Class of 2019: What new firms can learn from the past
As AccountingWEB prepares to follow a fresh crop of new firms starting out, Della Hudson reflects back on her practice highs and lows 10 years on from when she first opened the doors to Hudson Accountants.
Cast your mind back to the heady days of 2009. The Bank of England cut interest rates to what was then the lowest level ever at 1.5 %. Gordon Brown was still the prime minister, and online accounting – the precursor to cloud accounting – was all the rage for practice trendsetters like Farnell Clarke.
At the same time, a number of new firms across the UK first dipped their toes into practice life. Della Hudson led one of those fresh-faced start-up firms. Hudson and Co allowed AccountingWEB to follow its inaugural year as part of the Class of 2009.
Barriers to entry have dropped further
For Hudson, a lot has changed in those years: she has since sold her practice and has even found the time to write an award-winning business book, the Numbers Business.
In those intervening years, she also has seen a lot of changes that have lowered the barriers to entry for new firms. “Traditionally, to progress in an accountancy firm you would serve your time and then buy into the practice,” said Hudson. “Why on earth would you do that now if you have an ounce of entrepreneurial spirit? Give it a go on your own. It's so easy to set up?”
Many firms have decided to give it a go. Ten years on from launching her practice, the Class of 2009 alumna recently joined AccountingWEB in Bristol to speak to the new class of wide-eyed firms about the challenges she faced as she started out.
Starting in the cloud
The main difference for firms starting now is the cloud. It technically existed when Hudson and Co started, but they didn’t switch until 2012. In comparison, practices today are spoilt for choice. “It's so easy now because Xero and QuickBooks do a lot for their partners and accountants to help them with the traditional stuff that accountants don't typically do,” she said.
Hudson went with Xero in 2013, but for firms starting up now, she points out the choices available of 700-plus apps, and how software like “QuickBooks has really come into its own”.
She wishes she invested in software sooner than she did. It’s something she’d tell any new firm starting today: invest in tech. “I started off doing my accounts on a spreadsheet and my tax returns directly through the HMRC software,” she said. “Each time I invested in software I wished I had done it 12 months earlier.”
And that’s regardless of the software that doesn’t live up to your expectations. She’s been there and made those mistakes. “I did have a wasted subscription. It's not that the product was bad, it just didn't do enough for it to be worthwhile and required too much set up. You will make mistakes.”
The other big change is flexible working. Back in 2009, she decided to go it alone after failing to find part-time work. There weren’t the employment options for her to achieve the work-life balance she wanted.
Faced with the current flexible accountancy landscape, there may be a Sliding Doors version of Hudson living a completely different life in employment. “Today I think would have been able to find that and I would have never had set up my business. It would have been a parallel universe.”
Ironically though, the flexible working Hudson chased became even more elusive as she built her firm. “Initially, when I started off it was only me. So if I was ill or if one of the kids were ill, I worried how was going to cope with deadlines.
“I was desperate to get a member of staff to cover that and during the school holidays. Then, of course, you become dependent on that member of staff. Then you worry about them being ill or poached. The worries are there but they just change.”
The challenges don’t go away
It’s a sober lesson for new firms starting out: the challenges don’t ever go away.
“I've probably made thousands of mistakes over the years but you learn from them and you don't make the same mistakes again. Then you expand and come across other problems.”
“I remember having a thought that everything was perfect and I had the perfect team. At the back of your mind, you think something is going to change - and it did. Somebody had headhunted one of my team. There were a few weeks where everything was perfect”
But the Class of 2019 shouldn’t despair at these challenges. Hudson’s parting advice is the opposite: every firm gets to a certain stage when they have teething problems, she said. But it’s through these struggles that you get to the next level.