Opinions Required - New Accountancy Firm

 

Hi, I am just working on a few ideas and am trying to gauge the level of interest in the idea of an accountancy practice that:

- Does not increase fees at all after the first year of a client using services
- Is available purely as an online service as well as the usual client-into-office system
- Offers discounts to clients in return for services (dependent on nature of business)
- Employs qualified accountants (almost like an agency system) to take on work sometimes

Is this so much different to most regular accountancy practices? Also, as a customer would you be interested in a service such as this?

Any feedback would be really helpful,
Thanks, Adam

 

 

Comments
efficiencycoach's picture

Some of this is already happening in the marketplace    1 thanks

efficiencycoach | | Permalink

Hello Adam,

Some thoughts for your ideas:

1) Most very small accountancy firms do not renegotiate their fees after the 1st year. Many firms often make a loss in the first year as they get to grips with a new client. If an accountancy firm has given good service to it's new clients, it's fairly typical for it to pick up extra work to do for the client - this may be payroll, VAT, tax planning. However, the hourly rates normally stay the same. Ideally, a firm should offer a client 10 equal instalments for the client's fees across the year, then renegotiate the fees for the next year 10 months into the year - when the true cost of servicing the client is known.

2) There are many firms offering a completely on-line accountancy service. Cheap Accounting, run by Elaine Clark was probably the first firm to do this, and they are a franchise. As Elaine states fairly often, there are many firms offering a similar copycat service to her. Most small accountancy firms who use Kashflow, Xero or another online accounting system offer this kind of service. The days when clients expect to be able to physically visit their accountant are numbered.

3) Nearly all the accountancy firms catering to the SME marketplace will employ freelance book-keeping support to help them with the troughs and peaks of the workload. It's not unheard of for firms to use smaller firms to outsource work to when their workload is high.

4) Bartering accountancy services for the client's services is fairly common for new accountancy practices.

 

Thanks a lot for the reply, I

projekt | | Permalink

Thanks a lot for the reply, I did have an idea that bartering was quite common, although I hadn't realised the predominance of completely online services. With your third point, I didn't really mean just with book-keeping support, I meant more as, to use an example, a private tuition firm uses tutors and operates as an agency, although my idea was to employ a few staff who were full-time for the company, although to entrust entire tasks to the ad hoc staff rather than simply bookkeeping. Perhaps that is what you were getting at, apologies if I'm just repeating your point.

With regard to the online system, would you then recommend starting as a wholly online service? Or do you think there will still be the market for an office for a while?

Thanks again.

efficiencycoach's picture

It all depends on what you want to achieve...

efficiencycoach | | Permalink

I don't think it is possible to give you a good direction on whether you should start as an office or as an online service at the start. It all depends on your personal circumstances and your plan for the business.

What I can say is the following:

  • you should prioritise being able to offer an online accounting system to your clients, e.g. Xero
  • it is possible to operate completely remotely without having a formal office and dealing with clients remotely. However, it depends on who you want as your clients and whether they will want to be able to meet you in person in your office.
  • you should differentiate yourself from other accountants by niching yourself. For example, what sectors do you specialise in - the smaller the number the better.

If you want, happy to speak further via the phone. Send me a PM and happy to help.

MarkAOrr's picture

Be careful about removing the relationship

MarkAOrr | | Permalink

If you go purely online you may end up competing with well trained accountants in India who don't need to earn as much money as you do.

Heather has raised some every good points and when examining which online accounting system to partner with you need to work out which one will be easiest for your clients to use so you don't end up training them for free and wasting lots of time.  Most of them have some kind of reseller agreement so the amount of commission may also influence your decision.

I would think very hard about the fears clients have about changing accountants and put some cast iron guarantees into your offering to reverse their risk and make you stand out from the crowd.

Good Luck.

Interesting points from both

projekt | | Permalink

Interesting points from both of you, thanks a lot. I certainly agree with the online aspect of then having to compete with cheaper firms, and also removing the option of meeting in-office for clients who prefer this. With that in mind, it seems that I would be better catering as best I could for both options.

In terms of niche markets, my only concern (could be a naive personal opinion) is that it would eliminate a large amount of the potential client base. Should I be concerned about this?

Thanks again.

MarkAOrr's picture

Niche is best

MarkAOrr | | Permalink

Delivering multiple messages about all aspects of accounting doesn't increase the power of your communication or your response.  It dilutes it.

