Is Spreading Your Wings Your Next Growth Strategy?

Is Spreading Your Wings Your Next Growth Strategy?
Historically the professions have been pretty good in terms of growth.

The accounting profession would grow year on year, 10% or so, without much difficulty, until the last GFC. Now, if we think about how this event impacted the professions; our legal colleagues were probably a little slow growth wise initially, with a pick up in activity as time passed. We certainly know how this event impacted financial advisers, particularly those who still utilised commissions or asset-based fees, with negative growth not unusual across the profession for a couple of years in a row. Our accounting colleagues also tended to follow the trend set by financial advisers, perhaps not to the same extreme and at different times across the country. Nonetheless, growth has, and for some, remains the bane of their existence.

For some however, their growth strategy seems to be either acquiring or commencing practice in another geographical area, at times in another State. There may be a couple of drivers behind such an approach which include:

An increasing group of clients from the firm now based in that secondary location
The ability to support and retain personnel who may travel from that area
A diversification of services
A desire by a current partner to relocate
A client base that is perhaps not as significantly impacted by economic factors influencing clients in their original location
A geographical area undergoing more significant general growth
Historically this has been an approach implemented by the minority or larger firms with a phase of having multiple offices in regional and interstate locations, albiet experiencing the negative impact this has on profitability. These larger firms then switched to rationalising some or most of these sites back to operating predominantly within the capital centres only and achieving the cost benefits associated with fewer locations and double ups on expenses and resources. But, to now see much smaller firms implementing such an approach is interesting.

If your firm is finding growth tough, spreading your wings to another location may be an option for you. Keep in mind, this other location needs to be somewhat beyond your current premises to achieve any of the benefits listed above.

In addition, we would certainly caution firms regarding the impact multiple offices has on practice performance, especially for those smaller firms that can be hit more significantly by a relatively small change in expenses.