Do new practices need an office?

Many new accountancy practices start-up at home. Is this as good an idea as it sounds? asks Mark Lee.

It’s obvious isn’t it? Starting from home keeps overheads to a minimum and is the easy way to start up in practice especially if you have yet to leave your previous job. I agree. But there are other factors to consider too.

In this article I intend to explore some of the key arguments for and against starting up at home by highlighting some of the other options.

 

Physical vs virtual

While you may not need a physical office away from home you may still want a virtual one. Most cities have facilities that allow you to have virtual office facilities that give your practice an address with more credibility than a residential one.

Virtual offices provide an address for the post and will typically allow you to book meeting rooms just as and when you need them. There are the huge well-known branded serviced offices in almost every city and also some more individual local facilities that can be traced through a quick internet search.

A practical disadvantage though of a virtual office of this nature is the need to visit to collect your post – unless you pay to have this forwarded, which means you get it a day or two later than the sender might have expected.

Continued...

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Comments
johnjenkins's picture

Another good article Mark.    1 thanks

johnjenkins | | Permalink

You certainly are on 3 weetabix a day.

I started from home with no money, which is the total opposite to the advice I give.

These days, in order to build a varied client base business you need at least one years break even expense money behind you. The premises do not have to be large but a high street address, or similar, will certainly help. If one of the family can answer the phone, even just at peak times, this will also enhance status. Then it's just a case of plodding on.

I had a very low client base    2 thanks

abdullah gora | | Permalink

I had a very low client base for years.

Then a couple of months ago i changed the name of my business, incorporated and and set up on a busy commercial road; the clients and fees have quadrupled! without wanting to sound my trumpet, its the age old addage, "you reap what you sow".

Best of both worlds    1 thanks

HudsonCo | | Permalink

We have bought an old post office on the village high street which also happens to be the A370 from Bristol to Weston-super-Mare. I'm currently looking out at all the cars waiting at the traffic lights and reading my sign whilst I have all the conveniences of working from home with no commute.

I have a virtual PA and answering service and subcontract other work locally although there is space for a second office in the future.

I generally enjoy the solitude with occasional visits from clients and others. Social media is there if I need more interaction or I can just wave at passersby. With all these benefits I'm still considering a virtual office in the City centre for the address and meeting facilities.

Not everyone is as lucky so I would recomend that startups charge fees that will allow them to move into offices in the future.

Started at home    2 thanks

Jimess | | Permalink

I started my accountancy practice at home purely because I had zilch clients to start with and needed to build up the client base.  However I soon found that storage became a problem and because I was working at home some clients thought it their privelige to contact me at any old hour of the day - I once had a client turned up on my doorstep at 11.30pm clutching a carrier bag full of books and invoices and wondered why I suggested that I would call him the next day to arrange a more suitable time to go through them with him. Three years ago some offices came up in the local high street that were not too expensive and right opposite banks, post office, car parking, market.  I just had to go for it.  It massively increased my client base as I am the only accountant with a presence on that high street, but if I am totally honest - despite all of the obvious advantages of the office and despite the fact that I get to "go home" at the end of the day, I still preferred working from home.  I don't think it would be viable now unless I downsized my client base by a huge degree, but I still hark back to the days when I could work the hours I wanted when I wanted and not feel obliged to open the office doors at 9am every day.  I felt I had freedom working from home but I doubt I could have grown my client base to the degree I have at the office and I do have some lovely clients that I really enjoy working for. But - deep down I do feel that the office is a huge responsibility.

Double edged sword    2 thanks

Ken Howard | | Permalink

I started at home in the spare bedroom, but experienced the same problems, i.e. clients turning up on the doorstep at all hours - especially tradesmen at 7am! I even got a phone call on Boxing Day from a particularly stupid client.  

As a one-man band at the time, I only needed a very small office and found that most were far too big and expensive.  I settled on a small shop front at one end of the town's main shopping street opposite a car park - it used to be a small sweet shop.  Very cheap and big enough for desks, filing cabinets, etc.  I have to say that I got several good quality clients solely due to the shop front, signage, etc.  Trouble was that at the same time, I got harrassed daily by the local OAPs, salesmen, charity collectors, drunks and druggies, and every man and his dog wanting freebie advice.  I soon took the decision to have a "locked door" policy and kept the window blinds closed, just to keep out the time wasters who clearly thought it was a drop-in centre!

