Paul Meissner explains why the small business and small accountancy firm are the perfect fit.
Much like digital tax and a love/hate relationship with sport (depending on who’s winning), the UK and Australian accounting sectors share another commonality. We can all remember the headlines: ‘Big 4 firm aims to take over the SME space’. Then, two or three years later: ‘XYZ shuts small business accounting unit’.
The past 20 years are littered with Big 4 attempts to make inroads into the lucrative but scattered small business market. They have come up with different brands and witty marketing slogans, but have largely been a wolf in sheep’s clothing, with the wolf being the same bulky cost structure and traditional accounting offering.
We all know the playbook: it’s a big flashy brand and media blitz rollout that sounds great, the press and the scaremongers pick it up like it’s a fait accompli, with a fixed-fee-type cost structure (something they learned from previous failures).
They promise the world of top-level service, yet often have so many hands on the file and the timesheets that additional services ‘pop up’ and are charged at the big firm’s full charge rates.
What I want to do is outline what I think the power of the small firm offering is and why I truly believe small firms hold the keys to the industry. These points are the areas small firms have always focused on and are ones that I feel explain why the big firms struggle in the SME market.
I call it the power of small.
The world of micro
If you believe the accounting media you’d be forgiven for thinking that all businesses were growing rapidly and had massive teams doing massive things.
In the UK, 96% of all businesses are micro (0-9 employees) and this is a common situation globally. Micro businesses have different needs, different wants and different issues to that of larger businesses. Micro business owners are the jack of all trades in their businesses, often taking on roles which they’d never have imagined. It seems obvious to those of us that service micro businesses, but I think it’s important to remember as we battle the industry hype around automation, compliance and advisory.
Small firms have big relationships
Large business clients have an ‘accounting firm’, but micro businesses have ‘an accountant’. They largely don’t associate their service with the firm as much as they do with the person who services them. When you deal with a business owner rather than a whole finance team (and a board), the personal aspect of the service becomes more important. These business owners require a more personal, holistic and deeper client-accountant relationship. As a result of the relationship needs of smaller clients, an accountant needs to be a generalist rather than a specialist.
A team needs a team, but a small business owner needs a confidant. Someone that knows the whole picture about their business, someone that has a history with them, a comfort. The call centre-type set up of larger firms, where clients speak to a different person every time they call, just doesn’t work. The relationship is with the business owner and often extends beyond the numbers and covers financial, family and other issues.
Micro businesses often rely on a more relatable, lived-experience advice. More of a “this is what I have done or seen” rather than “this is what I’ve been told to tell someone in this situation”. It sounds obvious, but the strength of small firms is that it’s a shared experience that supports the client.
Better margin with lower fees
Small firms don’t need to carry the significant cost of flashy offices or inflated staff numbers. The modern small firm can run quite lean, both in head count but also in additional office and running costs.
With the technology developments in automation, small firms are far better placed than large firms to make changes that remove inefficiencies in their business.
They also can change their processes and systems to match the requirements of their clients and staff. One of the most powerful things for my firm has been our ability to re-write the book on our processes and systems and focus on creating efficiency and cutting costs.
There are plenty of issues facing small firms. Long hours, undercharging, inefficiencies from our systems and services are almost daily challenges. The overblown fear from automation, digital tax or big accounting firms doesn’t help, and worse, creates a very loud distraction.
Small firms have ridden the wave of the Big 4 looking for small clients before. Some of us have even profited off clients returning to us, despondent at the costs and service.
I’m sure we’ll do it all again.
• Paul Meissner is the founder of Freedom Mentoring and a director of the 5ways Group
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