There are 30.2 million small businesses in the US, but some are far more lucrative than others. If you're considering throwing your hat in the ring and creating a startup, you're making a great decision! However, you need to make one more great decision: choosing an industry that actually has high demand and, as such, can make you a steady and high income.
Starting a bookkeeping business is one of the best ways to ensure this. Today, we're going to delve into the specific reasons that this is the case and give you some pointers for starting an amazing business. Read on for more information on how to make your new venture a success.
What Is a Bookkeeping Business, Anyway?
If you're new to finances, you likely think that bookkeeping is the same as accounting. However, this is not the case.
Accounting is a field where financial data is interpreted and analyzed by professionals. They will classify, report, and summarize these finances so that a business has a deeper understanding of their financial situation. Accountants also will innovate new ways to streamlining business spending and get the most profits possible.
On the other hand, bookkeepers are simply responsible for recording each and every one of a business's transactions. It is mainly used to identify, measure, and record a business's financial transactions, and the goal is to keep records consistent and systematic.
Bookkeeping is a prerequisite to accounting because it provides the data for accountants to analyze. Managers don't make business decisions based on financial records that bookkeeping manages, but accountants interpret this data so that managers can make decisions.
This means that bookkeeping is the launching pad for all financial decisions!
Why Start a Bookkeeping Business?
Now that you know the basics of what a bookkeeping business is, it's time to look into some of the reasons that starting one is a good idea. Read on for some of the major benefits of bookkeeping business management!
It's Highly Profitable
The goal of any business is, of course, to earn a profit, so you'll be happy to know that running a bookkeeping business is a lucrative profession.
No matter what a business does, it inevitably needs to record their cash flow and profits. Many of these businesses will choose to hire bookkeeping services. If a professional bookkeeper isn't hired, accountants are usually forced to do it, which impedes their ability to innovate and critically consider new ways to streamline business finances. Hiring one allows them to save time that balancing the books would take so that they can focus on other tasks.
This means that you always will have a steady clientele. Bookkeeping isn't a business that will ebb and flow with the tides. Wherever there's a business, a bookkeeper is always necessary.
It's Easy to Maintain
A bookkeeping business is also easy to maintain over time.
Most bookkeepers use digital software to help them balance the books, which stops them from becoming disorganized and losing client financial information. Nothing will get lost and need to be scoured for. This means that your clients will always be satisfied and likely to promote you to their professional contacts. As you work, you'll find new ways to keep your business up with each client.
You also won't need to do much in the way of hardware maintenance. Since bookkeeping is a largely digital endeavor, the only physical items that you'll need to keep up to speed are your employee's work computers. Everything else can be managed online or within your computer's applications.
You'll Build a Professional Reputation
Because bookkeeping is so diverse in the clients that it takes on, your business will develop contacts in multiple industries. Law firms, fashion brands, government offices, and toy manufacturers all need bookkeepers. There's a wide range of areas in which you'll develop professional relationships and get your name out there.
If your bookkeeping business ever decides to expand and begin selling more services, you'll have a lot of businesses that you can reach out to for assistance,
You also will have a lot of people who feel loyal to your brand. If you ever fall on hard economic times, this makes people more likely to help you get back on your feet. It also means that you'll encourage repeat customers to come and purchase your services. This not only gets you more money but is also likely to get you more positive reviews on Yelp and other online platforms.
Flexible Work for Employees
Because bookkeeping is largely digital, it's incredibly flexible. Bookkeeping software can be run from many different devices, including both work and home computers. It can also be run from Smartphones and tablets for employees on the go!
You may think that you need to start a business from the ground up in order to reap these benefits. After all, how else could you ensure that you and others can be on your own schedule? Despite these concerns, there's a simpler and more efficient alternative: franchising an existing brand and working from within this pre-established name.
This is perfect for remote work as well as those who want to set up camp in a traditional office setting!
There are many different franchising opportunities for bookkeepers that allow you or your employees to work from the comfort of your own homes. This appeals to stay-at-home parents who need flexible schedules to look after their children. It also is perfect for retirees that want a steady income of work so that they feel productive and don't grow idle.
The Pros and Cons: A Run-Down
So, in a nutshell, what are the pros and cons of starting a bookkeeping business?
There are many benefits to starting a bookkeeping business:
- An incredibly lucrative industry with high demand
- Low costs for starting up
- Franchising opportunities (no need to painstakingly start a business from scratch)
- Business contacts in multiple areas
- Virtual, flexible work
However, there are also some downsides:
- Lots of responsibility
- High need to secure client data
- The potential need for expensive bookkeeping software
As you can see, pretty much all of the downsides are easily avoidable if you put in planning and preparation time before starting your business. Let's take a look at how to do that!
Planning and Preparation
Now that you know the many benefits of starting a bookkeeping business, it's time to look at some of the early things that you'll need to do when adopting a bookkeeping franchise. Read on to learn how to effectively plan and prepare a business that will bring in customers!
