Starting Your Own Practice: The Independence Guide for Professional Service Providers


Does your current work situation bother you? Do things beyond theordinary, day-to-day issues of working in a businessenvironment—such as lack of input into important companydecisions and compensation—continue to frustrate you? Ifyou're tired of working for someone else and have contemplatedstriking out on your own, Starting Your Own Practice: TheIndependence Guide for Professional Service Providers can help makethe transition as smooth as possible.

Written from the perspective ...

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Does your current work situation bother you? Do things beyond theordinary, day-to-day issues of working in a businessenvironment—such as lack of input into important companydecisions and compensation—continue to frustrate you? Ifyou're tired of working for someone else and have contemplatedstriking out on your own, Starting Your Own Practice: TheIndependence Guide for Professional Service Providers can help makethe transition as smooth as possible.

Written from the perspective of successful entrepreneur andinvestment advisor, Robert Fragasso, Starting Your Own Practice hasbeen designed to help professionals who provide skilled personalservice—especially those who already have experience asinvestment advisors, brokers, consultants, attorneys, andaccountants, as well as insurance and real estate agents—makethe right choices as they pursue their independent businessendeavors. But, the principles contained here are also readilytransferable to a much wider segment of the service sector,including computer programmers, architects, and healthcareprofessionals.

Filled with in-depth insight and practical advice, Starting YourOwn Practice begins by helping you decide if you should go intobusiness for yourself. You'll gain a realistic look at thefinancial benefits and risks associated with going at it on yourown—as well as take an entrepreneur's test that offers anhonest assessment of whether self-employment is right for you.

Once you've made the decision to move forward, Starting Your OwnPractice will help you plan your next moves, with valuableinformation on structuring the marketing, management, staffing, andgeneral operation of your business. Fragasso lays out a completeblueprint to independence that includes all of the aforementionedissues, plus guidance on:

  • Leaving your current employer
  • Converting existing clients or customers to your new businessas well as gaining new clients and customers
  • Finding the best ways to finance your business
  • Protecting yourself and your business from liability andloss
  • Choosing your business space
  • Gaining access to federal, state, and local assistance

Going into business for yourself requires careful thought andconsideration, but with Starting Your Own Practice as your guide,you'll quickly learn how to turn the dream of owning an independentbusiness into a reality.

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Editorial Reviews

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" written in a clear, common-sense language, ... examples drawn from the author's considerable experience in the financial services industry" (Accounting Technician, March 2006)
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Product Details

  • ISBN-13: 9780471733058
  • Publisher: Wiley
  • Publication date: 9/16/2005
  • Edition number: 1
  • Pages: 217
  • Product dimensions: 6.34 (w) x 9.24 (h) x 0.90 (d)

Meet the Author

ROBERT FRAGASSO has over three decades of experience in the investment and financial planning fields. He directs the planning, management, analysis, research, and review of all client programs at The Fragasso Group, Inc. After serving in the U.S. Marine Corps and graduating from Duquesne University, he did post-graduate work in accounting, finance, and economics through Carnegie Mellon and the University of Pittsburgh, and in investments via the New York Institute of Finance. Fragasso has been a Certified Financial Planner (CFP) since 1982 and is a member of the Financial Planning Association. He is also a Certified Divorce Financial Analyst through the Institute for Divorce Financial Analysts.

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Read an Excerpt

Starting Your Own Practice

By Robert Fragasso

John Wiley & Sons

ISBN: 0-471-73305-9

Chapter One


Does your current work situation bother you? Does it get to you beyond the ordinary, day-to-day frustrations of working in business or in the professions? If it does, is that caused by the environment in which you work? Or is it caused by the people on whom you depend for new business or for servicing your existing business? Is the revenue or cost sharing unfair? Are your ethics or values in conflict with your employer's?

Do you often ask yourself if you might be more comfortable in a business of your own?

If you are answering, "yes" to any of this, and if your blood pressure is rising while thinking about it, you are a candidate for independence.

But wait before taking action! Let's spend some time on your reasons for wanting business and professional independence. Those reasons will tell you a lot about your chance for success in your potential new venture. And if you do this correctly, this should be your last venture because you will own it. As the saying goes, be careful what you wish for because you may get it. So let's dwell on you and your motivations for a while.

Often, the first thought concerning self-employment deals with money. But rarely do individuals go into business for themselves solely for more income. It is usually more complex than that. See if you can find your feelings in any of the following scenarios:

The young attorney works hard to bring new business to the firm, and the senior partners do not recognize him for those efforts with an appropriate sharing of the profits or with elevation to partner status. Is that about money, or is it about something more?

