Accounting opportunities in Aussie startups
The annual Startup Muster has identified opportunities for Australian accounting businesses. Chris Sheedy finds out more.
The Startup Shop, an accounting and business-strategy company based in Sydney, began as a typical accounting business. But several years ago, they completed a job for a startup who passed them on to another. That next startup passed their name on to yet another.
It didn’t take long for the owner to identify a gap in the market around advice for very early-stage businesses. These days, that niche is big enough to keep The Startup Shop running exclusively.
The startup world is now far bigger than a ‘niche’, says Monica Wulff, CEO and Co-Founder of Startup Muster.
We recognised that independent, robust, relevant statistics were lacking.
“The purpose of Startup Muster is to showcase the challenges, opportunities and progress happening in the startup ecosystem,” she said. “We recognised that independent, robust, relevant statistics were lacking about a community that is growing, as is its importance and relevance to mainstream business and society.”
Monica and her team, many of whom have worked with the Australian Bureau of Statistics, collect data around the startup arena and write reports that are becoming increasingly significant to individuals and organisations in the mainstream world of established business.
These stats also provide very interesting reading, on several levels, to Australian accounting businesses.
How entrepreneurs think
After the rampant rise of software as a service in the accounting field, it is difficult to argue with the fact that accountants have to be more entrepreneurial than ever. New revenue streams must be found as others are taken away and accountants need to demonstrate their value in entirely new ways.
Monica’s knowledge of the way entrepreneurs think – the logic that makes them so successful at coming up with and breathing life into new business ideas – would translate well in the accounting field.
So where else do you add value to others? How can you leverage that for some kind of gain?
“For accounting businesses, it would be interesting for them to sit back and think, this is our core, direct business, but what else do we provide?” she said.
“The biggest thing with start-ups is that they are able to create a new business model. They are not always chasing that direct route. So where else do you add value to others? How can you leverage that for some kind of gain? That is the way entrepreneurs think and often they build an entirely new business on the answer. What else can you offer?”
Startups need CAs
Here is some food for thought from the latest Startup Muster report:
- 90% of startups outsource work.
- 59% of startups outsource their accounting needs.
- Only 10.9% of startup founders say they have accounting skills, and 13.5% specifically wish they had accounting skills in their founding team.
- 33.2% of startup founders say they have benefited from accounting assistance, and another 18% have benefited from tax compliance assistance.
Why are these figures important? They demonstrate the vital importance of accounting to people in the startup environment.
After all, the startup environment is one in which entities are seeking grants, funding and private investment. They know they can’t enter into such negotiations without having their books in order.
We’re seeing a big rise in the number of new founders of businesses and there is no reason for that trend to decline.
“The components involved in setting up a business might not be things that startup founders are aware of,” Monica said.
“Setting up a company structure, setting up your accounting software, seeking funding, basic accounting functions, various tax issues, issues around acquisition, etcetera – at every moment in the startup pipeline there is a need for financial literacy and accounting knowledge.
“We’re seeing a big rise in the number of new founders of businesses and there is no reason for that trend to decline. Of course, there is also an increase in demand for the services that assist with the development of startups.”
Businesses that do a good job in the space, and that understand the specific and unique needs of a startup, will benefit from very healthy word-of-mouth referrals, as The Startup Shop discovered.
“The thing that startup founders know how to do is ask questions, and they are not afraid to ask for help,” Monica concluded. “Once you’re in with one or two startups your business will continue to grow through referrals.”