Should I Stay or Should I Go?

“I’m a senior manager in a Big 4 firm. I was told that I am being groomed to become a partner of this firm in two to three years’ time. I am married with a kid and my husband and I are doing fine financially. Problem is I received a very generous offer from a private company if I resign from this firm and move there. Should I accept it? Or should I stay and wait until I become partner of this firm?”

The above is not an email, by the way. It was one of the questions my friend and I discussed when we met for lunch. She’s still in the Big 4 firm and she posed that question to me.

I’ve seen a lot of things written about working for the Big 4 in the Internet. But seldom do I see (or I haven’t really been looking hard enough) posts about becoming a partner, or how much a partner really receives from the firm. So whatever I write in this post, it’s based on my observation and what I’ve heard from the ‘office grapevine’.

For one, salaries of partners in Big 4 firms (and even in small to medium – size accounting firms) are not definite.  Can anybody give me a sure figure? $200,000 a year? $500,000 a year? How about a million dollars (or more) a year? Is it lower than what you will receive if you become a controller or a CFO or a VP for Finance in a big or small private company? Or is it way beyond the said positions’ compensation package?

Put it this way, and as I’ve told my friend, it’s kind of hard to compare a private company’s offer with a figure that can range from six to seven figures a year! The partner’s salary is one of the most closely guarded secret I’ve ever known – at least where I came from but I don’t think this situation is unique. But personally speaking? I would say the compensation is far greater for a partner in a Big 4 accounting firm than for a CFO or a VP or a controller.

That takes care of the salaries (or does it?). What about the time spent in the office? Are the hours if you’re a partner the same or higher or lower than the hours spent when you’re in a private company?

We all know that the hours in the accounting firm can be hellish. I’ve seen partners who work from 8 in the morning to 12 midnight, 7 days a week during busy seasons. I’ve seen partners who are no-shows after 9 or 10 in the evening and even during weekends, and this is during the busy season. What about during the not-so-busy season? Again, it depends. Some partners go from 8 in the morning to 10 in the evening plus a Saturday. Some partners go home by 6 in the evening and you don’t see them around during a Saturday.

Admittedly, the hours are easier if you’re in a private company. But if you’re part of the group that closes the books, you can be sure you’ll be doing a lot of overtime during the month-end. I’ve seen some CFOs work their *ss off during year-end closing and FS finalization stages. Still the hours are less than those you will spend during the busy season, even for partners.

What about the risks? Which is more ‘risky’? I would interpret ‘risky’ here as which job has a higher probability of pulling you down into the mud if you or the firm or the company fails to address an issue that blows up all over your faces. Before the Enron debacle, I would have said being a CFO or a VP for Finance is more risky than being a partner of a firm. If you fail as a former, chances are you’ll be booted out (and may even be blacklisted) but if you fail as a partner, there’s still a chance you might salvage your position (only they will do some ‘revamping’ meaning you will no longer be allowed to sign off on financial statements). But after Enron, and watching a whole accounting firm go down, I’m on the other side of the scale. It is riskier to become a partner of a firm (and a Big 4 at that) than to become a part of a private company.

What about work challenges? Gee, this one is easy (at least for me). It’s the reason why I never contemplated working for a private company. I think there are more challenges if you work for an accounting firm than for a private company. In an accounting firm, unless you get stuck with the same client year in and year out (for the next 10 or 20 years); chances are, you’ll be resolving a lot of (different) accounting and auditing issues.  The same cannot be said if you’re in a private company. But then again, this is me. It really depends on one’s appetite for such challenges. And I’m going to stop at that.

So what did I tell my friend? In the end, I told her it all depends on her and what she wants in life. Higher or lower salary aside, more hours or challenges or not, it all boils down on whether she really like what she’s doing. Kind of ideal, yes? But then again, I think it’s as simple as that.

If you’re my friend, what will you do?

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My Own Accounting Firm…The Clients and the Money

In my last post, I wrote about what the stress is like if you have your own accounting firm. In this post, I write about my clients and the money.

The Clients

Well, I’m just a small firm in this vast world of accounting / auditing firms. My clients are usually private companies and individuals, most of them local entities in the retail business. I do mostly simple accounting work like bookkeeping, taxes, closing the books, preparing the financial statements and the like.

I already have over 70 accounting clients. And no, I’m not responsible for obtaining majority of these clients. I actually inherited the firm from my father who died several years ago. I took over after he died and, since I was working in another city when he was still alive, I had almost zero knowledge about the firm and its clients. Fortunately for me, I had my 8 – year experience to back me up and I have to say that I was able to keep majority of his clients plus gain a few on my own.

What about auditing? Well I have a few audit clients. I don’t handle a lot since I’m the only one in the firm who can sign off on the audit reports and I can’t physically (and realistically) go through all of them during the busy season since I already have the 70 that I need to close during this time.

So, clients? Lots of small to medium – size private entities (usually family – owned and individually – owned), usually local companies engaged in the retail business.

The Money

Now we come to the most important aspect – the earnings. I can’t divulge of course. But my firm is earning more than enough to cover its expenses plus my personal expenses. My annual net earnings are more than my annual net salary when I was still working in a big accounting firm as a manager.

But…

I have to be honest. If I want to purchase new office equipment (such as computers, photocopiers, and such), I have to literally look for ways to raise the funds to buy these equipment. Right now, there’s little room in my firm’s cash flows to buy these items anytime that I want to. This may not be the case all the time but I think I can safely say that a lot of not – so – big accounting firms also experience this.

Another but…

If you want to become a partner of the bigger firms, I say stick to those firms (unless you will start a firm that you hope will compete with these firms someday). My net earnings are not in the same category as the earnings of the partners of these firms. Far from it.

This doesn’t mean that I want to quit what I’m doing right now and go back and become a partner of a big accounting firm. Having my own accounting firm is actually a trade – off between the time versus the money; the stress / pressure versus the money and the work – life balance versus the money. I chose the former, some people may choose the latter.

And this ends my posts on having my own accounting firm. To the two who commented in my previous post, hope I answered your questions. Thanks for your comments / questions!

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