How to build a £100m practiceby
Returning to the contractor accountancy market with Dolan Accountancy, Simon Dolan reflects on the key ingredients for his success, the threat of IR35 changes and spreadsheets.
Back in 2014 Dolan sold SJD Accountancy for £100m. It’s enough to never think about accountancy again – not that he wanted to: “When I did the deal, that was the last I ever wanted to see of accounting, that's for sure. What’s the motivation?" said Dolan. "It’s far more fun to do new things – or nothing.”
It’s how he got the ‘Twitter dragon’ moniker. Once SJD got to a size where he wasn’t needed for the hands-on stuff, Dolan turned his attention to other ventures, such as an aviation business jetting premiership footballers to a PR company.
But his days in the profession weren’t over. Two-and-a-half years went by and he started to think that maybe there was still something he could do.
As it happened, some of his former SJD colleagues started thinking the same thing. “I got together with a couple of them and asked: 'do you fancy doing something again?' They bit my arm off. That was it and away we went.”
Three years later, Dolan was back. Unperturbed by the government’s emerging IR35 legislation, he is again focusing on the contractor market with Dolan Accountancy.
His new firm is already growing rapidly. Dolans is gaining 50 clients a month; a number that supersedes his “ambitious” projections of 30 clients a month.
This growth level cannot be attributed to a spark of enlightenment during his three years away from the profession. "I know what works so we just did the same old, same old," he said. It harkens back to the knowledge of the market he gained from SJD Accountancy’s kitchen table beginnings.
“If you were somebody new starting up in that particular sector, you'd try all sorts of different things and then eventually you might happen upon what works,” he said.
So, rather than “gluing things together” like what Dolan originally did with SJD, where the firm had three or four databases, he was able to design from the ground up.
“We've actually been able to design a much smoother process and a much more robust system so we can afford to do it cheaper than we used to, and we now do it a lot better than we used to,” he said.
Not everything in the profession is as Dolan left it, though. SJD Accountancy was quite famous for running client spreadsheets rather than having a specific bookkeeping tool. Things have certainly changed on that front, as the government’s shift towards tax digitalisation may sound the death knell for the lowly spreadsheet.
But for Dolan, the Excel spreadsheet worked. “The spreadsheet system cost us nothing," he said. "When you've got 10,000 clients or when I sold we had 14,000 clients, you think from a client's point of view and from our point of view: is it going to be worthwhile rolling out a new online system? I've seen people do it in the past and make a complete hash of it.
"If you've got 14,000 clients that you have to shift over onto a new system, almost all of which are happy using a spreadsheet, it's a huge amount of money for actually at that point, very little benefit. That was why we never changed over. Not because of it wasn't the right thing to do, but it wasn't the right thing to do for a business of that size."
Oddly enough, SJD’s spreadsheet reliance actually contributed to cloud accounting innovation. Ed Molyneux was a client of Dolan, but he was so hacked off with the spreadsheet that he wrote the FreeAgent software, laughed Dolan.
With the blank canvas of Dolan Accountancy and the shift within the profession towards cloud accounting tools, Dolan felt it was a bit outdated to rely on spreadsheets. “So we went down the route of using FreeAgent which is a nice end to the whole Ed Molyneux story.”
Similarly, the threat of the government’s clampdown on off-payroll workers within the private sector could provide further headaches for his contractor-focused firm, but Dolan is not too concerned. The threat to contractors has been a constant thorn in his side since IR35 was first introduced:
“Every Budget after that you could see IR35 wasn't working and everybody thought the business was going to get decimated,” he said.
If the public sector clampdown of contractors is replicated in the private sector, Dolan believes the government will have to be careful as there will be a lot of “unforeseen consequences for small companies”.
“What the government fails to realise is there are a sector of people within the marketplace who are very happy working as contractors. It suits them really well. They are self employed – not in the legal or tax sense but in the real sense. Therefore they should have some sort of tax break because they are not employees and don't have employee rights and don't want employee rights. If the government gets this wrong it's certainly going to be a problem across small businesses as a whole."
He added: “It is a worry but it is not affecting us now. And let's face it, whatever happens, even if they outlawed limited companies entirely, people will have to have a different form of working.”
The key element for any practice – customer service
So, how do you build a £100m practice? Undoubtedly, the accountancy landscape has changed since Dolan’s last foray, but there was one basic tenet from his days at SJD Accountancy that’s essential and that’s to “make the clients' lives easier”.
For anyone hoping to replicate his approach, Dolan reiterated: “Accountancy is a customer service. As much as people used to think we provided a commoditised product and as much as you could see parts of accountancy going that way, you're still dealing with an individual and you're dealing with their money. I've always felt right from the early days that the service was by far and away the most important thing.”
As someone who made the most of spreadsheets Dolan was unsurprisingly sceptical of firms using automation to cut the bottom line. This, he said, leads to a production line which becomes disjointed from the client’s point of view.
“So the basic theme that runs through SJD and which I started off again with Dolan accountancy is as boring and old-fashioned as it sounds: it's getting the customer service right. When you do that the business works.”