I think the biggest part of working for yourself is being able to produce a nice work/lifestyle balance.

£77000 turnover with quite a high net profit and more time spent with family and on interests is most

peoples idea of a dream job. Why chase the hundreds of thousands just to be tied up with work

all the time. Well you could employ somebody, this has been discussed before, you end up doing the

work twice, this is the nature of most of us that frequent this site,and have the added bonus of

responsibility for another person and can easily lose that 'personal touch'


Good luck and hats of to you Mark.

Spamkebab wrote:

---

I think the biggest part of working for yourself is being able to produce a nice work/lifestyle balance.

£77000 turnover with quite a high net profit and more time spent with family and on interests is most

peoples idea of a dream job. Why chase the hundreds of thousands just to be tied up with work

all the time. Well you could employ somebody, this has been discussed before, you end up doing the

work twice, this is the nature of most of us that frequent this site,and have the added bonus of

responsibility for another person and can easily lose that 'personal touch'


Good luck and hats of to you Mark.

---

Agree with you 100% Neil.  The joy for me is the work life balance, pending loads of time with my kids and the ability to only work with people I like.  Money is not the be all and end all for me either.  Having said that I do have an employee but I think we still have the personal touch.  I still see every regular client about once a month, and speak to the others often.

Kris

Please ignore any spelling mistakes as the mercury has frozen here and i can't be ar*ed checking and correcting lol.

@Bob - I actually agree with part of what you said there. Working part time and building a practice, for me, doesn't work. I did it for a while. The problem is that when you know that eating and heating rely on you getting clients you do tend to work a lot harder at it than when you know that your bills are already covered. I do realise why some people do it, I thought I could too. I only started really building my business when I took the leap by taking a redundancy package on offer. If this hadn't been on the table though I may never have taken that big step, the security is too good.

I know that Mark has previously said that he has specific milestones where he will move to part time work and eventually leave, and it may work for him. It didn't for me.

It's amazing how the thought of going hungry motivates.

Kris

Hi Bob

For your info

1. Although the company was incorporated in 2009 didnt start actively supplying accounting services through it until July last year.

2. Have steadily built up my business on a part time basis to where I am the now of about 40 clients, mixture of sole traders and limited companies with GRF of about £25k providing mixture of services including year end accounts, management accounts, payroll, VAT returns, tax returns (corporate and personal), bookkeeping, etc.  Doing this while still working full time with CA firm.

Where I hope to get to is acting on behalf of say 100-150 clients and trading just below the VAT threshold so dont need to register for VAT as all my clients are small businesses so an extra 20% on their fee would be felt. 

In 5 years time assuming VAT level is say £90k where I hope to be is

Fees                                           £85k

Running costs                             £7k

Directors salary (2 x £9k)            £18k    (assume £9k is the tax free pay)

Pre tax profits                             £60k

CT (at say 20%)                         £12k

Post tax profits                           £48k

Dividends by 2 shareholders        £48k

Retained profit                            £0

 

Therefore two directors/shareholders take £66k (£18k + £48k) or about £5.5k per month.  Others may want to trade at £150k, £200k, £300k but I would be happy with the above just working for myself.

As said before value pricing may have some merit to medium/large businesses but for small businesses (who most on here deal with) in my view it doesnt.  If I went and said to my clients that I have a great idea that will grow your business by 20% year on year over the next 5 years and can save you £000s at the same time I know they would say "stop talking b*******." 

Most of our clients just want to get by and make a living, meet their statutory obligations and ensure they do so minimising their tax whilst they do.  It is tough times out there at the moment and most businesses are struggling to keep their heads above water rather than looking for value pricing ideas.

As said, I am happy with my way, you are happy with yours and I am quite happy to agree to disagree.

You may be onto something revolutionary and important but I dont think so and plenty others on here and on AWeb (who are more experienced than me) disagree.

Regards

Mark

 

@Mark - I am familiar with your strategy because I did it.

If you employed yourself how much would you pay yourself?

Good old usual waffle from Bob.

Anyone else have a clue what he is on about?

As said Bob stick to what you do and I will stick to what I do.

