The top five mistakes made by small firms

Mark Lee talks to accounting consultant Jason Dormer about the key areas where small firms of accountants and bookkeepers consistently fail.

Having founded his own award winning accountancy firm in 2005 - starting as a sole practitioner working from home, and growing it to a company of six trading from its own purchased premises – Jason Dormer knows a thing or two about making it in practice. His latest project, Seahorse (UK) Ltd, is an advisory service aimed at helping start ups and existing small firms of accountants and bookkeepers through the difficult first stages of establishing themselves, right through to growing and developing their client base.

“Being a good accountant or bookkeeper isn’t enough to make you a good business person”, he says. In the early stages, it’s important to recognise your limitations, as well as what you can do well, and try to work on those. While many issues are unique to the individual setting up their practice, there are a few common errors that Dormer has seen time and time again. Below, he outlines the top five slip ups.

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Comments

Sorry, Mark Lee's credibility is falling fast....

Anonymous | | Permalink

Despite his comments on Accountancy age, at this link...

http://www.accountancyage.com/accountancyage/ne/2248545/accountancy-fees-comparison

....why are we receiving new clients thick and fast?

J

Jason Dormer's picture

J    1 thanks

Jason Dormer | | Permalink

Unfair to say that on the basis of a point of view on another website but i'm sure that Mark can stick up for himself so i'll move on to your question regarding picking up clients thick and fast.

Obviously more information is needed but if you are picking them up through the price comparison site mentioned in your link I would argue that individuals and businesses likely to choose a price comparison site for professional services, be they accountancy or legal, are not the type of potential clients most professionals would be looking for.

Such leads would usually (with exceptions) have at least two of the following traits:

 - Want to pay less than the service is worth, resulting in reduced profit and demotivation;

 - Be higher risk;

 - Use up a disproportionate amount of non billable time;

 - Be poor payers;

 - Not take their responsibilities seriously;

 - Not value your time;

 - Be quick to point the finger

 - Not refer, or even worse they do refer but to similar types resulting in more unsuitable clients

 - Have no loyalty and will move on if they find someone else at lower cost.

If you are picking up clients purely by offering lowest cost then if that suits you and your business then great, personally I would rather pick up 5 suitable clients per month than 20 unsuitable ones.  From a quality of life, business and profit point of view.

Regards, Jason

 

http://www.seahorseuk.co.uk

 

 

 

 

 

 

 

 

 

 

 

Tom Bishop's picture

Jason, accept change! Otherwise how can you help others?

Tom Bishop | | Permalink

Jason,

The new concept has been welcomed by so many Accountants and Businesses across the UK in just our first 2 weeks of trading. Price matters. I'd encourage you to read my experience at this link on accweb to understand why. http://www.accountingweb.co.uk/topic/practice/accounting-price-comparison-site-sparks-online-fee-debate

Best regards,

Tom Bishop.

Jason Dormer's picture

Change    1 thanks

Jason Dormer | | Permalink

Tom

Hello.

I am all for change - I embrace change!  However, only if it is for the better.

Whilst I can see what you are trying to do here, respectfully I do not see how this service can benefit either the buyer or the seller of the accountancy and related services.

The seller will be forced to compete purely and soley on price, so whilst the lowest price wins and client numbers go up, the danger is that quality control, profits and service will go down.

The buyer will be selecting purely and soley on price without any regard of whether there is a good 'fit' for him/her or the business and will be at risk of reduced quality and service, probably disclaimed to the hilt within the engagement letters.  The T&C's may be on show for the world to see but how many price shopping clients will read them, and even if they do, UNDERSTAND them? 

You also mention your vetting procedures but do not detail what they are - could you elaborate?

My other concern is that the services being compared are not like for like and never can be.  Within your link, Anon 07/09/09 @ 11.43 makes many excellent points, amongst them being the VAT scenario - how would you respond to this?

I do not mean to be negative about this as I think that any innovation to bring buyer and seller together for mutual benefit should be applauded, however at first glance this looks flawed so would welcome your responses to the above.

Regards

Jason Dormer

 

http://www.seahorseuk.com

 

 

 

 

 

 

 

 

 

 

 

bookmarklee's picture

Hi J

bookmarklee | | Permalink

Not sure why I deserve a personal attack - will assume you didn't mean it to come across that way.

For completeness - here's what I said when first made aware of the new site:

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I'm not convinced

This is not really a price comparison site - nor could it be. It's a pitching facility for accountants who are desperate to secure work by quoting low hourly rates. I speak as someone who isn't in practice any more so I have no axe to grind. 

Whilst I entirely understand the thinking behind this site I'm afraid the concept may be fundamentally flawed. 

It seems to require accountants to pitch for work solely by ref to hourly rates AND is only available to those who will also share their terms of business. It then requires clients to compare prices and terms of business. In practice they will only look at the fees and choose the lowest. 

I'm not convinced that there enough accountants who both have standard terms of business and who want to compete on price to provide accounting and tax services to strangers searching online. 

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Bob Harper's picture

Accounts for free    1 thanks

Bob Harper | | Permalink

@Tom - great that you are cranking up the pressure on firms to prove their value and I am not surprised clients are switching providers when there is a recession and most firms cannot be bothered to differentiate and add value.

@Jason - they are not all PITA clients - when clients seek a lower price they really mean they want better value. They don't know how accountants can add value so they try to get better value with a lower price.

Bob Harper

Crunchers Franchise

bookmarklee's picture

As we approach the third anniversary of this popular article....    3 thanks

bookmarklee | | Permalink

I wonder if anyone can comment on the longevity of clients generated by the site in question and  indeed on why the site seems no longer to be active.

Mark

halessteve's picture

On the topic of generating new business

halessteve | | Permalink

I read this thread with great interest. Price is always a relevant part in the decision making process - and its influence obviously varies for different people. However there are so many other factors - for instance locality / proximity. 

Generating New Business Locally

A number of people choose the accountant for their new business because it is nearby. It still astounds me that typically 10,000 new limited firms register on Companies House every month. There are new firms opening up near every accounting practice every week - and the current economic climate only fuels this further as people experience redundancy or the inability to get the job they want.

Here are two things. I've worked with to help capture this opportunity:-

1. Optimise a Google Search For You Area

Where ever your business is located, a common internet search is 'Accountants in XYZ'. Here's a little article of how a business with offices in Cottenham and Soham in Cambridgeshire is now is number 1 in the Google search results when prospective clients search their area - 'Accountants in Cottenham'

2. How Many Limited Firms Start in My Area?

Here's a simple service, Recently Formed, which shows the number and details of new limited firms starting up in an area each week. It offers free 14 day trials and the ongoing service is £10 per month - no long term commitments required.