The Entrepreneurial Accountant – Do Accountants Make Good Entrepreneurs?

Posted by cocpa on August 22, 2011 · 2 Comments 

Do accountants make good entrepreneurs?  I think if we polled the general public and the accounting population itself, overwhelmingly the answer would be no.  I eluded to the reason why, and the benefits of having an entrepreneurial mindset, in my last blog post. The world doesn’t view us as entrepreneurs, largely because we don’t view ourselves as entrepreneurs.

In order to really dig in and evaluate why this is, we need to understand what an entrepreneur is and is not.

• Myth #1:  An entrepreneur is a “roll the dice” gambler – someone who financed the ranch through the bank of Visa and Mastercard before betting it all on lucky number seven.

Truth:  Research data indicates that successful entrepreneurs are actually risk averse and may not assume the risks involved to undertake a business venture. They are successful because their passion for an outcome leads them to organize available resources in new and more valuable ways. In doing so, they are said to efficiently and effectively use the factors of production, which include at least the following elements:
• land (natural resources)
• labor (human input into production using available resources)
• capital (any type of equipment used in production, i.e. machinery, technology)
• intelligence, knowledge, and creativity.

• Myth #2:  Entrepreneurs must have a unique and innovative idea, something that no one else has thought of before.

Truth:  Execution is what matters most, not the star-quality of the idea. A brilliant idea with weak execution will never surpass a good idea with brilliant execution. An entrepreneur takes possession of the company, enterprise, or venture that promotes an idea, and assumes significant accountability for the inherent risks and the outcome.  

When we compare ourselves to these myths, we don’t stack up. Most people don’t. But when we take a closer look at the truth, we can begin to see the similarities. Let’s take a closer look at the true entrepreneur for similarities to the accounting population.

• Risk and risk aversion – Risk is a prerequisite to everything good in life.  I wouldn’t have my wonderful family if I hadn’t taken the risk to ask my wife out on a date.  I wouldn’t have the practice that I have today if I hadn’t taken the risk to leave Ernst & Young.  But the most successful entrepreneurs manage or avoid risk as opposed to constantly rolling the dice.  As an extreme example, I was in the offices of a venture capital firm a few weeks ago and they were discussing a venture that they were funding.  They mentioned that the founder had an eight figure exit from his last venture so they were hoping that he would put some of his own money in his latest venture, but they weren’t sure if he would.  Here was an entrepreneur with in excess of $10 million in the bank and the venture capitalists were unsure whether he would put one dollar of that money into his new venture. Entrepreneurs are excellent risk managers, minimizing or avoiding risk wherever they can, as are accountants.
• Accountability – Cognitive dissonance is a term for the noise that exists in between the actual results we have today and the results that we want.  For many, that noise will culminate in excuses and blame, and ensure that we never achieve the desired result.  Successful entrepreneurs filter through the noise and have significant personal accountability for their desired results, as do accountants.  We beat the deadline, always.  Excuses or blame won’t do.
• Passion for an outcome – The etymological origins of the word “passion” lies in the Greek verb paschō, which means to suffer.  Forget about entrepreneurs for a minute.  After working in public accounting for over two decades, I can’t imagine a group more passionate about achieving a certain outcome.
• Efficiency vs. Effectiveness – The difference between efficiency and effectiveness is huge. Understanding the difference is invaluable.  Quick and dirty – we can be incredibly efficient, but if we are efficient at the wrong things, we’ll be completely ineffective.  Like being in a car making good time in the wrong direction. Successful entrepreneurs are both efficient and effective as they juggle multiple priorities and competing demands with typically insufficient resources. I’ll give us high scores in the effectiveness area because deadlines don’t move yet we typically find ways to meet them.  Efficiency?  That’s another conversation altogether, but for now, suffice it to say that whatever we lack in efficiency, we make up for in passion.
• Factors of Production – This is the idea vs. execution conversation.  Amazon and Barnes & Noble (bn.com) start online book retail outlets at roughly the same time.  Amazon did not have the financial or human resources that Barnes and Noble did but we know how this story ends.  Amazon had better utilization of their factors of production.  Likewise, Wikipedia, an all-volunteer online encyclopedia, is still here while Encarta, backed by Microsoft’s financial and human resources, is not.  They had the same idea.  The differentiator was execution and management of their factors of production.  Successful entrepreneurs are effective at both, as are accountants.  We constantly manage our human and intellectual capital, and technology and outside resources to bring about the best result for our clients or our employers.

As partners of firms, practice leaders, and engagement managers, these elements are a part of our life.  Does this make us entrepreneurs?  It is certainly a great start!

Brian Amann is a CPA and entrepreneur.  He is the Managing Director and founder of TaxOps, LLC, a rapidly growing tax consulting firm with offices in Lakewood and Englewood and a Principal with My Element Advisors.  Brian also leads TaxOps Investments, an entity established to meet the complex tax needs and cash flow requirements of promising early stage companies, and recently launched the TaxOps Foundation, a not-for-profit organization focused on funding “soft skill” education for accounting and tax students.  Brian has worked with, biked with, trained with, and consulted with, some of the top entrepreneurs in North America and can be reached through his company’s website at www.taxops.com or www.myelementadvisors.com.

Filed under Business, COCPA Members, Professional Transitions, Uncategorized · Tagged with entrepreneur