A female certified public accountant (CPA) spends a lot of time on the road representing the firm well in site audits. Meanwhile, her male peer back at the home office has been promoted to supervisor with a hefty raise in salary. Is this just about money?

And finally, a stockbroker working for a large, national investment firm is pressured to represent his company's internally manufactured products to the exclusion of the independent investment products that are also, ostensibly, offered by his firm. He knows his company has good products, but not all of them are best for his clients. He feels limited in his ability to work ethically on behalf of his clients. That's definitely not about money.

Years ago during the Great Depression, Alfonso Fragasso managed the men's tailoring department for a major department store in Pittsburgh. He had dozens of people working for him and held a prestigious position for a person of his background. He was a master technician who could make a fine suit from a bolt of cloth and also a good manager who was liked and respected by his coworkers. Yet it was the Depression, and the department store's ownership brought in time and motion study people, then called "efficiency experts" to find how to do more with less. Their recommendations, if implemented, would result, in Al's opinion, in diminished quality of goods produced. He also felt it just was not workable because the experts had never done any of the activities they were advocating. He chose to quit rather than oversee what he felt would result in lessened quality and an unworkable situation. It doesn't matter if Al Fragasso was right. He felt he was and acted on it. He spent the rest of his life owning and operating a specialty tailor shop, and he couldn't have been happier. He was well known in his community and respected for the quality of work that he did. And he did it his way.

There is an unspoken word threading through all of these examples and with all of the other examples that we could add to our list. That word is control. You do not have to control the company for which you work to feel in control. But if you feel that you are not in control of your outcomes, then you begin to focus on all of the ills that you perceive in your surroundings. If you are bringing in new business to your company but not being compensated or promoted for your efforts, you feel cheated and lacking in control over your destiny. If you see others being promoted for seemingly non-achievement-related reasons, you feel that your career path cannot be influenced by your efforts. You are not in control of those outcomes. If you cannot service your clients ethically and cannot engage in a corporate dialog to rectify it, then you also have no control over your outcomes.

So, what seems to be about money is really about controlling your desired outcomes and guiding your own destiny. True candidates for owning their own business say that they wish to control their own outcomes and destiny-and will earn the income they deserve as a result! So, business ownership is all about deciding which outcomes are desired, how those outcomes are obtained, who helps you do that, in what time frame, and with freedom of ethical action.


The bonus is that you also control the income you receive for doing it your way-and you build and own the equity in your business. Consider the role that business ownership plays in building wealth. Drs. Thomas Stanley and William Danko examined the accumulation of wealth in their book, The Millionaire Next Door. They determined that four out of five U.S. millionaires are still working, while one of the five is retired. Of those still working, two-thirds are self-employed, and 80 percent of those are first-generation affluent and have not received a sizable inheritance. Those folks have six and one-half times the wealth of those not in that category. So there is ample evidence supporting the hypothesis that business ownership is a principal road to wealth and independence. Stanley and Danko state that although self-employed people represent less than 20 percent of the nation's workers, they account for more than 80 percent of the wealth. Average annual income of a business owner is $247,000, and the 50th-percentile median was at $131,000 as of their 1996 writing. And 13 percent of business owners make $500,000 or more. Stanley and Danko peg the average net worth of the successful business owner at $3.7 million with 6 percent of them at more than $10 million.

And you will have lots of company as a business owner. Don't think of small business as a diminishing relic of past generations. Rather, it is a growing trend. The U.S. Small Business Administration published a study in December 2004 using Department of Labor data and covering the period of 1979 through 2003. Self-employed individuals (not incorporated) represented 9.8 percent of the labor force in 2003 versus 9.3 percent of a much smaller labor force in 1979. Their numbers increased by 11.5 million, or 6 percent, in the period between 2000 and 2003. This increase was reflected across both genders and most races. While 9.8 percent of the population is unincorporated self-employed, 6.8 percent of women and 12.4 percent of men are. 10.4 percent of Asian Americans, 5.2 percent of African-Americans, 7.0 percent of Latino-Americans, and 9.9 percent of immigrants are self-employed. Interestingly, while 12.4 percent of men are self-employed, 13.7 percent of male military veterans are self-employed, perhaps representing a higher incidence of marketable skills.

The point of all of these statistics is to present self-employed independence as a viable and growing avenue for marketing skills and for gaining control over one's outcomes and destiny. And that opportunity is not seemingly diminished by gender, race, country of origin, or economic background. A study of incorporated businesses that are controlled by the founder and providing personal services such as legal, accounting, investment management, architectural, and consulting may reflect similar demographics. Anecdotal evidence would indicate so. The research of Stanley and Danko compiled in The Millionaire Next Door presents self-employment as a primary road to wealth. And the preceding data indicates the opportunity is available to all, regardless of background.

