We thought this week we’d start off with a great Getty image of an accountant at a beach. Then as the dream of the beach disappears (sorry) we thought we’d recount a recent conversation we had with an Australian accountant.
This accountant was a principal of a firm in Perth. He was a part owner, with other major owners being resistant to outsourcing. The firm owned the building from which the practice operated. They’d used our services in the past, but had problems getting his staff to “buy into” the outsourcing process, so it had stalled after a couple of years, especially as the outsourcing liaison person had moved onto another firm, and so it was put into the “too hard” basket. At the same time, his succession plan seemed to be coming together, and he’d encouraged two of his senior most accountants to purchase part of the firm as part of his succession strategy. These two senior accountants now owned about 20%, with the accountant. When I spoke with him last month he’d told the other partner (the main owner), that he was looking to sell his part of the practice, and wanted to sell it proportionally to the other 3 owners. At that time the other major owner then decided he’d also like to semi-retire, and wanted to sell his portion. All of a sudden there was 80% of the practice up for grabs, and the well laid plans of this poor part owner were put into disarray.
As he mentioned to me the other day, he’d been doing compliance work for 30 years and was just coming up to another tax deadline and was exhausted. He had lost one of his main tax preparers during the tax season due to personal reasons, and they had trouble keeping accounting staff up to accounting managers. Compliance work is demanding, and he said that there seemed to be easier jobs out there for accountants. At the same time it was difficult to find new staff, and staff costs keep spiraling upwards while compliance costs don’t seem to rise in line with expenses. The usual result is that the profit suffers and the owners take less profit out of the practice.
His big comment was that the old traditional service model wasn’t working as well as it had done in the past. On top of increased pricing pressures on the compliance work, there was less margin in other traditional revenue streams like new company incorporations, and pressures on corporate compliance work. Marketing seemed to consume more of their budget, and the need for social media marketing wasn’t always clearly understood by everyone in their practice. Clients were moving to cloud, but at the same time other clients were on legacy desktop systems. Data was now online realtime, and clients expected more access to accountants.
He’d made the move to work his older clients out of their legacy desktop systems, but relationships matter and he couldn’t move all his clients over to online systems. His business coaches told him to cut those clients out of the business, but that didn’t quite feel right. At the same time internally there were issues with IT. They were moving to the cloud, but still needed to maintain their local servers which had the practice management system and other systems which hadn’t yet been replaced by cloud.
He’d been looking at selling, and talking to other business owners about the same age as him. Most of these owners were easing out of their practice, but were still stuck with legacy system issues, legacy owner issues, legacy staff issues, and legacy client issues.
Ideally he’d like to ease out of the business but just can’t seem a way to cut clear without losing a significant value of his built up capital.
Over a beer, I mentioned to him about how outsourcing might be able to assist with his concerns, though he’d need to separate himself from the above legacy issues.
Does this sound like your firm?
Next week we’ll be looking at an option one Australian accountant presented to us as an alternate to selling their firm.