I think that if you're going down the "shop front" route, you need to have a receptionist or similar to fend off the time wasters and for you to have a separate office, above or behind, where you can do the work without interruption - that obviously increases the costs!   

I'm now trading steadily and not necessarily out looking for new customers, so I've got a small office suite just down the site of the main street, with limited signage, and no big shop window.  It's worked remarkably well in being hidden enough to avoid the time wasters, yet central enough, and with adequate parking outside, to be convenient for clients.

 

Home, office, home again    1 thanks

scotty4196 | | Permalink

Good article. I started at home and am now in my second office - which is a small out of town 'shop'. I have picked up more more clients, more often since I moved here - but if I am honest I think my next move will be back home in a year or two.

I have a double garage and it would make a good sel contained office. I've worked hard to build the practice as much as I can but to be honest I seem to be working a hell of a lot harder than I was 3-4 years ago (at home) yet don't seem to be much better off - just more stressed!

My 'shop' appeared good value but it costs a fortune to heat, rates will be payable soon once the relief period finishes and I get my fair share of timewaters popping in whenever they wish.

I would say it all depends on your longer term ambition. I thought I wanted a chain of accountancy 'shops' and earn my millions that way but perhaps I might be better off moving back home saving myself a fortune each month and cutting back on the clients I don't really want to work with. Perhaps I lack ambition.

Has anbody else been there and back again - worried I might be making a mistake!

johnjenkins's picture

@scotty    1 thanks

johnjenkins | | Permalink

most of us are working harder these days for no further reward, and it will get worse until Euroland stop taking us for mugs and we get a PM with a backbone.

Steve McQueen's picture

@ Scotty4196    1 thanks

Steve McQueen | | Permalink

Been where you are my Friend!

Started straight into an office (I nicked a batch of clients from my former employer) over a chip shop in the subburbs of a northern town, grew like wild fire for seveal years thinking that I was going to make millions from a chain of accountancy businesses across the country, then realised that I was actually taking very little more out of the business when I had 70 staff and huge overheads and 90 hour weeks, than I was when it was just me over the chippy working 32 hours a week!

I made the decision to sell up and I've been doing other things since (5 years ago), but if I go back into accountancy (which I would like to do at some stage as I miss it), it'll be as a truely self employed person with enough work for just me (and maybe one other assistant) with very tight overheads.

I know I need a place away from the house to work, so I would either get a serviced office space or a small place over a shop (about £5k all in a year in my neck of the woods for either of these set ups). If I didn't, the wife, the kids and the cats would all drive me nuts!

 

Steve

JAADAMS's picture

Working from home = flexibility possibly lonely    2 thanks

JAADAMS | | Permalink

I find that I do more hours of work working from home, it is easier to concentrate and I can use my time much more effectively and be flexible. I can take time off in the day and go shopping etc out of busy times - difficult if you have to man a high street office.

 I was interested in the comment re being ‘lonely’ - sometimes its just me and the cats! Husband often works away. I see the postman every so often and see my neighbours go off to work at 7.30am to do battle with the traffic.

But if you do work from home and feel that you go days without seeing anyone there are such things as CIOT meetings where you can meet with other accountants/tax people  - in my area there is SOSCA (Society of Southern Chartered Accountants) held at the lovely Athelhampton House.  If you are a woman join Women in Business or the Business and Professional Women group.  Get clients/meet other business people at the local BusinessXchange Breakfast meetings or join the Chamber of Commerce.

This discussion about whether to go all out and get a high street office comes up in Any Answers periodically and on viewing comments the consensus of opinion seems to be that it depends on whether there is capital available and what type of client you want. It also depends on how you want to get your clients - again past Any Answers text invariably states that there are just two methods - either purchase of a block of clients (difficult - you have to be there at the right time etc) or by word of mouth - hardly any walk in off the street.  I too have friends who started in an office but found problems as detailed above and they have given up the office to work from home.

its a cruel business choice    1 thanks

david5541 | | Permalink

[quote=johnjenkins]

You certainly are on 3 weetabix a day.

