I'm fascinated to know how anyone can charge less than the minimum wage, cover overheads and make a profit. Have you invented a machine that distorts time? At my most charitable (well almost) I'm not keen on working for less than the Living Wage plus overheads.
-- Edited by EPF_Solutions on Monday 28th of April 2014 08:38:13 PM
I've noted that Shazad is from my kneck of the woods and can confirm that there are bookkeepers around here working for much less than that.
The issue is that this is a very high unemployment area where a lot of people believe the misinformation about bookkeepers having a huge pool of firms that need their services... If only bookkeepers needed bookkeepers to do their own books as there is certainly no shortage of them in this area.
The only weapon that many bookkeepers see as their way to win clients is by being the lowest priced option.
I know that some make up for the low rates by charging two or more hours for what is essentially an hours work.
Now whilst that may be reprihensible, it is also understandable as they are simply trying to charge the rate that the client should have been paying anyway (I wouldn't do that as I belong to a body that has ethics in the syllabus).
Of course, the above is not true in this case as Shahzad is ACCA so the cheap rates are I assume down to this actually being an offshoring arrangement with Shahzad being the go between for businesses.
That seems to tick all the boxes in that businesses have a UK presence that they can talk to combined with cheap rates for their bookkeeping.
The above should not in any way be considered as an attack on Shahzad. If he wasn't doing this someone else would be... Actually, on a different scale its no different to what the big boys are doing (not going to write their names as at times I work for them (as I note Shahzad does as well) but we all know who I mean).
Its happening to the UK at the moment but its also starting to happen in India. As an example, a few years back they had a National banking strike when it was discovered that some of their own IT systems were being outsourced to China, Mexico and the Phillipines (isn't it about time people in this country started standing up for what is right the way that the people in India and France do?).
Its a sad fact of non protectionist policies in a globalised marketplace that work will be funneled from the richer economies to the lowest competent workforce.
Then again, success breeds higher salaries which results in cases such as the banking strike as the offshoring country of choice moves to the new lowest priced competent workforce.
The question I hear you asking is, is this then a safe business to be in...
Answer. No.
There is no such thing as a safe business, but, quality of service will always win over the cheapest option so rather than UK companies fighting to see who can get to the bottom first by competing on price, (a fight that we cannot win so long as we have a minimum wage) we need to compete on quality of service. Go that extra mile, give value added services (I personally throw in the management accounts and don't charge if clients just need to have a chat).
Right, if that doesn't start a debate nothing will...
kind regards,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
I agree Shaun (well I think I do, I got a bit bored at the bank stuff) no one in this game should be trying to compete on price. Anyone who thinks that they need to is mistaken. Up until fairly recently I was twice the average price of other bookkeepers in my area and it hasn't harmed my growth.
By investing in good marketing, excellent systems and defining your niche properly theres still loads of room to move.
I'm not sure what I'll be charging yet, as I'm in a not very prosperous area, but will also be offering my services online. I'm thinking of starting off with a rather radical approach that I'm not mentioning yet, to see how it goes, inspired by the marketing studying I'm doing at the moment! I'm not going back to the more advanced stuff I was doing 10-15 years ago and charging £25 an hour for, but charging less than half that a decade later takes a bit of getting used to.
The niche I'm aiming for is the type of people who wouldn't outsource the work to an overseas sweatshop, but I'm not sure they can afford to pay more than those prices anyway yet!
When HMRC get round to processing my MLR form I'll have a chance to find out if anyone wants to pay me anything!
How can you get bored with Banking Kris. it's a lovely industry...
I think that there may also be an element of perception pricing in there in that if the price is too cheap clients expect that the service is a lesser one than a more expensive counterpart even though the reality may be totally different.
If you are charging a premium for your services and surviving then obviously clients believe that yours is the better service. (Which of course it may well be).
I keep trying to nail down a niche market and then clients appear from different industries so it's very much a transient niche at the moment.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Have to say though that many of the businesses in India are far from sweatshops.
There are some very nice businesses out there that put some of the offices that I've worked in in London and Edinburgh to shame.
One of the strangest photo's that I've seen was in Newweek when they had a special on outsourcing to India and it showed a view of the Infosys Pyramid that Infosys don't want shown where the very, very poor are going about their business right next to it.
I think that very much showed the two extremes of how extreme wealth and extreme poverty live very much side by side.
The market that you seem to be aiming at (micro businesses) is the one that many bookkeepers go for but personally I find the micro businesses the most difficult market to work with as they watch every penny (normally spending so long doing that, that they miss completely the pounds flying out the windows).
You may find it better to aim slightly higher even though the higher you aim the more that you will be competing against accountants for the work.
Then again, don't let a bit of competition deter you. Keep at it and I'm sure that you'll succeed.
All the best,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
In my past life, I was effectively the management accountant for companies too small to employ one. And their Sage supplier and support, plus hardware if they wanted it. It was interesting that with potential clients I either got a blank look and a comment like "what's the point of that?", or an excited "Wow! I didn't know that was possible, would you do it for me please?" When I moved to rural Somerset, I didn't think I'd get so many of the Wow responses, and now I'm in even more rural West Wales. The niche I'm starting with is green minded businesses, and I really don't know if there is enough demand or money, but I want to help them if I can. If it doesn't work, I'll just grab the money from whoever wants to pay me!
It's actually a business that's complementary to a social enterprise I'm working on, that I thought was almost ready to launch, but is now some months away, and I could do with earning some money very soon. So green and ethical is the target, as that fits with the social enterprise, but paying the bills is important too, which is why I may take whatever comes up.
Only one Kris... I'll merge all of the posts that are saying the same thing into the other thread.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
the site had already sussed that, see the above discussion.
I appreciate that globalisation is now the way of the world but do you not feel that there is something unethical about avoiding paying the right amount of UK tax by offshoring the work to cheaper alternatives paid less than the UK minimum wage?
All offshore resources that I have controlled in the past were paid a very good rate considerably above minimum wage, and offshoring was in a large part because we were unable to find the right number of UK based resources.
Outsourcing bookkeeping where there is a plentiful supply (even a glut) of UK based bookkeepers and accountants working as bookkeepers isn't really the same as outsourcing IT development where there is a shortage of some (but not all) skills.
Non of the above is in any way suggesting that you are doing anything legally wrong, it simply questions the ethical standpoint adopted.
kind regards,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
In another discussion I commented on how part of the skill of book-keeping is spotting things that don't look right. I wonder how well someone in another country can do that, rather than just process bits of paper. I suppose that's the compromise you make for saving money, but wonder if it will bring up expensive problems in VAT and tax inspections.
I don't think that those would be problems as the face of the business is in the UK, so a traditional accountant / client relationship.
The difference here is that the actual work rather than being done in the next room is being done on the other sode of the world.
You will probably find that the people in the other country are very well trained and able to spot issues.
My arguement above is based not on whether offshoring the work could work but rather whether it should as the issues as I see them are more ethical than any reflection on the offshore resources skills base.
kind regards,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