I dont think an accountant can have much input on how to grow a business and make more profit.  The strategy of the business is down to the owners and it up to then to deliver sales and grow the business.  We can advise on things like cost saving opportunities, tax saving opportunities, whether the GP is right for the sector they are in.  But I dont think we can help much with increasing the sales.

If you protege, Damion, is happy to pay whatever he is paying then that is up to him.

As said, I will stick to my business model of firstly getting to 50 clients (within the next 3 months) and then get to 100 by the end of next year.  Trade just below the VAT threshold and take home about £50k - £55k.

My only difficulty of getting clients will be not having the opportunity to get face to face with them.  Out of 40 people I have met I have signed up 36.  Two wanted to barter me down on price, which isnt my style, and the other two couldnt get to commit on the spot and waiting on them getting back.

Regards

Mark

 

Without getting involved with "the never ending story" being under the VAT limit can be seen as adding value to the client as you will be cheaper for unregistered traders compared to the larger registed accountants.

You can split the saving you are both better off, and everyone is a winner. 

If that isnt value pricing i dont know what is!!!!

BobHarper wrote:

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@Nick - correct, you don't know what is Value Pricing.

Do you Bob? I've yet to see evidence to confirm that.

I refer you back to the Albert Einstein quote that "If you cannot explain it to a six year old then you do not understand it yourself"... And that came from someone considerably wiser than you or I Bob.

It seems that it is simply that believe bookkeepers/accountants can (and should) help the clients on matters outside accounts/tax (by educating themselves, listening to their clients, sharing what they know, coaching and facilitating).

You mean that we don't do that? Well, that's news to me.

It seems that you try to differentiate your service by making out that you do something that others don't without actually knowing what others do.

I for one am always happy to chat to clients about how to improve their bottom line by implementing changes to their processes and procedures and way of thinking.

We study it all, it would be wrong not to use what we learn.

---

Hi Nick,

hope that you are well and I understood exactly what you meant which made sense to me.

kind regards,

Shaun.

BobHarper wrote:

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When you say "we study it all" can you tell me where you/accountants study Value Pricing?

---

 They don't.  And for a very good reason.  Everyone has tried in one way or another to say it, but here it is.... "It's nonsense!"

Maybe you have spotted something that everyone else has missed, but I doubt it.  If you have you will have the last laugh, but the rest of us are laughing now.

Why don't you pedal you pish elsewhere, it seems no one here is interested in rubbish you can't even explain.

Kris

I wouldn't dream of talking about Value Pricing to clients as I do not regard it as a legitimate theory... And nore apparently do any of the accountancy bodies as I haven't seen it appear on any bodies syllabus.

By study it all I am talking about the basic's which make an accountant an important part of their clients business.

Every client that sits accross the other side of my desk is different and requires different advice for their business (many don't want any advice at all beyond the statutory work that they want me to perform) for which one needs to have the fundamental building blocks for all situations based on years of study and experience.

As a short list such knowledge includes :

Risk Management
Performance Prism
Building Blocks model
Performance Pyramid
Decision packages
Budgeting
Beyond Budgeting
Stakeholder theories (Mendelow, Cyert & March)
Business Process Reengineering
Just in Time
Kaizen
Six Sigma
Identifying and eliminating waste in the production environment
Harmons Control Process Matrix
Portfolio Analysis
Benchmarking
Seven S's model (I don't personally like that one)
Learning curve models
3E's
Porters Value Chain
Porters Five Forces
Balanced Scorecard
BCG Matrix
Ansoffs Matrix
Product life cycles
Swot Analysis

There are lots, and lots of others.

I would not push Value pricing, or Matrix Management, or Agile as I have no belief in any of them. The first because I have difficulty understanding it myself so how am I supposed to explain it to others. The other two because I've witnessed them in use and was not impressed by the results.

If you want to offer clients advice you need to be able to pass ACCA papers P1, P3 and P5. Two of those are core papers and with good reason.

If you cannot pass them then you probably shouldn't be offering clients advice about their business model.

@Kris - yes, it would be easy to say it can't be done.

