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Starting your own practice: The first steps | Sage | picture of Sam Mitcham

Starting your own practice: The first steps

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This three-part series on starting your own practice covers everything you need to know, from establishing your business plans to future-proofing with cutting-edge technology. First, we look at getting the ball rolling.

4th Aug 2022
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Opening your own accountancy practice is an exciting step.

Maybe you’re tired of working for someone else, or perhaps you want a bit more flexibility. Either way, building a business from the ground up is a sure-fire way to show off your ambition. But getting the ball rolling isn’t as clear-cut as you might think. Before you open your doors to potential clients, there’s a lot of planning and legwork you need to do first.

In this first instalment, we’ll cover:

Is running a business right for you?

As idyllic as working for yourself may seem, it also comes with a lot of challenges. Some people thrive on the pressure, but for others, it’s too stressful an experience to handle alone.

Firstly, by venturing out on your own you’re taking on all the responsibility of keeping your practice running. All the important decisions will be yours to make, instead of having a manager or owner to defer to.

This doesn’t end at the accountancy work itself – you’ll also need to consider every aspect of the business, including HR, marketing, all of the admin duties and managing your client base.

Instead of having contracted hours like you would if you were employed by another firm, you’ll probably end up doing extra work, especially in the early stages of your practice’s life. This can be exhausting and will eat into your personal time.

If things should happen to go wrong, you’ll be accountable for it. It isn’t just your money on the table, but your reputation too.

Even though some of these what-ifs are daunting, and maybe even a little bit scary, the rewards are plentiful. 

Having the professional freedom to run your business the way you choose can be very liberating, giving you the opportunity to be as creative as you like. You’ll be able to instil your personal core values into the practice and run things the way you see fit.

Don’t rush into a decision. You need to consider all of the pros and cons of starting your own business before you take your first steps.

Building a business plan

The best place to start when planning to open your own practice is with a business plan. This document will be the backbone of your business, and you’ll need to update it regularly throughout the lifespan of your practice.

You need to be able to summarise your business model, structure, goals and reasons for running your business, and communicate those things to any stakeholders who might need to see them.

The plan will also include the structure of your practice – being a sole proprietor, a partnership or a company – and who owns it.

It’s a good idea to include market research and customer analysis, both to prove to others that you understand the industry you’re working with, and to establish the markets you’re focusing on for your own reference. 

You’ll also need to include any financial forecasts, such as expected spending and income, and check that they align with your personal and business goals. 

Creating clear business goals at this stage will also help you plan for development, and make key decisions such as hiring staff and expanding your practice.

What do you need to start up?

Starting an accountancy practice requires a relatively low level of up-front investment. Unlike hospitality or leisure, you won’t need to worry yourself with organising suppliers and stock. You’re the one providing the service – your expertise.

All you really need to start your own practice is enough capital to keep you going, a laptop, and the necessary software. 

You’ll need software that offers you all the tools you need to meet client expectations. That means something that is Making Tax Digital (MTD) compatible and has the extra bolt-ons for the services you plan to provide.

Not every business makes a profit from the very beginning – sometimes it can take a while just to break even. Make sure you have enough money to fall back on if things start out slow.

To begin with, you may want to continue working for another company while running your new practice on the side. This gives you a bit of job security and a regular income until you’re ready to go out on your own. You don’t want to leave prematurely and end up struggling to make enough to live on.

There are no specific qualifications needed to become an accountant. In theory, you just need the know-how and the confidence to prove to your clients they have chosen the right person for the job. Generally speaking, though, it’s best to join a professional accounting body such as the Association of Chartered Certified Accountants, the Association of Accounting Technicians or the Institute of Chartered Accountants in England and Wales. These require a certain level of qualification and ongoing development, showing clients you can be trusted.

Preparing for growth

Starting your own practice with expansion already in mind is ambitious. But to reach that goal, you need to think about it from the start. Sam Mitcham of SJCM Accountancy said: “I kept my growth targets realistic and personal. When I say personal, I mean that I focused heavily on my own targets. It’s great to share the journey with others who are on similar paths, and of course market research is valuable at times, but it is imperative to stay true to yourself.”

