Eleven years ago, when I started my accounting business, I had some simple goals.
My first goal was to make $5,000 a month.
My last employer paid me $43,000 a year, which works out to be ~$3,600 a month.
With $5,000 a month, I felt like I would be moving up in life.
My next goal was to earn $100,000 per year.
I found a picture of a $5,000 bill and a $100,000 bill.
I printed those two pictures off and placed them in my wallet.
When I opened my wallet, I wanted a constant reminder of the goals I was working to achieve.
In the beginning, I took any work I could get.
At that point in my life, the most important thing for me to do was to earn enough money to keep the lights on at my house.
In the beginning of my business, my expenses were low. Most of the money that came into my business went to me.
Then as my business grew, I started spending money on different tools, software, and business expenses.
There were frequent times where I spent money on things that I thought were necessary to grow my business.
I got to know a number of very successful accounting business owners, and they gave me valuable guidance on what they did to grow their businesses.
One of the big mistakes I made was not pricing my services correctly.
When I originally built my pricing structure, the only thing I factored into the price was how much I would get paid on an hourly basis.
As my business grew, I started to run out of time, and the only way I was going to get more time was to hire contractors or employees to do the work for me.
I was in a bit of a pickle because once I factored in the money, it would cost to pay my new hire and the business costs related to that new hire, there wasn’t enough money available to pay me an adequate salary.
To get my paycheck where I needed to get it, I had to get new clients, so there was enough revenue coming into the business to pay me adequately.
This was when it became apparent to me that the prices for my services were too low.
The fatal mistake I made was that I didn’t factor in the future costs it would take me to make that work profitable.
In those days, it cost me $5,000 to add another employee to my company.
I spent that $5,0000 on office furniture, a computer, printer, software, and other office supplies.
I was in the hole $5,000 before that employee even worked for one hour.
Then there was the time I devoted to getting that new person trained for the job.
I ran into some challenges when the employee didn’t learn their job as quickly as I had expected them to learn the job.
I began to get frustrated with the extra time it took to get the new employee up to speed.
My frustration grew as I reviewed the employee’s work.
There were all sorts of mistakes in their work.
I provided the employee with review notes where I pointed out the mistakes and told them to fix the mistakes and return the work to me once the mistakes were fixed.
Sometimes the mistakes were fixed, and other times the mistakes weren’t fixed.
At a certain point, I throw my hands up.
I gave up on this employee.
I determined that it was easier to fix the mistakes myself than it was to keep pushing the mistake-ridden work back to my employee for him to fix.
A few weeks later, I began to realize that it was taking me more time to fix the mistakes than it would have taken if I just did the work myself.
Then the employee left, and I was back to doing all the work myself.
I felt burned.
I decided for that point in time it wasn’t worth the hassle to hire employees.
I was better off just doing the work myself then to have to deal with the garbage of working with rotten employees.
Over the years, I’ve had some good employees that worked for me.
One of the biggest challenges I ran into was the seasonality of my business.
Around half of my annual revenue was earned during the eight weeks of tax season that ran from mid-February to mid-April.
A few of the years, I was able to hire good seasonal tax staff.
The challenge I ran into was when the next tax season came around that good tax staff wasn’t available anymore, and I had to hunt for someone new.
Then I ran into the situation of training up a new person to do the tax work according to my processes.
If I had been able to get the same staff to return to me each year, then I would have been more profitable because that person would have already been trained in my systems.
I determined it was better to stay in the comfort zone of my current business size because I determined the increased profitability from a larger business wasn’t worth the pain, struggle, and investment that was required to grow my business.
It was easier to stay in my comfort zone.
Several years passed, and I realized my decision to stay small had consequences.
One of the employees that worked for me started now has an accounting firm with eight employees.
One of my clients grew their company to a point where they only worked one day a week in their business.
They recently negotiated a partial sale of their business for a couple of million dollars.
When I made the decision to stay small, that was the right decision for me at that time.
I wasn’t ready to grow my business beyond my comfort zone.
Now that I’ve grown and learned from my experience, I’ve realized I’m not willing to stay in that comfort zone anymore.
I’ve spent the last year redesigning my business so that it would be scalable.
With the new design of my business, I’ve built a pricing structure that allows me to be profitable as my business grows.
There is sufficient profit built into my services so that I will have the cash flow to hire the right people, pay for increased overhead, and continue to pay me an appropriate salary.
I’ve learned that if my services are priced to pay for the work to be done, pay for the business to be run, and pay me, then I don’t have a business that can scale.
Without a scalable business, I am confined to be the only person that will be able to do the work.