In continuation to my previous articles on Invisible capital: For Cost Accountants in Practice – PART 3 its being found that many cost accountants are inclined to come and join practicing. I find that many cost accountants have come up with the question and that there is not much growth or prospects in the profession in term of practicing. Well today’s article is related to all those doubts in mind where we struggling to find the avenues of practicing. The challenge is not with the profession but with the limited vision of the profession prevailing among all of us. We commit mistakes in the initial process and we cry foul on the whole profession.
In practicing its being found that we often start with the idea of starting alone. This is one of the biggest mistakes of starting practicing segment. When we start alone we have the limitation of limited idea followed with limited networks and resources. It better to start the practicing with multiple founders who coming together would create wide options for networking, business opportunities and more over multiple source of ideas to grow the practicing. I often heard that cost accountants don’t find much opportunity in practicing; well the problem is in the attitude of looking towards the segment of practicing areas. For example you plan to get into the business of valuations and merger & acquisition segment. Now for this if you start alone just imagine that how much you have to run and how much time would be required to get business from various segments. You need to build networking with Banks, Private equity fund providers, venture capitalist etc. On the other side you have to focus on clients from whom you can get these works of valuations and merger & acquisitions. Moreover you need extreme speed to match up with all the segments to grow the business. The more you delay in reaching out to any one of these, you lose the business opportunity. This is why one needs to form the practicing platform with multiple members. Now when you start the practicing business do remember to take one senior member as guide or as master just like we required teacher to qualify Cost Accountancy/ examination. This teacher or guide would help you to avoid the death traps and block the loopholes in the process of running and execution of the business deals. You need to develop and acquire knowledge on management science and business strategies since these are the key drivers of the today’s business. Only Cost Audit and Cost Accounting would not be the only viable source of income for the profession. Just think about the MBA’s who develop consulting business and how much they charge fees from the clients for the strategic management advices. Now being an cost accountants having an in-depth domain knowledge of cost and various angles of business operation cant develop a successful practicing business.
We hear that we need technology, vision a strong team etc to build a successful cost accountancy practicing. Well above all these us need first and foremost important thing is a paying customer. Yes unless you get a paying customer neither you nor your team mates would be motivated to move ahead and come again on the next day in your office. Hence you should choose the area of your practicing filed where you can get paying customer and also you can dominate. Your practicing should be focused towards customer centric road map. Before you take up the decision of getting into practicing you need to extreme hard work to identify and understanding customer through primary market research rather than following the experience and achievements of others. Remember you are living in the world of 2014 and you need to explore opportunities so that you can move ahead. Don’t try to collect the stories of failures and negative attitude. Remember for every venture or profession attitude is the key factor and driving force behind success.
While starting practicing we need to design and develop a client profile. Client profile here means what type of client you need or you are focusing to start your practicing profession. Based upon this you should decide about the area of your profession you want to choose. I find in my research that traditional cost accounting areas are no longer viable mainly due to changing dynamics of business and technology. We need to get into strategic management areas where advisory business model of practicing which is the key demand of the time. A small statistic would make it very clear to understand the client profile you need to choose while opting for practicing. In India, there are 47 million SMEs who employ about 100 million people and contribute more than 8 percent of India’s GDP. Well another prominent barometer to find the growth of the SME business segment is that today 1.5 million SMBs export their products or services outside India which is a sign of the sector’s rapid evolution.
Now tell me how many cost accountants focuses towards SME segment. SME needs extensive cost management strategies as well as various type of support in strategic management terms to keep and grow their business in the long term. Recently the Union Government will create a separate Ministry for promoting entrepreneurship and skill development. Indian SME space today is largely dominated by micro scale businesses, contributing 95 per cent of the SME landscape, followed by small scale businesses contributing 4.8 per cent and the rest 0.2 per cent by medium scale businesses. Further note that out of the 4.88 crore SMEs around 55 per cent are located in urban areas while the rest 45 per cent constitutes to the rural regions. It’s not about only restricting yourself to cost audit and cost accounting areas, but to extend into the field of management science and develop innovative business models along with this growing SME segment which would give a new direction and path of revenue making for your new practicing ventures. You need attitude change to develop your practicing.
Moving ahead when planning to start your practicing you needs to calculate how much cost it takes to acquire a client. The lengthier the process of client acquisition and more cost get involved your profitability of the firms would be negligible. Hence the key to this way is that before you starts you’r practicing do research on type of segment you want to choose and how you plan to move ahead with the practicing. I will term this entire calculation as Innovation Accounting. More over your business principles, values and ethics should be of such higher standards that you get business referrals as well as networking referrals to grow your practices. This is why I have been giving emphasis on high level of visions. Remember when every practicing firms develops high level of ethics and value proposition individually then collectively the professional values also increases. In my next article I will discuss about the process and steps of profitable client acquisitions for getting a practicing firms to be successful.
Global Macro Economic Researcher and Business Strategist
Master of Economics, MBA in International Business Management, ICWAI (Final)/CWM Final/Journalist