Blogger
Share this content
0
36
3781

how 'big' do you want your practice to be?

i'm interested in hearing the views of aweb members about how big they would like to grow their practice to, and why.  

our little practice has now grown to 250k in fees after just shy of 2 years.  its been hard work, but i've enjoyed it (mostly!).  i've transferred my pension into a SIPP & just bought an office that could accomodate 20 staff (or, could just be a very spacious office for a smaller practice!).  we have several marketing channels in place now, and a steady stream of prospects means i can be selective about clients we take on.  its strange that we seem to turn away as many prospects as we take on - so just take the cream of the cream.  

i'd always regarded 2 years as the time needed to establish a practice.  i'm just wondering about 'phase 2' now ... half of me would like to get to around 300-350k GRF & then settle at that level, earning a decent income, & with good staff & my own premises i would be 'living the dream' LOL.  

the other half of me wants to grow, grow, grow ... and take the fees up to 500,750, £1m .... 

i've read some great posts from steve mcqueen on here about how growing a larger practice wasn't for him in the end ... (thanks for the honesty steve!) ... whereas other peeps seem bigger and perfectly happy ... 

would love to hear what others thoughts are ... do you grow 'deliberately' or just drift along / upwards ... when you cant handle any more clients and dont want to grow how do you turn away new clients ... do you have a 'practice plan' ... etc

thanks all ....

Replies

Please login or register to join the discussion.

avatar
By bobhurn
19th May 2012 12:16

Great Question

Firstly congratulations on your achievement to date, a much faster rate of growth than most and in turbulent times.  Personally I am where I want to be and not looking to grow exponentially, this has enabled my practice over the past year or so to target the type of clients that we want and 'sack' the 'D Grades’.  We are now able to work with clients that we like (an important criteria in deciding whether to accept nomination in my opinion).  The team are happy and we thoroughly enjoy our work.

Before deciding to attract more clients it would be well worth considering a cull of any 'D Grades' ensuring that your yield per client is sufficient to offer a high level of service and you are working with the right type of clients.  Apologies if I am teaching grandma to suck eggs.

On expanding your practice, I would recommend listening to is Steve Pipe & Mark Wickersham of AVN (I am not an AVN member so please let's not restart the AVN debate).  I have attended seminars run by both and they have had a huge impact on the way I run my practice.  Mark's book Effective Pricing for Accountants is well worth reading (on amazon).

To return to the original question it occurs to me that the answer must be dictated by your exit strategy.  Do you intend to build something that would be an attractive acquisition to a larger firm, head for a management buyout, pass down to children etc.?

I am sure that like myself others on AW would love to know how you have achieved your growth to date.

 

Thanks (1)
avatar
20th May 2012 08:57

niche + marketing = brand strength = good fees

thanks bob ... you've hit the nail on the head - we have been growing 'exponentially' so far ... i seem to speak to a new prospect every day, and am heartily sick of writing service proposals LOL.  

 

i'm just starting to think that maybe a smaller practice is the way to go for me.  and that means (say) 300+ 'A'-grade clients paying £1k each i.e. a premium price for a premium service.  an efficient practice machine that provides a good income & means hours of 8-6 are enough.  i've been prepared to work hard up to now, but don't want this pace forever. 

 

we have recently introduced a new £500+VAT minimum fee, and upped our prices across the board.  i've been turning away lower-priced work for some time now - although i'm thinking about a new product that i might be able sell through the website for those smaller ones ... priced at maybe £250+VAT.  in other words, a way to monetise enquiries from the smaller prospects. 

 

i'm not thinking about an exit at the moment - i'm 38 & looking to run this biz for another 25 years at least.  who knows what i'll do in 25 years?  probably a sale to a staff member, or possibly my son might take over (its a bit early to plan for as he's only 1!)

 

in terms of "How i did it" ... 2 key reasons ...

1. focus on a niche - one that i have a penchant for - and that i have practical experience of & so can offer clients more than just accounts & tax services

 

2. spend serious cash on marketing us as the 'go-to' firm for our niche.  we now have contracts to write for 2 national magazines (at half the rates of year #1 due to us now being a recognised name in the niche), are the accountant 'preferred supplier' for the national association for our niche, and regularly speak at trade shows & events to boost our profile.  also now have a good email list of 3000 that we are going to start using more. 

 

plus working blooming hard!

 

bobhurn wrote:

Firstly congratulations on your achievement to date, a much faster rate of growth than most and in turbulent times.  Personally I am where I want to be and not looking to grow exponentially, this has enabled my practice over the past year or so to target the type of clients that we want and 'sack' the 'D Grades’.  We are now able to work with clients that we like (an important criteria in deciding whether to accept nomination in my opinion).  The team are happy and we thoroughly enjoy our work.

Before deciding to attract more clients it would be well worth considering a cull of any 'D Grades' ensuring that your yield per client is sufficient to offer a high level of service and you are working with the right type of clients.  Apologies if I am teaching grandma to suck eggs.

On expanding your practice, I would recommend listening to is Steve Pipe & Mark Wickersham of AVN (I am not an AVN member so please let's not restart the AVN debate).  I have attended seminars run by both and they have had a huge impact on the way I run my practice.  Mark's book Effective Pricing for Accountants is well worth reading (on amazon).

