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Firms navigate contracting client bases

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As UK businesses grapple with the aftermath of the pandemic, the roll out of IR35 and surging inflation, AccountingWEB readers consider how these changes will affect their client bases in the coming years. 

29th Mar 2022
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While not wanting to keep bandying around the word ‘unprecedented’ more so than it has been over the last two years, it cannot be denied that the litany of crises since the beginning of 2020 has left the UK in a much more precarious position.

The accounting profession has become all too familiar with these economic stings over the past two years and is now asking some hard questions about their changing client bases and the future of their practices as they struggle with the current state of the economy. 

Changing client bases

“Throughout Covid, I have taken on new clients consistently, as well as losing a few as they decided to cease trading,” wrote contributor murphy1 in a recent Any Answers post. 

However, they were quick to say that not everything has been plain sailing, noting that “a number of our clients are really struggling, mainly to source material and decent staff, and I'm hearing on a daily basis that they are considering closing their doors”.

Feeling the pressure of the current crisis, murphy1 expressed concern their operation could only last another “12-18 months if [they] don't act now to actively source new clients”.

Other contributors shared the reader’s fears over the tumultuous client climate, with some feeling stressed, yet unsurprised, at shifting client bases. 

In response to the troubles UK businesses are facing, Crouchy questioned their fellow contributors by asking “is it really a surprise that some clients are struggling now?”

Grasp the opportunity

Glenn Martin, managing director at Avery Martin Limited, sympathised with murphy1 and others on dealing with the challenges that practitioners are facing, citing issues with his own firm due to complications around IR35 and the fact that around a quarter of his firm’s work was non-recurring during the pandemic and so quickly dried up as restrictions were lifted.

However, Martin pointed out that there are silver linings for firms who are willing to grasp the opportunities presented by the current crisis.

“Sometimes a bit of turmoil isn’t a bad thing when it removes the bad operators from the market,” Martin said, arguing that now is the time to “double down on marketing” in order to recoup clients.

While enquiry numbers have been positive, Martin’s firm hasn’t invested in marketing for over 18 months, which is something he’s looking to change as they consider new clients. Yet, Martin also highlighted that finding the right client is just as important as simply filling space in the Rolodex.

“We really work with a specific type of person as opposed to an industry type, we want to work with those who want to be better, grow as a business and are good people who share our values.”

The price is right?

Reviewing pricing was another option Martin has considered to better weather the current climate. “From 1 April, we are potentially going to review fees unless we win some work and replace the non recurring work.” Martin admitted. 

However, he noted that “Larger firms reviewing pricing could potentially generate leads for us”.

Other users were in agreement with Martin’s assessment on pricing, with reviewing prices being at the top of many contributors’ agendas. “Pricing of new business seems to be key given general inflation in software/staff/office costs,” wrote JD.

Selling up

For some, the drastic changes in clientele is making some consider shutting up shop for good and selling their practice on. User Moonbeam, in another Any Answers post, sat with this question as they considered whether making a deal with another accounting firm would be best as they reach retirement. 

But as Paul Crowley was quick to point out, practice sales come with their own set of complications, with one of the most difficult being that “buyers want clients, not your staff.”

With many sectors under pressure, and client bases shrinking, even practitioners looking towards the exit may also face an uncertain future too.

Replies (1)

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By Hugo Fair
29th Mar 2022 19:58

Too many strands forced into one article, methinks.

* The willingness (even ability) of clients to wear increased fees.
* The changes in which client sectors are/aren't able to maintain profit margins.
* The impact (even before MTD) of the govt's message that 'all you need is software'.
* The chasm that is opening between professional offerings and low-cost 'competition'.
* The change that most of us experience as the years roll by in what we're prepared to tolerate.

And there are others. But although there is some overlap, they only share two common factors:
1. they all affect all of us to some (but differing) degrees; and
2. you'll find the same issues in most sectors and across the last 200+ years (in repetitive cycles).

Thanks (1)