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Ten decisions to make when starting up in practice

14th Apr 2010
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AIA

Mark Lee outlines some key considerations for new practice success.

Decision 1 – Who will you target?
You will secure more clients faster if you are perceived as having a special focus on a specific niche – be that clients in a specific business type (e.g. shop owners, hospital consultants or dentists); those with specific issues (e.g. overseas property, divorce, large family, business start-up) or those willing to use your preferred bookkeeping and accounting software? Most accountants start up with no such focus and simply try to be all things to all people. You will be more successful faster if you have a clear focus.

Decision 2 – How will you distinguish yourself?
Try to avoid being seen as just another accountant. Unless you do this you will probably struggle to pick up work from established businesses and from taxpayers who already have an accountant. Your distinction needs to be real and not a figment of your imagination - and it needs to benefit your target clients.

Will you be targeting those who are looking for their first accountant or those who are fed up and want to move to someone new and different? That difference may be financial (as in lower fees) or it could be fixed fees, different services, a more businesslike approach, a more confident style or something else that the old accountant didn’t do in the way the client wanted.

Decision 3 – What services will you offer?
Many people start up and offer their services to everyone and anyone, which invariably results in loads of small low fees and no clarity as to what distinguishes the accountant from all the others. That then makes it difficult to grow and to attract more profitable clients.

Will you be servicing private clients? Unincorporated businesses? Partnerships? Limited companies? Will you be compliance led or also offering advice? On what subjects do you have the credibility and experience to provide valuable advice? If you would like to enhance your service offerings over time, where will you learn the additional skills you need? What support will you require?

Decision 4 – Know your competition
Research online, in local newspapers, directories and in the high street. Check out what others are doing, saying and claiming. You may find someone else has a similar focus to you. Their credentials and promises will be different to yours. You will need to understand those differences and whether this offers prospective clients a choice or means you should consider an alternative niche.

Decision 5 – Your pricing and billing strategy
Many accountants start by undercutting the competition. This means they build small practices full of cost conscious clients who will never move onto paying commercial fees. Is that what you really want? Do you really believe that everyone who uses an accountant chooses who they engage solely by reference to the lowest price?

Decide whether to adopt fixed fees value based fees or the more traditional time based charges for compliance work. Decide how you want to deal with advisory work. Rather than turn it down, as many accountants do, or undervaluing it as many others do, consider how you might collaborate with nearby specialists and sub-contract to them when clients want advice that goes beyond your knowledge or capabilities.

Beyond fee levels, determine your payment terms – up front, partial upfront, standing orders or only billing after the work is completed with payment due within 7 days/14 days/30 days. What will you do if your payment terms aren’t met?

Decision 6 – Your marketing plan
How are you going to secure new clients? Where will you go? What will you do? What will you say? What will you spend? Consider the costs of securing new clients, whether through marketing, networking or advertising.

You probably assume that it’s easy to get friends, family and other people you know to tell their contacts about you. This is called referral marketing. Many established accountants claim to get most of their new clients this way. However, when you’re new in practice it’s more difficult unless you really understand how to present your firm and your services in a way that enables other people to refer you on to their contacts and clients.

Decision 7 – Decide on your business plan
As a trained accountant you should understand the concept of business plans and of cashflow forecasts. You wouldn’t dream of starting in practice without one would you?

If you want to build a successful and profitable practice you will need a plan. Wishful thinking is never enough.

What do you want to achieve in revenues within a year, two years, or five years? What will you need to do to achieve those objectives and what will be the consequences and cost of doing so? Drafting the plan and incorporating cashflow projections will force you to consider related issues and to plan what actions you will need to take to achieve your objectives. All of the decisions on this list will also inform your business plan.

Your cashflow should include all of your business costs including PI and other business insurances. Will you work alone or need admin, secretarial or technical support staff? Will you do everything alone or use a virtual assistant? What about sub-contractors? How will such decisions impact your cashflow projections and the money you need to earn from clients?

Decision 8 – Establish commercial processes
The more systems you have in place the more efficient and organised you will be. That may not be your style of course. You may decide to hold off choosing your software support, but you’ll never have more time than when you’re starting up.

What compliance software will you use for the production and filing of tax returns and accounts? CRM (your client and marketing database? Practice management? Bookkeeping? Preferred bookkeeping and accounting software for clients to use? What about client sign-up procedures, anti-money laundering identity checks, through to billing and cash collection procedures. Internet banking? Will you be happy to work in the ‘cloud’ or will you need hosted applications and backup facilities?

How many screens will you need for your office work? Many people now consider two to be a minimum. If you’re planning to keep paper to a minimum then three screens are almost a necessity (one for internet/research, one for source documents and one for the output you’re creating).

Decision 9 – How will you keep up to date with relevant developments?
Do you still use books? Which ones do you need to have to hand and which can you access online or in libraries? When you need to check technical developments will you go online or look things up? Don’t buy too many books at the outset – just those you need, when you need them.

Online resources such as AccountingWEB are helpful for quick, up to the minute updates on key tax information or general practice advice. If you prefer hard copy, updates subscribe to relevant magazines too. Consider your CPD obligations and how you will satisfy these.

