When technology hits an industry and disrupts existing business models there are winners and losers. Business operators who fail to respond will flounder; early adopters do well but the big winners are consumers – the buyers. Think Uber, where taxi fares and availability have improved. Think Airbnb, which disrupted hotel accommodation and think about outsourcing where simple tasks from home repairs to graphic design to data analysis can be secured over platforms such as Upwork, Freelancer, Airtasker and Fiverr. Now consumers (buyers) of accounting and bookkeeping services are too, exercising their buying power.
Buyers of these services have seen their buying power increased. There is no question there’s a shift to a buyer’s market when one looks at the massive increase in suppliers to the industry on both the technology side but also on the provider side where new entrants such as the Big Four accounting firms as well as US-based software providers are offering solutions direct to small business owners. Once the add-on eco system is factored in, consumers at all levels have a myriad of choice: that’s buying power.
Understanding the buyer
For sure, compliance work will continue to be a core service but is it not a race to the bottom when pricing power lies in the hand of the buyer? It’s about understanding which clients a firm is best equipped to serve that’s really important here. Talking about clients as a big homogenous mass is quite false; we need to think about those particular clients or industry sectors that are best suited for the firm to serve.
New entrants to the market
Democratization cuts both ways. Uber and Airbnb bring in lots of new entrants and so too are new entrants moving into the accounting and bookkeeping space. These businesses are setting up firms or entering your market by opening a branch office or an online marketing campaign and may not be playing by the same rules. They can be bookkeeping firms or versions of it – such as integration or training organizations. Essentially, they’re just adding more of the same.
New players are re-defining the rules of competition; some address the ‘white space’ where SMBs are still using legacy accounting and bookkeeping systems. Others form alliances and use top-performing firms to distribute their services.
When has there been a clearer signal that now is the time for firms to change? The old order has now passed its maturity. It’s time to change because these forces will only get more adverse if you sit in their way. That means more compression and making less money, be working harder to try and keep the water out of the boat and that’s no way to reinvent yourself.
To make the right moves check out www.bookkeepershub.com.au/boc