061 When To Start Your Own Accounting Firm

You gotta put in your years. If I had a dollar for every time I heard that one coming up in an accounting firm.

Sold Timey Tuesday. We're gonna talk about how to navigate this.

If you are a staff accountant, kind of going through this sort of arbitrary putting in your years sort of experience, but also the flip side of that. If you're a firm runner, how easy of a trap this can be to fall into, expecting the team to just kind of put in their years arbitrarily to get to this point. I've been on both sides of this, I think.

So let's talk about it.

Come on in.

It's old Timey Tuesday. Putting in the ears.

So the worst version of this is the one where they say it to basically get. Get high performers to just kind of shut up and work. I definitely was up against this early in my career where I was outperforming a lot of my senior colleagues. But you just didn't get that seniority because this was all still new to you. And this isn't a problem that I think is unique to our space. I think there's struggles with this absolutely everywhere. Like how to balance the value of seniority with kind of the fast growth people. But having been a firm runner, I also see some aspects of like, what is problematic and hard about managing really fast growth people. They're absolutely the people that you want, but it is work to keep them engaged and to ensure that you're giving them a path to like, realize the unique skills that they have. So first to think through, like, how does somebody in this situation right now navigate this and decide, is this really worthwhile for me or do I go out and start my own firm? Like, I think to understand the right framing for that and how to make that decision for yourself, I think it's helpful to hop into the pleated pants of the manager or the partner that you're up against right now. So putting that hat on, sliding into those loafers. Why do people say things like this? You gotta put in your years? And is there any merit to it? I will say there's definitely just bad versions of this. Bad versions of this are. Well, that's what they did. So it's what you should do. Like, that is a bad reason. But where I even struggled not to slip into this trap. And if you run a firm, you can probably relate. Here is when you run a firm, you're kind of constantly at odds with designing a machine and then plugging people into that machine versus designing this tailored machine and org chart. Around the people that you have. So that org chart and the roles that you develop within your firm, those can all be extremely rigid. And you can go out and try to find the people who will fit exactly into those cookie cutter roles.

Or there's a more practical version that.

Is, here's the people that I have today. What is the best firm that we can build around those people?

Because even if you plug the perfect.

People into those cookie cutter roles, people change and inevitably they outgrow those roles or they develop this adjacent interest that could be valuable to the firm. But if you don't have a role for it, how do you enable it? Right. So like, a really hard aspect of firm running is balancing how much you craft your org chart and your business around the folks that you have versus how much do you just build a machine and just plug people into that machine. And the machine stuff for, like, for many of us is exactly the thing that we're trying to avoid because we're coming from something that felt like a machine. Many of us that like, went out and ran our own firm, like, that was what we most hated about this. The idea that we felt like cogs in a machine and people weren't given the space to grow and do something different. And you were just numbers on a spreadsheet basically. And there's a lot of kind of.

Business best practices around how to build your machine.

So like eos, like traction that whole framework, like, and feel free to disagree with this if you're a real EOS nerd.

A lot of that is like, here's.

How to build the system and then plug people into those systems, understanding what type of people you need in those roles, going out and finding them. But a lot of us, like, and myself included, we're kind of allergic to this because the extreme version of this is the very worst part of our profession is like that sort of like accountant mill. I think it's really easy to pile a lot of the problems of the accounting profession on those mills and the whole idea of realization and, and like, struggling to find meaning in this work that we do. So I can tell you from the other side when you make that jump and you're like, man, big four regionals, big firms, like, they just, they don't get it. They're too rigid. I'm going to go do my own thing. The struggle on the other side of doing your own thing is, do you risk building a firm around the people that you have, knowing that these are.

Employees they can leave for reasons completely outside their control? They can have life circumstances come up.

Where they need to go take another job or they need to go away.

But if you just built your practice.

Around that person and their skill set, ultimately as the business owner, you are exposing yourself to risk. If, for example, you've got a really high performer in your accounting practice that wants to go all in on fractional cfo, you're like, great, we finally got the person that can do this. So it doesn't just have to be my time. Let's start building this advisory practice. And they're crushing it. Nine months into it, maybe a family member gets sick or there's, you know, there's some life circumstances that takes them away from your firm. And you've now got this advisory practice that only you can run. And you would not have like gone out on a limb and built this yourself if it was just you that was going to have to service this part of your business. But this is ultimately the risk of just building a practice around the people that you have. So this is like, this is the struggle. And the bigger the firm is, the more they're leaning into the machine. Because there's just, I mean, running stuff without systems in unstructured way beyond a certain threshold like that just gets increasingly inefficient and impossible.