Far better to deliver a very powerful message to a small audience who will be engaged by your knowledge of their problem.  In this day and age with the web you can always multi brand to suit each niche.

efficiencycoach's picture

strange but true!

efficiencycoach | | Permalink

It seems strange to think that by niching yourself you actually win more business in the long run. However, that is the case. For these reasons:

1) In the world of professional services, buyers want to work with an expert who really knows their world. They don't want to work with a 'jack of all trades'. In fact they are happier to pay a premium price to work with an expert, as there is a greater perception of value in the service.

2) By focusing on a niche it helps you meet the right people when networking, and you can tailor your services and products to that particular niche. Which makes it even easier to attract more clients from this niche because you are being seen in the right places, speaking their language and offering them services and products directly tailored to their requirements.

3) having a niche makes you more memorable. When you start your accountancy practice you will realise just how many accountants there are out there. If you go to any networking event without a 1 professional rule, there will probably be several accountants in the room. I can bet you that most of them will stand up and trot out the same things about specialising in working with SMEs or small businesses. Not very memorable is it? However, you would remember one who said that they specialised in working with building companies and self employed tradesmen, and their 'xxxx' packages were designed with the needs of these people in mind. 

Think about this another way. There are *many* business coaches out there. Who would you personally prefer to work with, one who specialised in working with accountants and knew what you meant by GRF; and had a great track record of helping their accountancy clients overcome the 'delights' of working with a client base who had a huge inertia before they will switch accountants.

Or a business coach who worked with most kinds of businesses?

Your clients will have the same views about working with an accountant as you do with a business coach. 

I've been working with one accountancy client, who like you, was fairly resistant to the idea of niching and she didn't want to turn business away. As a result of niching her business, she has grown her revenue by 30% in 12 months and grown her lead generation by 400% each month. She says (and is writing me the testimonial as we speak) that the biggest takeaway for her for our coaching relationship has been the power of niching her practice, and the confidence this has given her when she meets other accountants out networking. No longer is she struggling to say what she does or worry about whether she sounds the same as all the other accountants in the room. 

Really helpful, the pair of

projekt | | Permalink

Really helpful, the pair of you, thanks! Multi-branding is certainly possible on the internet, and could be an option to help make the niche market as distinct as possible.

Also, when using the business coach analogy, I'd have to agree with you, I'd prefer to pay more for a coach who specialises in accountancy, and completely understand the appeal from this perspective. I can imagine the increase in confidence also when saying "my area of expertise is (business area)".

Thanks so much again.

maxxy's picture

Perception

maxxy | | Permalink

Just going back to your original post and not taking anything away from what Mark and Heather have offered (brill advice) I just want to mention the word perception.

 

Clients have a perception that their fees will increase after the first year. It's what they hear about from their colleagues and there are lots of accountants out there from my experience who do renegotiate and increase fees after the first year so giving reassurance of not increasing fees will certainly help in terms of perception that clients have.

 

Via my find-me-an-accountant service I see surveys regularly and generate leads where clients are looking for an accountant and one of the questions they are asked are about online/remote services.  A lot do want a local accountant and immediately rule out the online/remote working relationship and my figures for this are at around 70%.  Out of the remaining 30% I only usually see 25% wanting purely online with no prospect of visiting if they want to or feel they need to and about 70% saying they are happy with online/remote if they can get in their car and visit if they really felt they needed to or wanted to (2 hours away approx) I hope that puts things into perspective for you for the current time although I personally am expecting this % split to change towards more online and remote working relationships. The industries that are easier to convert to online/remote are either tech industries (e-commerce, web services, or people who are used to remote working themselves perhaps as professionals or as contractors).

 

Your point about bartering services does happen naturally where there is an opportunity but I would not say that it isn't usually a key feature in the relationship. Quite often accountants I work with do not do the accountancy for their suppliers even though they are trying to win the work and that work and opportunity comes quite a long way down the line when relationships are built up over time or when an event happens that presents the opportunity. This is because suppliers are loyal to their existing accountant. There are lots of "friends of the family" out there :)  Just because you can work for them doesn't always mean you should and it comes back to the big question already mentioned about who do you ideally want as clients? Where are your strengths? Where is the most profit likely to come from aligned to these strengths that will bring the most value to your clients?

