Big ambitions – starting your own practice

It may be just a dream when you are studying, but once you qualify you may seriously consider setting up on your own. Iwona Tokc-Wilde looks at what this entails

Despite the global economic turmoil of the last few years, the number of business start-ups has been rising steadily around the world, with some countries reporting record figures.

In the UK, more than 500,000 businesses were started in 2013, according to the national enterprise campaign StartUp Britain. Elsewhere, according to a global survey from RSM, Hong Kong has had the fastest rate of new business creation in the last five years – 9.9% year on year, while the BRICs (Brazil, Russia, India and China) have seen start-up levels increase at the rate of 5.8% per annum.

This is very good news for small, independent accountants.

‘Small businesses especially cannot warrant a full-time, on-site accountant or bookkeeper,’ says Ewan Tracey, senior lecturer in financial accounting at University of Northampton Business School. Neither can they afford the services of larger firms. ‘Because of this, the accountancy profession has seen a rise in the number of small practices and independent firms.’

As business confidence around the world is now growing, both trends – the rise in business start-ups and the corresponding need for small accountancy and bookkeeping firms – are likely to continue, so this is a big opportunity for those nearing qualification.

However, setting up even the smallest of practices is not something that should be undertaken lightly. In fact, there are many pitfalls and accountancy and bookkeeping firms are just as likely to fail as any other business. In the UK, for example, 103 firms became insolvent in 2013, up from 73 the year before.

So, before you start buying furniture for your new office, make sure you understand exactly what working for yourself means.

Compliance is key

First of all, you must comply with all the rules and regulations required for opening and running an accountancy practice, including being fully licensed to take on this sort of work.

ACCA’s Global Practising Regulations 2003 require any member who is a principal in an accountancy practice to hold an ACCA practising certificate (students are not permitted to start and run a public practice), even if the member holds a local licence for the region in which they practise. ACCA’s definition of public practice work extends beyond audit and other regulated work, to incorporate all types of work generally associated with an accountancy practice, but excluding bookkeeping services.

You also need to fully understand and comply with other industry standard guidelines and legal requirements such as data protection and anti-money laundering regulations.
In the high-risk, high-pressure field of accountancy even the most organised firms can make mistakes, so ACCA also requires all holders of practising certificates to obtain professional indemnity insurance cover against claims for professional negligence. On top of this, everyday business insurance to protect against theft or damage to yours or another’s property, or against personal injury around the office, makes good business sense too.
‘If you end up employing people, it will be your responsibility to comply with employment law, health and safety and fire regulations,’ says Belinda Darley, director at ABC Accounting Services. ‘You may have to pay a specialist to help in these areas.’

Have you got what it takes?

In many ways, the regulatory and legal side of things is the easy bit. Setting up your own practice is unlikely to suit you if you don’t have the qualities and skills necessary to be your own boss.

‘You need to be incredibly organised and driven, with a daring, confident and approachable personality, ready to seize every opportunity,’ says Darley. ‘There’s no-one else to keep you motivated so only strong, diligent characters with a flair for perfectionism have what it takes.’

Are you resilient and determined enough – able to work on your own for long periods of time and without getting distracted – especially if you intend to work from home? As for the skills, marketing nous and a deep understanding of how to promote your business are essential if you wish to earn a good living from it.
Before you leave your day job, you will also need a potential client base, either from existing personal bookkeeping clients or from a carefully planned and executed marketing campaign, says Darley.

‘You need a proper business plan – this is a big step so make sure you are prepared before you hand in your notice,’ she adds. You will also need business cards, a website and a memorable logo.
Look at all your other existing contacts too.

‘Established connections will necessitate and define your offering,’ says Ed Gooderham, director at Green & Co Accountants. ‘My co-director comes from a farming background so, naturally, we started by working with farmers and today our 240 agricultural clients form 50% of our client base. Never underestimate the power of your early connections – they can define your business for years to come.’

Keep going

Once you bag your first clients, you need to keep them and you need to find some more.

‘Relationship-building is key, but if you’re no good at what you do, you won’t last long,’ says Gooderham. ‘On the other hand, when you give your existing clients your high level of service and expertise, they will naturally refer you on to their contacts.’

Networking is never more important than in your first few weeks and months of trading. ‘You need to be at every local and regional networking event during the first three months,’ says Darley.
Keeping your dream alive will mean additional expenses including training. ‘Look into implementing quality systems as this will enable you to tender for larger contracts, and become well read in packages such as SAGE, XERO and other software that clients may use,’ recommends Gooderham.

You can access free expertise too. ‘Establish a good relationship with your bank as it may have local start-up business consultants who provide advice for free,’ says Darley.

‘Check out local business forums and hubs for advice from like-minded entrepreneurs and experts in finance, business law, marketing and management,’ she adds.

When the going gets tough

It usually takes many years to build a business and there are pitfalls no-one tells you about before you start.
You will work longer hours than ever before, and you may have to forsake holidays. In fact, research from Barclays Bank finds that the average new business owner takes only nine days’ holiday in their first year of trading.

‘When people start to work for themselves they are keen not to turn any work down but this in itself can be problematic,’ comments Tracey. ‘If you over commit your time and fail to meet deadlines, you may lose clients.’
Difficulties with clients and money will give you sleepless nights, says Darley. ‘Money is everything when you start your own business,’ she adds. ‘The profit margins are tight and you will have good months and bad, but you must never let your foot off the gas – keep driving hard at all times because that’s the only thing that will keep you afloat when the going gets tough.’
Finally, you will take everything personally.

‘That’s because you care more than you ever thought you could,’ says Darley. ‘You’ll give your clients your blood, sweat and tears and run yourself ragged as a result. It’s not easy, but you didn't really expect it to be, did you?’

"Money is everything when you start your own business. The profit margins are tight and you will have good months and bad, but you must never let your foot off the gas – keep driving hard at all times because that’s the only thing that will keep you afloat when the going gets tough"

Belinda Darley - ABC Accounting Services