To return to the original question it occurs to me that the answer must be dictated by your exit strategy.  Do you intend to build something that would be an attractive acquisition to a larger firm, head for a management buyout, pass down to children etc.?

I am sure that like myself others on AW would love to know how you have achieved your growth to date.

 

Thanks (1)

Control freak

My practice has creeping growth and that suits me. I struggle with things like delegation and the thought of suddenly entrusting others to do things that I am used to doing myself brings beads of perspiration to my brow. We are all different. My approach is relatively stress-free and I am happy with my lot.

I have one employee and that works really well. Hopefully, my growth in tiny steps will lead to a 2nd employee before too long.  I like to think I am the tortoise in the great race with the hare.

Thanks (1)
avatar
20th May 2012 09:21

systems + good staff = easy delegation

thanks andy ... 

 

i was like that in the early days ... i had to do everything myself.  i have some good staff now, and my #1 in particular.  we have also created an "operations manual" which documents how to do most things.  our accounts workbooks and software has been tagged with pointers & tips that mean the staff are reminded of things to consider / correct when preparing accounts / tax returns.  we recently bought a card reader & documented how to use it so that when a clients calls to pay a bill, anyone can pick up the reader & go to the operations manual page marked "how to use the card reader" LOL.  i'm a bit obsessive about everything not being totally reliant on me ... i also encourage the staff to try to deal with phone call queries themselves rather than just take a message that bob called to speak to me ... when the chances are bob just wants a simple mortgage reference letter ... or copy accounts etc.  banking, marketing, service proposals, client meets, are my job.  

 

each to their own ... i'm still a closet control freak :)

 

andy.partridge wrote:

My practice has creeping growth and that suits me. I struggle with things like delegation and the thought of suddenly entrusting others to do things that I am used to doing myself brings beads of perspiration to my brow. We are all different. My approach is relatively stress-free and I am happy with my lot.

I have one employee and that works really well. Hopefully, my growth in tiny steps will lead to a 2nd employee before too long.  I like to think I am the tortoise in the great race with the hare.

Thanks (1)
avatar
21st May 2012 14:57

I would like to do a set of standard procedures

Lancsboy2 wrote:

  we have also created an "operations manual" which documents how to do most things.  our accounts workbooks and software has been tagged with pointers & tips that mean the staff are reminded of things to consider / correct when preparing accounts / tax returns.    

 

Thats interesting. i had often thought about that, but have filed it away in the "too hard box", as I felt taht the work was just too varied, as the steps even for a standard piece of compliance works varies depending on exactly what the client fetches in.

Thanks (0)
avatar
21st May 2012 23:46

80-20 rule

thanks zara ...

 

the manual covers both operational stuff, plus technical stuff. 

 

the operational stuff is about the office, phones, server & PCs, key phone numbers, software, key contacts, ordering stationary & furniture/printers etc ... all the boring stuff.  

 

the technical stuff is really a case of the '80-20 rule' ... 80% of queries are pretty simple.  there is me (an ACA) + my 'number 1' (an ACA & a CTA) , plus 3 trainees.  it helps the staff with much of the basic queries and checks ... me and my number 1 then deal with the last 20% of queries.  

 

i had 2 calls today with clients .... the junior did the book-keeping, the trainee ACCA did the stats and ct600, and i reviewed for an hour.  then had a call with the client, resolved a couple of queries, updated the accounts & CT, emailed to client for approval to file online. job done, and about 2 hours of my time for a ltdco & sa100 for £900+VAT ... 6 months ago it would have taken me probably a day to do it all.

 

we just started with 'chapter 1' ... and now have a working manual that ensures the staff do more of the nuts and bolts work, and i am able to deal with more clients ... after all, they're not really paying me for my basic accounts work, its the added value stuff & the meeting time that they value. 

 

zarathustra wrote:

Lancsboy2 wrote:

  we have also created an "operations manual" which documents how to do most things.  our accounts workbooks and software has been tagged with pointers & tips that mean the staff are reminded of things to consider / correct when preparing accounts / tax returns.    

 

Thats interesting. i had often thought about that, but have filed it away in the "too hard box", as I felt taht the work was just too varied, as the steps even for a standard piece of compliance works varies depending on exactly what the client fetches in.

Thanks (1)
avatar
19th May 2012 14:38

Thanks for the shout out

Afternoon all, 

Thanks for the shout out Lancsboy!

You are doing very well with your practice growth, very few accountants achieve what you have.

If anyone understands what you think / feel about the desire to grow its me. 

I recently had lunch with one of my former employees (the second I ever took on) and he asked me what had happened to my original dreams. Apparently when I interviewed him in 2002 I had said I wanted to be a £1million operation in ten years and then I went and did it in three years before joining up with some others and being a £3.3m operation by Nov 2007. He said that the rate of growth I achieved simply blew me away and I ran out of steam and lost myself completely in the process.

He's completely right in what he says, but it was so interesting to hear it all being analysed by someone else who witnessed everything first hand.

I suppose what people always want to know is would I do it again and what would I do differently. The short answer is yes, I would do it again if I had the motivation I had back in 2001 when I first set up and the "freedom" I knew as a 29 year old.

When I started I was very much alone - with no parents, siblings, family or dependants. Today I am not.

