organic growth v. buy a firm?

[samanthaZ]

Dear all,

I am a fully qualified chartered accountant. I became a freelance last year after many years of office life.

Luckly I have a few clients that keep me quite busy but I am actually aiming for setting up an accounting firm.

Tried every way I can. However, it's so difficult to organically grow my business. I am wondering whether I shoule buy an accounting firm?

Is there anyone who has the experience could kindly give some advice about where to buy, what to be aware, how to keep the clients after change-over etc.?

Many thanks in advance!

[MyAccountantOnline]

Hi Samatha

Did you get your ACCA practising certificate in the end?

I personally have never bought in fees and it wouldnt be something I'd do but this site may give you a few useful pointers/tips/ideas - http://www.apma.co.uk/index.php?option=com_sectionex&view=category&id=3&Itemid=49

[samanthaZ]

Thanks Nicola!

I have a few months to go to apply for a practising certificate - have covered the required elements, only need to fulfill the 2-year -post-qualification.

The original plan was to accumulate some clients as bookkeeper, but it proved to be difficult. Time soon passed by and I haven't achieved my goal so far...

Thank you for your website! it is very helpful!

[Faevilangel]

The original plan was to accumulate some clients as bookkeeper, but it proved to be difficult. Time soon passed by and I haven't achieved my goal so far...

What advertising do you do? Do you have a website?

I found my book keeper by looking in a local magazine that's given to local households and businesses. I find book keepers need to get in front of local businesses so networking, chamber of commerce should get you noticed ;)

[samanthaZ]

Hi Faeivilangel,

Thank you for your reply!

Yes, I have my website... I sent letters & emails to local accounting firms(for sub-contracting work) & small businesses. I adverted in local magazine. I also told all my friends that I have set up my business now. The response is poor - maybe it's recession? My feeling is that small businesses can't afford an accountant, they would rather doing themselves, and medium businesses often already have their accountant, accounting firms concern that you will take their clients away.

Maybe what I did is still not sufficient? any suggestions please?

thanks again!

[MyAccountantOnline]

Maybe what I did is still not sufficient? any suggestions please?


Hi Samantha

It can be tough getting started but once you've got your PC you can market yourself properly offering a full range of accountancy services which will put you in a different league.

I dont know if you've used AccountingWeb - if not take a look there and do some searches for old posts on marketing and building a practice you will find a huge amount of information there.

[elainec100@cheapaccounting]

Organic growth can work ....

What is your usp?

Why would clients come to you rather than the zillion others around?

Who is your target market?

The normal marketing questions apply really.

I do find that some accountants have a view that their market is anyone.

But IMO you cannot develop a marketing strategy that targets everyone effectively.

Maybe have another think before shelling out the costs associated with buyimg a block of fees.

Happy to have a chat if it helps.

Have you considered:

http://www.cheapaccounting.co.uk/mainnavassociate1.php

Have a read of how Carleton found his first 6 weeks:

http://www.cheapaccounting.co.uk/blog/?p=687

[samanthaZ]

Thanks Nicola & Elaine, I will read the website you recommended carefully. Yes, I do feel I am limited because I can't advertise full range of services. I also haven't really consider carefully about my target market.

Very good points!

Thanks again!

[accountancyextra]

I looked at the purchase v organic route myself a few years back and decided on organic.

The main deciding factor was that through the organic route I could choose who I acted for.

I believe going rates are now 1 to 1.3 times GRF if you do go down the purchase route and a broker recently told me that he receives up to 20 enquiries for each practice put up for sale.

[wizzard]

Daft question alert:

What does GRF mean?

[elainec100@cheapaccounting]

Yes, I do feel I am limited because I can't advertise full range of services.

may I ask why?

Maybe the mentored route would be good for you to extend your knowledge?

[David Griffiths]

Daft question alert:

What does GRF mean?

Gross recurring fees

[samanthaZ]

may I ask why?

Maybe the mentored route would be good for you to extend your knowledge?

It's because ACCA has restrict rules that you can't advertise/provide services beyond trial balance to ultimate clients unless you are under supervision - i.e. one of my client is a quite big group, I am doing full range of accounts under supervision of finance director, but I can't do this to my own ultimate clients.

[elainec100@cheapaccounting]

Ahhh you are a chartered certified accountant - not a chartered accountant!

A difference!

So you do not have a PC?

[KidsBeeHappy]

With acquired - you get staff - and maybe some who've been doing the same thing, in the same way for decades. (as most firms listed for sale are those where the senior partner wants retirement)

[MyAccountantOnline]

With acquired - you get staff - ...

Not always it depends on the deal - with smaller practices or small blocks of fees you wouldnt be expected to be taking on staff too.

[Faevilangel]

Hi Faeivilangel,

Thank you for your reply!