At the end of the day Ron Baker has written books on this but Value Pricing is a theory. The basis is that that people will pay different prices depending on their perception of value and like most things it is best understood with examples.

I would recommend thinking about airlines ( they charge very different prices for essentially the same thing). The cost of flying a first class passenger is basically the same as someone in economy. If that doesn't do it check out the prices of a Christmas lunch in a restaurant on Christmas day compared to the week before. Again, the cost will basically be the same but the price will be far higher.

In terms of how to implement Value Pricing....understanding that pricing actually comes last. Start with thinking about your firm's purpose. For example, a dentist can be focussed on filling holes or creating beautiful smiles.

Next, work on your marketing and then:

1. Talk with customers and listen carefully for what they value
2. Price the customer not the job
3. Offer 3-5 price options to each client
4. Document the agreement
5. Project manage
6. Charge for variations and changes
7. Carry out after action reviews
8. Develop new people management strategies

Just as I thought Bob, you can't. The christmas dinner is because it costs more to pay for staff on christmas day, and they know demand will be higher for the short time they have. Sounds like you support my concept of "desperation pricing". Regarding the airline the costs are not the same. First class will get more attentive treatment, taking up more of the flight crew time ( there's that word time again), they will get better choice of meals, may get drinks. Is there no cost attached to this.

Sorry Bob, you ruined a great chance there.

Kris

Well, having read that document I can see a lot of sense in the model. In fact, it's really not that far from the model I use now. It's a pity Bob wasn't able to better explain it, or had a better way about himself in the way he communicates with others. I disagree with a few things, but on the whole it's a combination or fixed price and desperation pricing. Not really the rocket science you make it out to be Bob.

I'm sure you'll tell me I still don't get it, but I no longer care about your view.

Kris

Hal wrote:

---

Shamus

I may have misread your post but surely you are not saying that you have to be ACCA to advise clients on their business model?

Following on from your statement if you don't have the ACCA qualification how would you demonstrate that you could pass it.

Having said that I do agree with you in relation to value pricing as it has been presented on this forum. I am sorry Bob but I am just not convinced that any one pricing strategy can be said to be the best. To attract and maintain clients any service industry has to provide what the clients perceive as value for the money they spend. How that is established e.g. fixed pricing, hourly rate etc is down to what suits that client best.



Hal FFA FFTA MBA

---

Hi Hal,

no, that was not my intent but I can now see how it reads that way.

my arguement is that you should be capable of passing those papers, not actually having to take them.

Anyone can print them off and try them (the stock answers are also available to download from the ACCA site).

You don't have to prove to anyone else that you can pass those papers, only yourself.

Give it a try, it's quite fun to be thrown into a scenario and try and work your way through it. P1, P3 and P5 are management accounting so all the old papers are still current and are available for free. P2, P6 and P7 on the other hand really require updated exams from Kaplan or BPP as they are dependant upon tax and financial reporting standards which are likely to have changed since the papers were orriginally sat (the ones on the ACCA site are the exact one's as they were sat).

The only time it stops becoming fun is when there is someone telling you that you only have three hours to do it. Thats the bit that I reallyy struggle with as I just write way too much.

Every year I buy a selection of Kaplan exam kits (always including the advanced tax paper, P6) which will have 60+ old exams questions in that have been brought up to date for current standards and regulations.

Sorry for the confussion about the way that my post read but as I say, no, I do not expect everyone to be ACCA.

kind regards,

Shaun.

BobHarper wrote:

---

One more...what about a higher price of a ticket the day before the flight?

You are free to work out the price based on costs but costs have nothing to do with the price people are prepared to pay. They only determine if the supplier will make profit or a loss.

---

Thats basic supply and demand.

The more scarce the resource the higher value it has.

The hourly rate that we can charge is based upon the scarcity of the resource.

If the client is demanding when they meet you rather than you telling them that you have x slot available then there would obviously be a premium for our time but that is different I feel to the idea of value pricing which tries to move away from time as a concept.

Same principle of a client saying on a Friday evening that they need a report by Monday morning. There would be a premium for our needing to work outside normal hours, I would base that on my time where you would base that on the value of the report to the client but both would have a similar result.

