Australia 2018 Accounting Industry Performance Report · PDF filestudy for Australian...

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Australia 2018 Accounting Industry Performance ReportSee how your firm measures up and set a course to where you want to get to

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Cover: Wendy Davies, Moore Stephens, Perth | Xero partner This page: Abigail Crompton, Third Drawer Down, Melbourne | Xero customer

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ForewordWe’re very pleased to share with you this 2018 edition of our partner benchmarking

study for Australian accounting firms. This year’s report sharpens the focus on

forward planning, as partners have told us that the most valuable use of

previous reports was to inform their strategic and annual planning. We’ve also

added significantly more detail on marketing and advisory services, in line

with the feedback.

We produced our first detailed benchmarking reports – for the United Kingdom,

Australia, New Zealand, and the United States – in 2016 and 2017. Over 2000

firms took part in those studies, and now over 5000 accounting and bookkeeping

firms globally have participated in providing the rich data that lets Xero partners

compare their firm with other similar ones.

This report includes findings in three new areas.

• It shows results for firms who’ve taken different approaches to positioning

themselves in the market (see tables 3 to 5). It’s evident that raising these

questions helps firms agree and articulate their strategy for 2018 and the

following three to five years.

• It reveals the composition of advisory services revenues and what partners

are prioritising in 2018. In the ‘what if’ scenario in table 6, we show what the

2017 results would have been for a firm with 250 small business clients. This

demonstrates the potential revenue to be gained from advisory services.

• It shows the client and marketing communication method used by size of firm

(pages 28 to 37) and the sources of new clients. This information can help

accountants fine-tune their marketing and communications methods to attract

and serve the types of businesses they value most.

As you read through this report, you’ll see illuminating patterns emerge –

in client management, marketing, pricing, billing, employee compensation

and advisory services.

The findings in this report point to opportunities and ways for firms to achieve

their 2018 goals. We’re here to help you move your business forward and enjoy

the benefits of your efforts, so get in touch with your Xero account manager for

assistance to make it happen. Your account manager can also point you to more

resources to assist your firm as we couldn’t fit everything in here.

Please continue to share your questions and feedback with us as we plan for 2019

and beyond. You can reach me directly by email.

Doug LaBahn, Ph.D

[email protected]

Xero Practice Leadership Team

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We love putting reports like this together to help you plan for the future. Thanks for reading.

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ContentsHighlights ....................................................................................................................... 4

Participant profiles ......................................................................................................... 8

Insights to help your 2018 planning .............................................................................. 9

Marketing, performance and growth ............................................................................ 10

Client metrics for online firms ..................................................................................... 15

Advisory services opportunities .................................................................................. 21

Ingredients for success ................................................................................................ 24

Different size firms: a close-up look ............................................................................ 27

How we can help ........................................................................................................... 38

These stats are based on an online survey we did of 497 Xero Australian accounting partners. We aim to be as clear and concise as possible with this info, but we can’t promise that it’s free of rounding or other errors. The info and commentary in this report is just a guide and should not be taken as taxation, financial or legal advice – you should always check with an independent expert that what you’re doing is right for you and your firm.

List of figuresFigure 1. Sources of new clients

Figure 2. Investment in marketing

Figure 3. Growth in client numbers by age of firm

Figure 4. New clients in the last 12 months

Figure 5. Annual revenue per small business client

Figure 6. Revenue contribution per employee

Figure 7. Number of business clients per employee

Figure 8. Increases in employee compensation

Figure 9. Regretted client departures

Figure 10. Advisory service revenue

Figure 11. Comparison of firms with and without advisory services

List of tablesTable 1. Role and seniority of participants

Table 2. Growth in size and revenue over time

Table 3. Practice approaches

Table 4. Billing options

Table 5. Results for firms taking different approaches

Table 6. Contribution of advisory services to revenue

Table 7. Most attractive areas for advisory revenue growth

Table 8. Comparison of different size accounting firms

Table 9. Profile of sole practitioners

Table 10. Profile of small firms

Table 11. Profile of midsize firms

Table 12. Profile of large firms

Table 13. Profile of very large firms

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Results across all practices

Highlights

Average revenue growth rate for Xero accounting and bookkeeping practices

in Singapore in the 12 months to December 2017*

Average annual billing per small business client**

Average revenue per employee including contractors

* 139 Singapore accounting and bookkeeping practices in December 2017.

** Small businesses are defined as businesses with up to 100 employees.

$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200

11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%

$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200

$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200

14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%

$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000

Results across all firms*

Highlights

Average revenue growth for accounting firms in Australia

in the 12 months to December 2017*

Average advisory service revenue**


* 497 Australian Xero accounting firms in December 2017

** Average for accounting firms that provide advisory services to customers

5

$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200$137,200

11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%11.2%

$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200$164,200

$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200$180,200

14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%14.4%

$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000$494,000

Results for pacesetting firms*

Average revenue growth for accounting firms in Australia

in the 12 months to December 2017**

Average advisory service revenue***


* Pacesetting firms are those with the largest number of clients (300+) using online

accounting software. These firms grew more rapidly and more than doubled the advisory

revenue of average firms.

