Firms in the spotlight

There are highs and lows in running any business and in each edition of the Digital Accountancy magazine we are going to deep dive into some of the tech-focused accountancy practices to learn a little more about the team and how they operate, the background on the business and their future goals and aspirations.

In this edition, we spoke to Level Accountants and Full Stop Accountants to learn some more about the founders behind the firm and how they juggle their work and family life.

Dan Ryder, Level Accountants

Level Accountants is a successful digital practice based in Bolton and founded by Dan Ryder and Chris Quegan. The firm focuses on providing accounting services to tradesmen and we caught up with Dan to find out a little bit more about the firm and how they operate.

Dan, can you tell me a little about yourself and what you did before you started Level Accountants. Why did you decide to start up your own accountancy firm?

It’s a long story! I worked in IT for 18 years in various technical and business roles before finding myself no longer employed, a child having just started private school and a mortgage to pay. I needed some form of income rapidly.

A chance conversation resulted in me agreeing to buy the remains of a small practice. The original owner had agreed to sell to another practice but it had gone wrong. We agreed that I would purchase the practice on the understanding that he would stay on for 3 years, and I would retrain. This all happened around November 2016, right before tax season. That was one heck of a baptism of fire!

That is quite a change in your career - how difficult was that to do? Where did you get your experience from?

People will hate me for saying this but the transition wasn’t that difficult. I’d studied accounting at university and it was covered heavily as part of my MBA. The current focus on IT and cloud was never going to be an issue given my background and all my previous roles had some kind of client facing element. The main issue was getting to grips with the compliance requirements and good old HMRC.

You focus on trades such as plumbers, electricians, builders. Why did you choose this area as your niche?

Very early on I was keen to put together a marketing strategy. There are really only 3 marketing strategies you can use, price leadership, differentiation or focus (niching). I didn’t fancy going down the low cost route and true differentiation is really hard to achieve so focus was the only real option.

After a review of our clients we noticed two key niche’s, Tradesmen and Beauty. In the beginning we tried to market to both, but it diluted the message, so we went down the tradesman route. Funnily enough we still get a good number of leads from the beauty sector, so I don’t regret the decision.

Though we niche we do have a number of clients that don’t fall within either. They’ve mainly been with us for years or they are referred to us by other clients. Normally I turn clients away if they aren’t in one of the niche’s, but some are so persistent that I end up saying yes!

What services do you offer your clients? Have you tried to move away from compliance to an advisory based practice?

Everything starts with compliance so naturally most of our work is compliance based, mainly self assessment, VAT, year end accounts and CIS\PAYE. We also do a bit of book keeping when we don’t think it’s going to be too much hassle.

We’ve branched out into monthly reporting, review meetings, dashboarding and some accounts payable work in the last year, but at the moment I’m not sure if we will still go down this route. The compliance work is so efficient for us compared with the advisory part, and, being a small practice of just 3 people, it means that I have to be more involved in the advisory work than I’d like. If we continue to grow then I may look into this again but if I could just focus on compliance with a sprinkling of advisory I’d be very happy.

With Covid, there have been many challenges for businesses. How did the pandemic impact your clients and what did you do to help them through the initial weeks after lockdown in the UK?

Well to say it’s been manic would be an understatement! March was one of our busiest months ever and that has continued to this day. April and May are always busy months due to the

PAYE and CIS year end so, couple that with furloughing submissions and it’s been a challenge.

A large portion of my clients have been unable to work. A lot of building sites shut down due to supply issues and those serving the domestic market are being refused access to people’s homes. We had a lot of very difficult conversations with people panicking or wanting to vent their frustration.

Early on we sent out text messages and emails to our clients which helped, but people really like to talk in these situations, so that’s what we did. It may have taken a lot of time up but overall I’m hoping that it cements our relationship with clients and puts them in a better place once everything is sorted. Our aim at the beginning of this was to try and come out without losing any clients, either from them leaving or going out of business. Time will tell before we can see if it has gone to plan.

