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Building a practice before getting clients

Building a practice before getting clients

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Hi all,

I was wondering if anyone has invested in building a practice and hiring staff before they had sufficient clients, a kind of "If we build it, they will come" scenario.

At the moment I have about 115k of recurring income from clients with most paying monthly. This should increase to about 135k in the coming months as I have some clients who are just starting up and their activity will increase rapidly over the next year.

I have invested in IT, software, website, a nice office and have two part time staff - all of which cost money. One of my part-timers will be leaving shortly (amicably) and I have the chance to hire someone really good for 32k for a 4 day week. She would really take the pressure off me and allow me to grow the business. My other part-timer is a whizz at marketing as well as bookkeeping. The entrepreneur in me is telling me to offload the technical stuff and concentrate on growing the business. The accountant in me is reminding me of the drop in income I'll have to take. I have some money put aside for this purpose but it is still a scary prospect. (On the other hand, if I did take her on board, I would be even more motivated to up-sell to current clients and find new ones as well as ensuring I get paid a good fee.)

I notice that a lot of people on AWeb make a nice living from working from a home office with none of the cost or stress of hiring staff and paying for an office. Has anyone gone the other route and tried to build a practice first and then get enough clients.

Thanks for your advice as usual.

cardi

Replies (16)

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By mikeyban
29th Mar 2014 20:48

Turnover is vanity.

What's the profit and reality of your current practice?

I work from home in exactly the environment you mention ...

Tell us the bottom line and we can advise!!!!

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Replying to Justin Bryant:
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By Nigelrstarkey
01st Apr 2014 12:24

Expansion of Practice

Mikey,

Thank God the whole economy doesn't think like this ---- we'd still be in caves!  I trust you never call yourself a small business advisor.

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By Steve McQueen
29th Mar 2014 21:03

Yes
I did.

I've written about it often, just follow my historic posts.

I would have said I'd take the safe work from home route a couple of years ago when I got rid of the last elephant, but I find myself doing the same old stuff all over again for the second time.

October 2012 GRF = £0
March 2014 GRF = £1.8 million and counting

Steve

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By Cardigan
29th Mar 2014 21:26

Profit
I work about 32-35 hours per week (due to family commitments) and the profit is currently about 68k. I'm in business just over 2 years.

If I take on the new person, profit will initially drop to 45k.

I decided about a year ago that working from home was not for me. I'm much more productive in the office. I also want cover for when I'm not in the office.

I would love a crystal ball to see if I'm crazy or not. It's seems like I am going against the usual bootstrapping and I was wondering if anyone else took the risk and it paid off.

I'll check out your posts now, Steve.

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Man of Kent
By Kent accountant
30th Mar 2014 11:53

Well done

@Cardigan - looks like things have gone fantastically well for you in the last 2 years.

I do know, having spoken to some sole practitioners who started on their own and then decided to grow, that they did experience a drop in personal income for a while while they invested in the business to grow it to the next stage. 

The amount and time will depend on how quickly you can grow your business.

There's an interesting thread here which you may find useful:

https://www.accountingweb.co.uk/anyanswers/question/am-i-working-too-hard

Me - happy to go the home working (separate office) route for now with Mrs KA part time and one subcontractor - 1/2 days a month.

 

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By Cardigan
30th Mar 2014 12:35

Thanks for the link @ka. Lots to ponder there. One of the ideas was to raise fees which I am actively doing. We are doing far more work than clients think we are so we are in the process of restructuring our client offerings.

And thanks for the feedback. I'm never sure whether I am doing well or not.

As usual it's great to know there is someone listening!

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By BusinessEngineRoom
30th Mar 2014 14:09

Probably obvious but...
Have you considered a simple options appraisal to help you decide?

Option A - replace on like for like basis, take into account restructured offering (and any clients you might lose as a result of this), learning curve for new member of staff, etc, assume your growth to date

option B - invest in capacity to develop business, likely up-sale as a result of the new skilled member of staff, likely return on your business development time. What is the extra income you think you will gain? Is it worth it?

This is what you would recommend your clients to do when they ask you this question, right?

Good luck

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By petrbajer
30th Mar 2014 20:54

Interesting reading

Working 35 hours/week and make 68k? What a wonderful world is UK for accountants :-) PB, Czech republic

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By Steve Holloway
31st Mar 2014 08:10

Most don't do that well Petr!