** 497 Australian Xero accounting firms in December 2017

*** Average for accounting firms that provide advisory services to customers

6

Jason Robinson, RBK Advisory, Melbourne | Xero partner

7

“ Our whole thing is Xero. Just over 12

months from launch, our extended team

and partners have grown to 18 and we

operate out of five different locations

across Melbourne with a newly opened

Geelong office. A Sydney office is on

our 2017/18 financial year roadmap.

Down the track we also have ambitions

to set up RBK New Zealand.

How do a couple of accountants with a

big idea and some fancy software grow

so much in one year?

We focused on relationships.”

• Jason Robinson, RBK Advisory

8

Firm sizeNumber of

participantsOwner/Managing

partner/Partner/CEOPractice manager /

team leader Accountant Total

Sole practitioners 73 99% 1% 0% 100%

Small firms 216 92% 4% 4% 100%

Midsize firms 42 81% 13% 6% 100%

Large firms 30 75% 23% 2% 100%

Very large firms 5 46% 45% 9% 100%

Average 93% 5% 2% 100%

Table 1. Role and seniority of participants

Participant profilesDefinitions

TYPES OF FIRMS

For the purposes of this study, we defined:

• sole practitioners as having no employees other than the owner

• small firms as having 2 to 9 employees including the owner

• midsize firms as having 10 to 19 employees including partners

• large firms as having 20 to 49 or more employees including partners

• very large firms as having 50 or more employees including partners

Where there are instances of only a few responses, we’ve omitted the results from

this report.

SMALL BUSINESSES/SMBS

When we talk about small businesses or SMBs, we mean those with

up to 20 employees.

Participants’ role in their firm

This table shows the role and seniority of 366 of the 497 survey participants.

(The remaining 131 participants did not disclose their role.) By and large,

they hold senior positions in their accounting firm.

9

Insights to help your 2018 planning

Wendy Davies, Moore Stephens, Perth | Xero partner

10

Other

3%

55%

16%

26%

Switched from another firm

Were doing it on their own

New business startups

Marketing, performance and growthThis page shows the sources of new clients for firms in 2017. The high percentage of clients

switching accountants reflects the migration we’re seeing as SMBs move to firms with

larger cloud practices – which are also the ones that have much higher client retention

rates. We were surprised by the sheer number of businesses (estimated to be 190,000 in

Australia in 2017) switching to accountants with sizable online practices. This is a large

market for Xero partners, who can show small businesses that moving to cloud services

provides them with far better value by boosting collaboration and increasing ease of use,

while removing the cost, hassle and complexity of older methods of doing accounting.

Sources of new clients

Small businesses seeking to hire new advisors were the largest source of new clients.

This was followed by new business startups – who are often confused by the compliance

terms and regulations they face during their first year as a business.

Figure 1. Sources of new clients

11

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$20,000

$40,000

$60,000

$80,000

Largefirms

Very largefirms

Smallfirms

Midsizefirms

Solepractitioner

2017

2016

2015

2014

2013

2010

-12

200

5-0

9

200

0-0

4

1990

-99

1950

-69

1970

-89

Bef

ore

1950

1000

750

500

250

0

Ave

rage

num

ber

of c

lient

s

Year the firm was formed

All firms Best group: top 15% in each age cohort

Investment in marketing

Most firms – except for the larger ones, which generally have staff dedicated to marketing

and client development activities – are reluctant to invest in marketing.

Figure 2. Average investment in marketing in the last 12 months

Growth in client numbers by age of firm

This graph compares the average number of small business clients of all respondents

with that of the best group – the top 15% in each age cohort. So, in effect, it shows the

growth curve for average and for top practices in Australia over time.

Figure 3. Growth in small business client numbers by age of firm

12

All respondents Best group*

Year the firm was formed

No. of firms

No. of business clients

New clients in last 12 months

Revenue in the last 12 months

Average no. of employees

% of regretted staff departures

No. of business clients

Revenue in the last 12 months

No. of employees

2017 17 64 19 $306,000 2.5 3.9% 273 $859,000 3.7

2016 26 47 18 $448,000 3.8 0.0% 181 $536,000 5.5

2015 37 87 21 $438,000 4.6 7.2% 350 $874,000 5.5

2014 26 92 19 $637,000 4.3 5.6% 400 $2,442,000 14.0

2013 20 124 25 $497,000 5.9 8.3% 350 $1,324,000 16.0

2010-2012 50 121 19 $807,000 5.8 6.9% 375 $1,926,000 10.0

2005-2009 68 157 18 $817,000 6.8 4.1% 628 $1,402,000 11.3

2000-2004 38 126 15 $924,000 9.5 15.9% 450 $2,912,000 30.0

1990-1999 59 243 20 $2,014,000 17.6 10.3% 850 $5,177,000 43.3

1970-1989 43 350 29 $2,247,000 20.8 5.1% 1,000 $5,708,000 57.0

1950-1969 12 456 41 $3,050,000 31.7 2.4% 1,000 $5,500,000 61.7

Before 1950 15 393 32 $4,391,000 27.0 8.5% 750 $7,125,000 55.7

Average 177 21 $1,237,000 10.6 6.9% 567 $2,968,000 25.5

* Top 15% in each age cohort

Table 2. Average growth in size and revenue over time

Growth in firm size and revenue over time

These figures can help you set revenue, staff and client goals for 2018 by knowing what the

top and average firms have achieved.

