Predictions vs reality: challenges for the accounting industry

By Drew Arthur

What to watch out for:

In December 2013, an article published by BRW* flagged three major industry trends likely to have a significant impact on the accounting landscape:

  • Growing competition

It’s no longer just other accounting firms you’re competing against. All the way from the big four down to the boutique agency, accountants are increasingly dealing with a host of new competitors – investment banks, consulting firms, technology firms – each wanting a piece of your pie.

  • Increased commoditisation of accounting services

No one wants to pay more than necessary for goods and services, and when the market starts to determine what is “necessary”, it can become difficult to stay profitable.

  • Technological change

The BRW article also highlighted recent efforts by the Tax Office to link its computerised standard business reporting systems with commercial online accounting software – an example of technology challenging the relevance of accountants.

In addition, the growth of cloud-based, easy-to-use accounting software means that many savvy clients are increasingly driving their own accounting, and not needing their accountant as much.

What does this mean for you?

You can’t afford to do nothing. Staying static in a changing environment may sound like stability in uncertain times, but will more likely leave you exposed. Competitors may seize the opportunity to overtake you, clients may outgrow you, or you may lose your place of relevance in the market.

What can you do?

  1. Diversify

Do something aligned to what you already do, but different.

I’ve personally worked with a number of innovative accounting firms and professional services providers who, keen to stay on the front foot, have actively investigated new and innovative ways of delivering value to their clients. And with great success. You can read a little more about that here.

  1. Differentiate

Stand out from the competition. Find and develop a key characteristic about your business that others will find difficult to replicate.

A quick story: A partner at an accounting firm I’ve worked with, alerted to the changes in the accounting landscape, realised that between he and his partners, their collective experience amounted to much more than accounting. Their combined experience also included marketing, sales, HR, and other skills that small and medium businesses in their area would undoubtedly gain value from.

With this enlarged picture in mind, they set out to find software to complement this new whole-of-business approach. To cut to the punch line, the software ended up being HARMONiQ Business Tuning software, and the accounting firm is doing great as a result.

My point is, there’s a world of opportunity for growth within your own business, which can be easily complemented with the right software solution, to give you a real opportunity to differentiate your business from others in the market.

  1. Focus

Focus very clearly on owning one specific part of the market. You may be the small guy in the grand scheme of things, but in your space – you want to be the king! Perhaps you choose to focus very precisely on electrical wholesalers in your local region, perhaps you choose to focus on restaurant owners… it’s up to you. Think about the demand in the market, think about what you do well, and identify your sweet spot.

 

What the landscape look like into the future.

It’s evident that these issues aren’t just mild symptoms that can be treated and they will go away. What we are experiencing are shifts in the industry that will have long term implications into the future.

How you respond to these shifts can define the course of your business going forwards, and contribute to the shape of the accounting industry as a whole.

 

I hope these thoughts will help you when you beginning planning the future direction of your business and give you some ideas around what options you can look at. If you are dealing with any of the issues I’ve spoken about above and would like to discuss, call me on 02 9542 2000.

If you’ve got some thoughts on my blog, please leave your comments below.

 

*Click here to view the original BRW article that some of the information in this blog is based on.

 

Drew Arthur is the Managing Director of Micronet Systems, and is focused on working with accountants and professional services providers to help their clients tune their businesses by leveraging cutting-edge technology. If you want to help your clients gain further efficiencies within their business while boosting your own revenue, click here to see how HARMONiQ Business Tuning Software can make a difference to their business and your own, or get in touch.

 

Looking to focus specifically on a new market segment? Read my blog on the one key market segment that may deserve most of your attention.

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