Many business types grow through acquisition, tax practices and CPA firms are such businesses. If you think about it, it would take a very long time and a lot of money in marketing to get 100 new clients. If you market to 1000 people, you would be lucky to get 30 people to even call you back, and out of those you might close a few. So growing through acquisition definitely makes sense in this industry.
When determining whether the practice is a good fit you, there are several key components. Whether it’s a tax service business or a CPA firm, how many of the clients are mail in and how many require a "face to face" meeting. If it’s mostly mail in, then Geographic's don't matter much. However if there are a healthily percentage that require a meeting and your office is too far from the main demographic, then will most likely have a much higher attrition rate.
Another consideration in with CPA firms or Tax Practices, the billing rate should be on par to what you are currently charging. If your rate is approximately $250 an hour, don't buy a practice that bills at $150 an hour, thinking that you'll be able to implement a rate increase with these clients. Rate increases are very touchy and they can be increased but after a few years when trust has been established. Trying to do that in the beginning of the transfer will ensure a disastrous attrition.
It's important to look at the type of business the business is doing. Are they doing personal returns, corporate fillings, booking keeping, etc… you want to find a business that not only compliments your current client base but also you’re skill set. If you’re going to take on a lot of work that’s getting done throughout the year make sure that you have the staff to support it. You are not an Island and during the first couple of years of the transition the clients will be watching you and how you handle them the previous person might have earned some grace after 15 years but you have none and must be at your best.
Finally be ready to pounce! These types of businesses get sold quickly so be prepared. Know what you want, have your proof of funds ready and a resume of the current practice that you’re running. The seller is going to want to know who you are for two very important reasons. One he/she has known these people for a long time moist probably and he doesn’t want the accounts to be put in the hands of someone unprofessional or incompetent. Not only would he feel terrible but he will most like field all the "bad" calls for quite some time. Secondly, these businesses are most always sold with a note and some type of guarantee. The seller will have a vested interest in your success, so he’ll be interviewing you as much as you’re interviewing him.
Stay tuned for more articles regarding buying and selling CPA Firms and Tax Practice Businesses.
About The Author: Christina Lazuric is an Orange County Business Broker who shares her broker experiences with BizBen readers and has had varied direct small business experience in the past but now assists small business owners sell their business and offers business buyers find their dream business to operate. Phone Christina direct at 949-257-7823.
|Helpful Resources To Assist In Selling And Buying California Businesses|
|Rick Carlson, Business Broker - Southern California
You Will Never Feel Lost In The Shuffle. Many Brokers Simply Send Out An NDA And That's The End Of Communication. All Buyers Receive A Personal Meeting With An Ace Acquisition Specialist So They Can Recommend The Perfect Business For You. Phone Rick direct at 800-985-4939.
|William Park, Business Broker - Southern California
Highest Volume Broker in California, Simply Check our HUNDREDS of Listings! Over 25 Associates, Speaking Dozen Languages, Helping Buyers and Sellers of Small Business since 1982, Centrally Located between Los Angeles and Orange Counties, while Riverside & San Bernardino Counties are Very Accessible.
|Christina Lazuric CBI CBB, Business Broker: Orange County
Premier Brokerage for Selling Orange County Service Based Businesses since 2005! C.B.B. provides a step by step approach to Business Brokerage, Mergers & Acquisitions, Business Consulting and Valuations. We work on creating the best possible presentation for your business! Call today 949-257-7823.
|Ryan Clark, Business Broker: Southern California
The Veld Group provides a refreshing approach to Business Brokerage, Mergers & Acquisitions and Business Consulting and Valuations. From Your Street to Wall Street, we cater to Main Street Businesses as well as more complex Strategic Firms and Start-Ups. Phone Ryan, Business Broker at 310-652-8353.
|Bob Hughes, Business Broker: Coachella Valley Area
Bob Hughes is a business broker & is President of Hughes Properties. Hughes has a wide variety of entrepreneurial experience with the personal ownership & sale of numerous businesses, and has sold over 200 small & mid-sized businesses in the Riverside County marketplace. Call Bob at 760-323-8311.