13

Approach Options from which participants chose

WeWork shared community, talent, team

Our firm provides services as if we are employees or members of

their team with all the experience and benefits (and without the

high costs and effort) of hiring full-time employees.

Specialised surgeonOur firm provides the highest level of expertise in a select number

of important areas. We deliver exceptional service in a few areas.

Business mentor/counsellor

Our firm provides the wise, experienced advice and counselling

that helps businesses navigate the best path forward for their

business – both now and far into the future.

Tech-loving accountantsOur firm is filled with qualified accountants who are also tech

geeks or front-runners.

All-inclusive ‘Amazon’ shopping centreOur firm provides a full set of services that cover virtually every

business need.

Holistic health centreOur firm provides a regime that helps businesses and business

owners excel at work and in life.

Personal fitness trainer/coachOur firm provides great value and service to businesses that want

to get the job done quickly and economically.

Fast and effective service centreOur firm provides great value and service to businesses that want

to get the job done quickly and economically.

Urgent care centreOur firm provides high quality service when businesses get stuck,

are in too deep and need fast, smart resolution of their issues.

Table 3. Practice approaches

Practice performance based on approach

PRACTICE APPROACHES

We asked participants to select the best fit for their firm from the options below, then looked

at the performance of firms taking each approach.

BILLING OPTIONS

We also asked participants about the different ways they billed small business clients and

what proportion of clients they billed by each method. The options were:

Billing option Description

Service planClients are on a fixed-fee monthly or quarterly service plan and the agreed rate is automatically

collected.

Service plan

plus projectsClients are on both a monthly service plan and they expect to pay for additional project work.

Bill by projectClients are quoted a fixed amount for the service (eg, tax return, general ledger setup) and

billed when the work is complete.

Bill for time Clients are billed for the number of hours (and partial hours) of service provided.

Table 4. Billing options

14

% of clients on each billing option*

Best fit for the

firm

Annual revenue

per client

Revenue growth

in the last 12

months

Popularity of the

approach

No. of small

business clients

Service plan

Service plan plus

projectsBill by

projectBill for

time

% of employees required to

complete timesheets

WeWork shared

community, talent,

team

$5,260 8.8% 9% 140 26% 8% 16% 47% 59%

Specialised

surgeon$4,900 14.0% 11% 113 20% 15% 28% 37% 67%

Business mentor/

counsellor$4,870 10.6% 29% 189 14% 11% 30% 42% 66%

Tech-loving

accountants$4,580 16.3% 3% 250 26% 4% 27% 44% 24%

All-inclusive

‘Amazon’ shopping

centre

$4,560 9.0% 23% 220 13% 7% 24% 54% 75%

Holistic health

centre$4,460 11.7% 9% 255 19% 10% 27% 41% 66%

Personal fitness

trainer/coach$3,900 11.7% 3% 104 40% 7% 34% 19% 55%

Fast and effective

service centre$3,640 13.0% 12% 175 11% 8% 45% 36% 48%

Urgent care

centre $2,080 15.7% 1% 60 2% 34% 37% 27% 33%

Average $4,600 11.1% 185 17% 10% 29% 43% 63%

RESULTS FOR FIRMS TAKING DIFFERENT APPROACHES

See how firms taking different approaches performed and the billing options used to support

each strategy.

* Some respondents use billing methods other than the four shown, which is why the billing option percentages

(reading across) don’t add up to the full 100%

Table 5. Results for firms taking different approaches

Partners often ask us what small businesses are seeking in an advisor when they search

for an accountant. These results show that firms that take a ‘WeWork’ team approach are

realising the highest revenue per client ($4,870) but the slowest revenue growth. In contrast,

the next three approaches – specialised surgeon (14%), business mentor (10.6%) and tech-

loving accountants (16.3%) – are growing much faster and realising solid revenue per client.

It’s clear that firms can achieve success pursuing different approaches. We encourage firms

to align their pricing and employee time keeping strategies to support the approach they

determine is best for them.

15

Client metrics for online firmsNew business clients in the last 12 months

Firms with larger numbers of online accounting clients are adding more new clients.

The factors that contribute to their success are the lower rates at which they’re able to

offer their services, and being more tech savvy. Several findings, including regretted

client departures (figure 9) and practice approaches (table 5), suggest businesses

are placing a priority on technological know-how when choosing a new accountant or

bookkeeper.

Figure 4. Average number of new clients in the last 12 months

“ Xero has transformed my business over

the last five years. There’s no way I

could manage the number of clients

that I do on another platform. As a

business we can continue to grow at

this level because of Xero. As a company,

Xero is always looking that step ahead

and the conversation is way ahead of

the competition. ”

• Katrina Spinazzola, KRS Consulting Group

0 10 20 30 40 50

Average number of new clients in the last 12 months

Num

ber

of o

nlin

e cl

ient

s

100–299

300+

36–99

6–35

0–5

16

$0 $1,000 $2,000 $3,000 $4,000 $5,000

Num

ber

of o

nlin

e cl

ient

s

Average revenue per small business client

300+

100–299

36–99

6–35

0-5

$50,000 $100,000 $150,000$0

Average revenue contribution per employee

Num

ber

of o

nlin

e cl

ient

s

300+

100–299

36–99

6–35

0-5

Average annual revenue per small business client

Except for firms with very large numbers of online clients, the rates that advisors charge

are quite similar across segments. This finding, combined with other results in this section,

suggests that firms are using the efficiencies they gain from online accounting to boost

revenue per employee and value to clients while holding prices steady so as to win more

new clients.