As a result of Covid, have you changed or added any services that you offer?

We made the decision early on not to add any services. Having just purchased the new practice it made more sense to double down and consolidate rather than risk what we had. I’ll look at it again next year once things have returned to some kind of normality.

When the UK went into lockdown, we all had to work remotely. As you are office based usually, how easy was this for you to do and how did your team manage with the change?

IT wise we are 100% cloud, so it wasn’t an issue working from home. We simply took equipment home just to make things easier, such as dual monitors and the IP phones. The main work issue has been scheduling work, but that’s more an issue caused by the number of calls and requests coming in rather than working from home. I’m confident that this wouldn’t be an issue in a normal year.

The other challenge has been fitting work around home schooling. My wife works in the NHS, so her work is considerably more important than mine right now so we decided that I would do the home schooling and I have had to juggle work around that.

Will you retain your office in the future? I’ve decided that we will keep the office, but I intend on working from home a lot more often. It will give me an excuse to build a new study at home.

Technology is at the core of what you do. What specialist apps do you use to help your clients and why?

Capium and Xero are our core apps so anything we use needs to integrate with one of these. For the larger trade business we’ve found Commusoft to be a great app. It’s very easy to use and integrates well with Xero and some of the payment platforms. It also has an OCR aspect although we predominantly use Hubdoc.

We do have a few clients in the hospitality industry and the app we always recommend to them is Tabology. Again, it integrates with Xero, it’s easy to use and the reporting is brilliant. The guys there are always happy to add in features.

Whilst technology is core as to how we do things internally, a number of our clients wouldn’t know how to switch a computer on! We’ve worked hard on creating a “stack” which helps us do what we need to do without forcing a client into doing something they aren’t comfortable with.

Early on in the business, you undertook a detailed technology audit of your business. What did that entail?

At the beginning I looked to review what app’s we needed to carry out our core work. Everything was based on Excel and was a little dated to say the least.

Having come from IT, I knew the benefits of the cloud but also understood that it could end up costing a lot more in the long run if not implemented correctly. So I wanted to get it right. We looked at 3 options:

  • Traditional locally installed apps
  • Remote Desktop based solutions
  • And True Cloud.

Using a model developed while I worked at an Managed Service Provider, we worked out what the true cost was for each solution - even down to electricity costs. The results helped us build a road map for where we needed to be and helped us build our initial stack.

Did you find that doing this audit helped you to make changes and decide on what you were going to offer as a service in your firm?

Definitely. In the beginning it was all about getting the right apps in place to make the services we

provide easier. Now it’s about being efficient and cost effective. At the end of the day we need a minimum number of staff to run the practice, that will never change, so it makes more sense to make sure they are busy rather than pay extra for software to make them less busy.

Our original cloud stack was highly automated, but also really expensive. And was getting more expensive as we added more clients on board. Yes it grew in line with the number of clients but I wanted to see more economies of scale, not less. So, we actually removed some of the apps. For example, we moved a number of clients from Xero to Capium if they didn’t need any of the extra features. This saved us money while still providing the same level of service to the clients.

Do you consider a technology audit to be a step that all accountants should undertake?

Yes and I would say you should carry out a technology audit at least yearly. New software comes out all the time. Existing software matures and gets better. Other software gets left behind.

Technology is such a key area of your practice, if not THE key area, so I can’t see why you wouldn’t review it on a regular basis. Things are changing so quickly now then it could quickly cost you a lot, in either money, or time and effort, if you don’t keep reviewing it.

I’m lucky because I can do this myself but there are a number of good consultants who can help.

How do you decide on an app to use and do you regularly try new apps or do you find one that you like and stick with them?

I’m a recovering app junkie! I used to install and test anything that I thought could save a few minutes time. Now I’m much more restrained and stick to what’s needed. At the end of the day you can only work with a small number of apps, otherwise you or your staff can’t provide a good level of services.

