Interviews

How Crunch Accounting Avoids Becoming A Bubble

Growing an established business by 50% a year is no mean feat, but Crunch Accounting has done it for the last two years and will again in 2015. Here's how the Hove-based business is dealing with the pressure of fast growth.

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Growing an established business by 50% a year is no mean feat, but Crunch Accounting has done it for the last two years and will again in 2015. Here's how the Hove-based business is dealing with the pressure of fast growth.

Interviews

How Crunch Accounting Avoids Becoming A Bubble

Growing an established business by 50% a year is no mean feat, but Crunch Accounting has done it for the last two years and will again in 2015. Here's how the Hove-based business is dealing with the pressure of fast growth.

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How Crunch Accounting Avoids Becoming A Bubble

Crunch Accounting has no investment money and is growing organically - at 50% a year. Without bundles in the bank they have to be clever to avoid overstretch. Crunch boss Darren Fell explains how he prevents turning his business into a great big bubble.

What are your expansion plans for Crunch?

We have quite ambitious growth plans over the next few years. We did 50% growth in 2013/14 and just did our submission for the Accountancy Age Top 100 where we figured out we did exactly the same numbers - another 50% growth.

This should get us up from 97th to around 80th, and we’re hoping to see similar growth this year. We signed a really exciting partnership with Uber early this year and we’re talking to lots of other potential partners at the moment.

Although we have a hefty software offering which can scale without issue we’re primarily a service-based business, so we have to grow our team with our client base.

What preparation have you done for this?

The customer-facing part of our business - the bit that needs to reactively scale - is set up in a modular way, so we can easily bolt in extra teams as and when they’re needed. We call these teams “pods”, and they’re set up as teams of four account managers and four accountants.

"The biggest danger is always losing quality. The faster you scale something the more the quality suffers"

This setup was originally to make sure our clients always spoke to their own account manager and accountant, but we realised it’s actually a really helpful configuration when scaling - when we’re nearly at capacity we can simply add another pod.

What obstacles have you faced?

The biggest problem we have right now is finding more space to expand into. We’re currently split over two floors in a fantastic space in the old Dubarry Perfume factory in Hove, realistically we’re going to need to double our space over the next year or two but there just aren’t that many options.

Dubarry Perfume factory in Hove

The Dubarry Perfume factory in Hove. Credit: Flickr / the justified sinner

I’ve heard similar stories from other entrepreneurs in Brighton and up in Shoreditch too - there’s very little space available, and where there is space it’s hugely expensive. We’ve chosen to forego VC investment and grow under our own steam, which means we don’t have millions sitting in the bank to pay for a brand new space.

How have you addressed these?

We’ve had to get smart about the space we have. We brought in an interior designer who reworked the entire office space to maximise efficiency in terms of how many desks we could fit in, but also make it a pleasant place to work.

We added breakfast bars and comfy sofas, and used these really cool recycled railway sleepers as dividers to break the space up while still keeping it open-plan.

Obviously the end goal is to find more space for expansion, but we realised that would be challenging a while ago so did some contingency planning.

What are the potential dangers of rapid expansion?

The biggest danger is always losing quality. The faster you scale something the more the quality suffers, generally speaking. You can see this in loads of businesses - Tesco being a good example recently, or Twitter when it was going through its growing pains and would go down every half an hour.

Keeping the quality high in all aspects of your product is always the biggest challenge when growing fast. For us that means keeping our accountants highly-trained and keeping our software best-of-breed.

How have you retained a strong company culture while expanding?

I think something that really sets us apart from other accountancy firms is our working culture. I sit right in the middle of all our accountants and account managers and anyone can come and have a chat with me or any other department heads.

It’s a very egalitarian culture and there have been several occasions where people in the team have decided to experiment with new processes or services and have even created new positions for themselves by taking the initiative.

Lots of the traditional firms I’ve visited have an incredibly rigid hierarchy that’s almost like a totalitarian state - you have to know your place and to climb the ladder you have to know the right people or have gone to the right school. We want our team to think bigger than just their own position and succeed on their own merits and performance.

What advice would you give to an SME planning to expand?

Do just that - plan. Set revenue goals and involve the whole team in hitting them. Expansion is expensive, and can be really dangerous if you don’t have the revenue to support it, so make sure you lay the foundations before you go on a hiring spree or sign a big lease.

It’s also well worth speaking to someone who has done it before. We’re incredibly lucky in that our Chairman is the guy who built eBay in Europe, and ran Skype for a few years - he’s an absolute maestro at scaling businesses so his support has been invaluable.

But the flip-side of being cautious is that you also have to be ambitious. At some point you need to realise that you’ve done all the preparation you need to, and it’s time to pull the trigger and just go for it.

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How Crunch Accounting Avoids Becoming A Bubble

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