But even at small firms, even at.

Like, you know, 30 and under employee firms, this is a real struggle. Like, how much do you lock it down? How much do you leave it open? And I'll be honest, I think there's room for both.

There's a lot of people that go.

To work in accounting firms that absolutely want the structure and like, are not the type of people that want to go out and be trying, constantly trying new things. And that's why like, those types of folks are maybe more wired to go do their own thing. There's a ton of people who have been in that kind of machine like situation that grew to despise it and wanted to go do their own thing.

But I can tell you, I have.

Also seen people that are the inverse of that. Where you come in, you shake up a firm, you create a bunch of change, and you've got people that leave and go to more traditional firms who just want to come in, plug in, do one thing and that's it. Those people also exist. So there's probably space for both types of firms. Ultimately, where I ended up was probably something in the middle. What I enjoyed most about firm running was building a team of super, super talented people. That was what I got the most fulfillment from that was ultimately the version of the firm that I thought was most helpful for our clients. And I super enjoyed that. So if you're gonna pull in a whole ton of really talented people that will challenge you and constantly be coming up with fresh ideas, your job is really to enable those people. And those people grow, they change, there's new things they want to tackle. And I learned pretty quickly if those are the people that I wanted to work with, it was going to take a work environment that enabled that flexibility and by extension put some risk on me. Because if I was going to enable flexibility in the business to try new things and like new sources of revenue and that sort of thing that was built atop these really talented people who at the end of the day didn't have any skin in the game, could leave tomorrow. Like there was a degree of risk in that for me. And that level of skin in the game is I think, a big factor in how much flexibility you can afford someone. If somebody's going to build an entirely new part of your practice from the, from the practice owner hat perspective, there's some risk there. Now, does that also apply if they're a partner? Like, yes. Like, it is not as if partners don't have life circumstances that will take them away from work and all that. That as well. But that was, that was kind of a, a challenging aspect of firm running for me. So let's look at the other side of the coin. You are that high performing staff person. Are you feeling held back due to like valid reasons or is it arbitrary? And how do you like marry that whole framework with when should I go out and either try a different firm or even try starting a firm of my own? And I can tell you, when I was first starting out in the profession, it absolutely felt arbitrary. And I think in retrospect it was arbitrary. It was folks who had come of age in firms and they had had to put in decades to reach partner. And there was like these, there was the norm of how many years it took somebody to progress through a firm. And I actually had really good success hiring from other larger firms where you had really young, high performing people who arbitrarily were being restricted and couldn't be promoted beyond the threshold they were at because of their age or because of their number of years of experience. So there is a lot of this that happens. I'll temper that a bit with like, it can sometimes feel arbitrary when maybe that person is not a good, that that manager, that partner is not a good communicator of maybe why that is hard. So for all the reasons we were talking about a minute ago, where it's like you've got this like 20 something year old person that is hard for you to understand who's really ambitious and wants to do this new thing, like for the firm owner, like that feels a little scary, it feels a little risky. You already have these client relationships that maybe you don't want to jeopardize on this thing that you don't totally understand. But even if you believe in it and it can be successful, you have this staff person go and build this thing, great. But there is some risk there because ultimately if this is very dependent upon them and then that person's out of there, what do you do? So like this is, I do think firm owners can struggle with effectively communicating why giving someone that level of freedom can be challenging. But it's also one of those situations where it is like, what's the alternative? Right? So like, if you're the firm owner, what is the alternative? Do you want to work with people who are more comfortable just getting slotted into that role and doing that expected work until the end of time? And there are a lot of those folks and you can find them, or do you wanna work with the really creative people? Like a really common thing I heard was like, you quote unquote, just can't find people that have X, you know, some X factor that maybe the partners have that nobody else has. And it's like, well, usually the issue there is because you're running people through this ladder system that is incredibly rigid and doesn't enable any sort of creativity. And so the folks that like could have that X factor that you're looking for, they all get squashed. Like those roles are not attractive to them and so you run them out the door before they could ever, ever get to partner.

