The Future of Accounting: Business Models

Speaker 2: 0:01

Hey, ellie, yes, andrew.

Speaker 1: 0:03

When you were young did you have any like side hustles? You know little mini businesses and stuff you did.

Speaker 2: 0:09

I think I did like a lemonade stall or something Okay.

Speaker 1: 0:12

I actually was in the business of selling yo-yos.

Speaker 2: 0:15

Oh, really, yeah, they were big in my day.

Speaker 1: 0:17

They were, they were. It wasn't the best kind of business, though, oh why I just, I don't't know, it wasn't consistent.

Speaker 2: 0:27

Everything was just up and down. I like you like it like yes, yes, brings me back to my retro days as a young and doing my yo-yo up and down.

Speaker 1: 0:36

I did yo-yos as well, so I remember the brain. Oh, yeah, and the walking the door yeah, and the pyramid yeah, and you have the different type of yo-yos that would do different things.

Speaker 2: 0:45

I had like a fluorescent one. I had one that like sparkled, and I was in the era where they used to get people traveling around Australia, oh, and doing yo-yo presentations.

Speaker 1: 0:56

Traveling around.

Speaker 2: 0:56

Australia in horseback and cart doing that were they. Yes, thank you, andrew.

Speaker 1: 1:01

Well, you might not guess what that joke means.

Speaker 2: 1:06

No, I'm not sure either.

Speaker 1: 1:08

But we're going through the theme of the future of accounting and 10, 20 years in the future, but specifically today, we're talking about business structures.

Speaker 2: 1:20

What will business? How are yo-yos and business structures related?

Speaker 1: 1:23

I was talking about a business that I used to run.

Speaker 2: 1:26

It was a business. I was in a little side hustle. I didn't get the connection, but now that you've overtly pointed it out I do. Thank you, and I'm so glad the listeners now do too.

Speaker 1: 1:34

You're most welcome. So yes, we're talking about business structures. You know, in 20 years' time what will the business structures in the accounting space look like? Yeah, I think it'll be intriguing.

Speaker 2: 1:43

Or even just our businesses.

Speaker 1: 1:45

Our businesses as a whole.

Speaker 2: 1:46

Yeah, absolutely. And what do we need to think about as we move forward?

Speaker 1: 1:52

Yeah, yeah, yeah, All right. Well, we're going to go to the theme song and we'll be back in just a moment. How's your yo-yo?

Speaker 2: 2:04

Yo-yo, yo-yo, yo-yo. I've even got the hands going.

Speaker 1: 2:17

I gave my 10-year-old probably when she was nine a yo-yo, yeah, and she was like this is awesome, Tried it twice and went.

Speaker 2: 2:25

I don't like it oh, my little Lockie whacked himself in the head with his.

Speaker 1: 2:29

He didn't like it after that knocking himself out? Were you trying to teach him around the world, or something like that most?

Speaker 2: 2:34

probably I was trying to do some random trick and he thought he could do it better but I showed him.

Speaker 1: 2:41

So today we're talking about business structures. We do have a special guest, as you've been picking up on some of our episodes. So today you will hear from the wonderful and the amazing Meryl Johnston.

Speaker 2: 2:53

I know Bean Ninjas.

Speaker 1: 2:54

Bean Ninjas. Founder head of accounting at TeamUp.

Speaker 2: 2:57

Absolute legend. She's been doing it forever and she's got some quality gold stuff to help us out on this one.

Speaker 1: 3:05

I'm a big fan of Meryl. I've met her years ago on the Xero Partner Advisor Council and have been impressed in watching what she's doing since.

Speaker 2: 3:15

She also does a podcast.

Speaker 1: 3:17

She does. She has a rad podcast and she's involved in a bunch of stuff. I know. So, we're going to hear more from her perspective on this, but, ellie, yeah, crystal ball it Yep 20 years time.

Speaker 2: 3:31

Yep.

Speaker 1: 3:33

What? How are accounting businesses going to be structured? How are we going to be putting together, like we're talking things like legal structures, we're talking equity, we're talking profit, we're talking service. We're talking how do we actually put these and manage these things?

Speaker 2: 3:47

yeah, look, it could go a million different directions, because I think even part of the problem that we have today is that it's really difficult even having this equity conversation. What does it look like, and do people want equity? But what I'm already seeing today that I think will extrapolate out over a period of time is that there's a lot of people kind of doing the micro business type thing kind of jumping out of big firms not really wanting much, you know, they just want to do their own little backyard.

Speaker 2: 4:13

So I think there'll be a fair bit of that potentially.

Speaker 1: 4:16

It's almost like that side hustle kind of gig economy.

Speaker 2: 4:19

Yeah, the gig economy. I think that the tech will enable them more to deliver more, so that you don't just say, well, I'm just it might be able to widen their scope so that they can maybe deliver more services to fewer.

