Welcome to our founder lessons series. Today, Anthony Hanson reveals how he launched an accountancy business that supports businesses with cloud technology.

Anthony Hanson is the founder of iFinance Department, an online accountant for small business. They provide a range of services from virtual CFO to online bookkeeping. He founded iFinance Department as he thought small business were missing out on the advisory side as well as paying too much for the bookkeeping. iFinance set out to change that.

Introduce iFinance Department

iFinance Department is a virtual finance department (accounting department) for small businesses.  We provide advisory, accounting and bookkeeping services as an affordable solution because our clients only pay for the resources they need.  This means our clients can have their own CFO as well as a team of accountants and bookkeepers handling all of the financial aspects of the business and advising our client to help grow their business.

Why and how did you start your company

Many businesses starting out will use a bookkeeper to record transactions and an accountant to handle annual compliance work.  When they get large enough, they will leave their bookkeeper and hire a full-time accountant. The accountant will need to be very hands-on as they will likely be a glorified bookkeeper.  Most of the time will be spent doing the bookkeeping, and then the rest will be preparing the management accounts. A management accountant will likely be hired for this role, which means the accountant will not have the experience to give good advisory services, and will also be overpaid for all the bookkeeping services provided.

Having been involved in SMEs of various sizes, from start-up to multinational group companies, I felt that the small business was missing out on the advisory side as well as paying too much for the bookkeeping.

I wanted to create a company that would provide small growing businesses with an experienced CFO managing a team of accountants and bookkeepers to provide a full service solution at a cheaper price than hiring a management accountant.  This means a much better service for a lower price, helping to enable our clients to grow their businesses.

When I had the idea for this business, I was the FD for a group of companies based in the UK with operations around Europe.  I realised that with the advancements in cloud computing, I could provide a full accounting and advisory solution for many small businesses remotely.  Or at least mostly remotely as I meet with my advisory clients regularly for board meetings or just to keep close to the business.

For the first year, I continued to work for my employer full-time and worked on building my business in the evenings and weekends.  It didn’t take long before I used up my free time, so I had to take a pause on adding new clients so that I wouldn’t let down my existing clients.  I used this time not only to work for clients but also to prove to myself that the concept worked and could be a viable business. I developed a business plan that included a cash forecast using the client wins I had achieved over 4 months to project forward over 2 years.  I felt that I needed to allow 2 years to build the business to where it could sustain my family, and then continue to grow from there.

Once I realised that a 2 year plan was viable based on the performance to date of my business, I then looked into arranging the finance needed to allow me to leave employment and focus on my business full-time.

I registered my business as a limited company on the 21st of January 2019.  By October, I had my finance in place and gave notice of resignation to my employer.  With a 3 month notice period, my last day of employment was the 31st of December 2019.  As of the beginning of this year, I have been focused solely on my business and clients.

What has been your biggest success factors

One of the clients I won during those first few months came to me looking for a bookkeeper.  They were the type of recent start-up that had a bookkeeper for day-to-day needs and an accountant for annual accounts and tax returns; however, they are a high growth company that is in the process of raising capital through a series of private equity.  I was able to show them everything that I can do for them, and throughout 2019, they continued to add services until by the end of the year, they agreed for me to act as their CFO and provide all accounting and bookkeeping services for them to help them through their growth journey.

Additionally, when I gave notice to my employer, I treated it as a sales pitch.  Rather than just tell them that I was resigning my position, I started by telling them that I could save them some money.  As much as they would prefer to have a full-time FD, they believed that having me as their part-time FD was better than taking a chance on someone else.  This resulted in gaining my largest client to date.

What are the biggest challenges you have faced launching and running the company

The biggest challenge has been to get the word out to find the right clients that can benefit most from our services, and then get those people to understand how we work.  Most business owners think of their accountant as someone to avoid. Their accountant is very expensive and is really only used when required for compliance work. I think the accounting industry has promoted this perception as most accountants really don’t want to get involved in their clients’ businesses.  They think it’s too much work and they get paid well enough to prepare annual accounts and tax returns.

Even when I have won a client, it can take a while to develop the relationship and show my client that I actually do want to be involved on a regular basis and there is no additional charge to the client for this.

The reason I do not charge extra for regular contact and advice is that it is priced into my advisory and accounting fees.  I set a fixed price based on my client’s turnover, and other than inflation, my fee never increases unless their business’ turnover increases.  This ensures that I get a fair income based on the size of their business, and it aligns our motivational interests with the client, which is growing their business!

Which do you think is most important: the right market, the right product, or the right team?

Businesses in all markets benefit from a good CFO, and I have experience working in various industries, so for us, we are not as concerned with the market.

As our product is a service provided by a team, we cannot have the best service without the best team, so for me, these two are a tie.  As my business is still in the start-up phase, my team at the moment is me with the help of a bookkeeper working on a casual basis. This arrangement suits her as she has children in school, and that keeps her motivated.

As my business grows, and I need to bring in more help, the team will absolutely be my primary focus as they will have regular contact with our clients, so finding the right team and motivating them will ensure we provide the best service for our clients.

Final words for those chasing the startup dream

If you are passionate about your business concept, then find a way to do it!  As long as you can make a sufficient profit, then you will be so happy that you took the leap.  If you need assistance with planning, financials, and how to do it, give me a call. I would love to go on that journey with you!