Business conditions for accountants are at an all-time high, according to CommBank’s latest survey. So what’s driving this confidence – and how are accountants preparing for long-term success?
It’s a great time for accounting firms, according to CommBank’s latest Accounting Market Pulse. The report, based on a survey of 37 accounting businesses, shows that business conditions remain strong for accountants overall – with mid-sized firms the most optimistic about revenue and profit in 2019.
In fact, business sentiment among accounting firms is at its highest since the Accounting Market Pulse began. Nineteen of the 37 firms surveyed said they were positive or very positive about current business conditions, with the remaining 18 remaining neutral.
Looking ahead, 59% of firms thought conditions would be even better in the next 12 months. About 73% predicted their revenue would rise, while around the same were forecasting stronger profits.
However, firms were less positive about the longer term. With uncertain economic conditions on the horizon, many of the businesses surveyed said they expected softening conditions within the next 24 months.
So how are accountants making the most of the current conditions – and helping ensure they can withstand a future downturn?
Compared to last year, most accounting firms in the survey were experiencing higher demand for their services. Mid-sized firms were the most confident about winning new business – and their position to negotiate fees.
The trend for accounting firms to offer multi-disciplinary service lines may be contributing to this increase in demand. In fact, many firms reported strong growth expectations in their business advisory, tax consulting and management consulting offerings. And mid-sized firms listed wealth management and financial planning among their top five growth opportunities.
By contrast, large firms saw growth potential in delivering services in emerging niche areas, such as climate change, sustainability and cybersecurity.
2. Identifying points of difference
While confidence was high, accounting firms know that they operate in a competitive environment. So they’re keen to highlight their strengths to stand out in the market – and identify where there’s room for growth.
While different firms identified a variety strengths and weaknesses, there were some common themes. Client service was cited by 27 of the 37 surveyed firms as their greatest strength. Meanwhile, while 67% firms listed their people’s expertise as a strong advantage. Twenty-three of the 37 firms said their skills in niche areas made them stand out in the market.
3. Using technology to build on strengths
Firms are increasingly aware of the need to use technology to boost their service delivery, and to gain competitive advantage. By investing in technology and intellectual property, and automating repetitive and low value tasks, they can offer their clients faster turnaround times and more efficient outcomes.
At the same time, smart use of technology can free accountants’ time to focus more on personalised client service and niche areas – shoring up their core strengths and enhancing their competitive advantage.
4. Attracting the best and brightest
Attracting high-quality talent remains a key challenge, particularly for mid-sized and larger firms. Having a strong team of skilled staff is critical to ensuring business longevity – so firms are continuing to focus on making their workplace attractive to younger talent.
This has seen more businesses focus on providing an inclusive workplace that provides flexible working arrangements, and which offers their employees plenty of opportunities for professional and personal development.
5. Getting the word out there
The survey showed that accounting firms were focused on using their marketing spend strategically. Larger firms were keen to communicate that their size doesn’t prevent them from offering personalised service. Meanwhile, mid-sized firms were highlighting their client service credentials and niche expertise – while smaller firms were leveraging their brand as a drawcard for customers.
Fifty-two per cent of practices saw roundtable discussions as the best way to attract new clients. And close to a third believed that sending communications on topics of interest to clients, demonstrating thought leadership, and in-house seminars, were fruitful marketing activities.
Unsurprisingly, 65% of firms were also expecting to increase their social media marketing spend in the next year.
Source: All statistics and survey results referenced in this article are drawn from the CommBank Accounting Market Pulse, Commonwealth Bank, June 2019.