Speaker 1: 4:35

Yeah, potentially, I think that's like I do like the idea of like more of the gig economy in that space. But I think the thing that also makes me go I don't know about that is it's the regulation that sits around it Like, oh so you're just going to be a little side hustle tax agent Great, you still have to do all the same things that the bigwigs do. So you still have to have engagement letters, insurance, all this kind of stuff and you go. Well, man, am I really going to side hustle like 50K 60K, or like 50k 60k worth of work here and there or in between other bits and pieces? Is it worth it to actually run it as a full-fledged, like accounting business?

Speaker 2: 5:09

structure, yeah, or do you need a bit more scale, unless there's a bigger, you know bigger people that are willing to sign off on those potential people? Like having, like a larger business with gig people underneath.

Speaker 1: 5:22

Yeah, I could definitely see that, because you can't find people that just want to work the nine to five.

Speaker 2: 5:26

So that might be another thing. The other thing, I think, that we most probably see, and we see it today, is the big getting bigger.

Speaker 1: 5:32

Well, yeah, so we were talking before we recorded here and I was like just picture every kind of futuristic sci-fi movie that you've ever seen that has, like they've pretty much all got one mega corporation right.

Speaker 2: 5:46

Yeah.

Speaker 1: 5:46

There's that big, bad, evil thing and they're doing something inappropriate with the environment or with people or whatever and whatnot. And I'm not saying that the accounting industry is going to have a big, bad mega corporation but I could absolutely see it right People that haven't been doing the right thing recently. But like the scale, scale, the monopolisation of that.

Speaker 2: 6:07

You can see it.

Speaker 1: 6:09

Your big four, which one of the big four is now on the bottom of the big four?

Speaker 2: 6:14

Might fall out of the big four. It could be the big two. They could consolidate, they could buy up, consolidate, get bigger and bigger and bigger and, by stealth, change the whole industry.

Speaker 1: 6:24

Competition law is going to come into play there.

Speaker 2: 6:27

You know the ACCC in accounting. Yeah, go for it.

Speaker 1: 6:30

I mean, I could definitely see.

Speaker 2: 6:32

But it might not even be accounting firms doing that. It might actually be other firms, like Great Large Global, Like we were talking before about. You know the Woolworths and Coles. Potentially they might want to go into accounting.

Speaker 1: 6:41

We don't know yeah, that's a good point. They could see money in it. Diversifying.

Speaker 2: 6:44

They're going to diversify and they're going to go to any industry that has profit.

Speaker 1: 6:48

Yes.

Speaker 2: 6:49

And that potentially they can, you know, pull some value from.

Speaker 1: 6:53

I definitely see, like those mega firms or something happening from like a very small, innocuous M&A Like, oh, hey, I run an accounting firm, you run an accounting firm, you run an accounting firm, we should join up. And then all of a sudden, hey, that worked really well, we should join up with someone else.

Speaker 1: 7:07

and often what you see in some of these things, you know people will join a few things together and then they'll sell that upper level yeah and then the people who bought that will will do that a bunch of times and then they'll sell that upper level and all of a sudden one firm becomes like a thousand firms in a period of time yeah. And so we're seeing a lot of activity right now. There's a lot of conversation around private equity. Yeah, and that's something.

Speaker 2: 7:29

Let's just talk about that for a little bit because that's around the traps where private equity is actually quite interested in accounting firms. Well they'll purchase some of the equity. Want the people to continue on. So, they're getting a nice. You know retainer salary and wage whatever. You know retainer salary and wage whatever, but it's an early way to cash out, rather than waiting to the end of the career you can use the money while you need it, that type of thing.

Speaker 2: 7:48

So that's, that's around. So, yeah, and you look at the carbons of the world that like, just just like to buy up, you know, yep, and they want space, they want regional, they want, you know, metro. So I can see that happening and there's economies of scale in that. And you know, with those economies of style comes the money that you can actually spend on the marketing, the branding, the hr, the, it like it.

Speaker 1: 8:09

Really, it makes it harder for those small to mid-tiers to kind of get in there and make any sway I guess the question with that you know potential continual growth to, like you know, amalgamating a number of businesses together, uh, and letting them kind of, you know, push forward as a larger whole, is that there are a lot of people who really like working in a smaller team and small environment, and so I think you're the risk of like, like I know, illuminates.

Speaker 2: 8:37

You know we're 23 um, we used to be two yeah um, and so there's pros and cons across the way we and we're not even big Some people go to a smaller firm because that's what they want and then when you merge and merge and merge in, they're like, oh, hang on, that's not what I want. Them out yeah.