Figure 5. Average annual revenue per small business client

Revenue contribution per employee

This chart shows the substantial increase in revenue per employee that's achieved as the

number of online business clients increases as a consequence of greater employee efficiency

and higher advisory service revenue.

Figure 6. Average revenue contribution per employee

17

Number of business clients per employee

This chart shows the substantial increase in the ability of accountants to serve clients

efficiently as the number of online clients increases.

Figure 7. Average number of clients per employee

Increases in employee compensation

This chart shows the increase in employee compensation as the number of online clients

increases, illustrating how the benefits of greater revenue per employee flow on to staff.

It also shows the risks to employee compensation in firms that are slow to move their

clients online.

Figure 8. Average employee compensation (excluding partners) increase in latest review cycle in 2017

0%

2%

1%

4%

3%

5%

Number of online clients

Ave

rage

incr

ease

in e

mpl

oyee

com

pen

sati

on

100–299 300+36–996–350–5

0 2010 30 40

Average number of clients per employee

Num

ber

of o

nlin

e cl

ient

s

100–299

36–99

6–35

0-5

18

Regretted client departures

Firms with fewer numbers of online accounting clients have high rates of regretted client

departures. Their ability to retain desirable clients is much weaker than for firms with larger

numbers of online clients. This is one of several indicators that we see of clients moving

to firms adept at using technology and away from firms who are less tech savvy. Another

indicator is the number of new clients who switched from another firm (see figure 1).

Figure 9. Regretted client departures in the last 12 months as a percent total clients

Advisory service revenue

This chart shows that as advisors get closer to their clients due to the use of online

accounting, numerous opportunities for advisory services become apparent, easier to

sell, and simpler to deliver. The jump shown for partners with 300 or more clients is very

noticeable and suggests that the scale of the online practice facilitates the uptake and

delivery of advisory services.

Figure 10. Average advisory service revenue in the last 12 months

Figure 9. Average number of regretted client departures in the last 12 months

0% 2% 4% 6% 8% 10%

Percentage of regretted client departure on average

Num

ber

of o

nlin

e cl

ient

s

300+

100–299

36–99

6–35

0-5

Figure 9. Average number of regretted client departures in the last 12 months

$0 $100,000 $200,000 $300,000 $400,000

Average advisory service revenue

Num

ber

of o

nlin

e cl

ient

s

100–299

300+

6–35

36–99

0–5

19

“The impact of technology in particular, has meant

compliance can be done more efficiently with less

need for human interaction (fewer hours to bill) and

a resultant drop in fees. With compliance being a

grudge buy and perceived by many as not providing

them with anything of value, clients now shop

around for the lowest fee. In other words, it’s a

race to the bottom.

So, what services do clients value and what,

therefore, are they prepared to spend money on?

The answer, in a nutshell, is advisory services.”

•Wendy Davies, Moore Stephens WA

21

Advisory services opportunitiesThis section explores the 2017 revenue of partners to provide clarity on the often debated

notion of what advisory services include, and to assist with your 2018 planning.

Comparison of firms with and without advisory revenue

Practices that offer advisory services reported higher overall revenue per client but lower

compliance revenue. When we asked partners about it, they explained that there’s a shift

towards charging clients separately for advisory services instead of just simply giving away

these services to justify higher compliance billing.

Figure 11. Comparison of average revenue per client for firms with and without advisory services

Advisor services revenue Compliance revenue

$0

$2,000

$4,000

$6,000

$8,000

$10,000

Ave

rage

rev

enue

per

clie

nt

Compliance-only practices

Compliance + advisory practices

$4,200 $3,440

$3,550

22

Contribution of advisory services to revenue

This table shows the reported contribution of nine different advisory services to 2017 revenue

and how this would look for a firm with 250 clients by extrapolating the revenues reported by

participants.

Advisory service

Share of advisory revenue

What revenue would look like for a firm

with 250 clients

Advisory services, eg budgeting, cash flow forecasting, business planning 35% $312,000

Startup mentoring, advice, and networking or assistance with business

development12% $110,000

Virtual or outsourced CFO services 12% $107,000

Succession planning services 10% $92,000

Business performance benchmarking 9% $79,000

App/software (other than accounting) setup, configuration and support

services7% $62,000

Capital-raising or assistance moving to better interest, terms or financing

options6% $56,000

For-fee implementations of accounting software for businesses that are

unlikely to become long-term clients 5% $44,000

HR advisory services, eg, assistance setting employee compensation,

planning to add/reduce employees4% $38,000

Total $900,000

Table 6. Contribution of advisory services to revenue

23

Most attractive areas for advisory revenue growth

This table shows the areas rated most attractive for advisory services revenue growth in 2018.

