BRW Fast Starters 2010

2010-Cover-thumb

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The 2010 Fast Starters

2010 2009 Trading NameState Industry SectorChief Executive/sStaff Turnover
2008-09%
Growth
2008-09%
70N/RNational Education AcademyVICEducation and trainingVictor Hawkins51,693,33538.40
71N/RKatie Malyon & AssociatesNSWProfessional, scientific and technical servicesKatie Malyon161,689,5726.70
72B7Dallas Air ConditioningNSWConstructionRodney Jackson111,64l,49231.54
7393Catalogue Central/CC MediaVICInformation media and telecommunicationsRobert Wong181,833,38936.57
74N/RThirdi PropertyNSWRental, hiring and real estate servicesLuke Berry10

1,542,701

665.37
75N/RThe Kanga GroupNSWWholesale tradeAnnalise Law31,466,205122.60
767Books OnsiteNSWAdministrative and support servicesTim Johnston251,41 1,97931.34
77N/RProject ProcureQLDProfessional, scientific and technical servicesGlenn Munro111,330,882196.37
78N/RMacfixit AustrsgliaVICRetail tradeRobert Staszewski31,329,700112.36
79N/RRyan’s Recovery PartnersNSWProfessional, scientific and technical servicesRowan Brown161,329,66394.29
80N/RRapportCMSNSWInformation media and telecommunicationsSteve Sparkes21,284,04459.01
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BRW The Quiet Upheaval

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THE QUIET UPHEAVAL

An industry transforming change is on the way that will revolutionise the profession.
Report: Jeanne-Vida Douglas and Agnes King
Australia’s $14 billion accounting industry will be totally refashioned during the next decade by web-based accounting software. National Institute of Accounmnts senior tax adviser Tony Greco says this software revolution will change both the way accountants deliver services and the cost of providing them.
Many believe it will be a seismic shift for the accounting profession, forcing accountants out of their snug reactive work practices into a more competitive environment.
The shift should occur subtly, much like email has slowly infiltrated the business world. But that will change if the Henry review of taxation decides to scrap compulsory personal tax returns, something touted as a possibility in the May federal budget.
If this comes to pass, close to a billion dollars of industry revenue could be wiped out overnight, Nixon Advantage chief executive Rob Nixon says. It could take a lot of small accounting firms with it, as well as multimillion-dollar
franchises HR Block and ITP Australia.
Those left standing will have to be more active in selling, marketing themselves and servicing clients in ways they should have been doing for years, Nixon says. The ensuing dog fight may hasten the adoption of online accounting software as firms look for every edge.
The First iterations of accounting software arrived on the scene in the 1980s, not long after the first personal computer. At that time, PCs cost $5000 to $10,000 and the custom-built accounting software commissioned by medium practices anywhere from $20,000 to $100,000.
The software development industry went in different directions very early on. Some manufacturers made products
Real time: The web allows accountants to monitor their clients books in real time

“Once a business reaches a certain size you do require face-to-face contact with a client”

 

Tim Johnston
Books on Site

for accountants while others aimed for general business consumption.
“It resulted in accountants using irreconcilable versions of accounting software from different manufacturers written in different codes and sold and supported in different ways,” the chief executive of online accounting software manufacturer Xero, Rod Drury, says.
This fact lies at the root of big productivity losses for small and medium enterprises today Clients email a record of their finances to their accountant or they burn a compact disc and courier it. Two or three days later the adviser picks it up and puts $300 to $500 on the tab trying to make heads or tails of it before they add a skerrick of value.

    “By the time accountants decipher the data new invoices have been raised and it’s out of date. The financial position of the company has changed and they’ve lost the opportunity to advise clients on cash flow, accounts payable or how they might get a loan for a factory expansion or to hire another staff member.
“For 15 years the software has forced accountants to be retrospective in their engagement with clients and dudded small business out of valuable business advice,” Drury says.
Then came the internet. Brands such as Facebook, YouTube, Skype and Google proved that it was in many instances more logical and convenient to use software built, owned and operated by somebody else, software that people in different locations and organisations could access with reasonable security over the internet.
Suddenly accountants and their clients can look at the same ledger in real time. What’s more, accountants given permission can log into a client’s accounts, examine them and make suggestions to
improve operational performance.
“The software is hosted on the internet so there are less problems with different software versions and with transferring data between the customer and their accountant,” Greco says.
“There are some security issues that need to be addressed and it is important to check that client data is being stored securely. However, once you are over these obstacles it’s a far more reliable and practical approach than traditional accounting services.”
It wasn’t long before this new model was given a suimbly obscure name: software as a service, or SaaS.
The larger accountancy firms are steering away from SaaS because of customer concerns regarding data security and privacy However, the technology is being rapidly adopted by medium firms at which the productivity improvements associated with web-based software result in improved service.
Brisbane wealth management provider Logiro is typical of the type of business that has embraced SaaS technology not just for
accounting (using an Australian-made product called Saasu) but also to manage its customer relations database (with software called XPLAN).
“Both these SaaS products improve our back-end efficiency so we can spend more time on the things that matter to clients,” principal strategist Lyn Bell says.
Many of Logiro’s staff work from home, logging into the system from anywhere in the world, which reduces the firm’s overheads. The SaaS systems also automate rnany administrative tasks. Scanning a barcode on a letter of authority triggers a whole series of tasks, such as sending a thank you email or investing in some product.
“In the early days clients were naturally apprehensive about using online software, for some it was as simple as being reluctant to embrace change, others were understandably concerned with data security and integrity? Bell says. “In the eight years that we have been using these services, we have never found security to be a concern.”
For many medium companies the transition to web-based software provides a

