Chairman of the Tax Advice Network and BookMarkLee
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Do new practices need an office?

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30th Apr 2012
Chairman of the Tax Advice Network and BookMarkLee
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Many new accountancy practices start-up at home. Is this as good an idea as it sounds? asks Mark Lee.

It’s obvious isn’t it? Starting from home keeps overheads to a minimum and is the easy way to start up in practice especially if you have yet to leave your previous job. I agree. But there are other factors to consider too.

In this article I intend to explore some of the key arguments for and against starting up at home by highlighting some of the other options.

Physical vs virtual

While you may not need a physical office away from home you may still want a virtual one. Most cities have facilities that allow you to have virtual office facilities that give your practice an address with more credibility than a residential one.

Virtual offices provide an address for the post and will typically allow you to book meeting rooms just as and when you need them. There are the huge well-known branded serviced offices in almost every city and also some more individual local facilities that can be traced through a quick internet search.

A practical disadvantage though of a virtual office of this nature is the need to visit to collect your post – unless you pay to have this forwarded, which means you get it a day or two later than the sender might have expected.

Another option is to go one step further and to rent space on a short-term basis from a serviced office facility. This will often mean you have a secure room in an office building with its own reception, security and phone answering service.

A half-way house might be to start-up by renting space from another practitioner or in a hub of some sort for local start-up practices.

Alternatively you can arrange for a virtual answering service who will answer your calls as if they were your own reception. They then take messages or transfer calls to your mobile or landline number.

Your own space

I tend to think that most accountants with their own offices did not start-up on their local high street, close to the high street or in a local industrial park. By which I mean these options are probably not ideal options for most start-up practices. The practical reasons being the minimum length and costs of taking a formal lease and of kitting out the office.

It would be interesting to hear from any start-up practices that first established themselves in their own office space on or close-to a local high street or industrial park.

PO Box number

You can of course arrange for a Post Office Box number and for post sent to this address to be delivered directly to your home. This arrangement also has the advantage that you can designate an alternative delivery address for the Post Office if you relocate (home, office or both) within the local area.

Perception

You need to include your business address on your website. What image will your address give to prospective clients? Will they pay any attention to it at all? I can’t answer that – nor can you, unless you ask some of them. What matters is the perception of prospects and clients. You would need to ask some to get a clear picture. As a rough guide it may be more important to established business clients than to start-ups and to pure tax return clients.

An accountant who started their practice a few months back told me that he has found out that his client base of professional people take him more seriously because he has a city centre (serviced office) address rather than a residential one.

The Google effect

Remember the power of Google. I’m not suggesting that prospects will use the streetfinder facility to zoom in to see whether your office is at home or in an office block. But some might I suppose.

I’m more concerned with the search engine optimisation (SEO) issue: These days Google search results show local accountants on a map. Do you want your office to show up by reference to where you live or by reference to the area where you are targeting prospects? If the latter you need to have an address there.

Staffing issues

As a start-up perhaps you intend to work alone initially. Alternatively you may be quite happy for any support staff, colleagues, part-time staff, contract workers or a virtual assistant to visit you at home. Or you may not.

Do you want to limit your expansion and the efficiency of your practice by virtue of your initial desire to constrain costs and start-up at home?

It’s all too easy

These days almost anyone can start a business or an accountancy practice at home. We would like to think that any qualified accountant choosing to do this would have the skills and experience to prepare at least an outline business plan beforehand. That they would have considered the practical, commercial and strategic issues and made an informed decision about where to start their business. Some of the questions posed in Any Answers though suggest that this is not always the case.

One argument I have noted is that you can charge lower fees if you start-up at home as you have lower overheads to recover. This is true but it does rather tie you into servicing clients who are especially fee conscious. And what happens if your business is successful and you need to move out. Will you expect your initial clients to pay more because you now have higher overheads? Why should they care? They will be receiving the same service from the same accountant.

The contrary argument is that by incurring rental costs from the outset you are forced to consider a sustainable business model. This can also provide an added impetus to build the practice faster than might otherwise be the case if you were based at home.

Will you be lonely?

Some people who work at home find it lonely. This can also happen if you have an office elsewhere until and unless you have staff or someone else working alongside you.

Whether you find it more lonely working from home depends on your personality and your preferred approach to working. I quite like it. But I do notice that I tend to be more active on social networking sites (especially Twitter) on the days I work from home.

