My senior year I began a bookkeeping company with one of my friends. Though I am in the process of selling my interest in the company, I look back on my experience as some of the best business lessons I have learned. Below is an article about what I think we did correctly that allowed us to have a lot of initial success.
In our junior year, my friend had noticed that, in the Utah County market, small businesses only had two options if they wanted to outsource their accounting function.
Option 1: Small businesses could hire a free lance clerk who would often have years of experience using Quickbooks, but not an accounting degree. Without this foundational knowledge, it was more likely they would make costly errors. These freelance workers would charge $15 to $30 an hour, closely clustered around the $20 an hour mark.
Option 2: Small businesses could hire a CPA Firm. A CPA would offer exceptional service, one stop shopping, experience, and very few errors. These firms can also be very expensive, charging $50-$120 an hour for bookkeeping work. We also knew, that it was very rare for the CPA to actually do the bookkeeping work themselves, as they would usually hire an accounting student to do the grunt work.
We believed that there could be a better third option. We would hire only Brigham Young University Master of Accountancy students and provide bookkeeping for a mid range of $20 an hour. With our service, customers could gain from the experience and education offered by BYU, but pay what a free lance clerk would charge. The economics worked very well, charge $20 an hour and pay accounting student $10 an hour. Finally, the students we hired were excited to be gaining real world experience and had a real passion for making these little companies better. Even without knowing it, we were living the hedge hog theory from Jim Collins, "Good to Great."
Our activities supported each other in such a way that made marketing, recruiting and fulfillment fairly easy. Our customers were excited about getting inexpensive accounting services, and would give us referrals. Our employees were really excited about helping "real" companies, and would refer their friends when we needed new employees. They would often go the extra mile without being asked because they felt personally invested with these small companies. We worked out of my friend's apartment and as students had a knack of finding cheap or free office equipment. During our first year of business we averaged 32% month over month revenue growth, topping out at just under $7,000 in revenue and $3,000 in net income.
For more information, feel free to contact me or visit the company website www.exceptionalaccounting.com
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