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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 should I prepare for my first client meeting?

I opened a bottle of champagne when I got my first enquiry from my hand delivered mailshot. Then I wondered how to prepare for my first meeting. Over the years I found a way which worked for me.

You need to have some idea of your pricing. Don’t get caught on the hop or you’ll probably price lower. I used to keep a sheet with various prices to consult or you may invest in software which prices for you. Later we put our starting prices on the website to filter for better quality enquiries.

The reason I had a price list with me was:

1. In case I didn’t know

2. I think it was Paul Shrimpling or Steve Pipe who pointed out that people accept prices better from a price list than from your head

Before the meeting do a bit of basic background research. Google, Companies House, their website and social media accounts as well as asking around. No need for a private investigator, just what’s in the public domain.

Confirm the meeting 24 hours beforehand. Include directions of how to find you.

Have an agenda for the meeting.

1. Ask about their business and their personal ambitions

2. Ask about their accounting needs (and why they’re changing accountant)

3. Explain how you can help with exactly what they’ve said. Use their own words if possible. 

4. If you can’t help don’t push it, refer them elsewhere if you can.

5. Quote for the service discussed

6. Ask if they want to proceed or if they’d like you to email the quote and speak again next week

7. Generate email quote or engagement letter etc as soon as you get back to the office. Look at Practice Ignition or Go Proposal as soon as you can afford it. They can be used to generate the “paperwork” in the meeting itself

8. Engagement letter for company plus each director, 64-8 for each, invoice, standing order or direct debit form. All can go out electronically for online signature. Also professional courtesy letter for former accountant.

9. Set up all files/directories once engagement letter is signed

10. Celebrate (again)

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 depending 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.

How to handle the endless Summer

When we were kids the Summer holidays were something to look forward to but, as a working parent, they can be a mixed blessing.

We all make different choices on how much time we want/need to spend with our kids vs how much time we want/need to spend working. That can be anything from finding full time childcare so that important work is uninterrupted to arranging your work to spend the whole 6+ weeks with your kids.

If you are employed then you have the right to request flexible working. If you provide a foolproof plan for how you and your business owner can cover the necessary work then it is more likely to be accepted. If you run your own business then the responsibility lies with you anyway.

As well as professional childcare and holiday clubs the options include:

  1. working from home so that you can supervise your kids yourself. While this is great for some of the time it doesn’t provide quality time with your family or you may find small children too distracting.
  2. working evenings/weekends while the other parent, or somebody else, is available for childcare. This allows you to spend quality time with your kids but it can be harder to communicate with a team working conventional hours and it may be important to you for the whole family to spend time together.
  3. postponing non-urgent work or doing extra before the holidays. This can free up time during the holidays but there is additional pressure on you before and after your time off
  4. take on less work over the holiday period. There may be a natural lull in your business when fewer clients are around working themselves. This is easiest to do if you work for yourself. The downside is that this may also reduce your income so you will need to ensure that you have sufficient savings to cover the break.
  5. arranging reciprocal playdates for your kids with other parents trying to juggle the holidays. This gives your kids a change of scene and may keep them away from screens. If you have more than one child this can require pretty complex coordination.
  6. Holiday clubs can be useful for ad hoc childcare but they are often much shorter than a normal working day. Some clubs just supervise your kids whilst they are watching DVDs or playing on computer games so you’re paying for somebody else to let a screen babysit your darlings. Sports clubs can be good for older children but not everyone enjoys these.
  7. Electronic babysitters can be okay so don’t beat yourself up if you use them sometimes. Just try and mix in a bit of quality time with humans and some fresh air and exercise.

In practice you may choose a mixture of these and other methods.

You may well feel that you’re not working or parenting well enough over this period but just keeping the plates spinning is enough for now.

Please drop me a line with any other suggestions

Is your business a little drunk?

You’ve probably seen a few in your time. The drunk falling out of the pub, absolutely intent on getting to his destination if only he could remember where he was going and how to get there.

Ask him his name and he can hopefully recall this but ask anything else about him (or her) and you may struggle for a coherent response. An incredible amount of energy put into going nowhere.

Too many businesses also seem to be reeling about with no idea of where they’re heading (stop reading now if you’re feeling in control) or how they’re going to get there. In this case it isn’t alcohol but just everyday busyness, firefighting and minor crises.

Take a moment and consider:

  1. What do you, the business owner, want out of life? (your life goals)
  2. What do you need from your business in order to achieve this? (your business goals)
  3. What does this look like financially? (your budget)
  4. How are you going to achieve this? (your action plan)
  5. What will this cost? (revise budget)
  6. Are there any financial or time constraints on the actions you can afford to take? (revise action plan)
  7. Does this still give you what you want? (check life/business goals and adjust budget/actions)
  8. Start driving
  9. Check that you are on the right track (management accounts and non-financial KPIs)
  10. Adjust course accordingly to take account of diversions (coaching satnav) or blockages (specific business advice or consultancy)
  11. Repeat until you reach your planned destination

If you need a hand then we can help with strategic planning days, budget days and/or regular coaching sessions or ad hoc advice to keep you on track.

Business is tougher when you go it alone.

The Numbers Business – update

Friends will be pleased to know that ‘The Numbers Business: how to build a successful cloud accountancy practice’ is now completed.

I’m particularly excited because Gary Turner, head honcho of Xero UK, has written a very kind and flattering foreward.

The final draft has been approved by my publisher, Sue Richardson Associates, and is now with them to produce covers, copy-edit, typeset and print ready for publication on 10 September.

If you would like to be notified of when the book is available to order then please let me know via the contact form.

Next projects:

  • My next book will be on building a more generic business intended to help non-accountants to set up their own business.
  • I will be writing an online course for Directors including one along the lines of finance for non-financial managers. Please use the contact form if you wish to be notified when this is available

Never throw away a good idea

I love ideas

When my son was small I’d praise him because he was full of ideas. And some of them were good ones. At the time of writing I’ve recently helped to judge a dragons’ den afternoon at a local primary school. Kids are so uninhibited in their thinking which is always great fun. (OK, perhaps not always fun as a parent digging your child out of scrapes but we usually laugh afterwards.)

As such I keep all my half decent ideas in a folder of post it notes, magazine articles, an ideas list and more detailed notes on my phone.

Even this article started off being typed on my phone as the thoughts just came to me between meetings.

For some time now I’ve been planning to write a book using the materials from my business articles, blogs, Money Matters talks and training workshops such as our Strategic Planning Day and Budget Day as well as our Directors’ Webinars. This was almost a pipe dream as it was so far behind growing a successful business myself (that’s taken a few years!) and then my June 20117 ironman attempt required 6 months of intensive training.

After my iron distance triathlon I knew that I’d need a new project to keep my interest so I spent my recovery week eating, sleeping and looking for something that excited me.

The following week I found myself putting together the outline of a business book. A mixture of business theories, my own practical experiences and stories of clients and friends. I also received my first payment for an article and a further two  commissions which means that I am now a professional writer.

The framework of my first two books (one for accountants and the other for general business owners) came together quickly because I’ve been saving ideas and material for a long time. In the process I also found enough ideas for two further books although they will require more research and content. The first book ‘The Numbers Business: building a successful cloud accountancy practice’ is due for publication 10 September 2018

This is quite an exciting time but it also emphasises that you should never throw away a good idea. Even our quarterly Money Matters events came out of a file of ideas pulled together with the help of Evolution PR (thanks, Kerry) and a few guest speakers (thanks you lovely lot)

So get yourself a notebook, paper or electronic, to capture all the ideas that you have. Even if you’re not likely to use them for years.