Changes to the profession are happening fast.

I’ve been working with accountants for 27 years and many of the things I used to take for granted just aren’t true anymore.

One of the biggest differences is that firm owners no longer need years of experience behind them before setting up on their own. There’s been a surge in younger accountants rejecting traditional firms and starting their own business.

The ACCA 2025 Global Talent Trends report found that 61% of Gen Z accountants (born between 1997 and 2022) have entrepreneurial ambitions – the highest of all age groups.

And that makes me really optimistic for the future of the profession. That entrepreneurial mindset is exactly what’s needed to adapt to the rapid changes we’re seeing.

But…

I don’t want to rain on anyone’s parade, but the statistics on new businesses surviving beyond the first year are quite sobering.

20% go bust in the first year and only 38.4% make it to year five. Of course, this is across all business types and accountancy is certainly less volatile than other sectors. But it’s vital to put the right foundations in place from the start if you want your new accountancy firm to keep going.

Mistakes to avoid when starting up

The accounting firms I work with at AVN tend to be well established rather than new. But in many cases they are still carrying problems that stem from when they started up, such as:

• They took on any business at first because they needed the fees – and now many of their clients aren’t a good fit for the firm.
• They set their prices low to attract new business and they worry their clients will leave if they raise them – so they aren’t making enough profit.
• They didn’t set up proper systems and many of the processes live in the owner’s head – so they end up doing everything themselves, even if they have a team.

Those issues can go on for years. So, the business that started as a route to freedom becomes a kind of trap instead.

Being aware of those mistakes from the start will help you avoid them or at least reduce their impact.

Five questions to ask yourself before you begin

‘Start with the end in mind.’ This advice from Stephen Covey is solid gold. When you know what you’re aiming for, it’s much easier to make the right decisions for your business.

So, before you begin, here are some questions to ask yourself:

1. What do you want your firm to look like in one year, two years, five years, 10 years?

Are you aiming for a big team or do you want to keep it small? Will you outsource or employ as you grow? Start with the 10-year plan and work backwards so you have milestones along the way. Think big and be bold! Having that vision of your perfect firm in your head is really motivating.

2. What kind of work do you want to do?

Are you happy to focus on compliance or would you love to offer more added value services? Getting clear on this will help you position your firm effectively. This is particularly relevant to point 3…

3. Who is your ideal client?

Are there certain sectors you want to work with? Specific locations? What kind of personalities do you find it easiest to connect with? When you know who to target and what you can offer them, marketing your business becomes a lot easier.

4. What’s your pricing strategy?

Please, please remember that being the cheapest is not a pricing strategy! This is one of the most common mistakes I see and it leads to many issues further down the line. Price for the value you bring, not the lowest fee you’ll accept.

5. What’s your definition of success and how will you measure it?

This gets to the fundamentals of what really matters to you. Financial KPIs are important but they aren’t the only metrics you should measure. What about measuring the time you have to spend with your family? Or the number of 5-star reviews you get from clients? The happiness of your team, if you have one? Make sure to track these, too.

You may be thinking, those are easy for him to say! And yes, I know how hard it is when you need to pay the bills and, frankly, any client looks good.

So do what you have to do but always keep your perfect firm in mind. With that as your ultimate goal, you’ll find it easier to make the tough decisions – like shedding unsuitable clients – when you’re in a position to do so.

Shane Lukas: AVN – The Accountant’s Network