What is stopping firms moving to more profitable business model?

My last two emails highlighted what’s happening within our industry and why partners are considering transitioning away from the compliance business model.

Today, I am going to address what is stopping firms moving to more profitable business model?

It’s very simple, partners don’t fully understand the long-term consequences of staying in the existing compliance model, nor do they have clarity on the how to transition.

Speaking with hundreds of partners in accounting firms from rural, suburban and metro areas, the following are reflections on the consequences of staying in the traditional compliance model:

With the development of integrated cloud software compliance is becoming a commodity and causing;

Pricing pressure
It’s highly likely automation of compliance will see most traditional services disappear
Traditional ways of preparing financials and tax returns are keeping the cost of product high
Profitability erosion

Providing general advice under a compliance model has already resulted in clients questioning the value of the advice, more pricing pressure.
Consulting done part-time results in

Inefficient delivery of services, overruns, and scope creep
Poor knowledge development, how do accountants find time to advance skills whilst trying to keep abreast of tax laws
Overworked quality people

Staff will seek other career paths in order to upskill themselves
The most concerning of all, clients want more from their accountant and if you are not providing they will seek other accountants or outside sources for advice.

Even without considering the long-term consequences, firms are experiencing the effects now:

Inefficiencies in delivery of consulting is leading to poor recovers
Scope creep as a result of no consistent delivery
Lower than expected profitability
We know we could be getting better prices thus pricing it under a compliance model is not the best way!
We are too busy now and struggling to manage the workflow on top of the compliance demands.
The best people are becoming even busier and that’s leading to frustrations.
Expecting the best people to be Jack’s of all trade, generalists, and this is burning them out.

Therefore, if these consequences are not enough for firms to move, then getting a group of partners to make a decision on which model to choose is simply not going to happen. Procrastination is rife in the industry and that’s leading to stalled growth and lower profitability.

TwentySix Group Business Accelerator Program

A one-on-one Online discussion that identifies the drivers that will determine your one critical decision, which model is right for your Firm of Tomorrow. Facilitating this process, it is important that you and your partners understand how your firm sits in the market now and how it should sit in the future. Even more critical is to know, how clients will determine the value to them and their business. You will walk away with a plan on how to bridge that gap that exists between where you are now and your desired firm of tomorrow.