How to Fund an Accounting Firm
One of the more significant hurdles to starting an accounting firm is obtaining the necessary funds to purchase all the office space, furniture, equipment and reference materials needed to do business. At that point it's time to look for someone or some entity to fund that start of your accounting firm.
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Instructions
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Consider Your Funding Options
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Weigh the idea of funding the firm through selling debt. Banks offer you money in exchange for the promise that you will pay back the loan plus interest. Private investors or family members can offer a similar trade-off in exchange for start-up funds.
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Consider funding the firm through selling equity in the firm. In exchange for giving you capital for starting the accounting firm, you offer investors partial ownership of the firm in the form of stock. Investors can sell the stock to recoup their investment. The use of equity funding has ramifications for the legal structure of your firm.
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Go the self-financing route. This involves you "boot-strapping it" as you start small and reinvest profits into growing your company over a long period of time. Asking for loans or selling shares takes less time, but self-financing does avoid the trappings of debt and equity.
Raise Funds
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Determine how much capital is required to get an accounting firm into the next stage of development.
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Prepare a business plan that convinces potential financiers that your idea to begin an accounting firm carries money-generating potential for them.
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Spread the word among qualified investors that there is an accounting firm they can fund. Contact friends and family and offer the opportunity to them as well.
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Organize meetings and presentations with prospective investors and present the business plan as you make your request.
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Give the investors an appropriate decision deadline that will give them time to perform their due diligence and decide whether to fund the firm or not.
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Collect the requested funds or figure out why the investment did not meet their criteria at this time. Make sure to thank the investors you dealt with, whether they funded you or not.
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Report back to investors on a periodic basis regarding the firm's performance and the state of their investment.
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Stay vigilant about finding other investors as well as keeping current investors happy in case the firm reaches another level which requires new funding.
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Tips & Warnings
Bear in mind that investors and banks will want collateral on their investment, which means if business does not go well, you can stand to lose some of your personal property.
