starting up

Why are you considering giving up employment?

Your question is difficult to answer. It depends on so much - where you live, competition in the area, client base, how much clients like you and the service you provide, amount of referred work, whether you rent offices or work from home and so on. Book keepers can charge less than tax advisers so the mix of work may affect your income.

The figure you suggest does not appear to be unreasonable for a 40 hour week, taking into account 'non chargeable time'. Depending on your approach to the work, you may be able to make a higher or lower amount. By operating through a company and drawing dividends instead of salary, you may be able to achieve the net equivalent of a £50K salary on much lower profits.

I think first you need to consider your motives. I have worked for myself with no employees since 1993 and have never regretted doing so. The flexibility in working hours, holiday times and, most of all, not having to account for how I spend my time and how much I charge clients to anyone except myself has been wonderful. However, some people find the worry of needing to achieve a certain income outweighs the benefits of the flexibility and starting up full-time is, in my view, more challenging than starting with a few hours a week and increasing over time.

Research and expectations

It's possible to £50k net within 12-18 months providing you're happy to invest circa £30k in marketing and employing someone.

Click here to buy some useful Accountancy Research.

Bob

Don't Do it!!

If you can't even look at your current salary and work out what you need to charge for the amount of hours you want to work in order to earn more how on earth are you going to service clients to any reasonable standard.

This is basic stuff and only you will know what you need to earn to either carry on in the lfiestyle you have or earn more to get a better lifestyle

Go for it

I started a part time practice whilst working full time - working evenings and weekends. I quickly picked up work and gave up my job within the year so that I had time to properly run the practice. For the first year or so, I had to live mainly from savings as I was only earning a fraction of my previous salary and had lots of expenses, i.e. website, software, training, office costs, etc., but by the second and third years I was self sufficient and by years 4 and 5 I was running a turnover of around £60k with profits of £50k. I never joined any franchises or ever paid more than a few hundred pounds for software - it's amazing what's out there which is of a good quality but cheaper than the leading brands - I've managed to run the practice with overheads of less than £10k per year and that includes renting a small office. From years 5 onwards (now in year 9), I've concentrated more on keeping the fee income at £60k but on reducing the workload - that's meant putting fees up (even in a recession) and sacking the troublesome clients - I keep ticking over with new clients being recommended by existing clients so havn't advertised since the first year - now down to working the equivalent of a four day week with no loss of income and I'm aiming for a three day week next year, again without drop in income. The key is cherry-picking your clients - it's easy to be a busy fool, to under-cut other firms, and offer the earth, just to get poor quality clients - it's hard, but it's far better to respect yourself and say "no" rather than be stuck with an unprofitable and troublesome client for years. Also, be careful when it comes to advertising - when i started I put a regular ad in the local freebie newspaper which brought in a lot of work quickly, but the quality was poor and within a few years, they'd all either been sacked or had voluntarily gone elsewhere to the next new start up firm offering cheap work and advertising in the freebie paper. My best quality clients have come from my website and from tapping into friends and families, business associates etc - clients coming this way have stayed the course and are easy to maintain and profitable. I wish you well.

thank you

Thanks for all your encouraging comments.

I am giving up permanent employment as I need the flexibility in setting up my business. I always usually worked 60 hours per week which won't give me any flexibility and after many years I feel that I have to take it slowly.

I will use savings while I get off the ground gradually. I expect to have very few clients at the beginning and this will give me the opportunity to learn aspects I am not familiar with such as pricing.

I am sure I will make mistakes along the way but hope to make it in 2-3 years. I appreciate any other practical advice you can spare.

Newbie L

Newbie

I am in a similar situation as you are but not ging for it yet as I want to build up some savings from my current employment. Have you any experience of this kind of work or have you taken any specific training? Also, have you done any market research to look at what the competetion and demand is in your area?

more questions

Thanks again for your advice and wishes. I cannot resist asking some more questions ...

Did you have any prior experience in practice work?

What software did you choose? there is a huge choice out there and I'm not sure which offers best choice for money when starting up.

How important do you believe a qualification is when speaking to clients or their bank etc? I am an IFA member and a CIMA student as well. Is it worth finish CIMA as well if I plan to be a one man band?

Thanks again
Lucien

marketing

I did look to see who the competition is (plenty...) and have an idea of a target market but I cannot afford to be choosy at the beginning.

You can try some mistery shopping in order to see how th eother acocuntants operate.