As accountants, we are used to talking about our clients’ businesses. Not so much our own business.
This month we would like to chat about Wingman’s business model and share a few of our own growth strategies.
Hopefully, this sparks a few ideas for your business too.
Historically accountants (like many professionals) sold time for a living. Many still do. This model revolves around keeping track of time spent on different tasks and charging clients an hourly rate for work done.
There are several drawbacks to this approach. Suffice to say that there are only so many hours in a year, and if you stop working (holidays, weekends, sleep) you stop billing. Not to mention the admin hassle of keeping timesheets…
“Software As A Service” (SaaS) popularised the concept of paying fixed monthly fees for a wide variety of software services – think Netflix, Office365, Spotify, etc.
The SaaS wave also hit the accounting industry in the form of “cloud accounting packages” like Xero, Sage, QuickBooks and many others. In South Africa, this gained a lot of momentum between 2015-2020, with the COVID lockdown restrictions in 2020 really supercharging the adoption of cloud technology for firms that otherwise might not have considered it.
Some of the early accounting pioneers saw the opportunity to introduce “value-based pricing” along with cloud tech like Xero.
What is it worth for a small business to have compliance taken care of and have real-time access to their accounting records? Appointing an in-house bookkeeper might cost R20k per month, so if you can spend R10k to outsource that entire function to a team of people it sounds like a great deal that offers fantastic value hence “value-based pricing”.
Most small business owners don’t care how long it takes us to do things or how many individual tasks we perform – if you receive great service, the books are kept in good order and SARS is happy, Bob’s your uncle.
When Wingman launched in September 2017 we started on this value-based pricing model from day 1, essentially charging monthly retainers instead of hourly billing.
We were not the pioneers of this model, but very much early adopters here in SA.
Here are some metrics of how that turned out after five and a half years:
- 82% of our annual revenue consists of “monthly recurring revenue”.
- Roughly half of the remainder are once-off consulting projects, and the other half consists of clean-up/take-on projects and registrations.
- The model is highly scalable average year-on-year growth of 43.2% over the last four years.
- Our monthly recurring revenue covers our overheads, so once-off work is theoretically profit (a big chunk of this free cash flow is reinvested into the business to fuel growth, i.e. hiring new staff to have the capacity to sell more work).
- Overhead breakdown: 67% staff costs 16% software costs (mainly Xero) – this is significantly more than traditional firms. 17% all other costs
Here are the main growth strategies that we are actively implementing:
- Opening a second Wingman office in the Western Cape in 2021
- Adding new service lines (i.e. diversification), especially since March last year when we started a tax division and more recently with the launch of our Annual Financial Statements drafting division.
- Looking beyond SA’s borders to the US (and now also UK) to provide offshore bookkeeping services to earn foreign currency income.
- Partnering with Anchor Capital in a joint venture to provide wealth management services that we are unable and unwilling to offer. We co-hosted our first event with them on the 19th of May at Anchor’s offices in Bryanston.
- For the first time we are actively trying to acquire another business that could give a huge boost to our overall turnover and add a bunch of specialists to our team. Hopefully, we will be able to share more info on this in next month’s newsletter!
Make no mistake we make many of our own mistakes along the way!
And in more instances than we would like to admit we’ve been incredibly lucky. Lucky to be prepped & ready when an opportunity came knocking. Lucky to have an incredible team that keeps Wingman flying.
The point is not that we have it all figured out the point is that if you would like to brainstorm ideas for growing your own business, please chat with us!
We might be accountants, but we are also very much entrepreneurs on our own journey of building Wingman into something that Pablo Phitidis calls an “Asset of Value”.
Keep firing those afterburners at your business and remember, as always, we’ve got your back!
The Wingman Accounting Team