The top opportunity is commonly known as ‘compliance plus services’. The next one – startup

mentoring – reflects the importance of this large source of new clients. The third service –

app/software setup, configuration and support – is one we’ll be watching in 2018 to see how

quickly it becomes a large service line for Xero partners.

Advisory service

Rated as the

top service

Rated as one of the

top three

Rated as one of the

top five

Advisory services, eg, budgeting, cash flow forecasting, business planning 65% 92% 98%

Startup mentoring, advice, and networking or assistance with business

development10% 63% 85%

App/software (other than accounting) setup, configuration and support

services9% 41% 64%

Virtual or outsourced CFO services 7% 40% 61%

Business performance benchmarking 4% 53% 83%

For-fee implementations of accounting software for businesses that are

unlikely to become long-term clients 3% 26% 43%

Succession planning services 2% 29% 58%

Capital-raising or assistance moving to better interest, terms or financing

options1% 27% 45%

HR advisory services, eg, assistance setting employee compensation,

planning to add/reduce employees0% 20% 32%

Table 7. Most attractive areas for firm revenue growth

“The business has grown rapidly ever

since the introduction of Xero.

Our current focus is to use efficiency

apps in our practice to leverage our

expertise in compliance bookkeeping.

We also focus on offering advisory

services to our clients so we can

provide even more value and insight.”

•Jo Doye, Cloud Books

24

Ingredients for successThe survey results suggest four factors that

lead to positive outcomes and higher growth

for accounting firms.

Firms that have larger numbers of online accounting clients have an easier time signing on new clients and are better at retaining their clients.

“By choosing to specialise in online

bookkeeping and collaborate

with local tax accountants on

the single ledger, we have the

ability to go anywhere, because

the bookkeeping required for

management is very similar in

every country. Clients get a full

service, and businesses from

around the world come to us

because they want our Xero

expertise.”

• Meryl Johnston, Bean Ninjas

Firms that provide advisory services earn considerably more revenue per client than firms that offer only compliance.

“For me, it’s all about the

interconnectivity and the single-ledger

approach. I couldn’t imagine looking

after a client’s data today and providing

compliance and advisory services if

the customer used a different platform

to run their business. Xero eliminates

unnecessary errors and saves me so

much time in giving sound advice.”

• Andrew Van De Beek, illumin8 Partners

25

Firms that serve a larger number of online accounting clients generate significantly more revenue per employee.

“We were fortunate to have a large

client base when we launched

Pangea Partners. And all of our

clients were on Xero, or were willing

to go onto Xero. This meant that the

journey from bronze to silver took

place pretty quickly, and now, at the

time of writing, we’re just 49 points

away from gold.

Our clients know that by being on

Xero, they save time. They know that

the add-on apps save time. And all

of these positive experiences create

trust and efficiency.”

• Lee Kelly and Brendan Connolly, Pangea Partners

Firms that position their firms as business mentor or specialised surgeons generate higher revenue per client and experience rapid growth.

“We are now 100% cloud based. This

year will be the second year running

where we have excess capacity in

April, May and June – which is the

direct result of the efficiencies Xero

has brought us. We now use this time

to proactively meet with clients in an

advisory capacity.

We could see that the change was

going to be momentous and disruptive,

but we viewed it as an amazing

opportunity to improve our efficiency,

have total clarity over our clients’

numbers, and open up immense

advisory opportunities.

The dashboard is gold, and is what

CEOs were paying software companies

multi-millions for only 10 years ago.”

• Mark Lawry, Suntax

27

Different size firms: a close-up lookIn this section, we profile different size firms, from sole practitioners to very large firms,

as measured by the number of employees and contractors they employ.

Comparison of different size firms

This table compares firms of different sizes, allowing you to see things like how your

firm’s operations, marketing and performance stack up against those of your peers.

Firm sizeNo. of

respondents

Revenue growth in

the last 12 months

No. of smaller businesses*

served in the last 12 months

% of clients already

using online accounting

No. of new clients in

the last 12 months

Firm revenue in the last 12

months

Sole

practitioners74 12.6% 29 78% 7 $200,000

Small firms 236 12.8% 124 68% 18 $592,000

Midsize firms 52 6.5% 273 60% 28 $1,778,000

Large firms 40 9.4% 431 58% 45 $4,055,000

Very large firms 11 7.9% 895 46% 56 $9,216,000

Average 11.5% 176 67% 21 $1,236,000

* Businesses with up to 20 employees

Table 8. Comparison of different size accounting firms

28

Profile of sole practitioners

This table profiles sole practitioners according to their number of online business clients.

It shows averages for the firms in each group.

