Senior managers in a public accounting firm always have to make a difficult professional choice. Should they pursue a partnership route in their current practice, move into private or start their own practice?
To date, online accounting provided the needed tools and vision for a number of technology aware professionals to follow the latter route. At least for now, their immersion into cloud technology provides them with a competitive advantage over traditional practices. How many years will it take for online accounting to lose its novelty?
Starting From Scratch
What reasons are there for starting your own practice? The most obvious is the self-administered promotion to the partner level, without having to buy out the older generation of partners. Flying solo provides the freedom to determine the direction of the firm, focus on a particular client segment and pursue strategic initiatives (such as online accounting) without being encumbered by old systems and processes.
On the flip side, you are losing the old systems, processes, clients and people. That means losing access to specialised technical and procedural knowledge, sales expertise, revenue base and the division of responsibility that drives efficiency in larger firms.
In recent years online accounting has tipped the risk/benefit scale on several criteria and provided a point of differentiation for a number of new firms. For some, the entry barrier into the industry was lowered because extensive investment into hardware and software licenses was no longer a requirement.
Others saw an opportunity to provide better priced services, either through lower overhead or better designed back office processes. A few also saw an opportunity to complement compliance offerings with advisory services. All embraced technology to assist them in this transition. Some have made technology expertise their point of difference.
How Far Are We Into The Cloud?
It is a matter of opinion, with personal circumstances as a point of reference, as to what stage cloud adoption has progressed. I would argue that a distinct set of early adopters has already emerged and as time passes new entrants will face a different set of choices when establishing their firms.
On one hand, traditional firms are experimenting, learning and adopting cloud technology. While the adoption rate is slow and the process frequently requires structural changes within the firm, it is also irreversible. Furthermore, consultants who are able to assist these firms in the transition are becoming more numerous and experienced.
On the other hand, recently established online accounting firms are growing, improvements in cloud technology are making their processes better, while higher staff numbers allow for specialisation and further efficiencies.
Will it be harder to start an accounting practice next year?
Probably not. The adoption of online accounting technology is very quick for a certain segment of professionals but painfully slow overall. At the moment the model for a online accounting practice has been proven but not all opportunities have been taken in a growing market.
New entrants can use better refined cloud technology, copy models of early adopters and have access to the first generation of cloud trained accountants. The transition process is not instantaneous and will take place over several years of continuous change, but if you are thinking about starting your own practice the next two to three years will be the best years to do so.