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A bit of a straw poll here. If you are in practice, how long did it take you to make a profit? Were you in profit from year 1 or did it take some time.
I made a loss last year, I think I'll break even or make a small profit this year.
Kris
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- Companion Fellow PM.Dip
- Practice Licence
- 1137 posts
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Hi Kris
I started in 2002 and it was not till my third year end I made a profit. I know it is really hard . I had saved very hard before I went out on my own and I had about £10, 000 saved which lasted me the 3 years so I did not give in.
I am orginally from Dublin so I did not have any contacts in Scotland but I made them and eventually everything took off
I apprecaiate there are some members that clients just fell on their lap. but in reality I don,t really think that is the case for most practices.
Anyway it is clear you have loads of knowledge so I recommend you keep networking as they might not be intersted just now but in my case I got phone calls from 6 months to 3 years later.
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I didn't think I would make a profit until year 3 either, it's self assessments that have really helped this year.
The thread really came from a chat with a new bookkeeper who thinks he'll make a profit from the first year.
Kris
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Interesting. I am in the process of starting up, having just got my Practice Licence through this week. I suppose I am in a fortunate situation in that I don't need to be making a profit from the start in order to eat, (though it would be nice). Your experiences are also a good lesson in not giving up after the first few months....a marathon not a sprint!
If its not too rude to ask, how much of a loss were you making when you started out, and how much time did you devote to building up your business?
Thanks
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Hi
I would guess that this would be the case for most new bookkeeping practices - it is the start up costs, advertising, stationery, postage that will dent your accounts in the first year.
Have been actively marketing my business for the past six weeks - roll on the first client
Regards
Acorn
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allieballiesaid:
“Interesting. I am in the process of starting up, having just got my Practice Licence through this week. I suppose I am in a fortunate situation in that I don't need to be making a profit from the start in order to eat, (though it would be nice). Your experiences are also a good lesson in not giving up after the first few months....a marathon not a sprint!
If its not too rude to ask, how much of a loss were you making when you started out, and how much time did you devote to building up your business?
Thanks”
I made a loss of around £6000 in year one.
Let me quantify that a bit by saying that I worked from a laptop at my kitchen table for the first few months. When I realised this was not a long term plan. Knowing I could neither afford, nor justify renting office space. I decided the way ahead was to buy a garden office. A large part of the loss was to buy and insulate this and to run electricity and networking to it along with kitting it out.
I'm not for a minute saying that you can't start on a shiestring, and have a slightly smaller loss.
Kris
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- Member PM.Dip
- Practice Licence
- 195 posts
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I am in year 2 of trading and will have a reasonable profit by my year end in March. I have a home office and didn't have much in the way of startup costs except software.
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Thanks for your replies, very useful. I won't be splashing out on a shed (sorry, garden office) but maybe treat myself to a nice chair.
It is reassuring to read of members building successful businesses too.
Allison
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allieballiesaid:
“Thanks for your replies, very useful. I won't be splashing out on a shed (sorry, garden office) but maybe treat myself to a nice chair”
It's slightly more than a shed. I couldn;t work as well as I am without it. With 2 young children I'd never be able to concentrate in the house, or answer a phone in peace.
What works for one doesn't work for all though.
Kris
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- Companion Fellow PM.Dip
- Practice Licence
- 1137 posts
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Hi
I would also like to mention the ICB was not as well know when I started out. The amount of work that has been done since then to put ICB on the map.
I like Kris also invested heavily in software and training and my office. I think this led to be getting biiger contracts later on. My software investment as paid for itself 700 times over.
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- Member PM.Dip
- Practice Licence
- 51 posts
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kjmccullochsaid:
“allieballiesaid:
“Thanks for your replies, very useful. I won't be splashing out on a shed (sorry, garden office) but maybe treat myself to a nice chair”
It's slightly more than a shed.
Kris ”
I to have a 'shed' in the garden! And get very upset when people call it that! I only have one child but have the same problem as Kris when it comes to getting anything done. I have to confess I also get easily distracted so if I'm in the office there is only work to distract me!! Though my accountant wouldn't allow me to claim the cost of the log cabin against the business as it could be used for other purposes!!
As for turning a profit.......I was fortunate to make a profit from my 1st year.......a massive £57!!  Seriously though, I set up in Jan 2006 (on the dining room table with a second hand laptop) and this is the first year I have made a large enough profit to have to pay any tax. I have deliberately kept my business on the small size as school holidays can be a major problem for me and I don't see the point of paying as much for child care as I'm earning.
