4 CAs left corporate jobs to start their own practice

• In recent years, many Chartered Accountants (CAs) have moved away from traditional roles in large firms or corporate settings to start their practices.
• Hi, I am CA Naveen Nagaraj. I was thriving as a Deputy Manager at ASA Bangalore, one of India’s top 10 firms.
• And then before I knew it, I co-founded M S N A & Associates LLP with three friends. 
• We pushed through and secured our first client after 49 difficult days.

Backstory

After qualifying as a Chartered Accountant in 2016, I did not want to join the Big 4s, nor did I want to join the industry.

A midsize firm was the answer for me!

I joined ASA, one of India’s leading accounting and consulting firms serving global clients at their Bangalore office in their Audit Division.

Post 2.5 years I wanted to build a firm with a different approach. And for that, I had to start something of my own.

So, in October 2018 I quit ASA and took a six-month sabbatical.

During that time, I worked on various aspects of my life, especially career and the most obvious crossed my mind – Should I start a CA Practice? 

The decision to start my practice

But I had one question running around my mind – So, ‘How could I differentiate my practice?’

To give you context, there are over 160,000 practising chartered accountants in India, with many of them located in Bangalore only, especially in South Bangalore.

With that in mind, I set up a proprietorship firm called Naveen S N & Associates.

I discussed this with 3 of my friends. We have known each other for 16 years. They too wanted to start the practice more than I did.

In April 2019, Nitesh joined me as a Partner, and in 2020, my other friends followed– Ashwini Magod and Madan Hemaraju.

We reestablished it as M S N A & Associates LLP.

When I started the firm in 2019 we handled various tasks, including income tax queries, as we were still learning and trying to set up our firm.

But once my friends joined me, we decided to focus on our strengths…Each partner now takes care of a specific vertical.

• I am a certified internal auditor, hence my expertise is well-suited for specializing in internal and statutory audits, SOX (Sarbanes-Oxley Act) compliance, and tax audits.
• Nitesh manages financial reporting, Ind AS implementation, and assurance engagements.
• Ashwini handles GST (Goods & Services Tax), including regular compliances, advisory, opinions and litigation.
• Madan oversees Direct Tax, with an extended expertise in representation and appeals, and M&A taxation.

Starting a CA practice… not without its challenges

Year 1: 2019

It took us 50 days to land our first client.

Those initial 49 days were filled with hope and perseverance, searching for someone who believed in our potential to add value.

The first invoice was for INR 25,000, and I was thrilled to see our efforts getting appreciated.

From the outset, our focus was on building a reliable base of retainer clients, crucial for ensuring steady income and covering monthly expenses.

By June 2019, we secured a 1,000-square-foot office space (quite ambitious for a startup). Initially, my dad supported us by paying part of the rent, which turned out to be a wise decision.

Nitesh and I handled everything ourselves, hesitant to hire more due to limited work.

Year 1 was experimental, focusing solely on serving our first few clients. 

Despite our apprehensions, we managed to grow. By the end of the year, we were a team of 6.

Year 2: 2020

Madan and Ashwini joined and we rebranded to M S N A & Associates LLP.

Just as we were finding our footing, the COVID-19 pandemic struck us. We freaked out.

This period taught us valuable lessons about cash flow management.

A client advised us to maintain a reserve to cover 3-6 months of fixed expenses, which proved beneficial.

The lockdown forced us to rethink our operations, focusing on client value and leveraging our free time to plan strategically.

Despite the challenges, we grew 2.5 times by the end of 2020 and expanded our team to 12.

Year 3: 2021

2021 brought the second wave of COVID-19, but we were prepared for the worst.

We had learned from the previous year’s challenges and implemented strategies to ensure smoother operations.

We focused on building a senior team, and client engagements and successfully managed to work remotely.

By the end of 3rd year, we were a team of 15.

Year 4: 2022

This year marked a significant growth for our firm as we hired a chartered accountant for the manager position. A major decision for a growing firm!

We concluded the year with a team of 18 and achieved an impressive 80% boost in revenue.

This growth was fueled by the support of our team, clients’ trust, and our strategic planning.

Year 5: 2023

Our growth continued steadily, achieving a substantial 40% year-over-year revenue growth.

We began with a specific revenue figure and now we have grown 5 times.

We are now a team of 24 consisting of 4 Partners, a Company Secretary as an associate, 3 Chartered Accountants as Managers, 2 Employees, and 14 article trainees, and growing.

Future plans

Looking forward, we aim for a sustainable, organic expansion, targeting 30-40% annual growth.

