William Buck national chairman Nick Hatzistergos FCPA is an old hand who applies a proactive approach to capitalise on new disruptors.
Everyone can have 20/20 hindsight, but identifying future trends and properly planning for them is different.
Accounting has become an “always-on” profession, and finding ways to future-proof it has never been more important or challenging.
“There are multiple new disruptors,” says national chairman of mid-tier accounting firm William Buck
, Nick Hatzistergos FCPA.
“Software like Xero is putting a lot of accounting power into the hands of small businesses, reducing some of their needs for accountants and in turn diminishing what accountants used to rely on for their bread and butter.”
Passive dependence on basic compliance or transactional activities, he says, is a race to the bottom, because someone or something will always be cheaper.
“I remember when computers were going to dispense with accountants,” Hatzistergos says.
“Then when MYOB and Reckon arrived, that was the end. Now it’s the cloud, big data and offshore outsourcing.”
These aren’t the end, or even a perfect storm, but nor is the profession immune to the effects of new trends. Indeed, in 2015 average revenue growth across Australia’s mid-tier firms was just 5 per cent.
In contrast, William Buck is poised to break the mould with annualised growth of 15 per cent for the 2016 year.
“Focus and adaptability are vital,” Hatzistergos says.
“By that I mean working out where we can add value through advice and the influence we can have by understanding what drives a client’s business.
“Whether it’s a family business or one with a number of stakeholders, the owners have issues similar to us,” he says.
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“We act and look like them because we too have to meet payroll obligations, deal with the bank and then the landlord. In many ways, we’re a mirror of the advice we give.”
This way of thinking is traditionally applied at partner or senior manager level, but Hatzistergos is keen to see it embedded across William Buck at all levels.
“To do that you have to change the mindset of younger staff and start giving them the skills to conduct monthly or quarterly strategy meetings with clients.
“Because basic accounting tasks can now be done by clients, rather than charging at the end-of-year for [number-crunching] historical information, the onus has to be on talking about real-time business drivers.”
Inadequate succession planning can undermine growth. According to the Global Accounting Alliance, 52 per cent of just over 4,500 accounting firm employees it surveyed said they are looking for advancement opportunities at their current firm, either to become a partner or take on a more senior role.
More than half said they would be more likely to stay with their firm if they knew they would be offered opportunities in the future, suggesting that if they were not they would join a competitor firm or start their own business.
Clearly there is every reason to get succession planning right, not only because of the risk of losing key people, but to maintain company reputation, general morale and, of course, strategic momentum.
“With succession planning, too much importance is placed on who’s going to be the next managing partner," says Hatzistergos.
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“For us, it’s not about the managing partner – he or she is just the custodian of the business. We’ve focused on building a sustainable firm for the future by providing a clear career path for our people – and this starts from the beginning, at graduate level.”
“In accounting firms generally, we bring people in and make them highly billable but do not put enough emphasis on soft skills like business development, being in front of clients and becoming their trusted advisors,” Hatzistergos says.
“They weren’t taught those skills at university and it’s usually secondary to how they are performance-managed during their careers. Then they reach manager or director level and business development is suddenly one of their KPIs – it’s hardly surprising they struggle.”
The result, he says, is that over time many firms begin to contract.
“Where the right skills have not been grown within the firm, when people retire, leaving behind a good business, the next generation is not equipped to take it further, so leadership flounders and the firm slides backwards.
“Over years we’ve seen this happen time and again and are now focused on nurturing the next generation, ensuring that when people reach partner level, they already have the skills of a trusted advisor.
"Our performance framework and training programs are geared towards developing soft skills from day one. For example, our business development program spans across all levels, with level-appropriate activities and KPIs to match.
"While graduates are not expected to bring in new business, we do impress on them the importance of developing a professional network. By starting early, certain behaviours become second nature rather than intimidating, and our people already have strong networks by the time they reach senior positions.”
Hatzistergos emphasises the role technology has played in allowing his firm to take a more analytical and consultative approach to interacting with clients.
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“Analytics is an area that has created a real opportunity for us to continue being a business partner to clients. It has changed the style of work that we do insofar as there is less of what I call ‘legacy’ fees for year-to-year bread and butter stuff, but it’s a matter of understanding and embracing this rather than being threatened.”
Although William Buck’s investment in the future has included some strategic acquisitions, Hatzistergos cautions about growth for growth’s sake.
“If all you’re doing is adding bodies and billable hours with people who don’t necessarily have a lot in common with your vision, it may not be helpful for the firm longer term or in building your brand’s reputation,” he warns.
“Organic growth is usually more aligned with core values. Regardless, it’s important to determine whether an acquisition will deliver new skills, an industry segment you believe will be a part of the future, and intellectual property you can scale and use.”
Regulatory compliance is nothing new in accounting, but according to Hatzistergos its proliferation is the biggest issue small and mid-tier firms have to contend with – now and into the future.
“Accountants are no less capable today than they were yesterday in dealing with regulations, but it’s just one more thing they have to put in front of clients,” he says.
“It doesn’t improve client satisfaction or service, but Australia is still creating legislation that is not conducive to business. We have a regulator that is supposedly under stress and underfunded, but we keep giving ASIC [Australian Securities and Investments Commission] – which has done an average to poor job with what it already has – more to do.
“Take the SMSF [self-managed superannuation funds] licensing regime. I’m yet to understand how it makes any sense to clients who have invested their funds. I’m certainly not aware of any large-scale fraud that is the fault of SMSF work done via accountants. When I look at comparable jurisdictions around the world, it’s easier to do business there than it is in Australia.”
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The bigger picture
William Buck actively monitors trends overseas and leverages the insight to give itself a heads-up on what will eventually impact the local market.
“We spend a lot of time looking at what’s happening in bigger economies such as the US, UK and Germany, particularly through our international alliance with Praxity,” Hatzistergos explains.
“We spend time with US firms because generally they are three-to-five years ahead in terms of available technology and the types of services people are demanding. We use that to plan what we will need to do next to stay ahead of the curve.”
And whenever there is change, there is opportunity, he adds.
“It’s an incredible time for people coming into the accounting profession. There’s a whole new suite of technology tools and they can become the masters of them. They will have skills that I never will. So don’t be scared of change – it’s inevitable.”
TOP TIPS FOR GROWTH
William Buck’s investment in internal development has paid big dividends, with the firm set to break the $100 million barrier. Here are Nick Hatzistergos’s tips for sustainable growth:
• Have a long-term mindset.
A solid long-term vision will allow your firm to weather any temporary dips in profitability, safe in the knowledge you’re investing in the future.
• Be proactive.
Don’t wait for the market to demand new service lines or expertise. Do your research, pre-empt what may be required and build your offering around it.
• Invest in people.
In an accounting practice they will always be your biggest asset.
• Don’t forget current clients.
A substantial proportion of William Buck’s growth comes from cross-serving clients and word-of-mouth referrals.
• Consider mergers and acquisitions carefully.
They need to contribute to and complement strategic objectives.
• Do not pursue growth for growth’s sake.
While growing revenue is always desirable, it needs to be scalable. Rapid growth often results in profitless volume.
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