Lol
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My experience is a little different and never made a loss, but i really did run things on a shoestring. I started the business in my free time while employed, which I did for around two years. Eventually it was too much to do both, so I made the decision that although it would be very tight, I gave up the full-time job and decided to "give it a go", that was just over two years ago.
Edited at 30 Nov 2011 05:34 PM GMT
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- Fellow PM.Dip
- Practice Licence
- 117 posts
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When you say "profit", do you mean before you paid yourself anything?
Like Tony, I will have to juggle a full time job for sometime before I can risk going completely freelance! Would anyone be willing to say what their turnover was in the early years v how much they committed to advertising ....
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- Member PM.Dip
- Practice Licence
- 51 posts
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My advertising consisted of one poster - in a friends waiting room - and some flyers. From the flyers I got one client (12 months later) and from the poster two clients. I was very lucky in that I got to know one of these clients accountant very well and 90% of my work since has come from that one contact. I have found that word of mouth is often the best advertising.
Lol
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kjmccullochsaid:
It's slightly more than a shed. I couldn;t work as well as I am without it.
Sorry, was being tongue in cheek there, couldn't resist it.
Having a separate work space that you can shut yourself away in, then leave when your work is done must have its advantages. Something for the future, I think.
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Sorry, I get touchy. My Mrs calls it my 'hut'.
With regards to claiming the cost Lol, whats you're accountants arguement? I claimed the lot, it's kitted out as an office and used as for business 100% of the time. Thats like telling a builder you know they've bought a new works van and you know they only use it for business, but they can't claim all the money because they could use it for something else. Do you use it for anything else? Did (s)he claim any of it?
Kris
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Jude67said:
“When you say "profit", do you mean before you paid yourself anything?
Like Tony, I will have to juggle a full time job for sometime before I can risk going completely freelance! Would anyone be willing to say what their turnover was in the early years v how much they committed to advertising ....
”
As a sole trader, when I say profit I mean before my drawings. Sarah, as a limited company, may well mean after her wages.
Kris
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- Member PM.Dip
- Practice Licence
- 97 posts
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Like Tony and Saffron I will have to juggle a full time job as well as trying to get the business going as like most of us I have a family and a mortgage to keep.
I had been saving to try to keep us while I started up but losing my job just before christmas last year and having to wait 3 months for the Liquidator to sort ou wages blew most of that out the water.
I have now got my flyers and headed paper approved by ICB so here goes advertising.
I already have adverts in the online Thomson Local and yell.com along with the council business directory, all that has got me so far is a lot of utility companies, the so called meter registration and the old 'Police Federation' scammers calling me a millioon times a day.
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I made a small profit in yr1 - lower than the personal allowance and should do the same this year.
But I've spent absolutely zilch on advertising as my clients were mainly word of mouth.
Software and hardware have been my main expenditure.
In saying all that, I work from home around my six year old. (spare bedroom is now the office) With his social calendar, school holidays I dont think I'll make my first million doing this - but it's paying my car and lets me buy the household shopping two or three times a month.
Just had to splash out on Sage Accountants Club due to potential clients - so that is the first real risk I have taken - lets hope it pays off!
I will need to bite the bullet next year and advertise - I simply haven't got time for any new clients just now apart from the ones I mentioned. The worst of it all is that I really need to to stop saying yes to voluntary things!
And Acorn .... keeping my fingers crossed for you
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- Member PM.Dip
- Practice Licence
- 44 posts
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I'm glad to hear that I'm not the only one not to turn a profit in year one. It took a while to get my first client - and then two came along in the same week. I didn't write my first invoice until January - but business seems to be building up quite fast now.
I made a loss in the last tax year (to April 2011) of about £1800 - but having just updated my acounts I have now found that I have just broken even!
Lucy
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well done. I always think you appreciate a profit more when you've had a loss. I'll tell you better when I see mine.
Kris
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- Member PM.Dip
- Practice Licence
- 51 posts
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kjmccullochsaid:
“Sorry, I get touchy. My Mrs calls it my 'hut'.
With regards to claiming the cost Lol, whats you're accountants arguement? I claimed the lot, it's kitted out as an office and used as for business 100% of the time. Thats like telling a builder you know they've bought a new works van and you know they only use it for business, but they can't claim all the money because they could use it for something else. Do you use it for anything else? Did (s)he claim any of it?
Kris ”
As I was on a very tight budget I didn't get a purpose build office but a log cabin/summer house and kitted that out as an office. This was the reason my accountant advised against claiming it against the business. I did claim for the foundations, flooring, insulation, electrics etc. I also made the mistake of admitting that there was a TV and playpen in there!! Not my smartist move! One of those things that you live and learn from.
Lol
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