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Write a Feasibility Analysis on the Accounting Services in Australia
With ample experience in the accounting services industry, the plan to set up an accounting services company in a regional town is a dream come true. This report assesses the feasibility of setting up an accounting firm to provide bookkeeping and tax compliance services to small & medium businesses in a regional town.
This assessment reveals that the firm has the ability to capture 2% of the market in the region within the next three years. When compared against its competitors in the region, XYZ Accounting falls under the medium scale. This shows that the firm has to focus on small & medium businesses rather than large and listed companies in the region. Marketing strategies are to be devised to distinguish the product offerings from that of the existing service providers.
With the evaluation of services, target market, resources, location, legal requirement and costs, this venture is able to meet the market opportunity presented in terms of revenue growth.
The industry is prone to cyclical demands where peak demand is expected during the end of a financial year. XYZ Accounting has to implement marketing strategies to attract clients through networking, social platforms, newsletters, and advertisements. This would help in reaching potential customers at a lesser cost and in turn, helps in revenue generation and makes the start up a successful business venture.
Entering the business world as an entrepreneur can incite various emotions – fervor, apprehension, and joy. My business idea discussed in this feasibility study is the startup of accounting practice to target small and medium companies in and around Alice Springs in Northern Territory. For any business, accountants are considered as key advisers. The major business areas for accounting firms are tax and superannuation. Changes in the regulations on financial planning in Australia are a major driver for future business opportunities. This startup idea is based on the proven perception of SMEs that accountants are reliable, skillful and provide value for money.
The primary services offered by firms in this industry are accounting, auditing, and bookkeeping. These services target auditing, business advice, and support, financial reporting and taxation. The industry is experiencing a slight decline in revenue due to regulatory changes in e-tax and personal tax. However, the total industry revenue is expected to grow at 5.5%to reach AUD20 billion by 2016-2017. (AFP Brokers, 2015)The revenue growth is caused by traditional accounting functions due to an increase in the number of clients and competition.
The industry is negatively impacted by slow economic growth and reducing business confidence. The demand for financial advisors is increasing due to the changes in Australia's tax system. The employment growth in the industry is affected by the rise in outsourcing. Overall the industry growth is slower due to reducing production levels and stringent competition.
Technological advancement in the industry enables professionals to focus on high-end activities. This is evident from the rebranding of larger accounting firms as business service providers with consulting functions. Smaller accounting firms are focusing on wealthy individuals, small and medium enterprises for cash management and advisory services.
The profit margins are narrowing with increasing competition, the overlap of services and price squeezing to accommodate smaller clients. The ease in the personal tax system in the country is affecting the non-employing firms that account for around 50% of the total number of firms in the industry. (AFP Brokers, 2015)