The level of contributions to AccountingWEB by way of comments and Any Answers by some accountants suggest that they too may be ‘lonely’ at work. My point is that, these days, there are ways to overcome the issue. You can also attend more face-to-face networking events and build relationships that can replace those you used to have when you worked in a larger practice.

Commuting

Working from home saves the cost of commuting – whether by car, train, tram or bus. It also means no time wasted commuting. But maybe that is productive time for you. For example, when I was in practice I did all of my professional reading on the train. Other people use the time to gear up and plan the day ahead and to unwind before reaching home.

Will your saved commuting time convert into more productive billable time? Or will it give you more non-work time? As part of your start-up plan you need to decide how many hours a day you are prepared to spend working.

Working hours

Some people like the structure of having fixed office hours (as far as possible) and find this discipline easier if they work away from home. Similarly some people find it easier to focus on work issues in an office environment that does not contain the distractions of their home.

Then there is the issue of whether you want clients coming to your home – at all hours (as they know you’re there)?

“Accountancy House”

I suggested above that office facilities could give your practice an address with more credibility than a residential one. This may or may not be relevant and you may want to start-up from home regardless.

What you might choose to do then is to give your house or flat a business sounding name and to include this in your address. So, for example, instead of being Joe Soap, Accountant, 5 Beehive Lane, your address might become: Joe Soap, Accountancy House, 5 Beehive Lane.

Questions

Did you start-up at home? Are you still based at home? What other issues do you recommend that start-up practices take into account?

Mark Lee is consultant practice editor of AccountingWEB and writes the BookMarkLee blog to help accountants build more successful practices more enjoyably. He is also chairman of the Tax Advice Network of independent tax consultants. 

Replies (19)

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By johnjenkins
30th Apr 2012 16:47

Another good article Mark.

You certainly are on 3 weetabix a day.

I started from home with no money, which is the total opposite to the advice I give.

These days, in order to build a varied client base business you need at least one years break even expense money behind you. The premises do not have to be large but a high street address, or similar, will certainly help. If one of the family can answer the phone, even just at peak times, this will also enhance status. Then it's just a case of plodding on.

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Replying to johngroganjga:
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By david5541
01st May 2012 13:05

its a cruel business choice

[quote=johnjenkins]

You certainly are on 3 weetabix a day.

I started from home with no money, which is the total opposite to the advice I give.

These days, in order to build a varied client base business you need at least one years break even expense money behind you. The premises do not have to be large but a high street address, or similar, will certainly help. If one of the family can answer the phone, even just at peak times, this will also enhance status. Then it's just a case of plodding on..........

I AGREE WITH HINDSIGHT THERE IS ALWAYS A BETTER PLAN AND STRATEGY but all micro businesses such as newly practicing accountants operate in a very competitive market place whereby generating cash flow is the most crucial "operational strategy" since 30 % of startups go bust in the first three years.

 

Then there is the professional/personal cost/benefit figure to consider; local accountants with whom you previously had a raport will isolate themse;ves from you so you will loose your professional reputation/level of acheivement in your career in return for the advantages of total self reliance and the self confidence that grows out of it where all of your own ideas can impact on your business.

 

From outset all newly practicing accountants would relish being able to "hold out" just for premium professional clients instead of labourers and subby's who are on the phone everyday, but in a new enterprize you need to penetrate an existing market rather than think you create a new one.

 

i learnt all this after the event, made the mistake of trying to help subbys and taxi drivers, one who even had a tax enquiry(all whilst I worked to pay my bills)

 

a city centre location(or expensive serviced offices) might appear attractive, but its can only be justified if you hope to poach successfully on leaving your firm.

 

the choice is always a business choice not a strategic choice for startups.

Now I have use of an office in shared facilities the benefits of it far outway the costs but the costs dont justify the business model-types of client.

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By abdullah gora
30th Apr 2012 17:24

I had a very low client base

I had a very low client base for years.

Then a couple of months ago i changed the name of my business, incorporated and and set up on a busy commercial road; the clients and fees have quadrupled! without wanting to sound my trumpet, its the age old addage, "you reap what you sow".

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Della Hudson FCA
By Della Hudson
30th Apr 2012 17:37

Best of both worlds

We have bought an old post office on the village high street which also happens to be the A370 from Bristol to Weston-super-Mare. I'm currently looking out at all the cars waiting at the traffic lights and reading my sign whilst I have all the conveniences of working from home with no commute.

