Our MD Vipul has been on his travels again, speaking to practice leaders about issues on their mind… is there a practice void around the corner?
It’s been another busy work on the road for the Advancetrack team – namely, visits to two big events: the 20:20 Innovation Conference and the DFK UKI Annual and Emerging Leaders Conference.
The events, in Birmingham and Belfast respectively, led to me feeling pretty ‘jetlagged’ by Friday. But after some well-earned shut-eye, I thought it a good idea to reflect on two of the key themes.
Growth? How?
Discussion among the many practitioners at the 20:20 event was around the rising ‘cost’ of employment. While the firms themselves were unlikely to change anything internally around the recruitment strategy post-Budget, many spoke of their clients’ nervousness about being able to absorb further cost into their model.
And, while Employers’ NI rises is a ‘tax on big business’, it also becomes a proportionally big cost on smaller businesses too. There’s no doubt that they will have to make tough decisions about their cost base, which in turn means difficult and defensive support required from their practitioner. Let’s not forget, if an accounting practice can’t provide (and demonstrate) the value they provide their clientele, then their accountancy costs will come under pressure too.
Without wishing to harp on about policy again, but business now have another challenge to navigate – where is the growth agenda?
Who will support medium-sized businesses?
Ironically, smaller and medium-sized businesses may find that, even if they do want to change accountant, the choice of where to go becomes limited in the future.
DFK UKI’s Belfast event was very social-focused, but the three-dayer rounded off with some really interesting discussion points around accountancy’s direction of travel – in particular a discussion around private equity in the accountancy market piqued interest.
Without getting into all the ins and outs, there was a suggestion mooted that the main PE players will have to continue to consolidate to drive margin and achieve the all-important EBITDA multiples. And, in doing so, we will end up with 20-30 organisations below the Big Four that will act as ‘super firms’.
This could leave a ‘hole’ between them and much smaller accounting firms. So, will these super firms operate in a model that provides support and services to smaller and medium-sized businesses? My fear is that these clients could be left behind. Or, will they create regional sub-brands that really ‘speak’ to that group of clients?
Perhaps new firms will form from the fallout of partners from the super-sized practices… or the PE firms can manage the tension that is ‘get big while serving not-so-big clients’.
The future for accounting practices, and their clients, is uncertain. But which practices and businesses will come through the other side better off? check out our blog on what award-winning practices have in common?
If you’d like to talk to Advancetrack about building a sustainable accounting practice then book a call.
Vipul Sheth is founder and MD of Advancetrack
