Although not yet the most profitable demographic, millennial business owners are one sector advisers need to target now. Failure to do so could become a costly mistake later.
Many accounting firms say they need to attract young talent, but there hasn’t been the same focus on how to appeal to young business owners.
A number of millennials – Gen Y, those born between 1980 and the early 2000s – have already founded successful businesses, often harnessing social media and technology.
A study by Bentley University shows millennials believe that to be successful they need to be more nimble, independent and entrepreneurial than previous generations. Only 13 per cent aimed to scale the corporate ladder, and 67 per cent wanted to start their own business.
Millennial business owners start younger
A 2016 survey by BNP Paribas reveals that technology has enabled millennials to start their first business on average eight years earlier than previous generations.
Adelaide-based Accodex, which provides a cloud-based platform for freelance accountants, appeals to largely young, start-up clients. Co-founder Michael Macolino says the technology allows freelancers to deliver services and advice more aligned with millennial preferences.
“These are people in their 20s or early 30s having kids … and trying to start a business at the same time,” Macolino says.
Paperless is the new norm
US-based software-as-a-service company Bill.com found an overwhelming preference for digital accounting in a poll of more than 1000 millennial business leaders.
About 82 per cent opted for paper-free accounting, says the 2017 Millennial Business Owner-Accounting Firm Survey Special Report.
They wanted digital accounting which offers anytime, anywhere access and easy filing, searching and sharing.
About 64 per cent prioritise email communication with their accountant and readily accept working with virtual firms; 33 per cent prefer digital payments, and 25 per cent use their mobile devices for accounting.
Bill.com strategic accounts director Charles Crabtree says, “Fifty-six per cent of millennials want to work with cloud-based technologies.”
Value-based pricing in accounting
Any practice wanting to attract millennial-led businesses should reconsider hourly billing. Accustomed to subscription services (think Netflix and mobile apps), millennials prefer the predictability of flat rates and fixed fees.
In fact, 44 per cent prefer monthly flat rates and 35 per cent want fixed fees per project. Just 21 per cent of millennials are satisfied with hourly billing, and for those aged 30 and younger, a mere 14 per cent support it.
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What most frustrates younger business owners?
Millennial business owners find forecasting, managing cash flow, and reporting most troublesome. About half insist on an accounting firm that provides strategic insight and guidance.
When pitching to millennials, accounting firms should emphasise the strategic element of services, and offer integrated, technology-driven processes that provide accurate and timely reporting. Use integrated cloud-based technologies and digital payments to accelerate the reporting process.
The connected accounting practice
Software provider MYOB calls this trend the “connected practice” – the coming together of three critical functions: transaction processing, compliance and business advisory.
“In the future we believe this will all happen in real time and across a single technology platform supported by a single adviser or integrated network of advisers,” says MYOB CEO Tim Reed.
Client portals such as MYOB’s allow accountants to digitally exchange documents such as tax returns with clients. The uptake has been swift, driven by accountants realising that all businesses will come to expect this type of reporting technology.
Reed sees progressive firms expanding “upstream” by taking responsibility for day-to-day management accounting and bookkeeping, and “downstream” by supplementing compliance work with business advice.
“It’s often not high-end consulting, but pragmatic advice,” he says. “For example, where accountants used to get the financials once a quarter or yearly, they can now regularly check a ledger to forecast cash flow issues and advise clients on how to get ahead of the problem.”
The millennial accounting services mix
Taxes rank as the top service required by millennial business owners but they prefer a different set of services than earlier generations.
In the Bill.com study, 54 per cent opted for bookkeeping from accounting firms, compared to 34 per cent for those aged 40 to 55, and 30 per cent for people 56 years and older.
About a quarter have accounting technology recommendations and training on their list, while 20 per cent want an invoicing service.
“It goes much further than tax and bookkeeping,” says Tanya Titman FCPA, founder and managing director of Brisbane-based Consolid8.
“Millennials are looking for accountants who not only use technology but can recommend solutions. Being on their level and getting their respect requires knowledge of their world, without which firms will not secure them as clients. The rise of social enterprises in the millennial business model is hard to ignore.”
How do millennials find their accountant?
Word-of-mouth referrals heavily influence millennials but they use a mix of tools to research firms, suggesting multiple marketing strategies are needed, particularly search engine optimisation (SEO) and social media such as blogs, Twitter and Facebook.
“Millennials have no geographical boundaries, so location is less important,” Titman says. “Accountants need to take a national focus regardless of where their office is.”
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