Speaker 1: 8:52

Because typically you find at least this is my anecdotal, with no reference really at all is that when you're younger you go to a bigger firm and as you build up the experience, then you push out and you go to a smaller firm. Because you go. I don't want to be in that large environment now yeah, some of some people will stick yeah, absolutely, but more often than not, people want to leave.

Speaker 2: 9:10

Well, I did it. I did it for street cred, yeah, because ultimately I knew I wanted to go out of my own and I wanted street cred. I wanted big four on my resume. And has it worked? 100, it has absolutely so.

Speaker 1: 9:20

So then, if we're continually building and building and getting mega, mega businesses, will people feel like they're just part of not wanting to be there? But to put that on there like this M&A and this approach, we are seeing that with some people out there who are acquiring or unlocking equity and the like is they're not actually putting them together. They're not saying oh cool, so Illuminate and All In Advisory are now called ABC Accounting. It's like you, stay All In you stay Illuminate.

Speaker 2: 9:48

So you retain your original brands. We'll take the painful thing away from you.

Speaker 1: 9:51

So you're still running like you're a small accounting firm, but the investor or the owner of that now has 50 of them and they're getting, obviously, their share of the profits coming through and that kind of works well.

Speaker 2: 10:06

So I do think we'll see more of that, particularly with I mean, I don't, I don't and less of the people coming through and buying out the partner. Yeah, yeah, because like I don't know the statistics on how many people are going to probably be retiring who are owning accounting firms right now, but over the next 20 years I reckon there's going to be a significant percentage of them happening and the lamenting I hear from them is that they've got no one coming in that actually wants it.

Speaker 1: 10:26

Yep, and so what they do is they then go through an M&A or they sell out to someone M&A equity or retire. Or they retire and have to let the clients go, but yeah, more often than not the only way for them to get any. On external and then, it becomes XYZ accounting.

Speaker 2: 10:43

Well, I think we should throw to Meryl and see what she thinks.

Speaker 1: 10:45

I'm intrigued because she's got some street cred here. I know With what she's done and how she's built her business.

Speaker 2: 10:51

So true.

Speaker 1: 10:53

So, meryl, give us what you think the future of business structures will look like.

Speaker 3: 11:02

Let's talk the future of the accounting firm, business model.

Speaker 3: 11:04

Let's talk the future of the accounting firm business model. I predict that we'll see both an increase in the number of firms specialising in one industry niche and an increase in the number of small, one-partner lifestyle firms, where the partners will work 25 to 30 hours a week and make $400,000 plus a year. A great example of a firm specializing in an industry niche is Kelly Chard from GrowthMD, and that firm specializes in the medical industry, but they also have an ideal client profile that they're strict about. So not only does a potential client need to be in the medical space, but they also need to be running a practice rather than being an individual doctor. So why do I think there will be more of these highly profitable niche firms?

Speaker 3: 11:51

A couple of things. Clients want to work with a specialist who understands their industry, and I believe the industry knowledge, the deep industry knowledge, is more important than the specialist tax, payroll CFO knowledge. Instead, I think that these small, lean firms will work with outsourced providers who take care of payroll, end-to-end accounts payable or maybe even tax preparation. The specialist niche firm will manage the relationship with the client and then manage all of the providers to make sure that they're delivering accurate and timely work. Predict that firms will have more than 70% of their staff offshore, and that AI and automation will enable lean, high-performing teams. So these will be small firms of less than 10 people with prevalence of team members offshore.

Speaker 2: 12:52

Whoa.

Speaker 1: 12:54

Yep.

Speaker 2: 12:54

Intense, that's a thing.

Speaker 1: 12:55

Yep.

Speaker 3: 12:56

Hmm.

Speaker 1: 13:02

Yeah, I, just this is. It's something that intrigues me so much, this idea of this how we structure our businesses because it's a large part of what I consult on to clients but also how illuminate structure, um, you know, we have some equity holders, we have different services in different entities and and um and, and we've learned a lot because of that. But also we potentially we might want to change that as well and like just it's mind-bending at times.

Speaker 2: 13:24

I think it is and look, this is where it's just so hard to predict where it's going to go, and it might be one of those things that we didn't even foresee it, because it's just outside of our scope to even know what it's going to look like and what the government regulations are on the day. And are we going to go to a more global economy? Like all of these things? It's just they're unknowns.

Speaker 1: 13:41

Unknowns. What are you excited about, mate? So, if you look at this future and you look 20 years in the time and you go, how our businesses will be structured and operating, what makes you excited?

Speaker 2: 13:52

Yeah, look, I think it's not as exciting as the tech for me if I'm going to be wildly honest, most probably the eclectic mix, like I think there most probably be more of a mix than what we're currently seeing and people kind of being a bit more creative with how they're exiting, how they're entering, what type of business it's going to look like, who they're going to partner with. I think that will be the interesting thing for me how we're going to overlay that with the tech so that we can build those efficiencies and still have businesses that we enjoy and have a joy running.

