For those who follow me, you probably know that I've quit my job as a Tax Manager at a Big 4 Accounting Firm to start my own Tax Practice in Canada. If you want to get up to speed, make sure to check out the video here. Well that was just over two months ago and I wanted to give you an update on how that business has been doing. As you can tell by the title, I'm grateful that I was able to sign on clients and make 5 figures in revenue in my first month. My business was off to a good start and I want to share my process with you. If you are wanting to quit your 9 to 5, or if you are interested in starting your own business, make sure to read until the very end to learn from my trial and error, as well as be the first to know what my big plans are for this year.
Prepping for the Business Launch
First, I want to talk about the preparation required before I even started the business and everything that went on behind the scenes. I actually documented what I did back when I first launched my business. I will be posting these updates on my Instagram so if you are interested, make to follow me there (@ms.balance.gabriellelee).
Running the Business
Let's come back to the present time and reflect on what it has been like running the business for two months.
The first day of the business launch, I sent out an email campaign to those who were on my email list, who have reached out to me prior to the business launch, and who were interested in my tax services.
The next two to three weeks were spent on having Discovery Calls with potential clients and understanding what their business concerns are and if I can help them through the services I offer. This process came quite naturally to me from my role as a Tax Manager whose responsibility was to be the direct contact for clients.
Following the Discovery Calls, I drafted proposals with customized services to solve or find answers to their business problems. Usually, this came in the form of Tax Memos or Tax Consulting. Naturally, there would be add-on services such as tax returns for the individual, spouse, and their corporation.
If the clients agreed on the proposal, I would then send them an engagement letter and a retainer for 50% of the quoted fees. And that is how I made the 5 figures from the first month of business - on retainers alone!
The whole client onboarding process was definitely an investment of my time as I spent time to get to know the clients and their needs and crafted a customized list of services. This step is important in order to build that client relationship but also to be clear about the expectations set with the client in terms of fees and services that they will be receiving.
With a service business, it's easy to start blurring the lines as to what is or isn't included in the fee. That is why setting a scope in an agreement before starting any work is very important so your client knows that any out-of-scope items result in additional fees. This is because the service business is basically an exchange for your time and expertise. Out of scope items result in additional time and resources, which I believe, should be charged additionally to the client. It's a matter of communicating this to the client and letting them understand and agree to an additional scope and fee before you continue doing any more work related to it.
Most accountants charge on an hourly basis, but I like to charge based on a fixed fee range. This provides clients assurance in terms of the cost that they can expect, but the fee range also allows you some flexibility to charge clients on the higher range of the fee if more time was spent completing a deliverable than you expected. Pricing is a very tricky subject and there is definitely trial and error process. It would also be important to understand your overall financial position, such as your operating expenses and profit margin, so you are running a business that is making money and not losing money.
After the onboarding process is complete, it is a matter of working on and completing the deliverables. The deliverables in my case are tax consulting, tax memos, and tax returns. Instead of having a different way of working on a deliverable for every single client, I thought of ways to be more efficient by creating processes and automating tasks when possible. I've set up a few email automations for steps that clients need to complete and key milestones on a project, so I don't need to draft an email every single time.
Creating an efficient process that can be replicated saves a lot of time and stress. Sometimes you don't know what an efficient system is until you have many trial and errors after years doing what doesn't work. I think I saved some of the headaches by using my experience working at a Big 4, which had decades to "perfect" a system. I took from my work experience and applied what works for my business and customized processes that allowed me to be a bit more nimble.
While I tend to be an over-planner or even an over-thinker, I do believe this has its merits, as I'm able to forecast potential issues and scenarios and prepare for them. I also learned to let go and accept that you can't set up a perfect business from the beginning. Maybe have a business that is 70% to 80% ready, and then test it in the real world. There are going to be unpredictable events and the business is going to evolve and adapt to it. I had the mindset that there are going to be growing pains and instead of being afraid of the unpredictable, I decided to shift my mindset to accept challenges as they come and find solutions to issues as they arise.
So far, I've been grateful for a relatively smooth business launch and that I've been able to make more than my 9 to 5. My next plans are to learn how to scale my business and to grow it at a pace that is sustainable and that I can manage. So, make sure you stay until the very end to find out about my exciting future plans.
My Future Plans
After working with a handful of clients and having a good idea of what they are having difficulties with, I've realized there are many overlapping concerns among small businesses.
So far, there is a limit as to how many people I can help because I only have so many hours in a day. But I realized I want to reach and help more of you who are planning to start small businesses or already operating a small business in Canada. I realized many small business owners struggle with financial literacy, which is critical in growing a profitable business, but also being compliant with various reporting requirements that you may not even be aware of, and then be hit with penalties down the road for being non-compliant.
I understand that finances don't come easily to everyone and the exorbitant amount of information out there is difficult to absorb. It's difficult to even start sometimes since you simply don't know what you don't know. At the same time, outsourcing accounting and finances can cost you thousands of dollars, which can be quite pricey for a small business. For example, a CPA can cost you on average of $200 per hour, which can be higher or lower depending on their experience. I also believe that if you are just starting out your business, it's important to have a foundation of how the accounting and finance works. So, as you grow your business, you can delegate those responsibilities but you would first have an understanding of how your business is doing financially.
That is why I'm planning to create a program specifically designed for small business owners in Canada, so you can learn the foundations of being financially literate when it comes to running your business. I'm in the process of creating the course, but I intend to cover topics such as:
What business structure are available and what works best for your business (ie. sole proprietor, corporation, partnership)
How to know when to incorporate your business
How to register your business with various federal and provincial bodies.
Basics of bookkeeping (plus free templates and my favorite resources that can save you time and money)
How to analyze your income and expenses
How to read financial statements
How to keep on top of compliance requirements such as GST/HST, tax returns (ie. T1, T2125, T2), and tax slips (ie. T5, T4)
How to plan to minimize your tax liability by taking advantage of various tax deductions available to you
Difference between paying yourself a salary vs. dividend
Basic tax planning concepts.
If you are interested in learning more about this course and want to be on the waitlist for when it launches, make sure to fill in your information in the link provided here. You can also take part in the program creation by letting me know what business and finance concerns you have that you want to learn more about.
Also, feel free to email me if you have any suggestions for the course. If you reached the end of this post, thank you so much for getting this far! Look forward to my next post :)