Our focus remains on maintaining a balance between professional and personal lives while building a robust, and stable firm.

We have developed a comprehensive plan or vision for our firm that is updated every 3 years.

Initially, we launched Vision 2023, and now we are moving on to Vision 2026, which focuses on building a workforce of 32 employees.

However, I am confident that we will surpass that number. We will also outperform our revenue target.

What are our top-performing services?

From day one, we wanted to be seen as consultants rather than just auditors.

Currently, our core focus at M S N A includes,

• Internal audits
• Tax consulting
• Tax opinions
• Litigation
• Building Standard Operating Procedures (SOPs) for clients (whether operational or financial)
• ICFR engagements (internal control over financial reporting).

Our revenue split is quite diverse, reflecting our focus on both stability and specialization:

Internal Audit: 30%

Over the next 5 to 10 years, we aim to grow, but we do not want our major revenue driver to be statutory audits or attestation functions.

Given the increasing scrutiny from regulators like The National Financial Reporting Authority (NFRA), it’s crucial that if we do undertake audits, we do so with utmost diligence and meet the highest standards.

If we can’t meet these expectations, we prefer not to engage in audit work at all.

Traditional services: 50-55%

Traditional services include mainly Virtual CFO services and helping foreign clients establish their companies in India and later hand-holding them with the entire finance and accounts function.

This also includes accounting and tax consulting on a monthly retainer basis.

Building this fixed revenue stream is crucial for the long-term and short-term stability of the firm.

The demand for traditional services like tax consulting and litigation remains steady, providing a stable base for our practice.

Ad Hoc services: 15%

This includes tax consulting and opinions issued to clients, SEBI-related audits, Transfer Pricing documentation study, and Building SOPs for the clients.

Also read: Quit the Big 4, founded a startup-centric CA Firm & built a 100-member team in just 7 years: ‘Money’s in the Niche. 

Acquiring clients

The journey of acquiring clients has been an organic one for us, primarily driven by strong professional relationships.

A large portion of these referrals come from our peers who have since become CFOs or finance managers.

The majority of our clients have come to us through referrals, mainly because of the reputation I have established during my previous work.

Here is how we did it.

Providing top-tier services: Good work ensures client retention. Over the past five years, our clients have stayed with us because of the quality of our services.

Networking: I make an effort to meet with people in my professional field, attend events, and build connections without any immediate expectations.

LinkedIn presence: I ensure to write on LinkedIn every week about my experiences and share professional insights, which helps me connect with a broader audience.

Sending emailers: We send out crisp and informative emails to clients, which has proven to increase our visibility and engagement.

Apart from following these steps, we regularly ask for feedback from clients, either face-to-face or through virtual meetings. And enquire whether others can benefit from us.

Also read: S.R. Dinodia Partner says their firm is NOT in every vertical. Predicts huge growth opportunities within audit and tax

Client split

SME sector clients

Enterprises like manufacturing companies, professional services firms with multiple branches, trading organizations, software companies, SEBI-registered financial services organizations, and family-run conglomerates form the majority (80%) of our client base.

Typically, these are established SMEs with a turnover ranging from ₹10 crores to ₹100 crores.

These companies often seek internal audit services to scale and improve their processes.

Startups and newly incorporated companies

These businesses represent approximately 20% of our clients.

They often outsource their accounting and finance functions to our firm. Services include acting as virtual CFOs and handling end-to-end financial management.

Also read: Building a CA Firm in a tier 2 city in India and merging with Singhi & Co

Opportunities for CA Firms in Bangalore

SEBI-Related Matters

There is a significant demand for expertise in SEBI-related audits, Portfolio Management Services (PMS), Alternative Investment Funds (AIF), and registered investment advisors.

Bangalore’s startup ecosystem 

Bangalore is a hub of startups, creating a demand for incorporation services, and startup advisory services.

Virtual CFO services are particularly in demand, where we handle end-to-end financial operations until the client has their own accounts function.

Voluntary internal audits

Many organizations seek independent internal auditors to improve their processes.

There is a growing trend of organizations wanting their SOPs audited and built by professionals to enhance efficiency and compliance.

Wrapping up…

So you too want to start a practice?

Be very clear as to why you want to start. It’s a long-term game and the initial years are going to be painful.

And most importantly,

• Have a strategy.
• Do not lower your standards.
• Charge the right fees. Don’t ask for a lower fee just to onboard a client.
• And always have a good team.

Do you see more CAs starting their practices?