TechnologySpecial report: Accountants turned online entrepreneurs

Special report: Accountants turned online entrepreneurs

With the economy once again making positive noises, and online sales reaching record totals, budding internet entrepreneurs are witnessing renewed enthusiasm to be the next Martha Lane Fox or Jeff Bezos. Rachel Fielding and Paul Grant meet three accountants who used their financial skills to turn e-business dreams into reality.

Left to his own devices

Name: Keith Milsom
Age: 45
Challenge: You need to have an experienced technical person who knows what they’re doing. They’re expensive and often not as good as they think
Best thing: It’s a massive learning experience
Worst thing: Being online means customers’ expectations are high. They expect orders to be dealt with immediately
Advice: Free courses on the web help you learn about doing business online.

Plush, designer offices housing pool tables and fish tanks, cash-rich venture capitalists schmoozing business novices out to make a fast buck. No matter what images the dotcom era conjures up for you, it left an unpleasant taste in the mouths of many.

But for Keith Milsom, there is a good chance it only served to whet his appetite for an online venture of his own. ‘To run a web business is a very large, complicated thing to do – but it’s the place to be, despite the dotcom boom and bust,’ he explains.

He had been running Anything Left Handed – a specialist provider of products and information for left-handers – for 13 years when the internet bubble burst.

If you thought a business focusing on the left-handed market was niche, then think again. ‘Between 10% and 15% of the world’s population of 6.2bn are left-handed and all could benefit from the company’s products,’ he explains. ‘This gives us a potential total market of £1.2bn per annum.’

The company may have only scratched the surface in commercial terms – it’s on track to turnover around £500k this year – but it’s the company’s online offering that is making the business impact. Today online sales generate around 70% of revenues and Milsom expects that figure to more than double over the next 12 months. Indeed, one of the biggest challenges facing Milsom is managing limited resources to tap into this potential growth.

He and his father – both left-handers – purchased the retail business back in 1986. The pair managed to negotiate to spread payments for the business and raised personal loans to make up the shortfall. At that time, the business consisted of a small leased shop in London’s Soho dating back to 1968. Milsom, meanwhile, was running a leisure management business and working part time on his new venture. ALH was turning over £100,000 a year including mail order sales that accounted for about 25% of turnover.

When Milsom sold his 40% stake in the leisure business, it gave him the opportunity – and the all-important funding – to develop the anything website. But with no technical expertise, Milsom decided to go back to school and learn for himself how an internet business works. It proved a valuable experience. ‘I took six months out to learn how to build a website and how to market it on the web. Otherwise you can get ripped off by technology providers because they’re running their business not yours.’

But the decision distracted Milsom from business development and marketing.

‘We were constantly adding bells and whistles to the website and it ended up being a technical monster.’

More recently, the company outsourced hosting and web development to a third-party supplier. The shift is, Milsom admits, a double-edged sword. ‘Our supplier worked for some large organisations and is well regarded, but it’s not an easy ride. Once you’ve done it yourself, you can become a bit of a control freak. To make changes to the site can take a month. It’s more robust but less entrepreneurial.’

Milsom, who qualified as an accountant in 1981, always knew he wanted to set up and run his own company. ‘A financial background has got to be a good way of doing that. Marketing and strategic planning are key and CIMA was a good qualification in that respect.’

A stint working at Spicer and Pegler (now Deloitte) in the consulting division offered him first-hand experience of advising small companies on a raft of issues including business planning and the importance of management information systems. Then an internal transfer to the corporate finance division armed him the with intricacies of starting, funding and growing businesses. It also taught him some other valuable lessons.

‘It’s important to see a company as a tool. It’s there to manipulate. When you work for a company you get blinded by the fact you’re doing a job. But it’s there to create value for you and for shareholders.’

Milsom believes we are on the verge of a new internet boom. He could be right. Online sales figures in the UK for the first quarter this year were 123% up on the same period in 2003, according to Visa, with UK consumers spending £2.4bn on the internet.

But that’s not enough to convince him to turn his back on the “bricks” element of ALH’s bricks and clicks set-up. ‘Having the shop is our credibility. It features on the website. That shows customers that it’s a real business with real people.’

Milsom is frank about his plans. ‘My objective is to sell the business in the next three to five years – we’re not doing it for fun. That’s me with my corporate finance hat on.’ is a former finalist in the Accountancy Age-sponsored e-commmerce awards. Enter this year’s awawards at

Heating up the travel market

Name: Richard Downs
Age: 37
Challenge: there are significant roadblocks to growth when you add 20-30 people to a company this size every year. People with proven experience reduce the risk
Inside track: being able to understand how balance sheets and cash flow work is an immense help. Analytical skills make it easier to make informed judgements on new opportunities.

While some people are initially seduced by the world of accountancy, only later to find that they have entrepreneurial aspirations, others take to accounting purely as a stepping stone to their eventual goal.

That was the case for Richard Downs, chief executive and founder of, an internet-based travel agency originally set up to specialise in ski holidays. Despite spending four years in practice and four years as an accountant in industry, his ultimate aim was always to run his own company.

With a degree in engineering from Loughborough University, Downs joined the London offices of Coopers & Lybrand in 1988, spending four years working in financial services and qualifying as an ACA. From there he completed two-year stints at both ABN AMRO and Salomon Brothers.

But he had a different aim. ‘I had a really good time and some really good training with these companies, but all the time I had the burning ambition to set up my own business,’ says Downs.

With this in mind, Downs took on a two-year MBA programme at the London Business School in 1996, and part of the course involved a project to establish your own start-up – and the Iglu idea was born. It was in setting up this company that Downs’ experience in accounting really started to pay dividends.