But you can also become wealthy working for others. You can rise in your field and be paid large sums of money to perform the services that you do well. The U.S. Department of Labor, Bureau of Labor Statistics has published a National Compensation Survey listing average earnings for various occupations covering the years 1997 through 2003. In the year 2003, the average corporate nonowner, manager made $71,840; an architect made $62,320, and an accountant made $48,700. Civil engineers averaged $60,440, whereas computer analysts and scientists averaged $66,500. Those are very livable earnings levels, and remember that they are average.

But what happens when workers diligently apply themselves over a career with an employer? What do top people in management and the professions earn?, the Wall Street Journal Executive Career Site, publishes average and top earnings for various occupations. Table 1.1 shows some of their postings in January 2005.

So, if you can earn $100,000 employed by others and not risk your own capital or lose sleep over making payroll, why have your own business? You can also build equity in some one else's business through stock options and other forms of equity incentives offered to you to help your employer build the business. If your primary intent is to earn more income, you can do so with far less risk staying where you are right now and working even harder to progress more quickly within the organization. Be the best architect you can be and, inevitably, your employer or its competitors will recognize that and pay you appropriately. If you become the most productive sales person possible in your chosen field, your employer will have no choice but to pay you commensurately, or lose you to its archrival.

Why go into business for yourself? Well, if you want to see your idea for a product or a service become a reality, and you want that idea to be implemented in just the right way, your most fulfilling opportunity may be with your own business. If you want to build equity and wealth directly proportional to your efforts, and not wait for someone to eventually recognize your efforts, you must be in business for yourself. If you want to prove yourself, there is no better arena. If you wish to surround yourself with people and a culture of your making, start your own business. You will not have the luxury of specializing your law practice if you work for a large firm. When employed by others, you will spend years, decades or your entire career trying the cases and accepting the clients that your firm dictates to you. As a realtor, you will show the houses and place the mortgages exactly as your supervisor dictates. Your stockbrokerage firm employer will tell just how important the selling from product inventory is to the firm's profits. As a CPA, your firm will dictate your travel schedule and whether or not you will be able to take a vacation day to see your daughter's championship-winning skating performance. As a commercial realtor, you will clearly understand which corporations you may approach and which are off limits as house accounts. But, as a business owner, you will decide how, when, and with whom your business is conducted. And your earnings will reflect your work, energy, creativity, and your vision.

In making this decision, there are two questions that you must answer for yourself:

1. What do you want to do each day?
2. With whom do you wish to do it?

Sound simplistic? On the contrary, those questions are both profound and defining. Consider that if you only want to work on highly technical things and not be responsible for gaining new business, you are not a candidate for entrepreneurship. No matter how proficient your skills, people will not beat a path to your door. There actually have been better mousetraps invented. You likely haven't seen them, as everything needs selling and managing. If selling your service to potential clients or customers repulses you, you should not go into business for yourself. Representing your services to potential clients and customers will be required every day and year of your business career. You may not pound doors to tell your story, but you must present it professionally in your daily activities. If that is not what you want to do, then you must leave it to others at your current or a new employment.

A few years ago, a friend was leaving government service as a prosecuting attorney. He was well known and well respected. We had lunch and we spoke of how new business would come to him. It would not come to him simply on the basis of his exemplary government service record. How many people know of that, after all? And how would they know where to find him if they did? He would need to make new business acquisition a part of his daily activities, or he would not prosper. So will you.

So you must first answer the questions of what you want to do each day and with whom before diving into this adventure. This exercise, if performed honestly and fully, may tell you to change your place of employment rather than indicate that you should start your own business. The simple efficiency of this process, using only those two questions, will filter out the background noise provided by family, friends, and the emotional tugs of past associations as well as concerns over adequate capitalization. Although those are substantial considerations that must be properly administered, they are not central to the core decision. Only your uniquely individual answers to those questions will guide you to your self-actualization and career happiness. It will be worth the time spent.

If you determine that you should not be in business for yourself, but still feel unfulfilled in your current situation, you can obtain help through available career counseling services. Seek out psychologists with extensive career counseling experience. Their work with you will help guide you to the right situation. There is a word of caution here. Psychological testing is a commodity. By that I mean any psychologist can administer those tests. But the key is to locate the professional who can interpret the results in a meaningful manner tied to your goals. At our company, we had used various testing facilities for employment evaluations with mixed results. Then a very talented person named Al Schnur bought an agency we had used previously in Pittsburgh, PCI Human Resource Consulting, Inc. The quality of the analytics jumped. We now had a partner who took the time to listen and understand. And that's what you must seek. Find professionals who wish to first listen to your career goals and then account for them in the work they are proposing.

