Is business advisory really the future for the accountancy profession?
Make no mistake, I’m a passionate advocate of business advice by accountants.
For three reasons – here’s why you should take business advisory seriously.
The first reason - I didn’t get advice from my first accountant when running my first venture and it contributed to some catastrophic problems in my business. Yes the problems were of my making, partly because I chose the wrong non-advisory accountant, but I didn’t know any better then. I now make sure I have an accountant who actively advises me.
There are big wins from business advisory
Second reason. - Advise your clients well and they run healthier businesses, their trust in you goes up, and higher fees are easily justifiable. Oh and you’re likely to get more recommendations too so growing your firm is easier.
When accountants deliver only compliance services I believe they let clients down (by letting them make decisions that would benefit them from an accountants point of view only). Compliance-only accountants fail to help business owners achieve everything they can achieve in their business. And they fail to inspire referrals or a willingness for clients to buy more from them.
Reason three in favour of business advisory is…
…a repeating well-worn message
“Business advisory is here now and will become the dominant role of accountants in the future.”
This seemed to be the implied message at the recent AccountingWeb Practice Excellence conference.
A worthy message given as the ever-increasing march of software development and government inroads into accountants’ fees continues apace.
Paul Dunn of RAN1 and B1G1 fame won the lifetime contribution award (quite rightly I think) at the Practice Excellence conference. And Paul has been extolling the virtues of advisory work for accountants for 25 years or more.
The ICAEW 2005 report suggested the same.
2020, AVN and others continue to urge their member firms to pick up and run with the baton of business advisory.
And yet so few firms have wholeheartedly joined in.
So what’s different now in 2015?
Now there’s an appetite and a sense of urgency…
Yes there’s a sense of urgency that didn’t exist before.
Accountants can now feel the threat of a tsunami of software innovation.
Xero and other software producers now profoundly challenge the way things have been done. Sage can no longer comfortably predict their future. Many more accountants have woken from the snoozy status quo slumber they’ve been living in. The tech-threat now feels real. And many accountants are already turning the tech-threat into a tech-opportunity.
HMRC are getting in on the act…
The government are similarly stepping up their ‘attack’ on accountants’ revenues and profits. More audit threshold changes, RTI, and online filing is nibbling at the accountants revenues. When the government plug Xero into Companies House who knows what will happen?
So business advisory has lots of upsides and the tech-threat is real, however...
Business advisory work is worthless, you can’t scale it and there’s no capital value in it!
Business advisory is worthless in a lot of firms because the partners and managers advise but don’t charge for the privilege.
And yes, business advisory is hard to scale.
Even the firm I recently met with 90 business advisory clients paying more than £1m in fees felt that scaling business advisory is a major challenge they have yet to overcome. This work is so far being done almost entirely by the directors/owners of the firm.
Thankfully there’s still capital value associated with the gross recurring fees of your firm. Not so with business advisory consulting revenues, especially if these fees are exclusively delivered by partners/directors of your firm, because they’renon-transferable to new owners.
So why is scaling business advisory such a challenge?
1. Because business owners are reluctant to pay for business advice from anyone who is not (or has not been) a business owner.
Delegating business advisory work to non-business owner managers at your firm is likely to fail because business owners won’t believe in their ability or their credibility to deliver worthy, worthwhile business advice.
2. Because the personality that suits business advisory is not your typical accountant’s personality.
Recruit ex-business owners who can help you and your firm deliver a remarkable business advisory service.
This is far removed from accounts, managing accounts production and teams of accountants I know. But long term do you have any choice?
What do you think?
What does your firm of the future look like?
If you like this blog please click here to read hoe to set goals for your firm for 2015 and secure your future.