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How does your practice grow?

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27th Sep 2005
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AccountingWEB member Nigel Simmons provoked an interesting discussion when he posted a question on subcontracting.

"I'd be interested to know how other practices have grown and if they have found this a successful means of expanding. Are there any pitfalls that I should be aware of?"

More than 200 people tuned into this debate: how do sole practitioners deal with a heavy workload? What are people's experiences with subcontractors as opposed to junior staff? And what did Nigel decide to do?

AccountingWEB's Dawn-Marie Dart caught up with some of the members who took part in the debate to get more of an insight.

AccountingWEB veteran and sole practitioner Chris Irving of Northdown Associates was relieved to find the question as he is having a similar dilemma: 'Whilst doing my daily review of the AccountingWEB Any Answers section, I came across this question and it is so relevant that I had to post a comment. I found the answers from other people very useful as the challenges that I was having, were also happening to other people.'

Nicola Jones of Nicola Jones & Co Chartered Certified Accountants commented: 'My experience of subcontractors is both as a subcontractor, and also as an employee in other practices where subcontractors were used prior to setting up my own practice.

"When I was a subcontractor I worked very hard, but to be brutally honest my heart wasn't in it - I used it as a stepping stone to set up my own practice and to gain further experience. I know I helped the practice I subcontracted for but it really was a short-term solution. They needed a good employee, and I needed to get on and set up my practice.'

One of the main source of concern about hiring subcontractors, especially in the common situation where the y work from home was motivation. Non-company staff may not put 110% in to the work if they feel that they are not part of the permanent team.

On the other hand subcontractors may be more willing to please their employers to build towards a more solid working relationship in the future if the practice expands.

Subcontractors may also gain different experiences by working for a variety of companies and therefore have a broader knowledge of different accounting sectors, which could prove useful.

The alternative to subcontracting is to employ a junior. Although worthwhile in the long term, recruitment and training can prove time consuming in the early stages to bring them up to get someone to the skill level you need.

Nicola Jones said: 'The main problem is monitoring the quality of work and ensuring, if they work from home, that they are putting in the time charged and doing a quality job. The practicalities are also difficult, ie licensing software for them transferring data etc. In theory it should be simple, but in my experience it hasn't been.

"Another issue is client records - few clients would be impressed to know their books have been passed out of your office to a subcontractor. I have taken on several new clients recently who left former accountants because they didn't want records going to subcontractors and couldn't have information returned immediately if required as it was out of the office."

Members pointed out that outsourcing raises further issues such as client confidentiality, data protection/transfer and software licensing. There has to be a confident bond of trust between the practice and its subcontractor for the relationship to work - ultimately the firm will be held responsible for any shortcomings in the work that has been contracted out.

Chris Irving sums up this feeling: "I have only recently moved office from my home office into serviced offices. I saw this as a next step up from a professional image point of view as well as being appealing to a potential new employee. I reached that point six months ago where there was too much work for one person, but not quite enough for two. I advertised four weeks ago, went through the CV and interview process, which was very time-consuming, and whittled my 12 replies down to two interviews.

"I didn't really want to subcontract anybody. I wanted the 'ownership' and control of an employee. This person turned down my offer at the last minute so I am now back to square one with the recruiting process. After a bit of brainstorming, the idea of a trainee then arose. If I invested time with a trainee from day one, this would produce the same result in the long run. Wouldn't it? I am not sure! All I do know is that I will need to keep putting in the long hours to keep the current client happy whilst ensuring that I delay any new clients until a solution is found."

Nicola Jones added: "I just feel from experience, from both sides of the fence, that subcontracting is a short term solution only. To have a successful practice you need good, hardworking loyal employees who know the job and the clients. Finding them... that's another story!"

So to subcontract or not subcontract? And did AccountingWEB members make his choices any clearer? With his eyes opened to the potential problems, Nigel is going ahead and looking to recruit a subcontractor.

Add your thoughts to this important debate by posting your comments below this article.

