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there was no chance they would ever make it pay , it was simply an adventure in muscle flexing , big firms are not the answer for SME
A real shame for all the hard working people in that team. It just didn’t come together for their clients. To deliver world class small business accounting (and the promised advisory) at that scale to that wider industry sectors would require EXCEPTIONAL planning and execution. It is just not that easy. Thoughts with the team today and kudos to all the smaller practices out there smashing it.
Big accounting firms have no clue when it comes to SME's.
Irrespective how much money they throw at it.
Interesting read Tom, I should be on tomorrow’s world calling that it would not work in 2017
They should have just asked my advice and saved the heartache
Thanks Glenn. Could I trouble you for Saturday's lottery numbers as well please?
You have Saturday's, I'll have Friday's.
There was never much chance. The whole ethos of these large practices is shafting their staff and clients as much as possible in order to have maximum profits per partner. Ethics are not really part of the culture despite all the fine words in the mission statement.
In a few years time they will make another foray into this market.
In the mid 1980s I joined KPMG's small business unit which was always seen as a feeder unit for growing businesses.
Well back when this was launched in March 2014, some impertinent bean counter said
"My charge out rate over 15 years ago at KPMG as a newly qualified is still higher than my current one. not too worried quite frankly, as KPMG's idea of "very competitive" and mine differ somewhat. "
And so it has come to pass. Small businesses didn't want to pay a 50% premium to have KPMG file their books.
The department must be in a pretty sorry state as they seemingly didn't even try and sell it. Not sure how many clients they had but a staff complement of 200 means it would have been a pretty sizeable number. Nice add on for someone like Crunch et al.
If they have any sense then if the staff involved are to be released they ought to agree with KPMG to depart with blocks of fees and set up their own practices, they are surely in pole position albeit no doubt currently restrained by restrictive covenants in their employment contracts.
If KPMG handled this well they could offload the client base to such new smaller firms whose owners might then view KPMG favourably and if clients outgrew these new firms KPMG would possibly be the natural bigger firm to which the new practices would feed up the "grown too big clients", which was likely the object of the exercise in the first place.
In effect outsource the operation whilst say offering a high end technical support environment to the fledgling new firms.
I have a larger Scottish independent who are available for my practice re technical issues and organise events and seminars for smaller local firms, in effect they could act as technical/high end consultants for other firms.
In years past the firm I was then with referred to KPMG our higher net worth IHT work, they did not poach and we provided our clients with a service we could not properly offer in house, win win.
That's a good idea in principal but many don't get the working together idea and see everyone as competition or a threat.
I have a relationship with Johnston Carmichael up here in Scotland, I received a letter from them a few years ago offering to link with smaller practices re supporting them with their clients- my employers had previously used a niche set of tax planners in Newcastle but that relationship had run its course and we needed third party scrutiny re ideas and planning.
Previously I had Grant Thornton as external auditors and re tax, but tax ran out of Glasgow, not Edinburgh ,which was not wholly helpful and I had also consulted re tax planning with KPMG, but neither relationship was totally satisfactory, both were just a tad too big.
JC have 11 offices in Scotland, including one in Edinburgh, and the relationship has to date worked pretty well- they have become a sounding board when I have the framework of an idea , usually re tax, and they have earned fees in consequence.
I currently have a further client where I have been trying to suggest they consult and my employer may also need some structured input re IHT and succession planning where we may well use them.
In my opinion small firms do their clients a disservice not having such technical back up, I also have a vat consultant when I need input, the fact is the field of knowledge required by the general practitioner is, imho, too wide for a single employee firm of accountants to offer a fully robust service.
My gut feel is national firms these days may be too big for the role, so KPMG may not fit the right size, too many niche departments and different contacts.
What I have got from JC is one contact point and he then sits as point man re the in firm team he consults, when I used to talk with KPMG all these moons ago it seemed to be someone new each time which did not really work.
Still, it is their business to run, I am heading fast towards the practice exit door and how firms work over the next 20-30 years will not be my concern, but certainly if I was making decisions in KPMG I would have considered the idea .
Hi
I work for Crunch and we would very much like to support all exiting clients.
If you have any contacts at KPMG I would hugely appreciate an intro
I know it’s a long shot but worth asking - hope you don’t mind
The only person I had any contact with was Head of Tax in Edinburgh a long time ago who is now long retired.
I guess they could not shake as much money out of SME's as they hoped, also I guess SME's do not pay enough tax and tax avoidance schemes were not relevant to SME's, ie their fees were greater than any tax savings available.
