BROOKSON’S CHIEF EXECUTIVE Martin Hesketh has come under fire in the last year, especially from his peers. The reason for the criticism? He has suggested old-fashioned accountants fail to meet the needs of sole trader clients.
Earlier this year, Brookson commissioned a YouGov poll which found 51% of self-employed professionals felt their accountant should be more proactive through the provision of up-to-date information on tax liabilities, profit and cash flow – based on 1,000 self-employed respondents.
The survey, and Hesketh’s comments at the time (“it is clear the annual trip to the high-street accountant is an anachronistic practice and one which is limiting the ability of this workforce to play the full role it undoubtedly could in supporting UK plc”), caused much debate.
Accountants argued against Hesketh, claiming that clients don’t want to fork out the extra cash in order for them to do so – and if accountants began charging more during times of tightened belts, their customers would go elsewhere.
“I believe that accountancy services will progress in the direction we are taking it. We are doing things in a different way and some accountants can feel threatened by that,” said Hesketh.
This is where Hesketh claims Brookson excels. As part of a yearly, annual or one-off package payment, customers can receive constant dialogue with their accountant, business advice and some legal services.
Brookson presents itself as a one-stop shop for smaller micro entities, sole traders and contractors. It provides accountancy, tax, employment, and soon legal, services to any business that signs up.
It has about 170 employees and 8,500 accountancy customers – who are each allocated an account administrator. A rough guide to the costs for a limited company would be £1,500, for an all-inclusive service such as the year-end accounts prep. For £750 a client can have just the year-end taken care of, and for an unincorporated business it works out to about £37.50 per month for the latter option.
The ethos of the company came about with its inception back in 1998 when two freelance contractors, one an engineer and the other an IT expert, and their wives were fed up with high-street accountancy offerings.
“The service [Brookson’s founders] received from the high street was too narrow and didn’t help them come up with adequate financial planning, and they even ended up receiving surprise tax bills. They wanted something as easy as possible that allowed them to keep on top of their money, stay safe and compliant,” explains Hesketh.
Today Brookson’s revenue stands at £52m – with £9.5m attributed to its accountancy service.
Brookson isn’t just competing against accountants, the business is eating into software companies’ market, explains Hesketh. Where clients would have to purchase software to work more closely with their accountant, signing up to Brookson removes that aspect of the relationship.
“We compete against both online software providers and accountancy services, but at the same time are different to both because we marry both the two functionalities. You could use great software that is available, but you have to do all the work of inputting the information,” said Hesketh.
Not wanting to stand still, the firm has expanded into different services, including financial service advice, which currently makes up £500,000 of revenues, and an umbrella company division.
This umbrella business now produces the biggest chunk of revenue – at a whopping £42m. It allows Brookson’s core customers, contractors such as IT experts “and even some accountants”, to effectively ‘work’ for Brookson but still operate as a freelance contractor.
Although the largest division by revenues, it is the smallest in terms of resources and people needed to run it – with four directors out Brookson’s complement of 12 taking responsibility for it – dealing with about 1,000 customers. However, its core accountancy offering is Brookson’s fastest growing sector – increasing its customer base by 16% for the last six months ending 30 September 2012. Hesketh hopes to boost those numbers by a further 20% by the end of the 2013 financial year.
“We want to focus on our core market and we want to grow organically in 2013 as well as continue to improve the technology and experience for our customers,” says Hesketh.
ICAEW qualified Hesketh came on board in 2001, originally as the finance director, before taking on the managing director role at the end of 2005. He trained at what is now Deloitte and prior to Brookson worked at BAE Systems as finance and commercial director, training services – after three years as internal auditor in several companies.
Hesketh hopes to push his vision of a one-stop shop for the self-employed out to SMEs and has his sights set on micro companies – those with between one to ten employees – a porject that’s about about 12 months away.
“We tend to work mainly through referrals and there are a few SMEs we are speaking to at the moment, but we are probably about 12 months and a lot of investment away,” he says.
Hesketh aims to plough in about £1.5m for growing the business organically and hopes to introduce yet another division for customers – legal. Currently, legal services feature as part of the Brookson package, such as sending a solicitor’s letter to a debtor. But the solicitor is actually a sub-contractor and any legal services aside from basic requirements will have to go through a separate entity.
Brookson is currently hoop-jumping in its negotiations with the Solicitors Regulation Authority (SRA), and hopes to be certified as legal services provider in the next six months – at which point it will amalgamate with its sub-contractor Brunell Legal Services.
“The value of services is not in book-keeping; it is in the use of that information. No customer values book-keeping – they need what accountants can do to add value, not just compliance. Many high-street accountants are not geared to add that value without adding huge costs.”
Fee income/revenues: £52m
Specialism: Sole traders, self-employed
Top 50 +50 position: 59
Source: Accountancy Age Top 50 +50 survey/Brookson
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