Yaseen Ismail, founder of Durban-based Y Ismail Consulting, is a firm believer in ongoing learning.
At just 30 years of age, he already has a string of qualifications to his name, including CA, Advanced Programme in Taxation, and the RE1 and RE5 exams needed to become a financial advisor. He has also completed a 12-month estate agency internship.
Why the move into financial advice and real estate: “Because I wanted to offer my clients a full service, not just to provide accounting services for their businesses. Now I am able to give them a much deeper level of personal service. My objective is to help them grow, both in their businesses and in their personal and financial lives,” he said, speaking at the Practice Management Bootcamp for accountants, held at the Maslow Hotel in Pretoria this week.
He started off in the corporate world, then left to start his own practice, commencing with a portfolio of just five clients. He has now grown that to more than 40, some with a turnover of more than R1 billion. Little wonder that SA Institute of Chartered Accountants (Saica) ranked him as one of their “Top 35 Under 35” finalists.
Ismail, one of the keynote speakers at the Bootcamp, outlined the various pros and cons of going solo as an accounting practitioner, or partnering up with others.
As a sole practitioner the start-up is easy, simple to administer and no-one else is involved in decision-making. Plus, all profits go to the sole practitioner.
“However, as the practice grows, time becomes limited and there is a potential risk of compromising service,” he said.
This when many practitioners start looking at the possibility of taking in partners. This is also where possible disputes can enter the equation. Another option for the growth-minded practitioner is the personal liability company, where directors and the company are personally liable for any debts incurred.
In each of these growth models, the question of profit split inevitably arises. One option is to split profit according to equity participation, another is performance-based profit sharing where partners are rewarded for personal and group performance.
Another issue facing practitioners is whether to offer traditional “low end” accounting services, or graduate up into higher end services. Traditional services would include preparation of financial statements and tax compliance, whereas high-end services would include company and asset valuations, due diligence, acquisitions, business structuring and business processes.
“There are a lot of accountants in SA, but you need to establish where you fit on the spectrum. High end services can be very profitable, but occur less frequently than your low-end services. For example, a due diligence that takes a week to complete could make you more money than a month of traditional services, and is a great way to expand your range of services,” he says.
The downside of traditional accounting services is that this is a highly competitive field and companies are willing to cut prices to gain business. The regulatory environment is becoming more onerous, and businesses have greater need for accounting input. The problem is this may not necessarily be profitable if charged according to the standard billing models.
“If you take on more clients, you need to scale up in terms of resources and staff. Clients see accounting as something of a grudge purchase, and then you have the factor of technology, which is automating many processes. This means accounting time is less billable. Another factor is the tendency for companies to employ internal accountants as they grow.”
These factors are pushing accountants to seek out additional sources of revenue by moving to the high-end space. The problem here is that the work is inconsistent, and clients prefer well established firms with a track record in a particular line of specialisation.
Clients want accountants to be their advisors and to understand their businesses and how they operate. This is crucial in cementing a professional relationship. In times past, the accountant would prepare the month end statements after the event. Today, clients want up-to-date information that can help them in their decision making.
“As clients’ firms grow, so the demand for your accounting services grow too,” says Ismail.
The trick is to develop niche specialisations in areas such as mergers, valuations or estate planning. This way you can embed yourself into the client’s success and become part of it. “There’s great scope for expanding your revenues within your existing client base” – a theme consistently repeated at this year’s Bootcamp presentations.