If you have skills or experience in bookkeeping, you might be interested in starting your own bookkeeping business. After all, it’s an excellent opportunity to have more autonomy over your work, make more money, and take advantage of potentially infinite growth potential.
But how hard is it, exactly, to start a successful bookkeeping business?
How to Start a Bookkeeping Business: The Basics
The basics of how to start a bookkeeping business are relatively easy to grasp – and this type of business is a favorable one to new entrepreneurs. In fact, Bookkeepers.com offers this business startup guide that’s specifically tailored to home-based bookkeeping businesses. Overhead is relatively low, the services are somewhat straightforward, and you can eventually grow the business in many different directions.
But first, you’ll need to account for:
- Knowledge, skills, and experience. If you want to run a successful bookkeeping business, you need someone who knows bookkeeping to be at the center of it. Usually, this means you, the entrepreneur, must have the knowledge, skills, and experience necessary to either provide the bookkeeping services yourself or provide direction to people who can execute it. Depending on your circumstances, that could mean you need to spend some time in school or bookkeeping classes – or it could mean that you need to hire someone who has adequate bookkeeping skills and experience already.
- The business plan. Next, you’ll need to have a business plan in place. You aren’t technically required to have a business plan before starting a business, but it’s highly recommended, and for good reason. This is your opportunity to sketch out how your bookkeeping business is going to operate and how it’s going to be different from similar businesses in this space. This is also a chance to identify key strengths, weaknesses, opportunities, and threats related to your business, so you can appropriately address them.
- Startup costs. Starting a bookkeeping business is relatively inexpensive, at least compared to other businesses. But you’ll still need to make plans to accommodate the few startup costs you’ll face. Can you fund the business with your personal savings? Should you tap into your retirement accounts? Should you take out a loan? The answer is going to depend on your personal circumstances and goals.
- Paperwork and formalities. Before you can begin business operations, you’ll need to choose a structure for your business and formally establish it. Most bookkeeping businesses operate as LLCs, corporations, or sole proprietorships/partnerships. Each has pros and cons associated with it. But in any case, you’ll need to take care of some initial filing paperwork and formalities, based on the state in which your business is operating.
- Technologies. Most modern bookkeeping businesses depend heavily on technology to provide their services. You’ll need to choose software platforms that enable you to provide services to your clients easily and take care of administrative tasks like invoicing. Additionally, it’s a good idea to have a website in place for your bookkeeping business, so you can effectively communicate about your services, attract clients, and inform your audience.
- Your first clients. After that, you’ll be ready to start attracting your first clients. Your first clients are going to be the hardest ones to secure, since you won’t have much experience or a reputation to work with in the beginning. You may want to consider offering your services for a discount and using professional networking to win those first few partnerships.
- A path to growth. Finally, you’ll need to have some sort of plan in place for how you’re going to grow or continue the business. Do you plan on offering different services in the future? Are you going to expand to a different geographic region? Are you going to target a different audience? Are you just going to scale up your current operations to a higher volume through marketing and advertising?
Key Obstacles to Success
As you’ve been able to see, the steps necessary to start a bookkeeping business are straightforward enough that most people can consider this business a legitimate feasibility. But there are some obstacles standing between you and making that business successful, including:
- Offering reliable services. How do you make sure your bookkeeping services are impressive enough to encourage good word of mouth and referrals? One option is to improve your own education and training. Another is to hire and train better staff members. And you can supplement these options with better technologies and a commitment to customer service. Still, you’ll need to devise a unique plan for how to approach this hurdle.
- Charging the right price. Pricing products and services can be challenging. Charge too much, and you won’t attract customers. Charge too little, and you won’t make a meaningful profit. Market research and competitive research can help you enormously here, but you’ll still probably need to experiment to find the right price point for your niche.
- Mitigating the competition. The fact that bookkeeping businesses are relatively easy to start introduces a particularly challenging obstacle: competition. Your bookkeeping business certainly isn’t going to be the only one in the area, and you may have dozens or hundreds of similar businesses to compete with. How do you make sure that your business is not only unique but seen as superior to your top rivals?
- Attracting initial clients. Your first clients are going to be the hardest ones to win, since you won’t have established, satisfied clients to help you attract new ones. Focus on building strong relationships first.
- Growing and earning more revenue. Once the business is up and running, how do you earn more revenue? There are hundreds of sales, marketing, and advertising strategies that can help you here, but you’ll need a high-level vision for your long-term growth in place if you want them to work for you.
It’s not especially hard to start a bookkeeping business, but it can be challenging to make your bookkeeping business successful. That said, with proper planning, some knowledge and experience on your side, and appropriate acknowledgment of the biggest obstacles in your way, you should have no trouble turning a profit and eventually allowing your bookkeeping business to evolve into a major success.