You know how you've been hearing that automation is coming and that we are facing big disruption that will lead to bookkeeping price pressure and basically end in the demise of the profession as we know it?
Well, it's here! Though don't close up shop just yet.
This is certainly not the first time I've discussed the changes happening in our profession and how I see the vast majority of our colleagues reacting to (or better said, ignoring) the situation. In fact, it was less than a year ago when I highlighted that Intuit has plans for not only continuing with automation, but implementing artificial intelligence (AI) to serve small business clients more cheaply and efficiently than we can.
One of the key consequence for us with automation and AI is downward price pressure. Standard bookkeeping services are therefore being positioned as a low-priced commodity.
|If you didn't see the post from last year about automation and AI disruption, you can find it here: The Future is Now – Disruption is on Our Doorstep. In particular, take a look at the video that was shown at QuickBooks Connect back in the fall of 2016 included in that article.|
It wasn't just a bunch of bluster.
Over the last couple weeks there's been a firestorm of discussion that has been going on via social media ever since it was discovered that Intuit is now ˜testing' the small business response to their new QuickBooks Online Live offering. Do you think Intuit is getting closer to that science-fiction-like model in the video of a couple years ago?
Like it or not, disruption has arrived and is unavoidable. It will only continue to spread. And I think, it will do so rather rapidly. You see, Intuit is not the only big company seeking to capitalize on the more than 29.6 million small businesses with less than 20 employees, with the vast majority of those (24.3 million) having no employees (as of 2015, the latest stats).
KPMG, one of the big four accounting firms, has heavily invested in reaching this market with KPMG Spark, making big promises to take away the pain associated with bookkeeping.
Google has thrown their offering in the ring for G-Suite businesses and Bkper, clearly aimed at the collaborative, do-it-yourself young business clients.
And we already know about Bench and Botkeeper who've been gaining momentum too. On top of that we see prices dropping as mid-size accounting and bookkeeping firms move to flat fee packaged services at lower price points. These domestic firms are capitalizing on streamlined, automated workflows and seeking to scale their client base, filling them with micro-businesses.
It's like the perfect storm is brewing.
How Can We Compete?
I've been asked this question many, many times over the years by those looking to take their bookkeeping business online and work virtually. But now we have another layer added to the bookkeeping price pressure. And it is being felt by bookkeepers not only here in the US, but around the world.
For example, here's what one fellow bookkeeper asked me just last week:
“I received an email from an Indian based company offering all things accounting / bookkeeping via internet at £6 per hour. So as we are going more and more automated and not requiring to live local to clients, how can I compete?”
Ever since overseas companies have been offering outsourced bookkeeping services, I get this question. And I regularly get hounded by these companies asking me to outsource my client work to them at rock-bottom prices so I can pocket the difference. I know that some accounting firms do this quite successfully, especially during tax season.
Now that automation is taking hold and AI is improving, further commoditization of bookkeeping services is happening, promising faster work at lower prices. Given the opportunity to get results faster and cheaper, a large number of small businesses will jump at these services as they become aware of them.
Truth be told, the downward bookkeeping price pressure is more due the fact that our clients don't understand bookkeeping, and therefore don't place much value on it. They only know it is required by law so they can file annual taxes, or when they need financial reports to get funding.
Most small business owners see bookkeeping services as a low-value, necessary evil.
So are we sunk? Is this the beginning of the end?
It's Time for A New Approach
While we will continue to see shifting sands in the bookkeeping landscape, I believe that opportunities have never been greater for us! The key is, we need to be willing to change with the times and work differently. But there's the rub.
Change is something that most of us don't readily embrace. In fact, as a profession, we tend to be part of the late majority to laggards overall on the technology adoption lifecycle. THAT is where the real danger lies.
Yes, we can shift to higher-value services. Yes, we can (and must) overhaul our pricing model, and YES! We should also be embracing the automation and even AI, instead of hiding from it. But there are several roadblocks we MUST conquer before any of that will actually work for us.
The bottom line is you can still have and grow a thriving bookkeeping business, but you must be willing to change with the times. Otherwise, you will get left behind and become irrelevant. That is the storm that will be here sooner than most think.
This coming Thursday, February 21st, I'll be running a live 60-minute webinar where we'll dig into 7 of the biggest roadblocks that hold bookkeepers back from reaching true success. The changing times only amplify these.
Join me on this free online class so you can see clearly how to move forward from where you are now and navigate the changing tides as a high-value bookkeeping professional. Bookkeeping price pressure or low-cost commodity competition need not crush us, if we're willing to recognize the emerging opportunities and drive forward to meet them.