Moving with the shifting face of accountancy.

ADVISORY PARTNER NETWORK

Index

Welcome 03

Changes in small business 06

The needs of businesses 07

The benefits supported by market statistics 08

Digital technology solutions 09

Changing customer expectations 11

Clients want data heroes 12

The shifting needs of businesses 14

The shift in business processes 15

What does it mean to become an advisor? 17

Sources 18

Technology continues to define how humankind conducts business.

With the many innovations cropping up each day, tomorrow’s operations in the business world can only get better.

For the accounting industry, that tomorrow seems to have come a little earlier. Most accounting practices have realised they have to rethink their business models if they want a stake of the client base.

Small businesses have their priorities centred on attracting and retaining customers. With most of these businesses setting modest operational budgets, it makes sense to hire service providers that offer comprehensive business assistance.

That’s why accounting practices that include advisory services are in demand. In Australia and New Zealand, the accounting industry is worth $500 billion. So the shift needs to happen fast so practices do not find themselves outcompeted.

This trend is affecting the market structure. Practices aligned with the emerging trends are growing at rates more than 500 per cent faster compared to the overall industry’s pace.

If the hints given out by small businesses is anything to go by then the time to shift is now. With 55 per cent of accountants sourcing new clients from those who switched from another firm, we can only see that small businesses want change.

Practices that adopt the shift become not just accountants, but also business coaches and mentors. Also, business advisory brings in up to 66 per cent more revenue per client to these practices that have shifted the scope of their service provision.

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A best approach is to evaluate the firm from within and take on an approach that will shift the firm, making it relevant to client needs. Competitiveness is only possible by doing so.

Here, you’ll read about the speed and nature of digital transformation that shows the need for accountants to transition to advisory services.

If you’d like to understand more about the Advisory Partner Network, head to advisorypartnernetwork.com.au

Adam Laurie

Managing director, Advisory Partner Network

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Changes in small business.

SMEs are constantly reshaping to improve business efficiency and efficacy.

Businesses seek solutions that can make them impregnable to the mentioned economic misfortunes.

The huge resources that businesses need to scale up operations are often the biggest complication. But when businesses assume the growth trajectory, entrepreneurs need to pay attention to and know the place of the resources they can get from within and without the firm.

According to the Australian Anthill, these four challenges and the ten overall constraints every small business faces. Productivity, connections, regulation, marketing, and research and development need timely attention. But many small businesses do not have the comprehensive

ability to find solutions to all these problems in-house.

These businesses prefer to hire different specialty businesses to handle different challenges. But with cash flow constraints, it might not make economic sense to do multiple hires to address every respective operational problem. This is the opportunity for accountants to fulfil.

The four key challenges that small enterprises face include:

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1. Strained resources

2. Attracting customers

3. Retaining the customers that

4. Growing the businesses.

businesses win

According to a Deloitte report, Australian and New Zealand small and medium businesses value:

• Satisfactory work-life balance for their personnel.

• Growth in sales.

• Improving profit margins.

The three factors can come from the advantages that technology offers. The same school of thought proposes that businesses can make the most of digital solutions to personalise marketing content and rake in more customers.

The needs of businesses are transitioning in the digital age.

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Boosting your online sales/digital

Expanding overseas

Retaining your existing customers

Increasing the amount each customer spends

Improving market awareness of your business

Being more efficient in your business process

Gaining new customers more cheaply

Adopting innovative technologies

The benefits supported by market statistics.

Overall, 94 per cent of businesses that install or upgrade to customer relationship management (CRM) systems get better returns. These businesses record on average, about 30 per cent more revenue compared to businesses that still rely on no system at all or just the combination of paper and spreadsheet.

In addition, businesses that apply effective sales and marketing activities record chances of revenue growth by almost 20 per cent from 33 to 51 per cent.

So while a small investment in new systems might seem like a small step, the growth and revenue that can be achieved are more significant.

These businesses record on average, about 30 percent more revenue compared to businesses that still rely on no system at all or just the combination of paper and spreadsheet.

We also know that a 1 per cent increase

in digital marketing investment can lead

to a 2.9 per cent increase in revenue.