Or, do Crunchers actually work in reality with a hybrid between time based and value based costing and the above scenario would be based on your time?

If so, that would be exactly as Kris indicated and the model is not so far from what we use now. 

Whilst I can see the scenarios that you quote I do not feel that comparing a Christmas meal or flight which are services with a commodity element is quite the same as comparing to a true service such as accountancy and legal representation.

By the way, completely off topic but Christmas day is the cheapest time to fly... And you can have tripple seats to yourself... But don't expect the cabin staff to be happy little bunnies.

Airplanes have to be in the right places at the right times so need to fly even if they have no passengers. People want to fly on Christmas eve and will pay serious premiums. Also on boxing day but to a lesser extent.

But Christmas day people want to be at home with their families so if you've got to fly thats the day to do it (used to knock a few hundred off the return flights to BKK for me and er' indoors before Peter came along.... Very sorry Qantas cabin staff (but you would have been lonely without us, admit it)).

As I say, that bit was completely off piste and just for info of anyone interested in flying long haul (short haul can park up, long haul can't).

Shaun.

 

How are you finding CTA?

I understand that it's ridiculously difficult although the days of the 8% pass rate seem at least to have passed (average now seems to have moved up to 30%).

That one is my eventual intent for CPD although must admit that whilst I don't scare easily when it comes to study hat one scares the bejesus out of me.

The thing that appeals to me is that one at least only takes one element at a time, i.e personal tax, business tax, IHT, etc. rather than the ACCA approach where you go into the exam not knowing what element of tax it will be about and more often than not the testing is on the integration of various taxes within a scenario (such as joe bloggs runs a group of companies (queue lots of calculations), purchases foreign subsidiary mid year (more calculations), Then dies (yet more calculations) He has two children and six grand children what advice would you give to his wife... And the only points in the exam would be on the advice to the wife).

What is the pass mark for CTA exams? is it 50% the same as the ACCA ones or higher?

PM me and I'll reply with the ACCA exams and answers as attachments so that you have them stored for when you do have time (saved you opening and saving each one as I have done. I will only send the management accounting ones as the others as said before require updates each year so the ones sat are not a great deal of use. I've already got all of the CTA ones as well but have not attempted any of them yet (don't like the fact that they use FA10 no matter what year the exams are being sat for. That just seems like lazy paper setting on the CTA's part).

kind regards,

Shaun.

p.s. might be Friday night before I have chance to reply to your email but you will get them all by then at the latest to store for when you need them.

Ah, but if you wait with an airline and go for standby flights the absolute last minute flights (within the last two hours before flight) are almost give away as they would rather fly for something than nothing (Opportunity costing). So back to supply and demand.

I've done that myself where you just turn up at Heathrow with a bag, passport and credit card and then see who has an empty plane.

Now trains on the other hand... That would back up your argument. They would quite merrily run an empty train up and down the west coast line all day if people were not prepared to pay the often extortionate prices (Not sure of current prices but when I travelled daily, if you wanted to travel before 9 a.m. and you didn't have a season ticket it was cheaper to fly from Birmingham to London than to take the train!).

But we're off piste. The arguments are circular and in many ways comparable to the old chicken and egg scenario... Which comes first, the time based costing or the value based pricing.

We are at an impass but I will at least concede to reading Ron Bakers ACCA booklet as I scan read though it and he has a very easy to read style which might make for a nice rest from the stuff that I'm usually reading.

I'm not expecting any great epiphany but I am expecting amongst identifying other models embedded within his (as I did with the works of Johnston, scholes and Whittington) to take something away from reading the booklet as it does seem very well written (He's already won a million brownie points by tipping his hat to Peter Drucker for the ideas that led to value pricing).

Actually, on JSW, that is probabably a book that you would enjoy reading Bob as it's very much in the Ron Baker type of vein of challenging concepts.

Personally I'm no great fan of JSW as I see too much of Porter, Harmon, Ansoff, etc. in their work simply recycled, repackaged and rebranded.

If you get the exploring corporate strategy book make sure that you get the one with the cases as it's always great to see how companies implement these ideas.

Shaun.