Bookkeepers take to the cloud

Nobody likes paperwork: trawling through receipts, spreadsheets and inputting data into fields can be boring and soul-destroying work. Entrepreneurs don’t want to be accountants, but then accountants don’t want to fiddle with paperwork either. The legwork of business administration is borne by the humble bookkeeper, who collates all the information from sales ledgers, suppliers, debtors, staff expenses and bank statements and presents them in neat packages for the accountant to turn into a financial report.

“We are like the glue in the middle, we provide the books for the accountant so they can do their financial reports, which is where they make their money and add value,” says Mandy Bagot, founder of franchising business Cloud Bookkeeping, which she established in 2010. “Accountants don’t to want to go through receipts,” she adds.

Her business is one of a number of bookkeeping and accountancy franchises that are embracing new cloud-based software and shaking up the sector. “Cloud technology has opened up the market and is going to get rid of all the bookkeepers that don’t want to change,” says Bagot. She may well have a point as the cloud has the capacity to disrupt many industries and when combined with an easily replicated franchise model, it packs a rather powerful punch.

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The right people

There are different variations on these franchising models, and people from different business backgrounds can get involved. Bagot’s franchisees aren’t necessarily bookkeepers, instead they are networkers and socialisers that want to connect with other businesses. “They don’t have to have bookkeeping experience, but they need an analytical and logical mind and attention to detail. They have to be able to sell and so they need to be a people person.”

For Lisa Curteis, director of the Rosemary Bookkeeping franchise, the message is similar and those who buy one of her franchises receive training where required, she says. “If you have a wealth of experience in bookkeeping we don’t expect you to go through all that again. Instead we’d focus on areas where they need help like marketing and website. Not all franchisees are bookkeepers; one of our top franchisees is from an IT background.”

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The model

Franchisees purchase an area, which tend to cost around £17,000, and then work to attract business. Typically, their clients are small businesses that need help getting their books in order but are too small to hire someone full-time. The main job for franchisees is to network (see case study) and bring in the sales. In some cases, the franchisee does the processing, or sometimes they hire a bookkeeper, or even send it off to be done centrally. The franchisee also liaises with the client’s accountant, who will prepare the financial reports. From this franchisees can earn a few hundred pounds per client each month. Therefore if a franchise can amass 25-30 regular clients, they could be turning over in the region of £100,000. For Bagot, this is precisely her aim: “I want all our franchisees to earn £100,000 per year. You don’t need many clients to do that.”

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Software

The growth of cloud technology is shaking up industries and accountancy is no exception. For the franchisors however, it means they need to be up-to-date with all the latest software and this can be a challenge. Although Sage has been the dominant force in UK accounting software for some time, there are other packages, which some prefer, especially in the cloud. Intuit’s QuickBooks and relative newcomer Xero has its supporters too. For franchisees it means the business owners often call the shots and flexibility is required. “You’ve got to be aware of all the different software and to be able to offer multiple solutions to your clients,” says Bagot.

Curteis similarly regards cloud-based software as the way forward and has seen a lot of growth in the past few years. “When we launched, the cloud wasn’t so huge but everything has grown quickly since. The software providers are really pushing the cloud solution and more accountants want the bookkeepers to use it.”

Of course, some small businesses get by with simple spreadsheets and if they do choose software then the franchisee may have a hand in recommending the best package for them. Handling software issues and functionality problems is part of the job for these franchises. “The problem with a lot of cloud-based software is that it doesn’t have the same functionality as desktop software,” says Curteis.

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Is it for you?

The UK is not short of small businesses and many would benefit from a bookkeeper and better financial records. This is a growth area and, as it is utilising the latest technology, it might well prove to be highly disruptive. However, franchisees should be aware that franchises don’t come without risks and that they tend to be hard work, especially at first. It is also essential that the business has a good relationship with their franchisor as they will be working together for many years.

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Networking”to success

Alistair Moffat had grown tired of his office job working as a demand planner for a battery business; he disliked his commute, wanted to spend more time with his family and become his own boss. After looking for a business to buy, he found his opportunity at a franchise exhibition where he met Mandy Bagot, founder of Cloud Bookkeeping. She encouraged him to purchase a franchise.

“We thought we’d try to start it part-time and then go full-time when the business was more established. But after the first year we realised that we couldn’t do that. I needed to be at breakfast networking events when I was commuting to work. I gave up work in September 2012 and gave it my full attention. I started networking three to four times per week and picked up 11 clients in that first year. That doesn’t sound that much, but it’s ongoing business every month.”

Moffat now has 15 clients and made revenues of approximately £30,000 during his last financial year, although he expects to grow significantly and his wife is now working with him on the business. “It takes time to build relationships and trust. The first year was largely about getting our brand out there and getting people to know me. It really is about networking, networking, networking.””