Five Investments Accountants Can Make to Grow Their Practice
The good news for anyone setting up or hoping to expand as an accountant is that the sector is growing. According to the Office for National Statistics (ONS) Labour Force Survey, there were only 124,000 accountants employed full time in the UK in 2013. By 2014 this figure had risen to 156,000, a 26% growth level. Much of this growth was driven by larger firms recruiting to meet higher demand, admittedly, but, according to Steve Arundale, NatWest’s head of Commercial Professional Sectors, 70% of the 12,000 UK accountancy firms employ less than five people.
In addition to which, the NatWest Financial Benchmark Report, published in September 2015, found that smaller accountancy firms were able to record a growth rate of 15%, compared to 4% for larger firms and only 1% for the biggest firms of all.
The higher demand for more accountants, particularly employed by smaller firms, is likely to be driven, in large part, by the huge rises in the number of self-employed in the UK in recent years.
According to the Bank of England Quarterly Report from the first quarter of 2015, a massive 15% of the workforce is now self-employed, a figure which accounts for no less than a third of the overall increase in employment since 2010. Since the crash of 2007/8, the figures for self-employment have gone up by 600,000, and a large percentage of these people require the services of an accountant.
Those accountancy firms wishing to take advantage of this relative boom by investing in business expansion could concentrate their investment in any of several areas:
If need be, invest in professional marketing services. The reach of mobile date and social media have revolutionised the manner in which all businesses spread their branding message in recent years, and accountants should be no different. The other advantage of accessing specialist marketing assistance is that it frees you and your colleagues up to concentrate on delivering the core services you bill for.
Software and Hardware
Run a full audit of your business and identify functions – such as entering data – which are low value. All of this could be automated and the range of software now on offer – whether site or cloud based – is wide enough to enable you to shop around. By automating low value activities you’ll be giving staff more time to concentrate on big ticket services.
A good example of this in practice is the billing process. According to the aforementioned Nat West Report, the average time spent between an hours work being recorded and being billed for is 42 days, while, the time from date of issue of a bill to payment is 75 days. The relatively small investment required to automate practices such as fee calculating, bill issuing and bill chasing would cut this time and boost cash flow.
You may feel, once you’ve qualified as an accountant, that simply staying up to speed with the new regulations the Treasury seems to take sadistic pleasure in unveiling every year, represents all the training you need to do. The truth, however, is that many accountancy firms, like law firms before them, are finding that expansion relies upon specialisation – becoming an expert in a chosen field of accountancy, and in the wider personal or business world it applies to, and thus being able to act as a full blown business adviser rather than someone who simply audits a couple of times a year. Of course, the training or research required to build up this expertise will take time and, as any accountant will tell you, time is money.
Mergers and Acquisitions
One short cut to expansion for accountancy firms traditionally involves purchasing a block of fees, but it’s a process which is daunting and fraught with risks. Simpler (although still hugely complex) would be to buy out or merge with another accountancy firm working in areas and with clients which either complement your own, or would expand your working base significantly.