It makes sense to find out whether there is enough demand for an accountancy practice in your area.
Don't forget that accountancy services are available from:
- qualified accountants working in practices of all sizes
- unqualified people offering more basic services such as book-keeping, completing tax and VAT returns and so on
- online accountancy businesses, many of which charge very competitive fees
- organisations like banks that offer personal tax services to customers, including tax return completion and submission and tax planning
Check out the competition in your area to identify how many other accountancy practices are already in existence. A look on Yell.com will not only indicate the number of competitors you will have in oyur area, but will also help to identify the size of these practices and the range of services they offer. Adverts may also include details of membership of professional bodies such as the Institute of Chartered Accountants in England and Wales (ICAEW).
It may be that you will only be competing directly against some of these practices because you will be offering very specialised services. For example, you might have the training and expertise to offer tax consultancy, or you might decide to offer a very comprehensive service to a certain type of business such as the medical profession or the catering trade.
Try to find out roughly what your competitors charge. This will help you to set your own fee scale. You could also have a good look at the premises and general set up of practices which are similar in size to yours. This will give you an idea of the standard of fittings and so on which is expected by clients.
Why will clients choose your practice
It is important to identify and advertise the factors which differentiate your practice from your competitors. Although clients are generally very cost conscious it is best to avoid competing on price - you will find it difficult on low fees to attract good calibre staff to your practice or to devote enough time to each client to provide a first class service.
Be cautious when estimating the number of clients you will be able to take from other accountancy practices. Some accountancy start-ups have described getting people to change their accountant as being as difficult as getting them to change their bank.
Find out what clients want
You might consider carrying out an informal survey of businesses which you have identified as being potential clients. Ask them what, if anything, they find unsatisfactory about their present accountant. Many business people accuse their accountants of having little interest in how their businesses work or in offering advice on how to grow or improve profitability. This might be something you could build on.
Be proactive when finding out what services potential clients would like you to provide, suggesting services they may not have considered, such as the preparation of management accounts, help with pension auto-enrolment, providing general business advice and so on. The introduction of mandatory digital record keeping and quarterly returns under Making Tax Digital (MTD) will mean that businesses are likely to have an increased need of accounting services to ensure that they keep digital records in a way that enables their quarterly returns to be made in compliance with HMRC requirements. Demonstrating that you are on the ball when it comes to the requirements of MTD may be a good way of gaining new clients.
Online accountancy services
Don't overlook the possibility of offering online accountancy services to clients anywhere in the country. Your clients would enter details of their business transactions into specialist cloud-based accounting software that you could then work on. You'll need to make sure your website features prominently in online searches for accountancy services.
Use the record sheets to note down the results of your market research.