March 28, 2023

New opportunities for regional professional service firms

There’s never been a better time for regional professional services firms to take on their city counterparts. From new recruitment models to technological advances and more, here’s how to make the most of the opportunity.

For the past few years – and for the first time since 1981 – population growth has been faster in regional Australia than in our cities. That surge of 11 per cent across Australia’s regions had many impacts, and sparked an important question: can a regional firm now compete head on with a metro one?

Nowhere is this David vs Goliath question more evident than in professional services, where regional firms are looking to take advantage by expanding their footprints to new areas and client bases and offering expanded services.

Regional firms have already benefitted from people seeking sea or tree changes, as well as technological advances, while at the same time not having to maintain large, expensive city offices. Now, they’re continuing to level the playing field with their metro counterparts.

How are they doing this? Firstly, they’re seeking new and innovative ways to get the best people into their practices.

“Competitive salaries are a given, but many firms are now actively talking to potential staff about the advantages of regional relocation – such as housing affordability and lifestyle – in order to entice them across,” says Naomi Stuart, Business Banking Executive, Regional & Agribusiness at NAB.

Alternatively, regional firms are bringing in staff from metro firms without requiring them to relocate, either by allowing them to work remotely, offering flexibility such as compressed working weeks, or even setting up satellite offices in metro areas.

“It’s becoming increasingly common to have your main headquarters in a regional centre and then a small office in the nearest city – this has advantages for staffing and also provides an additional base from which to meet with clients,” Stuart says.

Taking a long-term view on recruitment

Stuart says the most-forward thinking regional firms are clearly communicating the advantages of coming to work for them, then staying for the long term. This nurturing starts at a young age, she explains, with firms talking to school-aged people to encourage an interest in accounting as a career.

“Then they offer traineeships or allow them to work for the firm part-time while they’re at university. From there, they will aim to retain them right through to partnership.”

Regional firms are also very clear on the career possibilities they offer.

“Firms will make sure potential employees know that, by working for them, they will get a broader grounding of experience across different areas than they might at some metro firms if they’re put into a single department,” Stuart says.

“They’re also being transparent on training and development opportunities as well as clear pathways to senior management and partnership.”

Offering service that hits the mark

At the same time, regional firms are wowing clients with superior service in order to expand beyond their geographical limits.

“Regional firms have always provided a high-quality and personalised service,” Stuart says. “And that’s especially powerful now we’ve reached the point where most people don’t really mind where their accountant is based, as long as they do a good job.”

A key factor in this is investing in the right technology, which can help in several ways, including providing an enhanced client interface, automating low-value tasks and allowing for additional advisory services.

“We’re seeing a lot of our regional firms invest in technology upgrades as it’s become extremely important; for example, software to enable remote working or better client service,” Stuart says.

Growth as a competitive strategy

When it comes to chasing growth, firms are thinking organically but also about consolidation. When NAB surveyed 86 accounting practices last year, the ratio of firms wanting to buy versus sell was 2.5 in regional areas, compared to 1.8 buyers for every seller in metro areas – a clear indication that regional areas are a hotbed of merger and acquisition activity.

A regional firm’s strategy for acquisition often begins by consolidating with others within their area. They might also look further afield, particularly if they already have a strong presence in one location. In these cases, they may widen the net to another region or even city-based practices. Alternatively, they might offer a more complete package to clients, by acquiring complementary services.

Whatever strategy appeals most, the key is to make it a considered decision and get ready early.

On top of ensuring the financial side of any merger stacks up, it’s vital to consider the cultural fit between the parties – will it be possible to bring the staff together to work as one?

If the answer to that is yes, any regional firm considering an acquisition or any kind of expansion should talk to a banker right away. That banker should be one they can work closely with, who understands regional firms and who can brief them on other factors like what’s happening in the market or with interest rates.

So, can David take on Goliath when it comes to professional services? Regional firms have an excellent chance if they continue to embrace innovative techniques for attracting staff, look for the right growth opportunities, invest in technology and continually find new ways to provide quality service.

“We’re certainly seeing regional firms wanting to be known for providing that whole package of service to their clients,” Stuart concludes.

Ana Marinkovic – Making the most of holiday trading

Ana Marinkovic – Making the most of holiday trading

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Ana Marinkovic – Making the most of holiday trading