This panel included:
If you missed the live webinar this blog will bring you up to speed with the core predictions for 2018. Please note, this webinar has been edited for clarity and length.
You can watch the full recorded webinar here to see what else our panel discussed.
Rob: Larger firms are competing more aggressively in the smaller business economy; 2018 is going to be the year of the small firm. SME firms have more access to tools than ever to chase high-value clients. The tools we use to convert data into information, like Futrli, will become essential. We’re seeing clients unwilling to pay as much for just data conversion; they’re looking for more advice. The take up will explode next year for tools like Futrli which help convert that data.
Peter: Amazon are arriving in Australia this Christmas, and I think they’ll hit the ground running in the new year. They’ll ramp up remarkably quickly, and that’ll have an impact on SMEs, and in turn, that’ll perhaps challenge us as advisors and some of the strategy we’ll talk to people about. We all hear about how easy it’s become to access data so the profession will continue to broaden, the services offered to clients will be a natural progression simply due to the availability of data. And finally, interest rates are remaining low and I think will continue to remain low – they might even go even lower. But I think smarter clients will continue to find opportunities for good cash flow. That means that good advisory work available for the accounting profession.
Rob: Often when there’s big change going on in a market, we overinflate the short-term impact and underinflate the longer term. It’s a very exciting opportunity for a lot of SMEs in AU to start being able to distribute more efficiently, but I don’t think we’re going to see the full change in 2018 – in my view, it’s going to flash through to 2019/20.
David: There’s never been a better time to be a small business owner – especially business builder – and there’s never been a better time to be an accountant or advisor. Barriers for entry are at an all-time low, largely thanks to technology enabling things to happen quicker. People are asking questions and challenging the way businesses run. We’re going to see a lot of strategic partnerships rolling out over the next few years. My professional network has people in it I never even thought existed before who can add value to my clients, and vice versa, because of co-working spaces. Professionals collaborating will add more value to businesses. Business owners are getting smarter, asking questions we don’t have all the answers to, and I think will start choosing advisors based on networks. We saw this year in the accounting world that all the accounting events have had record numbers – everything was over attended. We’re getting off our computer screens and into the real world.
Rob: Knowing where your circle of competency is and then trying to streamline the tools and the resources around you. I don’t think SMEs want you to be a jack of all trades, they actually want to know you’ve got expertise in this actual channel, and it could be 4, 5 or even 12 tools that you’ve got expertise in.
David: I think already we’ve got too much data that we’re wasting and not using.
Peter: I think that clients that are SMEs are getting more and more stuff that’s being put in front of them and they’re saying they need help to know what’s relevant. The beauty is if you’ve got the right tools and people who can deal with these tools for you, they can help you with management. Business owners know more about their business than we ever will, it’s about just putting the data in front of them that helps and enables them make decisions.
Peter: SMEs are trying to find someone they can trust and talk to. Our service lines are evolving, so we need to firstly ensure that we play a role in advising around digital efficiencies that business can gain. Clients are getting emails listing services, so it’s about dealing with the noise and making a decision that is right for their business. We need to play a role in that. Secondly, lots of advisory services are now arising out of the availability of data, and there are stronger interactions with clients. We need to develop our expertise in these areas and not try and be good at everything, but really identify what we are good at and ensure that we identify those particular services. What is changing is the skill set we need to deal with those services. Thirdly, is ensuring that the technology is well utilised in delivering all client engagements. That’s going to be modus operandi for all accountants now.
Rob: I think we’d all agree, this feels like the busiest December we’ve ever had in our careers and the pace keeps picking up. I’ll be looking back and seeing what we can learn from 2017, particularly things that aren’t adding value to businesses and trimming those inessential things. It’s hard, but every time we say yes to low-value opportunities, we say no to something else. Secondly, people don’t generally have the confidence to value their services appropriately, which comes down to confidence. The third is valuing your time. It’s your most precious commodity; it’s a finite resource. As we move into January, start planning for 2018. Planning and holding yourself accountable in 2018 will definitely yield some great results.
David: The definition of what an accountant is being massively disrupted. Clients are expecting different things. A big change is working out what type of accountant you are, and what you want to do for both yourself in your career and staff, and what your clients actually need. Accountants need to stop thinking of ourselves as partners in firms and start thinking of ourselves as business owners. Just make decisions, because that’s what your clients do – that’s what business owners do. I put my job title as CEO on LinkedIn, which put me in the mindset of a business owner. The second you start thinking like that you start thinking about strategy and products and about value. I strongly recommend accountants start doing that.