Speaker 2: 14:24

So that, for me, is what excites me. What about you?

Speaker 1: 14:27

I think I look at that and I look at and with full respect of the fact that, like how we structure and how we run our businesses and what you and I are going to experience over the next 10 to 20 years. Someone experienced that 30, 40 years ago.

Speaker 1: 14:40

So, this is just our change in our time in that, but it is going.

Speaker 1: 14:45

The future of that means I can potentially be great at what I'm great at and not have to worry about the other things. So if it is part of that whole like people are buying up you know firms and putting them together, great. If I get a prospective client that's in the medical space but I don't look after the medical space, we can still look after them now, which means I don't have to say no, but I'm also not saying yes, I really like that. I like also the future and I think there's a lot of opportunity in terms of the services our clients desire and the skill set that we have. So at our core, we might be a compliance accountant, but we have a client that's growing and they require some CFO-based services. So, fantastic. I might now be, as a result of like what my business structure looks like in the future, able to deliver that, because I can find people that can do that in a way whether that's via a gig economy approach or whether that's because of the way I put that together.

Speaker 2: 15:40

So it feels like there might be more of an openness to working together and collaborating with the human element in the structures that potentially we don't have now because we might be a bit more closed off.

Speaker 1: 15:49

I think so, like when I get into the scared part, I'm probably going to speak the absolute opposite of what I'm saying right now but. I do. I think the future is going to continually, because what clients are going to ask from us? We've already experienced this they're wanting us to not be accountants.

Speaker 2: 16:04

They're wanting us to be so more. They're wanting us to be crystal ballers. Right, Be proactive. Luckily we are. Tell me the future. That's what we're doing.

Speaker 1: 16:10

That's what we're doing right now so much more opportunity to do things for our clients, but we don't because we are at a core. We have a skill set that we're great at.

Speaker 1: 16:20

We can't just go learn how to like juggle tomorrow, um no, so that's a physical challenge, but if there's knowledge, then potentially that's where we use the tech and the ai to totally boost up our skill set but then also looking at and say, well, if my clients need uh, you know, ai tech built for them, if my clients need, you know, marketing or legal, all that kind of stuff that we've seen historically with firms. I think the continual future of that is how private equity plays a large part in this I think they will, and how the exiting partners and owners of businesses who are, you know, 50, 60 plus, which is a large portion of maybe people retire earlier you reckon maybe well, I know that we had the podcast uh, where david boyer spoke, yep, um, and he talked about a significant uh like shift in like value of

Speaker 2: 17:11

assets and wealth well, that's going to happen.

Speaker 1: 17:12

Yeah, isn't it super so 20 year olds right now might have a couple million dollars worth of assets by the time they're 40. Can I talk about?

Speaker 2: 17:19

this wealth generation thing, because it's a well-known fact that the first generation builds it, the second generation looks after it, builds it a little bit more, the third generation pisses it down the toilet. What generation will that become? We're saying there's massive wealth moving to that next generation. Are we in that second generation involvement? And then will that third generation potentially, you know, post that 20 to 30 years actually have to start again?

Speaker 1: 17:46

Look, you know what I'm going to save that for a beer later because my brain's hurting.

Speaker 2: 17:53

But we need to hear from Meryl. We do Meryl like, come on?

Speaker 1: 17:56

We need to hear from Meryl. We do, meryl, come on. What are you excited about Ali's scraping the barrel here? Because it's not Tech and AI, it's not my thing.

Speaker 2: 18:02

I keep trying to bring it in.

Speaker 1: 18:04

I'm excited about the diversity of what this can look like. I'm excited about the service offering that we can do because of how we structure things. I'm excited about a whole bunch of other stuff that I haven't talked about.

Speaker 2: 18:13

You're excited about a lot of them this month.

Speaker 1: 18:14

Like equity ownership, I'm excited about employee opportunities.

Speaker 2: 18:17

So you're the laser lighting up.

Speaker 1: 18:22

There's a lot of cool stuff that we could do if we open our eyes and allow it. And I also think the disruption of the private equity players coming in and of a mass exiting of people who are retiring, who are in ownership, I think it's going to create a change in perspective of how we do that. I think it's going to create a change in perspective of how we do that and I think there's huge opportunity over the next 10 to 20 years to say, well, where am I in my career and am I wanting to potentially be running an accounting firm, or not even, but do I see that as a good investment? Can I invest in some of these firms to relate, and can I be the person that can actually start releasing equity and say, hey, ali, let me buy in 20% of equity?

Speaker 2: 18:59

in your business, and that'd be more of a normal thing to do.

