Organising your own timetable, choosing your own clients, working when you want and where you want… Being your own boss is an appealing prospect for many. And in the current climate of job insecurity and redundancies, more and more accountants are facing up to the fact that by setting up your own practice, you get to control your destiny. But while accountants may be used to helping other business start-ups, when it comes to doing it themselves it is a very different story. So where do you begin?
On your own, a buyout or a franchise?
You can start up on your kitchen table as a sole trader or limited company, taking on a few clients and building up from there, with minimal overheads. But in doing this you are, by definition, on your own, responsible for making a name for yourself and finding clients.
Bob Harper, Portfolio Marketing
A franchise offers a ready-made strategy and support for those that are not 100% confident
Buying a business means buying into an existing client base and reputation. It requires greater upfront investment, either using private funds or finding a loan. Chris Marston, head of professional services at LloydsTSB Commercial, says: “This can seem safer and more solid but beware: if the business is built around one owner, one very strong personality, it can be a very difficult situation to be in.”
“A franchise offers a ready-made strategy and support for those that are not 100% confident,” says Bob Harper, a former accountant who now runs Portfolio Marketing, a business consultancy working with accountants and other sectors. According to Marston: “Franchises are a safer way to go. They have a proven operational model and failure rates are lower.” If you need funding, this model will often give banks more confidence.
Kingsley Sansom, head of operations at franchise firm AIMS accountants, says franchises help to avoid some of the isolation of self-employment. “I think we underestimate how much people like to be part of something,” he says. AIMS charges up to £5,000 up front, and an annual fee on a sliding scale which works out at roughly 10% of turnover.
Plan, plan, plan
Once you know which path is for you, get planning. “I wrote a business plan out for myself, and I would heartily recommend that,” says Jonny Miller, a chartered accountant who set up his practice in Penrith in March 2011. If you are planning on using private funds it will help you see the road ahead more clearly. But if you are going to be applying for a bank loan, it is a necessity.
“Business plans should be robust and capable of being monitored,” says Marston. “They should include your strategy as well as your endgame and need to cover a forecast of profit and loss, balance sheet and cashflow, month by month for at least year one, and then quarterly for year two.”
For Marston, the long-term view is key. “You can’t devise your strategy if you don’t know where you want to end up. You need to ask yourself a lot of questions. Do you want to grow the business? Do you want to recruit? Who will eventually buy the business? It may be that these things change over time – a business plan should be revised regularly.”
Get ahead with your admin
There are certain things that you absolutely can’t avoid doing at the outset, such as getting your practicing certificate from ICAEW, registering as a limited company… if this is the route you have chosen, signing up with Companies House, taking out professional indemnity insurance, registering with the Information Commissioner... and so it goes on. The ICAEW website has a full list of all the bodies you need to inform, so put a checklist together and work your way through it.
Sort out your workspace
“Some people set up at home and stay working from home, some work from home for a while and move out to an office as they grow,” says Harper. A lot depends on your preferred way of working and on your budget. The AIMS franchise is designed for people working from home, although a handful of franchisees do have high street offices. The opportunity to rent a workspace came up for Miller and he went for it, finding it helps him to separate work from home life.
Chris Marston, head of professional services at LloydsTSB Commercial
Business plans should be robust and… include your strategy as well as endgame, and forecast of profit and loss
Whether you decide to work from home or rent premises elsewhere, you need to have the basics in place. Setting up a business phone line and broadband can take longer than you expect. You may need new IT equipment, or an office entry phone system. All these things eat into cashflow and take up your time.
“Use your spare time properly when you are setting up so that you avoid scrabbling around once you are busy with clients,” says Miller. “Spend some time choosing the software you prefer to work with and getting to grips with it, and set up a backing-up process.” A call to your local ICAEW regional director can put you in touch with a fellow practitioner who’s recently set up and would be happy to share their lessons.
Get online early
Setting up a website early on is essential. “It’s best to buy your domain name before you register with Companies House, otherwise you may find out that it gets snapped up by someone else who then tries to sell it to you at an inflated price,” says Miller. “My website isn’t all-singing, all-dancing but it shows people who I am and what I am about.”
Get all these things in place before you find you are too busy with clients, says Marston. “Otherwise you end up with the classic problem where you spend all your time working ‘in’ the business, and not enough time working ‘on’ the business dealing with your own requirements.”
Find your niche
“Setting up today requires a more strategic approach,” says Harper. “Often, this means targeting a niche or sector and
positioning yourself as an expert.” Marston agrees: “It could be that no one else around knows more about the motor trade, or self-employed taxi-drivers,” he says. Identify the area you have most expertise in and draw your client base from there. Miller, for example, works with SMEs, with clients ranging from one-man bands through to multi-million pound turnover businesses, and is aiming to increase presence in the charity sector.
Georgina Rollins, a chartered accountant who started with Deloitte and worked in the US for three years, set up practice last year from her home in Maidenhead. She works around the childcare of her twin daughters, and targets businesswomen in a similar position. “I think it’s a mistake to be too general and just target everybody,” she says. “I deliberately went in very niche and it’s worked well for me.” Finding your niche makes it easier to prospect for clients. “You know where they hang out.”
For many accountants setting up in practice, finding clients is something of an organic process. Often it starts with one or two people and snowballs from there. The more you make yourself part of the local community, the more you are likely to gain interest from potential clients. Eventually, the bulk of your business is likely to be from referrals. Miller writes regularly for his local magazine, and has had calls from people thanks to that. For Rollins, the first few clients came through social media. “A couple of people came to me through Twitter and Facebook,” she says. She has gone from having six clients last year to 30 clients today, largely through referrals. “Momentum can build very quickly,” she says, “which is why it is good to have your framework in place early on.”
Get your pricing right
When you have been working within a larger practice or a big corporation, it
can be hard to know where to position yourself on pricing. “It’s one of the things I have found most difficult,” says Rollins, who came from a corporate background. “It’s quite a closed subject – people don’t tend to talk about what they charge so it’s very hard to know whether you are competitive.”
Marston believes getting pricing right is crucial. “Do some mystery shopping and ask your friends to do the same,” he says. “Don’t just ask about price – it’s the whole proposition. If a client wants to pay less, tell them what service you can provide for that amount.”
Take the leap
“If you are serious about doing it, then do it,” says Miller. “I don’t think it’s possible to do this alongside a day job. If you are driven and want it to work it will take up all your time. But it is worth it. There are clients out there and there is a lot to be said for being on a committee of one.”
Find out more at icaew.com/practiceresources