When deciding on apps, we only have a small number of criteria,

  • Can it help us or our clients save time?
  • Do I or my staff understand it enough to answer questions when asked?
  • Is the provider likely to be in business long term - there no point investing time and effort in an app if support is withdrawn in the near future.

It can be quite challenging having no business partner to work with. Do you have anyone that you can bounce ideas off?

Luckily I’ve always had someone around. In the beginning it was the original owner. Now it’s the owner we made the recent purchase from. Both have very similar personalities and will challenge any ideas I come up with. They have no vested interest apart from maybe legacy, so it produces good, honest conversations.

I’m also very close to the guys and girls at Capium, so it gives me a good insight into what is happening outside my little bubble.

Finally I’ve worked with Amanda C Watt’s. over the years, who I rate highly and is always open to a chat.

What are the biggest challenges that you face in your work?

Time will always be an issue for a small practice owner. Trying to run the practice and grow it at the same time can be difficult but it becomes easier the bigger we get.

It’s a challenge to find the right staff. We have gone down the path of employing the right personality for us and then training, but this is a longer process and limits our ability to take on more clients and introduce more services. Outsourcing could be the answer but I’ve found working with other accountants to be challenging.

Finally changes in compliance are always a challenge. We handled MTD very well but there was no way we could plan for all the furlough work and who knows what HMRC have in store for us now!

What would be your top tips to an accountant thinking about or who has just set up their own cloud based accountancy firm?

Don’t follow the herd. I see so many trying to copy what other successful practices without really knowing what makes them successful or if they are even successful in the first place.

Secondly restrain from buying every shiny app. You can end up creating a near fully automated system but it will cost an absolute fortune. In the early days you need to make sure you have enough profit to live off. If that means doing some of the work manually, then so be it. You can always add apps later but it's harder to take away once they are in place.

Don’t hide behind a computer. At the end of the day this is a relationship based business, go out and see your clients. The great advantage of cloud is that we can do anyone’s accounts no matter where they are but people still want that personal touch, especially at the beginning of the relationship. It can be done remotely but it’s much more difficult.

One last tip – read the E-Myth Accountant. It’s a great book with a very simple message that most practice owners will relate too.

Lauren Harvey, Full Stop

Full Stop is a Cardiff based accountancy business founded by Lauren Harvey in 2011. They are 100% digital and have twice been nominated for the Xero Small Firm of the Year award. We caught up with Lauren to find out a little bit more about her and her business.

You created Full Stop in 2011. Tell me a bit about yourself and why you decided to set up your own firm.

I started my career as an analyst programmer at PSA (Peugeot and Citroen’s Parent Company) and through my time there I became more involved with defining and implementing processes and ERP systems for car dealers throughout the UK.

It was at this point I realised how important accounting was in telling the ‘story’ of a business using efficient and accurate data and that was the starting point of becoming a Chartered Management Accountant.

I continued to work in different industries as a hybrid of accountant and systems/process specialist before starting Full Stop.

Why did you decide to start up your own accountancy firm?

It initially was out of necessity. We had decided to move back to Wales, my childhood home, and this hybrid role I had in industry didn’t exist for businesses here at the time.

There was an increasing passion for small business and cloud accounting was growing in the UK so I took the leap and decided to set up my own business for multiple remote smaller businesses.

Do you mind just giving us a quick snapshot into your firm today?

No not at all!

We are a small firm with 6 of us in total (5 full time and 1 almost full time). We worked out of a rented shop front until the end of April and now and post lockdown we will work from an old dentist surgery (in our garden).

We are a 100% digital fixed fee firm with the vast majority on Xero and a couple historically on Freeagent.

You must be thrilled to be shortlisted for the Xero Awards this year - congratulations on such a great achievement. Did you enjoy the event?

Yeah it was great although slightly surreal now given we were all sat around shared tables eating, chatting and drinking! We’ve been finalists for two years running now which we don’t underestimate, and we are busy working on making 2020 our best yet!

Your niche is creative businesses. Did you choose to focus on this area from the outset?

