Can a sole practitioner still flourish

Is running, and especially growing, an accounting firm today too big a job for just one person?

The sole practitioner has always been the bedrock of our profession. Whilst the big 10/8/6/4 may make most of the noise, the sole practitioner has always dominated the High Street, either on their own or as a route into partnership.

With the digitalisation of the profession streamlining data, delivery and information processes, it has never been easier to start your own firm and the large numbers of new firms registering each year, especially since the end of the pandemic, reflects this. Whether driven by ambition or lifestyle choices, the sole practitioner market at first glance looks healthy.

So why question it?

It’s exciting to see the new blood coming through and to watch the growth in accountant entrepreneurs but, as with any business, the real challenges come when growth starts to outstrip the supply of resources. Those early years can be great with relatively low costs and a close relationship with clients but, as the business grows, both will get tested. Can the sole practitioner stay ahead of the game, particularly in developing the software, systems and people needed to support a growing client base.

Whilst it has always been a challenge, the rapid rate of technological development today, the increasing range of client needs and the pressures on recruitment and retention makes staying on top of it a much bigger test for a single business leader.

As well as the practical challenges brought by managing resources, there are wider, and, possibly, even more fundamental issues around support. I wrote in my previous blog about the pressures of being the person at the top who everyone turns to but who has no-one themselves to share the load with. Growing a firm today requires ambition, drive, energy and focus as well as a confidence in your own decision making. Whilst a sole practitioner’s team may go some way along the road in sharing those attributes, it’s unlikely that they will fully match those of the boss. Is it too hard now for a sole practitioner to sustain their own performance without a like-minded soul in the office alongside them?

Some may point to the model of a sole practitioner supported by a layer of managers sitting between them and the challenges of the firm. I’ve seen this work well on occasion but seen too many more examples where it has stifled growth. More than ever, the difference in mindset between an ambitious, entrepreneurial sole practitioner, and a hardworking, loyal but commonly less ambitious team cannot be ignored.

Then there is the challenge of meeting the wide range of skills required to run an accounting firm today. In addition to the professional knowledge required to meet standards and client needs, running a firm requires expertise in technology, HR, sales & marketing, customer service, data analytics, production and so on. Does one person have all this?

I wrote at the outset that sole practitioners were the gateway to partnerships. Historically, as a sole practitioner grew their firm, they were able to recruit more and more team members with core accounting skills to fuel that growth. With an expanding team came a greater likelihood of future partners. Succession plans typically would grow from within, at least until the original sole practitioner’s final exit.

These days, firms grow with much smaller teams and many in those teams will have work-life or career ambitions that certainly don’t include facing up to the stresses of running an accounting firm. In-house partners are becoming as scarce as ambitious qualified accountants in the recruitment pool. Natural succession looks anything but natural today.

If a sole practitioner either feels the need for a partner now or recognises a future need, then we have to be thinking of different solutions.

One route, given the points above, is to look outside of the profession and bring in like-minded people with different skill sets in areas relevant to the needs of the sole practitioner’s firm and clients’ businesses. This is a great way to accelerate growth but does come with its own challenges, particular around the restrictive thinking of some of the professional bodies towards ownership criteria.

An alternative is to consider a merger, sale or acquisition. A merger or acquisition can be a short cut to the resources and partners that the sole practitioner needs although, of course, a degree of compromise is inevitable required. Matching vision, values and culture is crucial but a smaller slice of a much bigger pie can enable ambitions currently restricted by resource to be achieved.

A sale may seem like a failure. Surely this is for those looking to exit or admitting defeat? However, by ticking those vision, values and culture boxes, it can also be the step to free the sole practitioner’s wings, enabling flight to much higher levels.

If growth cannot be fuelled by the traditional model of bringing in more bodies then we need to think more creatively about how we are to achieve it, and spread our nets in different directions as a consequence. If you are an ambitious sole practitioner, don’t let a lack of like-minded people overwhelm you.

Richard Brewin

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