‘One of the key aspects of starting a venture capital-backed company is that you must keep a tight control on costs,’ explains Downs. ‘Being able to understand how things like balance sheets and cashflow work is an immense help, and the analytical skills you acquire make it easier to make informed judgements on opportunities that arise.’

These skills were also vital when it came to raising funding to start the business. ‘It’s an intangible benefit, but when venture capitalists hand over their cash they want to make sure the money sweats for them,’ he says. ‘Being an accountant, there is a trust. They know you know what you’re talking about and they know you can manage the cashflow.’

The need for a healthy cashflow position became even more important as the company evolved. Established in 1998, Iglu joined the burgeoning internet industry, but within a couple of years the bubble spectacularly burst. Downs simply rolled up his sleeves.

‘When the wind was taken out of the sails, we knew it was going to be tougher. But we knew from the outset that we needed three or four years before we moved into profitability. Our feet were firmly planted on the ground and we kept control of costs.’

Some of Downs’ biggest problems were at the other end of the scale. From a starting point of three people, the company now turns over £25m a year and plans to have around 150 staff by the end of the year. Keeping on top of the tremendous pace of growth, with the company doubling in size within a year on several occasions, has been a great challenge for Downs.

‘There are significant roadblocks to growth when you are adding 20-30 people to a company this size every year,’ says Downs. ‘Getting experienced people is crucial. People with proven experience reduce the risk and it means they do a job straight away.’

Another crucial aspect is that the company’s staff all have an interest in skiing. This, says Downs, gives them a common cause, allowing them to empathise with the customer.

Down’s advice to those in accountancy thinking of starting their own business is simple: ‘It’s doable. Accountancy is a great profession to be in and a good platform to build on. If you can keep the skills you’ve got and add to them then anything’s possible.’

Going to great expense

Name: Ashley Whittaker
Age: 37
Hindsight: I’d probably outsource a lot more because it’s my own business there are compensations for working so hard. If I were an employee, I’d be more stressed.
Billing: People are loathed to pay high set up charges and licence-based charges. They prefer to pay for what they use.
Advice: Don’t recruit in your own image. I make sure our senior managers complement my lack of people skills.

The Inland Revenue may not seem like the obvious place to nurture entrepreneurial instincts, but for Ashley Whittaker it was the starting point of a business idea that today provides services to more than 250,000 employees in more than 50 companies.

After graduating with an honours degree in history, Whittaker joined the Revenue as a trainee inspector of taxes ð but one year on he admits he was already getting a ‘bit bored’.

But he was to stick out his career in tax for another 10 years before biting the bullet and setting up on his own. After a stint at Deloitte, he moved to Sotherby’s as European corporate tax manager, then on to Pricewaterhouse-Coopers’ international insurance tax division.

‘Ultimately I was looking for a marketing role. But a stint at Rio Tinto in a tax role was the straw that broke the camel’s back,’ Whittaker explains. ‘I went on a rather gruelling trip to Jakarta in Indonesia. When I got back I thought: “Why am I working this hard for someone else?”‘

When, just two weeks later, he picked up an article explaining Microsoft’s plan to offer access to its Office products to customers over the web using the application service provider (ASP) model ð an idea was born.

‘Expenses are an area where staff want their money quickly. It’s about large volumes of small amounts, there are lots of taxes associated with it and the Revenue has loads of people to prove you did it wrong.’

Whittaker started pulling together the business plan at the height of the dotcom boom. Along with four business partners, who together put up around £110,000, the company finally started trading in January 2000 ð just as the shine was coming off the internet dream. By July – after fashion e-tailer Boo had gone to the wall – the company had raised a further £1.2m in equity and £800,000 of debt. A product finally launched in November.

‘If I did it again, I wouldn’t raise any debt. We believed we could get the product into the market quickly. I’d do it differently,’ he muses.

The product – Global Expense – allows customers to outsource their expense management. Employees can access the system using a web browser and file expenses remotely receiving payment to the bank account of their choice within a week. The company has 70 customers including catering firm Brakes, Alcatel and Lotus Cars.

But launching at a time when confidence in internet businesses had reached an all-time low, proved a costly decision. ‘We spent the first year educating people about the internet. Because lots of people in the dotcom world had gone bust, it did a lot of damage. It cost us an additional £3m in funding.’

The combination of trying to sell a very new technical concept to ‘the most conservative people on the planet’ was no mean feat.

‘But we have a very strong proposition,’ Whittaker says. ‘We can take out headcount in the accounts payable department and make sure you get your tax position right. That’s all cash into the business.’

The ASP model relies heavily on robust technology, as clients expect to be able to access the systems at all times. Fortunately Global Expense has suffered only six days downtime since 2000. But not all business ideas can work using this model. ‘You need to have a real business idea first and think how can I use this fast communications medium to make it better,’ Whittaker warns.

Solid groundwork will always pay off when getting your business idea off the ground. It’s one thing that Whittaker stresses. ‘We took the view that everyone needed to do expenses and needed to demonstrate that they did it more efficiently than other companies. But we didn’t really segment the market, and as a result one client has two users and another is WHSmith. It takes as much effort to service a blue-chip client as a small company. Focusing on the market that’s most cost effective is very important.’

The company runs all the technology itself, employing an in-house development team, but as the cost of hosted services comes down, it’s an option Whittaker is looking into. ‘But you need someone in-house that understands the market to put together service level agreements with technology suppliers. Expandability is key ð you don’t want to be locked into terms that are too fixed.’

These days, Whittaker has well and truly hung up his tax boots. He now employs an FD alongside HR, sales and IT directors. ‘You have to be conscious of what you’re good at and don’t try to do too much. Don’t recruit in your own image. I make sure our senior managers are good people managers who complement my lack skills there.’

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