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But at the end of the day like your job is to do what is best for yourself and the best managers you will ever have will understand that they are a stop on kind of your life journey and their job is not to prevent you from seeing opportunity and hide you from the rest of the world and prevent you from growing like their job. The best manager's job is to create the best possible place for you at that stage in your career and acknowledge if you're no longer the best thing for that person, then you can hardly expect them to stick around with you forever. Right? So like, that was the best version of hiring, especially with high level people for me was it was almost more like this partnership where you knew that you could get them from A to B and enable like the next phase of their career, which may be with you, maybe with somebody else. And the level to which you feel like your current role is enabling this, like, this is probably what ought to drive the decision of, is this still the right place for me? Should I go somewhere else or should I go start my own firm? Now? There's a ton of sources of interference when we struggle with this conversation. There's a huge degree of fear of the unknown. Like, we are chronically slow to make decisions because we can see the circumstances we have today, but we can't see the circumstances in this, like, future timeline that we haven't explored yet. And that just slows down our decision making. I think we lean into kind of like common tropes of like, common wisdom. We hear like, you know, the larger firms having, get like giving you better technical development paths, like, and there's a degree of truth to this. So like your big four, your regional firms, like, they're investing a lot, most of them in technical development for team members. Where coming out of that, theoretically you should have people that are much more technically capable. And that's like the appeal of hiring people with big four experience. But the flip side of that is the cost of working for a giant machine like that if you ultimately end up doing your own thing or working in a firm at a smaller scale is you don't really develop any sort of like business acumen or experience in managing engagements or like any of the more fiddly aspects that actually go into running your own firm or being successful in a smaller firm if your goal ultimately is to go out and do your own thing. In my mind, like, I'm sure there is value to be gleaned from working for larger firms and like, the resources they have and helping people to develop. But if you're ultimately going to go out and do your own thing and you're gonna be at a big four firm doing audit for three years, that's not very practical experience for going out and running your own firm. If you're gonna be doing tax work for huge, like Fortune 500 companies, that's gonna have absolutely nothing in common with helping support small businesses for you. Like, the decision of whether it's time to jump ship or not. Like needs to come down to what is the relevance of what you're doing today toward, like, what you ultimately want to do longer term. And if you're on the other side of this equation and you're running a firm, like, these are really important questions to have with your team. Like, what are they enjoying right now? Like, what do they see themselves doing in five years or 15 years? Like, what feels like what looks like it would be fun right now? And is that path for them a path that you see your firm on, or is it in conflict with that? If it is in conflict with that, that's totally fine. And that's a thing that you want to know sooner than later and is worth saying out loud. Like, if you have someone on your team who's like, yeah, one day I just want to run my own firm, cool. Like that person's going to have a different level of independence and entrepreneurship. And that's something that you want to know sooner than when they drop the bomb on you and they're leaving in two weeks. So if you're that staff person, try to gather experience that will inform, like, what do I think I want to do 10 years from now? If you're the person running a firm, just like have meaningful conversations and create a safe space where people can like be real with you and not feel like they're going to get punished if somebody does say, like, yeah, I'm doing audit right now, but I think I really want to do tax long term. Or I'm working with type of client A, but I'd really much better enjoy working with client B. People at the end of the day, like, need to act from a position of self interest. Like the days of going to work for a single company for decades, that stuff's probably behind us. Like that's not going to be most people's work experience anymore. And so the way that I thought about it for myself was I've got to balance this like, level of selfishness with the value of like sticking around and like being part of a team and actually pushing through hard times. Like there is a tremendous amount of value in that. Because even if you go out and do your own thing, there's going to be times where it's not great and you're going to like, the people that will stick with you through that. Like, that's really valuable. Like, you're going to have to find a way to work through that. So if you find yourself in that difficult situation, consider whether There's a path there that will ultimately get to what you think you want to do or what you even want to explore next. Or not. Like, that ought to be the guiding light for. Is this, Is this something I should continue pursuing? A stopper? There sometimes can be. Well, if I really know that I want to go do this, like, how do I find someone that will enable this for me? I know for me, that was a blocker. Like, I started developing this vision of, like, boy, this seems like this would be fun, but I'm not sure how to dabble in it, how to give it a try. Honestly, I think that is where, like, building a network online becomes really valuable. If you're going to accounting conferences, if you're engaging in stuff like this, meeting the people who are in the room, like, you will never, never be short on opportunities, on being able to explore different, different things and learn what you really like. And if your goal is to someday run a firm, or maybe just do, like we say, run a firm, but there's a hundred different versions of that that can be as simple as, like, just being a contractor for, like, three clients. Like, that is, quote, unquote, in my mind, running a firm. Or it could be like having hundreds of clients and just being a solo practitioner or having thousands of clients and running a big team. If your goal ultimately is to explore some of that. One of the best parts of running.

