Perfect model: What’s the best recipe for accounting success?
The challenge lies in providing clients with the tailored support they need while also ensuring a sustainable and profitable business model for their practice.
With this in mind, many accountancy firms choose to focus their offering on clients who operate as directors of their own businesses. Some may also take aim at a particular sector, like IT or those working in media and the creative industries. Other firms, meanwhile, choose to be generalists, both in terms of the sectors they support and the sizes of business they advise.
Whatever those choices are – niche or broad – the underlying challenge for practices is to make their chosen model work in the best way possible.
The generalist approach
Michaela Rees, founder of Sterling Rees Tax & Accountancy, has chosen a model that supports a fairly broad range of businesses.
“We like having a breadth of clients,” she notes. “We promote software accounting packages like FreeAgent to the client where the fit is right, but we also don’t shy away from working with clients of all sorts; between them, they use numerous software packages for bookkeeping, tax returns, document management and more.”
Some Sterling Rees clients are large and relatively complex, and have specific needs, says Rees. “For example, one client is an insurance broker with five sites. They are actually using FreeAgent fairly extensively, and put the platform’s in-built functionality to good use; but for others there are different tools in the marketplace that are more suitable.”
Rees makes the follow-up point that accounting software options in the marketplace are all pitched at a particular level or for a notional target customer. “If a company doesn’t fit the mould for one software package, there is another out there waiting for them. As a business, we understand and embrace that. We have always been early adopters when it comes to technology.”
Rees adds that going to Accountex helped her find the right tools to support her practice’s business model. Attending trade shows like Accountex is a great way to see what is on offer and to understand which tools will be best for your specific client base. For practices that have a broad range of clients, like Sterling Rees, it is important to adopt a range of different software packages and not to attempt to force clients onto one particular software that might not be the most appropriate for them.
Peter Edwards from Warr & Co has a similar approach to choosing which software packages to work with. He explains, “It’s a crowded field. But every software has different functionality and different sweet spots, and our clients arrive with packages they are using very often.”
Allowing the software selection decision to come from prospective clients can be a great way to grow your client base and reputation. A lot of practices only take on clients who work with a particular software; however, adopting a more flexible approach could provide practices with a competitive advantage.
Towards the other end of the spectrum from Sterling Rees’s generalist approach is the more niche model adopted by the firm PaperRocket Accounting.
Sarah Solo, head accountant at PaperRocket, says: “As a practice, we have mainly one-person limited company clients and a few sole traders.”
Many practices choose to focus on one specific market and in doing so can benefit from offering only one software package to clients.
Solo explains that this allows her type of practice to:
become experts in advising on their chosen software package
spend less time managing and learning many software packages and more time adding value to clients in other ways
save on costs associated with training staff on multiple different software packages
take advantage of the discounts offered by software partners for adding clients in bulk to their software.
“Nearly all of our clients are on FreeAgent – and having this software focus allows us to be specialist and assist clients and streamline all we do. Being an expert in one approach, rather than generalists, has some clear advantages: clients like the level of insight we can offer, with FreeAgent very much part of that offering.”
Solo says one of the main benefits of being a FreeAgent practice is the ease with which she and her team can monitor client records. “Because we are so familiar with it, it makes it easier to check quickly and in detail, with fewer errors. We can educate clients at every step, too.”
From a business perspective, Solo emphasises how the capability for the firm’s staff to work remotely is part of the attraction of cloud software - this can be a major cost-saving benefit for practices. “We save on overheads and lots of infrastructure cost is eliminated.”
Choosing a cloud-based model
Cloud-based software can benefit practices in more than just a financial way. Choosing a cloud-based accounting software package that can be accessed from any device in any location means practices can offer their employees more flexibility and a better work-life balance. It also provides wider recruitment opportunities for practices by opening the door to more applicants who are based further away from the office.
For practices to realise the benefits offered by cloud-based software, it is very important to have the right package in place - security and support are of the utmost importance. Sarah Solo remarks, “We are confident in FreeAgent in this respect – in its support and its security. Along the way, it takes some big things off our table: we simply don’t have the support burden that those with bespoke applications might have. Plus we know we can reach out for resolution and response when it’s needed.”
There are varying approaches practices can take when deciding which business model suits them best. Whether to choose a generalist approach to attracting clients or a more niche business model will depend on each individual practice and their unique qualities. However, regardless of the model that a practice chooses, it is clear that cloud accounting is the future - due to the limitless benefits it can offer.
Find out more about different business models to suit your practice with examples from successful firms in our new guide Accounting for the Future - 5 firms share their strategies.