Decision 10 – Anticipate the level of support you will require
You will feel more comfortable and be more confident if you know you can rely on a support network.

That might simply be ex-colleagues who are always on hand, or your professional body may provide a helpline facility. You may want a more objective and independent mentor to work with you and to encourage and support you.

Mark Lee is Consultant Practice Editor of AccoutingWEB and chairman of the Tax Advice Network, which provides tax support to over 2,500 accountants across the UK.
 

Replies (10)

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By Anonymous
14th Apr 2010 11:43

Where you will operate from

What about where you will operate from?

That's a really important factor when you start up and will to some extent determine the type of clients you can obtain and target, and how quickly you will grow your business.

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By cymraeg_draig
14th Apr 2010 13:40

You miss the most important point of all.................

... are you suited to being self employed?

 

Many people crave security, a regular guaranteed income, paid holidays, set hours, sick pay, company pension.

These type of people are usually utterly miserable in self emploment.

To start a practice from scratch you need to be willing to gamble, able to work day and night when needed, able to live without income in bad times, and suited to all the risks involved with going it alone.

Anyone without these attributes will never succeed no matter what other qualities they have.

 

 

 

 

 

 

 

 

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Mark Lee 2017
By Mark Lee
14th Apr 2010 18:09

Sorry to disappoint

My original text has been edited. I agree these are not "The" (only) key considerations.  I suggested that they were simply "ten key decisions which could ensure your success". Of course there are others and ONE important preliminary consideration is to recognise the practical, personal, emotional and financial implications of choosing to run your own practice.

Always pleased to have additional constructive comments added to my posts here. I write them in a genuine effort to be helpful. I'm saddened when anyone simply posts a critical "you missed this" type comment. I miss lots of things. I hope the article still has some value though.

Mark

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By Anonymous
14th Apr 2010 21:04

Thank you, Mark!

Dear Mark

I have recently started my own accountancy practice and I found your article very helpful - thank you!  Any advice and guidance you can get when you are starting out is valuable.

 

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By Anonymous
14th Apr 2010 21:49

Another Thank you

Thanks Mark, I found it a very helpful post. Please carry on with you posts. I learn a lot from them.

 

 

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By Gina Dyer
15th Apr 2010 09:27

Thanks Mark...

...for a really useful article! It's certainly food for thought for anyone starting up in practice. I take your point about them not being 'the' (only) considerations, so I've amended the intro to make that clear. Apologies for the oversight!

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By sandralee
15th Apr 2010 11:05

Thanks Mark!

Hi Mark

Good post. These are all good points, and worth keeping to the forefront of your mind in the early days of starting up a practice.

Thanks for the post.

Sandra

 

 

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By Jason Dormer
17th Apr 2010 18:57

Working for yourself

Great post Mark. I agreed with CD, not it a 'you missed it' way but as an add on - the first question that needs to be asked of onself is 'Have I got what it takes?'

I was speaking to a chap last week who said that he wants to start up on his own, when I asked him his reasons he replied that he sees his boss take the occassional morning/afternoon/day off whenever he feels like it and would like to do the same!

I asked him whether he also sees his boss:

 - Lie awake at night worrying about how to pay the staffs wages that month?

 - Work evenings / weekends at the expense of his family time

 - Take no income from the business during lean times

 - Stressed to the hilt

 - Suffer the guilt of telling someone that they are not up to the job and having to let them go?

 - Have the guts and faith to put the family home up as security for capital

He wasn't so keen after that!

Whilst not ALL of the above will be encountered by everyone, these are all common scenarios for entrepeneurs and it takes a very special breed of person to cope with these situations.

Regards

Jason Dormer

Seahorse (UK) Ltd - For accountants and bookkeepers

www.seahorseuk.co.uk

 

 

 

 

 

 

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Mark Lee 2017
By Mark Lee
18th Apr 2010 16:39

Cheers guys

Thanks Gina.

My pleasure Sandra.

Thanks Jason. I agree with the points you make. Perhaps they could form the basis for a related article on decisions to ask BEFORE choosing to start up your own practice.

Mark

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By elyeung
17th May 2010 05:13

Choosing the right bookkeeping program

I run a jewelry wholesale business,and I used to use desktop accounting/bookkeeping software. It was packed with features but it was too complicated to use. Recently, I've been using Sage's Billing Boss (http://www.billingboss.com) which is a web-based invoicing tool. Very easy and intuitive to use. It's free, and they currently offer unlimited invoices for unlimited customers. With their add-on option, I accept payments online when I email customers the invoices. One of the best features is that I can use it with my current merchant account. I don't need create another merchant account with another set of fees.

My bookkeeper and accountant likes how she can access my invoices and track payments in real-time at any time. I also use the other add-on features Payment Boss which allows me to accept payment through my mobile phone (http://www.paymentboss.com). All payments I accept through Payment Boss automatically creates an invoice in Billing Boss - the integration saves me a bit of time.

When you recommend bookkeeping software for your clients to use, you may want to suggest Billing Boss. It's free, made for easy access for the accountant/bookkeeper, and saves businesses the extra set of merchant fees.

Please note: This author has been compensated by Sage. They asked me to share my experiences of Billing Boss with others.

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