When I started I was a TA Paratrooper who longed for the experience of war; today I am not.

I was a bodybuilder, who longed for control; today I am not.

Etc, etc, etc

In other words, over the last 11 years I changed beyond all recognition and I find myself seriously considering things like "how great it would be to grow my own vegetables" and "I wonder if I have the time to do the art degree I always promised myself from the OCA"

What once mattered no longer does. 

Don't get me wrong, I still want to do the best for my family and earn well, its just I want to do it without the hassle and comittment and fear that comes from pushing as hard as I once did.

What I am trying to say, is that if you think you need to push your place onward and onwards you probably do need to do it, for the experience of it all, if only to say, as a prematurely old man "I did that and really couldn't face it again"

That said, I recently watched the latest "Wall Street" film (Gordon Gekko has always been a hero!) and relished the bit where he sits in his new offices by Tower Bridge and says "Right now it's ugly times ugly, and that's when the ugliest get going... you tell'em babe, Gordon Gekko IS BACK!" Who know's, if the right offer came my way, maybe I'd do the same!

Best regards

Steve

 

 

Thanks (2)
avatar
22nd May 2012 00:02

£3.3m practice! Gulp!

thanks steve ...

 

i must admit i'm quite proud of how things have progressed on the practice development front ... and it's this early success that has whetted my appetite for building up the practice ... or has it it?  i'm really starting to wonder ... 

 

"Lancsgirl2" (ahem) does not want a workaholic for a husband .... and the "lancsbabies" (Ok, this is getting silly!) also want to see their dad sometimes ... and i must say I am ready to slow things down on the business development side.  i think it was an initial fear factor that has driven me on to graft solidly for almost 2 years to get to a stable position where the future of the practice is pretty much assured ... and its nice that i own the business without a partner, and i have no debt.  

 

i have a 'side-business' that i run now that makes a good profit for 3-5 hours effort a week.  it was absolutely exhausting setting it up and knocking it into shape ... i can;t go through that again, so i'm thinking £300k GRF by xmas 2012 ... and then "hold it steady" ... 

 

... until my best mate tells me how well his biz is doing & the old competitive spirit kicks in again .... sorry Lancsgirl2!!

 

Steve McQueen wrote:

Afternoon all, 

Thanks for the shout out Lancsboy!

You are doing very well with your practice growth, very few accountants achieve what you have.

If anyone understands what you think / feel about the desire to grow its me. 

I recently had lunch with one of my former employees (the second I ever took on) and he asked me what had happened to my original dreams. Apparently when I interviewed him in 2002 I had said I wanted to be a £1million operation in ten years and then I went and did it in three years before joining up with some others and being a £3.3m operation by Nov 2007. He said that the rate of growth I achieved simply blew me away and I ran out of steam and lost myself completely in the process.

He's completely right in what he says, but it was so interesting to hear it all being analysed by someone else who witnessed everything first hand.

I suppose what people always want to know is would I do it again and what would I do differently. The short answer is yes, I would do it again if I had the motivation I had back in 2001 when I first set up and the "freedom" I knew as a 29 year old.

When I started I was very much alone - with no parents, siblings, family or dependants. Today I am not.

When I started I was a TA Paratrooper who longed for the experience of war; today I am not.

I was a bodybuilder, who longed for control; today I am not.

Etc, etc, etc

In other words, over the last 11 years I changed beyond all recognition and I find myself seriously considering things like "how great it would be to grow my own vegetables" and "I wonder if I have the time to do the art degree I always promised myself from the OCA"

What once mattered no longer does. 

Don't get me wrong, I still want to do the best for my family and earn well, its just I want to do it without the hassle and comittment and fear that comes from pushing as hard as I once did.

What I am trying to say, is that if you think you need to push your place onward and onwards you probably do need to do it, for the experience of it all, if only to say, as a prematurely old man "I did that and really couldn't face it again"

That said, I recently watched the latest "Wall Street" film (Gordon Gekko has always been a hero!) and relished the bit where he sits in his new offices by Tower Bridge and says "Right now it's ugly times ugly, and that's when the ugliest get going... you tell'em babe, Gordon Gekko IS BACK!" Who know's, if the right offer came my way, maybe I'd do the same!

Best regards

Steve

 

 

Thanks (1)
21st May 2012 23:15

20 staff?

Great discussion.

I was intrigued by the ref to having 20 staff (in time) and growing the practice from £200k to £350k GRF. I'm wondering what proportion of your turnover you anticipate will be absorbed by the employment costs of 20 staff.

To make it worthwhile I think you would need to grow the practice to closer to £1m given there would be other overheads to cover too - plus you would want a decent return for yourself.

Maybe you're not worried about the opportunity cost of the funding costs of the office you have bought. Or maybe I have misunderstood your plans.

I tend to think that 'Steve' has got it right. But then again I'm nnot in practice and I too made the decision a few years back to avoid taking on any staff. I concluded that the additional PROFIT I could make with staff on board did not justify the combination of employment laws and employment costs I would need to endure.