Rob: That’s really interesting – what role do you think empathy plays as the business owner?
David: I worked at an advisory firm once and my boss made me go through an emotional intelligence training course. I didn’t take it too seriously, but it’s
legitimately one of the best things I ever did. The point was to see the situation through the eyes of the business owners. That comes down to leadership – if you’re a business owner what kind of leader are you?
Rob: As the economic blend changes over time, as the baby boomers move over for the younger generations, we’ve all got to make a decision about which shoes we want to walk in, in our own businesses.
David: I think we need to really focus on the definition of advisory. When I did my CA, a client asked us for a P&L cash flow forecast and that was considered ‘special work’, and whoever the accountant was who got to work on the special work was destined for a great career. That’s now becoming compliance work! That change as to what the norm of the work is going to be, the firm owner must take control of this and make it happen, not just let it happen.
Peter: There’s a question on the chat there about the value of those services, and that’s a whole mindset change as well. What’s the value being provided and what’s that service worth? That’s a whole challenge for some accountants to move away from traditional ways of engaging with clients and do like every other business has to do and put a price on what it is you’re providing.
David: And just to add in about a sector we’ve missed out, that’s where bookkeepers fit into the mix on the advisor platform. Going back to ‘what is an accountant?’, I know loads of really good bookkeepers starting to call themselves small business accountants so maybe accountants are starting to think of marketing now. Maybe that will be a new trend for next year.
Rob: I love the idea of a bookkeeper or a small firm, a small business advising small businesses. And not even necessarily advising just small businesses. It’s quite powerful – like I said, 2018 will be the year of the small firm, and that’s actually an advantage.
Peter: We want partnerships so we’re trying to leverage that by having one ‘RSM way of doing things’. We’re a collection of small practices and see that there will be an enhancement of client advisory role, even stronger client relationships and that in turn will provide revenue opportunities. It creates the talking point. Using Futrli we’ve had some great feedback from partners across the country of conversations they’re already having with clients. Secondly, the availability of data being better and quicker will enable our accountants to refresh their clients’ relationships. Lastly, because we’re across the nation we’ll be in a position to develop industry-specific dashboards and that’ll add value to our client discussions.
Rob: It’s a few steps. Step one fundamentally goes back to having a growth mindset, therefore a business owner being open to change and learning. Step two is defining what growth means to them. You have the tools now to provide the very basics of being a growth consultant – you can be a bookkeeper and now provide that. Step three: there are so many tools out there right now and we need them in one place. Xero HQ is a good example – it’s growing, it’s evolving, but we’ve got a starting point of 12 apps all able to notify and alert users in there, making it easier to access the tools to do growth advisory in your practice.
David: I’m not so sure in the accounting world ‘advisory’ was ever defined. It’s like the ‘special work’ as advisory was called, but now we get to define what this is. There are buckets being developed as to what advisory is. I’ve got them in 4 buckets. The first is compliance – there’s what happened in the past, we need to get that right and we need to report on that. Compliance is still absolutely critical.
Peter: I think compliance has become risk management now.
David: Yes and governance might fall into that as well. Then you’ve got wealth advice, where baby boomers had massive opportunities. The third, technology – not just converting them to Xero or cloud-based applications, but managing their CRM so they get more information on their clients, managing their POS systems through tech. The fourth is business advisory, starting at the top end of bookkeeping, management accounting and reporting work – and I need to mention Futrli’s use in providing that! Go and work out what kind of advisor you want to be. To become advisors, we should change our training programmes to pass on relevant knowledge. Combine that with our financial and technical skills and you’ll be a really powerful advisor.
Rob: What challenges do you see in FY19 and finding talented people for your teams? Do you see that as being a growth constraint?
Peter: I think across the whole spectrum it’s tough finding the right people. I think the workforce is changing and has changed. Technology is driving that.
David: People are happy to share their personal data to get a better experience. I know an accountant who plays their client’s favourite song when they come to the office – how’s that for hyper-personalisation!?
Rob: Hyper personalisation is very much a destination in my mind. The whole concept, for me, is number one you’re being customer-centric, so you want to give a great experience to each one of your clients, and number two – not treating everyone the same. That’s a journey, you can start off by segmenting off who your clients are even if that’s by industry it’s a starting point for personalisation. Then you keep drilling down all the way to each individual conversation.