big improvement to their data security because externally hosted data provides a higher level of security redundancy and disaster recovery options than many could afford to provide within their own computing facilines.
The main challenge for accounting practices that offer web-based accountancy services lies in finding staff who possess the right skills to use the software.

   Tim Johnston, the managing director of Booksonsite, says accounting SaaS is the most cost effective approach for small and micro businesses and will ultimately enhance the level of service they can afford, although he says larger businesses will still require face-to-face support.
“The increased accessibility does provide greater flexibility to our staff. However, once a business reaches a certain size you do require face-to-face contact with the client due to the physical volume of paperwork and the level of interaction required between the bookkeeper and the client,” Johnston says. BRW
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Peter Switzer – The Australian

Bookkeeping tailored to the client’s story

Some accountants often seem more like an outpost for the tax office

PETER SWITZER

IN an increasingly online world it is comforting to know that a bricks and mortar business can still make a fast start to business – even if it is someone else’s bricks and mortar.
Books Onsite started in 2006 and was the brainchild 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 stank of dettol”.

The company aims to deliver strength where many small businesses are weak. On the flipside, Johnston’s bookkeeping business, which is actually 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 says.
“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 is apparent that Johnston has positioned the company to deliver strength where many small businesses are weak. But it is more than this. His business does not do tax returns, which can blindside accountants, meaning they fail to become advisers to their clients.

Business owners 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 and learnt from 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 accunts, actual versus budget comparisons and cashflow forecasts,” he says “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 but not tax returns. But the point of

The company aims to deliver strength where many small businesses are weak difference was to be that the business’s team, as they were a CPA practice in their own right, 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 accontants often take issue with their entries and decision processes.
Second, accountants see the bookkeeping software often used by small business, as Johnston suggests, “beneath them”. Finally, some accountants are so busy with tax returns they don’t know their client’s business well enough to be good advisers.
And bookkeeping serves as a perfect “in” to establish a relationship with a customer and then it’s only a matter of developing the relationship by adding value.
Bookkeeping is interrelated to cashflow and this is the main 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 inquiries.”
Johnston worked in various accounting roles in the private sector for 10 years, including a stint in PNG with ASX-listed company Downer Engineering Australia.
He jumped ship and gave in to the call of the entrepreneurial “wild” in 2001, starting up his own CPA practice, and that’s when he saw the hole in the market that needed to be filled.
“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 year end.”

Johnston says the typical mistakes that result from second-rate bookkeeping are double payment of invoices, incorrect calculation of payroll, including leave and super entitlements, and incorrect coding for GST. And making matters worse, he argues, sometimes these errors cannot be rectified if not picked up immediately.

While Johnston has grown a face-to-face business, it doesn’t mean he is an anti-IT Luddite. “I have always had a passion for finding efficiencies in the ways things are done, so I make sure I am up to date with any new technologies that

This Business Life

Tim Johnston

CAREER HIGHLIGHT
Making the BRW Fast Starters list

BEST PIECE OF BUSINESS ADVICE YOU GOT
“The most powerful factors in the world
are clear ideas in the minds of energetic men of goodwill.” – Scottish naturalist J. Arthur Thomson

THE WORST
“Your’re spending too much money on
marketing.”

MOST FRUSTRATING PART OF DOING BUSINESS
Watching good clients struggle through
tough economic times.

FAVOURITE MARKETING
TECHNIQUE

Writing articles about bookkeeping and
distributing them through PR agencies.

