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Fees to staff ratio

300k fees and 5 members of staff

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What do we think about £300,000 fees with 5 full time members of staff not including the partner? To me it seems a low fee level to support 5 full time employees and earn a wage for the owner, I can't see the payoff being much more than a well oiled sole practitioner with no employees. 

Replies (14)

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By Calculatorboy
18th Oct 2020 22:36

Depends on level of 5 employees, if it its 30k per employee , its probably ok , owner will get 150k less overheads

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By Andy556
19th Oct 2020 00:01

I'd say that's below average from my experience but still workable.
Depends if the staff are experienced or trainees really.
I usually work to £125k per experienced staff member.
I'd hope for better than £300k for 5 staff but if the partner doesn't need to work to get the same income as a sole practitioner then that's what they might be looking for.

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By Paul Crowley
19th Oct 2020 06:12

Is this a practice you are looking to buy?

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By OldParkAcct
19th Oct 2020 08:36

It seems low, but depends on what staff are paid and what work they are doing. If that's for a payroll/bookkeeping firm then ratios are very good, if its for a general practice then would expect it to be much higher. When I used to have staff the target was for them to bill between 2-3 times their salary.

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By wilcoskip
19th Oct 2020 09:50

Does seem on the low side, and may indicate that the practice isn't making much/full use of technology.

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By JD
19th Oct 2020 09:57

To make a judgement I think we need a little bit more information on the level of the 5 Staff, or go old school and multiply the wage bill by three.

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Slim
By Slim
19th Oct 2020 10:55

To give some background the practice is headed by one person who is looking to retire, he contacted me to see if I was interested.

While I am not seeking to acquire I said I would think about it, from an investment payback point of view buying fees doesn't seem all that bad but that doesn't take into account all the work I'd have to put in.

There is one admin, one bookkeeper/payroll and 3 who do accounts prep and tax returns. I'd have to guess at this stage but I say total staff costs must be in the 175,000 region. After overheads I think he's be very lucky to clear 100,000, actually I am sure he said he uses IRIS so he would be lucky to clear 90,000.

I suppose if he is hands off and it runs itself it's not bad.

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Red Leader
By Red Leader
19th Oct 2020 10:58

As said, a well run sole practitioner with no staff and working from home could make profits of £100k.

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Glenn Martin
By Glenn Martin
19th Oct 2020 15:27

You would need to see the numbers better it does seem low, unless as others have said he does not put much time and it runs itself, and he gets £100k per year.

It could be that his fees are just low though,

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By JD
20th Oct 2020 10:12

As others have said looks low, but that is also your opportunity.

However, be careful to not underestimate the amount of management time transitioning the clients, inviting the staff to adopting your systems and processes and so on, unless of course you intend to leave everything as they stand now or one of the more senior individuals can step up and cover some of that for you.

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ALISK
By atleastisoundknowledgable...
20th Oct 2020 10:30

I have turnover of c£200k with 2.5 FTE plus me, I spend about 50% of my time on client work, so I guess that’s 3 FTE.

He’s a little behind me on the income/e’ee ratio and I undercharge / over service.

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Slim
By Slim
20th Oct 2020 11:55

Thanks all for the replies. It is really interesting to see how it compares with what others achieve.

I'm a bit wary which is why I haven't given the chap the third degree. I used to work for an accountants who were constantly on a buying spree, even though they had decades worth of experience in buying they were pretty rubbish at actually making it work. We ended up with so many different systems, different processes, nothing was standardised, clients were dissatisfied /preferred their old accountant etc and left.

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Replying to Slim:
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By Andy556
20th Oct 2020 12:28

Baldwin's by any chance?
That's all I hear about them

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Replying to Andy556:
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By JD
20th Oct 2020 15:13

and to give the clients extra confidence, they have changed their name and even better for us, closing their newly acquired office, just down the road from us.

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