Will Global Growth Rates & Industry Reform Impact Upon Your Firm’s Growth Aspirations?

Will Global Growth Rates & Industry Reform Impact Upon Your Firm’s Growth Aspirations?
Last month I attended a conference where Dr John Hewson, economist and ex leader of the Liberal Party in the 90’s, presented on the economic future of small business in Australia. He reflected on the broader international climate, the potential impact this could have on Australia as well as his expectation regarding future growth within Australia.

Hewson highlighted a significant number of development opportunities. Unfortunately he was unable to convince the then prime minister to persue (Perhaps he will have more luck with the current leader). Interestingly, when I mentioned these remarks to some clients, they commented on Hewson’s pessimism. So, to those Practitioners who consider Hewson a Dr Doom, take this with a grain of salt.

The underlying tread of his comments suggest that the broader world economy, and therefore the economy within Australia, is under greater threat or risk than superficially acknowledged by many. Perhaps the meltdown of our share market at the end of October is indicative of his view. However, in regards to expected growth rates in Australia over the short term, Hewson spoke about government targets of 3.5% – 4%. However, according to his expectations, reality is more likely to be 1.5% – 2% for at least the short term.

I was left contemplating. ‘Okay, if the economy is not growing at the expected rate, plus the profession is in a state of disruption, yet firms are talking about targeting growth to underpin practice performance and improvement; are such aspirations actually realistic or achievable?’

Perhaps firms will endeavour to grow their practices in the coming years, after what has probably been a rather flat period post GFC. To achieve growth, organic growth is typically going to come from either providing more services to existing clients, attracting new clients from other providers, or perhaps providing significantly more services to a reduced client base. Add to this the whole flux within the profession around compliance services, and we now have a profession that is being told to expand into value adding or advice type services. One question for an individual firm is, ‘how many of those types of clients do we have?’

Here’s my concern. If we are trying to service our clients more extensively to generate internal growth, but the economy as a whole (therefore our clients) are not growing at the expected level of 3.5% – 4%, how many of our clients will actually require these additional/higher value services? Thus, will our internal growth actually be hampered by the slower growth being achieved in the broader marketplace?

Therefore, for those firms planning internal growth in the short term, you may wish to factor in Hewson’s comments for your targets. If your clients aren’t growing, and there are pressures on compliance services, I would suggest you need a different plan to enable your firm to achieve it’s growth aspirations. Perhaps an acquisition will be more up your alley?