Out of all the accountancy & financial franchises on the market, a bookkeeping franchise might appeal to you for a number of reasons. Perhaps, after working as the bookkeeper for a company, you've decided to go at it for yourself. Maybe you have been made redundant at your current place of employment and believe starting your own business is the answer. Possibly you've always had a burning desire to start your own business, are good with numbers and want to help others succeed.
No matter the reason, running your own bookkeeping practice can be extremely fulfilling. For one, it can be financially rewarding to start your own bookkeeping business. In addition, by helping to run your clients’ businesses smoothly and efficiently, you will also be providing them with an essential service.
Below you will find some information on the industry, franchising, and what to look for during your franchise search.
The Difference between a Bookkeeper and an Accountant
But first, a discussion of bookkeeping and its close counterpart, accounting. They are very similar, but vary in key ways.
Per Business News Daily, “bookkeeping is a transactional and administrative role that handles the day-to-day tasks of recording financial transactions, including purchases, receipts, sales and payments. Accounting is more subjective, providing business owners with financial insights based on information gleaned from their bookkeeping data.”
Common bookkeeper tasks include:
- Recording financial transactions
- Posting debits and credits
- Creating invoices
- Managing payroll
- Maintaining and balancing ledgers and accounts
The UK Bookkeeping Industry
Bookkeepers are most often employed by business owners that prefer to focus on their core, front-of-house functions rather than back-office tasks. Every business, no matter how large or small, has a need for bookkeeping. All companies have to maintain accurate and up-to-date financial records for tax purposes – not to mention simply maintain a finger on the pulse of their business operations.
According to general industry reports, industry revenue has declined slightly over the past few years with companies preferring keep their bookkeeping activities in-house.
As with all industries, the pandemic has had the most impact on the field as of late. As for the future, per market researcher IBISWorld:
<blockquote>The industry is expected to recover gradually from the decline caused by the COVID-19 (coronavirus) pandemic over the next five years. Growth in the number of businesses determines the potential growth in demand for bookkeeping services. As the UK economy grows, an improvement in levels of business profit may slowly start to reduce the number of business closures and increase business formations. This will boost the potential number of businesses that industry participants can market their services to. The adoption of IT and telecommunications technology is also expected to increase, providing an opportunity for firms offering online and cloud-based services.</blockquote>
Here are some more interesting facts about the UK bookkeeping industry:
- The bookkeeping industry is considered to be in a mature life-cycle phase, due to the increasing number of technological innovations in the field.
- There are approximately 5,000 businesses and 30,000 people directly employed in the UK bookkeeping industry.
- A bookkeeping franchise is more likely to succeed with word-of-mouth recommendations, a qualified work force and user-friendly products and services.
- The fall in the UK pound has made UK bookkeeping franchises more price competitive.
- A bookkeeping franchise can increase revenue by offering advisory services to clients.
Potential Bookkeeping Franchise Clients
When considering whether to buy a bookkeeping franchise, you should examine the scope of the sector and assess its potential.
As noted before, there is not a business that couldn’t benefit from bookkeeping assistance. However, many are still unaware that the industry is not limited to businesses and private individuals. Clients can also include the following:
- Government agencies
- Insurance
- Lending
- Nonprofit organisations
- Securities trading
What to Look for in a Franchisor When Selecting a Bookkeeping Franchise
When determining which bookkeeping franchise you may want to invest your money and time into, you should consider the role of the franchisor. How much and what type of support you would like to receive from the franchisor both initially and on an ongoing basis.
Although all franchisors provide their licenced and easily recognised name, the level of support and kinds of services they offer will vary. A hands-on franchisor may extend a combination of the following:
- Advertising and a proven approach to marketing
- Assistance choosing and developing the franchise site
- Continuing business advice
- Field support from the home office
- Licencing
- Management training
- Mentorship
- Operating manuals
- Quality control
- Supplies and support equipment
It is essential that you realise that the franchisor owns the rights to the name and its business strategies. You, however, independently own your franchise. Therefore, you are accountable for the everyday decisions that affect your business and any clerks or support staff members employed by it.
If your company experiences an increase in business with a steady stream of revenue and profitability, it is because of your efforts and managerial skills. If it suffers a loss, however, it is your responsibility, as well.
Choosing a franchisor who provides adequate support without being overbearing will benefit both parties.
Finding the Money: Franchising vs Independent Businesses
Investing in a franchise is often considered a safer option than creating an independent business from the ground up. This is certainly the case for lending institutions, franchises have been more likely to appeal to banks and moneylenders and draw the necessary capital to start the business since franchises have a demonstrated history of feasibility and market sustainability.
Independent companies often find it a challenge to procure loans with sensible borrowing rates since they have no evidence that their business will reach potential. This lack of faith from lenders has the potential to jeopardise their company from the start.
Having enough money before you start is important. The first couple of years of any business can bring challenges, placing most independent businesses at imminent financial risk. Without the ability to generate enough revenue to cover initial and operating expenses, independent business owners will likely find the venture unviable. In fact, more than half of all independent start-up companies go out of business within the first two years in the UK.