Firms by number of business

clients using online accounting

0-5 6-35 36-99

Firm profile

Number of firms participating 31 33 7

Average revenue growth in the last 12 months 12.2% 12.5% 11.7%

Average annual revenue per small business client $4,677 $3,844 $5,500

% of business clients using online accounting today 73% 82% 85%

Average number of small business clients served in the last 12 months 8 25 75

People performance and management

Average revenue $107,600 $199,800 $406,700

Timesheets completed for any purpose 29% 29% 0%

Timesheets completed for billing clients 37% 36% 0%

No. of clients talked to or chatted online with on a typical business day 1.8 2.6 1.5

Firms actively looking to add staff 39% 34% 26%

Clients and marketing

Average number of new clients in the last 12 months 6 6 10

Regretted client terminations in the last 12 months (% of total clients) 9.3% 4.4% 1.8%

Average marketing investment/spend in the last 12 months $800 $1,000 $400

Average advisory revenue in the last 12 months (all types of advisory) $48,000 $71,000 $62,000

Pricing and billing (% of clients)

Bill for the number of hours (and partial hours) of service provided 37% 46% 49%

Quote a fixed amount for a service and bill when the work is complete 35% 29% 21%

Fixed-fee monthly or quarterly service plan and automatic payment 19% 18% 14%

Monthly service plan and clients pay for additional project work 9% 8% 1%

On another method of billing 0% 0% 14%

29



0-5 6-35 36-99

Marketing and client communications

Number of methods used, not including word of mouth 0.9 0.8 0.6

Word of mouth 77% 73% 57%

Social media: Facebook 30% 27% 29%

Website and/or blog using search engine optimisation (SEO) 23% 21% 0%

Online advertising / Google search engine marketing (SEM) 7% 15% 0%

Other social media: Twitter, LinkedIn, Instagram, etc 7% 9% 0%

Print advertising 13% 0% 0%

Newsletters 0% 0% 0%

Industry event/award sponsorship 0% 0% 0%

TV or radio advertising 0% 0% 0%

Podcasts 0% 0% 0%

Other 0% 3% 0%

None of the above 10% 0% 29%


Switched from another firm 55% 47% 52%

New business startups 30% 22% 29%

Were doing it on their own 15% 26% 4%

Other 0% 5% 14%

Biggest issues in the year ahead

Finding new clients 71% 45% 43%

Staying up to date with new technology 32% 55% 71%

Upskilling myself and my staff 39% 36% 43%

Tough competition in the area 16% 6% 14%

Hiring and retaining staff 13% 6% 0%

Other 3% 9% 0%

Table 9. Profile of sole practitioners

30

Profile of small firms

This table profiles small firms (those with 2 to 9 employees including the owner) according

to their number of online business clients. It shows averages for the firms in each group.

Firms by number of business clients


0-5 6-35 36-99 100-299 300+

Firm profile

Number of firms participating 15 84 76 53 8

Number of employees including contractors 3.3 3.8 4.8 5.6 6

Revenue growth in the last 12 months 13.1% 12.8% 11.6% 15.0% 8.4%

Annual revenue per small business client $2,767 $4,661 $4,013 $3,566 $2,625

% of business clients using online accounting today 54% 65% 70% 71% 76%

Average number of small business clients served in the

last 12 months12 48 100 248 550


Revenue per employee including contractors $69,800 $97,100 $124,800 $176,900 $247,300

Number of small business clients per employee 4 13 22.5 48.5 95.2

Increase in employee compensation in most recent

cycle, excluding partners1.5% 2.5% 4.5% 5.0% 1.9%

Regretted staff departures in the last 12 months

(as a % of total employees)13.3% 5.2% 8.9% 7.5% 16.7%

Employees required to complete timesheets for any

purpose55% 62% 60% 69% 97%

Employees required to complete timesheets for billing

clients49% 62% 57% 64% 90%

No. of clients employees talk to or chat online with on a

typical business day2.3 3.2 3.9 4.6 3.9

Firms actively looking to add staff 41% 57% 63% 58% 43%


Number of new clients in the last 12 months 5 11 20 27 46.0

New clients per employee 1.7 3.3 4.7 5.8 8.3

Regretted client departures in the last 12 months

(as a % of total clients)12.7% 5.9% 4.1% 1.5% 0.7%

Marketing investment or spend in the last 12 months $1,100 $2,400 $5,700 $4,200 $2,400

