GMO Accountancy Practice Broker Garry Manners overviews the eight key success factors for Accountants.
Australia’s accountants have experienced relatively “flat” trading conditions in the past year and predictions from IBISWORLD indicate that profit margins are likely to be reported as slightly lower in 2010/11
I note that IBISWORLD has recently identified some major factors which accountants should concentrate on to ensure continued success. They include:
- The ability to manage risk
- Being a member of an industry organisation
- Establishing a quality brand name
- Recruiting and maintaining an experienced work force
- Ensuring optimum capacity utilisation
- Having access to the latest and most efficient technology
- Ensuring excellent customer relations.
- Accessing and servicing niche markets
While many of the services accountants offer their clients are compulsory in need and nature I do note that some non- discretionary accounting services have been hit by clients cutting costs and sacrificing “non- essential services”.
Some of the services clients have been cutting back on include:
- Expansion/acquisition advice and
- Capital raising advice and IPO’s
The major cost in the accounting industry is labour, with wages and associated costs accounting for 46% of industry revenue. The partnership structure in the industry tends to understate the true cost of labour because partners take a share of profits rather than receiving a wage. Consequently the accounting industry has traditionally reported profitability of close to 20% of revenues. However the recent flat trading conditions are expected to result in 2010-11 results being closer to 19%.
(source: IBISWORLD July 2011)
It may be that the employment see- saw is swinging in favour of accounting employers in 2011-12 as a number of expatriate accounting staff return from depressed markets overseas and seek employment back in their home Australian cities.
Other key points I note affecting the accounting sector are:
- Managing the level of technology change is a growing challenge to smaller practitioners.
- The electronic lodgement of tax returns is increasing rapidly
- The level of government regulation is increasing
- New regulations for reporting requirements (including the Anti-Money Laundering Act, the Counter Terrorism Act and the Emissions Trading Scheme) will fuel extra work for accountants.
- Accountants are facing increasing threats from the Legal Services industry, the Management Services industry and the Computer Services industry.
If your practice does not subscribe to IBISWORLD, please feel free to call me on 9481 4422 and I will discuss other relevant points in the report.
As always, I have some accountancy practices available for purchase at GMO and am available should you wish to have a discreet discussion about your own expansion or exit planning.