I have a virtual PA and answering service and subcontract other work locally although there is space for a second office in the future.

I generally enjoy the solitude with occasional visits from clients and others. Social media is there if I need more interaction or I can just wave at passersby. With all these benefits I'm still considering a virtual office in the City centre for the address and meeting facilities.

Not everyone is as lucky so I would recomend that startups charge fees that will allow them to move into offices in the future.

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By Jimess
30th Apr 2012 18:12

Started at home

I started my accountancy practice at home purely because I had zilch clients to start with and needed to build up the client base.  However I soon found that storage became a problem and because I was working at home some clients thought it their privelige to contact me at any old hour of the day - I once had a client turned up on my doorstep at 11.30pm clutching a carrier bag full of books and invoices and wondered why I suggested that I would call him the next day to arrange a more suitable time to go through them with him. Three years ago some offices came up in the local high street that were not too expensive and right opposite banks, post office, car parking, market.  I just had to go for it.  It massively increased my client base as I am the only accountant with a presence on that high street, but if I am totally honest - despite all of the obvious advantages of the office and despite the fact that I get to "go home" at the end of the day, I still preferred working from home.  I don't think it would be viable now unless I downsized my client base by a huge degree, but I still hark back to the days when I could work the hours I wanted when I wanted and not feel obliged to open the office doors at 9am every day.  I felt I had freedom working from home but I doubt I could have grown my client base to the degree I have at the office and I do have some lovely clients that I really enjoy working for. But - deep down I do feel that the office is a huge responsibility.

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By Ken Howard
01st May 2012 10:34

Double edged sword

I started at home in the spare bedroom, but experienced the same problems, i.e. clients turning up on the doorstep at all hours - especially tradesmen at 7am! I even got a phone call on Boxing Day from a particularly stupid client.  

As a one-man band at the time, I only needed a very small office and found that most were far too big and expensive.  I settled on a small shop front at one end of the town's main shopping street opposite a car park - it used to be a small sweet shop.  Very cheap and big enough for desks, filing cabinets, etc.  I have to say that I got several good quality clients solely due to the shop front, signage, etc.  Trouble was that at the same time, I got harrassed daily by the local OAPs, salesmen, charity collectors, drunks and druggies, and every man and his dog wanting freebie advice.  I soon took the decision to have a "locked door" policy and kept the window blinds closed, just to keep out the time wasters who clearly thought it was a drop-in centre!

I think that if you're going down the "shop front" route, you need to have a receptionist or similar to fend off the time wasters and for you to have a separate office, above or behind, where you can do the work without interruption - that obviously increases the costs!   

I'm now trading steadily and not necessarily out looking for new customers, so I've got a small office suite just down the site of the main street, with limited signage, and no big shop window.  It's worked remarkably well in being hidden enough to avoid the time wasters, yet central enough, and with adequate parking outside, to be convenient for clients.

 

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Replying to DMGbus:
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By david5541
01st May 2012 13:09

shop front

Ken Howard wrote:

I started at home in the spare bedroom, but experienced the same problems, i.e. clients turning up on the doorstep at all hours - especially tradesmen at 7am! I even got a phone call on Boxing Day from a particularly stupid client.  

As a one-man band at the time, I only needed a very small office and found that most were far too big and expensive.  I settled on a small shop front at one end of the town's main shopping street opposite a car park - it used to be a small sweet shop.  Very cheap and big enough for desks, filing cabinets, etc.  I have to say that I got several good quality clients solely due to the shop front, signage, etc.  Trouble was that at the same time, I got harrassed daily by the local OAPs, salesmen, charity collectors, drunks and druggies, and every man and his dog wanting freebie advice.  I soon took the decision to have a "locked door" policy and kept the window blinds closed, just to keep out the time wasters who clearly thought it was a drop-in centre!

I think that if you're going down the "shop front" route, you need to have a receptionist or similar to fend off the time wasters and for you to have a separate office, above or behind, where you can do the work without interruption - that obviously increases the costs!   

I'm now trading steadily and not necessarily out looking for new customers, so I've got a small office suite just down the site of the main street, with limited signage, and no big shop window.  It's worked remarkably well in being hidden enough to avoid the time wasters, yet central enough, and with adequate parking outside, to be convenient for clients.

same here, maybe a high street/traffic lights shop front in the next step

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By scotty4196
01st May 2012 10:52

Home, office, home again

Good article. I started at home and am now in my second office - which is a small out of town 'shop'. I have picked up more more clients, more often since I moved here - but if I am honest I think my next move will be back home in a year or two.

