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Non-business view 'restricts small practice growth'. By Dan Martin

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15th Jun 2006
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A tendancy to view their organisation as a practice rather than a business is impinging on the growth of half of the UK's small accountancy firms, new research suggests.

A poll by software provider MYOB, in conjunction with AccountingWEB, revealed that although 80% of firms were looking to grow, 43% confessed to not having developed a business plan for the next three to five years.

The figure was even worse among small practitioners. Over half of respondents with less than ten employees admitted to lacking the existence of a formal path for future growth.

Simon Crompton, MYOB accounts division general manager, cautioned that with business plans being one of the mainstays of accountancy, the survey's results were "staggering".

"It highlight's one of the profession's biggest challenges, that many firms continue to run themselves as practices rather than businesses. Small practices cannot expect to grow if they don't have a business plan in place." he said.

Administration and compliance were among the most common reasons given for constrained growth with 36% of those polled saying both factors were impinging on business development.

Crompton said to overcome such issues, practitioners should overhaul their processes including embracing time-saving technology.

"There seems to be a lot of evidence that a "templated" model now exists for how to run a successful, modern accountancy practice," he said. "One: apply workflow systems to manage your compliance. Two: go for document management systems to make paper disappear and give you more time to service your clients. And three, use outsourcing to provide more flexibility in your resource levels."

A large 66% of accountants revealed they spend more than 20 minutes a day filing and chasing documents. Crompton admitted that although he knew paperwork was a problem, he was "amazed" that as much as 20 minutes was being wasted on it.

The research did find however that the less paper philosophy is gaining hold in the accountancy profession. An overall 18% of respondents said they use electronic document storage, with the figure rising to 28% among firms with 11 to 100 employees.

However, although firms with document management systems showed some improvement on speed of communication and filing times, there were also negative replies that indicated that technology alone could not cure all the firms' organisational problems.

Almost half of the paperless small firms were among those who spent the least time filing, and 24% could respond instantly compared to the survey norm of 16%. But the research also showed that staff at 35% of the smallest paperless firms still spent more than 30 minutes a day shuffling paper and 41% of respondents from these firms confessed to only having minimal or reasonable control over their resources.

In conclusion, Crompton said: "What came back from this survey was that two-thirds of firms want to grow, and 96% say IT is important to their success. Yet almost half aren't planning; almost a third aren't controlling their resources; and a third are bogged down in admin and compliance. They want to grow, but they can't. We can also see that many of them are looking for ways to reduce their admin, for example by going to less paper systems or outsourcing their compliance work."

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