Speaker 1: 19:01

I reckon I could. This is definitely one of those ones where it's a leather chair, a leather couch it's a whiskey.

Speaker 2: 19:09

It's amusing of like it's stuff that you can go, like this I need to get my pen and paper out and just start writing stuff down and asking lots of questions going mm-hmm. Yeah, yes, Andrew, how do you feel about?

Speaker 1: 19:19

that, yeah, I'm going to say there's stuff I'll save to you. When we talk about what can we do, but what we should do, we should probably. Should we go to some sponsors first? Yeah, why not? Let's go to some sponsors, hey, sponsors, yes.

Speaker 2: 19:38

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Speaker 1: 25:52

Thank you sponsors. As always, amazing, incredible, wonderful. Hopefully that your business structures in the future are profitable and amazing and hey, you know what guys listeners reach out to them, use their products.

Speaker 2: 26:05

Ask for a demo. If you don't use them, connect in with them.

Speaker 1: 26:07

They're doing amazing work we should also say and we don't, we actually really say this on the podcast because we probably just keep forgetting to you can sign up for a newsletter. With the podcast. You can get access to a whole bunch of really cool and interesting stuff. And hopefully, by the time you're hearing this one, we might even have a new website.

Speaker 2: 26:25

Oh no, Some cool stuff. And we send that newsletter once a month. It's full of goodies.

Speaker 1: 26:29

Full of goodies.

Speaker 2: 26:29

Oh, it's like a show bag.

Speaker 1: 26:31

Snippets hot tips.

Speaker 2: 26:32

Yep hot tips and tricks and actions and all the bits.

Speaker 1: 26:37

Now, with great excitement comes great. I don't know. There's a quote there, but I don't know what it is. But anyway, what's Trepidation? What's scaring you? What are we scared about Scaring me?

Speaker 2: 26:48

about structures. I think it's more the legal side, and you mentioned it before. I mean, who on earth knows what structures are going to be actually available at that point in time? Like knows what structures are going to be actually available at that point in time? Like what's going to happen with wealth and equity and tax and trust? Are they going to be a thing? And, like you know, I've seen in my 30-year career um, companies were on the nose and then it turned. So everyone went to trust and then trust were on the nose. So now we're back to companies. Like, what else is there going to be? Is there going to be a new one? Like that just has to come. You know, trust, committees, trust committees.

Speaker 2: 27:18

Companists, who knows? Partner, companists, the giggies, I don't know, but yeah, it's the unknown element of. I remember the PTSD from COVID and cash flow boost and JobKeeper and all the stuff that kept coming out, and it was just change after change, after change, and it's so hard to keep up. And if the tech is changing rapidly then I would therefore assume that, at some point, regulation Surely To match the pace.

Speaker 1: 27:44

And we'll always make it and will that impact structure?

Speaker 2: 27:46

Will that impact how we function? Is it going to impede us? Is it going to improve it? Will there be?

Speaker 1: 27:51

less. When you talk regulation you always hear of politicians saying we're trying to cut the red tape, but they can't. In our industry there's ever been anything that has made it easier.

Speaker 2: 28:00

They just make it worse. It's always made. There's more you have to do.

Speaker 1: 28:04

There's more hoops to jump through, there's more things to get done, but I am scared for a bunch of stuff. Oh, tell me Right. So I have some fear of private equity and what they would expect of accountants to do.

Speaker 2: 28:21

Like the ROI.

Speaker 3: 28:22

It's all about the return right, and we've seen this with a number of accounting technology businesses that will go, you know, and we've seen this in other businesses as well.

Speaker 1: 28:34

I mean, you see it in Woolies and Coles right.

Speaker 2: 28:37

The focus has to be the return on shareholder and not the people, and they lose that human element. They in some ways lose their purpose, although they go out to market and brands saying that you know that's their purpose and their wine, their culture, but they do lose it.

Speaker 1: 28:49

And if you lose that environment where it's Ali running Ali's firm with her team that believe in what they're about and Ali making a decision that is not a smart financial decision, but is the right decision? From a human perspective, you know. Does that mean that investment in our industry will potentially water or remove some of that? Remove the purpose and the why and the culture. Remove the purpose and the why and the culture.

Speaker 2: 29:13

It's like we're here to make money and a lot of people go into accounting because they want to help and they want to support and they want to care. And that's what we lament about as well, because sometimes we're not being paid what we should, because we're giving so much True, so that corporatization will wear away and potentially, some of the trust that people have in us and wear away potentially, ethics. I mean people that are motivated by money, and we've even seen it in some particularly large firms Yep, you know they'll sell their souls for a bit of cash.