Dawn-Marie Dart

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Replies (6)

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By theedges
27th Sep 2005 12:36

Subcontracting
I have experience of sub-contracting from both sides and can understand the issues involved. As a sub-contractor actually working in a pratice I found I had to work harder than the employees, as I was costing them more! What eventually happened was that they took on an employee who was keen to climb the ladder and my work was whittled down to the occasional training visit miles away from home. Needless to say I bowed out.

Having used subcontractors myself, I can only say it depends on the person involved. The say would apply to an employee. If you have faith in the person and their capabilities it is fine; however if you have to do it again when it comes back for reviewing then it was an expensive waste of time.

From my own perspective I would be reluctant to subcontract again in practice, but would do it again from my home office as this offers more flexibility and does not leave you open to being used for the difficult on site visits no-one else wants.

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Dennis Howlett
By dahowlett
28th Sep 2005 03:17

What are you afraid of?
I hear the pros and cons but think the cons are overbloated. The technology side of it can be taken care of easily. In fact, one of the things I'd insist on is access to DSL and a VPN connection. That's as secure as it's likely to get. Who wants this data anyway other than you and the tax office?

As for not working 100% - subcontracting is not an easy option. There is no employment in the conventional sense - so the contractor has to work damned hard to make sure he/she earns enough to make up for any leans times or (unpaid) vacation and sickness.

If you have to resort to subcontractors all the time there is something wrong with your place of employment. If not then you're in the wrong location, not using the right technology, have the wrong client mix or all the above problems and some.

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Richard Murphy
By Richard Murphy
28th Sep 2005 08:58

Don't sub-contract. Outsource instead.
If you treat someone as a sub contractor they'll resent it. Why not? You're putting them on a different, lower plane than you. How would you feel? 100% motivated? I doubt it.

So don’t sub-contract. Instead recognise that there are things your practice can’t, or does not want to do. That’s fine. Markets work on the basis of people doing what they are best at, not on the basis of people doing everything asked of them (which is why odd-job people get paid so little).

So don’t sub-contract, outsource what you’re not good at. That might be book-keeping. It might be VAT. It might be IT advice. It might be financial services advice. Each is a skill you might not have. So what? You’ve probably got plenty to offer still.

The important thing is to keep the core service you’ve sold in house, If that’s doing tax returns and accounts that’s fine. Finishing accounts from TB onwards is not the same as book-keeping. Doing tax returns is not the same as sorting out inheritance tax planning. If you think about things this way then people don’t subcontract to you, they extend the range of services you can offer, cost effectively. And that makes this form of networking a very different proposition for all involved.

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By AnonymousUser
27th Sep 2005 17:01

Hang on, which century are we in?
"Ownership", "control", concerns about communication difficulties. This is the language of the 50s and 60s. My main work is interim management. If this sort of thinking was applied in industry there would be no interim managers, but in fact the market has grown, and continues to grow.

Concerned about costs? Then set a specific rate for the job. Problems with information transfer? Then arrange log in to your server via the internet. This is straightforward stuff, commonly used.

There are lots of second rate sub-contractors and I don't defend them. Nor do I defend second rate contractors.

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By SteveReynolds
27th Sep 2005 19:22

Subcontractors
There is another alternative to using subcontractors who work from home. Due to personal circumstances I am not able to work full time, so I now work 1 day a week for a sole practitioner. This gives him access to a qualified FCA at a reasonable cost to help to carry out the higher level work that he should do but does not have enough time. It also provides a sounding board to discuss and resolve the sundry tax and accounts problems that cause so much time wasting if you do not have a partner to discuss it with.

I am happy that I get regular work and am able to keep my professional knowledge etc up to date.

Overall it gives a reasonable compromise for a growing practise.

I have given assurances about not taking work etc to get round the obvious weaknesses in employing a potential competitor.

There are lots of older accountants out there without work who might be happy to work part time to help new practises grow.

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By neilglos
28th Sep 2005 21:52

How...?
How do you find good subcontractors?

Im in the earlier days of a small book-keeping/financial admin practice. I provide a range of services from book-keeping, credit control through to management accounts and payroll aswell as advice and internal training.

Some clients want me to make a provison for year end accounts and returns, instead of having to go to another firm.

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