E&Y is also trying with "bespoke" SME accouting software based on Microsoft Azure platform.
Lots of promises which I know they cannot deliver. Waiting for the announcement that they are withdrawing. May take them a few years seeing they have deep pockets.
Dont see QB or Xero very worried.
Smugness alert from every small firm of accountants in the UK that actually knows what that sector requires and delivers it well. Big 4 Nil Real Accountants 1
Interesting to read that KPMG have found that tech isn't the answer to everything, but HMRC still think it is.
Oh dear...Not enough traction, ie clients.
But someone on here said there were 100 people in the department. That's actually pretty big.
If you could sign up enough clients in 4 years to have 100 staff, it would be like winning the lottery.
Its taken me 19 years to get to 30....and the nice QAD man from the ICAEW said that was a lot :)
And they couldn't even sell it off....
I guess its small potatoes in their world.
Let me run it, let me run it, pleeeeeeeeeease :)
I love acting for small business owners, mainly because you can build a really close relationship with them. The core of the service is that we are local to them and then can pop in any time they have a query and to drop off records, have a coffee and go through any questions
. Having trained with one of the Big Firms I really struggle to see how they could have offered the level of expertise these small business owners need at a viable price.
How surprising!
Since the Big Boys know squat about SMEs, their problems, threats, and how damned hard it is to create decent revenue , let alone create real wealth, in what is, thanks to myopic Government and its agencies including Treasury and HMRC in particular, then how and why might KPMG address the SME market with comprehension and empathy?
After all, as I have, over many years, tried and failed to explain to Government Ministers et al, the SME sector of the UK economy generates:
2017:
Small Businesses accounted for 99.3% of ALL Private Sector businesses and 99% were Small to Medium sized.
Total employment in SMEs was 16.1 Million; i.e. 60% of ALL Private Sector UK employment:
The combined annual turnover of SMEs was
£1.9 Trillion i.e. 51% of ALL Private Sector Turnover in the UK.
Source: ?? Well, err, the UK Government!
https://assets.publishing.service.gov.uk/government/uploads/system/uploa...
Yet when considering any sea change in regulation and particularly taxation (MTD springs to mind!), to whom do the Great Gods fly, seeking guidance and critique?
Well, such as the KPMGs of the world and, naturally, CCAB... Oh and according to Middleton and Stanier, the Office of Budget Responsibility!!
Well said. Everyone knows SMEs succeed despite what the Government does and not because of it. Ronald Regan famously said something similar I think re the US.
When I first heard about this a few years ago, it seemed strange, as I couldn't see how an entity with a huge cost base like KPMG could make it work.
I expect most of the grunt-work would have been done by trainees and I shudder to think what their chargeout rates would have been.
Interesting,but the big boys come up with this rubbish a lot of the time.Most Mid Tier firms have an SB Unit and presumably they will go the same way ?
However I am surprised a “one man band “ operation could survive with just 30 such SB Unit clients ?For that sort of fee level would it really be sustainable?
Does make you wonder where the industry is going.
I thought it was 30 staff not 30 clients that was mentioned, but maybe I got that wrong or we are at cross purposes?
Out of interest, does anyone know how Propel by Deloitte is doing?
Looked good initially but the website has less information than it used to.
Was pretty much doomed to fail, as you can't fit small clients into a big firm where they think nothing of charging clients thousands of pounds for 'partner review' to justify their enormous cost base and huge charge out rates.
Most small business clients want a bespoke service with one point of contact and someone who understands their business- and then stays with that business for the long term.
This is a common failing of big businesses and indeed the bigger contractor firms- they either don't understand or don't care as they consider high churn rates a part of the business, as long as they can squeeze maximum revenue from the client.
My thoughts are with the clients who have been left unsupported and abandoned following this withdrawal by KPMG - who is supporting them now that KPMG have decided the SME space isn't worth their attention. My company actually professionalises the accounting functions of UK SME businesses between £0.5m and £2.5m, providing business class book-keeping and insightful management information which we take the time to explain to clients. We take the SME market very seriously, after all 95% of all UK businesses are <£1m, right? (approx. figure). We're interested in supporting these clients, who's with us?
I recently picked up a bookkeeping client who had KPMG as their accountants. On closer inspection KPMG were expensive and just doing the compliance work, by their own admission, but no business development support of the sort a smaller independent accountancy firm offers which is what my client really needed. We ended the contract with KMPG before this news came out and I am not surprised to hear it.