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Stop Pecking the Keyboard Like a Parakeet and Grow an Accounting Business

“Grow an accounting business!” Easier said than done? On this chart you can see on the left hand side there we have profitability. So, how do we increase profits? On the bottom here you can see we have the percentage of time working on the business rather than in it. So, how can we work less time in the business where we’re actually doing the accounting, actually going through and helping with the QuickBooks file or getting inside of tax software and doing the actual returns, and spend more time working on the business as an entrepreneur? Grow an accounting business vs. staying small.  We’re going to talk about what it means to go through each of these stages. So, the very first stage that most people start out at is called the parakeet. And I’m going to walk through each of these stages in detail, but a parakeet is typically a generalist.

Someone that has low fees. And I say that they often charge a hundred dollars a month to play kind of calculator games. So, the life of a parakeet, most people that start their businesses in accounting, they start out as a parakeet if you don’t have any training, if you don’t have any help, if you don’t have any mentors, it’s kind of the obvious way to start. It’s really the easiest. Typically this business is built on word of mouth, networking events, friends and family and connections. As business comes to you, it’s great. We take it and we go on from there. But you’re typically a generalist if you’re a parakeet. You provide really any service that someone will pay for. You could have as much as a dozen or 30 or more services actually at a website, which we’re going to talk about later, where someone had 33 services and there was only a couple people, like two or three people working at the company.

How does everybody know how to do all this stuff really well? They don’t. Are you ready yet to grow an accounting business? When you get into this situation where you’re not only a generalist on the services you offer, but also the industries you work with. So it’s not just that I offer 30 or 40 different services, but I’ll really work with any industry. So generally, if somebody has a pulse and a business, they can become a client regardless of the industry or the help they’re looking for… just anybody. And so because of that, that really drives low fees, and the fees are low often because to be honest, the value is low. I mean, it’s hard to be the best at the services delivered when there’s so many different services, custom work. Each industry is different and it’s kind of a learning curve with every single new client.

So parakeets generally aren’t respected by their clients and their work is seen as a commodity. It’s just like, I could go over here if the price is less. And most of their clients are small, they’re services work only, there’s no training, there’s no higher level value in these services. Just baseline commodity services. And most of the companies they’re working with are less than $500,000 a year in annual sales. I commonly say that parakeets are paid to play a hundred dollars a month calculator games, just paid to peck the keyboard like a parakeet. That’s really what it is. It’s a sad story and it’s unfortunate, but if you’re at this level, the good news is it’s easy to get out of this level. There’s just one or two key things we need to make it beyond a parakeet…

 

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