 | « Back to article | Print this article |
He became an entrepreneur with just Rs 5,000
A chartered accountant selling papad (a thin crispy wafer) and ice-cream? Well, that's what Robin Moses loved doing. Not just that, he also dabbled in selling merchant acquisition terminals, credit cards before he was bitten by the entrepreneurship bug.
Four years later, he gave up his first love, 'selling' to do something more concrete. He decided to offer taxation and accounting services to people in his locality. What started as a small service for friends and relatives, grew from 5 to 300 clients in a year, without any money spent on advertising.
Robin Moses realised this was a great opportunity as many small and medium businesses found it difficult to finalise their accounts month on month and calculate their tax liabilities.
"In most cases, their CA was a mere spectator. I founded Reach Tax with the aim of making taxes and accounting easy for the small business owners. We grew at 30-40 per cent every month but had limited resources. Eventually, I built a good team, deployed the right technology for my people to use and a set of strict operating processes," says Robin.
Today, Reach Tax processes over 10,000 orders annually. Bullish on the growth potential of accountancy services, Robin has big plans. He plans to launch an online accounting/tax product for small and medium businesses that will facilitate accounting without an accountant.
Reach Tax will operate from Delhi, Mumbai, Hyderabad, Chandigarh and Kolkata by November 2010. Robin Moses shares the pleasure of being an entrepreneur solving 'taxing' worries.
When did you start? How has the experience been so far?
I started Reach Tax in 2006 with 5 clients. By July 2007, I prepared more than 6,000 business tax returns in Chennai (which is roughly 6 out of every 100 returns filed in Chennai ). I also started 5 franchisee outlets for retail tax preparation and accounting by December 2007.
After the Income Tax department enabled electronic filing of tax returns, Reach Tax launched 'Online Tax Preparation Software for Salaried Filers' available at www.reachtax.com (which was earlier used inhouse ). In July 2009, we took the help of Morpheus Venture Partners to boost business and build strong tax products. We started operations in Bangalore in October 2009. We hope to be India's preferred tax and accounting software and services company soon.He became an entrepreneur with just Rs 5,000
As a chartered accountant, I have a 'tax background'. What I am trying to solve is truly a painful problem for startups, small business owners and self-employed professionals. This was a huge Rs 4,000-5,000 crore (Rs 40-50 billion) market.
Most people find finance a major constraint to start a venture. How was it for you?
I started off with a seed capital of Rs 5,000. Over the years, I pledged my personal assets and borrowed from friends to give the necessary mileage to the venture. We often put our plans on hold, till we generated enough funds from internal accruals.
However I also believe that it is good to evolve this way. Financial constraints provide us a balance between profitability and growth.
What kind of challenges do you face?We are currently the only organised player in the tax and accounting domain. We have a rare combination of taxes, technologies and tested processes. Being the first mover, conquering a new market poses serious challenges for a SMB like ours.
We are confronted with problems on new technology, consumer behaviour and identifying the right markets, where we are forced to decide with very less research and business intelligence. Making these decisions are even more difficult as any mistake would prove costly for a SMB.
How many people are there in the company? How difficult is it to convince people to join a start-up?
We currently have 55 employees. We built the company with people who were willing the learn the required skills, instead of people who already have the skills. As a startup, we could start at a low cost and provide a good learning platform to our employees.
We focussed on building a technology-driven 'anyone can do taxes' and auto-pilot accounting, a product to help our employees help clients with taxes flawlessly. I have not faced any difficulty in getting the right people.Have you received funding? Do you have plans to approach venture capitalists?
We haven't taken funding yet. We might talk to VCs (venture capitalists) for expansion in the future.
He became an entrepreneur with just Rs 5,000
We process over 10,000 orders every year. We currently have three retail outlets, two of which are franchised.
Are people more comfortable with e-filing of returns?
No, they are not. Unlike in the western nations, taxpayers in India are not yet comfortable filing returns electronically by themselves. The preferred mode of filing is to ask an expert, who will do it for them (which we are currently focussing on). However, the following developments would increase the number of electronic filers:
The Income Tax department has made e-filing of corporate tax returns mandatory. We can expect individual e-filings to follow suit soon.
