Darren Fell explains how Crunch has become a successful business model in 18 months
StumbleUponCrunch Accounting, who opened their doors just 18 months ago, has begun to turn a profit after signing up its 800th customer towards the end of 2010. By combining a flat-rate model with a software-based approach to reduce costs, Crunch has now expanded to a staff of 32 and has moved into a new office as the company expands even further. By Darren Fell.
By Darren Fell
Today we live in an instant world. You can get in contact with people on the other side of the country at the touch of a button, and you can make payments to people on the other side of the world in seconds. Technology is moving forward apace, and many industries are struggling to keep up.
In 2007 I, along with my partners Steve Crouch and Drew Griffiths, realised freelancers and contractors did not have an efficient accounting solution that matched the fluid nature of their business. This inspired us to create Crunch.
Accounting is a time-consuming process, however it is also a process that can be automated in high degree. As many of the tasks involved in accounting are rules-based, they lend themselves well to a software solution, and obviously software scalability is a piece of cake these days - if the software is designed with scale in mind from the start. A cloud software solution pays dividends when it’s time to update - update the software on the server and the changes filter down to the users - no needs for individual updates. Once transactional data has been entered, processing end of year accounts can be completed online in a matter of seconds.
Understanding the nature of the tasks and the processes behind accounting, we developed the genesis of the Crunch system. The first step was developing a streamlined, banking-grade enterprise Java system to deal with company accounts. The system had to meet all the statutory requirements of Companies House and HMRC, and most importantly be completely secure. We have used cutting edge technology based around the inherent security of Enterprise Java, and spent around 3 years and £1million to develop the back-end of Crunch.
However, since the beginning, we realised Crunch could not succeed using a classic dotcom model. It would be necessary to have a very accessible human side to support our technological infrastructure. For this reason the company relies on PCG-accredited accountants, who are available on the phone any time for no extra charge. If a client has a question about any aspect of their accounts, from VAT through to issuing shares, all they have to do is pick up the phone. In essence we have taken the all-you-can-eat model popular with dotcoms and spliced it with traditional accounting practises to offer a more appealing package than our competitors.
We also keep our customers updated about the company using social media channels, mainly Twitter. Although we can’t answer specific accounting questions over Twitter, every day we use it to engage potential clients and answer questions about our service.
Next steps
One important aspect of growing quickly is that your software infrastructure needs to be updated constantly, which implies new investments and technical challenges. Currently Crunch is working to provide automatic reconciliation of customer’s data with many major banks. Once complete freelancers and contractors willhave even greater up-to-the-minute control over their finances. This exciting new feature should be available for our almost 1,000 users in the coming months.
As with any startup, attracting investors is of major importance to Crunch. The company has been able to attract two vital partners, Paul Birch, co-founder of Bebo, and former Skype Chairman Michael van Swaaij. A recent second round of investment has allowed the company to invest more in developing our software and expand into bespoke new offices.
The Crunch business model is a hybrid of new and traditional methods that combines the advantages of both. Where traditional accountants are costly, Crunch has introduced secure software to take care of the leg-work. Where dotcoms are impersonal, Crunch has cultivated a friendly network of customer-facing staff, offsetting these costs against the savings made through software automation.
Some sectors, such as retail, do not necessarily require a human face to provide good service. However, accountancy has long been a “dark art”, understood by a select few who charged extortionately for their services. This lack of understanding means many people need guidance, and a responsible accountancy practice could not function without having qualified experts to help their clients.
We expect this model to be used increasingly in the future. Traditionally complex and time-consuming sectors can use software to automate the costly elements, while retaining an all-important human face. Areas such as IT Support and HR are rife with potential for such a business model.
About the Author
Darren Fell is a serial entrepreneur, founder of Pure360.com, and Managing Director of Crunch.co.uk. He is also a passionate supporter for Freelancers, and creator of industry portals FreelanceAdvisor.co.uk and ContractorAdvisor.co.uk.
About the Company
Crunch.co.uk provides online accounting services for freelancers, contractors and small businesses. Boasting a custom-built software solution backed up by a team of expert accountants, all available for a flat monthly fee, Crunch.co.uk is cloud accounting done right.
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