Ten top tips for those considering starting in practice
It is now thought that we might be heading for one of the deepest recessions in living memory, with a recovery likely to take years.
A global economic reset appears to be upon us, whereby consumer spending habits and the way in which businesses operate will change indefinitely. The good news is that with economic downturns comes renewed entrepreneurial spirit and an increase in business start-ups for those looking to make a change. So, is now the time to start up on your own if you’re facing an unexpected redundancy?
The decision to go into practice and work for yourself rather than someone else is a life changing event that requires commitment, grit and is certainly not for the faint hearted. Setting up even the smallest of practices is not something that should be considered lightly. Being your own boss might be an exciting prospect, but it does require a diverse range of skills and the ability to wear many different ‘hats’. The mindset shift from ‘employee’ to business owner can often be a difficult one, especially if you have always been employed before now.
With this in mind, here are ten top tips for those who might be considering a move:
1. Obtain a practicing certificate
You will need a practicing certificate if you decide to independently offer accountancy services to the public. In order to obtain a practicing certificate, you will need to evidence you have sufficient experience and knowledge to fulfil the services you propose to offer. In most instances you will require a sound knowledge of a range of taxes (income tax, CGT, corporation tax and inheritance tax) and up to date accounts preparation knowledge to ensure you are familiar with disclosure requirements as a bare minimum.
2. Ensuring compliance
As well as obtaining a practicing certificate you will need to comply with many other rules and regulations. This will depend on the type of business structure you adopt and if you belong to a professional body, but you should ensure you have researched the rules and regulations that will apply to you in detail as it can impact how you register your business, who will be responsible for the business debt and what reporting responsibilities you might have for example.
You will also need to fully understand and comply with industry standard guidelines and legal requirements such as data protection and anti-money laundering regulations. Professional indemnity insurance will be a necessity to cover any claims for professional negligence, as even the most diligent accountant can make mistakes.
3. Being right for practice
The regulatory and legal side might actually prove to be the easy part – you should be comfortable with the responsibilities and challenges that come with being your own boss. The transition is likely to be a steep learning curve as you will need to fulfil many roles in the early days from marketing, HR, MLRO and managing director alongside your day-to-day client work. Being organised, disciplined and driven will be just as important as having an outgoing personality as being in practice is ultimately a people business so you will need to be confident and approachable.
4. Knowing your goals
It will be important to know the end goal and your ‘why’ to get you through the tough days. Do you want more flexibility? To work on your own terms? More time with your family? To satisfy a gap in the market?
Whatever your reasons for starting in practice, you will need a business plan to serve as a formal document that will guide you as your business grows and keep you on track. Formalising your plan in a written document will provide structure and substance to your ideas and the opportunity to discover and solve any potential problems. This should include a financial plan to assess your financial requirements from the outset, based on a basic set of assumptions, and how much you could realistically survive on in the difficult start up months.
5. Think about your USP
Research what’s happening across the industry as well as locally to help find your niche. There are now huge opportunities with the surge in digital technology helping firms automate their bookkeeping services to free them up to do more advisory type work. You will also need to think of your brand – what will you call yourself? What will your logo and website look like? Having a sleek and professional brand is more important than ever in an online marketplace so think about the image you want to portray and the ideal client that you want to attract.
6. Utilising technology
Recent events have catapulted all industries into working from home, using technology more than ever. It goes without saying that it will be vital for new entrants to make the most of cloud-based software and apps that are designed to reduce the administrative burden on accountants, increase efficiencies and free up time to spend on more engaging client work.
It will be worthwhile researching the options available to you and investing in training on Xero, for example, to increase your understanding. Investing in quality systems from the outset will pay dividends as you will be able to hit the ground running with slick operations.
Whilst the increasing use of technology breaks down geographical barriers, meaning the pool of potential clients is now much bigger, it is also far easier for clients to move or switch accountants. Being proactive and finding your niche are ways in which you might be able to gain a reputation in the marketplace quickly. Think about who you enjoy working with and what industries you have most experience in and go from there, contacting friends and associates to start conversations. If you already have strong and positive relationships with a few clients, it is a great starting point to build upon – but do be careful if they belong to your ex-employer!
8. Network online
Obviously, during the current pandemic, in person events and networking are non-existent. But this can be seen as a huge opportunity as there are a myriad of free events and webinars happening online. The extreme pressure accountants have been under of late has fostered a real community spirit online with many members of the community keen to help others with tips and tricks. So become part of this conversation – share ideas, learn new trends and build key relationships with other accountants. The profession is progressing at a rapid rate so immersing yourself in the online conversation is a crucial way to stand out from the crowd. key
9. The final decision
After months, and possibly even years, of planning the day will come when you will have to hand in your notice to your current employer. Before you do – make sure you have completed your business plan and are fully prepared for the highs and lows of starting in practice on your own. It might be worth considering more flexible ways of working in the early months, potentially working as a consultant a few days a week to ensure a steady stream of income whilst you build up your client portfolio.
10. Keep going
Once you have made the leap into the unknown, you need to keep going when it might seem like an uphill battle. Relationship building will be key in the first few months – you will need to obtain clients, keep them and then find some more so impressing from the outset will be vital. Growing organically through word-of-mouth referrals is preferable so ensure you are providing a high level of service that clients expect. There will be long hours, unknown pitfalls, mistakes and little time for holidays but it’s a great time to be part of an exciting new breed of online accountants!
Download the Starting in Practice guide.