When founder Tim Johnston started BooksOnSite in 2006 he took a punt that his 15 years’ accounting experience would enable him to build his own accounting company.
“To be honest, I didn’t know exactly what I was doing for the first couple of years,” he says.
“I thought I’d give the idea a good go for two years and if it didn’t work out I’d return to the workforce.”
But in three years, he already boasts annual revenue of $2.5 million.
Get business news first
Sign up to SmartCompany’s daily newsletter
Johnston mainly attributes his success to having quickly changed direction early on in the game.
Johnston had left his job as a financial controller for an ASX listed company with the goal of growing an accounting business servicing corporate clients. But it wasn’t until he saw the demand for part-time onsite bookkeepers that he realised he’d found his niche.
“A lot of smaller companies don’t have enough work to justify a full-time bookkeeper. And a lot of high level bookkeepers and accountants are looking for flexible hours but prefer not to have the hassles of chasing up accounts and the other issues that come with working for yourself,” he says.
Today, BooksOnSite has around 50 bookkeepers servicing clients in Melbourne, Sydney and Brisbane with an average turnover of $2.5 million. This makes the company one of the five largest bookkeeping businesses in the country.
But BooksOnSite faced early challenges in balancing growth with cashflow. “We had one or two clients that went belly up and we lost a fair bit of money… We lost about $20,000, which had a pretty huge impact because we’re a thin margin business. So that $20,000 on a client represents about five years of margin. It was a pretty massive hit.
The young company was also reluctant to chase clients for its own overdue accounts.
“Early on you are just so desperate to keep all your clients happy that you are almost a bit afraid to upset them by calling and chasing for money.”
A turning point came around 18 months ago, when Johnston introduced a direct debit system for his clients.
“It was the best thing I ever did – I’m surprised you don’t hear more about it. When we get new clients on board and they sign up a contract, they also sign a direct debit agreement. We set it up through a third party because some clients are hesitant, but if they know it’s possible to call up and cancel at any time it alleviates those concerns.”
It wasn’t until the business’s second year that BooksOnSite was “able to pick up a few decent clients”. But Johnston was able to advertise the contracts with these larger clients to strengthen his branding and gain market trust.
This growth also meant the company could put in place systems to help smooth client introduction. Previously, it had been hard to balance staff work requirements with an excess capacity to work with incoming clients.
“At the end of 2007, when we were approaching $1 million turnover. I was finally able to hire a manager in each city to go in during the client’s initial few weeks,” Johnston says. “In that stage they go in, do an audit review, tidy everything up and write up a procedures manual for the client.”
This system also means managers are familiar enough with clients to step in when staff are sick or on leave, providing a flexibility that helps staff retention.
Today, Johnston attributes the company’s success to extensive staff recruitment, training and quality control. BooksOnSite spends around 3% of its turnover on training. It’s a lot, Johnston says, but “if you want to grow, you have to”.
“I think we could grow a lot faster but I’ve chosen to hold back our growth to some extent, just to maintain the quality.”
Johnston monitors and engages with staff through remote access technology that lets him log onto staff computers and take temporary control to assist with queries and problems. In addition, he maintains a CPA on call for employees with questions on the job.
He says this sets the company apart from competitors with less support. “If [other companies’] staff are stuck on something they might need to ring the client’s tax accountant, who is going to charge them for that.”
And unlike most of Australia’s larger bookkeeping businesses, Johnston doesn’t franchise. “Again, maintaining quality is the main concern, although we might go down that route in the future.”
There are still challenges to future growth. Johnston wants to introduce radio and TV advertising, which he believes would bring significant growth.
“The problem is you have to basically have a call centre set up to deal with the influx of enquiries, because you see much more immediate results than with print advertisements.”
But Johnston is confident enough in BooksOnSite’s current systems to expand across the country and even to New Zealand, where has already registered a company website.
“There’s huge growth potential in Perth and even Darwin… and New Zealand uses very similar systems to Australia so that’s the logical next step,” he says.
“I’m too busy to sit and navel gaze at the moment, but I’m looking forward to that down the track.”