Prediction # 4 – There will be less firms but larger firms
The accounting profession is still a ‘cottage industry’ made up of primarily small businesses. Even in Australia where it is a (approximately) $14BN industry with approximately 10,000 firms only (approximately) 400 firms have revenues over $3M. There is also an estimated 45% of all current partners over 50 years of age.
There are too many firms and far too many small sole practitioner firms. According to industry statistics approximately 65% of all firms employ less than 5 people. There should be half as many firms yet they should be larger in revenue. Many of the current partners should not be partners. If compliance is to become a commodity then some accounting firms may not be interested in continuing in their current format. To thrive accounting firms needs to offer a broad range of services (see prediction 12) and as such they need to be of a larger size with a broader range of people offering those services.