Mark

Thanks (0)
avatar
21st May 2012 23:15

£300k GRF = 4 staff + me

thank mark ... i'm not really thinking of growing to 20 staff -its just that the building we are going to move to shortly could accommodate that number. i got a great deal on the property for various reasons ... it's knackered so as I'm a cash buyer i'm in a good position ... it has "planning issues" that we've been able resolve ... the vendor is desperate LOL! the surveyor thought it was worth much more but i'm the only buyer so as far as i'm concerned its worth what i'm paying! i've posted about this before - i know i know its not "free money" ... but its cash sat in my pension doing nothing, so i spent it on a big office ... i'm looking at a net margin of 40-45% up to around £350k t/o ... not to shabby for a 'lancsboy' ... joking aside, i've read with great interest the views of steve mcqueen & paul scholes ... guys who have been there and done it & can tell me what it was like. it sounds like you have also concluded that 'small is beautiful' ... few staff = few hassles. i must admit i'm really starting to come around to that ...

bookmarklee wrote:

Great discussion.

I was intrigued by the ref to having 20 staff (in time) and growing the practice tofrom £200k to £350k GRF. I'm wondering what proportion of your turnover you anticipate will be absorbed by the employment costs of 20 staff.

To make it worthwhile I think you would need to grow the practice to closer to £1m given there would be other overheads to cover too - plus you would want a decent return for yourself.

Maybe you're not worried about the opportunity cost of the funding costs of the office you have bought. Or maybe I have misunderstood your plans.

I tend to think that 'Steve' has got it right. But then again I'm nnot in practice and I too made the decision a few years back to avoid taking on any staff. I concluded that the additional PROFIT I could make with staff on board did not justify the combination of employment laws and employment costs I would need to endure.

Mark

Thanks (0)

Do less Be more

Hi Lancsboy2 - think you have hit the nail on the head with the paragraph starting "i'm just starting to think that maybe a smaller practice is the way to go for me...."

I started my practice over 30 years ago have been through several combinations.  In particular one of the firms went through a similar exponential growth, which, because we had little in the way of systems and controls, nearly imploded under the weight.

From what I can tell, many firms (and many western businesses) follow growth, for growth's sake, aka "the only way is up" but as I've found all too often, all that happens is you end up getting fat and out of breath.

The sort of constructive growth you describe, in which you maintain quality for both clients and colleagues, whilst hopefully maintaining spare capacity, is great but there are so many varaibles and influences these days that you have to work extremely hard to manage it and to make sure that clients and colleagues all follow the same path. 

Far later in life than you I too reached the stage, a few years back, when I recognised that by downsizing and only keeping/attracting valuable clients/work I could actually improve my finances and work/life balance.  I've now gone far further than I ever thought possible with perhaps 40-50% of the clients & fees that I had 4 years ago but, after 30+ years I think I've finally got it right!

Obviously I'm now looking to a semi-retired position in a year or two but, if I had my time again, I'd certainly look to stop the growth before it overtook me and then practice "constructive inertia" generating the same or even more fees from a stable client & staff base, with more time off.

With regard to getting the most out of people and motivating them at the same time, your approach of getting everyone involved is key.  In so many firms I've come into contact with (especially when taking on new staff and hearing about their current employers) client contact is still restricted to partners and managers with other staff being told to refer any client questions, even if they already knew the answer.

Having a proper CRM system and procedures in place enables any member of staff to be able to see all current issues for any client and, by enabling them to give the client direct advice, either in part or whole, you get a better result for the client, staff member and "the bosses".

Where I differ from you is in using fees to put off less valuable clients or encourage existing ones to exit.  Over the years I've got to know a couple of similar minded younger firms and they have been able to take on/buy clients and work that I no longer wish to deal with.  I can stay in the background and consult until they get to know them well and it maintains the client goodwill.

So sounds like you are thinking of this at exactly the right time, ie before you hit the top of the curve.  Good Luck.

Thanks (4)
avatar
21st May 2012 23:49

scholesy - are you me back from the future?!

thanks scholesy ... i had to chuckle at this post ... spot on!

i'm into efficiency ... systems ... and profit! 

i initially harboured grand plans of a national network ... growth ... maybe franchising ... LOL

now i'm feeling like a small, 'boutique' practice that specialises in one thing & charges good fee to good clients is the aim.  

its very tempting to let growth for its own sake be the benchmark ... "how many clients have you got" .... "whats your GRF" ... etc.  i'm far more in the "whats your net margin as owners and how hard do you have to work to get that" camp ...

in terms of fees, i'm trying to price us at the top end of the market, and as each new client comes up each year really check whether the fee is right.  i think we have the systems and office set up in place now - so just a case of being more and more selective with clients.  

i'm going to re-read your post several times - thanks. 

 

Paul Scholes wrote:

Hi Lancsboy2 - think you have hit the nail on the head with the paragraph starting "i'm just starting to think that maybe a smaller practice is the way to go for me...."

I started my practice over 30 years ago have been through several combinations.  In particular one of the firms went through a similar exponential growth, which, because we had little in the way of systems and controls, nearly imploded under the weight.

From what I can tell, many firms (and many western businesses) follow growth, for growth's sake, aka "the only way is up" but as I've found all too often, all that happens is you end up getting fat and out of breath.

The sort of constructive growth you describe, in which you maintain quality for both clients and colleagues, whilst hopefully maintaining spare capacity, is great but there are so many varaibles and influences these days that you have to work extremely hard to manage it and to make sure that clients and colleagues all follow the same path. 

