Am I a failure?

Back in 2017 I undertook a huge triathlon over ironman distances.

The event was 2.4 mile swim, 112 mile bike ride and 26.2 mile (marathon) run.

On the day I found myself struggling on the bike and “only” completed 89 miles of the bike course. But this is still the longest, toughest endurance event that I have ever undetaken.

Was I a failure for missing 23 miles of the bike course? Or have I succeeded in pushing my body further than most (sane) people would even contemplate?

So why not take a chance in your business and set yourself some stretch targets?

 

5 things I never foresaw in a 5 year plan

  • Having kids
  • Starting my own business
  • Entering an ironman
  • Selling my business
  • Writing a book

Things often happen which you couldn’t foresee 5 years ahead. Some things only make it onto your agenda a year or two ahead and somethings hit you completely out of the blue. This is often used as an excuse for not having a business plan.

Here are the two main reasons that like to have a plan A.

  1. If you aim at nothing you’ll hit nothing. I didn’t actually complete the whole ironman. I “only” did 89 miles of the 112 mile bike section. But it is still the longest, hardest endurance event that I’ve done in my life. If I hadn’t set myself that target I would never have done more than an olympic triathlon which is a quarter of the distance.
  2. Which way do you turn when you pull off your drive? If you don’t know where you’re heading for then how do you know the first step?

So, grab yourself the back of a fag packet (or a laptop or pen and paper) and work out where you want to be in 5 years time. Then break it down into the smaller steps needed to get there. 

If you need a hand or a more formal plan then I can help you with a strategic planning day but start by getting your thoughts clear

How much should I save before taking the leap into running my own business?

I always recommend having 12 months living costs, less is you already have some established income

1. This means that you will only take on good quality clients and not be tempted to discount or take unsuitable work just to get somebody signed up. 

2. You will feel better if you aren’t trying to bootstrap in the business and at home too. 

3. Allow a couple of years to get back to where you were financially but there’s a huge variation deoending on the nature of the business and clients, how much time you put in, how much money you invest in automations etc.

Capitalise webinar – the rest of the questions

Thank you to all those who listened in to the Capitalise webinar. I’ll add a link here once they put it up on line for those who were unable to attend the live version.

There were a few questions sent through after the event which I thought I could answer here.

Q1. Hi, I am a one woman practice, offering all kinds of services at the moment (I set up my practice 1.5 years ago). How do you make accounts production as automated as you can? A lot of clients dont even know what information they need to keep, send statements in pdf, some numbers in excel spreadsheets, etc – way which are really time consuming for me at the moment.

A1. Hello, I know exactly the feeling. No matter how much you train clients some of them still don’t get it. Don’t be afraid to be firm with your clients and to help them to help themselves. Ultimately you need to decide if these are the kinds of clients that you want to be working with. But before you reach that stage here are a few things that we found useful with different clients:

  • have a standard list of what you expect to receive from clients when you chase them soon after their year end
  • chasing clients is not a technical task and can be done by a virtual PA for about £15ph which will free you up to do the technical work
  • we started the bookkeeping and the Xero workshops to show clients how to keep their records properly. This was free to clients as we saved the time/money by having better records at the year end
  • PDF statements are a pain. We used an online tool which converted PDF statements into CSV.
  • make friends with a good bookkeeper who can help your clients to keep proper records throughout the year.

Q2. Did you use data extraction software such as AutoEntry or Receipt Bank? If so did you think it improved productivity?

A2. Yes, we used Receipt Bank for clients that were big enough to justify the cost. We found that we broke even at 16 invoices/receipts per month compared to the cost of manual data entry by a junior, even assuming no keying errors. You can then get the client to do the RB entry for you by putting the app on their phone (even older clients know how to take a photo of their grandchildren) and forwarding electronic invoices to their ‘special’ email address. This keeps the paperwork out of your office and save s the client postage or a visit.

See my answer to the first question above for how we used to convert PDF statements to CSV. Obviously use common sense for when it is more efficient to type a small statement manually into Excel

Q3. For engagement letters and sorting out all admin related things (such as AntiMoney Laundering regs), do you know if there is anything to make it more automated? Signing, chasing for AML docs, etc

A3. There is some great automation software out there for all these sorts of things. We used Signable for online signatures which were usually same day turnaround. I believe that Accountancy Manager can do the automatic chasing for you as can some other practice management packages.

See my answer to the first question above and remember that this admin task can easily be outsourced to a virtual PA.

How do I set my prices?

When you first start up it is often hard to know where to pitch your prices

There are three main ways of setting your prices and a number of variations on each

Hourly billing

The traditional model is 1/salary, 1/3 overhead contribution and 1/3 profit. This should be a minimum if you want a sustainable and saleable business. If you are self-employed with no staff then you should still charge a comparable amounts as you are doing the work as well as running the business. You should also allow for your non-chargeable admin and marketing time.  If you want to grow in future you will need to cover employee wages plus a profit margin for yourself without changing your prices too much.

Fixed pricing

Fixed pricing is more normal these days although, for bookkeeping, you may want to offer three months on an hourly rate before fixing. This means that you have more time to cover any teething problems or initial backlog plus you get to work out your likely ongoing hours. 

Once clients are on fixed rate you can use repeating monthly invoices and they can pay you on standing order so you will save admin and credit control time as well as improving cashflow. Most clients also prefer regular outgoings.

The price can be fixed using on a cost plus model based on estimated hours or on value pricing.

Value pricing

This is often confused with fixed pricing but it is based on the value to the client irrespective of the cost.

I once wrote a single letter to HMRC which took no particular research and saved a client £2,400 in tax. The admin that I had to complete, in line with ICAEW guidelines, in order to take on the client actually took longer than writing the letter.

So what do you think I should have charged?

  1. £100 as the notional cost of my time to write the letter
  2. £300 as the cost of my time to speak to the client, carry out all the necessary new client admin including money laundering checks for HMRC and then the time to write the actual letter (this was a one-off piece of work)
  3. £800 as the client would still be better off by £1,600 if the appeal was successful
  4. Not a fixed fee but 50% of any tax saving

There’s a whole chapter on pricing in my book and even that is just the tip of the iceberg.