My Week: Right Wall

FirstTab
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Hello folks. Once again Trump kept me entertained. I think this week was his best worst act. As you know, POTUS retweeted videos about Muslims attacking non-Muslims without verifying the facts or the source of the videos. Well done PM for making it clear that it was wrong of POTUS.

Unlike Ms. Markle, my thoughts were about survival as a small practice owner. Is it all worth it? Can I do something better? Is there anything better? Over the last ten years was my ladder leaning against the right wall?

The Beginning

It has been over ten years since I left the world of employment. As you know, I started without practice experience and clients.

I have made many mistakes. Some of these were costly. I learned from them, and I moved on. The practice has grown. I am far from being well off, but I am okay. Having said that, as a senior level employee, my income would have been higher.

Returns

Over the week, I took a broad view of my last ten years or so. That was a downer. I will lay it on the line. It is the comparison of effort and returns that do not balance in my mind. The return (MONEY), could be significantly better. I am left thinking do I want to feel the same way in another ten years?

Investment

Another way, to look it is to see the last ten years as an investment and progress from here. I think there is something in it. With my experience, I can make better decisions. I feel, and I am more in control now.

The thought of taking on a part-time job did enter my mind. FT store would be open the regular hours with Q. The reason behind the thought is to keep my options my open. The small practice world has become increasingly competitive. I cannot see it getting better. Are advisory services a way out?

Change yours truly

For survival and success, it is important that I am open minded and adapt. In the last five years or so, I have become fixed in my views and cynical. There is room for that part of me. It has some advantages. At the same time, it is important not to have a closed fixed mind. Good ideas would be ignored.

One Basket

It is important to spread the risks. Meaning not to have all the eggs in one basket. Taking on a part-time job would adversely affect the progress of the practice. I will need to think about other ways I can spread my risk, to some extent, without a significant adverse effect on my practice.

Why now?

I would have preferred my doubts to have come to my attention five years earlier. I was too busy trying to make something out of a non-existent practice.

For my sanity and well being, I need to end a positive. I have sound systems, ten years relevant experience, my tax knowledge, and understanding will improve with CIOT, and I have a good office. I can build over the next ten years from a solid foundation that I have created with hard work, my cash, loss of earnings and in private tears.

About FirstTab

bike

Blogs about my week in a boutique practice. My independent channel: https://accountantblog.co.uk/

Replies

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01st Dec 2017 10:06

Seems to me like you just need to stop dicking on, roll your sleeves up and get on with some of the day to day work. If your systems are as good as you say then with 2 members of staff and some hard work theres no reason you cant take home £100k a year.

Thanks (3)
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to MissAccounting
02nd Dec 2017 23:58

I’d say you need high value clients or (more) staff to achieve that particularly if you genuinely mean take home . Not impossible but according to AVN the average gross (not take home) profit is around 68k with its members

Thanks (1)
to stevo5678
03rd Dec 2017 17:09

"...average gross (not take home) profit is around 68k..."

That is pants.

I'd go and get a proper job if that's all I was earning.

Thanks (0)
to stevo5678
05th Dec 2017 09:14

stevo5678 wrote:

I’d say you need high value clients or (more) staff to achieve that particularly if you genuinely mean take home . Not impossible but according to AVN the average gross (not take home) profit is around 68k with its members

£68k?!?!?!?!

That says a lot about AVN to me, which is that its a load of crap!

Thanks (0)
02nd Dec 2017 11:47

@FT - do you measure your chargeable time each week/month?

That is a good guide to how the practice is performing in terms of revenue and profit levels when you are (or should be) the main revenue generator.

Given the size of your practice your support staff should be just that - doing the lower level grunt work so that you can review, finalise and communicate to clients.

This is how I operate and I would have thought that our practices have a similar set up in terms of available resources.

I look to achieve a minimum of 25 chargeable hours each week. Sometimes it is over 40. This does translate into revenue and profit.

I've said it before - you need to devise a business plan and stick to it rather than flitting between different approaches.

From your blog posts I would anticipate that your do not use your time efficiently or cost effectively.

Thanks (2)
02nd Dec 2017 16:30

You have already spread your risk. By having lots of clients, none of which are more than say 5% of your total fee income.

Thanks (3)
By Locutus
04th Dec 2017 00:55

FT - I get the impression that you spend a great deal of your time on what you regard as "added value" matters, such as marketing, building systems, practice development, changing software, changing office, etc. As the business owner, you also have various administrative matters to deal with.

You could probably afford to do all of this full time if you had 5+ staff members productively working for you. But you don't.

In a micro practice, the business owner needs to be prepared to do a significant amount of chargeable work (i.e. work that clients are prepared to pay for). Otherwise, you need to be prepared to earn a lower amount until your practice grows to a sufficient size.

Thanks (2)
04th Dec 2017 12:07

The way I understand it, is that you want a practice where you don't actually do any of the work.

That's fair enough - but I think you'd need quite a large fee base to afford yourself that luxury, and it doesn't seem like you're anywhere near that at the moment.

If you have enough time to take on a part-time job, then should you really consider whether you need to be paying staff. You could just do the work yourself.

Also, if you were to take on a part time job, what would your staff think? If I were them I'd be looking for another job for fear of losing mine.

As others have suggested, just knuckle down and do the menial work, like most micro practice owners do.

Thanks (2)
06th Dec 2017 17:23

The average AVN member is averaging 68K gross? I'd suggest you better quit being an AVN member!

I agree with MissAccounting, Kent & Loctus, you need to be doing more chargeable work as a micro practitioner. There is absolutely no reason a small practitioner with 1-2 members of staff can't make in excess of £100k (before tax) without working an unhealthy number of hours.

Don't believe the hype that to grow your practice you have to work on it and not in it. While you're small you need to do both if you want to make money!

20hrs chargeable a week absolutely minimum would be a good starting point at your size. That should generate at least £70k-140k in turnover depending on your location/ability. 46 weeks x 20hrs x £75-£150 p/h (you should be able to achieve a higher charge out than this). That should be pure profit if you have 2 members of staff as their chargeable work should at the very least cover all the business costs.

Thanks (1)