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+30%

Digital technology as a solution to changes in small business.

Goals and perceived threats in businesses change with age. But the ever-evolving customer expectations and local competition are common threats across all businesses. (6)

A new category of threats is also emerging, especially among young businesses: online competition now is emerging as a key threat.

Changing client tastes and expectations are another set of key threats, especially to maturing businesses. These threats can affect the agility and efficiency of a business. This means that business provisions, products and services as well as the delivery model must be responsive to any emerging customer trends.

Luckily, digital technology offers a means of perceiving as well as addressing the mentioned

threats. Analysing customer data, for instance, can provide a window into whatever changes the expenditure trend captures. A new category of threats

is also emerging, especially among young businesses: online competition now is emerging as a key threat.

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Changing customer expectations.

Forecast your clients’ needs.

Given the way that small businesses operate, it’s key that service providers targeting them also change their approach to doing business.

Small businesses give more preference to:

• Business growth

• Growth in sales

• Work/life balance for its executives

It is essential that executives get access to tools and resources that make it easy to run businesses more easily and with increased efficiency.

Accounting practices that don’t heed this call will fall off the bandwagon. However, it may not come fast. This is because most established practices with a dependable customer base may get the benefit of this base for the time being.

But with almost 200,000 businesses changing accounting practices in 2017, even the most

dependable of customers may leave if they think they are not getting their money’s worth from their accountants.

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55%

16%

3%

26%

Switched from another firm Were doing it on their own

New business startups Other

In 2017, Xero reported that 55% of new clients were those who switched from another firm.

Clients now prefer accounting practices that are data heroes.

Data driven accountants are the kinds of outfits that can help their clients make meaning of the wealth of data in their possession.

Industry players know that with just the right tools for data analysis as well as skilful forecasting, such firms can translate whatever data clients possess. By doing so, these practices open up their clients’ vision to bigger opportunities and improving their competitiveness.

Today’s client is better off with proactive advice.

The financial data in their custody matched with the innovative technology in the hands of the accounting practices that already have embraced advisory services, can help these clients to make appropriate decisions and very fast.

The Big Decision Survey, conducted by PwC in 2016, reveals that up to 61 per cent of business executives polled who are decision-makers in their businesses admit that the data in their possession is underutilized.

But they admit they understand the risks involved with this kind of inadequate exposure and agree that they risk losing to their competition if they do not factor in their data in decision-making.

Online knowledge learning tools

Cloud back up and productivity tools

Online digital marketing tools and resources

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51

45

43

61 per cent of business executives polled who are decision-makers in their businesses admit that the data in their possession is underutilised.

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As time passes, so shift the needs of business.

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In almost equal proportions, Australian and New Zealand SMBs pay more attention to improving their profit margins, growth in sales, and attaining work/life balance.

These three are the immediate needs that SMBs consider as essential to their success. However, the age of a business does determine its inherent needs. Similarly, these businesses admit that they can take advantage of digital tools to personalise their content marketing and attract new customers.

There are slight variations, however, regarding the specificity of these statistics. Age is the biggest determinant of the difference.

Businesses display these subtle differences in how they weigh the methods of attaining growth. For instance, young businesses prefer to attain growth by retaining their customers, followed by improving their market awareness and increasing net spend per customer.

Matured businesses have a different approach. Instead of paying attention to market awareness, these businesses stress on efficient business processes as compared to market awareness.

YOUNG BUSINESSES

Under 3 years of age

1. Growth in sales

2. Work/life balance

3. Improving profit margins

MATURE/ESTABLISHED BUSINESSES

Over 3 years of age

1. Work/life balance

2. Improving profit margins

3. Growth in sales

Customer expectations vs the shift in business processes.

Businesses have the ingredients to the solutions to most of their problems. And, the components of advisory services are emerging as the missing link that can cook these ingredients to become the desired business goals.

Some of these goals such as marketing, brand awareness and accurate measurement of ROI are easily attainable. All that businesses need to do is to attain the goals is to employ digital technology, which is a skill that advisory service providers have on offer.