It is and it isn’t! We have always naturally attracted creatives as they want to work with people who are able to make things understandable and as simple to them as they can. This then allows them time to run the business for which they have a passion. Effectively we are process and systems specialists who translate how their business is doing for them!

The ‘niche’ for us has actually always been working with ‘Nice People’ – we relaunched in 2016 with a Nice People Charter. We rely on great tech but we specialise in providing a great human service to owner managed businesses - full stop.

Our clients are mainly located along the M4 corridor so not too far from us although we’re set to work with people wherever they are based!

What do you feel are the main benefits of niching and do you believe this helps when it comes to marketing?

The advantages of niching internally are the economies of scale IF you have enough of that one type of client in terms of knowledge, reduced systems costs and efficiency in following fewer processes. It takes time to grow those sorts of numbers of clients. This leads on to marketing and the clarity in the message you're putting out - meaning more of this type of client and less time vetting prospects to see if they are the right fit. Again this takes time to build so you have to be in it for the long(er) haul to see the benefits!!

We didn't specifically niche in the early days as being cloud was enough then. It is only as times have changed since then that we've learnt enough to know which area we've wanted to niche in and this remains under review with us working on it still.

Technology is the heart of your business so what are the core products that you use in your firm?

Our core applications (including internal and external ones) are Squarespace, Infusionsoft, Practice Ignition, Karbon, Receipt Bank, Xero and Float. Those are at the core of every client interaction then we have a host of others for Vertical specialisms!

What is your approach when it comes to apps?

For us it’s very much to get the value out of the software and going deep on knowledge and integrations before moving to a new product. Often they can do way more than you give them credit for!

These apps for us are very much like additional members of our team and unless we get that sort of value from each one then we don’t work with them!

With the Covid-19 outbreak, did you find moving from an office to remote working to be a difficult transition.

We’ve all been able to work from home if needed since day one and we went travelling around Europe two summers ago to see how remote working could work if any of our young team did want to go travelling. It worked well but at the time we had no idea it would be a pandemic we were practicing for.

How did you keep in touch with your team remotely and keep morale up?

We have Zoom team meetings at the start and end of the day. Some meetings at the end of the week may have a drink attached to them and we have done quizzes too. I’ve also sent parcels of gin, Lego and books to the team to keep them going!

What about your clients - how did you keep in contact with them?

A mixture of 1-1 meetings on Zoom, agreed task lists in Karbon and they have our mobiles for emergencies. We also run cash flow surgeries which Float help us with!

We did use Zoom for client meetings before covid and we will continue using them as they remain the best use of everyone's time. When we are out of lockdown, we are also able to meet people in the ‘surgery’ or at a club we work from in London if needed.

Did the lockdown have a big impact on many of your clients?

We do have orchestras and arts organisations who are our clients so we are making sure they get all the grants they can right now. We are also starting to plan scenarios of how the business needs to change to make sure its purpose can still be met in the future.

It can be hard to run your own firm and to take the time to work “on” your business. Have you got a business coach/mentor to help?

I’ve had two over the last year - one within the accounting industry and one completely unrelated. I’ve learnt from both and have needed both to ensure realistic accountability and to ensure I remain on the periphery of the accounting industry which is where I work best!

It is not often you meet an accountancy firm which also owns and runs a shop! Tell me a little bit about how this came about!

So we love an app (as you can tell!) but when planning and creating ideas for business you can’t beat a notebook! So when we had the shop, the plan was that when clients came to our space to work on their business they had a curated range of stationery to choose from to help with those plans. System wise it also meant we were Vend experts for example as we were using it ourselves. With the physical shop now closing as we move locations, we’re currently getting Shopify set-up and linked to our Squarespace website. However, when clients do come to the new office, we will still have our products for sale displayed.

We sell stationery that everyone drools over! I studied Japanese at University and have a love of all things Scandinavian so goods from those countries feature prominently alongside stationery from our own clients and an assortment of the best pens and pencils!

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