The IT department has established a independent processing cell for assessing e-filed tax returns and processing tax refunds in Bangalore. We are focussing on the 'Expert-Assisted Tax Preparation' as we continue to scale our Tax Preparation Product for the future.
What kind of tax-saving measures would you suggest for the salaried class?
Structure your payslips and make some investments. Some expenses and donations can save taxes for you, too. However, the quantum of savings cannot be personified and will depend on various other factors. You can plan your taxes using the free tool (http://reachtax.com/PrepareTax/TaxPlanner.aspx")
What are the most important things salaried people must remember in terms of taxation?
- Remember to plan your taxes in advance (taxes account for up to 30 per cent of your salaries).
- Remember to communicate your tax shield investments to your employer, this could reduce your tax cuts.
- Remember to file your tax returns before July 31st every year.
What kind of problems do people face in terms of taxation? How do you sort them?
Being an SME, we could understand the problem of finalising accounts and taxes month on month. We had a good accounting software, an accountant and myself as a CA. Yet, we never finished our accounts month on month. So, we could not have the required business intelligence on time and paid penalties, which we could have avoided.
What we needed was an auto-piloted accounting product with multiple options of input, a good urge to complete our accounts on time and some expert guidance. This was a problem. There was nobody providing a solution for this. I decided to work on this, because I had the necessary expertise to do this.
He became an entrepreneur with just Rs 5,000
Apart from accounting and tax preparation services, we also provide business incorporation services and tax registration services.
How do you plan to fight competititon as there are established players offering similar service? What is your USP?
Unlike our competitors, our core business is tax. We understand taxes better and we will come out with customer-friendly plug-ins and add-ons to the product shortly. We plan to take on the competition by showing the customers some real value addition.
In terms of competition for Reach Tax's tax product for individuals, we have support from real tax people. Every member of our support team is a trained tax consultant (against a CSR, who would note down your query and promise to get back to you).
We back our tax return through our retail outlets, you can have a tax professional explaining your tax computation in our outlets. We offer a money back guarantee. The product we give you is the product we use. If you find an error in the computation (which is not an input error), we return your fees.About the Reach Tax's accounting product for SMEs, we don't intend to sell the software and watch you struggle to do your accounts using it. Rather we send an accountant to your office at predefined intervals to convert your financial data into meaningful accounting information. We handle it end to end.
We prepare all tax returns for the customers who choose our accounting services, free of cost. For a small additional fee, we also scan and store you source documents to be retrived in future. The enables you to handle any audit at ease and protects you from tax scrutiny calls.
He became an entrepreneur with just Rs 5,000
How profitable is this business? What kind of revenues do you expect?
With our current revenue rate, our revenues would hit Rs 1 crore (Rs 10 million) this year. We have a steady growth of 25- 35 per cent every month. We plan to reach hit a revenue of Rs 5 crore (Rs 50 million) by next year by continuing to maintain the current growth rate and marginally leverage the revenues with our online accounting product.
How do you sum up your experience as an entrepreneur?
Being an entrepreneur has brought out the 'creator' in me. I experience the joy of creation by building new products, services, processes and solutions everyday.
How important is innovation for an entrepreneurship to succeed?
Entrepreneurship cannot succeed without innovation in some form. Every day we innovate and provide new perspectives and products to add value to the customer or our own company. A good innovator is more likely to succeed as an entrepreneur.
Did you have any role model who inspired you?
I draw inspiration from entrepreneur, philanthropist, cancer survivor and founder of H&R Block, Richard A Block.
He became an entrepreneur with just Rs 5,000
- Entrepreneurship is full time job so quit your job if you are planning to start a venture.
- Work out your business plan. For example, If you sell 1 unit of your product every day, then make a plan on what you can do to meet a target of 30 units/month and see what more you can do.
- Don't add a co-founder unless absolutely necessary.
- Hire people who can learn the skills instead of hiring people who have the skills. This means that if you have enough knowledge of your domain, you can train people to get the required skills.
- If you want to scale up, build a service and derive a product from it or vice versa. Try this before you think of any other expansion strategy.
How do you spend your leisure time?
I am a simple guy and I like simple things. I take a technology break every week (no mobiles, no laptop, no iPod, no television. . .) and isolate myself with simple things like cooking a meal myself, painting, reading books.