Is accounting a great business to start? Assuming..

[warpdrvr]

Assuming:

A) your goal is to reach 8-figure net worth within 7-8 years

B) you're willing to work your ass off (obviously!)

C) you're able to be one of the best out there AND adapt to new technology

In other words: with the above criteria and a strong desire to learn and apply a valuable analytical skill set as you become an entrepreneur, is accounting a particularly good choice?

Hot takes welcome!

 

[exjwstudent]

@warpdrvr Like a CPA? The problem is accounting is generally $150-200 hour rates so good steady income and good career but not great to establish a ton of wealth. Accounting firm maybe but it requires hiring people with degrees and careers which means heavy labor costs and thin margins.

Accounting isn't like other skilled labor like Attorneys and doctors where they can hire interns and assistants to do most of the work, Accounting typically has all the work handed to them by the business and they just need to review and rubber stamp it

 

[cuddlycutebaby]

@exjwstudent Ya OP is looking to accumulate over 10M in 8 years meaning they need to clear 1.25M per year after taxes and expenses. Not sure accounting will get you there.

 

[exjwstudent]

@cuddlycutebaby Fresh out of college and ready to grind, it would likely take 5-8 years to get the experience and customer base to clear 300k/year after expenses and an assistant or two.

IF he continued to grind he could hire accountants for $150-200k/yr with benefits and could make 100k/year minus other expenses off them (like office and management).

Typically for a service based business you want 70% gross margins and its not really possible with accounting as it requires an accounting degree to be a CPA. Thats why there aren't major national accounting companies

 

[warpdrvr]

@exjwstudent This is helpful, thank you. The necessity of an accounting degree can be worked out another way here in the UK: a few years of study, then 3 years of combined study and real-world experience before taking ACCA / ACA tests for chartered status.

The thing is, accounting seems like a field relatively sparse when it comes to innovation or firms breaking from small to medium to large. More like small, then Big 4 et al. unless you open a family office.

Is there really no gap in the market?

 

[exjwstudent]

@warpdrvr There's no gap because there isn't really enough profit for a medium sized company. Small companies don't have the management overhead and typically the accountant is the owner or its just a group of a few accountants.

The major companies can charge whatever they want and are working almost exclusively with major companies. public companies or ones looking for IPOs will use them because they provide a guarantee you can't get from a small firm.

 

[warpdrvr]

@exjwstudent So this is the big picture of the accounting landscape. Starting to look less hospitable. Thanks for breaking it down simply; I studied accounting before and thought to get back into it since it is interesting, but really your insight has allowed me to see more clearly that it just doesn't line up with what I'm aiming at.

 

[exjwstudent]

@warpdrvr Its a great industry to be in IF you're looking for a steady job and like numbers.

There's other avenues like being a CFO for a start-up or such where you can take chances and work on projects that you feel will take off. You don't always need to be the CEO/founder to make a ton. CFO of a large corporation can make 8 figures annually.

 

[warpdrvr]

@exjwstudent All excellent options no doubt!

Really I'm aiming first and foremost at having control of my own time, even if it means more of it must be spent serving clients; becoming a CEO / CFO of someone else's business - at least right now - doesn't sound like an appealing long-haul goal.

But man, some of those guys at that level truly demand admiration, as long as they believe in what they're doing!

 

[scubajosh77]

@exjwstudent There aren't major national accounting companies? Lol, I'm howling, this is so wildly wrong.

 

[exjwstudent]

@scubajosh77 There's only a few literally called the big 4...

compare this to major law firms, health centers, education systems or any other career that requires degrees.

 

[warpdrvr]

@cuddlycutebaby Very fair point. I should have been much clearer, sorry. I did mean starting a firm and growing it from there. Outsourcing, automation, and likely combined financial planning services could all be key tenets of the business. It's hard to know what to do nowadays since I'm not one who's inclined at all towards programming or dragging myself through poverty in university (when it hardly seems necessary IRL) but everything seems to be going that way!

 

[gerym147wj]

@warpdrvr The margins on this business are tough, there are some new companies that are doing accounting for startups for like £20/mo I have no idea how they will generate enough profit. Honestly I would steer clear.