I have a double garage and it would make a good sel contained office. I've worked hard to build the practice as much as I can but to be honest I seem to be working a hell of a lot harder than I was 3-4 years ago (at home) yet don't seem to be much better off - just more stressed!

My 'shop' appeared good value but it costs a fortune to heat, rates will be payable soon once the relief period finishes and I get my fair share of timewaters popping in whenever they wish.

I would say it all depends on your longer term ambition. I thought I wanted a chain of accountancy 'shops' and earn my millions that way but perhaps I might be better off moving back home saving myself a fortune each month and cutting back on the clients I don't really want to work with. Perhaps I lack ambition.

Has anbody else been there and back again - worried I might be making a mistake!

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By johnjenkins
01st May 2012 11:13

@scotty

most of us are working harder these days for no further reward, and it will get worse until Euroland stop taking us for mugs and we get a PM with a backbone.

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By Steve McQueen
01st May 2012 11:35

@ Scotty4196

Been where you are my Friend!

Started straight into an office (I nicked a batch of clients from my former employer) over a chip shop in the subburbs of a northern town, grew like wild fire for seveal years thinking that I was going to make millions from a chain of accountancy businesses across the country, then realised that I was actually taking very little more out of the business when I had 70 staff and huge overheads and 90 hour weeks, than I was when it was just me over the chippy working 32 hours a week!

I made the decision to sell up and I've been doing other things since (5 years ago), but if I go back into accountancy (which I would like to do at some stage as I miss it), it'll be as a truely self employed person with enough work for just me (and maybe one other assistant) with very tight overheads.

I know I need a place away from the house to work, so I would either get a serviced office space or a small place over a shop (about £5k all in a year in my neck of the woods for either of these set ups). If I didn't, the wife, the kids and the cats would all drive me nuts!

 

Steve

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Jennifer Adams
By Jennifer Adams
01st May 2012 12:36

Working from home = flexibility possibly lonely

I find that I do more hours of work working from home, it is easier to concentrate and I can use my time much more effectively and be flexible. I can take time off in the day and go shopping etc out of busy times - difficult if you have to man a high street office.

 I was interested in the comment re being ‘lonely’ - sometimes its just me and the cats! Husband often works away. I see the postman every so often and see my neighbours go off to work at 7.30am to do battle with the traffic.

But if you do work from home and feel that you go days without seeing anyone there are such things as CIOT meetings where you can meet with other accountants/tax people  - in my area there is SOSCA (Society of Southern Chartered Accountants) held at the lovely Athelhampton House.  If you are a woman join Women in Business or the Business and Professional Women group.  Get clients/meet other business people at the local BusinessXchange Breakfast meetings or join the Chamber of Commerce.

This discussion about whether to go all out and get a high street office comes up in Any Answers periodically and on viewing comments the consensus of opinion seems to be that it depends on whether there is capital available and what type of client you want. It also depends on how you want to get your clients - again past Any Answers text invariably states that there are just two methods - either purchase of a block of clients (difficult - you have to be there at the right time etc) or by word of mouth - hardly any walk in off the street.  I too have friends who started in an office but found problems as detailed above and they have given up the office to work from home.

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By johnjenkins
01st May 2012 15:34

@David

Normally there is a choice between becoming a partner (eventually) where you are working or going it on your own. It doesn't matter what business you are in, enbarking on self-employment is a "culture shock". You have to get the work, find somewhere suitable to do it, do it, then get paid. I'm sure an IT bod could come up with a flow chart? Sometimes hindsight can mean experience. I certainly wouldn't go back to working from home although I do work at home. Even then I prefer to stay a lot later at the office. These days I prefer to keep work and homelife seperate. I do accept that in the early days, sometimes the choices are limited, that's why I always advocate that you have a years money behind you.

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By dbowleracca
01st May 2012 21:05

Only two ways to get new clients???
@JAADAMS, I'm not sure which posts you have been reading, but there are many more ways to get new clients than the two you mention - buying a block of fees or word of mouth.

What about direct mail, email marketing, website, telemarketing, seminars, social media, networking and advertising?

I would think the last way you are going to get new work as a startup is by word of mouth, and buying a block of fees would be unaffordable for the majority of startups.

