While not yet the most profitable demographic, millennial business owners are one of the sector advisors that sector advisers need to target now. Failure to do so could turn into a costly mistake down the road.
Many accounting firms say they need to attract young talent, but there hasn’t been the same attention to how to attract young business owners.
A number of millennials – millennials, those born between the 1980s and the early 2000s – have already founded successful businesses, often tapping into social media and technology.
A to study by Bentley University shows that millennials believe that to be successful they need to be more agile, independent and enterprising than previous generations. Only 13 percent aimed to climb the corporate ladder and 67 percent wanted to start their own business.
Millennial business owners are starting younger
A 2016 investigation by BNP Paribas reveals that technology has enabled millennials to start their first business on average eight years earlier than previous generations.
Based in Adelaide Codex, which provides a cloud-based platform for freelance accountants, caters largely to young start-up clients. Co-founder Michael Macolino says technology allows freelancers to provide services and advice more aligned with millennial preferences.
“These are people in their twenties or early thirties who have kids… and are trying to start a business at the same time,” says Macolino.
Paperless is the new normal
US-based software as a service company Bill.com found an overwhelming preference for digital accounting in a survey of over 1,000 millennial business leaders.
About 82 percent have switched to paperless accounting, according to the Special Report of the Millennium Business Owners and Accounting Firms Survey 2017.
They wanted digital accounting that offers anytime, anywhere access and easy filing, searching, and sharing.
About 64% prioritize email communication with their accountant and are happy to work with virtual businesses; 33% prefer digital payments and 25% use their mobile devices for accounting.
Bill.com Director of Strategic Accounts Charles Crabtree says, “Fifty-six percent of millennials want to work with cloud-based technologies.
Pricing based on accounting value
Any practice that wants to attract businesses with millennials should reconsider hourly billing. Used to subscription services (think Netflix and mobile apps), millennials prefer the predictability of flat rates and fixed fees.
In fact, 44 percent prefer monthly flat rates and 35 percent want fixed costs per project. Only 21% of millennials are happy with hourly billing, and for those 30 and under, just 14% support it.
What frustrates young business owners the most?
Millennial business leaders find forecasting, cash flow management, and reporting the most difficult. About half insist on an accounting firm that provides strategic advice and guidance.
When presenting to millennials, accounting firms should emphasize the strategic element of services and offer integrated, technology-driven processes that deliver accurate and timely reporting. Use integrated cloud technologies and digital payments to speed up the reporting process.
Connected accounting practice
Software provider MYOB calls this trend “connected practice” – the bringing together of three essential functions: transaction processing, compliance and business advice.
“Going forward, we believe this will all happen in real time and on a single technology platform supported by a single advisor or integrated network of advisers,” said Tim Reed, CEO of MYOB.
Client portals such as MYOB allow accountants to digitally exchange documents such as tax returns with clients. Adoption has been swift, driven by the fact that accountants have realized that all businesses will expect this type of reporting technology.
Reed sees progressive companies grow “upstream” by taking responsibility for day-to-day management accounting and bookkeeping, and “downstream” by supplementing compliance work with business advice.
“It is often not high-end advice, but pragmatic advice,” he says. “For example, where accountants used to get financial data quarterly or annually, they can now regularly check a ledger to predict cash flow issues and advise clients on how to anticipate the problem. “
The Millennium Accounting Services Mix
Taxes rank as the primary service required by millennial business owners, but they prefer a different set of services than previous generations.
In the Bill.com study, 54 percent opted for bookkeeping at accounting firms, compared with 34 percent for people aged 40 to 55 and 30 percent for people 56 and older.
About a quarter have accounting technology recommendations and training on their list, while 20 percent want an invoicing service.
“It goes much further than taxation and accounting,” says Tanya Titman FCPA, Founder and Managing Director of Brisbane. Consolidate8.
“Millennials are looking for accountants who not only use technology, but who can recommend solutions as well. Being at their level and gaining their respect requires knowledge of their world, without which companies will not secure them as customers. The rise of social enterprises in the millennial business model is hard to ignore. “
How do millennials find their accountant?
Word of mouth referrals strongly influence millennials, but they use a mix of tools to research businesses, suggesting that multiple marketing strategies are needed, especially search engine optimization (SEO) and social media such as blogs, Twitter and Facebook.
“Millennials don’t have geographic boundaries, so location is less important,” says Titman. “Accountants need to take a national approach, regardless of where their office is located. “