The creation of a super accounting firm (Big 4)

AMS_Accountants

Hi

I have been toying with the idea of creating a super accounting practice and when I say super, I don't mean amazing but large in size.

I was thinking of how hard it would be to create a practice that could rival the 'Big 4' and the obvious answer is that it would be extremely hard. It would be a case of starting out as a small (one man band) practice and growing it. Then you would start a new practice in another area of the country and grow that or just acquire another practice and re-brand it. You would then repeat this multiple times in the UK before doing the same thing in other countries and before you know it, you are the new Grant Thornton looking to be the next PwC.

Of course, this process happens over many decades and before you know it, you are retired and nowhere near the size of Grant Thornton, so why bother right?

Then I had the idea of getting around it another way, a new business model. Over the last 2 days, I have been building a new website for myself and while I was doing this, the idea came to me. What if I could transform this website into a super site where I could get other accountants, tax advisers, financial advisers and business consultants to have a physical presence on the site as though they all worked for one business with multiple offices around the UK but still traded under their own individual companies.

I know as a 'one man band', how hard it is to compete with larger practices in the area who have bigger budgets for internet marketing and already have that established presence in the area but what if a large group of professionals clubbed together? They would have a bigger budget to compete against the larger practices and soon enough, the brand would be well known, like a franchise such as AIMS or Tax Assist but without the ridiculous franchise fees.

If anybody is interested in my idea, please send me a PM.

Thanks

AMS_Accountants

Tax Assist charge a large franchise fee of £36,950 + VAT and probably ask for a percentage of sales each year. I'm not talking about doing any of that.

The idea is not for me to charge people to use my brand but for a load of us to club together to promote a single website where we would all give the impression that we are one big business. Each member would have an area that was no less than 20 miles from the other member and the marketing would cover England and Wales so if a potential client typed in 'Accountant in Southampton' they would come to the website and find the guy based in Southampton.

MarieNoelle

You would need a big marketing budget to attract new clients and professionals. Once you have created a brand, how would you check/maintain/control the quality of the professionals who join the site?

How would you fund this without asking for a franchise or joining fee?

AMS_Accountants

Each member would be hand picked, it's not a case that anybody can just sign up. The members of the group would be registered with a body like the AAT, who are responsible for regulating the quality of the work.

In terms of branding, each member would receive a template for things like stationery and purchase their own.

In terms of marketing, of course there would be a fee otherwise how else would it get paid for? But it's not a huge capital layout like £40k just to join. Each member would contribute say £100 a month. There are 57 cites in England and Wales so that's £5,700 a month on marketing. That would start bringing in some new business and eventually we could move up to £200 a month (£11,400), then £400 a month (£22,800) etc. That kind of budget is what the Top 10 will likely be spending. Cities are at least 50 miles apart meaning that large towns are open to membership as well meaning that we could end up with 150+ members and at £500 a month, that's a £75,000 budget on marketing which surely is a Big 4 budget.

AMS_Accountants

mrme89 said:

AAT aren’t responsible for regulating the quality of work. They will only step in if a complaint is made. I’m sure there are lots of crap work produced across all the professional bodies where a complaint is never made. It’s entirely up to the firm to ensure the work going out of the door is up to scratch.

I know that but the point I am trying to make is that members will already run their own practice so the only difference would be that they would be trading under a different brand so I would imagine that members would already provide a good standard of work.

mrme89 said:

I think you have underestimated what is needed to drive a project like this forward.

Off the top of my head, other costs incurred will be:
1. Legal fees
2. Staffing
3. Web development and IT

1. It would be based on a gentleman agreement rather than paying for lawyers to draft contracts, that is a huge barrier when trying to achieve something like this.

2. The idea of this is that it allows practices to grow to the point of being able to hire staff and trainees to take on the extra work.

3. I've pretty much built the website myself as its one of my hobbies. The only real cost is the PPC marketing and keyword research.

mrme89 said:

Another thing you might not have considered is how you would calculate the charge to the individual practices. You say £x per month for advertising but what if one practice is running at full capacity and won’t benefit from any advertising, and another practice has a lot of capacity – not really fair that they both contribute the same towards an advertising budget.

If a practice is running at full capacity then they can either hire new staff, outsource it for a fee percentage or come out of the scheme. The purpose of this is to significantly grow each member's practice.

If they have lots of capacity then you would have to question why they are not benefiting as the idea is to beat their local competition to the top of the search results both organically and paid. Again, they can choose to leave the scheme.

mrme89 said:

Also, by doing the project on a city basis, you are limiting each practice as each will have a specific geographical location. That isn’t how the profession is going. I have clients all over the country and I wouldn’t want my business to be restricted by location.

I also have clients all around the UK but it depends on how complex their accounting needs are and some just prefer that face to face meeting. The eventual idea is to bring everybody together under an LLP if it can be proven to work.

I can appreciate all your questions and highlighting barriers but this is exactly the reason why people no longer grow their practices to national level as they are put off by the hard work that it takes and are just happy with average earnings.

MarieNoelle

I do admire your determination @AMS_Accountants - I am sure the likes of Richard Branson or Alan Sugar had to deal with their fair share of cynicism.
Who knows, your business model may well succeed.

On a side note, not all individuals or companies want their accounts dealt with by big accountancy firms.

TreadStone

"1. It would be based on a gentleman agreement rather than paying for lawyers to draft contracts, that is a huge barrier when trying to achieve something like this. "

A gentleman's agreement on this scale simply won't work. Drafting contracts and such is a huge barrier for a reason. Surely you can see that ?

AMS_Accountants

mrme89 said:

I don’t think people are put off by hard work. £60-70k for full time earnings for a sole practitioner is very achievable, and I wouldn’t call it average earnings.

That would be good earnings for an AAT MIP but sadly most AAT MIPs are likely earning between £20k and £40K.

MarieNoelle said:

On a side note, not all individuals or companies want their accounts dealt with by big accountancy firms.

It depends on the firm. Granted that a one man band turning over £40k a year would not go to PwC to get his books done but it doesn't mean that a large brand can't have a small personal feel to it.

TreadStone said:

A gentleman's agreement on this scale simply won't work. Drafting contracts and such is a huge barrier for a reason. Surely you can see that ?

Of course I can understand the importance of contracts but this is simply a case of lots of accounts contributing to a pot each month to increase their on-line presence. It's not like its a £40k payment upfront for a franchise.