Carl Reader leads Wiltshire-based multi-award winning chartered accountants d&t.
Regularly appearing in the national media as a franchising, start-up and small-business expert, he’s the author of The Startup Coach: Teach Yourself and The Franchising Handbook. Reader has co-founded several small businesses, so he understands the importance of minimising and managing costs.
Commercial premises often add unnecessary costs for accounting businesses, says Reader. “Many accounting businesses, especially newer ones, fall into the trap of believing that they need full-time premises. But thanks to technology, your place of work could be your kitchen table or a spare room at home, which would save a lot of money, at least until your business is more established. And, obviously, you can claim for a proportion of your domestic bills.”
If working from home isn’t possible, Reader recommends local flexible workspaces or trying to rent workspace from another business. And even established accounting businesses can waste money by paying for space they don’t use or to be in more expensive locations, Reader warns.
“Cloud-based services enable accounting businesses to offer clients a more convenient service, but they can also reduce initial technology costs for smaller accounting practices, allowing teams to work remotely,” Reader explains. “Cloud software updates prevent unexpected maintenance or upgrade costs, because your monthly subscriptions are fixed,” he adds.
Accounting businesses can also waste money by keeping certain business functions in-house, when outsourcing can be more cost-effective. “With larger, more established accounting firms, this can include, IT, marketing, HR and other functions. Staff working under capacity is the biggest profitability killer at many accounting firms. And although you might pay a higher rate per hour to outsource, the overall savings can be significant.”
Accounting businesses can also waste a lot of money on marketing, says Reader. “Often accounting firms are poor at monitoring results. Success is likely to come from using various marketing methods and from having a sound marketing plan. You must allocate enough budget, test and monitor to find out what works. Remain open to new methods and change where necessary.
“Caution is advised when using marketing agencies,” Reader stresses. “You need to ensure best value, but you also need to find an agency that won’t just make you look like all other accounting firms out there – you must stand out.”
Reader says accounting firms shouldn’t base spending decisions on “false economies”, which he frequently sees. “An example might be buying cheaper practice-management software that only ticks 80 per cent of your boxes. This can cause problems later on, when you’ll probably have to spend more on new software. You must try to anticipate your future needs.”
Lean and efficient
Fiona Hotston Moore is a partner at Ensors Chartered Accountants, which has offices in London, Cambridgeshire and Suffolk. Before joining in 2014, she worked for [top-30 UK accountancy firm] Reeves, having been managing partner of MRI Moores Rowland LLP, then one of only two women running a leading UK accountancy practice. This year, Hotston Moore won partner of the year at the British Accountancy Awards.
As well as helping to ensure her own firm remains lean and efficient, she has extensive experience of advising other businesses on cost management. “Not investing enough time and money in your staff can mean your accounting business ultimately wastes money,” Hotston Moore reveals.
Recruitment and training
“The first priority for professional services firms, both in terms of money and time, should be their staff – not clients. If you look after your people and invest in their skills, they’ll look after your clients and be more likely to remain loyal, which helps to minimise recruitment costs.
“Recruitment is expensive, so you must work hard to find the right people and give them the necessary training, experience and rewards. Poor recruitment, talent retention and development is where the most time and money is wasted by many accountancy firms,” she argues.
Outmoded, inefficient systems and practices can also drain your profits, says Hotston Moore. “At established firms, you’ll hear people say –‘but that’s the way we’ve always done it’ – which isn’t a good reason to carry on if there are more cost-efficient alternatives.”
The most profitable firms, she says, remain open to new ideas and implement them if it reduces costs. Hotston Moore says start-ups and newer businesses need to introduce efficient management and admin systems from the start, upgrade them when necessary and use technology to its full cost-saving potential.
Hotston Moore believes that digital technology and social media provide small businesses with the capability to reach out to potential and existing customers for little spend. “Even the smallest firms can raise their profile, display their expertise and engage in conversations, which can generate sales. Those that embrace digital technology and social media are often the most successful accounting firms.”
Hotston Moore would also like more businesses to embrace the paperless-office concept. “When I see workplaces cluttered with files, piles of paper and overflowing in-trays, I see a business that’s likely to be struggling to meet client service expectations. I’ve also seen senior people still dictating or handwriting letters for their PAs to type up and send via email. What a waste of time and money?”
This brings Hotston Moore onto another profit-wasting bugbear – pointless meetings. “If they’re not necessary – don’t have them. Meetings can be costly, especially if you have to travel. If a meeting with a colleague or client is necessary, set a duration time and stick to it.
“Decide in advance what outcomes you need to achieve, draw up an agenda, prepare well in advance and don’t allow conversations to stray off topic. Early on in my career, I remember being stuck in a three-hour meeting spent discussing which Christmas cards the firm should send out. It was such a waste of time and money.”
Mark Williams contributes to The Guardian Small Business Network and planned and wrote the Start Up Donut website – a leading source of advice for would-be entrepreneurs.