Advisory revenue in the last 12 months

(all types of advisory)$80,000 $105,000 $141,000 $176,000 $135,000

31



0-5 6-35 36-99 100-299 300+


Bill for the number of hours (and partial hours) of

service provided34% 36% 37% 43% 57%

Quote a fixed amount for a service and bill when the

work is complete46% 28% 30% 34% 26%

Fixed-fee monthly or quarterly service plan and

automatic payment13% 21% 19% 11% 12%

Monthly service plan and clients pay for additional

project work0% 14% 12% 11% 6%

Another method of billing 7% 1% 1% 2% 0%


Number of methods used, not including word of mouth 1.1 1.3 1.3 1.5 0.6

Word of mouth 53% 69% 63% 55% 88%

Website and/or blog using search engine optimisation

(SEO)13% 31% 29% 32% 38%

Social media: Facebook 40% 29% 29% 42% 0%

Other social media: Twitter, LinkedIn, Instagram, etc 13% 14% 20% 15% 0%

Newsletters 7% 13% 8% 15% 13%

Print advertising 20% 8% 12% 11% 0%

Online advertising / Google search engine marketing

(SEM)7% 13% 14% 15% 0%

TV or radio advertising 0% 4% 1% 4% 13%

Industry event/award sponsorship 0% 10% 5% 6% 0%

Podcasts 0% 1% 1% 0% 0%

Other 0% 5% 7% 13% 0%

None of the above 7% 2% 4% 2% 0%


Switched from another firm 42% 53% 54% 57% 61%

New business startups 45% 22% 28% 30% 34%

Were doing it on their own 11% 21% 15% 12% 6%

Other 2% 3% 2% 0% 0%


Finding new clients 80% 48% 43% 26% 38%

Staying up to date with new technology 40% 43% 46% 47% 38%

Upskilling myself and my staff 40% 30% 42% 43% 13%

Hiring and retaining staff 27% 27% 34% 34% 25%

Tough competition in the area 33% 15% 13% 8% 13%

Other 0% 8% 9% 17% 0%

Table 10. Profile of small firms

32

Profile of midsize firms

This table profiles midsize firms (those with 10 to 19 employees including the partners)

according to their number of online business clients. It shows averages for the firms in

each group.



6-35 36-99 100-299 300+

Firm profile

Number of firms participating 8 10 22 11

Average number of employees including contractors 15 15 15 15

Average revenue growth in the last 12 months 3.6% 5.2% 6.1% 10.3%

Average annual revenue per small business client $7,000 $5,150 $4,667 $4,455

% of business clients using online accounting today 37% 53% 61% 85%

Average number of small business clients served in the

last 12 months113 127 304 459


Revenue per employee including contractors $95,800 $106,700 $118,700 $147,000

Number of small business clients per employee 7.5 8.5 20.3 30.6


cycle, excluding partners2% 4.1% 3.7% 3.3%


(% of total employees)4.2% 18.3% 5.3% 4.5%


purpose90% 76% 89% 70%


clients68% 74% 82% 69%

Number of clients talked to or chatted with online with

on a typical day2.3 3.3 3.6 4.4

Firms actively looking to add staff 48% 72% 71% 58%


Number of new clients in the last 12 months 12 23 34 36.0

New clients per employee 0.8 1.5 2.3 2.4


(as a % of total clients)8.4% 6% 2.3% 0.8%

Marketing investment or spend in the last 12 months $11,200 $10,500 $18,400 $5,000


all types of advisory)$391,000 $241,000 $274,000 $264,000

33



6-35 36-99 100-299 300+



service provided49% 46% 43% 41%

Quote a fixed amount for the service and bill when the

work is complete23% 25% 34% 30%


automatic payment23% 9% 13% 24%


project work5% 18% 10% 5%

Another method of billing 0% 3% 0% 0%


Number of methods used, excluding word of mouth 1.1 1.8 1.4 0.8

Word of mouth 75% 40% 50% 64%


(SEO)50% 40% 41% 18%

Social media: Facebook 13% 40% 32% 9%

Newsletters 13% 40% 18% 9%

Other social media: Twitter, LinkedIn, Instagram, etc 13% 30% 9% 18%

Industry event/award sponsorship 13% 10% 0% 18%


(SEM)13% 10% 5% 0%

Print advertising 0% 10% 9% 0%

TV or radio advertising 0% 0% 0% 0%

Podcasts 0% 0% 0% 0%

Other 0% 0% 23% 9%

None of the above 0% 0% 0% 0%


Switched from another firm 47% 58% 68% 67%

New business startups 33% 28% 24% 22%

Were doing it on their own 20% 4% 7% 11%

Other 0% 10% 1% 0%


Upskilling myself and my staff 75% 60% 43% 55%

Staying up to date with new technology 50% 90% 33% 27%

Hiring and retaining staff 38% 50% 29% 27%

Finding new clients 50% 40% 24% 18%

Other 0% 0% 24% 27%

Tough competition in the area 25% 0% 10% 0%

Table 11. Profile of midsize firms

34

Profile of large firms

This table profiles large firms (those with 20 to 49 employees including the partners)

according to their number of online business clients. It shows averages for the firms

in each group.



6-35 36-99 100-299 300+

Firm profile

Number of firms participating 4 5 18 13

Number of employees including contractors 35 35 35 35

Revenue growth in the last 12 months 20.3% 11.4% 5.6% 10.7%

Annual revenue per small business client $13,250 $6,200 $4,597 $5,846

% of business clients using online accounting today 50% 50% 48% 77%

Number of small business clients served in the

last 12 months123 120 425 654


Revenue per employee including contractors $72,700 $94,300 $101,400 $157,500

Number of small business clients per employee 3.5 3.4 12.1 18.7


cycle, excluding partners6.9% 4.8% 3.4% 5.2%


(% of total employees)0% 14.3% 6.0% 8.8%


purpose99% 75% 89% 88%


clients99% 95% 87% 87%

Number of clients talked to or chatted with online with

on a typical day5.3 3.1 3.8 5.0

Firms actively looking to add staff 100% 95% 78% 75%


Number of new clients in the last 12 months 30 35 43 55.0

New clients per employee 0.9 1.0 1.2 1.6


(as a % of total clients)3.9% 5.7% 3.1% 1.7%

Marketing investment or spend in the last 12 months $28,600 $16,100 $21,300 $41,500