David: Hawthorne Football Club make themselves so attractive that the best players want to come to them. This is going to start happening in business. Offering a paycheck, even 5% above market, isn’t enough to get talent. You need to find out why an employee would want to work for you. People would choose to go to an employer because they work environment is right for them. It’s so throwaway to blame universities – we need to make ourselves attractive for the talent to come to us.
Rob: The generations that are coming through really are more wanting to wake up in the morning with a sense of purpose. One of the things I look for from people on my own team is I don’t want salespeople full stop, I want people who genuinely care and want to make a difference – they’ve thought about why they want to make a difference, and how they can find avenues to achieve that.
Rob: We’ve got a partner who’s taking receipt of fees through bitcoin. There’s likely to be a tipping point where these distributed ledgers which will be used in ways around customer services so you can build up information over time. I think regulatory bodies will start paying attention to it as well – the risks vs benefits will tip in favour of benefits. In the meantime, you’ve got unregulated markets, like in the 1910s/20s which means big booms and busts. With cryptocurrency, we’ll see a lot of volatility.
Peter: I suspect blockchain should be sneaking into the top 3 predictions for 2018. There’s a lot of development there. I’ve seen a lot of applications in the business world already, some implemented and many potential, and you can see how it’ll bring data in better form through the system. Then, grabbing hold of it and interpreting and gaining efficiencies then leveraging from the better data that you have in front of you.
Rob: That data efficiency, whatever form it’s in, that’s going to be a continuing theme. I’d say we’d see a lot more growth in machine learning with those data efficiencies being deployed before we start looking at blockchains.
David: I think we’ll just absorb it through the software. The amount of data that will be in blockchain is scary – we might start seeing data scientists for SMEs.
David: It’s the model behind Sequel. In the early 90s, people stopped having mainframes in their businesses and everyone moved to outsourced IT. In about 2005/6, marketing started to get outsourced and now aim for retainer-based service agreements. It makes sense that accounting for SMEs is outsourced. This will be coupled by thousands of accountants being pushed out of corporate places in the next 10 to 15 years.
Peter: We see merging bookkeeping, accounting and CFO work as a huge growth area in 2017 and continuing in 2018. I look after some SMEs on the other side of the country and being their CFO. Technology allows that to happen and machine learning – you’ve got products like Receipt Bank that feed into Xero and the data is there for you. Having that technology available means there are significant efficiency gains.
David: The science of business advisory is the technology, but that still needs judgement and good decision making.
Peter: You’ve got to decide which skills you’re going to specialise in, and then build the talent in those areas. Rob mentioned the term ‘growth consultants’ – what are the skills growth consultants bring to the table or specialise in? Then find those people. I think it’s a matter of being able to tap into a network of people who can do things you don’t do.
Rob: Overall the 3 big things for me that go into advisory are you’re a function of your own experience, previous engagements you’ve worked on, that feeds into the advice. Secondly, the relationship you have with someone is critical. Lastly, the way that we’re giving advice will change. Currently, there are very long, established relationships, at a minimum we’re looking at actually understanding the clients’ businesses and that’s something you can’t turn into a science.
David: Referrals are still the number one for most accounting firms for revenue growth. I don’t believe growth hacking exists for accounting firms.
Peter: I strongly believe in niche focus. I’m a retail pharmacy specialist and I get calls from people I’ve never met. I think if you can develop a niche and then go to social media and tell the world about it people will find you. I’m saying take a rifle approach, not a shotgun approach: pick a target.
David: Get out to the networking events and build your brand.
Rob: Do a great job for your existing clients, that is what builds advocacy from within networks as well, then having the confidence to ask for those referrals. Going that extra mile and surprising a good client with a great outcome, that’s what gets people talking.
Rob: There’s a wide scale of where accountants and bookkeepers are in Australia when it comes to how they’re marketing. BOMA is that tool that may give you an edge: it’s laser focus. That’s the beauty of a free market – put a tool out there, add in imagination and we’re going to see it continue to evolve and people will be able to differentiate themselves.
Peter: The culture at RSM is fantastic, it’s roll up your sleeves work hard culture. I mentioned earlier the ‘one RSM way’ and that’s a mantra. It’s very difficult to beat a professional over the head and tell them what to do but if you appeal to their better judgement you get great results.