|Chris Seaman, Business Broker: Southern California
Founded in 1994, First Choice Business Brokers has accelerated to become one of the most successful Business Sales Organizations in the world. Our team of agents have gone through extensive training to become experts in the field of business brokerage. Call Chris at 858-578-4111 for more info.
|Willard Michlin, CPA, Certified Fraud Examiner, Due Diligence
Willard Michlin, CPA #106752, offers buyers step by step training & assistance in doing Due Diligence Services when they are thinking of making an offer, or are in process of investigating a business purchase. He helps to determine the actual net profit even when there is cash. Call 805-428-2063.
|Shalonda Chappel-Pilgram: Escrow & Bulk Sale Services - Southern California
Escrow services to brokers/agents, sellers, & buyers. Established 43 years. Extraordinary service. Experienced with handling difficult transactions. One stop for all your escrow needs: Bulk sales, lien searches, UCC searches, liquor license transfers, publishing & recording services. 951-808-3972.
|Related Articles, Events, Blog Posts, Discussions, Videos, Interviews|
|Buyer Asks: Is Buying A Service Based Business A Good Choice These Days?
I've been selling businesses a long time & I get many calls from buyers who are open to buying something but aren't sure what would be a good investment. I'll get asked what I would buy if I was them and my answer is always the same, "a service business". Business broker Chris Lazurik explains.
|Due Diligence Issues: What Business Buyers Should Know About The Process
Willard Michlin, CPA, CFE at 800-864-0420 elaborates why you can do a large portion of the due diligence yourself, depending on your background, but you should never try to do it solely on your own. In this BizBen blog post he explores ways business business buyers get themselves into trouble.
|Purchase A Business With Limited Or No Cash - Financing Tips For Buyers
Purchasing a business with no money down can be difficult, but not impossible. Financing a business purchase or down payment can often be accomplished with these strategies from Peter Siegel, MBA (Business Purchase Financing Expert, ProBuy & ProSell Program Advisor with BizBen) at 925-785-3118.
|Live Workshop: How to Find Profitable Businesses For Sale Not On The Market
Live Workshop For Business Buyers: Find Small Businesses Possible For Sale Not On The Market. This Workshop Is In Southern California. Every Month On Saturdays - 1:30 PM to 4:30 PM. Call 805-428-2063 to RSVP. Willard Michlin, CPA will be presenting this workshop. Click On Link For Schedule & Times.
|Attorney Specialist Shares Escrow Instruction Tips When Buying A Business
Once you have successfully negotiated the Asset Purchase Agreement ("APA") for your acquisition it's natural to relax a little and let your guard down. Attorney Specialist Mark Chatow discusses what business buyers should look out for when opening escrow and getting escrow instruction in place.
|Thinking About Selling A Small Business? Know These 8 Factors That Matter
The likelihood of selling a business is often determined by external factors in the marketplace. Here are eight influences on how easy, or difficult it might be when selling a small California business. Peter Siegel at 925-785-3118 (BizBen ProSell Program) explains these factors for owner/sellers.
|Business Purchase Financing Expert Peter Siegel - Tips On Proving Cash Flow
What are the actual "provable" adjusted net earnings (cash flow) of a small to mid-sized business being purchased? Buyers need to look carefully at all financial info for the "real" adjusted net income/cash flow. Peter Siegel, MBA (BizBen ProBuy & ProSell Lead Facilitator) at 925-785-3118 explains.
|FREE Sat Seminars: Best Practices When Buying Or Selling A Small Businesses
This seminar focuses on the process of buying & selling a small business. Sat's - Monthly (refreshments will be served) in Southern California. Phone Willard Michlin (CPA, Certified Fraud Examiner, Due Diligence Expert, Business Broker). Phone 805-428-2063 to RSVP. Click On Link For Schedule.