Far later in life than you I too reached the stage, a few years back, when I recognised that by downsizing and only keeping/attracting valuable clients/work I could actually improve my finances and work/life balance.  I've now gone far further than I ever thought possible with perhaps 40-50% of the clients & fees that I had 4 years ago but, after 30+ years I think I've finally got it right!

Obviously I'm now looking to a semi-retired position in a year or two but, if I had my time again, I'd certainly look to stop the growth before it overtook me and then practice "constructive inertia" generating the same or even more fees from a stable client & staff base, with more time off.

With regard to getting the most out of people and motivating them at the same time, your approach of getting everyone involved is key.  In so many firms I've come into contact with (especially when taking on new staff and hearing about their current employers) client contact is still restricted to partners and managers with other staff being told to refer any client questions, even if they already knew the answer.

Having a proper CRM system and procedures in place enables any member of staff to be able to see all current issues for any client and, by enabling them to give the client direct advice, either in part or whole, you get a better result for the client, staff member and "the bosses".

Where I differ from you is in using fees to put off less valuable clients or encourage existing ones to exit.  Over the years I've got to know a couple of similar minded younger firms and they have been able to take on/buy clients and work that I no longer wish to deal with.  I can stay in the background and consult until they get to know them well and it maintains the client goodwill.

So sounds like you are thinking of this at exactly the right time, ie before you hit the top of the curve.  Good Luck.

Thanks (1)

More is less

My practice is less than a year old and growing well in a controlled way, at the moment I intend to grow to around £200k GRF and keep it there. Working with a small team (2-3 PT staff) and a number and type of client I'm comfortable with.

I've tried a 'partnership' in a previous venture and it didn't work so I won't be going there again.

I think niche is important as is actually liking your clients.

My background is property and construction and a good proportion of my clients are in that sector ranging from sole trader up to businesses with several million turnover.

 

 

 

Thanks (1)
avatar
23rd May 2012 11:19

Would you mind a email question?

Hi Lancsboy

I remember reading your posts when you had been going for about seven months and had already got fees signed up for about £150k! I was amazed back then, and am shaking my head again!

Would you mind if I contacted you direct to ask a couple of questions please?  I am trying to specialize rather than be a general practice, I keep reading that the specialist charges more than the generalist and how we need to be 'narrow and deep' rather than 'wide and shallow'.

If you don't have time/energy for a couple of questions not to worry, I can see you have your hands full!

Kind regards

Dave

 

 

Thanks (0)
avatar
24th May 2012 23:33

aweb cheaper than therapy

hi dave ... PM me, no worries. 

 

my business plan was really to hit the marketing & signing up of clients REALLY hard ... I had a plan.  i know there are members here that have been happy to grow slowly, or who are happy working from home etc (nothing wrong with that!) ... but thats not what i am aiming for.  i wanted to go for a big bang, and gave myself 2 years to hit the first target of 250k GRF by 2nd anniversary.  

 

this thread is a kind of 'therapy' for me - what am i actually looking to do with the practice, how ambitious am i (when its just me staring at myself in the mirror ... i thought i was really ambitious, not sure now!), what do i actually want from life now that the biz is built to a good level and there is no question of me having to go back to my dreaded job .... LOL ... this thread is cheaper than therapy though!

 

Sloane Walker wrote:

Hi Lancsboy

I remember reading your posts when you had been going for about seven months and had already got fees signed up for about £150k! I was amazed back then, and am shaking my head again!

Would you mind if I contacted you direct to ask a couple of questions please?  I am trying to specialize rather than be a general practice, I keep reading that the specialist charges more than the generalist and how we need to be 'narrow and deep' rather than 'wide and shallow'.

If you don't have time/energy for a couple of questions not to worry, I can see you have your hands full!

Kind regards

Dave

 

 

n
Thanks (0)
avatar
23rd May 2012 11:24

The race

Take my hat off to steve, he beat me, took me 10 years to get to £1m by organic growth and advertising etc. I cant see how its possible in 3 years...wow. Looks like Lancs boy is coming up on the rails...keep going my son! We will be welcoming you to the £1m club soon.

 

Mind you I  dont think I would merge with someone bigger, well not unless the partnership title had '' Senior'' in it and I had 50% plus of the equity.

 

How big? Depends how much money you want...the bigger the more you make...( generally speaking you should be dropping out 30-40% at whatever level you are at)

The job also changes, you have to recognise this and delegate more and more and more. I dont do accounts anymore and try not to speak to clients. I  sit and answer emails all day, sign up new clients and do the 2nd review on jobs ( ie sign em off)

 

and now I need a hair cut, its great being the boss I can just wander off and no one tells me off...