BUSINESS LEADER YOU ADMIRE
Virgin boss Richard Branson

“I have always had a passion for finding efficiencies in the ways things are done, so I make sure I am up to date with any new technologies that can improve systems and hence save time and money for our clients.”

can improve systems and hence save time and money for our clients.”
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, 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 did not 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 proactive networking, they have not 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 says. The old-fashioned approach seems to be working: the business employs 50, including 20 full-time staff, and has revenue in excess of $2 million. When asked about his own business’s main challege, it is the major problem his business was set up to crush: the cash crisis. But true to accountant’sform he devised a system that brought the pressure down.

“Cashflow was the major challenge when building the business,” he says. “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 trust of the fledging 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 he also manages a fair bit of kite surfing.
“I do have ambitions to continue to grow Books Onsite but not at a pace that may comprimise the quality of our service,” he says. “I love whatwe 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 not meant that Johnston has had to work 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 inquiries.”
On what has inspired him in building his business, Johnston nominated Virgin’s Richard Branson and Michael Gerber’s book 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 says. “My business style follows on from that to a certain extent in that I am a traditional 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 tocontinually challenge yourself and not rest on your laurels.”
On E-Myth, he pinpointed his biggest take-out.
“The best lesson I learnt from E-Myth was ‘leverage’,” he says.
“You may be technically 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.”
On the future, Johnston is shooting for more growth and expects to helped by a government crackdown on bookkeepers. “The Tax Agent Services Act 2009 means there will be quite onerous requirements in terms of qualifications and experience to provide BAS services, which is a large part of bookkeeping,” he says.
“This will help insure that there is a higher standard of bookkeepers within the industry.”
One man’s threat is another’s opportunity.

Peter Switzer is a founding director of Switzer Business Coaching

www.switzer.com.au
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Smart Company

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Books OnSitetim-smart-company
Start Up Rank: 24
Revenue: $1,411,979
Founder(s): Tim Johnston
Industry: Property and business services
Head Office: New South Wales
Employees: 17
Website: www.booksonsite.com.au/

Sometimes the best businesses happen by accident. Tim Johnston originally started Books Onsite as a support service to an accounting firm, but in just three years, the company has transformed into one of the five biggest book keeping firms in the country, with revenue of $1.4 million.

But Johnston experienced problems from the start. The company had a few clients go under which cost the business $20,000, and he admits he was hesitant to go after clients who owed money in order to keep everyone happy and keep their business.

But introducing a direct debit system, along with new remote access technology that allows him to take control of staff computers to fix problems, has allowed Johnston to pick up some new clients and keep accounts flowing.

MOST CHALLENGING PART OF STARTING YOUR BUSINESS:

“Getting new clients and finding good staff. Through trial and error you have to find the best mediums that suit your business.”

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Nichework BRW Fast Starters 2009

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NICHE WORK IF YOU CAN GET IT

Doing other people’s dirty work has become a sure way to make a buck for these Fast Starters newcomers.
Report: Gina McColl

…”Books Onsite founder Tim Johnston is
almost an accidental entrepreneur. The
former financial controller for a big listed
engineering company quit the corporate
world seven years ago. “I got sick of
working until 3am,” he says. So he hung
out his shingle as a certified practising
accountant and did the usual run-of-the-mill tax jobs with a bit of bookkeeping
advice.
Gradually, he noticed a considerable
niche that wasn’t being serviced: the
myriad small businesses with bookkeeping needs that were not big or
sophisticated enough to require hiring a
full—tirme accountant, and which needed
regular onsite help to manage their cash
flow and accounts. The big firms weren’t
interested, and there were plenty of small
traders, but no one doing it really
professionally, Johnston says.

Books Onsite was founded in 2006
with three staff. New customers would get their books and systems reviewed by
Johnston, a CPA, then one of two
bookkeepers would maintain the business
after that. The company payroll has since
grown to 45 staff.
The biggest challenge, Johnston says,
has been controlling the growth and
maintaining quality – and the key to that
has been good staff. “A lot of people say
the client comes first, but for me it’s staff
first and clients second.” Clients may not
like to hear this but they should, Johnston
says, because good staff lead to great
service, which leads to happy customers.
Johnston has so far resisted franchising the business, unlike competitors including Ledgers
Bookkeeping and Express Bookkeeping
“It’s great for rapid growth, but whether
you can retain quality, I’m not sure,” he
says.
   The economic downturn has, paradoxically, been a help to Books Onsite.
Outsourced services are more in demand than ever and great staff are much easier to attract and retain, Johnston says. “We are able to offer staff the flexibility of what days and geographical areas they prefer to work, which they can’t achieve by working directly for one client- this flexibility means our staff retention levels are very high.” B
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