Ten months ago, Ron Durkin and his son-in-law, Dan Dehner, saw an opportunity. The result, Durkin Forensic, has succeeded beyond expectation. The San Diego-based firm has already recouped Durkin's $500,000 in seed money and is well into the black.
To be sure, Durkin Forensic had the advantages of Ron Durkin's deep pockets. It also benefited from the former FBI agent's longstanding reputation in forensic accounting, which combines accounting and investigative skills. Durkin was partner in charge of fraud and misconduct investigations for KPMG and is a widely respected authority in his field. For potential clients, he could tap into four decades of contacts in the legal community.
The firm's brief history is instructive for accountants thinking of starting up their own businesses. Some of these professionals - both laid-off and employed - believe that with the job market floundering, they'd be better off taking more control of their careers. They no longer feel secure even at Big Four firms, many of which have had layoffs over the past two years.
Durkin Forensic made a number of decisions that kick started its climb. But the firm also made mistakes from which other entrepreneurs can learn. "Starting a business has a million moving parts," notes Jon Goodman, the former head of the entrepreneur program at the University of Southern California and an expert on start-ups for more than three decades. "The more time you spend at the front end, the better off you are."
Durkin Forensic's roots date to 2008, when Durkin was mulling mandatory retirement from KPMG. A fit age 62, he wanted to continue working. Moving to another firm would have been easier - he received a few inquiries - but Durkin had experience with start-ups. He'd founded an accounting firm in 1987, selling the business 11 years later. He liked the idea of once again setting his own agenda.
Setting up Shop
In Dan Dehner, who'd worked at KPMG for five years and was married to his daughter for two, Durkin knew someone who would complement his experience. While the 26-year-old Dehner lacked Durkin's network, he was willing to shoulder infrastructure responsibilities along with client work. In the initial months, Dehner handled the nuts-and-bolts of the launch.
In July 2008, Dehner left KPMG and found office space in downtown San Diego, not far from where he lives. Here the economic downturn was a boon: Commercial rents had dipped and Dehner was able to find a better deal than he would have the previous year.
On Sept. 1, Dehner brought an old desk and laptop from his home and set up an Excel spreadsheet of tasks. Creating the list helped him stay organized, he says. He based his business model on KPMG's forensic practice, installing the same type of remote computer access and forensic software program, called "IDEA," as was used by his former firm.
Durkin officially retired from KPMG at the end of October. By the end of November, Durkin Forensic had hired its first two employees, including a former KPMG colleague expert in using forensic accounting software to find patterns in financial data. His presence ensured the firm would have the skills to tackle even highly complicated assignments. In January 2009, the firm added a partner to oversee a litigation and banking practice. The company now has a total of nine employees, including Durkin (senior managing director) and Dehner (senior consultant). Durkin Forensic paid for temporary healthcare coverage of its new employees until it could offer its own company plan.
A Slow Start
There were bumps along the way. References for capable service providers didn't work out. Dehner had to switch real estate brokers and locked into a three-year contract that will keep Durkin Forensic overpaying for phone and Internet service. The lesson? Dehner says he should have spent more time researching vendors instead of relying on personal recommendations. "What I fell victim to was the 'I have a guy trap,'" he says. "At the end of the day, the phones work, (but) I'm never going to do business with this vendor again."
Then, Durkin had serious doubts about the venture when business was slow for the first three months. He was prepared to consider other options, even closing the business, if things didn't pick up by the spring.
But in January, the firm received a large assignment via a court contact (Dehner won't reveal the name, citing confidentiality issues) and subsequently signed on for several smaller projects and longer-term assignments.
Durkin wants to keep the firm small and nimble. He says a boutique firms offer a more personal touch. "When you hire Durkin, you get Ron Durkin," he says.
Starting a firm isn't so much about timing as self-belief, he believes. "You have to be a risk taker but confident of what you do and what you're selling," Durkin says. "You have to be willing to market these skills sets."