Speaker 1: 29:38

Yep, so that makes me nervous. The other thing that makes me a little bit nervous as well, and I don't know if there's any actual foundation. There's like there's opportunity here in terms of, uh, older generation business owners transitioning to younger generation business owners.

Speaker 1: 29:56

If that's not done, well, um, the value of our firms could drop yeah so if that's done poorly, to a point where all of a sudden there's a lot of firms that are selling cents in the dollar and that starts to become a bit more of a norm and then I get to a point where I'm trying to exit, whether it's through my team, whether it's through external, does that mean that I am now accepting a lower valuation on that? I don't think it's a thing, but I think it's really interesting to monitor on how a lot of these things are dealt with and put together.

Speaker 1: 30:26

I think that's something to look at. I also look at and I'm afraid for we've talked about the lack of desire of potential people wanting to get into equity and ownership.

Speaker 2: 30:37

Yeah, or even just into accounting in general.

Speaker 1: 30:40

I've seen that in our industry over the last five or six years on quite a high level People who ordinarily would, who won't be Now. It's also possibly the stage of life I'm going through. You know, mid to late 30s, you have a couple of kids, you figure out what's actually really important and all of a sudden, maybe having equity and running a business and the stress and the pressure that that might come with, irrespective of the benefit you get out of it, is something you go. You know what I don't want that.

Speaker 2: 31:04

Yeah, and I am saying that actually coming through in the younger generation it is more about lifestyle and purpose and passion and not necessarily the linear pathway. And look, we're getting that now, so that's most probably going to be amplified to another degree.

Speaker 1: 31:19

So who's going to lead that in 20 years' time? What are the leaders within those firms in our industry going to look like? Will we have enough of them to actually look after the business structures that we have?

Speaker 2: 31:29

Well, maybe then we do have to consolidate, don't we?

Speaker 1: 31:31

Giant mega corporations. Yeah, I think the other one as well is if we go, if we look at the element of the gig economy and we go little, tiny, tiny, tiny ones everywhere, how can you? Are we comfortable of the skill set and the expertise.

Speaker 2: 31:44

That sits there. The quality, yeah, the quality.

Speaker 1: 31:48

And that's not to speak negatively against anyone that's running like a sole trader, small firm right now, but we do know that when you are surrounded by people, you learn from that. If you're just running it by yourself.

Speaker 2: 31:59

It can be lonely and you're not getting the exposure, especially if you do it too early Yep, yep, yep, if you don't have the experience behind you. And just a thought that triggered in my mind is this global structure as well, crossing all boundaries, crossing all countries and all the different tax legislation. Is there going to be some consolidation there?

Speaker 1: 32:16

Totally yes, and as you do that, maybe you lose the ability to utilise small business capital gains concessions.

Speaker 2: 32:24

Yeah, we could see some of that gone. That's what I'm saying. The constant change in legislation Constant.

Speaker 1: 32:30

Or even if you're a part of rolling your firm up and up and up, that's what forces you to do and all of a sudden, when you actually get to point to sell it, you might not qualify for you might have to pay a lot more tax on selling it yeah, absolutely I don't know. I tax all that often these days I like to throw the word tax out there. You sounded really intelligent, but I think Meryl will be able to give us more. Meryl, what is scaring you about the future of business?

Speaker 3: 32:55

structures in our industry. Something that scares me about the future of the accounting industry is the number of accounting firm owners now so people who are purchasing accounting firms who aren't trained accountants. And I think competition is a good thing and I don't think you need to be an accountant to be a good owner of an accounting firm. But there's something special about being an accountant, and I think part of it is that we instinctively put our clients first rather than our own personal profit. I'm not sure if that's from the ethics training that we do as part of becoming a chartered accountant or a CPA, or if that is drummed into us from the managers and partners that we work with as young accountants. But as more non-accountants enter the industry and own firms, I can see there being pressure around profit over putting clients first, and if we want to maintain, if we want to maintain our position as one of the most trusted professions, then I think this is something that we need to be aware of and to fight for does it make you scared, mate?

Speaker 2: 34:05

yep you're you scared, I'm quivering.

Speaker 1: 34:07

You don't look like you're quivering, you look like you're pretty relaxed, pretty chilled, having a chat.

Speaker 2: 34:15

You know it's business structures. If it was AI?

Speaker 1: 34:17

No, I'm just kidding, I love that I love the fact that I can see some podcasts where you are really in and others where you're like yeah, this is interesting, this is great, but like can we talk? About tech or people.

Speaker 2: 34:29

No this is where I'm learning from Andrew. This is me kind of sitting back and finding the vibes from you and I'm getting all the gold you see because you've put way more thought into this particular topic than I.

Speaker 1: 34:44

And this is probably where I sit right now. It's like what are you doing today? Plan your exit Because it takes time.