Overall, the qualities that become apparent from businesses that embrace advisory services are deep knowledge of customers, timely forecasts and accurate measures of ROI.

These firms’ other characteristics are impeccable brand awareness on social media, application of AI, proper use of data and the insights that these bits of information generate as well as personalised marketing. In addition, these businesses practice new and innovative customer acquisition methods.

The shift from compliance to strategic advisory

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SalesEnablement

BusinessIntelligence

Technology

Digital

Business

Sales &

Valuations

Tax

Compliance

Finance

Business

Coaching

Wealth

Creation

Accounting

Services

What does it mean to become an advisor?

Pioneering the modern advisory firm.

The shift small businesses are adopting is to become more competitive, gain a firmer foothold of their markets and increase sales. In the midst of this shift is the role accounting practices can play to help these businesses attain their goals.

While these changes are necessary, some accounting practices are stalling. Instead of changing with the times, these practices would rather wait to evaluate if the industry changes are indeed good for them.

These shifts are good for accounting practices keen to maintain their market share. We know the changes have brought increased earnings to almost 70 per cent more per client and practices that have already aligned their operations are growing at more than twice the industry average.

Accounting practices have such an important role to play in enhancing the growth and sustenance of small businesses.

We know accounting practices can arm their executives with the right skills and knowledge so they can help small businesses use their resources optimally.

The benefits that come with the shift can be massive. Advisory services have the potential to increase the current earnings of accounting practices two-fold.

Firms that want to continue serving the needs of small and medium-sized businesses must align with the changes in the industry. These firms must prioritise a reorganisation.

That all starts by asking yourself a question: where are your clients at, and how much will they benefit from getting advice from you on how to pioneer the changes in their business?

Ask yourself:

Where are your clients at, and how much will they benefit from your advisory?

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Sources

• Anthillonline.com. (2018). 10 challenges small business are facing in 2016. [online] Available

at: http://anthillonline.com/keeping-business-owners-night-10-challenges-small-business-

facing-2016/.

• Arteaga, D. (2018). Redefining Yourself as a Strategic Advisor. [online] AccountingWEB. Available

at: https://www.accountingweb.com/practice/practice-excellence/redefining-yourself-as-a-

strategic-advisor [Accessed 12 Nov. 2018].

• Australia 2018: Accounting Industry Performance Report. (2018). [ebook] Xero. Available at: https://

www.xero.com/content/dam/xero/pdf/au-2018-accounting-industry-performance-report.pdf

[Accessed 12 Nov. 2018].

• Boomer.com. (2018). [online] Available at: https://www.boomer.com/single-post/RightNetworks/

Moving-from-Compliance-to-Advisory-The-Way-of-the-Future [Accessed 12 Nov. 2018].

• Robertwalters.co.uk. (2018). Practice or industry in accounting. [online] Available at: https://

www.robertwalters.co.uk/career-advice/The-accountants-dilemma-practice-or-industry.html

[Accessed 12 Nov. 2018].

• Sage Works. (2018). Stop competing on price alone: why accounting firms are transitioning to type 2

service. [online] Available at: https://www.sageworks.com/blog/post/2013/08/06/Stop-competing-

on-price-alone-Why-accounting-firms-are-transitioning-to-Type-2-service [Accessed 12 Nov.

2018].

• Salesforce (2017). Digital opportunities for today’s small business. [ebook] Deloitte Access

Economics. Available at: https://www2.deloitte.com/content/dam/Deloitte/au/Documents/

Economics/deloitte-au-economics-digital-opportunities-for-todays-small-business-

salesforce-220317.pdf [Accessed 12 Nov. 2018].

• Scribendi.com. (2018). 4 Challenges Faced by Small Businesses and How to Overcome Them |

Scribendi. [online] Available at: https://www.scribendi.com/advice/challenges_faced_by_small_

businesses.en.html

• Small business imperatives for the digital age. (2016). [ebook] Deloitte. Available at: https://www2.

deloitte.com/content/dam/Deloitte/au/Documents/Economics/deloitte-au-economics-salesforce-

smbs-imperatives-digital-age-080518.pd [Accessed 12 Nov. 2018].

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