I started from home with no money, which is the total opposite to the advice I give.

These days, in order to build a varied client base business you need at least one years break even expense money behind you. The premises do not have to be large but a high street address, or similar, will certainly help. If one of the family can answer the phone, even just at peak times, this will also enhance status. Then it's just a case of plodding on..........

I AGREE WITH HINDSIGHT THERE IS ALWAYS A BETTER PLAN AND STRATEGY but all micro businesses such as newly practicing accountants operate in a very competitive market place whereby generating cash flow is the most crucial "operational strategy" since 30 % of startups go bust in the first three years.

 

Then there is the professional/personal cost/benefit figure to consider; local accountants with whom you previously had a raport will isolate themse;ves from you so you will loose your professional reputation/level of acheivement in your career in return for the advantages of total self reliance and the self confidence that grows out of it where all of your own ideas can impact on your business.

 

From outset all newly practicing accountants would relish being able to "hold out" just for premium professional clients instead of labourers and subby's who are on the phone everyday, but in a new enterprize you need to penetrate an existing market rather than think you create a new one.

 

i learnt all this after the event, made the mistake of trying to help subbys and taxi drivers, one who even had a tax enquiry(all whilst I worked to pay my bills)

 

a city centre location(or expensive serviced offices) might appear attractive, but its can only be justified if you hope to poach successfully on leaving your firm.

 

the choice is always a business choice not a strategic choice for startups.

Now I have use of an office in shared facilities the benefits of it far outway the costs but the costs dont justify the business model-types of client.

shop front

david5541 | | Permalink

Ken Howard wrote:

I started at home in the spare bedroom, but experienced the same problems, i.e. clients turning up on the doorstep at all hours - especially tradesmen at 7am! I even got a phone call on Boxing Day from a particularly stupid client.  

As a one-man band at the time, I only needed a very small office and found that most were far too big and expensive.  I settled on a small shop front at one end of the town's main shopping street opposite a car park - it used to be a small sweet shop.  Very cheap and big enough for desks, filing cabinets, etc.  I have to say that I got several good quality clients solely due to the shop front, signage, etc.  Trouble was that at the same time, I got harrassed daily by the local OAPs, salesmen, charity collectors, drunks and druggies, and every man and his dog wanting freebie advice.  I soon took the decision to have a "locked door" policy and kept the window blinds closed, just to keep out the time wasters who clearly thought it was a drop-in centre!

I think that if you're going down the "shop front" route, you need to have a receptionist or similar to fend off the time wasters and for you to have a separate office, above or behind, where you can do the work without interruption - that obviously increases the costs!   

I'm now trading steadily and not necessarily out looking for new customers, so I've got a small office suite just down the site of the main street, with limited signage, and no big shop window.  It's worked remarkably well in being hidden enough to avoid the time wasters, yet central enough, and with adequate parking outside, to be convenient for clients.

same here, maybe a high street/traffic lights shop front in the next step

johnjenkins's picture

@David    1 thanks

johnjenkins | | Permalink

Normally there is a choice between becoming a partner (eventually) where you are working or going it on your own. It doesn't matter what business you are in, enbarking on self-employment is a "culture shock". You have to get the work, find somewhere suitable to do it, do it, then get paid. I'm sure an IT bod could come up with a flow chart? Sometimes hindsight can mean experience. I certainly wouldn't go back to working from home although I do work at home. Even then I prefer to stay a lot later at the office. These days I prefer to keep work and homelife seperate. I do accept that in the early days, sometimes the choices are limited, that's why I always advocate that you have a years money behind you.

dbowleracca's picture

Only two ways to get new clients???    1 thanks

dbowleracca | | Permalink

@JAADAMS, I'm not sure which posts you have been reading, but there are many more ways to get new clients than the two you mention - buying a block of fees or word of mouth.

What about direct mail, email marketing, website, telemarketing, seminars, social media, networking and advertising?