Speaker 2: 34:50

Right, it takes time, it takes time, it's not like I want to exit, one or two years later I'm out. It doesn't work that way, does it?

Speaker 1: 34:56

No, but you need to do this from the beginning. Oh wow, if you're going to go set up your accounting firm or if you're going to buy into equity, if you're at that point where you're entering into an ownership point, you have to understand there will be an exit point.

Speaker 1: 35:10

If you don't know what you want that to look like or when you want that to be. You're just going to float in the wind. You won't have anything to aim towards, right, so there won't be a School me, andrew School me, I get it, I get it. So I don't know if you remember, but I don't have it anymore because I passed the date, but I had a countdown timer on my phone for days, and it was a number of days that I wanted to get to a point to be able to make myself redundant.

Speaker 1: 35:34

Now, that wasn't saying I was leaving the business, but I had to get the business at a point where I wasn't required. But they didn't need you, that date landed like halfway through COVID lockdown, so obviously it got pushed back a couple of years, but in reality that has now happened.

Speaker 2: 35:48

Yeah, and look, I think you most probably wouldn't be as far through that process if you hadn't at least focused on it. And look, it's most probably something for me that I should put on my radar, with bright neon lights that are flashing red and yellow, because, as a sole director shareholder company, if something happened to me, what happens to the business? Now I've got that in play with Lee.

Speaker 1: 36:09

You're welcome to leave that to me.

Speaker 2: 36:11

Lee's getting it. She's my work wife, so you know I think what if you? So I think it's very important for those people that do have those businesses where you are the sole person and that somebody else just isn't the natural person just to step up and take it, that you do actually think about it.

Speaker 1: 36:27

That's a good thing as well.

Speaker 2: 36:28

It's like writing your will for your death right. It's hard to do, but you've got to confront it.

Speaker 1: 36:31

And you don't want to leave your partner with your accounting firm.

Speaker 2: 36:34

Like if Ivana was left with Illuminate she's created a lot of stuff, but all of a sudden she's like ah. I apologize profusely to my girls. If that no, it goes to Lee.

Speaker 1: 36:44

I know a few sole trader accountants who actually have agreements with another accountant from another accounting firm to say okay if this happens, this is what we'll do. That's really smart. So if you're in a position right now, you haven't done that. It's not really business structure, but I think you need to think about that.

Speaker 2: 37:00

I think it folds into it. I think it's one of those things like what am I going to trade in and how am I going to get out? I think those are two very important things to kind of focus on when you're in business.

Speaker 1: 37:11

And, as you're going through that, look at the leadership and the structure and the way the people become part of your business. So you either exit through internal buyout, external buyout or like a merger, or that you just let it go right. I'm a big fan of the first one because I always want to pass on what we do to our people. But but, like, look at that and be mindful of that. How do you set your structure up? Well, to make sure that that is able to facilitate that? You know, do you have agreements with your team that that they can earn equity potentially?

Speaker 1: 37:43

yeah do you have the agreement? If you're not here, what that goes to? So really think about that from day one to the future, and I think if you look at that and then communicate that and revisit it on a consistent basis. That's not a. Okay, we did it, put it in the bottom drawer. Never look at it again, forgot about it. Seven years later, something happens. Oh crap, what are we supposed to do? Plan it and work towards it. There's nothing wrong with building a business to sell.

Speaker 2: 38:06

No, absolutely not, and it's actually something that we all should do at some point. That's why we build the business to get equity, and at some point, you want to cash it out. Yep, all right. So we now move on to the final part of the play, which is what actions should we-?

Speaker 1: 38:18

Well, that's literally what I was just talking about. That's literally what I said. What actions should you do? You're really paying attention so much, aren't you? Oh my gosh. What we need to do is we need to go and see what Meryl thinks we should do. Thank you, did you specifically say the word action. I did. I said what are we going to do? What are you going to do? You need to start planning for your future.

Speaker 2: 38:37

I thought that you were just rounding out your last conversation, no.

Speaker 1: 38:41

Anyway, enough of you and me.

Speaker 3: 38:48

Meryl please rescue Ali from her brave face Digging my hole. We're talking accounting firm business models of the future and how to prepare for that future. So my prediction is that there will be more small one-partner lifestyle firms that are specialised in an industry niche, and so how do you prepare for that future? Well, I think that general technical skills plus communication skills will be a valuable skill set and will help with those sort of firms. Or having deep technical knowledge in one area will also be valuable as a support to those kind of firms. So I'd pick one of those to focus on.

