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Turn your firm into a hybrid vehicle


As technology takes over core accounting tasks, it makes sense to diversify into strategic business advice.

By Craig West 14 minute read

It’s a tough time to be an accountant. Client demand is up, but what good is that if you don’t have enough staff to service it? Not to worry. We’ll all soon be out of a job anyway thanks to AI. That is, unless we start thinking more strategically about our true value as accountants.

It’s not compliance, and it’s not tax returns

It started slowly and many of us were sceptical, but now it’s evolving so quickly it’s threatening to make all of us obsolete. Technology is replacing an accountant’s core work of compliance and tax returns. Many firms have yet to fully appreciate this, instead focusing on how to use technology to churn out more of that work faster and at less cost.


What happens, though, when you have a race to the bottom on pricing, an impossibly tight labour market and rising inflation? It’s a disaster that’s currently staring the industry in the face.

The hybrid model: A better way

That doesn’t mean technology is something to fear. Quite the contrary. View it as an accounting workhorse, there to deliver those previously labour-intensive jobs such as compliance and tax returns as quickly and cheaply as possible. Then spend the time that gives you on the real value-add: providing strategic advice to your clients.

Which clients?

Business owners, specifically small- to medium-sized enterprises (SMEs), need professional advice. Some realise it, some don’t. Truthfully, most are probably asking you how to reduce their tax bill and that’s it. But you better believe there’s a growing population of so-called business coaches ready to meet them where they’re at.

Think about it. SMEs are dealing with the same issues you are – a tight labour market, changed workplace practices, inflation, rising interest rates, and a new government.

Add to that the fact there are up to 6,000 Baby Boomers turning 65 every week. Not all those people own businesses of course, but those that do need help. This is an ideal market for an accountant to specialise in.

Move beyond financial statements

It starts with a conversation. When you deliver financial statements to your business owner clients, sit down with them to talk about the results, then move the conversation beyond that. Even if you’re the best accountant in Australia and you produce your financial statements on 2 July each year, theyre too late and too complicated to really add value to a small-business owner. I’ve seen business owners sit down with their financial statements and it might as well be written in another language. Move the conversation beyond them.

Question one could be: What outcome do you want when you’re ready to exit your business? Do you want to sell? Are you building it up for your kids? Do you want to merge with three other businesses and list it? It still amazes me that people who own very large, very successful businesses have no answer to that question.

Next, what do you think your business is worth? Again, most either don’t know or have a figure that is way off. Its not like valuing a property. Small businesses are complicated. This is where technology can do the heavy lifting for you and value it accurately.

Then talk about what all that means in terms of succession or exit planning. For example, if your business is worth $3 million today, do you need it to be worth $5 million when you are ready to exit? Or are you happy with a lower amount if it’s in a stable and secure position for eventually passing on to your children? The “how” varies depending on their unique needs and desires. It could be through an employee share plan, listing, management buyout, private equity, you name it. Whatever it is, you can help them there.

Succession and exit planning are all about getting three things right and ready at the same time. First, the business needs to be ready for transitioning to the desired outcome. This encompasses everything critical to the business from staffing to suppliers.

The second is about the owner or owners and getting them ready, both psychologically (a whole different topic and set of skills) and financially through self-managed super, estate planning and trusts.

Last, teach them how to get their finances in order. Boring but vital things like normalising the profit of the business, removing any personal expenses, over or underpaid salaries to owners, excess super contributions, rent paid to a related entity and so on fall into this category. Both the business and the owner need to have their financial act together before they try to exit.

The trick is to get those three things ready at the same time, and the earlier you can help your business owner clients think about this stuff, the better.

Share the gains

You’ve seen the headlines and, if you own or manage an accounting firm, you’re probably feeling it. The labour market is extremely tight. Wages are rapidly increasing and there aren’t enough skilled workers to fill the roles. A range of benefits, such as bonuses, working from home and extras, have become a popular response.

However, in my experience, a formal alternative to a cash-based salary increase is key to attracting the right candidates or retaining essential employees long term. This can be done through offering employees the opportunity to own equity in the business through an employee share ownership plan (ESOP) and is something you can help your clients with.

We’ve seen a huge increase in inquiries from SMEs about how best to offer ESOPs to their employees, with many business owners noting that the demand is coming from the employees themselves. Increasingly, staff want to own equity in the business they work for, and this can have significant benefits for both the business and its owner. I’ve got a client currently advertising for a management accountant role. The subheading on the job ad is, management accountant and the next line said: “Not just income, equity as well”. Complete differentiator. A game changer.

Now’s the time

Now’s the time for the accounting industry to pivot its business model to a hybrid between technology and advice. Providing compliance and other traditional accounting services is a hygiene factor. Advice must be the key component. Succession and exit planning and employee retention are critical issues facing all business owners. Add to that their estate planning, asset protection and retirement planning needs and accountants have a wide range of areas they can provide advice on – or risk being replaced.

Craig West is founder and executive chairperson of Succession Plus, which advises business owners on how to prepare for a successful exit.

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