Late last year, the Edinburgh Group released The Small to Medium Sized Practitioner (SMP) of the future in a changing world, 2019, a report on the results of its SMP of the future survey. Rather than summarise a document that is both sweeping in its scope and publicly available on the Group’s website, let’s look at a selection of its recommendations on how SMPs can build a future-proof accounting firm.
By Faith Ngwenya, Technical and Standards Executive at the South African Institute of Professional Accountants (SAIPA)
Surprisingly, most of the report’s recommendations could be described as “textbook” or “back-to-basics”. Yet, as pressure to survive grows, SMPs might set these business mainstays aside in favour of fighting fires. The owners of small and medium entities rely on their SMP for support and providing guidance in the changing environment. The fourth industrial revolution requires new solutions to old and current problems. It would pay any firm’s leadership to revisit them frequently.
Know your client
Easier said than done, this business fundamental still vexes even the largest organisations. However, the SMP that is willing to follow the breadcrumb trail left in the media, online forums, consumer research and other data sources will discover unmet needs. When they focus their resources on or design new services around them, they start becoming the practice clients turn to for results, not sales pitches. Their limited resources can be overcome by forming networks, thus leveraging each other’s resources.
Know your competitor
Another basic marketing principle is to win clients by offering services your competitors don’t or cannot. To capitalise on their shortcomings, you must first know who they are and what they are up to. This means regularly scanning the market for new firms and discovering their strategies for growth. Not only will you identify the gaps they’ve overlooked but also their strengths that pose a threat, so you can start developing robust plans to defend your territory.
Build a distinctive brand
Building a brand is hard; building one that differentiates itself favourably from the rest is a knight’s quest. Think of your brand as an actor on screen. Can it evoke the emotions from your audience you direct it to? Will it win their respect and motivate them to do business with you? If not, a brand consultant or PR firm can help you fashion a brand identity that positions you favourably and prompts new business.
In other words, embrace technology to improve efficiency. Every repetitive task can be automated, even in part. Every minute once wasted can now be made productive. Favour accounting software that takes work away from you. Use mobile technologies to do business on the go and Cloud services to share information while collaborating with clients in real time. And if you can hand work off to an AI, don’t hesitate. Because if you don’t do these things and more, others will, and they will win the market. What was clear from survey responses is that most SMPs have started refocusing most of their resources on technology and innovation.
Well-trained, knowledgeable staff bring in more income. That’s a fact. You could hire the best you can afford or train up existing workers to increase their performance and expertise. Either way, you can take control of your firm’s brainpower and productivity by leveraging the vast number of online learning courses. These include advanced accounting skills but also important soft skills like time management and critical thinking. Additionally, take advantage of the information resources provided by your professional accounting organisation (PAO).
Professional networking is when several firms, each with its own specialisation, work together to provide shared clients with a more diverse set of services. Potentially, they can also share resources to offset costs and collaborate on larger projects. Only 30% of respondents in the survey said they belong to a network, association or alliance. Yet, this is an ideal way to emulate the strengths of larger firms and close the competitive gap where growth capital is not readily available.
It may seem counterintuitive but excellent sales can kill a firm. If an SMP takes on more engagements than it can handle, corners get cut, quality drops, mistakes increase, and dissatisfied clients go elsewhere. Every SMP should understand its practical limits and only retain the number of clients and assignments for which it has sufficient resources. How then can it grow?
It must scale those resources and therefore their capacity. This can be done in two ways. The first is to increase the number of resources. This requires that more clients are indeed available and it means costs will rise with each new resource. The second is to increase the capacity of existing resources. This is more cost effective and can be achieved mainly through previously discussed points - upskilling, automation, networking, etc.
IFAC’s Guide to Practice Management for Small- and Medium-Sized Practices, 4th Edition, along with its supporting Companion Manual, is an excellent resource for private practices. You can also contact SAIPA’s national office for advice about your SMP and more information about a district support group in your area.