Whether you’re thinking of setting up as a self-employed bookkeeper, starting your own accounting practice or making changes to an existing business, deciding on your business model is a big part of the process.
Put simply, your business model is your plan for making a profit. It identifies the products or services you plan to sell, who you want to sell to and other key information about how your business will operate.
When creating or adjusting your business model, you should consider the following:
The services you want to offer
A key component of your business model is the set of services you plan to sell. Some practices build their business models primarily around compliance services, whereas others focus on offering technical advisory services to their clients.
The shift from compliance towards advisory services is a hot topic in the world of accounting. From help with understanding cashflow to guidance on new legislation, advising clients is an increasingly important part of many practices’ business models.
Who you want to work with
A crucial part of your business model is identifying who you want to sell to. This will depend on a variety of factors, including the services you offer and whether you specialise in a particular area (for example, accounting for landlords).
The type of customer you want to sell to may also impact on the number of clients you choose to take on. For example, a practice focusing on providing compliance support to sole traders may be able to take on more clients than a practice specialising in advisory services for larger companies.
Working with a large number of smaller clients can reduce your reliance on a single business relationship, so if a client leaves, you’re less likely to be left scrambling to make up the shortfall.
However, working with many clients can make it harder to stay on top of what each client needs. This makes it more difficult to provide bespoke, tailored advisory services and the workload can sometimes be difficult to manage unless you put some good systems and strategies in place. Check out our dedicated post to learn more about strategies for working with multiple clients more efficiently.
In contrast, working with fewer, larger clients could allow you to spend more time on valuable advisory services. This may also reduce client turnover, as you’ll be better integrated into your clients’ businesses. The potential downside is that it can increase your reliance on individual clients - meaning that if a client does leave, then your income can take a significant hit.
How you price your services
Another key component of your business model is how you choose to price your services. Many practices use hourly billing or charge a fixed fee for a particular service, but other options are available.
For example, an increasingly common approach is to charge clients a monthly retainer. This often covers ongoing bookkeeping and compliance activities, with additional services available at a fixed additional fee.
Alternatively, you may want to consider a value-based approach. This means setting the price of a service based on what a client is prepared to pay. This approach may be particularly suited to advisory services where a client might pay more for your expertise.
Other things to consider
Understanding what you’re selling, who you’re selling it to and how you’ll price your services are key to creating a successful business model, but they aren’t the only things you’ll need to think about.
Your business model is your plan for making a profit, so you may also want to consider what resources your business already has that could help. This might include thinking about how to utilise your team effectively to attract new business, or how best to tell potential clients about your success if your practice has won awards, for example.
If you have employees, you should also consider their skills and experience. Those who are best suited to delivering advisory services may not be quite so well suited to compliance work, for example, so your employees’ skills may impact on your business model and determine whether or not you need to hire additional staff.
It’s also important to think about your value proposition - the reasons why a customer would choose your product or service - and how you’re going to market this proposition to the world. Check out our marketing tips for accountants and bookkeepers for inspiration on growing your client base.