Thanks (1)
avatar
24th May 2012 23:50

the £1m club - like the sound of that

thanks tom ... i was hoping you would find this thread as i have read through a lot of your previous aweb posts & noted your practice size and fantastic client sign-up rate.  

i looked at the tax assist franchise initially, and their 'star performer' (per their marketing material) is / was mark XXX from st albans.  he managed 80k in year 1, and after 6 years was at 600k GRF.  pretty impressive.  but, i am a bit of an alpha male & thought "i can beat that" LOL!  

as time has passed, my marketing has been honed, and my pitches and service proposals are better ... so adding 100k per year to GRF is achievable - not easily, mind, but not daunting to me at this stage.  this was different to the first year where i had that sense of "will i do it" - now, it's a formula. 

your £1m GRF is seriously impressive, and for you to have maintained 100% control is exactly how i would play it - you dont need a partner, you need staff.  

one thing that has perhaps been missed so far is how fab it would be to be on 30-40% of a much larger GRF .... bigger GRF = bigger net profit.  whats wrong with wanting that?!  i am a working class lad and I like having money ... i'm not ashamed / embarassed about that.  it really boils down to - how much is enough??  i don't know yet ... though i do know that i wont sacrifice precious time with my 2 young sons to earn more - i want to be efficient, as well as earn a decent wedge. 

 

Tom 7000 wrote:

Take my hat off to steve, he beat me, took me 10 years to get to £1m by organic growth and advertising etc. I cant see how its possible in 3 years...wow. Looks like Lancs boy is coming up on the rails...keep going my son! We will be welcoming you to the £1m club soon.

 

Mind you I  dont think I would merge with someone bigger, well not unless the partnership title had '' Senior'' in it and I had 50% plus of the equity.

 

How big? Depends how much money you want...the bigger the more you make...( generally speaking you should be dropping out 30-40% at whatever level you are at)

The job also changes, you have to recognise this and delegate more and more and more. I dont do accounts anymore and try not to speak to clients. I  sit and answer emails all day, sign up new clients and do the 2nd review on jobs ( ie sign em off)

 

and now I need a hair cut, its great being the boss I can just wander off and no one tells me off...

Thanks (0)
avatar
23rd May 2012 12:00

Sounds Familiar

Hi Lancsboy,

Your set up sounds familiar, I have similar staffing and pension funded property but it took 10 years to build up to £260k level in general practice. You should be well chuffed.

BUT where to go from here, I have been at about the same level for the last three years, we tend to have minimal client movement and have a good stable team. However, I always get a buzz from new clients/work and tend to take on clients that I like at the first meeting and sound interesting to deal with for both myself and the team, and that i feel we can give a good service to. Not doing Audits anymore and life is much less stressful. I don't work at weekends and we only have to do a few additional hours in January if necessary. You are younger than me, with young kids, enjoy the time with your family etc. If you are getting enough of a buzz at the moment, stick with it. I have been down the Partnership route when my kids were young and it was always hassle and much longer hours, and firefighting for others, don't go there. I think growing too large will bring similar pain !!

Regards

 

Richard

Thanks (1)
avatar
25th May 2012 00:07

good point - client selection is key

cheers rich ....

 

i am pretty chuffed with progress so far ... but it;s human nature to want more isnt it?  LOL  i know, i know ... we should be happy with what we have etc etc.  tom7000 mentioned "the £1m club" ... i nearly spewed my hoegarden over the laptop ... i must admit i've buzzed off the growth so far but have firmly decided against a partner, or a merger.  

 

a big part of why i set up the biz is that i am not a 'natural' employee ... too damn cheeky & don't like being told what to do!  i have positioned our firm as the go-to firm for our niche... good at what we do, good fees, but no nonsense from clients.  kind of like a "treat em mean keep em keen" approach. so the general quality of clients is high as the marketing nets more clients than the odd one we boot (discreetly).  i'm loving that side of things ...

 

paul scholes comments above about using fees to ditch clients - or get well paid by them - struck a chord.  your comments below also resonated with me and my team ... namely that you work with new clients that you (a) like, and (b) are interesting.  for me, it's about (a) liking the client, and (b) the right fee. i'm not too fussed whether the client is interesting as for me this is more a business than a vocation.  

 

cheers, LB2.

 

 

richard leighton wrote:

Hi Lancsboy,

Your set up sounds familiar, I have similar staffing and pension funded property but it took 10 years to build up to £260k level in general practice. You should be well chuffed.

BUT where to go from here, I have been at about the same level for the last three years, we tend to have minimal client movement and have a good stable team. However, I always get a buzz from new clients/work and tend to take on clients that I like at the first meeting and sound interesting to deal with for both myself and the team, and that i feel we can give a good service to. Not doing Audits anymore and life is much less stressful. I don't work at weekends and we only have to do a few additional hours in January if necessary. You are younger than me, with young kids, enjoy the time with your family etc. If you are getting enough of a buzz at the moment, stick with it. I have been down the Partnership route when my kids were young and it was always hassle and much longer hours, and firefighting for others, don't go there. I think growing too large will bring similar pain !!

Regards

 

Richard

Thanks (0)
avatar
By pauld
23rd May 2012 12:29

What do you eat for breakfast Lancsboy2?

It must be 3 shredded wheat cos your growing so fast.

Where do all these clients come from?

I take on 1 or 2 newbies a month but it will be 2030 before I reach that sort of turnover.

