The face of the bookkeeping industry is hugely changing. The last 5 years have seen massive changes and I don’t believe those changes will stop, pause or even slow down. In fact, I believe they will accelerate. So what are those changes?
The three main changes in the bookkeeping industry in my view are:
- Automation of accounting software, especially programs like Xero, Quickbooks Online and MYOB Online (AccountRight, Essentials etc)
- Offshoring becoming more and more prevalent
- Accounting firms becoming a one-stop shop and encompassing bookkeeping.
With the automation of accounting software, there are absolute advantages. No longer do you have to hop into a car and drive to a client’s office. You can service clients anywhere in the country from the comfort of your own office. Some clients balked at travels fees, so this is great news for all involved. Improved automation also means that the software does more than it ever did. No longer does the bookkeeper have to enter in every transaction – it’s (mostly) all uploaded via the bank feed – so that’s less work. Great news for the client but what about you, the bookkeeper? You rely on work hours to feed your family and pay your mortgage or rent. Oh, I know firms like Xero constantly sell the concept of packages, but the reality is that if the program is more efficient, then a client (they are not stupid) is not going to pay the same they used to for half the hours being done.
Offshoring is another big area of concern. People have got to wonder why they would pay an Aussie bookkeeper anything between $60-90 dollars per hour when they potentially can get someone offshore from $5-25 per hour? This represents both an opportunity and a threat. Those charging the lower end of the scale may not have the skills. They may not have the local knowledge (what has GST on it or does not, or what is ‘Origin’) but those overseas people are learning. There are also source businesses which provide a link between the client and the offshore person (for a fee of course) who bridge those gaps and issues.
Finally, accountants after years of their professional industry groups telling them to stop giving bookkeeping work away are now doing just that. They offer a one-stop shop which incorporates bookkeeping, BAS and accountancy services. Sure, they may (or may not) outsource that bookkeeping work to offshore services, but as long as the service is good, the client will likely remain satisfied.
So, after all that, what do YOU do about it?
You have to change your mindset and realise that things ARE changing and that you cannot continue to do what you always have done and expect the same results. Unless you change, you will absolutely get left behind. I’ve already seen a number of professional bookkeepers leave the industry. It does not mean the industry is dying, it’s simply evolving and you need to evolve with it. Burying your head in the sand will achieve nothing.
2. Have a 5-year Plan
Know where you want your business to go and how you are going to get there. Starting with a long-term plan is a great start. What is your end game? Is your bookkeeping business purely a cash cow for you or are you wanting to build it up with the view to selling it (perhaps to an accounting firm)? Or perhaps you’re thinking about national expansion (as I had done myself before I sold my own bookkeeping business). Know where you are heading, then work out the action steps to make that happen.
3. Adjust the Service
If you are a bookkeeping business focussed on data entry, then you need to change that focus. Plain, ordinary data entry is the thing that is either being offshored or more likely automated by the accounting program. Entering in purchases and receipts is done by the software, in conjunction with other linked programs like ReceiptBank. Customers are doing their own invoicing, often (smartly) from a tablet or iPad whilst onsite or immediately after a job. So you need to be looking at the services you provide and thinking outside the box to expand to related areas which will always be needed.
Along with the adjustment and expansion of your services will come the need to upskill. Perhaps you will offer preparation of budgets but you are not overly comfortable in creating a budget? Then learn how (this is something I do teach my coaching business clients if required). Is there an area where you are lacking confidence?
5. Get your Team on Board
It’s important that if you are going to expand to other services that your team is on board and willing to travel the journey with you. If not, they may not be the right people to have on the bus long term. Consider this also when recruiting. Do you recruit bookkeepers who are scared of change, only willing to do basic data entry and afraid to go into new areas, expand their skillset and develop? Have the right people on board for the long-term sustainability of your business. Recruiting and retaining great team is a critical part to growing a service-based business. You need people to leverage time and to increase your billable hours. The right people (managed well) will make you a tonne of money but the wrong people will constantly be a source of pain and frustration.
6. Be Competitive!
With these changes, the weak or ineffective will fall by the roadside. I know that is harsh but it’s a reality. It also means that the strong, effective and smart bookkeeping professional has the opportunity to do well. As the weaker businesses fall by the roadside, the stronger business has the chance to take on their clients. This means if you want to be that stronger business, you will need to be competitive in the marketplace. I’m not talking here about pricing, but about your marketing and competing with others for the clients that you want. For a start, your branding and perception needs to be right. You need to have effective marketing and an exceptional sales process. When I was in the industry, once I got to meet with a client my success rate was 98% to bringing them on board as a client. This wasn’t because we were cheap (in fact, we were relatively expensive). It was because I developed an exceptional sales process.
7. Know what your clients need – and give it to them!
This principle applies to any business. As a business coach, I ask my clients what is important to them. I don’t assume. I don’t give them services which are not valuable to them, or which they don’t want or need. Determine your client’s needs and wants are, and then work towards providing those items. Naturally, of course, you want (or rather need) to do this in a profitable way – but there is no reason that you cannot provide an exceptional service for a very good fee. It all comes back to value. Provide a value-based service and no-one will complain about your fees or rates.
If you’d like to learn more about how I can help you improve or grow your professional bookkeeping business, then please reach out to me. I founded and grew a bookkeeping business from a garage to five locations around Australia. In the peak of my bookkeeping and consulting business, I had over 400 clients and 25 staff. Give me a call on 0411 622 666 or click here to contact page.