Make money your business: financial services

by Domini Stuart
“We do DiSC profiling on everyone who is considering a franchise to help both of us get an idea of their natural behavioural style,” says John Birse, CEO and national divisional franchisor of the Jim’s Bookkeeping division. “We find that many are in the C for conscientious range – analytical, reserved, precise and systematic but not naturally extroverted or outgoing.”So why are there so many successful franchisees in this area? Clive Barrett, managing director, First Class Accounts, believes it’s all a matter of coaching and support.
“It’s interesting how many potential franchisees start out by saying ‘I’m not a salesperson’,” he says. “We help them to see that you don’t need to be. Every time you talk to anyone, you’re selling yourself. And, while being part of networking groups might initially take you out of your comfort zone, once you’ve been taught the basic skills it soon becomes second nature.”
Barrett leads a group of investors who purchased First Class Accounts in January this year.
“One of the features that appealed to us is that there are around two million small to medium enterprises (SMEs) in Australia and bookkeeping is a major issue for most of them,” he says. “My background is direct response television and I also saw an opportunity to use television to generate exposure for the First Class Accounts brand as well as to help generate leads. We think our new national TV campaign may be touching a raw nerve with the slogan “Give us your books and we’ll give you back your life” because many people who are already working incredibly hard feel overwhelmed by compliance issues like BAS and GST.”
Many financial services franchises are home-based, which brings the benefit of flexibility and a low cost of entry, generally around the $30,000 mark. For many people, this is a much more realistic goal than a franchise requiring an investment in retail premises or expensive equipment, which can range into the hundreds of thousands of dollars. At the same time, home-based franchises don’t have to be limiting. An ambitious franchisee will have opportunities to expand; for instance, a number of First Class Accounts’ franchisees have gone on to open one or more offices.

 

“All of our new franchisees undertake a seven week training program which includes the fundamentals of running a business,” says Barrett. “This is followed by an ongoing program of mentoring support, regional training, a help desk, forums and one on one business development, including help with gaining a Certificate IV in Financial Bookkeeping Services. Franchisees also benefit from our close relationships with alliance and branding partners including leading software retailers, banks and accounting firms.”
Barrett’s investor group was also impressed by the camaraderie and spirit among the franchisees.

On-the-job qualifications

While many franchisees start out as bookkeepers or accountants, qualifications are not always a prerequisite. “Bookkeeping is one of the rare industries where you can come in with no formal qualifications but build up to Certificate 4 – the educational standard you need in order to become a BAS agent,” says Birse. “There are a lot of stay-at-home parents who would love to run their own Jim’s Bookkeeping business but think they’d have to go to university first. The reality is that, as long as you have the basics of bookkeeping up to trial balance, you can build up competence through practice and end up with both a qualification and your own business.”
Other would-be franchisees are qualified but fed up with working for someone else and spending hours travelling to and from work when they could be at home with their family.
“Again, they love the idea of running their own business but they don’t know how or where to start,” continues Birse. “Once they have the support of a franchise and all the help they need with networking skills, marketing and branding they are very motivated to succeed.”
Jim’s Bookkeeping franchisees also benefit from the relationship Birse has developed with major software companies such as MYOB, QuickBooks and Zero.
“These companies understand that, while anyone can buy and run their packages, businesses still need the support of a professional bookkeeper. That means they’re happy to work very closely with us,” he says.
Birse has a background in training; Jim’s Group was originally a client. “As a group, Jim’s has 32 different service areas and I saw a great opportunity to provide bookkeeping services to all of those divisions,” he says. “I was also very interested in the franchising concept. Jim’s is a very successful franchise model and I liked the fact that it is based on a very supportive relationship between franchisor and franchisee. For instance, while some groups charge a percentage of earnings, Jim’s has a fixed monthly fee, which I think is a much more effective way of rewarding enterprise.”
Another member of the group, Jim’s Finance Professionals, helps clients to source all kinds of finance from a wide range of lenders. “We work on a client referral model, with emphasis placed on outrageous customer service and forming life-time client relationships,” says  Mike Woodrow, divisional and regional Victoria franchisor. “Our training, both initial and ongoing, focuses on the actions, abilities and skill sets that create this type of customer relationship. We include a program called LAMP (Local Area Marketing Plan) in our training that covers a wide variety of marketing activities that are designed to generate market awareness and profile for the franchisee/broker. We also introduce them to a variety of people from within the Jim’s Group, allowing them to establish easy networking relationships.”
Woodrow recognises that it can take time for someone entering the industry to establish a client base or professional network. To get them started, Jim’s Finance Professionals contractually guarantee a minimum of 12 leads per month for the first year of operation.
“These leads come from a variety of sources, including our national call centre system, the Jim’s Group website, the Jim’s Finance Professionals website, internal referrals and leads from marketing activities such as Reach Local,” he says. “After the first 12 months our franchisees are generally well established, but they can continue to access leads from our website or the Jim’s Group free of charge. We can also supply externally-sourced leads for a cost which depends on the source.”

Easing business cash flow

The Interface Financial Group helps small businesses access the working capital they need to maintain cash flow. “When small businesses are doing business with larger businesses, it’s the larger business that dictates the payment terms,” explains David Hechter, master franchisee and chief operating officer. “It’s common for them to take 60 to 90 days to pay, so you end up with a perverse situation where a small business is effectively financing a large business.”
Rather than having to sit it out, a client can sell the invoice to the Interface Financial Group and immediately receive up to 90 percent of its value. When payment is eventually made, the Group deducts a fee calculated on the number of days it was outstanding and gives the difference to the client.
“There are other companies offering a similar service but they tend to lock in a business for 12 to 18 months whereas our clients can simply use us when they need us,” says Hechter. “We’re also prepared to buy relatively small invoices. The average transaction for us is from $35,000 to $50,000 and we have even gone as low as $10,000. Not a lot of finance companies want to play in that market.”
 When small business owners are facing a cash flow challenge they often turn for advice to people they trust such as their bank manager, an accountant or a lawyer. Hechter says that building strong relationships with these people is crucial; referral is by far the most successful way of marketing this kind of service.
“We give franchisees a lot of training and support in developing these relationships,” he says. “A local presence is vital, and that’s why the franchise model works so well.
“Our franchisees can make themselves available personally, get out and kick tyres, make sure they’re comfortable with the legitimacy of any business seeking help. They also become known as a supporter of small business in the area. That brings in more referrals, and it also brings the satisfaction of helping local businesses to grow. We’ve seen some really dynamic businesses flourish once we’ve helped them to solve the cash flow problem. Our franchise is about making money, but it’s also making a difference.”