Thanks (0)
avatar
25th May 2012 00:22

breakfast is for wimps LOL

thanks paul ... i decided that i wanted to grow rapidly initially to get from zero to a good GRF asap ... & resigned myself to some long hours.  i regularly have dinner after putting the kids to bed and work until midnight 4-5 nights a week.  i can work hard when i need to. i have 4-5 key marketing strategies that bring in the clients ... but i've spent maybe £40k on various marketing initiatives.  its paid off, and what has also helped is that for example the trade show that we exhibit at, and which i give a 40 min presentation each day, have halved our fee as we sell out the sessions most times, and off the back a national association actually paid ME to attend their annual conference and give 2 talks to their members ... which i would gladly have paid for.  its not for everyone - but i made the decision 2 years ago that i would write magazine articles, columns, commentaries, do evening presentations, exhibit at trade shows, do seminars, write material for other industry players' newsletters ... etc etc ... i.e. chuck everything but the kitchen sink at getting our GRF & turnover to my target within the 2 years slot.  

 

i used to run marathons (i did 5) until a few years ago & its the same mentality .. how do you eat an elephant - one bite at a time .... 

 

cheers, LB2. 

 

pauld wrote:

It must be 3 shredded wheat cos your growing so fast.

Where do all these clients come from?

I take on 1 or 2 newbies a month but it will be 2030 before I reach that sort of turnover.

Thanks (0)
avatar
By lme
23rd May 2012 12:42

first things first

A good starting point might be to focus on what you want to achieve financially and for your life. There's no point blindly growing for the sake of it if it will mean you are stressed or miss out on nicer things in life.

I started my own practice only a year or so ago and am intentionally growing slowly, to gain more experience of the smaller clients I now have (previous career mainly "Big 4" and similar). I aim to keep it small because I like working alone (sad I know!) and perhaps I am a bit of a control freak.

So long as I can feed my horses, do a few competitions and feel I have a financially secure future without the need for (other) extravagances, I am happy. If I can do that in 30 hours a week I ride my horses every day. If I can do it in less I would probably grow the practice and aim to finish up selling it a few years earlier than otherwise. Otherwise I might find something else useful to do with those few extra hours - like some charity work or perhaps gardening...

Hope this helps.

Thanks (0)
avatar
23rd May 2012 18:35

Am I unusual in not needing to make pots of money to enjoy my career?

I started my own practice in 1996, when self-assessment started, because I was fed up with the poor service that was offered by my firm to the smaller clients and wanted to help them.  A small handful came with me (no restrictive covenant!) and with the aid of Yellow Pages and many referrals I now have over 250 clients, including about 15 limited companies and many self-employed.  I also work on a subcontract basis for another accountant.

My (younger) husband joined me in 2003 and we run the practice from home with no staff.

I mostly charge the clients what I think they can afford and dont have one eye on the clock, as I like to spend time engaging with them as part of our "personal" service.  Maybe it is not the most efficient way to run a business but we make enough to support both of us and it is largely stress free (except in December and January).  It is rare for clients to leave us for other practices, though sadly we do seem to have a high mortality rate with so many pensioners on the books.

Coming up to 60 now, I aim to keep going for many more years if possible (actually I need to wait until my husband is 67 before I can retire!).  I have no regrets at going solo.

Thanks (0)

Unusual?

hw - I don't think your approach is unusual for someone in our age group.  Difficult to remember but when I started out on my own in my late 20s it never occurred to me that I should limit my activity, yes I have always wanted to be efficient but the overriding addiction was to "bigger & bigger". 

Obviously there is also the fact that you have perhaps 30-40 years ahead of you, the "need" for a bigger house, providing for the kids (to come), mortgage, pension etc etc, so lots of uncertainty with the result that you "need" to build a large buffer to provide some degree of comfort & protection. As it happened all I did was build debts!

I still have a chunky mortgage but, to be honest, having now been through periods of trauma, and come out the other side, I don't worry much about the future and, if I had to chuck it all in and live in a caravan, grow all my own veg, that's fine.  So, in addition to a firm belief that we've taken far more than we need from the planet, it now feels right to make the most of what I have and only take what I really need.

BUT where you are unusual is in being married to another accountant AND working with him....how on earth does that work?!  I've taught my wife to keep her own books for her business and that's as far as I can imagine going in sharing debits & credits with her.  She has also indicated that if I ever think of asking her to help out in my business, I should put the request to her lawyer!

 

Thanks (0)
avatar
24th May 2012 12:54

Unusual? - Not so difficult

Paul, you asked how I managed working with my husband.  Actually I am the qualified partner but he has taken on all of the bookkeeping and accounts preparation, which is invaluable.  I just do the finishing off.  As I much prefer dealing with tax (except when problems with HMRC drive me mad!) and clients this suits us both fine.  (He also does most of the cooking nowadays, as he got fed up with waiting for me to prepare dinner in the busy months)

As Shirley (I think) suggested, it is all about quality of life now.  We have paid off our mortgage (not having kids helped) and spend all the modest profits on our holidays!

The only other thing (apart from HMRC) that drives me mad is comments from friends and acquaintances that assume we must be well off because we run an accounting practice!

Thanks (0)

This is a bit of a cliche ....

but nobody ever said on their death bed 'I wish I had grown my practice just a little more!' Work out how much you need to live comfortably, make sure love ones are financially secure should something happen to you, put your kids through Uni etc etc. Divide that number in to the GRF required and spend the rest of the time enjoying your life and family. It is the latter that you will judge your life on later on I promise you.

Me ... £50k income, back bedroom office, patio door open this week, walk the dog .. perfection. I have been head of finance for £50m t/o business but I only look upon that as preparation for this life!

