Self Employed Professionals- How did you fund your startup

[berettafan]

Talking about atty's, cpa's (which i am), architects, and other pro. svcs where the svc is the product;

I'm looking at office rent, various insurances, office furnishings, computers, signage, etc. + replacement for my current salary for 6mos +/-. I USED to have a good idea of what my home equity was but in this market...i dunno.

Also interested in your thoughts on just how important visibility is for the office location. Cost for very visible might be around $25/sf/yr whereas less desirable (and less visable) space would run in the neighborhood of $18/sf/yr.

Thanks for your input-

Erik

[911Rob]

I know I should probably know this Erik, but what is the actual business again?

[ErVikingo]

Erik,

I funded mine with well, savings. As to visibility, if you are looking for tax clients it is but if not, don't bother. I'm not in a highly visible place (and I don't do taxes) but we get calls and visitors every year.

Yelllow pages and the local business bureau help for attracting clientele.

[berettafan]

Yeah, really Rob how can you not have a quick reference chart on all the PPOT players?!

j/k. I'm a CPA. Been in accounting since graduating in '96 but didn't start in public accounting until '00 or so.

[Rot 911]

When I opened my own law office I used my savings and a credit card.

[Jims5543]

In 1995 I used my Visa Gold card. I had a small saving account (maybe $5,000 in it) and was trying to keep it there.

I was lucky to be able to start with a home office then move to a real office 3 years later.

I bought a 15 year old Ford Bronco, borrowed some equipment from a good friend (I am a land surveyor) and kept it as simple as possible.

I miss those days with 1 employee.

[berettafan]

Thanks Juan- I was going to PM you about this if you didn't see the thread.

I do corps and 1040's with a heavy concentration on S corps. I also like estate work but I am not going to push on that initially because it is a relatively lawsuit prone field.

Home offices seem to work for local bookkeepers and the like but it doesn't fit for $2 - $10k/yr small corporation clients i'd like to attract. It surely would simplify things though!

[911Rob]

OK,
funding, yes cash.
When I started in business I gave away 70% of my profits for the start up cash with a couple investors; I rolled my 30% back to them and bought them out in 4 years. What'ya gonna do?

Business is about profit, no profit, no do.
Profit comes AFTER overheads are paid, Overheads can EAT profit.
IMO, forget the $18/sqft office space and all the OH associated.
Build/Add a nice home office, professional. If your house won't accomodate, move.
Separate entrance, phone, fax, computer, etc., all at home.
my two cents, sometimes its not feasible, I know.

edit: heh, what am I doing, you're an accountant, you already know this stuff?

[ErVikingo]

Erik,

PM or email me. Been there done that. There are a lot of ways you can do this whilst controlling the expenses.

All the best !

[Dueller]

Fresh out of school I worked as associate for a firm, then another. Became a junior partner in my last firm until divorce when we mutually decided we go separate ways (long story...firm partly tied in with ex-wife's family). I literally found myself on the street with a used computer, very few clients and very little money. Opened a small store front office. Slept in the back room for 6 months. Hit a lick against a major automaker, moved to city where I am now. Entered into rental situation sharing office space with an established solo practitioner. Ran a frugal operation unril I could afford my own space.

I don't know that high visibilty is important. I have very little "walk in" traffic. Would think less as a CPA. Has to be accesible, but most clients will find you thru word of mouth, referrals, and not noticing your office from the street.

If you're going to be a sol;o practitioner, you might want to find an office sharing arrangement with a solo tax atty, estate planning atty, or closing atty. Rent and share conference rooms. reception area etc would be my move. Especially if you could share with a complimentarty business...maybe an insurance agent that does a lot of estate planning. Once you get into cororate work more and more you'll find they want you to come to them rather than them coming to your office.

As far as finding the place, start networking. You'd be suprised what attorneys have vacant extra offices but don't want to advertise. nd many times thgey'll be happy to pick up an extra $750-1000/month to defray their overhead. My first office sharing arrangement cost me $250/month and included reception area , break room, conference room, copier (just paid my share of lease based on usage) and use of their phone system (had to pay for my own line service). And it was highly visible in nice hightraffic thorouhfare


Not much help, but that's my story.

Bottom line...if you haven't stashed a bunch away to finance this move, don't go way into debt to start out with a big office, etc. Keep it small to begin with, Despite what some think you can't grow a business with ever increasing debt.

[kach22i]

The key to making money is to keep your expenses low. This is why a lot of architects still work out of their home, basement or studio garage.

Four kind of work spaces.

1. A space for you to work (could be your house)

2. A space which allows you to supervise employees (not your house).

3. A place of convenience for you, so you have fast easy access to the daily services. For instance my office is located so that it's less than a three minute walk to; bank, office supply, art supply, photo processing, photocopy shop, lunch place, parking garage, book store..........and it's a 30 minute walk from my house.