 

Referral schemes are also something that come into play as some clients want their accountancy supplier to refer them to their clients. Accountants tend to have mixed feelings on this as generally don't want to risk their relationship with their clients by recommending services unless they feel comfortable about it.

 

As for outsourcing and agency workers there is something to think of here around trust and service perception too ... how will you package the message to your clients that it is something that they can benefit from and trust if you are going to be open about this? Will they work on site at the client's offices or purely behind the scenes?

Good luck :)

Maxine

 

 

Thanks, I think a guarantee

projekt | | Permalink

Thanks, I think a guarantee of not increasing clients' fees was certainly one of the things I wanted to do, as I do genuinely believe that clients' fees should not be increased (obviously unless they request additional services).

Interesting points about bartering and online services, I didn't realise that so many people wanted a local accountant (or didn't realise quite how high the percentage was). This certainly points to setting up an office, probably with a "simple for the client" online system, but certainly looking to expand in terms of offices. It looks as if your point regarding bartering was that it just naturally occurs, and as such I shouldn't really be looking to promote it to attract clients.

I think the agency system wouldn't work, other people have made the point about a client giving you work for you to do, and not to be given to a sub-contractor. Possibly with a bit of transparency it could still work but it would be a bit of a risk. Your questions were interesting though. Perhaps if they worked in office, and were taken from a small number of accountants as opposed to anyone who registered, this may be more credible.

And in terms of how would I

projekt | | Permalink

And in terms of how would I sell the agency system to clients, what's your opinion on basically saying to them that it would ensure faster service for them and almost guarantee deadlines were met? Would this matter?

maxxy's picture

Bit confused re the agency thing...

maxxy | | Permalink

I've read your post a couple of times and I'm still not sure on the agency thing... sorry :)

 

Do you feel that by operating an agency of accountants that the end client would receive a better level of service?  If so, how? why?

Basically, if I use the

projekt | | Permalink

Basically, if I use the example of a private tuition agency: Tutors sign up to the agency, the agency finds them work, tutor does work, gets paid and agency takes a percentage.

In terms of how clients will receive a better level of service, by spreading the work it will be done faster, and so clients will feel like they matter and are prioritised. However, I am also aware that I would have to be careful about who registers in order to maintain a decent level of service. Nice idea, but it would require a bit of thinking about, especially if the registered accountants take business from the firm.

maxxy's picture

Faster?

maxxy | | Permalink

Projekt I have to be honest and say that I'm not so sure about whether clients would perceive an agency set up for their accounting needs to be a benefit for them on a general accounting and advice basis.  

People usually rate their overall relationship with their accountant as extremely important. People like to feel comfortable and reassured that their accountant specifically understand their business inside out and the quirks within it, and their industry, aligned to future goals, aware of current obstacles and helping them overcome them. Some people even stay with their accountants for too long (poor service, high fees) purely because they feel their accountant knows their business really well and they are concerned new accountants will take too long familiarising themselves with their business. I'm not so sure that you could replicate that with an agency / temp working structure.

You mentioned the word "faster" but in terms of benefits to clients I wouldn't necessarily put that at the top of the list of benefits that most clients seek. Unless of course it is ambulance chasing with deadlines and penalties where you may have more of a market opportunity. ie; a set of accounts is needed in 2 days etc. 

Hope that helps :)

 

 

Thanks, you answered my

projekt | | Permalink

Thanks, you answered my question, would it be worth keeping the agency system but only using them for clients who would need a job doing in a couple of days, and advertise this (but as a sidenote as opposed to a main selling point)? Is there realistically a market for this? I know that some clients leave it until about a week before a deadline but not sure if it would be worth offering.

pillowmay's picture

Outsourcing

pillowmay | | Permalink

Hi

A lot of your ideas are ones that we are currently implementing into our business!  You won't see that yet as we are still in the process of updating our website for all the changes which we've put in place over the past three months.

In terms of staffing, I have one accounts staff member, one tax staff member and one administrator who handle the client queries.  Any extra work which needs to be done goes to my Indian Outsourcing company - Sand Martin who are fantastic.  They give us back a really tidy accounts file, promptly action my review points and have become an integral part of our team. 

We have a hosted desktop IT system and the Outsoucers are one of the users so they really are part of the team despite being many miles away geographically.

My outsource experience has far exceeded my expectations and is very cost effective too.  They will also offer fast turnaround times when required, if there is an emergency and their standard turnaround times aren't bad either.

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