projection.

Your business purpose. Identify the types of work you enjoy doing and do well. These should be the services you seek to provide and on which you build your practice.

Then, research immediate, intermediate and long-term trends and unfulfilled needs in your targeted service areas, while identifying details about your market, such as the size and industries within the business sector, as well as gender, age and income of targeted individuals. Dun & Bradstreet and the advertising departments of local publications such as a business journal are good sources for this information.

Identify your competition so you can determine who already is performing the services you intend to provide--and how much of the market they have. How will the services you provide be different?

Operational and administrative processes. Describe how you will implement the core processes of your business. Do a mental walk-through of the steps involved--from receiving a lead to billing for services rendered. Remember to include all indirect tasks such as computer-related responsibilities, continuing education and marketing.

When choosing which processes to standardize, keep in mind the need to focus on the values of your target market and quality relationships.

Financial projection. When preparing your projection, be sure that it supports personal financial goals and needs, succession plans and other areas of your overall financial position that your business may impact. When planning for your startup needs, identify financial resources to tap during the early stages of your business.

Determining just how much money you'll need to launch your business is dependent upon a number of factors, among them your location; whether you'll be renting space or working out of your home; equipment and furniture needs; technological needs; marketing efforts; and whether you'll be hiring employees and the salaries you'd have to pay, along with employment taxes and benefits that come along with running your own shop.

WHERE ARE THE CLIENTS?

Once you are confident with the services you will provide, the clients you are targeting, operational processes and your projected financial results, you need a marketing plan to convince your target market that you're what they need. This plan should include a clear message about who you are and how you can help potential clients.

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Your marketing efforts should communicate to potential clients why you are the best solution for their needs and that you are positioned to identify and implement strategies that will achieve their goals. Being aware of information and issues that concern your clients is a key when establishing credibility. It shows your clients that you are concerned about their needs.

But be patient. Though your efforts may not generate immediate results, stay with your plan. If you experiment too much before you are established, people will not remember you and it will be even more difficult to secure clients.

Remember that financial services is a relationship business. Developing contacts is critical both as resources for information as well as for business referrals. Identify how you can reach key contacts and prospects, such as joining organizations they participate in and getting to know the bankers, attorneys and other professionals they rely on.

Also, get involved in both formal and informal networking at least six months before you start out on your own. This could be in professional, general business, social or service organizations. Seminars that address relevant practice needs also can help you reach your target market.

If speaking to groups is not something you are comfortable with, start with Chamber of Commerce or Rotary Club events before venturing into organizations and events within your target market. Toastmasters and public speaking classes also can be a good investment.

An organized, up-to-date and active contact database will help you regularly communicate with contacts that are critical to keeping a continual and adequate supply of prospects.

ASK YOUR PEERS

Arrange to meet with other CPAs who have started their own practices in the past few years. They often can provide many of the answers you need and can alert you to obstacles that they had to overcome to succeed, such as:

* Technology shortcuts. Too much of a business is tied up with computer technologies for you to skimp in this area. It is important to be up to date (including being current on all software patches to avoid risks to computer data).

This doesn't mean that you should venture off to the "bleeding edge" of the newest technologies that may not be completely debugged and could create havoc in your office--or may be too expensive and offer much more than you need.

* Letting it go. Resist the temptation to take all billable work, regardless if it is the work identified in your business plan. You can't be all things to all people.

* Keeping the balance. When building a business it is often easy to forgo time with family, friends and personal pursuits. Be sure to create and maintain boundaries between your business and personal life. Planning your time and keeping a to do list will help you honor your personal commitments.

There are risks and challenges to starting your own CPA practice. But there are also many rewards. Taking the time to properly plan can reduce your risk and your stress as you pursue your goals.

By Bruce A. Gray, CPA and Pamela M. Thompson, CPA

Bruce A. Gray, CPA is a sole proprietor in San Dimas. He is vice president of the Inland Empire Chapter and is a member of the CalCPA Council, the Financial Literacy Task Force and the CalCPA Membership Committee. You can reach him at [e-mail]. Pamela M. Thompson, CPA is the founder of Show Your Stuff, a strategic planning firm for CPAs. She is president of the Inland Empire Chapter, a CalCPA Council member and member of the CalCPA Communications Advisory Committee. You can reach her at [e-mail].