 

Thanks (0)
24th May 2012 08:57

It is all so familiar

I, too, do not chase growth anymore.

I got caught up in it all, mostly due to outside pressures, but I have a completely different outlook now. If I could afford a 10 bedroom mansion, or a Rolls Royce, I wouldn't buy either. Extravagant possessions mean you have to keep pursuing money just to hold onto those possessions, and I think the money could be better used elsewhere anyway.

Unless you are very very clever (and I obviously wasn't clever enough), a larger business, even if very profitable, brings extra stress and pressures and the worry that you may lose it all.

I used to thrive on the challenges, but I don't now.  I enjoy my practice much more than I did before. I am happy with my lot.

As Paul says ... the change in priorities is maybe something that happens to us as we get older.

Thanks (0)
avatar
24th May 2012 10:35

Slow growth

I started my practice almost exactly 5 years ago (wow that time has flown) and apart from doing some flyers and door knocking at the start, I haven't advertised (if you ignore the money I wasted at the start on Yellow Pages ads!!).

My accounts show year on year growth at a slow rate but growth nevertheless.

I work from home and want to keep it that way and I also don't intend to take on staff as I want to keep it a simple business.

That being the case, does anyone have an idea how big I could grow the business (turnover wise) and still be able to manage the work load?

I know I still have spare capacity for new clients and also my fees for certain existing clients need to be increased and I need to make sure I don't under quote potential new clients otherwise I am not valuing myself highly enough.

Any ideas?

Thanks (0)

@: Dave

Is your T/O more or less than my £60 -£70k? At my fee level I don't think I could do too much more business otherwise I find the admin burden subsumes the actual 'doing'. 

Thanks (0)

I agree with Steve

Unless you have some material advantage over the completition or are operating in a high value niche area I reckon Steve has about the right figure.

I have an assistant (and a shop front) but I am pretty sure I couldn't beat that figure on my own without precipitating health problems!

Thanks (0)
avatar
24th May 2012 12:27

Steve/Andy

Thank you for your replies Steve and Andy.

My turnover is well below £60k at the moment but to get £60k by working say 45 weeks a year and doing 30 chargeable hours each week would work out at £44 per hour.

I suppose that's reasonable, please feel free to argue with the above figures!!

 

Thanks (0)

Bid Dave

bigdave1971 wrote:

Thank you for your replies Steve and Andy.

My turnover is well below £60k at the moment but to get £60k by working say 45 weeks a year and doing 30 chargeable hours each week would work out at £44 per hour.

I suppose that's reasonable, please feel free to argue with the above figures!!

 

 

Something like that .... my average job value is about £450 at a charge out rate of £50.00. So that is 1200 chargeable hours per annum or 26 per week (46 weeks). That is probably about right when you look at the admin / CPD and generally looking on ebay for bits of rusty car!! You also have to accommodate the peaks and troughs of work if it is only you in the seat.

 

Thanks (0)
avatar
24th May 2012 16:51

@homeworker

 

The only other thing (apart from HMRC) that drives me mad is comments from friends and acquaintances that assume we must be well off because we run an accounting practice! ......

Well if you are not you should be....or you are doing something wrong...

Working with your wifes great, especially if shes an ACA.like mine..mine does all the internal control and I do all the external control, works a treat. We get to go to lunch every day too.

 

If you are working from your garage and are methodical and conceientious you can probably bill up to the vat limt  without killing yourself

 

I have £1.1m and 15 full time staff equivalents so you are looking at  £73k there...probably as I am effectively 100% overhead.

 

I dont think our fees are particularly high others seem to charge double. Eg if you are a self employed tradesman you would be looking at £250+vat. So I just have lots of little jobs

 

 

 

Thanks (0)
avatar
24th May 2012 23:00

How big, or how good?

In my view, it is not about absolute size, but about managing service delivery that determines your next target size.

The highly qualified good lady and I started 7 years ago with the ambition to hit £250k fees and work well until retirement.

Last year we grew 40% due to a niche product and this year we are hitting at least the same as we can't turn away new clients away as it might give the wrong impression to pre-existing clients.  We will be at £500k this year and target £1m GRF in two years.

This week a new client from 500 miles away and with whom we have never had contact emailed to ask us to act and replace the existing accounts without any qualifications about fees, timescales or anything else.

We have split the business streams into their functions, and realised that we can get more junior staff to deliver some important tasks, whilst the newly recruited qualified staff can work on the more complex tasks, leaving us to deal with new clients.  Of whom there are 2-5 a day every day at £500+ each.

We struggled most with the recruitment and delegation, but we realised that we have an enormous opportunity that we can't miss as long as we can manage the service quality.

You must manage the growth carefully, or you will lose clients, but don't sit back and let the opportunities pass you by. You will regret that later.

Thanks (1)

A simple formula

More clients = more staff.

More staff = more responsibility

More responsibility = more stress

More stress = more liklihood of dying young.

 

 

 

Thanks (0)
avatar
By BKD
26th May 2012 07:59

You forgot a couple of lines

littlemoaner wrote:

More clients = more staff.

More staff = more responsibility

More responsibility = more stress

More stress = more liklihood of dying young.

 

 

 

More clients = more money

More money = retire earlier

Thanks (0)