Massive growth in accountant practices

IRIS Software Group have reported on the UK practising accountant population:

  • 4 mega firms employing over 1m UK & worldwide

  • 50 National firms each employing 200+

  • 400 Regional firms each employing 75+

  • 3,000 other large firms each employing 20+

  • 13,000 mid-size firms each employing 10+

  • 25,000 small practices each employing up 3-5

  • 30,000 micro-practices each employing 1-2

That means (discounting the Big 4 who service the top 7000 businesses):

  • 72,000 practices with 300,000 accountants servicing 6m small / medium businesses

  • Average practice servicing 83 businesses

  • Average practice accountant servicing 20 clients

ICAEW stats suggest that small / medium firms pay their accountant an average of £1200 pa, so:

  • Average practice revenue £100,000

  • Average revenue per accountant £24,000

And given that not every business retains qualified accountants the real position is below that.

The consequences include:

  1. Not enough revenue in the mass market

  2. Many unviable practices

  3. Heavy price competition

Is there redemption?

Well just one thought:

According to DBEIS small business longitudinal research:

  • The average micro business (1-9 employees) spends £2000+ pa on general business advice - around double the accountancy market

  • Which is provided by an unqualified cohort of unregulated consultants

This is a market that accountants could legitimately take by expanding their services to clients they already know and who trust them.

Runagood Ltd