Yes, I have my website... I sent letters & emails to local accounting firms(for sub-contracting work) & small businesses. I adverted in local magazine. I also told all my friends that I have set up my business now. The response is poor - maybe it's recession? My feeling is that small businesses can't afford an accountant, they would rather doing themselves, and medium businesses often already have their accountant, accounting firms concern that you will take their clients away.

Maybe what I did is still not sufficient? any suggestions please?

thanks again!

Are you advertising the site? How is it ranking for local keywords e.g. accountants in town name? Do you have google map listing?
Have you gone and spoke to businesses instead of sending letters? Join the towns chamber of commerce, you will then be in front of a few local businesses.
Why not just offer a book keeping service for smaller businesses? Not the full accountants service. If they are happy with your book keeping they might decide to use you to help with more tasks leading to using your full accountancy service.

Try out local networking groups, they are full of local businesses. The most popular is 4networking. Meet, like, know, trust.

Get out there and get noticed, be liked. Trust will then get you further.

[elainec100@cheapaccounting]

Can I ask - do people still get good referrals from Chambers?

I must admit that I found it full of networkers networking and not a place where potential clients hung out :)

Of course this is just my experience - happy to hear other views.

How do accountants market to 21st century businesses :|

[David Griffiths]

How do accountants market to 21st century businesses :|

Tweeting? Or perhaps in some cases cheeping! ;) :p

[MyAccountantOnline]

Can I ask - do people still get good referrals from Chambers?

I must admit that I found it full of networkers networking and not a place where potential clients hung out :)

Of course this is just my experience - happy to hear other views.

How do accountants market to 21st century businesses :|

No I dont think 21st century accountants wanting to grow a practice get much from the old style networking and Chambers type meetings anymore. Personally I wouldnt bother but each to there own.

I've run a couple of very different practices and how you grow them depends very much on your target clients and the services you want to provide.

[MyAccountantOnline]

Why not just offer a book keeping service for smaller businesses? Not the full accountants service.

We'll have to agree to disagree on that one;)

In my opinion an ACCA qualified accountant shouldnt primarily be seeking bookkeeping work once they have a practising certificate of course.

[Faevilangel]

We'll have to agree to disagree on that one;)

In my opinion an ACCA qualified accountant shouldnt primarily be seeking bookkeeping work once they have a practising certificate of course.

Gets clients on board ;) Tough time calls for different methods :D

I am just throwing options about, not all will work for everyone but it's something to look into :p

[elainec100@cheapaccounting]

No I dont think 21st century accountants wanting to grow a practice get much from the old style networking and Chambers type meetings anymore. Personally I wouldnt bother but each to there own.

I've run a couple of very different practices and how you grow them depends very much on your target clients and the services you want to provide.

Exactly and until you know that then IMO you are wasting a lot of time.

A clear strategy is required

[elainec100@cheapaccounting]

IMO the market is swamped by new entrant bookkeepers looking to earn a few quid in hard times - some with good experience others not

[elainec100@cheapaccounting]

Tweeting? Or perhaps in some cases cheeping! ;) :p

Tweeting alone does not get / keep the client :rolleyes::rolleyes::rolleyes:

It is just a tool to use :p

[MyAccountantOnline]

Gets clients on board ;) Tough time calls for different methods :D

I am just throwing options about, not all will work for everyone but it's something to look into :p

Trust me as one who has run 3 very sucessful practices it really isnt a good strategy - hard times or not it wont work long term:)

[imaggroup]

I found my accountant through yell.com, I wonder how many other new business's do this?

[accountancyextra]

I found my accountant through yell.com, I wonder how many other new business's do this?

Not many I don't think

[elainec100@cheapaccounting]

I found my accountant through yell.com, I wonder how many other new business's do this?

wow - how did you check their credentials?

[imaggroup]

wow - how did you check their credentials?

They're a reasonable sized practice with several offices so I rang up, made an appointment to see them for a free consultation and was happy with what I heard. I've previously worked in finance and trusted my own judgement, perhaps not the best approach but I've used them for 4 years now and never had a problem.

[Geoff T]

Trust me as one who has run 3 very sucessful practices it really isnt a good strategy - hard times or not it wont work long term:)

Sorry to stick my nose in here, but - thinking cashflow here - could this not just be a short term strategy?

Allowing for continued existence till things improve - type of thing...?

Anyhow - sorry - forget I said anything...

[elainec100@cheapaccounting]

Sorry to stick my nose in here, but - thinking cashflow here - could this not just be a short term strategy?

Allowing for continued existence till things improve - type of thing...?

Anyhow - sorry - forget I said anything...

Geoff with respect and I am going to have a bit of a rant here which is not aimed at you but is a general point that needs addressing IMO .....

To get any client takes effort.

Clients don't just appear.

You have to market, write proposals, engagement letters, terms of business, sell, do the work etc.

And then eventually you can bill and get paid.