Accounting, being an accountant, man, everybody be hustling. Like, pretty much everybody you talk to has these side hustles, has a couple.

Of these little side projects that they do. And that's ultimately how you're going to learn, like, if you should do this stuff or not. Like, the way to start a firm is not to go out and do this, like, yolo, take out an SBA loan and buy this big old firm. It should just start a side hustle and learn what you like and what you don't like. Learn if you're actually capable of doing it. There's, like, so many things besides the technical that you only encounter when you, like, first go out and try to do your own thing. The mental struggles of, like, setting boundaries and, like, managing people. Is that a thing that you're actually going to enjoy? You don't know about yourself whether any of that stuff is going to be something that you enjoy or not until.

You just do it.

And so, like, these days, it has, like, never been easier to have a couple little side projects that you can do alongside your day job that will teach you a lot of lessons about, like, managing scope and client expectations and having to have uncomfortable pricing conversations and all these other things that you might find that you like, despise and may keep you from wanting to go do your own thing, or you may find that you love. And it's with that experimentation that I think we refine what it is that we ultimately want to do and can even inform your decision of whether the place you're at is the forever place for you. Most things in life, you just. You're just not going to know until you taste it. Like you just. You got to give it a try. And that's ultimately what's going to inform your happy place. And like that, that place that you find that may not be a destination, but you're like, man, this is my zone. Like, this is the intersection of what I enjoy, of what I'm good at, and what feels sustainable to me.

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Notes to learn more.

