Speaking at Smithink’s Practice Managers Workshop last week, Mr Holton said the amount of firms attempting to move into the business advisory space and failing should be a big concern for the accounting industry.
“Generally of every 100 firms that want to offer a business advisory service only 30 succeed in a reasonable time.
“The rate of failure is scary,” he said.
With the ATO’s well-documented automation agenda and the inevitable decrease in compliance work available to firms, Mr Holton said a successful move into business advisory will be vital to the ongoing success of many firms throughout the country.
“Let’s be frank, we report to big brother and if big brother changes the way we do it or changes the very nature of what they require or even, heaven forbid, start to think about interacting digitally direct [with] an SME, and we sit on the periphery of that, then that’s going to very well change the way we do business.
“What they have made clear, and what I think will happen in our industry, is that a practice whose value proposition is around transactional processing is under threat,” he said.
Mr Holton said the two main reasons why firms fail are a lack of commitment and a lack of capacity.
“Lack of commitment, that’s a critical one because it’s never as important as compliance and what happens to stuff that’s never as important? When does it get done? Never.
“The second ‘c’ is lack of capacity. Because of the lack of commitment we are not putting enough resources towards it so we lack capacity.
"That’s the single biggest issue,” he said.
Given the move to business advisory is set to be so important for so many firms, Mr Holton said more needs to be done to ensure a successful transition.
“If so many firms fail, we have to start to analyse why and put in preventative strategies to stop it happening.
“The challenge is how do I grow the size of my advisory services and have a lot of fun doing it? Well none of that is going to happen if you don’t get out there and give it a crack,” he said.
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