What will 2021 hold for your practice?by
With stress levels at an all time high could 2021 be the right time to think seriously about what the future holds for your and your practice?
Accountancy has long been a stable and desirable profession; however, it has also become one of the most stressful working environments. A 2019 survey by the Chartered Accountants Benevolent Association found that 98% of accountants had been affected by stress at some level.
There is now anecdotal evidence to suggest that these stress levels may have increased even further due to the Covid-19 pandemic. Accountants have been placed under ever increasing levels of mental pressure as they attempt to support clients through these extraordinary times; long working hours, exhaustive workloads, the isolation of working remotely and watching as clients and possibly friends lose their businesses through no fault of their own has not been easy. Many owner practitioners have also had the added burden of having to cope without the support of an HR department or colleagues.
When Covid-19 fades, the Treasury has forecasted that the economy may not recover until the end of 2022. What, then, is the future of general practice? The government economic watchdog predicts that 2.6 million people will be unemployed by mid 2021, with a record number of redundancies, but the flip side to this is the huge rise in start-ups. According to Enterprise Nation, new business formations increased by 9.5% year on year for the first nine months of 2020, and the percentage of small businesses operating exclusively online has increased to 55%. These are trends that are expected to continue as the UK remains in the grip of the pandemic.
For those savvy enough to see where the market is going there will be opportunities to replace those lost fees. But beware, there are likely to be a lot of accountants targeting start ups as a way of replacing lost fee income. If this is the strategy you are going to employ, then you need to make sure your practice is relevant to the market. Technology will feature heavily in successful practices, particularly as the start-up market is expected to be driven by millennials - the young entrepreneurs who have suffered some of the highest employment rates. They operate in a world where technology is a given; with 70% of consumers stating that technology makes it easier to switch your accountant if they are not happy with the service they are receiving, accountants cannot afford to ignore this important operational element.
Other accountants are rethinking their growth strategies and abandoning organic growth for acquisition. For those with the funding to follow this path, there are an ever-increasing number of opportunities in the marketplace. However, even this route may not be as easy as it once was, as accountancy has also been hit by redundancy and some are seeing this as the perfect opportunity to go it alone. There are an increasing number of buyers looking to purchase fees in the £50,000 to £100,000 range so competition for these blocks of fees/practices is stiff, but the current economic climate means multiples are remaining static.
2021 will be a challenging year for everyone. As the pandemic rumbles on, businesses struggle and technology continues to change the way in which accountants practice; not everyone will feel inclined to keep going. As Darwin stated: “It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change.”
But in order to change, a business must have the inclination, time and manpower to do so and small-owned practices are struggling. There comes a time in everyone’s life when you decide enough is enough and step aside for a younger, hungrier generation to take over the reins. Will it therefore be a surprise to anyone if 2021 is the year that more accountants make the decision to retire?
If you want to consider your options for 2021, feel free to visit our website www.practicesales.co.uk or get in contact at 01823765085 to see how we can help you.