So with respect getting any client is not a short term thing!

And then ....

If you are a member of an professional body you need a replacement available to cover for you.

Although there is nothing to stop you doing so IMO it would be rather bad form to drop a bookkeeping client when you can get better paid accounts and tax work later.

And I could go on but rant over - time for tea :):)

[Geoff T]

Geoff with respect and I am going to have a bit of a rant here
...

And I could go on but rant over - time for tea :):)

Glad that wasn't aimed at me!;)

And thanks for the "respect" bit:)

Can't tell me it doesn't happen though...

[elainec100@cheapaccounting]

Glad that wasn't aimed at me!;)

And thanks for the "respect" bit:)

Can't tell me it doesn't happen though...

It may well happen but if I had a pound for every post on here over the last year that was from someone starting a Practice - bookkeeping or accounting.

I would love from them to all come back and tell us how it has gone over the last year.

Times are tough ....

With the on line (cheap) accounting systems available there are more people doing their own bookkeeping.

So how many bookkeepers are needed or will be needed in the future?

Are the numbers decreasing?

How many of the circa 30,000 new companies formed in July will pay for a bookkeeper?

How many will file their accounts on time?

How many will even make their first year end before their dissolve?

Or so many questions. :):):)

[Geoff T]

It may well happen but if I had a pound for every post on here over the last year that was from someone starting a Practice - bookkeeping or accounting.

I would love from them to all come back and tell us how it has gone over the last year.

Times are tough ....

With the on line (cheap) accounting systems available there are more people doing their own bookkeeping.

So how many bookkeepers are needed or will be needed in the future?

Are the numbers decreasing?

How many of the circa 30,000 new companies formed in July will pay for a bookkeeper?

How many will file their accounts on time?

How many will even make their first year end before their dissolve?

Or so many questions. :):):)

Enjoying your tea?;)

[MyAccountantOnline]

Geoff with respect and I am going to have a bit of a rant here which is not aimed at you but is a general point that needs addressing IMO .....

To get any client takes effort.

Clients don't just appear.

You have to market, write proposals, engagement letters, terms of business, sell, do the work etc.

And then eventually you can bill and get paid.

So with respect getting any client is not a short term thing!

And then ....

If you are a member of an professional body you need a replacement available to cover for you.

Although there is nothing to stop you doing so IMO it would be rather bad form to drop a bookkeeping client when you can get better paid accounts and tax work later.

And I could go on but rant over - time for tea :):)

I agree entirely.

[accountancyextra]

Geoff with respect and I am going to have a bit of a rant here which is not aimed at you but is a general point that needs addressing IMO .....

To get any client takes effort.

Clients don't just appear.

You have to market, write proposals, engagement letters, terms of business, sell, do the work etc.

And then eventually you can bill and get paid.

So with respect getting any client is not a short term thing!

And then ....

If you are a member of an professional body you need a replacement available to cover for you.

Although there is nothing to stop you doing so IMO it would be rather bad form to drop a bookkeeping client when you can get better paid accounts and tax work later.

And I could go on but rant over - time for tea :):)

Completely agree too

[elainec100@cheapaccounting]

Love it that you love my rant! :D:D:D

[DFL]

Dear all,

I am a fully qualified chartered accountant. I became a freelance last year after many years of office life.

Luckly I have a few clients that keep me quite busy but I am actually aiming for setting up an accounting firm.

Tried every way I can. However, it's so difficult to organically grow my business. I am wondering whether I shoule buy an accounting firm?

Is there anyone who has the experience could kindly give some advice about where to buy, what to be aware, how to keep the clients after change-over etc.?

Many thanks in advance!

In answer to the original question on buying in, this is a general overview. I am not specialised in this area but hopefully this will give you something to go on Samantha.

1. Its a sellers market - for every sale you will get an average of 20 potential buyers, as stated by alreadt.

2. The seller (or agent) will arrange interviews between buyers and the seller for both sides to obtain further information.

3. Different sellers have differing goals - some want as much as possible from the sale of their practice, others place more importance on how their clients will be treated by the buyer. Many will be somewhere in between.

4. The seller will whittle down the buyers to a final three and negotiations begin.

5. The sale will usually range from 0.75 - 1.2 X turnover depending on conditions of sale.

6. Usually, a down payment of 50% is made with two further additional payments of 25% and 25% further down the lines.

7. It is also usual for a clawback arrangement to be in place to compensate the buyer for lost clients in year one.

8. The seller will usually stay on for a set period on a consultancy basis.


There is much much more and lots to consider.

Pro's - ready made client base, priced on turnover not profit, lifetime value of clients far outweighs investment, established business

Cons - Poor processes, unsuitable clients, pricing issues, TUPE - may inherit poor performing staff, unwelcome by clients, opportunity cost of investment.

Hope that helps.

Jason