This can all be mapped out in your business plan. Setting out specific targets and with dates attached can be a good way to give yourself structure in the initial phases of your business. Some of these targets could include:

  • Number of clients
  • Number of employees
  • New markets or clients
  • Revenue (as either a specific figure or a percentage increase).

By setting yourself deadlines, you can put yourself under a bit of pressure so you can stay focused. 

It’s also helpful to tie these targets with your personal goals and the core purpose of your firm. If you catch yourself straying from that path or making a decision that doesn’t match up to your underlying plans, these goals should keep you on track.

Beyond this initial planning phase, your next key steps will be attracting clients, setting out your services, and building a team of people. We’ll cover all of this, and more, in the second part of this series: clients, services and your team.

You can also access all this information and more, plus eight fascinating case studies from inspirational accountants who’ve started their own practice in our free downloadable white paper – Starting your own practice.
 

Replies (9)

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By johnjenkins
05th Aug 2022 10:54

Whenever I see these sort of articles, I cringe. Melissa, if an Accountant doesn't know how to start their own practice how in heaven can they advise anyone else. The training they receive during their work time is the key. They should have (during their training) managed start-ups etc.
Let me make this very clear, Melissa, Accountants shouldn't start their own practice unless they are fully aware of what they are doing. I'm not talking about bookkeepers or the like. Financial Advisors have to go through vigorous training and exams before they let loose on the public. You are dealing with people's livelihoods here.

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Replying to johnjenkins:
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By AlanKennedy
05th Aug 2022 16:54

I disagree with you John. In my training I received a lot of input on start ups, cashflow forecasts budgets but absolutely zero training on sales, pricing and marketing. These are key to building a successful busines and significantly more important than the technical training I received.

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Replying to AlanKennedy:
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By Hugo Fair
05th Aug 2022 20:09

Really should declare your interest here.

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Replying to Hugo Fair:
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By johnjenkins
06th Aug 2022 06:56

As soon as "marketing" was mentioned, alarm bells went off.

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Replying to johnjenkins:
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By AlanKennedy
06th Aug 2022 17:31

As soon as marketing was not mentioned the alarm bells went off however you can separate sales and marketing from good quality tax and business advice. Clients in my experience are not stupid and even if they do not know when an accountant is not sharp being technically sharp, being technically sharp and thorough helps the sales process.

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Replying to AlanKennedy:
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By johnjenkins
08th Aug 2022 10:10

I agree that marketing in certain business is a key factor but NEVER in Accountancy.
Once you go down that rout you lose the essence of what an Accountant is all about. I wonder how much "marketing" was involved in the lates audit scandals. Banks came a cropper using "marketing" techniques.

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Replying to johnjenkins:
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By AlanKennedy
08th Aug 2022 15:45

i have built two accountancy practices from scatch. Had I not marketed I would have no clients. I tend to see good sales and marketing as helpng clients to take an informed decision about the best adviser for them - once is becomes pure sales and marketing puff you are quite correct you lose the essence of professionalism. One point of concern is that I speak to several accountants each week who are clearly not charging enough. They may very well be great accountants but just do not have the bottle to bill what they are worth - I do not see that encouraging them to be brave will affect their professionalism.

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Replying to AlanKennedy:
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By meadowsaw227
09th Aug 2022 11:12

Perhaps it is nothing to do with "not having the bottle to bill what they are worth" but that they are happy with what they are currently earning.
I have not increased some clients bills for several years and have NEVER EVER resorted to marketing.
Not interested in growing or amassing money just to boast about it and count it ! .

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Replying to AlanKennedy:
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By johnjenkins
09th Aug 2022 12:06

"One point of concern is that I speak to several accountants each week who are clearly not charging enough." This sort of speak is clearly linked to "marketing overload".
Alan you should choose your words wisely. What you really should have said is "several Accountants are not charging what I would have charged".
Substitute "bottle" and "brave" for "marketing gimmicks".

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