Lean Accounting for CPAs

The LEAN STARTUP MOVEMENT seems to be reproducing itself in cities around the world – like a kind of modern day capitalist pandemic. The movement has been fascinating for to watch…

These days many of us have heard of the ‘lean startup’ and ‘minimum viable product’

We pilfered Eric Ries’ terminology and “re-purposed” it to describe the “minimum viable workflow” required to provide compilation and tax services to the ‘micro-businesses’ that are the bread and butter of most small, professional accounting practices in Canada today.

What is a Startup?

It’s important to understand that a startup isn’t just any small business. In fact no less an expert than Steve Blank defines a startup as “a temporary organization trying to find a business model”.

Most startups work in the high tech space. Since my tax practice has been focused on tax incentives for experimental development and technological advancement, I’ve had a bit of a wild ride helping many local startups to claim generous tax incentives from successive Canadian governments.

The Lean Startup - Eric Ries

I have been lucky enough to observe and work with some incredibly creative people.

As venture capitalists and angel investors search for unicorns and gazelles among the usual thirty-something suspects with the requisite running shoes and designer beards, I can’t help thinking of medieval alchemists trying to transform base metals into gold…

…and I have to admit to a kind of nausea at the glorification of “entrepreneurial culture”. Wanting to disrupt the status quo is something that the best entrepreneurs share with the best artists and musicians. It is also risky, and the margin between success and failure can be razor-thin in any field.

It’s refreshing to hear Warren Buffet – the third richest man in the world – attribute much of his success to winning the “ovarian lottery”. Acknowledging the importance of timing and luck in his success makes for a change and should give pause to would be entrepreneurs who want to “hit one out of the park”.

You’ve probably seen interviews on YOUTUBE or in ENTREPRENEUR MAGAZINE where someone asks a successful entrepreneur how they were able to succeed where so many else have failed. Would-be entrepreneurs are encouraged to hang on every word, as if they can somehow extract and distill the magic ingredients that will guarantee future success.

Too many successful people attribute their own economic success to personal characteristics like intelligence, creativity, discipline and work ethic. The truth is that they probably don’t have much more or less of those characteristics than many of the hundreds of competitors who didn’t quite make it. I’ve often felt that it might be more informative to talk to some of those who “nearly made it”.

While some of us feel the need to glorify risk-taking entrepreneurs, it is probably telling that most successful companies put risk management strategies in place once they start to scale.

At any rate “running lean” is important for any organization, but for our smallest businesses it’s actually a matter of life and death.