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RAN ONE: Accountancy's top growth opportunities

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20th Apr 2005
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The lack of differentiation between firms together with technology-driven commoditisation of services creates an increasing risk of price based competition.

What must accounting firms do to grow and prosper?

Through its work developing solutions for accounting firms serving the SME market, RAN ONE has identified the top areas of growth for the accounting profession today.

Industry figures show that over the past six years any growth in fees has been largely the result of increased turnover in non-compliance work. Those accounting firms that provide the best proactive advisory services are also generally the most profitable.

The DTI's Small Business Service recently released its report 'Passing the Baton ' Encouraging Successful Business Transfers' The report notes that an estimated 40% of the 4m small businesses in the UK will undergo a transfer of ownership in the next ten years.

For advisors the area of small business transfers is large and almost untapped. And importantly, the report cites accountants and business advisors as being a primary source of advice and assistance for small business.

In 2003 'The Profitable and Sustainable Practice' ' a report by The ICAEW, came to some very interesting conclusions:

  • 'In order to remain profitable and sustainable, a practice needs to re-engineer itself and refocus service delivery in new areas.'

  • Small firms will succeed in many cases by specialising, and by developing skills to provide added-value products, services and consultancy in areas such as strategic business advice and personal financial services.'
    Business Planning and Profit Improvement
    'Businesses with properly formulated strategic goals tend to be more successful than those without'' - Business Link West Yorkshire

    Accountants can help their clients set their personal goals and then tailor their business objectives around them. They can develop a business plan that covers these business objectives and the strategies that will achieve them. Working through these kinds of details creates a clear picture for the client of the intended future of their business.

    Many small business owners do not have strong management backgrounds - a real opportunity exists for accountants to assist in professionalising clients' management processes and improve profits.

    Succession Planning
    Durham University estimates that up to 100,000 viable businesses close every year for lack of a suitable successor. The DTI notes that succession planning ''often takes place too late or at crisis points'.

    Succession planning needs to be done correctly, well before the need for transition arises, particularly as nearly half of all business transfers are for non age-related reasons. Accountants are uniquely positioned to provide managerial advice, planning and ongoing support as businesses address this need.

    Every business needs a succession plan and too few presently have them.

    Estate Planning
    Many family businesses fail because the owner dies and hasn't reflected the business succession or transition arrangements in their estate planning. A study by Barclays Bank found that 30% of family business owner-managers haven't even made a will.

    The business is an asset like any other asset and can be subjected to destructive taxation if the estate planning isn't done correctly. The estate plan must be linked with the plan for succession to ensure the business is able to continue trading if an owner dies.

    Accountants can help their clients plan their estate and incorporate elements that will give the business an ability to survive the period of transition without being negatively affected by whatever changes have to be made.

    Business Coaching
    Coaching is about developing people and businesses so they can operate at the peak of their abilities.

    No-one is better placed to provide ongoing coaching services than the accountant for a family business. You already know the personalities and the structure of the organisation; coaching is a process that helps you improve the financial performance of the enterprise.

    Coaching is a powerful tool for organisational change and involves a monitoring process that tells the business owner where they are and how they are travelling. The coach's role is to continually improve the way the business does things so it will gain buy-in from key stakeholders and reach its objectives.

    In the UK today this work is sometimes referred to as non-executive directorships or "virtual CFOs". Irrespective of the title the role provides greater services in the field of performance and profit improvement and ultimately extends your range of services.

    Grooming the business for sale
    The sale of a business is a complex and time-consuming process that offers numerous opportunities for an accountant to provide additional services to the owner of the enterprise over an extended period of time.

    The services associated with business transactions can greatly increase the value of the company being sold by overcoming issues that can have negative implications for purchasers.

    Making a business attractive to a buyer is essential since business transfers are increasingly being made to non-family members. Accurate valuation of stock and other assets is crucial, as can be providing assistance to obtain finance for the incoming purchaser.

    Every business sale is different and has its own set of requirements. The accountant's role will be likely to grow as the process continues, and the part they play can be integral to optimising the value their client receives from the sale.

    Find Out More About these Opportunities and Your Practice
    If you would like to examine these opportunities for your practice please click here'

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