The OP looks like they are getting most things right .... there are many, many more doing the same hours for less that half that profit I suspect!

Thanks (1)
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By Cardigan
31st Mar 2014 21:30

35 hours of hard work
Just to clarify, I work very hard for those 35 hours. Knowing that I need to be home at a certain time, gives me super-focus. It can also be stressful when I can't finish a task before i leave.

I also work a few hours more in the busy season. Getting staff on board allowed me to earn more than I could have on my own.

While it's good to get a reality check and realise I am doing ok, I am forever comparing myself to some of my clients - doctors, lawyers and other professionals who are earning multiples of my profits.

I know my original post was more of a rambling post than a question. (There was a glass of wine involved!) I'm really looking for advice from those who took on staff and built a practice. Is there anything you would have done differently?

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Replying to Rweaver:
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By David Winch
01st Apr 2014 10:34

How Smart Can You Be?

Cardigan wrote:
Just to clarify, I work very hard for those 35 hours.

Does your business/charging model allow you to work 'very smart' for the same or greater profit too?

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By Maslins
01st Apr 2014 08:22

Gradual process, but

We've now got 3 "proper" staff (4 including me).  I think it's vital to do it gradually.  Take someone on full time too early and you'll find yourself struggling to give them stuff to do.  Where possible, get someone who'll be able to increase their hours over time (fully aware many potential employees won't want this).

Once you've got to staff member 3-4 it's less important, as taking on another full timer is less of a jump.  The first employee is the hardest as it's the biggest adjustment, but it sounds like you've already done that so congrats.

As others have suggested, read that other thread.  What do you want?  Some posters on here absolutely love accountancy, so tend to want to remain very hands on.  Others love running a business which just so happens to be in accountancy, so tend to want growth, systemisation, delegation etc.  No "right" answer.

If you believe the news, the recession is behind us and we're returning to boom times...so possibly now is the right time to make that slightly speculative recruitment and hope you can capitalise on any economic growth?!

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By Sloane Walker
01st Apr 2014 14:24

Well done

I must congratulate you, you have grown to a really good turnover in just two years.  Based on your growth, you must be good at finding and engaging new clients.  If you can afford to take on a full timer I would say go for it.  When you have them trained and doing things your way, you can then take on more work and eventually have a real business.

To me a 'real business' is one where it makes money and you don't need to be there every moment of every day.  Otherwise it's just a well paid job.

You will drop some income, however, you will have a lot more time to pick up new work, and based on your growth so far, you should be able to cover the full timers annual wage within 6 months.

Can you share your two top tips that have helped you grow so quickly please?

Thanks (2)
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By FRAS
01st Apr 2014 15:00

getting a Partner

What do you think if another junior partner was to join you with a client base of £80k solid bookkeeping & payroll clients with income of £80K?. As the Senior partner you can keep over 60 % and 40 % going to the new shareholder. Can you consider something like that?

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By Cardigan
01st Apr 2014 21:00

Working smarter

Haha @David Winch. I was going to say that I work hard and smart but it sounded a bit strange. :)

I try my best to work "smart" and have good days and bad days. With the new team member on board, there is definitely room to work smarter.

Thanks @SW and @Maslins. I do appreciate the advice and encouragement.

@frusere, I worked as a salaried partner for some time in a previous life and I couldn't go through that again! Maybe I will change my mind over time.

As for my 2 top tips on growing the practice...

* I do a lot of part-time financial controller work which brings in large fees. 90% of the work is payroll and bookkeeping which I delegate. The last 10% is the most important work and that is keeping the client informed of changes to tax law, keeping them on the right side of the taxman and coming to the client with ideas. I am also the person they bounce ideas off of as well as a shoulder to cry on. I could just provide a bookkeeping and payroll service but I make it much more valuable to the client by being their financial controller too.

* I work on my website constantly and I am very active on social media. My Google Ranking is quite high, which is mainly due to having a Google+ profile. I use my website and social media presence to keep me present in the minds of clients, potential clients and others, as well as to show that I know what I am doing! Quite a few new clients were people I had met at networking events previously, who had seen my posts on LinkedIn etc and had happened to be looking for a new client at the time.

Thanks as usual for the support. I am a terrible worrier!

 

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Replying to KungFuKipper:
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By FRAS
01st Apr 2014 22:47

Excellent

You are so smart and I wish you the best Cardigan.

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