Industry and regulatory change is prompting many accountants to think strategically about the future direction of their business. By giving consideration to the following four key factors, accountants can ensure that their business model provides the optimal platform for continued growth and success.
1. Service Offering
It is helpful to think about the value your firm’s services add to both your clients and business. Look at the competitive landscape for various services and take into account fee pressures. Think about whether these services are best provided by your firm, or offered through a referral partner or outsourced model. Using a ‘value’ lens for services will help determine which services to provide. It is important to remember that value can arise from diversifying your sources of revenue.
2. Client Retention
The business model you choose should support client retention, both in regard to services offered but also with respect to the choice of referral partners and strategic relationships. With growing industry convergence between the financial planning and accounting industries, clients can receive accounting services and other services from outsourced partners. It will be critical that accountants protect themselves from the risk of ‘losing’ their clients by choosing the right strategic partners.
3. Succession Planning
The business model will also impact on the value of your accounting business. For example, the revenue streams associated with particular services, such as financial advice, can add more value than others at the time of sale. The structure under which you provide advice is also important. If a firm offers advice through their own Australian Financial Services Licence (AFSL) this will be seen as a liability at the time of sale due to exposure to potential future claims. Where advice is provided through a licensee external to the firm, this liability sits with the licensee and therefore is not a potential stumbling block at the time of sale of the business.
4. Capacity and resourcing
The optimal business model will also be dependent on the capacity and resources within the firm that can be allocated to different activities. For many accounting firms certain activities will only make sense once the firm reaches an appropriate size. Some activities are best left to third party providers, for example licensee services and support for the provision of financial advice. If chosen carefully, accountants can focus their services on those activities most valued by their clients which, by definition, are the ones to which clients are likely to be least price sensitive.
By considering these factors, accountants can take advantage of the industry and regulatory changes ahead and establish a business model to support future growth and success.
David Lane is the Chief Executive Officer of Count Financial Limited.