Now with accounting man, like the side hustle stuff is super easy if you want to build an accounting practice. Like there's virtually no barrier to entry to start doing accounting work for SMBs. Taxes may be a little harder. I will say in the US Like Drake has made that very accessible because Drake is like so much more cost effective than other tax prep solutions. But I would say the like, the biggest barrier I think with folks on the tax side is the technical bar of do I know enough to go out and do this thing on my own? I did tax for like a decade and probably still wouldn't have had the confidence to go out and start a tax practice on my own. I do think there are like alternative paths there where you could go out on your own, but ultimately like work with a peer reviewer like somebody that else that has their own firm or something like that. Just as a second set of eyes, like that's absolutely how I would have done it, is maybe go out and try running my own solo practice, but still having a peer that could support me with like peer review and I could do the same for them. So the bar to like do a tax side hustle is maybe a little higher than just an accounting practice, but it's worth the work. Like if that's something that you think you want to do, dipping a toe in the water like a much better approach than just cannonballing straight in because you're just frustrated with your past employer. So your framework for is this where I need to stick around or not? Ultimately today, are you either being enabled to try different things to help refine your picture of what you want to be doing? Ultimately, if you're still blind to all of that and you're just like getting shipped off to audits, not getting any closer to learning what do I actually want to do then like, that is not an opportunity that's going to help you get any closer to figuring out what you want to do. If you know what you want to do and you don't see this opportunity like taking you on a path to that, that's when maybe you start talking with other firms or maybe even start a side hustle in that domain to learn more about whether that's something that you actually want to do. I think, in my opinion, it has never been easier and more accessible to start your own itty bitty little firm than it is today because of Internet communities. And I don't mean to, like, say this in a way that sounds like I'm shilling my community. And it doesn't even have to be like community in the formal sense where you come and you log into this place. It is just how I meet people now is online and just talking about firm running. And I think, like, being able to build relationships with other people who are at a similar stage to you has never been easier. And that can happen anywhere. I can happen on LinkedIn, on Twitter, Facebook, wherever. But this network that you can build for yourself lowers the bar in so many ways because you're not creating everything from scratch yourself. You can beg, steal, and borrow from other people that have done the same thing. You can have these hard conversations with peer groups that are like, man, I really don't enjoy this aspect of firm running. And those conversations can be so energizing because they truly understand what you do and you can learn from them and how those people have navigated those struggles. All of this stuff, like, this is the very best part of the Internet to me, is like, its ability to connect people who have just such a nuanced understanding of each other and what they do. And that, for me, like, if I'm starting my own firm, is absolute gold, gonna make all this feel way more sustainable. And honestly, like, cut years off the learning process when you can steal from what other people have gotten right and gotten wrong. So there you go. Don't put in your years arbitrarily. I did this. I probably. It's probably seven years that I just put in that I probably didn't need to put in. But consider whether this, this current role is taking you to either discovering what it is you want to do, or if you know what you want to do. Is it getting you any closer to, like, just being able to do that thing? One parting thought, I was cleaning out my notion capture stuff, kind of where I just dump stuff as I come up with ideas and there's this tweet that Kyle Bauman had had. It was a Reddit screenshot that he had posted on Twitter from the anti work subreddit. It says psa. Twenty years from now, the only people who will remember that you worked late are your kids. That's an oof. Somebody commented. My old boss told me this. I've missed so many birthdays, plays and events for work. I can't even tell you why. I don't remember what I was working on. I can't tell you why it was important. But I can tell you how my not being there made my kids feel. Don't be like me, okay? So as I've gone through a big life change this year, I have come into it with a lot of ambitions and cool stuff and ideas and all that. But on the flip side of that, as you're considering a change, you gotta have anti goals. Like for me, I've had very explicit anti goals that here that are. Here are the things that I'm not willing to do so that there's like no level of ambition or opportunity or any of that that will overcome the anti goals, which are like the core tenants of who you are and the things that you're not willing to sacrifice. And oftentimes as we are doing hard, scary things like going out on your own for the first time or changing jobs, we're willing to sacrifice those things. The old adage of like trading time now for later I think is almost 100% of the time a trap. I think when we trade time now for later, what actually happens is we raise that bar of how sweaty we're gonna approach work. And it's really, really hard to ever give ourselves permission to come back down from that. I don't know if I've shared this story on. On the pod. My. This was generationally. I think this is kind of like the historically been a generational approach of you work hard, then you retire long term, right? So this was definitely my family situation. Dad worked crazy, just unbelievable hours. And the trade off was like, we're going to have an early retirement. We're going to get all that stuff, get all that time back, right? My dad drove and my dad had this successful exit from a company, not as young as he would have liked for it to have been, but driving home from that company on his very last day of work, he went to the doctor and they diagnosed him with cancer and said, you have a 30% chance of living the next 12 months. And this was after spending, you know, he's I think he's over 50 at this time. And imagine going through life betting the whole farm on this like theoretical payoff and that you're going to get all of this time back only to get punched in the face with that. And like, he's in remission and like, he's incredibly fortunate. But that for me was like a huge slap in the face of like, okay, that's something that I just need to never do. And I think generally, generationally, I think we are being more mindful of that of, you know, like four hour work week introduced the idea of like these mini retirements throughout your career. And I think folks aren't quite bedding the farm like they used to on like growing old and retiring and rather trying to find a lifestyle that balances both, like day over day. And so as I leave firm running and do whatever all of this is, I come into this year being like, okay, like it is all on me. I don't have a team anymore. Like, I'm going to make this stuff happen. And in some ways there's then more pressure on that kind of level of independence. But like no amount of ambition and wanting to help other people and all of that should ever come in conflict with what ultimately are my anti goals, like what are the things I'm unwilling to do? What are the sacrifices that I can't make with, like, the time that I spend with my family, the time that I spend on myself and investing in my own learning so that like, I'm not standing still. I think we all need to have these like, anti goals of like, what are the boundaries that we're not willing to cross? And we set those boundaries when we are in a moment that is like, we are clear of thought because we aren't always there. And those anti goals kind of like frame the boundaries for what we're willing to do and what we're fundamentally unwilling to do in any professional context, whether we're working with somebody else or working for ourselves. But oof. Yeah, that quote. Twenty years from now, the only people who will remember that you worked late are your kids. That puts things in perspective, doesn't it?

Hey, that's Old Timey Tuesday. Thanks for coming and hanging. We got Q and A Wednesday tomorrow. You got any Q's?

Drop them in the comments. Thanks for coming and hanging. That's a nice face.