No surprise that firms are withdrawing from the SME market
Following the announcement that KPMG are withdrawing from their small business accounting service Bobby Lane a partner at leading accounting, tax and advisory firm Blick Rothenberg says that it is no surprise that another global firm has decided to withdraw from the SME market.
Lane, who has advised hundreds of owner managed businesses added: “ KPMG’s announcement follows the closure of the Geniac project by Grant Thornton in 2018.
He added: “ To those providing services to owner managed fast growing businesses this comes as no surprise. We have seen the cycle repeated time and again whereby the global firms look at the SME market, dip their toe into the water, find that they can’t make it work and then withdraw.
Lane said: “ This time the strategies were based on building out cloud based platforms and using technology to provide low cost services that would require minimal interaction with the client. This proved attractive to many clients who believed that they could not only cut their accounting costs but also have one of the largest accounting firms to fulfil their needs. Rapidly many of those businesses found that the one-size fits all technology approach was far removed from the relationship driven services that they had become accustomed to.
Lane begged the question: Where did they go to discuss their funding requirements? How do they decide whether salary or dividends was the right answer? And who would the entrepreneur call when they were having a panic late at night.
He said: For some it did work but for many they rapidly realised that they still needed someone to explain the numbers, discuss their business and help them to prepare for the obstacles that they would inevitably face as the business grew and the economic climate changed.
For the firms within the profession that have a long tradition of working with these types of businesses and the issues facing them it was a matter of waiting.
Lane added: “ I have spoken at length over the last few years about the role that technology has to play in the future of the profession. Whilst many have been fearful of the effect on future fee income others have embraced the opportunity to automate many routine processing tasks. Technology is an enabler, which has meant greater efficiency. This in turn has meant clients paying fees for the services that add value to their business making the relationship with the accountant more positive and meetings that they looked forward to rather than simply a legal requirement.”
Lane said that the average age of a client for a practice is set to drop dramatically over the next decade with the future businesses owned by millennials.
He added: “ This generation have been brought up around technology and are comfortable using various platforms. However they are also open to outsourcing and plugging the gaps in the skills within their business. They will seek professionals who can help to solve their problems. They want to focus on their business and build a team around them who can help to support their growth and them as issues arise.
“They will look for firms that are small enough to provide the relationships and support that they need but large enough to offer the breadth of services that they may require as they grow. Businesses will be looking for a service provision that is able to marry technology with real support, especially for the next generation of entrepreneurs. Only firms that understand the challenges faced by SMEs and their owners with the skill set to deliver those services will thrive in this market.”