Can your new firm be profitable in its first year?
Is it really possible to create a profitable firm within the first 12 months of trading? Will Cole chats with Mark Telford on how he reached the £100,000 milestone in year one and how others can do the same.
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Working as a sub contractor for a few days a week while you build up your practice is not the same thing as starting a full time practice from day one. In fact I did exactly the same thing I had a decent part time wage while I built up my practice which by the way took about 3 or 4 years, and even then I needed a boost to push me over the line by buying fees.
The real question to Mark would be "how much of the smashed targets was attributable to your sub contract work? Or are you saying that you did well over 50k in year one excluding the SC work?
Similarly, whilst I totally endorse the statement that "most growth comes through referral and recommendation" ... there's an interesting follow-up question that doesn't seem to have been asked:
* "How did you identify/pick the groups in which networking is a common feature, and so likely to be productive for you?"
In my experience, there are three broad types of such groups ... a) those for a recognised profession; b) those in a sub-group of the public sector; c) those who are related to each other through familial ties.
All three groups are culturally used to exchanging opinions amongst their cohort - whereas other groups tend to regard each other as competitors (so are not as likely to pass on helpful recommendations), which leaves you relying on ad-hoc referrals (unreliable, unqualified and to which you can only react).
Whereas my suggested 3 groups are more amenable to being pro-actively 'farmed' (they are happy to learn together - providing opportunities to give talks or even host get-togethers).
I probably should have said that my experience is based on targeting reasonable sized businesses.
If you are more interested in the OMB size, then it's harder to be that targeted (although operators within a single trade do often exchange tidbits of info) - so you will be more reliant on the ad-hoc referrals that result (including those that you'll possibly wished had stayed with MDTP)!
I think becoming profitable depends if you are including a salary for self. I was initially a part time sole trader, I was certainly profitable every year, including year one, but frankly with virtually no overheads it is pretty hard not to be; I think at peak my annual costs struggled to even reach £2,000 pa.
"Can your new firm be profitable in its first year?" should maybe more be "Can I earn earn a living and keep the wolf from the door in year one?" because frankly starting a practice from home and with no salary to pay oneself it is near impossible not to be profitable.
The problem is verifying the highly positive claims made by the contributors in this article.
I have a £1m fee bank. It is achievable. You need to follow my model, please get in touch I will tell you how.
You need the right mindset and follow my tried and tested model.
BTW my fee is £500+VAT PCM. You need to show commitment, to make my time worthwhile.
I currently have only one space left.
"You need the right mindset and follow my tried and tested model.
BTW my fee is £500+VAT PCM. You need to show commitment, to make my time worthwhile.
I currently have only one space left."
Please note my comments above were tongue in cheek. I am drafting this response as a result of a PM I received.
I do not offer a service of the nature outlined. PLEASE do give your time and hard-earned money to anyone who offers this service.
There is no precise (formula) way to improve your client base/profits. It is down to you trying out various marketing options and luck.
They are many good articles/books/videos. Most of these are free. Use the free resource. You are unlikely to need anything more than YouTube.
Please do not buy into award winners/shortlisted, Sift's star article writers and practice gurus.
If you base your business development on trying stuff and luck I would suspect your progress is likely slower and less focussed than those that invest in external support and advice.
External consultants can bring much to bits you are not good at and provide some external accountability which is often lacking in a sole director business.
So much of life is based on chance/ luck. Where you are born, the parents you ended up with etc etc. It plays a major part.
I did not say it 100% all luck. What I am saying is accountants should be very mindful of practice advisors and award winners/shortlisted etc. It is always about them and not you. Promoting themselves is their hidden agenda.
In all honesty, this is a non-article. What does it tell us? That somebody sheltered themselves from throwing themselves in at the deep and by taking on three days a week subcontract work and taking on new clients. Big deal, that's simply re-inventing the wheel.
Entirely possible, I did just shy of 100k in first year entirely from new client fees on subscription. However as others have stated a really good plan and skills in marketing or the funds to acquire them are essential as is having a bit of a network to support you. You will also need an element of unproductive time for training and up skilling in areas you need if you have not done the complete end to end before. I came from industry so it was very much same same but different.
100% you should be profitable in your first year, it also should be the most profitable period of your practice.
The only thing I would do differently before leaving employment, is have a big chunk of working capital to go at from day 1, and I don't mean money to live on whilst you win work you need that also.
There is common image of accountants setting up on their kitchen tables for £500 but if you want to grow quickly you need more than that.
I would pay for branding, a good website and maybe commit to 6 months professional marketing up front. Hire an office and some outsourced bookkeeping support.
That way you you could quite easily deal with 2/3 new clients per week and you could just focus on onboarding them etc.
I had to grow a bit then spend some money as self funded everything but I think with the correct amount of funding at the start I could have got to where I was after 3 years, in 12 months.