(all types of advisory)$234,000 $460,000 $368,000 $547,000

35



6-35 36-99 100-299 300+



service provided60% 50% 61% 48%

Quote a fixed amount for the service and bill when the

work is complete31% 16% 13% 25%


automatic payment7% 23% 19% 9%


project work3% 11% 7% 11%

Another method of billing 0% 0% 0% 8%


Number of methods used, excluding word of mouth 3.0 1.6 2.4 1.6

Word of mouth 50% 40% 67% 15%


(SEO)75% 20% 61% 38%

Newsletters 75% 40% 44% 15%

Social media: Facebook 25% 40% 56% 38%

Other social media: Twitter, LinkedIn, Instagram, etc 50% 40% 33% 15%

Industry event/award sponsorship 25% 20% 17% 8%


(SEM)25% 0% 11% 8%

Print advertising 25% 0% 11% 0%

TV or radio advertising 0% 0% 11% 15%

Podcasts 0% 0% 0% 0%

Other 0% 0% 0% 23%

None of the above 0% 0% 0% 0%


Switched from another business 60% 55% 60% 68%

New business startups 23% 24% 25% 26%

Were doing it on their own 17% 13% 11% 5%

Other 0% 8% 4% 2%


Hiring and retaining staff 75% 80% 33% 38%

Upskilling myself and my staff 50% 40% 44% 46%

Staying up to date with new technology 50% 20% 39% 31%

Finding new clients 0% 40% 33% 31%

Tough competition in the area 0% 0% 0% 0%

Other 25% 20% 11% 8%

Table 12. Profile of large firms

36

Profile of very large firms

This table profiles very large firms (those with 50 or more employees including the

partners) according to their number of online business clients. It shows averages for the

firms in each group

As there were only a few responses from very large firms with between 36 and 99 online

clients, we’ve omitted the results from this table.



300+

Firm profile

Number of firms participating 7

Number of employees including contractors 96.4

Revenue growth in the last 12 months 7.3%

Annual revenue per small business client $8,214

% of business clients using online accounting today 58%

Number of small business clients served in the last 12 months 1121


Revenue per employee including contractors $99,000

Number of small business clients per employee 12.1

Increase in employee compensation in most recent cycle,

excluding partners2.6%

Regretted staff departures in the last 12 months (% of total employees) 6.3%

Employees required to complete timesheets for any purpose 93%

Employees required to complete timesheets for billing clients 95%

Number of clients talked to or chatted with online with on a typical day 6.9

Firms actively looking to add staff 77%


Number of new clients in the last 12 months 52.0

New clients per employee 0.6

Regretted client departures in the last 12 months (as a % of total clients) 2.1%

Marketing investment or spend in the last 12 months $56,600

Advisory revenue in the last 12 months (all types of advisory) $994,000


Bill for the number of hours (and partial hours) of service provided 57%

Quote a fixed amount for the service and bill when the work is complete 26%

Fixed-fee monthly or quarterly service plan and automatic payment 4%

Monthly service plan and clients pay for additional project work 11%

Another method of billing 1%

37



300+


Number of methods used, excluding word of mouth 2.6

Word of mouth 43%

Print advertising 29%

Website and/or blog using search engine optimisation (SEO) 43%

Social media: Twitter, LinkedIn, Instagram, etc (excl. Facebook) 43%

Social media: Facebook 29%

Newsletters 29%

Industry event/award sponsorship 29%

Online advertising / Google search engine marketing (SEM) 14%

TV or radio advertising 14%

Podcasts 0%

Other 29%

None of the above 0%


Switched from another business 76%

New business startups 15%

Were doing it on their own 9%

Other 1%


Upskilling myself and my staff 43%

Finding new clients 43%

Hiring and retaining staff 43%

Staying up to date with new technology 29%

Tough competition in the area 14%

Other 14%

Table 13. Profile of very large firms

38

How we can helpOnce you’ve decided that Xero is the way forward for your firm, a Xero account

manager is the perfect person to help you get going. It’s their job to help you with

every aspect of the transition to Xero, and be there for you every step of the way.

If you’re not already a Xero partner, sign up to the Xero partner program at

xero.com/partners or get in touch by emailing [email protected]

Once you’ve become a Xero partner, getting yourself and your team certified is key

to ensuring your firm understands Xero and how it can help your clients. Our most

successful partners are the ones whose teams are certified and where everyone is

singing from the same sheet. Many firms adopt a model where staff can dedicate a

percentage of their work hours (say 10%) for getting certified and staying up to date

on Xero and connected apps. This quickly becomes productive, as certified staff

are much more effective when helping clients or working on Xero-related tasks in

the business.

We understand that making a significant change within your firm isn’t easy, which is

why we’ve launched migration certification. Migration certification is perfect for

the person at your business responsible for converting a large number of your

client accounts to Xero, and is filled with guidance, resources and tools to

support the switch.

Of course, you need to keep your books current when you’re changing software,

and we have several really good options to help you including our partnership

with Jet Convert.

Talk to a Xero account manager today

We’re here to help, with Xero account managers and partner consultants standing

by ready to help you create a business plan for moving your firm forward in 2018

and beyond.

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