Speaker 3: 39:27

If you're a good communicator, maybe it's better to build a generalist skillset. If you're really interested in something, then maybe it's worth going really deep in that and becoming a specialist. If you want to become a better communicator, then I recommend practicing Practice public speaking. If it's writing, then do some copywriting courses and publish your writing, and I think those type of skills will be even more valuable, because that's what the client will be after Someone that they can trust and that they can communicate well with, who understands the industry. The other thing I'd suggest is staying curious and allowing time in your schedule to experiment with technology. Things are moving really fast and, as accountants, it's important that we stay on top of things and are aware of what automation opportunities are out there.

Speaker 1: 40:29

Oh, that's kind of shambles. We've spent a bit of time today having a lot of conversation around a lot of things, and I love the fact that it's currently quarter past four on a Friday afternoon. Is it really that time? Oh my gosh.

Speaker 2: 40:45

It's quarter past four. Yeah, look my brain has checked out.

Speaker 1: 40:48

We've spoken to a few cool people today.

Speaker 2: 40:50

Can I tell you I don't have an action.

Speaker 1: 40:51

You don't have an action, Ellie, you have to have an action. Oh my gosh.

Speaker 2: 40:54

Well, give me one, give me one. This is the only time I'm ever going to ask you. Just give me one what my action will be.

Speaker 1: 41:04

What it will be.

Speaker 2: 41:05

Listening back to the.

Speaker 1: 41:06

Listen back to the episode and then do that. I think what's important is for us to just be very mindful that things will change, right? Yeah, you talk a lot about like being prepared for change.

Speaker 2: 41:17

Continuous learning, that's mine. Continuous learning, right, that's what I'll end with. Continuous learning on education, on business structures and exit.

Speaker 1: 41:24

But particularly within our industry. How does it work? How does it look like, looking how we structure it? So I would be saying, yes, I said look at your exit plan, but I think the other thing from a business structure and how we operate and deliver our services is look at what you're great at and what you're not great at, and then, decide whether you want to be able to deliver the service or whether you want to refer out to that, and if you want to, be able to deliver it.

Speaker 3: 41:47

You need to either find people or educate yourself.

Speaker 1: 41:49

So I think it's important it's all use tech, but remember the humans still have to be involved. We still need humans, yeah that's right.

Speaker 2: 41:54

We've talked about that, I know, I know.

Speaker 1: 41:55

Especially if it requires licenses and registration.

Speaker 2: 41:58

That's it. Yes, okay, you're right.

Speaker 1: 42:00

But, yes, think about that in terms of the structure of that. Is that a joint venture you're going to go into? Do you actually bring them within your business structure itself? Is there equity involved? Is there not? What does that look like?

Speaker 1: 42:19

And what I think, and what I hope, and what I pray, and whatever other word I can throw in there is that, as we continue to go through and this has been a bit of a theme that we see more and more collaboration and more and more good quality work being done by our industry because we're focusing on that and less of the scary shit of like potential mega corporations that now, like you know, monopolise the accounting services or the likes of some digital solutions that remove significant human interaction from it. I love it.

Speaker 2: 42:41

I love it. I love it when you're on fire.

Speaker 1: 42:43

Thanks, mate, go friend, I'm glad I was able to carry you on this one.

Speaker 2: 42:46

You totally did. My back is sore I know Like literally carried, like I was on your shoulders the whole time.

Speaker 1: 42:52

You're good mate, all right, well, hey friends, thank you for listening to me talk to you today about the future of business structures. Thank you, Mer contributed.

Speaker 2: 43:05

I really enjoyed. Do you know what I really enjoyed about this episode? The dad joke at the beginning. That was amazing. You didn't even really like that one I did, I liked it. Was that the yo-yo.

Speaker 1: 43:14

Yeah, it was the yo-yo one.

Speaker 2: 43:16

Yeah, I liked that, that's good it was good, I got back into my retro memory and to my vibes.

Speaker 1: 43:27

Love that. Thank you, meryl, thank you everybody for listening to my dribble.

Speaker 2: 43:29

Thank you sponsors. Ellie, you're okay. Don't forget Andrew, you're amazing.

Speaker 1: 43:31

Thank you, jump on, sign up for the newsletter, give us a like, all that kind of stuff, and make sure you come back for the next. All Aussie.

Speaker 2: 43:39

Accounting Adventures. See you then, guys.

Speaker 1: 43:58

Gotcha, wasn't that a fun adventure, my friends, thank you so much, so incredibly much, for hanging out with us today. Ali, you've been amazing. Andrew, you've been all right. How good is it to be able to have adventures together it so is, and you know what?

Speaker 2: 44:06

following us, we are all over the socials at Accounting Adventures. Check us out on the website. Give us a bit of a like. You know how much we love that stuff.

Speaker 1: 44:15

The best thing about the adventure is the people that we do it with. So thank you so much for listening, thank you so much for hanging out with us, and please bring all the ideas, keep them coming. We can't wait to share more cool adventures with you.

Speaker 2: 44:30

We love you guys.