But if your two question exercise of self-exploration points to entrepreneurship and its potential monetary and emotional rewards, keep on reading. The rest of this book is meant to guide you through the design and creation of your business, its implementation, and its successful management.


Begin with consideration of the risk of business ownership. Might that outweigh the benefits? It probably would not at this point because you have your goal and your reasons for adopting it firmly in mind as a result of your two-question exercise. But it is still worthwhile to spend some time putting risk in perspective and, thus, make it something that you can more easily handle.

The U.S. Small Business Administration in its publication, Small Business Economics 2003, referenced Dun & Bradstreet statistics that show 76 percent of new businesses were still open after two years, only 47 percent after four years, and 38 percent after six years. The SBA went on to state in that report that it regularly received calls from alarmed potential entrepreneurs citing the oft-repeated claim that 9 out of 10 new businesses went under, even believing that this occurred in the first year of business. The SBA called this misuse of data a "myth" and attributed its existence to a misunderstanding of generalized statistics. The SBA report stated that the closure statistics also included those businesses "closing while successful." In an SBA study covering 1989 through 1992, 29 percent of closing business owners stated that their companies were successful at time of closing. This would be typical of the otherwise successful service provider (consultant or shoemaker) who wishes to retire and does not have a successor to carry on the business.


Excerpted from Starting Your Own Practice by Robert Fragasso Excerpted by permission.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.

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Table of Contents




Chapter One: Is It Your Time to Move to Independence?

The Financial Benefits.


The Entrepreneur's Test.

Chapter Two: What Does It Mean to Be in Business ForYourself, and Who Does It Well?


People Make the Difference.

Chapter Three: Creating Your Business.

Choosing Your Market Niche.

Structuring Your Business to Serve Your Market Niche.

Creating Your Organizational Model.

Chapter Four: Staffing and Compensation.

Filling Positions in Your Model with the Right People.

Your Fringe Benefit Package as a Recruitment, Retention, andProductivity Tool.

Fringe Benefits Summary.

Managing Workforce Growth.

Chapter Five: Leaving Your Current Employer.

Preparing for the D-Day Invasion.

Protecting Your Confidentiality.

Chapter Six: Choosing Your Business Space.

Interior Design.

Office Location and Image.

Finding the Right Building.

Negotiating for Space.

Chapter Seven: Equipment and Supplies.

The Rubber Band Phenomenon.

Chapter Eight: Financing.

Chapter Nine: Legal Format and Protecting YourInvestment.

Incorporate or Not?

Protecting Your Business Investment.

Chapter Ten: Ask What Your Government Can Do ForYou.

Federal Government.

State Government.

Local Government.

Other Not-for-Profit Resources.

Chapter Eleven: Converting Existing Clients orCustomers to Your New Business.

Chapter Twelve: Gaining New Clients andCustomersâ?'The Right Way.

â??Man Must Sit in Chair with Mouth Open for Very Long Timebefore Roast Duck Fly inâ??.


Public Relations.

Create Your Own Public Relations through Newsletters andE-Newsletters.

Direct Mail.

Networking: The Natural Way to Gain New Clients.

Educational Seminars.

Teaching the Seminars.


Chapter Thirteen: Managing Your Business.

The Pugil Stick Effect.

Manage Your Business or It Will Manage You.

Time Management.

Activities Management.

Putting Your Goals into Action.

It Is as Easy as A-B-C.

Techniques of Activities Management.


People Management.

Talk, Talk, Talk, and Talk.

Creating Your Organization's Employee Structure.

Evaluate Results but Manage Activities.

Creating and Implementing Your Business's StrategicPlan.

Appreciate and Validate or The Duck Sauce Factor.

Which Clients or Customers Do You Want?

Managing Your Clients and Customers.

Treating Clients as People.

Managing during Tough Times.

Chapter Fourteen: Your Exit Strategy.


Who Will Buy or Receive Your Business?

How to Receive Payment for Your Business.

Special Considerations in Selling to Family Members.

Retirement Planning.

The End of the Rainbow.

Appendix A: Reading List.

Appendix B: Newsletter and E-News Examples.


About the Author.

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  • Anonymous

    Posted June 12, 2005


    I had the opportunity to preview this book. If you are looking to go out on your own professionally, this book is excellent.

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