The market for Accountants is evolving fast. Technology continues to exert its influence but changing client needs, the prestige of the profession and increased competition require a quick response from accountants. Resilient accounting businesses will overcome the challenges and pursue opportunities based on astute market understanding, especially regarding their clients and the competition.
All businesses should periodically revisit their assumptions on the market, especially when conditions are influenced by recessions, pandemics, regulatory change, wars or similar events. “Market understanding” may sound complicated… so let’s break it down to a few simple questions.
What exactly do we mean by ‘market’?
A market is the group of individuals or businesses who share an interest in buying your product and have the ability to do so. The clients you want to sell to within this group are your target clients. Many accountants target small-medium enterprises, high-net-worth individuals and other broadly defined groups. The more specific we can get the better. So…
What should I know about my target clients?
A starting point is to define their attributes. Are they individuals or businesses? In any particular industry? What size of business? How many employees? In what location(s)? What stage of development (start-up or mature)? Are they raising capital? Selling assets? Buying businesses? Any other specific attributes of the clients with which you excel?
What do my target clients want from me?
That’s really important… we call it client needs. On the face of it, it’s simple. Think of someone shopping for groceries. They have a need for food. But it’s more complex because maybe that shopper specifically wants healthy food or fresh food. Perhaps they are buying for a family meal, an individual meal or a large party. In each case, their needs will differ.
Another example: someone buying a car needs a means of transport. But someone buying a Ferrari may have other needs such as prestige, status and/or exhilaration.
On the face of it, your clients need ‘accounting services’ but this can mean technical advice, business advice, personal advice, emotional support, organizational support and so on. Understanding this is critical to making decisions on marketing, selling, pricing and product development.
Have the needs of my clients changed?
Client needs don’t change very often though changes can be subtle. Going back to the person shopping for food, imagine they are 20, 40, 60 or 80 years old. Their basic need is still to buy food but their preference for what food to buy may vary due to health, budgetary or nutritional needs.
Sometimes needs shift quite quickly. Example: In a pandemic environment, the need for business travel might disappear and, if you are a travel agent, your customers’ needs have changed completely.
For Accountants, a strong economy may trigger businesses to raise capital, expand, buy other businesses and take risks. A weak economy will see businesses fight for survival, conserve cash and avoid risk. A young entrepreneur starting out may be ambitious and bold while a business operator of 40 years may prefer a quiet, uncomplicated life.
What these businesses require from accountants will vary greatly. That raises the next question…
Are changes to client needs temporary or permanent?
It’s true that a change in client needs can be temporary and things will bounce back (see the travel agent example above). But all markets evolve over time and experience disruption… It’s just a matter of time.
What about the competition?
Running an accounting business means understanding it’s not just about you and your client. There are also competitors who will take your clients at the first opportunity. A rural firm might compete with very few businesses but a firm that offers ‘general’ services in the CBD may have many competitors.
Your competitors might operate very similar businesses to you… but they might also look quite different. For example, the internal finance function in a medium-sized business may ‘compete’ to do the work you want to sell them. An outsource agency which places accountants in businesses on temporary assignments may also compete with you. We need to get clear on the solutions available to your clients so you can distinguish yourself.
Has the competitive environment changed?
Competitors will come and go. Accountants will break away from large firms to start their own accounting businesses. Firms will merge to achieve economies of scale. Some practicing accountants exit the profession to take jobs because it’s a ‘safer’ option. Some competitors will start to specialize in a particular service offering or a type of client. These changes have an impact so resilient accounting businesses monitor the competition to maximize their market share.
How is your market changing, especially in light of the COVID-19 pandemic? How are you responding?
Panalitix’s MarketDecoder solution provides a comprehensive analysis on understanding your clients and competition. And we’ve developed a guide to help you consider these questions. Please spend the time working on your business and get in touch to discuss further. We look forward to helping you build a resilient and successful accounting business!