4. An office for your clients and to impress your clients, which typically includes drive up to the door parking and something just off the highway, and or something close to where they are located.

.................................................. ...................

In the old days the architect just needed a drafting board and a client, now it takes $10,000 and up for computers, software, printers and the like.

The number one expense is help, followed by rent and taxes. There is only so little you can pay good help. Taxes are a fixed cost which you cannot escape. Therefore the overhead of rent and transportation cost are the ones you can be creative with.

To answer your question; savings and a wife that works.

[WolfeMacleod]

Startup costs weren't that great for me. Buy some parts, wind coils, put them together.
Literally started on about $200.

[M.D. Holloway]

freelancing dollars

[berettafan]

The sharing arrangement is interesting. I'll do some digging to see what comes up on that.

[Dueller]

Buddy of mine who was working out of his home as a tax LLM and CPA, was given free office space in a swank building by a life ins company. They just wanted him accessible to show their clients they had an atty on call. Not only did he get free office space, he picked up some sweet clients from the insurance company

[MRM]

Dueller, let me know next time you hear of an insurance company giving away that deal again.

BF, you should look into the office sharing idea. It is probably the best chance you have of getting reasonably priced office space that will be nice enough to help you attract clients. It is almost invariably what new sole practicioner lawyers do. You do have to worry about appearances if you are attracting corporate work. It doesn't have to be fancy but it needs to be nice and accessable. If you can find a small law firm that has an extra office, you can get inot the office with phones, internet, receptionist and your name on the door for almost nothing.

The best fit is somewhere professional that will show clients you have some substance but doesn't cost an arm and a leg, has other professionals who can give you referrals and who you can refer clients to, and who has a a secretary who you can use to do your clerical work on an hourly per-use basis.

I went out on my own almost three years ago. It was the magical convergence of a couple of events. I was unhappy at my previous employer, I had a large client who told me they wanted to send me work if I started my own firm, and my wife makes enough that we could almost cover our expenses on her salary if we cut way back. We saved up so that we had enough to live on with me not taking any money home for a full year. Each month we planned to take a certain amount out of savings to cover our expenses, preparing worst case for a year without income. The combination of the client going with me and savings with a draw down plan made going out on my own possible and livable without stressing out over everything.

Do a budget and don't scrimp on capital equipment. You need good computers, software, etc. Good infrastructure will (doesn't need to be luxurious) make your practice much more efficient and easier to live with. At the same time don't spend a penny unless the money you spend returns you more in value than the cost of the item. Be generous in the budget to handle any unforseen expense. It always seems like something comes up. Compare your budget to the income you anticipate you can generate from the clients you will take with you. Don't leave until you have a good plan in place for getting clients. Don't be unethical about stealing your firm's clients, but be realistic in identifying clients who will sign up with you when you're on your own. Don't borrow money to start up, but do get a line of credit in place before you leave in case you need it to ballance out cash flow. Figure out your billing system in advance so you don't spend all your time on administrative details.

[CurtEgerer]

>>>Also interested in your thoughts on just how important visibility is for the office location. Cost for very visible might be around $25/sf/yr whereas less desirable (and less visable) space would run in the neighborhood of $18/sf/yr.<<

You could save a ton there by moving to Michigan. Nice office space for $5/ft.

..... of course the downside is nobody has a job here so they probably wouldn't need your services

[Dueller]

MRM...will do. It has ended up being a good deal for both the lawyer/cpa and the ins co. They overbought space and were tied into a long term lease. They did a lot of estate planning with their products that often required modification of wills, legal advice on gifting, tax advice, etc. Rather than let a potential customer get away, they could say "We have an attorney available to speek to you today if you don't already have an atty." So letting him have space sitting idle they had to pay for anyway, it has turned into a win/win arrangement.

I have a pretty sweet deal now. I have an office that belonged to an atty friend that died 5 years ago. Very upscale space. He was a mass torts attorney so his estate is administering closing out all those settlements that are still being generated. No new business. So his widow has allowed me to rent the office and since she has to have an attorney on board to oversee the cases, I am "of counsel" to his PLLC. I get a small fee for doing this and pay $1000/month for about 3600 sf that is completely furnished and set up. The dec'd lawyer's estate pays about $40K per year for the space.

[ErVikingo]

I used the services of an "office suite' place when I started. Not a bad deal and had a larger entity feel to it.

[MRM]

Go to the county law library (probably at the courthouse) and get copies of the local bar association monthly publications, or look for them on the web. If you look in the classifieds sections you will see tons of office share oportunities.

What Dueller said reminded me of something. I had a friend who was a financial planner. A credit union asked him to office with them so they could refer him their members for trustworthy financial advice. Last I heard he had moved from his 3500 sf built new in 2000 hovel of a home and bought something really big in a gated community. You might want to check with banks and trade groups.