Okay, you’ve built a firm. But did you build a business?

What happens if we assess an accounting firm like a potential acquirer or investor? 

Would the majority of firms be deemed successful, sustainable businesses? I’m going to go out on a limb and say no.

There are several reasons for this. One being that many accountants set out to build firms using their existing skills and experience as the springboard. They were trained in personal or corporate tax, auditing, statutory accounting, management reporting, processes, etc., so that’s what they choose to offer. While entrepreneurs would spot an opportunity, then test for product-market fit and gather customer feedback, many firm leaders jump straight in without strategic planning; they do what they’ve always done.

It also feels like many firms weren’t designed to be highly profitable. That’s why private equity often has to come in, because for a lot of firms, that’s the only way they can realise cash.

This issue came up in discussion at this year’s Finance Takes The Piste (FTTP), and was widely agreed to be holding plenty of firms back. If we were to build an accounting firm today and take it from zero to £1 million revenue, our careers to date as accountants wouldn’t be where we’d start.

Instead we’d look at what’s shaping our clients’ industries and what factors drive change in the economy at large. We’d focus more on building a competitive business model, that just happens to be in accounting. 

Here’s what we might consider in doing so.