Entrepreneurs 101, day four â creating a point of difference
In an increasingly online world, it’s comforting to know that a bricks-and-mortar business can still make a fast start to business – even if it’s someone else’s bricks and mortar.
Books Onsite started in 2006 and was the brainwave of a creative accountant, Tim Johnston, who suspects his entrepreneurial inclinations were bred at ‘sea’.
“My father was a ship’s captain who was always trying to find a way to make a living ashore by trying different ventures including property development, a yacht hire business and inventing his own anti-dandruff shampoo,” he recalls. “But it stunk of Dettol.”
On the flipside, Johnston’s bookkeeping business, which actually is more than this, has come up smelling of roses after taking out a number of business awards, including being named in BRW’s fast starters list.
“Although we market ourselves as bookkeeping services, we provide more of a management accounting role to our clients in Sydney, Melbourne and Brisbane,” he points out. “Most of our staff are either degree, chartered accountants or CPA-qualified and we look after the bookkeeping side of things such as accounts payable and receivable management, bank and credit card reconciliations and payroll.”
It’s apparent that Johnston has positioned the company to deliver strength where many small businesses are weak. But it’s more than this. His business doesn’t do tax returns, which can blindside accountants, meaning they fail to become advisers to their clients.
Businessowners often complain that their accountants seem more like an outpost for the tax office rather than a partner in their business. Johnston has seen this and leveraged off this observation.
“In addition to traditional bookkeeping, we look to add value as more of a management accountant by helping business owners measure and forecast performance through providing accurate and timely profit and loss accounts, actual versus budget comparisons and cash flow forecasts,” he explains. “We also manage compliance for superannuation, BAS’s and ASIC returns.”
The strategy was decided on early in the piece that Books Onsite would specialise in onsite bookkeeping and without tax returns. However, the point of difference was that the business’s team, as a CPA practice themselves, would be able to communicate effectively with the clients’ existing tax accountants.
It was smart stuff for the sole founder of the business to note three failings in the bookkeeping/accounting world. First, many bookkeepers are not well-qualified and it means accountants often take issue with their entries and decision processes.
Secondly, accountants see the bookkeeping software often used by small business, as Johnston suggests, “beneath them”. Finally, some accountants are so busy doing tax returns they don’t have time to know the client’s business well enough to be a good adviser.
Bookkeeping serves as a perfect in to establish a relationship with a customer and then it’s only a matter to grow the relationship by adding value. Bookkeeping is so interrelated to cash flow and this is the number one killer of businesses. Most businesses would love an in-house financial controller, debt chaser and cash monitor, so Books Onsite is a price-competitive alternative.
“We have a minimum service level of one full day per week,” Johnston says. “We normally lock in a regular day (or days) per week so that everyone knows which day to make any accounts-related enquiries.”
Queenslander Johnston, now based in Sydney, worked in various accounting roles in the private sector for 10 years including an expatriate stint in PNG with ASX-listed company, Downer EDI, and wound up as financial controller of Downer Engineering Australia.
He jumped ship and gave into the call of the entrepreneurial ‘wild’ in 2001, starting up his own CPA practice and that’s when he saw the gaping hole in the market.
“I recognised many clients were having difficulties finding quality bookkeepers,” he says. “It can be difficult for some business owners to assess the quality of their bookkeeper until the tax accountant reviews their accounts at yearend.”
Johnston says the typical mistakes that result from second-rate bookkeeping are double payment of invoices, incorrect calculation of payroll including leave and superannuation entitlements, and incorrect coding for GST. And making matters worse, he argues sometimes these errors cannot be rectified if not picked up immediately.
Marketing offline and online
While Johnston has grown a face-to-face business, it doesn’t mean he’s an anti-IT Luddite.
“I have always had a passion for finding efficiencies in the way things are done so I make sure that I am up-to-date with any new technologies that can improve systems and hence save time and money for our clients,” he insists.
That said, Books Onsite has used more traditional marketing methods to build the brand, with a bit of online.
Johnston says he uses press releases, which he composes himself, as well as online and print advertising but he has also leveraged off business awards in business publications. He also thought the business benefited from the fact that he placed a very high value on his independence and the fact that the company didn’t take commissions for any cross referrals. This kind of approach is good for word-of-mouth referrals.
And if success came from new age marketing strategies, search engine optimisation or pro-active networking, they haven’t explained Books Onsite’s success. Johnston’s self-promotion technique is as old fashioned as bookkeeping itself.
“I’d much rather learn about a person rather than what they are trying to sell in a social environment, so we have never been any good at marketing,” he observes on the subject.
The old-fashioned approach seems to be working with the business employing 50 staff, 20 of which are full-time.
When asked about his own business’ main challenge, it was the major problem his business was set up to crush – the cash crisis. But true to accountant’s form, he devised a system that brought the pressure down.
“Cash flow was the major challenge when building the business,” he confesses. “We implemented a direct debit system of payment where all of our clients’ bills are processed seven days after they are sent out at the end of each month.”
This innovation was seen as a key turning point in his business as it eliminated the pressure of significant clients who were slow payers. Another business builder was winning over bigger clients who permitted him to refer to them in his advertising, which helped to build the brand and the trust of the fledgling business.
So, what’s the goal that drove this business along?
“I wanted to spend more time fishing,” Johnston admits. “I didn’t have any grand ideas when I started the business. It was more for health and lifestyle reasons.”
The time fishing might not have worked out as planned but he says he does spend more time with his wife and two boys, and also manages a fair bit of time kite surfing.
“I do have ambitions to continue to grow Books Onsite but not at a pace that may compromise the quality of our service,” he explains. “I love what we do so I do not have any kind of exit strategy at this stage.”
Unlike other bookkeeping businesses, he has avoided franchising but it has meant that Johnston has worked hard.
“In the early days, you have to be very hands on and I would do new client set ups myself initially,” he says. “I now have managers in Brisbane, Sydney and Melbourne to assist with this and my focus is on recruiting and training quality staff and also handling new client enquiries.”
On what has inspired him in building his business, Johnston nominated Virgin’s Richard Branson and Michael Gerber’s book The E-Myth.
“My training as an accountant taught me to be conservative with money, which is how you want your accountant to be when they are dealing with your accounts or finances,” he advises. “My business style follows on from that to a certain extent in that I am a traditionalist low-debt, low-risk operator.
“When I look at Richard Branson’s life, he repeatedly risked everything for growth and, although I could never do that, he does inspire you to continually challenge yourself and not rest on your laurels.”
On The E-Myth, he pinpointed his biggest take-out.
“The best lesson I learnt from E-Myth was ‘leverage,’ he says. “You may be technically the best at what you do, but if you can’t leverage that within your business so that your staff can provide the same standard of service or product as you can personally, you have put a ceiling on your growth.”