Blake Christian
Top do’s and don’ts when opening a new CPA office

Save money by choosing the right space and negotiating your lease.

March 9, 2015
by Blake Christian, CPA

Late last year, I entered my 34th year in practice and completed my fourth CPA office opening, in Park City, Utah. Our firm now has nine offices in three states. Opening an office more than 700 miles from the one I had been working at in Long Beach, Calif., presented a number of unique issues, including adapting to a true four-season climate (where I am accumulating summer and winter tires at an alarming rate), learning about a new regional business environment, identifying other local professional service providers to partner with, and getting the firm and myself registered with the state of Utah.
Is your firm considering opening a new office in the near future? If so, here are a few of the lessons I’ve learned while making my many relocations:  

  1. Do your research. If you are venturing into a new geographic region, there are many things you should research before you make the move, including your competition, typical billing rates in the area, the employment market, the types of salaries your potential clients will make, and the candidate pool for new hires.
  2. Relocate or hire key staffers. Evaluate whether any of your current employees might be open to relocating. When we opened a satellite office for a Big Four firm in the Los Angeles market, the managing partner allowed us to hand-pick our staff and seniors to ensure that the transition was smooth and the probability of success was higher. But if such transfers aren’t practical for your firm, your priority should be to hire a key employee (generally a manager) who has many connections in your new community and can assist with recruiting, practice development, and community involvement. Consider using a headhunter to help you find the right person.
  3. Choose the right location for your office. The location of your office can affect everything from how convenient it is for your clients and employees to reach you to your employees’ morale and security and the stature of your firm. Consider factors such as easy freeway access and proximity to other business providers. Choosing an office that won’t require a lot of construction or wall movements can also save you big.

    Another important consideration is parking, which can dramatically increase your overall occupancy costs, especially if you’re moving to a large metropolitan area. Evaluate the work pattern of your employees to decide how many reserved vs. general parking spots you need. You may be able to save money by renting in a building that includes free parking or lower-cost “stacked” parking where co-employees share a tandem space, or by negotiating a lower cost on validation stickers for your clients with your landlord.
  4. Remember, many aspects of your lease are negotiable. Virtually everything in the lease is negotiable, so do not think that you need to simply accept the boilerplate terms your landlord initially submits. You may be able to negotiate late payment terms, including a provision for notice from the landlord, and the ability to remedy. Tenant improvement allowances (generally defined by dollars for square foot) as well as CAM (common area maintenance) charges are generally your most significant front-end costs, so they require careful attention. Be sure to think through such issues as the tax ramifications of funding tenant improvements versus including them in your base rent-deductible monthly. CAM costs can add inflationary costs to your monthly rent, so carefully negotiate what the CAM base year will be.

    You can also try to negotiate the minimum assumed building occupancy level to avoid shouldering a disproportionate amount of project overhead. Other areas where your landlord may be willing to negotiate include deposit amounts, personal vs. firm guarantees, insurance requirements, and which party funds leasehold improvements, repairs, and utilities.
  5. Try to strike a deal on utilities. Generally utilities are included in the basic lease during “normal business hours,” and additional charges are imposed at a fixed hourly rate for any time falling outside this period. However, because CPAs work many weekend and off-hours during tax and audit busy seasons, add-on utility charges can add up quickly. If this is the case for your firm, determine whether the utilities for suites and floors are separately monitored. If not, you might benefit when another tenant is running the air or heat on your specific floor after hours. You can also attempt to negotiate a block of free “excess” utility hours, or for a lower rate for hours outside normal business hours.
  6. Rebuild your network. When moving to a new market, it is critical to quickly establish a solid network of referral sources, business prospects, and other professional services providers such as bankers, attorneys, consultants, payroll companies, and investment advisers. Reach out to your co-workers and other professionals who have relationships with your firm to develop a marketing and networking database for the new office. Great “influencers” to meet and network with include commercial real estate brokers, attorneys, bankers, and investment advisers.
  7. Become involved in your new community. Establish your firm in the new marketplace by joining community organizations such as the local chamber of commerce; fraternal organizations such as the Rotary, Lions, or Kiwanis; the YMCA; and the Boys and Girls Club, as well as various trade groups that match up with the marketing objectives of the new office. Getting to know your local city staff and council members can also be useful.
  8. Get the word out. Inform the local and regional press about your new office in order to spread the word to both the business community and local residents. Generate and distribute press releases, line up interviews, develop a social media campaign, and announce the opening of the new office on your website. You can also send out direct mail to companies and individuals who fit the criteria for your target market. Your mail and email outreach should include clear descriptions of the firm’s history, its overall capabilities, its local partners and managers, and the general and niche focus of your new office. You may also want to host events such as open houses, networking sessions, and wine tastings to introduce your firm and services to your new neighbors and contacts.
  9. Don’t neglect client service. Ultimately, your reputation and long-term success in the new office will be dictated by the quality of your client service. Therefore, do not lose sight of the importance of serving your existing and new clients while you are focused on marketing your new office.
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Blake Christian, CPA, MBT, is a tax partner of CPA firm HCVT LLP.