I would think the last way you are going to get new work as a startup is by word of mouth, and buying a block of fees would be unaffordable for the majority of startups.

If I was starting up, I would get an office if I could afford it, and use direct mail, networking and a good website coupled with telemarketing and email marketing and social media to get my clients. And then I would make sure they all got world class service and ask them for referrals, and then repeat the same process with those new clients whilst continuing with the marketing I started with.

Hansa's picture

Well presented synopsis - thought provoking too!    3 thanks

Hansa | | Permalink

The article covered the most important points that need to be considered.  At the risk of being a bore, my own experiences (far more risky than that of most start-ups) might be helpful.

In the late '90's I decided to move from Insolvency work to offshore, and felt that the UK was not the best base for this.  I moved to Gibraltar, buying a flat and renting a 2 room office (£600 per month).  No clients at all in the first 2 months. and slow growth in the first 9 after which things started to take off.

Why did I take an office?  1. I would not want clients/the world at large having my private address 2. Virtual offices are usually obviously just that.  3. Clients like to see a real presence and anonymous, empty,  shared meeting rooms are again rather obvious.  - Most clients I think expect their accountants' to appear reasonably prosperous/successful.  

I have subsequently moved more than once (to different countries) and each time the office has been a priority for the same reasons.   

More recently we have sought to establish offices in more than one country which has lead to being in the odd position of having more offices than staff at times.  We now have a mix of virtual offices (which clients are not expected to visit) and real offices if only lightly manned in some cases.    PO Boxes are also useful.  

With regard to the fee issue, (ie lower fees by working from home) ... I never subscribed to this in that there is in my opinion little point in leaving safe (?) employment only to engage in a race to the bottom in fees.  I believe that before anything start ups should calculate the amount the hope/expect/need to take in drawings, multiply that by 3 (to get the notional charge out rate) and, if fixed fee, calculate those fees on that rate x estimated hours.  Anything less suggests a "freelancer" rather than a "practice" which will require "reinventing oneself" later when overheads increase.  Yes, some cheapskate potential clients might be lost (but would they really have been worth it?). - better in the short term to take on work as a sub-contractor as this can be dropped as your client base increases.

Finally, from my own experience, I would suggest that at least 6 months reserve of living expenses should be available as I cannot see any new practice generating sufficient fees to pay it's way in less than 9 months.

After many years working in

whithys | | Permalink

After many years working in high street practices, I set up on my own over three years ago and purpose built an office in the back garden.  I have the best of both worlds, the flexibiity to come and go as I please, an office to see clients in without disturbing the family and a dedicated place for all the files, etc.  It is also more relaxed for the clients and you can build a proper relationship with them, something I was unable to do in a large practice. 

johnjenkins's picture

@whithys

johnjenkins | | Permalink

Although I can see where you're coming from I doubt very much if your business will reach its full potential, but then you might be happy with this situation. There is a lot to be said for keeping the turnover of a business to a one man manageable level, especially with the crap that we have to put up with from the "powers that be". I wish you all the best.

Agree with David Bowler

mutaf1976 | | Permalink

Hi all,

I've started my practice while i was working full time for insurance company in order to build up customer base them time came and left full-time job for a part-time one just to be able to pay absolute minimum expenses while i was building my business. I also added a commercial insurance service as well as accountancy. For almost a year, i worked from home but in my experience it was difficult to concentrate and also realised that having a small serviced office which is close to my client base could be a good idea. I have moved to my very small office 3 monhs ago , I will be using newspaper and leaflets to get more clients but best way is undoubtly referrals. I believe that differentiating my business is a good idea as if a business/ person do not take up the one service, i can always offer the other one. I am keeping all the  costs minimum and slowly building my business. I will be the biggest one shop accountancy & insurance business within my community.

johnjenkins's picture

@mutaf1976

johnjenkins | | Permalink

I tried doing Insurance to supplement my Accountancy business years ago (Equity and Law - then AXA) but found the two conflicted with each other. Now I prefer to use a local comapny to deal with mortgages and the insurance side. If your Accountancy side takes off will you refer?