Set Business Goals for Starting a Bookkeeping Business
The first thing to do before starting a business is to set goals for that business. Goals should be:
- Quantifiable, meaning that there are concrete qualifications that must be met
- Specific, meaning that you need to have time frames, exact amounts of money, and smaller goals along the way to larger ones
- Realistic, meaning that they can happen within the time frame you've set (don't aim too high, but also challenge yourself)
For example, "make contacts in multiple industries and make money fast" is a poor goal. A better one would be, "make 3 professional contacts in the legal industry and make $25,000 in net profit by December 15th." This is specific, hopefully realistic, and able to be measured.
You may also want to take this opportunity to write vision and mission statements for your business. The franchise that you adopt may already have such statements, but considering creating them for your own business purposes never can hurt.
Know Your Startup Costs
The next thing you'll need to do is a little bit of research into your business's startup costs. Here are some things that you'll likely need to consider.
The single biggest expense of a bookkeeping business is the software that they use. Most clients will expect you to work with the accounting software that they already use. It's best to focus on a single piece of versatile software that can connect with many different accounting systems so that you can be as efficient and effective as possible.
Make sure that you choose an advanced option when selecting your bookkeeping package. This costs a bit more, but you're a professional and need to make the investment. Account for high-end software packages in your budget.
Training and Certifications Courses
While you don't need a degree for bookkeeping, there are some certification and training classes that you and those you hire might need to take. A training course ensures that everyone knows what they're doing and can accurately reflect the professional nature of your business. Showing a certificate to demonstrate credentials also will help you get clients as a less experienced bookkeeper.
You'll also need to purchase errors and omission insurance. Not only is this a legal requirement in many situations, but it also will prevent you from getting sued. Bookkeepers are responsible for your client's personal data as well as maintaining accurate records, and when you don't do this effectively, you could have a lawsuit on your hands. Insurance protects you if this ever happens.
When you franchise an existing bookkeeping company, it's possible that they already have purchased liability insurance (or have invested in it slightly). However, this isn't always the case. Look into your specific situation and plan accordingly.
Security Software for Data
Since you'll be working with sensitive data, you're going to need to purchase security software to ensure that malware, viruses, and hackers can't access it. Password management software is a good way to stop malware from bypassing your security, as is disc encryption. You'll also want to invest in some good antiviral software so that your employees don't accidentally download anything that steals client data.
Finally, there are office supplies that you'll need to set up a bookkeeping business. This is especially important if you plan to work from a traditional office. A scanner, copy machine, and fax machine are all must-haves, but you can usually get an all-in-one machine pretty cheaply. You also will need pens, pencils, notepads, sticky notes, paper clips, and all of the other office staples (no pun intended).
Franchise Your Business
If you're a startup, you'll need to franchise your business if you want to grow. However, this can cost between $20,000 and $50,000, which is likely way more money than you have in your budget.
However, there is an alternative! Purchasing and owning a bookkeeping franchise erases the need to undergo this process. The franchiser has already done this work for you!
As we've discussed, bookkeeping businesses are basically 100% digital. Here, we're going to talk about some of the ways that you can ensure that your business thrives over a network and computer applications.
Get the Right Software
There are many different bookkeeper software systems out there that you can choose from. Here are some of the best!
Quickbooks is the single most popular bookkeeping software on the market. It's the zenith in the hierarchy of bookkeeping software because you can use it for such a flexible range of tasks. Quickbooks:
- Manages bills
- Manages invoicing and payments
- Monitors client's cash flow
- Tracks the profitability of specific projects
- Finds tax breaks that clients can get
- Calculates professional estimates
As a professional business, you'll want the advanced plan. This plan lets you access all of these features and additional tutorials and webinars for $150/month.
Xero is very similar to QuickBooks in that it's Cloud-based and has most of the same features. Xero is better for businesses with more employees, though, because it lets you add multiple users to a single account for less money.
On the flip side, though, Quickbooks offers tax support and lending, which Xero doesn't. Still, since an Established (advanced) Xero plan is only $60/month, it may be worth it.
Sage One is a little bit different from Xero or Quickbooks. It takes a more basic approach to bookkeeping, making it the least appealing popular option to new businesses. However, it is great for project management and tracking client's invoices.
You may want to get Sage One as an additional service to supplement Quickbooks or Xero. It's only $25/month, so it's worth at least trying out.
Engage in B2B Digital Marketing Strategies
You also will want to engage in some digital B2B marketing strategies to grow your bookkeeping business, including:
- Using social media appropriately (posting frequently, liking pages that may be interested in your services, responding to DMs promptly, being on multiple platforms like Facebook and Twitter)
- Advertising with engaging and interesting video content
- Using marketing services like SEO and SEM
- Sending out emails to potential clients
- Hosting promotions and giveaways online
These are all great ways to find clients and start growing your business!
While there are thousands of industries that you could choose to start a business in, bookkeeping is one of the most diverse, lucrative, and flexible options out there.
Now that you know the benefits of starting a bookkeeping business and the first steps that you should take, it's time to get started. Request a franchise brochure from us to find out how much it will cost for you to start your bookkeeping business through a BooXkeeping franchise. We're here to help you ensure that you get the most out of your new startup so that you can remain competitive in a growing market.