Compare your results: Starting a business quiz

Starting a business requires a huge investment of time, energy and resources. It’s not a decision to be taken lightly, but one that needs to be made on the basis of myriad factors – such as the demand for your accounting service in the market, startup costs required to get your business off the ground and your level of savings to fall back on in the short-term.

To help you gauge your readiness to start your own practice, Financial Accountant developed a short 8-question quiz. We’ve collated some of the key findings – many of which suggest the vast majority of respondents are well-positioned to take the plunge and start their own business.

Simon Thandi, Director at Thandi Nicholls, shares his insights into five key areas and his top tips for accountants looking to set up their own practice.

Missed the quiz? You can take it here.

1. Determining startup costs

Forty-three per cent of respondents have determined specific startup costs, based on their own research and knowledge of business startup costs.

“This is a really good starting point,” says Thandi.

“Accountants should have a business plan that involves knowing their startup costs and their cash flow forecast. If they don’t do this upfront, they’re increasing their chances of failure. You need to do some planning upfront: what are your overheads? If you don’t know that, you’re going to be caught out.”

Calculating your startup costs and making a business plan can also help you estimate when you’ll start drawing a profit.

2. Researching accounting practices

Thandi says spending a decent amount of time doing your own research should be a key priority for prospective business owners.

“Research other accountants in your area, spend time on their websites, find out what kind of services they’re offering and at what prices.”

One of the first questions prospective clients will ask is how much you charge. And while there is more to pricing your services than just beating your competitors’ price list, you don’t want to be too far – either under or over – for a similar service.

“If you’re way off the mark compared to other similar businesses, they’ll probably take their work somewhere else. They’ll say you’re way too expensive, or way too cheap,” says Thandi.

“The legwork really pays off and it’s not difficult to do. Talk to other people and do some background research so that when you go into your own business you’re ready to offer something competitive.”

3. Savings to fall back on

Almost half of respondents – 48% – have enough savings to last them 12 months.

It can be challenging to draw a decent income from a new business straight away. Thandi advises that accountants starting their own practice should have enough savings to last them 12 months.

When he started out, many clients agreed to pay Thandi at the year-end when he delivered work for them, so he wouldn’t receive income from them for 6-12 months.

“There were some clients for whom I did work for straight away, so that generated some income, but at the same time that was just covering my overheads – the marketing spend, the cost of administration and office supplies,” says Thandi.

He says that while he was breaking even, it was lucky that he had resources to draw on – he suggests having a minimum of six months’ expenses saved up, ideally 12.

“It was very tough in the first year, but the situation started to improve in my second year in business because I had a base of clients to rely on, and the marketing spend was beginning to generate more traction.”

4. Local or remote business

The vast majority, 86%, of respondents have decided whether they will offer services solely to local clients, or to clients beyond their local area.

Deciding on the geographical scope of your business will help to determine where to direct your marketing efforts. It will also shape your business operations.

“You can concentrate on attracting local businesses and promote your practice in your area, or if you decide to be a cloud-based business you’ll need to have a national or even global presence,” says Thandi.

“We are located in Northampton but have clients throughout the UK. In fact, one-third of our clients live outside the UK. Having an engaging and informative website enables us to service a much broader geographical area.”

Given the widespread adoption of video-conferencing platforms, offering remote accounting services is a viable option for many practices.

“For many people, gone are the days of wanting your accountant to live in the same village or city as you. We’ve had a lot of clients who don’t want to meet face-to-face because it takes a lot of time out of their day,” says Thandi.

“They want to know if they can access your services in a timely manner. If they ring, will you pick up the phone and answer their questions? If they email will you get back to them quickly? Can they arrange a VC within a reasonable timeframe?

“That’s how we operate and it enables us to attract clients throughout the UK and worldwide.”