If I was starting up, I would get an office if I could afford it, and use direct mail, networking and a good website coupled with telemarketing and email marketing and social media to get my clients. And then I would make sure they all got world class service and ask them for referrals, and then repeat the same process with those new clients whilst continuing with the marketing I started with.

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By Hansa
03rd May 2012 12:00

Well presented synopsis - thought provoking too!

The article covered the most important points that need to be considered.  At the risk of being a bore, my own experiences (far more risky than that of most start-ups) might be helpful.

In the late '90's I decided to move from Insolvency work to offshore, and felt that the UK was not the best base for this.  I moved to Gibraltar, buying a flat and renting a 2 room office (£600 per month).  No clients at all in the first 2 months. and slow growth in the first 9 after which things started to take off.

Why did I take an office?  1. I would not want clients/the world at large having my private address 2. Virtual offices are usually obviously just that.  3. Clients like to see a real presence and anonymous, empty,  shared meeting rooms are again rather obvious.  - Most clients I think expect their accountants' to appear reasonably prosperous/successful.  

I have subsequently moved more than once (to different countries) and each time the office has been a priority for the same reasons.   

More recently we have sought to establish offices in more than one country which has lead to being in the odd position of having more offices than staff at times.  We now have a mix of virtual offices (which clients are not expected to visit) and real offices if only lightly manned in some cases.    PO Boxes are also useful.  

With regard to the fee issue, (ie lower fees by working from home) ... I never subscribed to this in that there is in my opinion little point in leaving safe (?) employment only to engage in a race to the bottom in fees.  I believe that before anything start ups should calculate the amount the hope/expect/need to take in drawings, multiply that by 3 (to get the notional charge out rate) and, if fixed fee, calculate those fees on that rate x estimated hours.  Anything less suggests a "freelancer" rather than a "practice" which will require "reinventing oneself" later when overheads increase.  Yes, some cheapskate potential clients might be lost (but would they really have been worth it?). - better in the short term to take on work as a sub-contractor as this can be dropped as your client base increases.

Finally, from my own experience, I would suggest that at least 6 months reserve of living expenses should be available as I cannot see any new practice generating sufficient fees to pay it's way in less than 9 months.

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By whithys
08th May 2012 14:53

After many years working in high street practices, I set up on my own over three years ago and purpose built an office in the back garden.  I have the best of both worlds, the flexibiity to come and go as I please, an office to see clients in without disturbing the family and a dedicated place for all the files, etc.  It is also more relaxed for the clients and you can build a proper relationship with them, something I was unable to do in a large practice. 

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By johnjenkins
09th May 2012 09:01

@whithys

Although I can see where you're coming from I doubt very much if your business will reach its full potential, but then you might be happy with this situation. There is a lot to be said for keeping the turnover of a business to a one man manageable level, especially with the crap that we have to put up with from the "powers that be". I wish you all the best.

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By mutaf1976
13th Jun 2012 16:26

Agree with David Bowler

Hi all,

I've started my practice while i was working full time for insurance company in order to build up customer base them time came and left full-time job for a part-time one just to be able to pay absolute minimum expenses while i was building my business. I also added a commercial insurance service as well as accountancy. For almost a year, i worked from home but in my experience it was difficult to concentrate and also realised that having a small serviced office which is close to my client base could be a good idea. I have moved to my very small office 3 monhs ago , I will be using newspaper and leaflets to get more clients but best way is undoubtly referrals. I believe that differentiating my business is a good idea as if a business/ person do not take up the one service, i can always offer the other one. I am keeping all the  costs minimum and slowly building my business. I will be the biggest one shop accountancy & insurance business within my community.

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By johnjenkins
14th Jun 2012 09:43

@mutaf1976

I tried doing Insurance to supplement my Accountancy business years ago (Equity and Law - then AXA) but found the two conflicted with each other. Now I prefer to use a local comapny to deal with mortgages and the insurance side. If your Accountancy side takes off will you refer?

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By James Bingham
28th Oct 2015 13:26

Trying to find a freelance account/boutique firm

I am not sure whether this forums supports this sort of request, but having read the posts there could be something of interest to members. We are looking for a boutique accountancy/compliance company (who works in a serviced office in central London, preferably Mayfair), who might be interested in using our office space for their practice while doing one day a week of work for our company. Any suggestions of how of interested parties or how to go about finding someone?

 

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