Tax, accounting, and advisory services are always in high demand. This can result in repeat business and the chance to make significant profits. You are also simultaneously building a saleable asset.
But, as with any business opportunity, there are major hurdles to overcome if you are to get the business off the ground and achieve the success you desire.
Read our guide to the top 10 mistakes to avoid when setting up your own accountancy practice:
1. Working ‘in’ not ‘on’ the business
Once you are up and running, you need to decide when to take on staff. This is the first step to scaling up your business.
What level of staff you decide to take on will be dependent on your skill set and needs, but getting this right is key to growth. Do you want to grow as a one man/woman band or do you want to build a larger business? If the latter, becoming a bottle neck to growth is a mistake you do not want to make.
Build up a trusted team to whom you can delegate. This might be employed staff in your practice or you may decide to outsource work. Marketing, client attraction and retention, systems and processes should be top of your to do list.
Ensure you have the right mindset to be self-employed. Don’t just think like an accountant – think like a business owner.
2. Not planning for success
Completing and updating business and marketing plans is a must.
You need to have a clear plan for what you want out of the practice, the hours you want to work, the level of income you want and how you will achieve your goals. You also need a timeline of how long you want to be in practice and your plan to exit.
There’s a lot to consider and you may need a mentor or specialist help and advice to help you to reach your targets.
3. Going in underfunded
As with any new business, it would be a huge mistake to start the practice with insufficient funds. Making a loss in the first few years is to be expected as you build up your client base.
Debtors and work in progress need to be funded, along with your drawings/salary until cashflow supports this.
New practices can need a fairly significant amount of funding in the early stages, so make sure you start building relationships with banks or ensure you have enough personal funds to tide you over while the business is getting established.
4. Wrong pricing structure
Price setting is an art not a science. Get it wrong and you may end up with too many low paying clients demanding too much of your time.
Learn how to overcome objections. Educate your clients on how you will be adding value to them/their business and don’t undervalue to service you are offering.
5. Not understanding the type of client you want to work with
Many accountants start off with no clear idea about the type of client they are looking for. Often they fall into the trap of wanting to take on every client, over accommodating and undercharging. Remember that running your own practice is about profitability, not top line.
Decide whether you prefer to focus on tax and accounts or offer advisory services. Do you want to form alliances with other businesses to refer certain clients to or carry out this work yourself? Do you want to work with just a few high value clients or many smaller clients?
You may choose to establish yourself as the ‘go to’ accountant for certain groups of clients. If this is you, then identify which types of clients work well for you and then work out how to get more of them. Put strategies in place and measure your progress to help you make decisions.
6. Not standing out from the crowd
Because accountancy is a lucrative and in demand service, you will likely see many competitors local to you. How are you going to differentiate yourself? Will this be your brand or a specific focus?
Either way, just sitting back and expecting clients to come to you is unlikely to work. Your offering needs to be compelling and you need to sell your services.
7. Not taking marketing seriously enough
When starting an accounting practice, marketing yourself and your business may be unfamiliar territory for you.
You will need to budget considerable funds for marketing and lead generation. This will help to establish your presence both online and locally and to build a steady stream of new clients. You cannot rely on referrals alone. This is an area you need to get right, and you may need to seek expert assistance.
8. Wrong location
The location of your practice really depends on what you are looking to get out of your business. If you are hidden away at home, in a back office or offer virtual services, you will not have as many overhead expenses as a high street office or shop, but are you getting enough visibility? How will you attract clients?
A visible premises will integrate with your online marketing and help to establish you within the local community. It also provides somewhere for your staff to work and clients to meet with you, as well as helping you to stand out from the crowd.
Also, the credibility factor exists. Having a professional practice can attract higher value clients. They will take you more seriously and be willing to pay accordingly.
9. Poor systems and processes
The key to running a successful practice is to manage workflow, working practices and service delivery effectively. Online accounting software, tax automation, and AI now do many tasks that practices used to do manually.
Embracing efficiency will help your profit margins as well as enhancing the customer experience. Operating a well-run, modern practice can also attract job seekers looking for an innovative workplace.
10. Not communicating with clients
Building a rapport with your clients is essential because of your role as a trusted advisor.
Communicate with your clients regularly. Send them reminder emails to gather information in a timely manner, send newsletters and relevant information and guides. If they have a question, assume they need an answer quickly. Be responsive and accessible and become an essential part of their team.
Successfully building an accountancy practice is hard work, but worth it. Make sure you’re choosing how to run your accountancy practice and don’t let your accountancy practice run you!
Try to avoid the mistakes above and you’ll create a business that’s rewarding both personally, professionally and financially.
You may decide that you want to build your own practice but would prefer the support of a successful network. We’d be glad to talk you through the process for taking on a TaxAssist Accountants franchise. We offer training, technical, mentoring and marketing support, an established brand, client lead generation and additional income streams, providing a fast-track way to achieve the business growth that you aspire to.
