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The latest Good Bad Ugly (GBR) report from Business Fitness illustrates the way accounting firms are changing when it comes to succession planning – and it makes for interesting reading.
While some of the statistics are not unusual, it’s clear the value model of accounting is shifting. The average age of a partner is on the increase, and yet 60 percent of partners aren’t looking to retire in the next five years (with the oldest partner surveyed aged 70).
So why the shift? And why do the majority of partners think it will be harder to exit a firm, in the traditional sense, in the future?
A changing value system
Let’s go back 10 years or so, when I first bought my own practice at the age of 27. Back then, the advisor-client relationship was often lifelong and a client’s paper records were a large part of a firm’s IP. When it came time to sell, a partner would package up their portfolio and all its associated paperwork, hand it over for purchase, receive a golden handshake, and be on his or her way.
Today, things are different. Clients don’t need need to be instinctively loyal to an accounting firm if they perceive better value elsewhere. Technology has enabled them to be more nimble and take their records with them. It’s easier to switch accountants, but by the same token, it’s easier for firms to take on new clients.
So as the value model shifts away from inherited customers, and we value a firm by new variations in the here and now, where can we add profit to our businesses?
Actions to make a firm more profitable
An overwhelming majority of survey respondents (82%) say the opportunity lies in streamlining our workflow and processes, and leveraging technology (76%) – two responses that, I’d argue, work side by side. Training your team is up there too, with 54% of respondents seeing it as a profitable activity.
Brad Geelan, client development manager at Business Fitness, which commissioned the research, shared his view of the shift.
“Valuations for traditional ‘compliance’ style practices have fallen, with profitable firms delivering higher valuations, including those providing advisory services,” he said. “The results of the survey show firms are leveraging technology to streamline their processes and improve firm profitability.”
Where the opportunities lie
As the pendulum swings away from cost of sale and settles on a dynamic day-by-day value, the way we do business shifts. Technology gives partners the flexibility and autonomy to work when and where we want, while consulting their client base in a far more advisory-centric capacity than ever before.
“Partners are dedicating their time to improving the quality of clients to be able to offer additional services such as advisory services,” Brad says.
And with the report showing that only 20 percent of the profession are looking to “get out”, the other 80 percent know that the best returns are available right now.
It’s a good time to be an accountant.
The post How technology has shifted succession plans for Australian partners appeared first on Xero Blog.
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